In addition to merchant processor Shift4 Payments Inc., another payments-industry initial public offering of stock is in the offing. This one comes from Bill.com Holdings Inc., a provider of cloud-based invoice-management and payment services for small and mid-sized businesses.
Palo Alto, Calif.-based Bill.com hopes to raise approximately $158.9 million after underwriting expenses if its planned sale of 8.82 million shares is priced at $20 per share, the mid-point of its expected $19 to $21 range, according to a prospectus the company filed with the Securities and Exchange Commission Tuesday. That’s up from the $16 to $18 range Bill.com expected earlier. The net could rise to $183.6 million if underwriters exercise their full options to buy more shares.
The IPO could happen this week, according to reports on the financial wires. In contrast, Shift4 so far has filed only a draft registration statement and hasn’t set an IPO date.
Bill.com says its 76,000 customers generated $70 billion in payments in fiscal 2019 ended June 30. (The customer count rose to 81,000 by Sept. 30 and almost $22 billion in payment volume for the three months.) The company provides an invoice-management platform to automate invoice handling and payment of invoices to save on writing paper checks. Together with clients’ suppliers, Bill.com say it has a network of 1.8 million members.
The company has integrated its services with Intuit Inc.’s QuickBooks accounting software for small businesses, and it has referral relationships with several other popular accounting-software providers, including Oracle NetSuite and Sage Intacct. The prospectus also says Bill.com’s partners include major financial firms such as Bank of America, JPMorgan Chase, and American Express, as well as 70 of the top 100 accounting firms. These partners bring Bill.com’s services to their own small-business clients.
Founded in 2006 by chief executive René Lacerte, Bill.com’s revenues have been growing rapidly—$108.4 million in fiscal 2019, up 67% from $64.9 million in fiscal 2018. But the company has incurred losses since inception, most recently $7.3 million and $7.2 million for fiscal 2019 and 2018, respectively.
Bill.com plans to use the IPO proceeds for working capital and general corporate purposes, including product development and possibly investments in technologies and other companies. The company is pegging prospects for future revenue growth and profitability on replacing outmoded, check-based processes its says still dominate small-business payments.
One source of strength and potential weakness for Bill.com is its relationship with Intuit. “Our platform is integrated into Intuit’s QuickBooks product, which millions of SMBs rely on for accounting services,” the prospectus says. “Achieving this integration required extensive coordination and commitment of time and resources, and has led to thousands of additional customers for us. If we are unable to increase adoption of our platform by Intuit’s customers, however, our growth prospects may be adversely affected. Additionally, if Intuit reconfigures its platform in a manner that no longer supports our integration or if Intuit terminates this relationship or replaces our platform with that of another provider, we would lose customers and our business would be adversely affected.”
Bill.com’s stock will trade on the New York Stock Exchange under the ticker symbol BILL. In April, Bill.com said it would offer Mastercard virtual cards to businesses as digital replacements for checks.