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What changed in BILL Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BILL Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+457 added−455 removedSource: 10-K (2024-08-23) vs 10-K (2023-08-29)

Top changes in BILL Holdings, Inc.'s 2024 10-K

457 paragraphs added · 455 removed · 371 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+16 added−8 removed69 unchanged
Biggest changeOur talent acquisition team also developed our ERG Ambassador Program, which gives candidates an opportunity to connect with an ERG member to learn more about BILL’s culture and our focus on DEI. We are hopeful that through programs and partnerships like these, we can both help local communities and build a solid pipeline of future employees for our company.
Biggest changeWe are hopeful that through programs and partnerships like these, we can both help local communities and build a solid pipeline of future employees for our company. As part of our focus on community outreach, we sponsor the Adelante Program, a partnership with a local high school in San Jose, California, to expose underprivileged, low-income students to technology-focused careers.
We compare favorably with our competitors on the basis of these factors. We expect the market for SMB back-office financial software and business-to-business payment solutions to continue to evolve and grow, as greater numbers of SMBs and larger businesses digitize their back offices. We believe that we are well-positioned to help them.
We believe we compare favorably with our competitors on the basis of these factors. We expect the market for SMB back-office financial software and business-to-business payment solutions to continue to evolve and grow, as greater numbers of SMBs and larger businesses digitize their back offices. We believe that we are well-positioned to help them.
Any actual or perceived failure to comply with legal and regulatory requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, regulatory or governmental investigations, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate.
Any actual or perceived failure to comply with legal and regulatory requirements may result in, among other things, revocation of required licenses or registrations, loss of approved status, private litigation, 12 regulatory or governmental investigations, administrative enforcement actions, sanctions, civil and criminal liability, and constraints on our ability to continue to operate.
By design, we protect our SMB customers against check fraud by never disclosing their bank account details to a supplier and by reviewing every check presented against a check issue file to detect and prevent check fraud. • Cross-border payments – We simplify cross-border disbursements by facilitating electronic funds transfers around the world with our International Payments service.
By design, we protect our SMB customers against check fraud by never disclosing their bank account details to a supplier and by reviewing every check presented against a check issue file to help detect and prevent check fraud. • Cross-border payments – We simplify cross-border disbursements by facilitating electronic funds transfers around the world with our International Payments service.
This eliminates the need to switch between systems for two-way matching and reduces the back-and-forth communication between PO creators and accounts payable managers. 6 • Frequent status updates – We provide timely status updates of financial inflows and outflows by providing status updates of all transactions on a regular basis.
This eliminates the need to switch between systems for two-way matching and reduces the back-and-forth communication between PO creators and accounts payable managers. • Frequent status updates – We provide timely status updates of financial inflows and outflows by providing status updates of all transactions on a regular basis.
We center our culture around five values which are core to who we are, guide how we operate, define how we treat each other, and help make our teams strong, cohesive units: • Humble – No ego; • Authentic – We are who we are; • Passionate – Love what you do; • Accountable – To each other and our network; and • Fun – Celebrate the moments.
We center our culture around five values which are core to who we are, guide how we operate, define how we treat each other, and help make our teams strong, cohesive units: • Humble – No ego; • Authentic – We are who we are; • Passionate – Love what we do; • Accountable – To each other and our network; and • Fun – Celebrate the moments.
Customers who use other types of systems use our advanced file import/export capabilities to minimize data entry activities. • Purchase order (PO) matching – We sync POs directly from accounting software systems, including Oracle NetSuite and Sage Intacct, and QuickBooks Desktop into our platform.
Customers who use 6 other types of systems use our advanced file import/export capabilities to minimize data entry activities. • Purchase order (PO) matching – We sync POs directly from accounting software systems, including Oracle NetSuite and Sage Intacct, and QuickBooks Desktop into our platform.
Guided by best practices, feedback we receive from our stockholders, and third-party frameworks such as the Sustainability Accounting Standards Board Software & IT Services standards, we are focused on the initiatives described below. 12 Our Culture and Employees Our culture enables us to attract and retain exceptional talent.
Guided by best practices, feedback we receive from our stockholders, and third-party frameworks such as the Sustainability Accounting Standards Board Software & IT Services standards, we are focused on the initiatives described below. Our Culture and Employees Our culture enables us to attract and retain exceptional talent.
Through our cloud-based desktop and mobile applications, SMBs can connect and do business from anywhere, any time. Our platform offers a variety of payment solutions which enhances the experience for both buyers and suppliers in a transaction. • Diverse Distribution Channels.
Through our cloud-based desktop and mobile applications, SMBs can connect and do business from nearly anywhere, any time. Our platform offers a variety of payment solutions which enhances the experience for both buyers and suppliers in a transaction. • Diverse Distribution Channels.
The lending products and services subject us to state and federal lending regulations including, but not limited to Fair Lending, state specific lending disclosures, and Unfair, Deceptive, or Abusive Acts and Practices and Unfair or Deceptive Acts or Practices requirements. Anti-money Laundering, Counter-terrorist Financing, and Sanctions.
The lending products and services subject us to state and federal lending regulations including, but not limited to Fair Lending, state specific lending disclosures, and Unfair, Deceptive, or Abusive Acts and Practices and Unfair or Deceptive Acts or Practices requirements. 11 Anti-money Laundering, Counter-terrorist Financing, and Sanctions.
We enable secure connections and storage of sensitive supplier and client information and documents, such as invoices and contracts, and make them accessible to authorized users on any device, from anywhere. • Visible and Transparent.
We enable secure connections and storage of sensitive supplier and client information and documents, such as invoices and contracts, and make them accessible to authorized users on any device, from nearly anywhere. • Visible and Transparent.
Regulatory Environment We operate in a rapidly-evolving regulatory environment. 10 Payments and Banking Regulation In order to conduct the payment services we offer, we are required to be licensed to offer money transmission services in most U.S. states.
Regulatory Environment We operate in a rapidly-evolving regulatory environment. Payments and Banking Regulation In order to conduct the payment services we offer, we are required to be licensed to offer money transmission services in most U.S. states.
Through card issuing partners, Divvy provides both physical and virtual Mastercard and Visa cards to companies that enroll in its business spend and expense management program. • Real-time payments (RTP) – Through The Clearing House’s RTP ® network, a real-time payments platform, we offer an instant transfer service to allow businesses using our solutions to disburse funds rapidly to meet urgent funding needs.
Through card issuing partners, BILL provides both physical and virtual Mastercard and Visa cards to companies that enroll in its business spend and expense management program. • Real-time payments (RTP) – Through The Clearing House’s RTP ® network, a real-time payments platform, we offer an instant transfer service to allow businesses using our solutions to disburse funds rapidly to meet urgent funding needs.
We are integrated with several of the most popular business accounting software applications, including QuickBooks, Oracle NetSuite, Sage Intacct, Xero, and Microsoft Dynamics 365 Business Central. Our two-way synchronization capabilities virtually eliminate double data-entry, as our platform and the customer’s accounting software continuously keep each other updated.
We are integrated with several of the most popular business accounting software applications, including QuickBooks Online, QuickBooks Desktop, Oracle NetSuite, Sage Intacct, Xero, and Microsoft Dynamics 365 Business Central. Our two-way synchronization capabilities virtually eliminate double data-entry, as our platform and the customer’s accounting software continuously keep each other updated.
These compliance programs include policies, procedures, reporting protocols, systems, training, testing, independent audits, and internal controls designed to address these legal and regulatory requirements and to assist in managing the risks associated with money laundering. Our United States (U.S.) compliance program includes the designation of a BSA compliance officer to oversee the program.
These compliance programs include policies, procedures, reporting protocols, systems, training, testing, independent audits, and internal controls designed to address these legal and regulatory requirements and to assist in managing the risks associated with money laundering. Our U.S. compliance program includes the designation of a BSA compliance officer to oversee the program.
We believe that the key competitive factors in our market include: • Product features, quality, and functionality; • Data asset size and ability to leverage AI; • Ease of deployment; • Ease of integration with leading accounting and banking technology infrastructures; • Ability to automate processes; • Cloud-based delivery architecture; • Advanced security and control features; 9 • Regulatory compliance leadership, as evidenced by our money transmitter licenses in all required U.S. jurisdictions and in Canada; • Brand recognition; and • Pricing and total cost of ownership.
We believe that the key competitive factors in our market include: • Product features, quality, and functionality; • Data asset size and ability to leverage AI; • Ease of deployment; • Ability to integrate with leading accounting and banking technology infrastructures; • Ability to automate processes; • Cloud-based delivery architecture; • Advanced security and control features; • Regulatory compliance leadership, as evidenced by our money transmitter licenses in all required U.S. jurisdictions and in Canada; • Brand recognition; and • Pricing and total cost of ownership.
We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective. As of June 30, 2023, in the U.S. we had two trademark registrations covering the “Bill.com” logo and three trademark registrations for DIVVY or the Divvy logo, along with registrations for Divvy slogans.
We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost effective. As of June 30, 2024, in the U.S. we had two trademark registrations covering the “Bill.com” logo and three trademark registrations for DIVVY or the Divvy logo, along with registrations for Divvy slogans.
Our Solution Our platform automates the SMB back office and enables businesses using our solutions to pay their suppliers and collect payments from their clients, in effect acting as a system of control for their accounts payable, accounts receivable, and spend and expense management activities.
Our Solution Our platform automates the SMB back office and enables businesses using our solutions to pay their suppliers and collect payments from their clients, acting as a system of control for their accounts payable, accounts receivable, and spend and expense management activities.
