BILL Holdings’ BILL shares have fallen 20.4% in the past month, underperforming the broader Zacks Computer and Technology sector’s decline of 5% and the Zacks Internet - Software industry’s rise of 5.6%.

The BILL stock has also underperformed peers, including Compass COMP, Guidewire Software GWRE and Aspen Technology AZPN, over the same timeframe.

While Compass shares have returned 22.8%, shares of Guidewire Software and Aspen Technology have declined 7.5% and 3.6%, respectively.

BILL Holdings has been suffering from a sluggish revenue forecast for the third quarter of fiscal 2025, compounded by concerns over trade policy changes and their impacts on small and medium business (SMB) sentiment and spending.

The company’s prospects suffer from rising operating expenses, changes in payment volumes and a challenging macroeconomic landscape, straining its financial performance during the period.

Payment Volume Shift Hurts BILL’s Profitability

BILL Holdings faced revenue pressure in the second quarter of fiscal 2025 as transaction volumes shifted toward lower gross interchange merchant categories. These categories typically generate lower processing fees, leading to a decline in revenue per transaction.

As more customers and vendors favored payment methods with reduced interchange fees, the company saw slower growth in its high-margin payment segments. This shift has directly impacted BILL's ability to sustain its previous revenue momentum, putting downward pressure on overall profitability.

BILL Holdings’ Sales & Earnings Estimates Show Mixed Trend

For the third quarter of fiscal 2025, BILL expects revenues between $352.5 million and $357.5 million, suggesting year-over-year growth of 9-11%, marking a noticeable slowdown from the previous quarter’s projection of 12-13%.

The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is pegged at $355.27 million, indicating year-over-year growth of 9.98%.

Non-GAAP earnings are projected between 35 cents and 38 cents per share. The consensus mark for earnings is pegged at 38 cents, up 8.6% over the past 30 days. The estimate indicates a year-over-year decline of 36.67%.

For fiscal 2025, BILL Holdings expects revenues between $1.45 billion and $1.47 billion, implying 13-14% year-over-year growth.

The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $1.46 billion, suggesting year-over-year growth of 13.21%.

Non-GAAP earnings are expected between $1.87 and $1.97 per share. The consensus mark for earnings is pegged at $1.94 per share, up 6.6% over the past 30 days. The estimate implies a year-over-year decline of 8.49%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

However, not everything is gloomy for BILL. Its long-term outlook remains strong, driven by an expanding customer base and strategic fintech collaborations that enhance its growth potential. Additionally, the rising adoption of its platform strengthens its market position, creating long-term value for investors.

BILL Advances With SMB Growth & User Adoption

BILL Holdings has demonstrated a strong commitment to serving SMBs. With an ever-expanding footprint, its cutting-edge platform has become an absolute necessity for more than 480,000 businesses, strengthening its dominance in the SMB sector.

BILL is enhancing its platform by introducing international payment options, such as local transfer and improving instant payment and invoice Financing features. These advancements provide SMBs with faster, more flexible and secure payment solutions.

In the second quarter of fiscal 2025, BILL Holdings processed approximately $85 billion in payment volume across 30 million transactions, reflecting strong adoption and increasing engagement from its expanding customer base. This substantial transaction volume highlights the platform’s essential role in simplifying and optimizing financial operations for small and midsize businesses.

BILL is actively investing in its go-to-market strategy to expand its presence in the accounting firm market, which includes above 40,000 CPA firms in the United States and more than 100,000 when book-keeping firms are included. The growing demand for Embed Solutions from accountants and larger businesses is creating opportunities for SMBs to access and integrate the platform seamlessly, strengthening market reach.

In the reported quarter, BILL Holdings introduced an embedded 1099 filing service to simplify tax compliance for SMBs. This feature streamlines the generation and submission of 1099 forms, reducing administrative effort and ensuring IRS compliance. By integrating it into its platform, BILL enhances its financial solutions, making tax filing easier and more efficient for businesses.

Conclusion

BILL Holdings continues to strengthen its position as a leading financial operations platform for SMBs, driven by strategic partnerships, expanding customer adoption and innovative product enhancements. The company’s focus on automation, AI-driven financial solutions, and digital payment capabilities has enhanced its platform’s value. 

Despite these advancements, BILL faces challenges, including a declining share price, macroeconomic headwinds and evolving competitive pressures in the fintech space.

BILL Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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