Cloud And AI Will Fuel Global SMB Automation

Key Takeaways

• Accelerated AI and rapid product innovation could drive outsized automation, customer growth, and dominant share in SMB digital payments and workflow automation.
  
• Expanding holistic solutions and international payment capabilities uniquely position BILL to capitalize on rising SMB cloud adoption and unlock multiple new revenue streams.
  
• Weakening small business demand, rising competition, and integration risks from acquisitions threaten BILL's revenue growth, margins, and ability to sustain its competitive advantage.

Catalysts

Provides financial operations platform for small and midsize businesses worldwide.

• Analyst consensus expects AI-powered workflow automation to provide moderate efficiency gains, but BILL's massive proprietary data set and accelerated deployment of Agentic AI agents could unlock an order-of-magnitude in automation for SMBs, driving unprecedented customer acquisition, long-term platform stickiness, and sustained margin expansion well beyond current forecasts.
  
• Analysts broadly anticipate that new payment solutions like advanced ACH and invoice financing will increase take rates, but the company's deep supplier network and rapid iteration with enterprise suppliers suggest BILL could dominate digital B2B payment rails for SMBs, allowing for premium monetization and outsized ARPU growth versus consensus.
  
• The accelerating shift of SMBs from manual to integrated, cloud-based back-office systems is still in its early innings, and BILL is singularly positioned to capitalize as the essential provider for the multi-trillion dollar segment, potentially driving double-digit revenue CAGR as SMB digital penetration rapidly increases.
  
• With recently launched near real-time cross-border/local transfer payment capabilities gaining early traction, BILL's global expansion could capture a massive additional TAM that is mostly untapped, building new recurring revenue streams and increasing margin via higher-valued international transactions.
  
• BILL's holistic product suite-including procurement, expense, spend management, and embedded partner APIs-creates a powerful all-in-one solution, which if bundled and repriced (as management now signals), can yield step-function increases in subscription and transaction revenue as SMB automation expectations rise industry-wide.

BILL Holdings Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on BILL Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming BILL Holdings's revenue will grow by 19.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 2.7% today to 8.2% in 3 years time.
• The bullish analysts expect earnings to reach $197.0 million (and earnings per share of $0.73) by about July 2028, up from $38.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 48.4x on those 2028 earnings, down from 123.4x today. This future PE is greater than the current PE for the US Software industry at 42.7x.
• Analysts expect the number of shares outstanding to decline by 3.43% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.93%, as per the Simply Wall St company report.

BILL Holdings Future Earnings Per Share Growth

Risks

• Prolonged uncertainty for small and midsize business customers has caused a reduction in transaction volumes and spending per customer, with management noting fewer transactions per customer and lower total payment volume per customer, which directly reduces both revenue and monetization growth potential for BILL Holdings.
  
• Intensifying competition from fintech startups, embedded banking solutions, and accounting software giants like Intuit and Xero-many of whom are now also integrating bill pay and expense management-may force BILL to lower its pricing or increase spending on customer acquisition, resulting in compressed gross margins and higher operating expenses.
  
• Ongoing execution and integration risk from past acquisitions (such as Divvy and Invoice2go) remains as the company expands product offerings and moves upmarket; if new product rollouts or cross-sell efforts with these acquisitions lag expectations or lead to operational inefficiencies, net margins and long-term shareholder value creation could deteriorate.
  
• With significant monetization still tied to ad valorem, float-based, and transaction-based pricing, a sustained high interest rate environment or a sharp downturn in small business spending could erode revenue streams, especially as recent comments highlighted near-term headwinds and growth rate moderation.
  
• The increasing adoption of advanced automation and next-generation AI tools across the industry risks commoditizing BILL's core AP/AR platform, forcing price compression or requiring accelerated innovation and compliance investment that could undermine its long-term competitive moat and future earnings growth.

Valuation

• The assumed bullish price target for BILL Holdings is $80.28, which represents two standard deviations above the consensus price target of $60.22. This valuation is based on what can be assumed as the expectations of BILL Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $89.0, and the most bearish reporting a price target of just $49.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $2.4 billion, earnings will come to $197.0 million, and it would be trading on a PE ratio of 48.4x, assuming you use a discount rate of 8.9%.
  
• Given the current share price of $46.07, the bullish analyst price target of $80.28 is 42.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.