Whether on-the-go or in the office, an SMB can view up-to-date spend against budgets, so they always know where they stand. We market Divvy cards to potential spending businesses and issue business-purpose charge cards through our partnerships with Issuing Banks.
Whether on-the-go or in the office, an SMB can view up-to-date spend against budgets, so they always know where they stand. We market BILL Spend and Expense to potential spending businesses and issue business-purpose charge cards through our partnerships with Issuing Banks.
These programs are also designed to manage terrorist financing risks and to comply with sanctions requirements to prevent our products from being used to facilitate 11 business in certain countries, or with certain persons or entities, including those on designated lists promulgated by OFAC and relevant foreign authorities.
These programs are also designed to mitigate terrorist financing risks and to comply with sanctions requirements to prevent our products from being used to facilitate business in certain countries, or with certain persons or entities, including those on designated lists promulgated by OFAC and relevant foreign authorities.
Under the card rewards program, spending businesses can earn rewards based on transaction volume on the cards issued to them and can redeem those rewards mainly for statement credits or cash, travel, and gift cards. Customer Success SMBs have unique needs and customer support contact expectations.
Under the card rewards program, spending businesses can earn rewards based on transaction volume on the cards issued to them and can redeem those rewards for statement credits, cash, travel, and gift cards. 10 Customer Success SMBs have unique needs and customer support contact expectations.
Our document management capabilities help businesses using our solutions make payment decisions, answer supplier questions, and provide support to accountants and auditors. • Intelligent bill capture – We have automated the capture of data from bills by leveraging our proprietary AI capabilities. Incoming bills are machine-read, and critical data fields, including due date, amount, and supplier name, are prepopulated.
Our document management capabilities help businesses using our solutions make payment decisions, answer supplier questions, and provide support to accountants and auditors. 4 • Intelligent bill capture – We have automated the capture of data from bills by leveraging our proprietary AI capabilities. Incoming bills are machine-read, and critical data fields, including due date, amount, and supplier name, are pre-populated.
When a business applies for a Divvy card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a Divvy card pursuant to our credit 5 policies.
When a business applies for a BILL Divvy Corporate Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Corporate Card pursuant to our credit policies.
As a card program manager for the CPMBs, we have implemented compliance programs designed to ensure we are in compliance with applicable banking regulations and the Visa and MasterCard network rules. The CPMBs oversee our compliance program and conduct periodic audits to ensure compliance with applicable regulations and rules.
As a card program manager for the CPMBs, we have implemented compliance programs designed to ensure we are in compliance with applicable regulations and card network rules. The CPMBs oversee our compliance program and conduct periodic audits to ensure compliance with applicable regulations and rules.
Once approved for a Divvy card, the spending business is provided a credit limit and can use the Divvy software to request virtual cards or physical cards. Payment Services Our suite of comprehensive payment services includes: • ACH payments – We enable ACH transactions for both disbursements and collections.
Once approved for a BILL Divvy Corporate Card, the spending business is provided a credit limit and can use the BILL Spend and Expense software to request virtual cards or physical cards. Payment Services Our suite of comprehensive payment services includes: • ACH payments – We enable ACH transactions for both disbursements and collections.
In the U.S. we are subject to privacy and information safeguarding requirements under the Graham Leach Bliley Act and state laws relating to privacy and data security, including the California Consumer Privacy Act and the California Privacy Rights Act. Additionally, the U.S.
In the U.S. we are subject to privacy and information safeguarding requirements under the Graham Leach Bliley Act and state laws relating to privacy and data security, including the California Consumer Privacy Act, as amended by the California Privacy Rights Act. Additionally, the U.S.
Rather than building a business budgeting strategy using outdated numbers in a static spreadsheet, our budgeting software syncs automatically with the employee's Mastercard or Visa cards, while also facilitating reimbursements and vendor spend. With Divvy’s intuitive web and mobile applications, budget owners can drill down into spending by department, team, project, or individual.
Rather than building a business budgeting strategy using outdated numbers in a static spreadsheet, our budgeting software syncs automatically with the employee's Mastercard or Visa cards, while also facilitating reimbursements and vendor spend. The intuitive web and mobile applications enable budget owners to drill down into spending by department, team, 5 project, or individual.
We offer training for new people managers. To facilitate ongoing learning and development, we provide employees with an online curriculum of study, linked to business needs, leveraging a third-party platform. The curriculum includes coursework in inclusion, change management, and decision-making. All employees are eligible and participate in developmental reviews with their managers. We conduct performance review cycles twice a year.
To facilitate ongoing learning and development, we provide employees with an online curriculum of study, linked to business needs, leveraging a third-party platform. The curriculum includes coursework in inclusion, change management, and decision-making. All 13 employees are eligible and participate in developmental reviews with their managers. We conduct performance review cycles twice a year.
Once in the network, other BILL customers can easily link to that same supplier without the supplier having to repeat this process again. This approach to connecting businesses has allowed us to build a robust and growing business-to-business payments directory, which includes approximately 5.8 million network members as of June 30, 2023.
Once in the network, other BILL customers can easily link to that same supplier without the supplier having to repeat this process again. This approach to connecting businesses has allowed us to build a robust and growing business-to-business payments directory, which includes approximately 7.1 million network members as of June 30, 2024.
With respect to the domestic payments that comprise the bulk of our business, we disburse and collect funds on behalf of our customers through our proprietary payments engine. We manage the associated financial risk of processing billions in total payment volume through our proprietary risk models and rules.
With 9 respect to the domestic payments that comprise a large portion of our business, we disburse and collect funds on behalf of our customers through our proprietary payments engine. We manage the associated financial risk of processing billions in total payment volume through our proprietary risk models and rules.
We also facilitate near real-time payments to customers’ debit cards via a service offered with a partner. • Checks – We issue checks if our customer prefers or is contractually obligated to pay via this method.
We also facilitate near real-time payments to customers’ debit cards via a service offered with a partner. • Checks – We issue checks if our customer prefers or needs to pay via this method.
BILL's purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Businesses use our platform to generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting systems, foster collaboration, and manage their cash.
BILL's purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Businesses on our platform generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting system, foster collaboration, and manage their cash flow.
As of June 30, 2023, in the U.S., we had 20 issued patents that expire between 2028 and 2040, and seven pending patent applications, two of which have been allowed as of the date of this Annual Report on Form 10-K, along with five pending international patent applications.
As of June 30, 2024, in the U.S., we had 25 issued patents that expire between 2028 and 2042, and seven pending patent applications, two of which have been allowed as of the date of this Annual Report on Form 10-K, along with five pending international patent applications.
This asset has allowed us to build powerful AI capabilities. The data provides a view into customer transactions and operational status of various payment processes, which enables us not only to effectively manage risk exposure but also to provide businesses using our solutions with enhanced tools, such as automatically populating drafts of bills, to save time and simplify their operations.
The data provides a view into customer transactions and operational status of various payment processes, which enables us not only to effectively manage risk exposure but also to provide businesses using our solutions with enhanced tools, such as automatically populating drafts of bills, to save time and simplify their operations.
Through the self-directed brokerage features of the plan, participants in the 401(k) plan can choose to invest their contributions in funds focused on their particular goals and preferences, including having options of funds that are focused on their particular goals and preferences, such as ESG matters. We develop our leaders and high-potential employees through intensive, cohort-based, key talent programs.
Through the self-directed brokerage features of the plan, participants in the 401(k) plan can choose to invest their contributions in funds that are focused on their particular goals and preferences, such as ESG matters. We develop our leaders and high-potential employees through intensive, cohort-based, key talent programs. We offer training for new people managers.
As of June 30, 2023, we had a total of 2,521 employees working across three offices in the U.S.: San Jose, CA, Houston, TX, and Draper, UT; one office in Sydney, Australia; and others working remotely. We also employ individuals on a temporary basis and use the services of contractors as necessary.
As of June 30, 2024, we had a total of 2,187 employees working across three offices in the U.S.: San Jose, CA, Houston, TX, and Draper, UT; and others working remotely. We also employ individuals on a temporary basis and use the services of contractors as necessary.
Item 1. BUSINESS Overview Our mission is to make it simple to connect and do business. We are a leader in financial automation software for small and midsize businesses (SMBs). As a champion of SMBs, we are automating the future of finance so businesses can thrive.
Item 1. BUSINESS Overview Our mission is to make it simple to connect and do business. We are a leading financial operations platform for small and midsize businesses (SMBs). As a champion of SMBs, we are automating the future of finance so businesses can thrive.
Hundreds of thousands of businesses rely on BILL to more efficiently control their payables, receivables, and spend and expense management. Our network connects millions of members so they can pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers.
Our integrated platform helps businesses to more efficiently control their payables, receivables, and spend and expense management. Hundreds of thousands of businesses rely on BILL’s proprietary network of millions of members to pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers.
Spend and Expense Management With Divvy, spending businesses gain robust spend and expense management tools, helping them spend smarter. Our spend and expense management product provides businesses full visibility into their spend, by giving businesses the ability to issue any employee their own Divvy card.
Spend and Expense Management With BILL Spend and Expense, spending businesses gain robust spend and expense management tools, helping them spend smarter. Our spend and expense management product provides businesses full visibility into their spend, by giving businesses the ability to issue any employee their own BILL Divvy Corporate Card, a charge card for business expenses.
Our network makes it simple to make the switch from paper checks. • Card payments – Through a third party, we offer businesses using our accounts receivable solutions the convenience of accepting credit and debit card payments.
Our network makes it simple to make the switch from paper checks. • Card payments – Through a third-party service provider, we offer businesses using our accounts receivable solutions the convenience of accepting credit and debit card payments. In addition, we enable virtual card payments to vendors of businesses using our accounts payable solutions.
