Bill Holdings (NYSE: BILL) stock is down 34%. The cause of the BILL stock fall wasn’t, in fact, the results announced last night. It wasn’t even, not particularly, something contained in the announced results themselves. Rather, it was the prediction for the next few quarters that was the problem. It’s almost as if high interest rates have meant that a recession is coming.
The business line itself: “BILL Holdings, Inc. provides financial automation software for small and midsize businesses worldwide. The company provides software-as-a-service, cloud-based payments, and spend management products, which allow users to automate accounts payable and accounts receivable transactions, as well as enable users to connect with their suppliers and/or customers to do business, eliminate expense reports, manage cash flows, and improve office efficiency. It also offers onboarding implementation support, and ongoing support and training services.” A very reasonable thing to be doing, enabling the nuts and bolts of the business world to be done more efficiently.
Bill Holdings stock price from Google Finance
The actual results were good: “Payments and billing software maker Bill.com (NYSE:BILL) announced better-than-expected results in Q1 FY2024, with revenue up 32.6% year on year to $305 million.” Beating estimates should mean a rising stock price, obviously. Except that’s obviously not what happened.
There was an indication in the actual results. That revenue guidance: “However, next quarter's revenue guidance of $298 million was less impressive, coming in 6.47% below analysts' estimates.”
It was really only in the investor call to discuss that this was really made plain: “While our performance exceeded our outlook and strong customer adoption continued, we started to see more intense macro pressure on our business related to spend late in the quarter, and that has continued through October. As a result of higher interest rates and tighter credit markets, capital and cash have become less affordable and available for SMBs. Some of our larger businesses have scaled back their spend while both customers and their suppliers became more selective with their payment choices. Business behaviors changed rapidly in this respect. This has impacted our fiscal year outlook, which John will talk about more in a few minutes.”
We read that not as that a recession might arrive. Rather, we read that as the US economy is in recession right now. OK, that might seem a bit excessive but it is normally true that we only even recognise a recession after it’s all over. Seriously, one of those weird but true economic facts.