When both trading partners are in the network, businesses using our solutions can see when their invoices are delivered, opened, authorized to be paid, and when payment was received.
When both parties to a transaction are in our network, businesses using our solutions can see when their invoices are delivered, opened, authorized to be paid, and when payment was received.
We have procured and maintain money transmitter licenses that are required in 50 U.S. jurisdictions and actively work to comply with new license requirements as they arise. We are also registered as a Money Services Business with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
We have procured and continue to maintain money transmitter licenses from the states and territories that require them in the United States (U.S.) and actively work to comply with new license requirements as they arise. We are also registered as a Money Services Business with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Other competitors range from large firms that predominantly focus on selling to enterprises, to providers of point solutions that focus exclusively on one of the many aspects of our business: document management, workflow management, accounts payable solutions, spend and expense management, card issuance, or accounts receivable solutions; to companies that offer industry-specific payment solutions.
Other competitors range from large firms that predominantly focus on selling to enterprises; to firms focusing on adjacent products for SMBs which enter one or more of our market segments and offer products that compete with ours; to providers of point solutions that focus exclusively on one of the many aspects of our business: document management, workflow management, accounts payable solutions, spend and expense management, card issuance, or accounts receivable solutions; to companies that offer industry-specific payment solutions.
Our Platform Our purpose-built platform leverages the fact that we can see both sides of a transaction and can easily connect both transaction parties and promote the rapid exchange of information and funds, with strong network effects and greater monetization opportunities as more customers adopt our platform.
We have built a unique culture that resonates strongly with employees. Our Platform Our purpose-built platform leverages our ability to see both sides of a transaction and can easily connect both transaction parties. This promotes the rapid exchange of information and funds, with strong network effects and greater monetization opportunities as more customers adopt our platform.
For example, BILL allows administrators and payors to remind approvers to act, or delegate payment authority when a key employee is unavailable. Our platform creates a clear audit trail that becomes invaluable in the event of an audit, or for tax compliance.
Our in-app messaging capabilities make communications between businesses using our solutions and their employees, vendors, and clients, easy. For example, BILL allows administrators and payors to remind approvers to act, or delegate payment authority when a key employee is unavailable. Our platform creates a clear audit trail that becomes invaluable in the event of an audit, or for tax compliance.
As of June 30, 2023, more than 460,000 businesses used our solutions and processed $266 billion in Total Payment Volume (TPV) during fiscal 2023. As of June 30, 2023, approximately 5.8 million network members have paid or received funds electronically using our platform.
As of June 30, 2024, approximately 474,000 businesses used our solutions and processed $292 billion in Total Payment Volume (TPV) during fiscal 2024. As of June 30, 2024, approximately 7.1 million network members have paid or received funds electronically using our platform.
We have robust access controls in our production environment with access to data strictly assigned, monitored, and audited. To ensure our controls remain up-to-date, we undergo continuous external testing for vulnerabilities within our software architecture. These efforts have enabled us to certify our platform to SOC1 Type II, SOC2 Type II, and SOC3 standards.
To ensure our controls remain up-to-date, we undergo continuous external testing for vulnerabilities within our software architecture. These efforts have enabled us to certify our platform to SOC1 Type II and SOC2 Type II standards.
We also own a U.S. trademark registration for the name Invoice2Go and the Invoice2Go logo. We own a pending application for BILL.COM plus design in Canada, along with a registration in Canada for the Invoice2Go logo. We own one registration in Australia for the Invoice2Go logo, along with additional registrations internationally 14 for the mark INVOICE2GO or the Invoice2Go logo.
We also own a U.S. trademark registration for the name Invoice2Go, the Invoice2Go logo, the name Finmark and the Finmark logo. We own a pending application in Canada for BILL.COM plus design and the "B" logo, along with a registration in Canada for the Invoice2Go logo.
We process the payment with the business' credit or debit card provider, then we pay the vendor or contractor via ACH ePayment or check depending on the business' preference. • Invoice financing – We, through a partnership with a third party, enable businesses easier access to cash by allowing them to finance outstanding invoices.
We process the payment with the business' credit or debit card provider, then we pay the vendor or contractor using a method they accept. • Invoice financing – Through a relationship with a third-party bank, we enable businesses easier access to cash by allowing them to finance outstanding invoices.
Regulatory authorities regularly consider new legislative and regulatory proposals and interpretive guidelines that may contain privacy and data protection obligations. In addition, the interpretation and application of these privacy and data protection laws in the U.S., Europe, and elsewhere are often uncertain and in a state of flux. Anti-corruption We are subject to the U.S.
In addition, the interpretation and application of these privacy and data protection laws in the U.S., Europe, and elsewhere are often uncertain and in a state of flux. Anti-corruption We are subject to the U.S.
We are also subject to foreign laws and regulations governing the handling of personal data, including the European Union's General Data Protection Regulation (GDPR), the United Kingdom's GDPR, Australian and Canadian privacy laws, and the privacy laws of other foreign jurisdictions. Regulatory scrutiny of privacy, data protection, cybersecurity practices, and the processing of personal data is increasing around the world.
We are also subject to foreign laws and regulations governing the handling of personal data, including the European Union's General Data Protection Regulation, the United Kingdom's equivalent law (collectively referred to as "GDPR"), Australian and Canadian privacy laws, and the privacy laws of other foreign jurisdictions.
Through our workflow progress bars on each page, businesses using our solutions can see who has approved an invoice and what approvals remain, the status of each payment, and the date transactions are expected to clear. • Treasury services – Our platform integrates advanced treasury services tools that are normally either not offered to or are costly for SMBs.
Through our workflow progress bars on each page, businesses using our solutions can see who has approved an invoice and what approvals remain, the status of each payment, and the date transactions are expected to clear. • Cash flow forecasting – We empower businesses to optimize their cash flow management with dashboards that showcase key metrics, including Cash In and Cash Out, Net Cash Flow and Cash Balance, and to generate cash flow forecasts for up to 13 months. • Treasury services – Our platform integrates advanced treasury services tools that are normally either not offered to or are costly for SMBs.
It is our practice to enter into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, and contractors involved in the development of intellectual property on our behalf. We also enter into confidentiality agreements with other third parties in order to limit access to, and disclosure and use of, our confidential information and proprietary information.
We rely on trade secrets and confidential information to develop and maintain our competitive position. It is our practice to enter into confidentiality and invention assignment agreements (or similar agreements) with our employees, consultants, and contractors involved in the development of intellectual property on our behalf.
Through our APIs, developers can: • interact with business entities, like suppliers and clients; • obtain summary-level reports, such as payables and receivables reports; and • interact with accounting details, such as the general ledger codes of the chart of accounts. 7 Our Unique Data Asset BILL's total payment volume and number of documents processed for businesses using our solutions provides us with a unique data asset.
Through our APIs, developers can: • interact with business entities, like suppliers and clients; • obtain summary-level reports, such as payables and receivables reports; and • interact with accounting details, such as the general ledger codes of the chart of accounts.
The customer's Accounts Payable staff can review the result and make any adjustments required, and our platform routes the bill internally for approval. 4 • Digital workflows and approvals – Our platform speeds approval processes through policy-driven workflows.
The customer's Accounts Payable staff can review the result and make any adjustments required, and our platform routes the bill internally for approval. • Digital workflows and approvals – Our platform speeds approval processes through policy-driven workflows. Much of this activity takes place while people are on-the-go: one of the top three uses of our mobile app is bill approvals.
We deliver single sign-on, multi-factor authentication, integrated provisioning, and entitlement of new accounts, as well as integration with required compliance systems. Transactions are synchronized automatically between the financial institution’s platform and ours, keeping the customer’s view current and consistent.
We deliver single sign-on, multi-factor authentication, integrated provisioning, and entitlement of new accounts, as well as integration with required compliance systems.
We have extensive contacts in the banking industry, and we utilize these to reverse payments when possible. If a suspicious or fraudulent payment cannot be reversed, we follow a rigorous collections process to recover funds. This risk management process gets progressively more insightful as our data set gets larger and our AI-enabled risk engine gets smarter.
Once a payment transaction is processed, we continue to manage our exposure. We have extensive contacts in the banking industry, and we utilize these to reverse payments when possible. If a suspicious or fraudulent payment cannot be reversed, we follow a rigorous collections process to recover funds.
We have used, and intend to continue to use, our website, investor relations website (accessible via our website), and social media accounts, including our Twitter/X feed (@billcom), our LinkedIn page and our Facebook page , as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
We have used, and intend to continue to use, our website, investor relations website (accessible via our website), and social media accounts, including our X, formerly Twitter, feed (@billcom), our LinkedIn page and our Facebook page, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. 15 The contents of the websites provided above are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.
In addition to our white-labeled solution, we support a broad range of partners and customers with our platform application programming interfaces (APIs). These APIs allow our partners to integrate our platform seamlessly into their solutions, create web or mobile apps that integrate with ours, or leverage our payments capabilities.
These APIs allow our partners to integrate our platform seamlessly into their solutions, create web or mobile apps that integrate with ours, or leverage our payments capabilities.
We also partner with a FDIC and State of Utah regulated bank to offer lending products originated by such bank and may originate loans using our own licenses in the future.
We are required to comply with Regulation E, the Electronic Funds Transfer Act, which regulates certain funds transfers. We are procuring additional state lending licenses to support certain lending products. We also partner with an FDIC and state-regulated bank to offer lending products originated by such bank and may originate loans using our own licenses in the future.
We have built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily. Divvy, a BILL company, provides a solution for businesses to have smart corporate cards, build budgets, manage payments, and eliminate the need for manual expense reports.
We have built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily.
We will pursue additional trademark registrations to the extent we believe it would be beneficial and cost-effective. We also own several domain names, including www.bill.com, www.getdivvy.com, and www.invoice2go.com. We rely on trade secrets and confidential information to develop and maintain our competitive position.
We own one registration in Australia for the Invoice2Go logo, along with additional registrations internationally for the mark INVOICE2GO or the Invoice2Go logo. We will pursue additional trademark registrations to the extent we believe it would be beneficial and cost-effective. We also own several domain names, including www.bill.com, www.getdivvy.com, and www.invoice2go.com.
Along with the African Diaspora Network, BILL founded the African Diaspora Network's Accelerating Black Leadership and Entrepreneurship (ABLE) program, an enterprise accelerator program. The program is designed to strengthen, energize, and support startups and small businesses led by Black entrepreneurs in the U.S.
The program is designed to strengthen, energize, and support startups and small businesses led by Black entrepreneurs in the U.S.
Even if any such third-party technology was not available to us on commercially reasonable terms, we believe that alternative technologies would be available as needed. For additional information about our intellectual property and associated risks, see the section titled “ Risk Factors—Risks Related to our Business and Industry .” Available Information Our internet address is www.bill.com.
For additional information about our intellectual property and associated risks, see the section titled “ Risk Factors—Risks Related to our Business and Industry .” Available Information Our internet address is www.bill.com.
Agents have the latitude to contact customers to gather further information, or if a financial risk is imminent, to prevent funds from leaving our system until any suspicious activity can be resolved. Once a payment transaction is processed, we continue to manage our exposure.
Our risk engine analyzes many unique data elements to score transactions. Those that score above our thresholds are routed to trained risk agents for manual review. Agents have the latitude to contact customers to gather further information, or if a financial risk is imminent, to prevent funds from leaving our system until any suspicious activity can be resolved.
Through Codepath’s Internship Connection Program, we have placed underrepresented students majoring in computer science into technical internships at BILL. Last year, we also sponsored the Tejano Tech Summit, which brought together Latinx founders, investors, and professionals working in tech to advance their community.
Through Codepath’s Internship Connection Program, we have placed underrepresented students majoring in computer science into technical internships at BILL. Last year, we also sponsored the Black is Tech Conference, a platform that connects Black tech professionals, students, and entrepreneurs, and provides access to resources for growth and development.
ERGs are self-organized communities that bring employees together to raise awareness and belonging for under-represented groups. Through a grassroots effort, BILL employees have established seven ERGs focused upon the following dimensions of identity: women, Latinx, Black, LGBTQIA+, disabilities and mental health, veterans, and Pan Asian and Pacific Islanders.
Through a grassroots effort, BILL employees have established seven ERGs focused upon the following dimensions of identity: women, Latinx, Black, LGBTQIA+, disabilities and mental health, veterans, and Pan Asian and Pacific Islanders. These ERGs support the career development of their members through customer chats, skill-building workshops and community engagement.
By leveraging our machine learning capabilities, we generate insights from this data that drive product innovation. • Proprietary Risk Management Expertise. Leveraging our data, our proprietary risk engine has trained upon millions of business-to-business ACH, check, card, and wire transactions, enabling us to keep businesses using our solutions’ funds secure. • Experienced Management Team and Vibrant Culture.
Leveraging our data, our proprietary risk engine has trained upon millions of business-to-business ACH, check, card, and wire transactions, enabling us to keep businesses using our solutions’ funds secure and to manage our own risk exposure. • Experienced Management Team and Vibrant Culture. Our management team has deep experience with SMBs, software-as-a-service companies, AI, accounting firms, and financial institutions.
In addition, we enable virtual card payments to vendors of businesses using our account payable solutions and who have elected to accept card payments. Virtual cards support faster payments to suppliers, which includes the data needed to easily match incoming payments with open receivables.
Virtual cards support faster payments to suppliers, which includes the data needed to easily match incoming payments with open receivables.
Throughout the transaction lifecycle, we monitor data and payments to ensure that we are safeguarding our customers, their suppliers and clients, and our company. When a bank account is added to the platform, we validate that the bank account is held at a U.S.-domiciled financial institution, is associated with the organization adding the account, and is in good standing.
When a bank account is added to the platform, we validate that the bank account is held at a U.S.-domiciled financial institution, is associated with the organization adding the account, and is in good standing. 8 When customers use our services, we monitor key activities looking for signals that would indicate anomalies that could create risk exposure and need to be investigated.
Unconscious bias training is available through our e-learning platform, we regularly host speakers from diverse backgrounds to share their lived experiences, and our ERGs host safe-space discussions on issues important to their members. We partner with organizations like Codepath.org and ColorStack to support Black, Latinx, and Indigenous students interested in technical careers.
In July 2024, over 40% of our employees were members of at least one ERG. We also offer employees learning opportunities to increase awareness of DEI issues. Unconscious bias training is available through our e-learning platform, we regularly host speakers from diverse backgrounds to share their lived experiences, and our ERGs host safe-space discussions on issues important to their members.
Security, Privacy, and Data Protection Trust is important for our relationship with customers and partners, and we take significant measures designed to protect their privacy and the data that they provide to us. Keeping our customers’ data safe and secure is a high priority. Our approach to security includes data governance as well as ongoing testing for potential security issues.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics ” for a detailed discussion of our key business metrics. Security, Privacy, and Data Protection Trust is important for our relationship with customers and partners, and we take significant measures designed to protect their privacy and the data that they provide to us.
As a percentage of total card payment volume transacted by spending businesses that use Divvy cards, fraud and credit loss rate was approximately 0.28% for fiscal 2023. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics ” for a detailed discussion of our key business metrics.
As a percentage of our TPV, fraud and credit loss rates for our BILL standalone payment services were nominal, less than 0.01% for fiscal 2024. As a percentage of total card payment volume transacted by spending businesses that use BILL Divvy Corporate Cards, fraud and credit loss rate was approximately 0.35% for fiscal 2024.
We further control the use of our proprietary technology and intellectual property through provisions in our terms of service. From time to time, we also incorporate certain intellectual property licensed from third parties, including under certain open source licenses.
We also enter into confidentiality agreements with other third parties in order to limit access to, and disclosure and use of, our confidential information and proprietary information. We further control the use of our proprietary technology and intellectual property through provisions in our terms of service.
In addition, we are subject to FDIC oversight through the provision of FDIC insured business deposit accounts provided by a regulated bank in relation to certain Invoice2Go products. We maintain loan origination, brokering, and servicing licenses through our subsidiaries in a number of U.S. states and actively work to comply with new license requirements as they arise.
We maintain loan origination, brokering, and servicing licenses through our subsidiaries in a number of U.S. states and actively work to comply with new license requirements as they arise. Our services utilize ACH transfers and require compliance with National Automated Clearing House Association rules.
Our platform also expands the ability of businesses using our solutions to budget for, monitor, and approve employee expenses across organizations of all sizes, all in real-time. Accounts Payable Automation Our accounts payable automation service streamlines the entire payables process, from the receipt of a bill, through the approvals workflow, to the payment and synchronization with the accounting system.
The integrated platform enables businesses using our solutions to navigate our product offerings easily, and to gain more visibility and control, empowering them to better manage their finances. Accounts Payable Automation Our accounts payable automation service streamlines the entire payables process, from the receipt of a bill, through the approvals workflow, to the payment and synchronization with the accounting system.
Much of this activity takes place while people are on-the-go: one of the top three uses of our mobile app is bill approvals. Our platform proactively suggests payment dates based upon a bill’s due date, helping customers avoid late payment penalty fees. Businesses using our solutions assign each user a role: administrator, payor, approver, clerk, or accountant.
Our platform proactively suggests payment dates based upon a bill’s due date, helping customers avoid late payment penalty fees. Businesses using our solutions assign each user a role: administrator, payor, approver, clerk, or accountant. Each role has its own entitlements to ensure appropriate checks and balances in the back office. • Collaboration and engagement – Our platform promotes collaboration.
Global Affairs Canada and Canada's Department of Public Safety administer Canadian sanctions programs and oversee our compliance with these regulations. We are contractually obligated to comply with Federal Deposit Insurance Corporation (FDIC) federal banking regulations, as well as with Visa and MasterCard rules, as a card program manager for the card program management banks (CPMB) for our card product offerings.
We are contractually obligated to comply with consumer protection laws and regulations applicable to our product offerings and customer base, as well as with Visa, MasterCard, and American Express rules, as a card program manager for our card program management banks (CPMB) for our card product offerings.
This is an advantage that we expect to continue to grow over time. Our success in managing the risk inherent in moving funds for business customers is proven. As a percentage of our 8 TPV, fraud and credit loss rates for our BILL standalone payment services were nominal, less than 0.01% for each of fiscal 2023, 2022, and 2021.
This risk management process gets progressively more insightful as our data set gets larger and our AI-enabled risk engine gets smarter. This is an advantage that we expect to continue to grow over time. Our success in managing the risk inherent in moving funds for business customers is proven.
Environmental Matters Our San Jose headquarters building is LEED Gold and Energy Star certified, our Houston building is LEED-certified GOLD, and our Sydney building features a green roof and an organic waste farm, and was awarded a ‘Green Star’ rating of six (the highest rating available). In San Jose, we also offer employees free electric vehicle charging stations.
Last year, ABLE graduated 11 entrepreneurs with impact-oriented solutions at the local and national levels across multiple sectors. 14 Environmental Matters Our San Jose headquarters building is LEED Gold and Energy Star certified, and our Houston building is LEED GOLD certified. In San Jose, California and Draper, Utah, we also offer employees free electric vehicle charging stations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur Divvy card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their Divvy cards. Certain of our other current and future product offerings may also subject us to credit risk.
Biggest changeMoreover, if our renewal or expansion rates fall significantly below the expectations of the public market, securities analysts, or investors, the trading price of our common stock would likely decline. 22 Our BILL Divvy Corporate Card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their BILL Divvy Corporate Cards.
As our market matures, product and service offerings evolve, and competitors introduce lower cost or differentiated products or services that are perceived to compete with our platform, our ability to sell subscriptions or successfully increase customer adoption of new payment products could be impaired.
As our market matures, product and service offerings evolve, and competitors introduce lower cost or differentiated products or services that compete or are perceived to compete with our platform, our ability to sell subscriptions or successfully increase customer adoption of new payment products could be impaired.
If the legal structure underlying our relationship with our Issuing Banks were to be successfully challenged, our extension of credit offerings through these banks may be determined to be in violation of state licensing requirements and other state laws. In addition, Issuing Banks engaged in this activity have been subject to increased regulatory scrutiny recently.
If the legal structure underlying our relationship with the Issuing Banks were to be successfully challenged, our extension of credit offerings through these banks may be determined to be in violation of state licensing requirements and other state laws. In addition, Issuing Banks engaged in this activity have been subject to increased regulatory scrutiny recently.
We, in turn, are subject to audit by our Issuing Banks in accordance with FDIC guidance related to management of service providers and other bank-specific requirements pursuant to the terms of our agreements with our Issuing Banks.
We, in turn, are subject to audit by the Issuing Banks in accordance with FDIC guidance related to management of service providers and other bank-specific requirements pursuant to the terms of our agreements with the Issuing Banks.
An inability to purchase participation interests from our Issuing Banks, whether funded through financing or corporate cash, could result in the banks’ limiting extensions of credit to spending businesses or ceasing to extend credit for our cards altogether, which would interrupt or limit our ability to offer our card products and materially and adversely affect our business.
An inability to purchase participation interests from the Issuing Banks, whether funded through financing or corporate cash, could result in the banks’ limiting extensions of credit to spending businesses or ceasing to extend credit for our cards altogether, which would interrupt or limit our ability to offer our card products and materially and adversely affect our business.
Although we do not currently offer our payments products to customers outside the U.S., starting in 2018, we introduced cross-border payments, and now, working with two international payment services, offer our U.S.-based customers the ability to disburse funds to over 130 countries. We are continuing to adapt to and develop strategies to address payments to new countries.
Although we do not currently offer our payments products to customers outside the U.S., starting in 2018, we introduced cross-border payments, and now, working with two international payment services, we offer our U.S.-based customers the ability to disburse funds to over 130 countries. We are continuing to adapt to and develop strategies to address payments to new countries.
Our amended and restated certificate of incorporation and second amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority vote of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and second amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • prohibit cumulative voting in the election of directors; 53 • provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock; • provide that vacancies on our board of directors may be filled only by a majority vote of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.
The local, state, and federal laws, rules, regulations, licensing requirements, and industry standards that govern our business include, or may in the future include, those relating to banking, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as licensed money 39 transmission, payment processing, and settlement services), lending, anti-money laundering, combating terrorist financing, escheatment, international sanctions regimes, and compliance with the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect spending business data.
The local, state, and federal laws, rules, regulations, licensing requirements, and industry standards that govern our business include, or may in the future include, those relating to banking, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as licensed money transmission, payment processing, and settlement services), lending, anti-money laundering, combating terrorist financing, escheatment, international sanctions regimes, and compliance with the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect spending business data.
The occurrence of any credit losses, operational errors, software defects, service disruptions, employee misconduct, security breaches, or other similar actions or errors on our platform could result in financial losses to our business and our customers, loss of trust, damage to our reputation, or termination of our agreements with financial institution partners and accountants, each of which could result in: • loss of customers; • lost or delayed market acceptance and sales of our platform; • legal claims against us, including warranty and service level agreement claims; • regulatory enforcement action; or • diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs.
The occurrence of any credit losses, operational errors, software defects, service disruptions, employee misconduct, security breaches, or other similar actions or errors on our platform could result in financial losses to our business and our customers, loss of trust, damage to our reputation, or termination of our agreements with financial institution partners and accountants, each of which could result in: • loss of customers; • lost or delayed market acceptance and sales of our platform; 25 • legal claims against us, including warranty and service level agreement claims; • regulatory enforcement action; or • diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs.
Summary of Risk Factors Consistent with the foregoing, we are exposed to a variety of risks, including the following: • We have a history of operating losses and may not achieve or sustain profitability in the future; • Our recent rapid growth, including growth in our volume of payments, may not be indicative of our future growth, and if we continue to grow rapidly, we may not be able to manage our growth effectively; • A significant portion of our revenue comes from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, and volatile or weakened economic conditions in the U.S. and globally may adversely affect our business and operating results; • If we are unable to attract new customers or convert trial customers into paying customers or if our efforts to promote our charge card usage through marketing, promotion, and spending business rewards are unsuccessful, our revenue growth and operating results will be adversely affected; • If we are unable to retain our current customers, increase customer adoption of our products, sell additional services to our customers, or develop and launch new payment products, our business and growth will be adversely affected; • Our Divvy card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their Divvy cards.
Summary of Risk Factors Consistent with the foregoing, we are exposed to a variety of risks, including the following: • We have a history of operating losses and may not achieve or sustain profitability in the future; • Our recent rapid growth, including growth in our volume of payments, may not be indicative of our future growth, and if we continue to grow rapidly, we may not be able to manage our growth effectively; • A significant portion of our revenue comes from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, and volatile or weakened economic conditions in the U.S. and globally may adversely affect our business and operating results; • If we are unable to attract new customers or convert trial customers into paying customers or if our efforts to promote our charge card usage through marketing, promotion, and spending business rewards are unsuccessful, our revenue growth and operating results will be adversely affected; • If we are unable to retain our current customers, increase customer adoption of our products, sell additional services to our customers, or develop and launch new payment products, our business and growth will be adversely affected; • Our BILL Divvy Corporate Card offering exposes us to credit risk and other risks related to spending businesses' ability to pay the balances incurred on their BILL Divvy Corporate Cards.
There has also been significant recent government enforcement and litigation challenging the validity of such arrangements, including disputes seeking to re-characterize lending transactions on the basis that the non-bank party rather than the bank is the “true lender” or “de facto 26 lender”, and in case law upholding the “valid when made” doctrine, which holds that federal preemption of state interest rate limitations are not applicable in the context of certain bank—non-bank partnership arrangements.
There has also been significant recent government enforcement and litigation challenging the validity of such arrangements, including disputes seeking to re-characterize lending transactions on the basis that the non-bank party rather than the bank is the “true lender” or “de facto lender”, and in case law upholding the “valid when made” doctrine, which holds that federal preemption of state interest rate limitations are not applicable in the context of certain bank/non-bank partnership arrangements.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “ Management’s Discussion and Analysis of Financial Condition and Operating Results—Critical Accounting Policies and Estimates. ” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “ Management’s Discussion and Analysis of Financial Condition and Operating Results—Critical Accounting Estimates. ” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
We compete on several factors, including: • product features, quality, breadth, and functionality; 23 • data asset size and ability to leverage AI to grow faster and smarter; • ease of deployment; • ease of integration with leading accounting and banking technology infrastructures; • ability to automate processes; • cloud-based delivery architecture; • advanced security and control features; • risk management, exception process handling, and regulatory compliance leadership; • brand recognition; and • pricing and total cost of ownership.
We compete on several factors, including: • product features, quality, breadth, and functionality; • data asset size and ability to leverage AI to grow faster and smarter; • ease of deployment; • ease of integration with leading accounting and banking technology infrastructures; • ability to automate processes; • cloud-based delivery architecture; • advanced security and control features; • risk management, exception process handling, and regulatory compliance leadership; • brand recognition; and • pricing and total cost of ownership.
In the event of a major earthquake, hurricane, or catastrophic event such as fire, flooding, power loss, telecommunications failure, vandalism, cyber-attack, war, or terrorist attack, we may 36 be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.
In the event of a major earthquake, hurricane, or catastrophic event such as fire, flooding, power loss, telecommunications failure, vandalism, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.
Adverse orders or regulatory enforcement actions against our Issuing Banks, even if unrelated to our business, could impose restrictions on our Issuing Banks’ ability to continue to extend credit through our platform or on current terms, or could result in our Issuing Banks increasing their oversight or imposing tighter controls over our underwriting practices or compliance procedures or subjecting any new products to be offered through our Issuing Banks to more rigorous reviews.
Adverse orders or regulatory enforcement actions against the Issuing Banks, even if unrelated to our business, could impose restrictions on the Issuing Banks’ ability to continue to extend credit through our platform or on current terms, or could result in the Issuing Banks increasing their oversight or imposing tighter controls over our underwriting practices or compliance procedures or subjecting any new products to be offered through the Issuing Banks to more rigorous reviews.
Government agencies may impose new or additional rules on money transmission, including regulations that: • prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to, or from certain countries or with certain governments, individuals, and entities; • impose additional customer and spending business identification and customer or spending business due diligence requirements; 40 • impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring; • limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements; • impose minimum capital or other financial requirements; • limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange; • require enhanced disclosures to our money transmission customers; • require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid; • limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; and • restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.
Government agencies may impose new or additional rules on money transmission, including regulations that: • prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to, or from certain countries or with certain governments, individuals, and entities; • impose additional customer and spending business identification and customer or spending business due diligence requirements; • impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring; • limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements; • impose minimum capital or other financial requirements; • limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange; 42 • require enhanced disclosures to our money transmission customers; • require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid; • limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; and • restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.
Regulators in the United States, Canada, Australia, and in many other foreign jurisdictions continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the U.S., Canada, and Australia.
Regulators in the United States, Canada, and in many other foreign jurisdictions continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the U.S. and Canada.
In the event of a challenge to the legal structure underlying our program agreements with our Issuing Banks or if one or all of our Issuing Banks were to suspend, limit, or cease its operations, or were to otherwise terminate for any reason (including, but not limited to, the failure by an Issuing Bank to comply with regulatory actions or an Issuing Bank experiencing financial distress, entering into receivership, or becoming insolvent), we would need to identify and implement alternative, compliant, bank relationships or otherwise modify our business practices in order to be compliant with prevailing law or regulation, which could result in business interruptions or delays, force us to incur additional expenses, and potentially interfere with our existing customer and spending business relationships or make us less attractive to potential new customers and spending businesses, any of which could adversely effect our business, operating results, and financial condition.
In the event of a challenge to the legal structure underlying our program agreements with the Issuing Banks or if one or all of the Issuing Banks were to suspend, limit, or cease its operations, or were to otherwise terminate for any reason (including, but not limited to, the failure by an Issuing Bank to comply with regulatory actions or an Issuing Bank experiencing financial distress, entering into receivership, or becoming insolvent), we would need to identify and implement alternative, compliant, bank relationships or otherwise modify our business practices in order to be compliant with prevailing law or regulation, which could result in business interruptions or delays, force us to incur additional expenses, and potentially interfere with our existing customer and spending business relationships or make us less attractive to potential new customers and spending businesses, any of which could adversely affect our business, operating results, and financial condition.
As a result of these and other factors, we may be unable to attract new customers or our related expenses may increase, which would have an adverse effect on our business, revenue, gross margins, and operating results. In addition, revenue growth from our charge card products is dependent on increasing business spending on our cards.
As a result of these and other factors, we may be unable to attract new customers or our related expenses may increase, which would have an adverse effect on our business, revenue, gross margins, and operating results. 21 In addition, revenue growth from our charge card products is dependent on increasing business spending on our cards.
For instance, these provisions would not preclude the filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act of 1933, as amended (Securities Act), or the rules and regulations thereunder in federal court. 51 Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company.
For instance, these provisions would not preclude the filing of claims brought to enforce any liability or duty created by the Exchange Act or Securities Act of 1933, as amended (Securities Act), or the rules and regulations thereunder in federal court. Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.
Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 54 If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, 45 and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or 48 grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof. The conditional conversion feature of the Notes, when triggered, may adversely affect our financial condition and operating results.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof. The conditional conversion feature of the Notes, when triggered, may adversely affect our financial condition and operating results.
Additionally, as customers increasingly seek expedited methods of electronic payments, such as instant transfer, or potentially migrate spend to our Divvy corporate card offering, our revenue from interest earned on customer funds could decrease (even if offset by other revenue) and our operating results could be adversely affected.
Additionally, as customers increasingly seek expedited methods of electronic payments, such as instant transfer, or potentially migrate spend to our BILL Divvy Corporate Card offering, our revenue from interest earned on customer funds could decrease (even if offset by other revenue) and our operating results could be adversely affected.
As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our products.
As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. 49 Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our products.
Finally, in addition to the risks outlined above, any change in laws 25 or applicable regulations that restrict the scope of permissible investments for such customer funds could reduce our interest income and adversely affect our operating results. Our business depends, in part, on our relationships with accounting firms.
Finally, in addition to the risks outlined above, any change in laws or applicable regulations that restrict the scope of permissible investments for such customer funds could reduce our interest income and adversely affect our operating results. Our business depends, in part, on our relationships with accounting firms.
Further, our funding 27 sources may experience financial distress, enter into receivership, or become insolvent, which may prevent us from accessing financing from these sources. In addition, because our borrowings under current and future financing facilities may bear interest based on floating rate interest rates, our interest costs may increase if market interest rates rise.
Further, our funding sources may experience financial distress, enter into receivership, or become insolvent, which may prevent us from accessing financing from these sources. In addition, because our borrowings under current and future financing facilities may bear interest based on floating rate interest rates, our interest costs may increase if market interest rates rise.
If security, data protection, and information security measures in place at businesses we acquire are inadequate or breached, or are subject to cybersecurity attacks, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged and we could be subject to regulatory scrutiny, investigations, proceedings, and penalties.
If security, data protection, and information security measures in place at businesses we acquire are 31 inadequate or breached, or are subject to cybersecurity attacks, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged and we could be subject to regulatory scrutiny, investigations, proceedings, and penalties.
We rely on assumptions and estimates to calculate certain of our performance metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business. 38 We calculate and track certain customer and other performance metrics with internal tools, which are not independently verified by any third party.
We rely on assumptions and estimates to calculate certain of our performance metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business. We calculate and track certain customer and other performance metrics with internal tools, which are not independently verified by any third party.
Although we currently only offer our payment and card products to customers in the U.S.,and payment services in Canada and the United Kingdom, Invoice2go has international subscribers in approximately 150 countries, including Australia and several EU countries for 45 which payment activity is conducted through third-party payment providers.
Although we currently only offer our payment and card products to customers in the U.S., and payment services in Canada and the United Kingdom, Invoice2go has international subscribers in approximately 150 countries, including Australia and several EU countries for which payment activity is conducted through third-party payment providers.
We currently do not have “key person” insurance for any of our employees. Certain of our key employees have been with us for a long period of time and have fully vested 29 stock options or other long-term equity incentives that may become valuable and are publicly tradable.
We currently do not have “key person” insurance for any of our employees. Certain of our key employees have been with us for a long period of time and have fully vested stock options or other long-term equity incentives that may become valuable and are publicly tradable.
Any litigation may also involve patent holding 46 companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals.
Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals.
Although we currently only offer our payment and card products to customers in the U.S. and Canada, Invoice2go has international subscribers in approximately 150 countries, including Australia and several EU countries, for which payment activity is conducted through third-party payment providers.
Although we currently only offer our payment and card products to customers in the U.S., UK, and Canada, Invoice2go has international subscribers in approximately 150 countries, including Australia and several EU countries, for which payment activity is conducted through third-party payment providers.
We can provide no assurance as to the financial stability or viability of the option counterparties. 49 Risks Related to Ownership of Our Common Stock The stock price of our common stock has been, and will likely continue to be volatile, and you may lose part or all of your investment.
We can provide no assurance as to the financial stability or viability of the option counterparties. Risks Related to Ownership of Our Common Stock The stock price of our common stock has been, and will likely continue to be volatile, and you may lose part or all of your investment.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it 50 could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.
Any of our patents, trademarks, or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products, or design around our patents.
Any of our patents, trademarks, or other intellectual property rights may be 48 challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products, or design around our patents.
Our risk management policies, procedures, techniques, and processes may not be 22 sufficient to identify all of the risks to which we are exposed, to enable us to prevent or mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future.
Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to prevent or mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the U.S.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE. 39 Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the U.S.
Our failure to comply could materially harm our business; 16 • Our debt service obligations, including the Notes, may adversely affect our financial condition and results of operations; • We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes; and • The market for our common stock has been, and will likely continue to be, volatile and the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control.
Our failure to comply could materially harm our business; 17 • Our debt service obligations, including the Notes, may adversely affect our financial condition and results of operations; • We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes; and • The market for our common stock has been, and will likely continue to be, volatile and the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control.
We offer software that digitizes and automates financial operations for a large number of customers and executes payments to their vendors or from their clients. We are responsible for verifying the identity of our customers and their users, and monitoring transactions for fraud.
We offer software that digitizes and automates financial operations for a large number of customers and executes payments to their vendors or from their clients. We are responsible for verifying the identity of our 23 customers and their users, and monitoring transactions for fraud.
We cannot be sure that the expansion and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could adversely affect our business, operating results, and financial condition.
We cannot be sure that the expansion and improvements to our 33 internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could adversely affect our business, operating results, and financial condition.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, 47 restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive.
If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed. 31 We generate revenue by charging customers a fixed monthly rate per user for subscriptions as well as transaction fees.
If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed. We generate revenue by charging customers a fixed monthly rate per user for subscriptions as well as transaction fees.
In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to 35 collect and remit sales and use taxes in states where we have not collected and remitted sales and use taxes.
In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to collect and remit sales and use taxes in states where we have not collected and remitted sales and use taxes.
As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our business and products continue to develop and expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards.
As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our 41 business and products continue to develop and expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards.
We have been investing in a number of growth initiatives, including to capture a greater 20 share of spending businesses’ total spend, but there can be no assurance that such investments will be effective.
We have been investing in a number of growth initiatives, including to capture a greater share of spending businesses’ total spend, but there can be no assurance that such investments will be effective.
These risk models may not accurately predict 21 creditworthiness due to inaccurate assumptions, including assumptions related to the particular spending business, market conditions, economic environment, or limited transaction history or other data, among other factors.
These risk models may not accurately predict creditworthiness due to inaccurate assumptions, including assumptions related to the particular spending business, market conditions, economic environment, or limited transaction history or other data, among other factors.
Any of these developments could adversely affect our business, financial condition, and operating results. If we fail to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business, operating results, and financial condition may suffer.
Any of these developments could adversely affect our business, financial condition, and operating results. 35 If we fail to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business, operating results, and financial condition may suffer.
Furthermore, any costs incurred as a result of this potential liability could harm our operating results. 43 We, our partners, our customers, and others who use our services obtain and process a large amount of sensitive data.
Furthermore, any costs incurred as a result of this potential liability could harm our operating results. We, our partners, our customers, and others who use our services obtain and process a large amount of sensitive data.
Certain of our other current and future product offerings may also subject us to credit risk; • Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, which could expose us to material financial losses and liability and otherwise harm our business; • The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed; • We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results; • Our business depends, in part, on our relationships with accounting firms; • Our business depends, in part, on our business relationships with financial institutions; • We are subject to numerous risks related to partner banks and financing arrangements with respect to our spend and expense management solution; • Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition; • Payments and other financial services-related regulations and oversight are material to our business.
Certain of our other current and future product offerings may also subject us to credit risk; • Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses or their counterparties, or other third parties which could expose us to material financial losses and liabilities and otherwise harm our business; • The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed; • We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results; • Our business depends, in part, on our relationships with accounting firms; • Our business depends, in part, on our business relationships with financial institutions; • We are subject to numerous risks related to partner banks and financing arrangements with respect to our spend and expense management solution; • Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition; • Payments and other financial services-related regulations and oversight are material to our business.
In addition, the market for our spend and expense management solution is new and fragmented, and it is uncertain whether we will achieve and sustain high levels of demand and market adoption.
In addition, the market for our spend and expense management solution is new and fragmented, and it 32 is uncertain whether we will achieve and sustain high levels of demand and market adoption.
Further, as our business develops, we may revise or cease reporting certain metrics if we determine that such metrics are no longer accurate or appropriate measures of our performance.
Further, as our business develops, we may revise or cease 40 reporting certain metrics if we determine that such metrics are no longer accurate or appropriate measures of our performance.
For a substantial majority of extensions of credit to Divvy spending businesses facilitated through our spend and expense management platform, we purchase from our Issuing Banks participation interests in the accounts receivables generated when spending businesses make purchases using Divvy cards, and we bear the entire credit risk in the event that a spending business fails to pay card balances.
For a substantial majority of extensions of credit to BILL Spend and Expense spending businesses facilitated through our spend and expense management platform, we purchase from the Issuing Banks participation interests in the accounts receivables generated when spending businesses make purchases using BILL Divvy Corporate Cards, and we bear the entire credit risk in the event that a spending business fails to pay card balances.
To increase our revenue, in addition to acquiring new customers, we must continue to retain existing customers and convince them to expand their use of our platform by incentivizing them to pay for additional services and driving adoption of new and existing payment products, including ad valorem products such as our Divvy cards, virtual cards, instant transfer, and international payment offerings.
To increase our revenue, in addition to acquiring new customers, we must continue to retain existing customers and convince them to expand their use of our platform by incentivizing them to pay for additional services and driving adoption of new and existing payment products, including ad valorem products such as our BILL Divvy Corporate Cards, virtual cards, instant transfer, and international payment offerings.
Non-performance, or even significant underperformance, of the account receivables participation interests that we own could have an adverse effect on our business. Moreover, the funding model for our Divvy card product relies on a variety of funding arrangements, including warehouse facilities and, from time-to-time, purchase arrangements, with a variety of funding sources.
Non-performance, or even significant underperformance, of the account receivables participation interests that we own could have an adverse effect on our business. Moreover, the funding model for our BILL Divvy Corporate Card product relies on a variety of funding arrangements, including warehouse facilities and, from time-to-time, purchase arrangements, with a variety of funding sources.
Our Issuing Banks are subject to oversight by the FDIC and state banking regulators and must comply with applicable federal and state banking rules, regulations, and examination requirements.
The Issuing Banks are subject to oversight by the FDIC and state banking regulators and must comply with applicable federal and state banking rules, regulations, and examination requirements.
If we invest substantial time and resources to further expand our cross-border payments offering and are unable to do so successfully and in a timely manner, our business and operating results may suffer. 33 A substantial portion of our revenue is derived from interchange revenue, which exposes us to potential variability in income and other risks.
If we invest substantial time and resources to further expand our cross-border payments offering and are unable to do so successfully and in a timely manner, our business and operating results may suffer. A substantial portion of our revenue is derived from interchange fees, which exposes us to potential variability in income and other risks.
As a licensed Foreign Money Services business in Canada, we are subject to Canadian compliance regulations applicable to money movement and sanctions requirements. In addition, our DivvyPay, LLC subsidiary holds brokering and servicing licenses required in connection with our Divvy card offering, and certain of our other subsidiaries hold loan brokering and servicing licenses as well.
As a licensed Foreign Money Services business in Canada, we are subject to Canadian compliance regulations applicable to money movement and sanctions requirements. In addition, our DivvyPay, LLC subsidiary holds brokering and servicing licenses required in connection with our BILL Divvy Corporate Card offering, and certain of our other subsidiaries hold loan brokering and servicing licenses as well.
We are subject to oversight by our financial institution partners and they conduct audits of our operations, information security controls, and compliance controls.
Finally, we are subject to oversight by our financial institution partners and they conduct audits of our operations, information security controls, and compliance controls.
For example, the GDPR and the UK GDPR impose stringent operational requirements for controllers and processors of personal data of individuals within the European Economic Area and the UK, respectively, and non-compliance can trigger robust regulatory enforcement and fines of up to the greater of €20 million or 4% of the annual global revenues.
For example, the GDPR imposes stringent operational requirements for controllers and processors of personal data of individuals within the European Economic Area and the UK, respectively, and non-compliance can trigger robust regulatory enforcement and fines of up to the greater of €20 million or 4% of the annual global revenues.
The Conversion Condition for the 2025 Notes and 2027 Notes was not triggered as of June 30, 2023, but had been triggered for the 2025 Notes in several prior quarters. In the event the Conversion Condition is triggered, holders of the Notes will be entitled to convert the Notes at any time during specified periods at their option.
The Conversion Condition for the 2025 Notes and 2027 Notes was not triggered as of June 30, 2024, but had been triggered for the 2025 Notes in several prior quarters. In the event the Conversion Condition is triggered, holders of the Notes will be entitled to convert the Notes at any time during specified periods at their option.
Our cross-border payments product and international expansion strategy involve a variety of risks, including: • complying with financial regulations and our ability to comply and obtain any relevant licenses in applicable countries or jurisdictions; • currency exchange rate fluctuations and our cross-border payments providers' ability to provide us favorable currency exchange rates, which may impact our revenues and expenses; • reduction or cessation in cross-border trade resulting from government sanctions, trade tariffs or restrictions, other trade regulations or strained international relations; • potential application of more stringent regulations relating to privacy, information protection, and data security, and the authorized use of, or access to, commercial and personal information; • sanctions imposed by applicable government authorities or jurisdictions, such as OFAC, or comparable authorities in other countries; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Our cross-border payments product and international expansion strategy involve a variety of risks, including: • complying with financial regulations and our ability to comply and obtain any relevant licenses in applicable countries or jurisdictions; • currency exchange rate fluctuations and our cross-border payments providers' ability to provide us favorable currency exchange rates, which may impact our revenues and expenses; • reduction or cessation in cross-border trade resulting from government sanctions, trade tariffs or restrictions, other trade regulations or strained international relations; 34 • potential application of more stringent regulations relating to AI, environmental and social matters, privacy, information protection, and data security, and the authorized use of, or access to, commercial and personal information; • sanctions imposed by applicable government authorities or jurisdictions, such as OFAC, or comparable authorities in other countries; • exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, and security of various types of data, including data that identifies or may be used to identify an individual, such as names, email addresses, and in some jurisdictions, internet protocol addresses.
Laws and regulations in these 44 jurisdictions apply broadly to the collection, use, storage, disclosure, and security of various types of data, including data that identifies or may be used to identify an individual, such as names, email addresses, and internet protocol addresses.
Moreover, our obligations under the Revolving Credit Facility are secured by our Divvy credit card receivables and certain other collateral. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
Moreover, our obligations under the Revolving Credit Facility are secured by our BILL Divvy Corporate Card receivables and certain other collateral. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
The U.S. and other key international economies have experienced and may in the future experience significant economic and market downturns in which economic activity is impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity, and foreign exchange markets, inflation, bankruptcies, and overall uncertainty with respect to the economy.
More broadly, the U.S. and other key international economies have experienced and may in the future experience significant economic and market downturns in which economic activity is impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity, and foreign exchange markets, inflation, bankruptcies, and overall uncertainty with 19 respect to the economy.
In addition, we expect to continue to expend substantial financial and other resources on: • sales, marketing, and customer success, including an expansion of our sales organization and new customer success initiatives; • our technology infrastructure, including systems architecture, scalability, availability, performance, and security; • product development, including investments in our product development team and the development of new products and new functionality for our AI-enabled platform; • acquisitions or strategic investments; • international expansion; and • regulatory compliance and risk management.
In addition, we expect to continue to expend substantial financial and other resources on: • sales, marketing, and customer success; • our technology infrastructure, including systems architecture, scalability, availability, performance, and security; • product development, including investments in our product development team and the development of new products and new functionality for our AI-enabled platform; • acquisitions or strategic investments; • international expansion; and • regulatory compliance and risk management.
The credit decision-making process for our Divvy cards uses techniques designed to analyze the credit risk of specific businesses based on, among other factors, their past purchase and transaction history, as well as their credit scores.
The credit decision-making process for our BILL Divvy Corporate Cards uses techniques designed to analyze the credit risk of specific businesses based on, among other factors, their past purchase and transaction history, as well as their credit scores.
Interchange revenue involves a variety of risks, including: • interchange revenue fluctuations due to the variability of card acceptance practices at supplier locations, and the resulting effect on our revenue; • changes in card network interchange rates or rules which could dissuade new and existing card-accepting suppliers from continuing to accept card payments; • unexpected compliance and risk management imposed by the card networks or resulting from changes in regulation; • declines in the number of active card-accepting suppliers due to concerns about cost or operational complexity; and • unexpected changes in card acceptance or card issuing rules which may impact our ability to offer this payment product.
Interchange fees generally involve a variety of risks, including: • fluctuations due to the variability of card acceptance practices at supplier locations, and the resulting effect on our revenue; • changes in card network interchange rates or rules which could dissuade new and existing card-accepting suppliers from continuing to accept card payments; • unexpected compliance and risk management imposed by the card networks or resulting from changes in regulation; • declines in the number of active card-accepting suppliers due to concerns about cost or operational complexity; and • unexpected changes in card acceptance or card issuing rules which may impact our ability to offer this payment product.
We are currently required to comply with U.S. economic and trade sanctions administered by OFAC and we have processes in place to comply with the OFAC regulations as well as similar requirements in other jurisdictions, including the Australian Sanctions Regime, the Canadian Proceeds of Crime and Terrorist Financing Act and, to the extent we expand our offerings into the UK and the EU, UK and EU money laundering directives.
We are currently required to comply with U.S. economic and trade sanctions administered by OFAC and we have processes in place to comply with the OFAC regulations as well as similar requirements in other jurisdictions, including the Australian Sanctions Regime, the Canadian Proceeds of Crime and Terrorist Financing Act, the UK Office of Financial Sanctions Implementation, and, to the extent we expand our offerings into the EU, EU money laundering directives.
We do not file UCC liens or take other security interests on Divvy card balances, which significantly reduces our ability to collect amounts outstanding to spending businesses that file for bankruptcy protection. Any such losses or failures of our risk models could harm our business, operating results, and financial condition.
We do not file UCC liens or take other security interests on BILL Divvy Corporate Card balances, which significantly reduces our ability to collect amounts outstanding from spending businesses that file for bankruptcy protection. Any such losses or failures of our risk models could harm our business, operating results, and financial condition.
These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from high inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war (such as the war in Ukraine), or other geopolitical conflicts.
These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war (such as the ongoing conflicts in Ukraine and the Middle East) or other geopolitical conflicts.
We rely on a variety of funding sources to support our Divvy corporate card offering.
We rely on a variety of funding sources to support our BILL Divvy Corporate Card offering.
The market for SMB software financial back-office solutions is relatively new and subject to ongoing technological change, evolving industry standards, payment methods, and changing regulations, as well as changing customer needs, requirements, and preferences.
The market for SMB financial software solutions is relatively new and subject to ongoing technological change, evolving industry standards, payment methods, and changing regulations, as well as changing customer needs, requirements, and preferences.
Our spend and expense management products are dependent on our relationship with our Issuing Banks, Cross River Bank and WEX Bank. The extensions of credit facilitated through our platform are originated through Cross River Bank and WEX Bank, and we rely on these entities to comply with various federal, state, and other laws. There has been significant recent U.S.
Our spend and expense management product is dependent on our relationship with the Issuing Banks, Cross River Bank and WEX Bank. The extensions of credit facilitated through our platform are originated through Cross River Bank and WEX Bank, and we rely on these entities to comply with various federal, state, and other laws. There has been significant recent U.S.
In addition to the factors discussed in this report, the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets; • actual or anticipated fluctuations in our revenue and other operating results; • changes in the financial projections we may provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • recruitment or departure of key personnel; • the economy as a whole and market conditions in our industry, such as high inflation and high interest rate and recessionary environments; • the global macroeconomic impact of the COVID-19 pandemic; • negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new products and services that gain market acceptance; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of new products or services, commercial relationships, or significant technical innovations; • acquisitions, partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits threatened or filed against us, litigation involving our industry, or both; • developments or disputes concerning our or other parties’ products, services, or intellectual property rights; • changes in accounting standards, policies, guidelines, interpretations, or principles; • interpretations of any of the above or other factors by trading algorithms, including those that employ natural language processing and related methods to evaluate our public disclosures; • other events or factors, including those resulting from war (such as the war in Ukraine), incidents of terrorism, or responses to these events; • instability in the U.S. and global banking systems; • the expiration of contractual lock-up agreements; and • sales of shares of our common stock by us or our stockholders.
In addition to the factors discussed in this report, the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets; • actual or anticipated fluctuations in our revenue and other operating results; • changes in the financial projections we may provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • recruitment or departure of key personnel; • the economy as a whole and market conditions in our industry, such as high inflation and high interest rate and recessionary environments; • negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new products and services that gain market acceptance; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of new products or services, commercial relationships, or significant technical innovations; • acquisitions, partnerships, joint ventures, or capital commitments; 52 • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits threatened or filed against us, litigation involving our industry, or both; • developments or disputes concerning our or other parties’ products, services, or intellectual property rights; • changes in accounting standards, policies, guidelines, interpretations, or principles; • interpretations of any of the above or other factors by trading algorithms, including those that employ natural language processing and related methods to evaluate our public disclosures; • other events or factors, including those resulting from local or federal elections, war or other geopolitical conflicts, incidents of terrorism, or responses to these events; • actual or perceived instability in the U.S. and global banking systems; • the expiration of contractual lock-up agreements; and • sales of shares of our common stock by us or our stockholders.
In addition, some acquisitions may require us to 30 spend considerable time, effort, and resources to integrate employees from the acquired business into our teams, and acquisitions of companies in lines of business in which we lack expertise may require considerable management time, oversight, and research before we see the desired benefit of such acquisitions.
In addition, some acquisitions may require us to spend considerable time, effort, and resources to consummate and/or to integrate employees from the acquired business into our teams, and acquisitions of companies in lines of business in which we lack expertise may require considerable management time, oversight, and research before we see the desired benefit of such acquisitions.
We are subject to the FCPA, U.S. domestic bribery laws, and other anti-corruption laws, including Australia’s anti-bribery laws, the Canadian Criminal Code and the Canadian Corruption of Foreign Public Officials Act.
We are subject to the FCPA, U.S. domestic bribery laws, and other anti-corruption laws, including Australia’s anti-bribery laws, the Canadian Criminal Code, the Canadian Corruption of Foreign Public Officials Act and the UK Bribery Act 2010.
If we fail to comply with requirements applicable to us by law or contract, or if audits by our Issuing Banks were to conclude that our processes and procedures are insufficient, we may be subject to fines or penalties or our Issuing Banks could terminate their relationships with us.
If we fail to comply with requirements applicable to us by law or contract, or if audits by the Issuing Banks, or regulatory audits of the Issuing Banks, were to conclude that our processes and procedures are insufficient, we may be subject to fines or penalties or the Issuing Banks could terminate their relationships with us.
Several of our other product offerings whereby we advance funds to our customers or vendors of our customers based on credit and risk profiling before we receive the funds on their behalf, such as our Instant Transfer feature, also expose us to credit risks.
Several of our other product offerings whereby we advance funds to our customers or vendors of our customers based on credit and risk profiling before we receive the funds on their behalf, such as our instant transfer and invoice financing offerings, also expose us to credit risks.
Our current and prospective service offerings subject us to the EU's GDPR, the UK GDPR, Australian and Canadian privacy laws, and the privacy 42 laws of many other foreign jurisdictions. Such laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.
Our current and prospective service offerings subject us to the GDPR, Australian and Canadian privacy laws, and the privacy laws of many other foreign jurisdictions. Such laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES We lease our office facilities, including approximately 138,000 square feet in San Jose, California for our corporate headquarters. This lease agreement expires in June 2031. We also maintain offices in Draper, Utah, Houston Texas, and Sydney, Australia.
Biggest changeItem 2. PROPERTIES We lease our office facilities, including approximately 138,000 square feet in San Jose, California for our corporate headquarters. This lease agreement expires in June 2031. We also maintain offices in Draper, Utah, and Houston, Texas.
Our leased facilities in Draper, Utah consist of 155,000 square feet of office space for our employees located in Draper, Utah, approximately 20,000 square feet of which is being subleased for a period of 5 years expiring in December 2025. The lease for our Draper, Utah property expires in March 2030.
Our leased facilities in Draper, Utah consist of 155,000 square feet of office space for our employees located in Draper, Utah, approximately 26,000 square feet of which is being subleased for a period of 5 years expiring in December 2025. The lease for our Draper, Utah property expires in March 2030.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. MINE SAFETY DISCLOSURES Not applicable. 53 PART II
Biggest changeThe results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. 57 Item 4. MINE SAFETY DISCLOSURES Not applicable. 58 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes an initial investment of $100.00 at the close of trading on December 12, 2019 and that all dividends paid by companies included in these indices have been reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance. 54 Recent Sales of Unregistered Equity Securities None.
Biggest changeThe graph assumes an initial investment of $100.00 at the close of trading on December 12, 2019 and that all dividends paid by companies included in these indices have been reinvested.
The following graph depicts the total cumulative stockholder return on our common stock from December 12, 2019, the first day of trading of our common stock on the NYSE, through June 30, 2023, relative to the performance of the S&P 500 Index and S&P 500 IT Index.
The following graph depicts the total cumulative stockholder return on our common stock from December 12, 2019, the first day of trading of our common stock on the NYSE, through June 30, 2024, relative to the performance of the S&P 500 Index and S&P 500 IT Index.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The New York Stock Exchange under the symbol “BILL”. Holders of Record As of June 30, 2023, there were 181 holders of record of our common stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The New York Stock Exchange under the symbol “BILL”. Holders of Record As of June 30, 2024, there were 162 holders of record of our common stock.
We currently intend to retain future earnings for use in the operation of our business and do not anticipate paying any dividends on our capital stock in the foreseeable future.
We currently intend to retain future earnings for use in the operation of our business, to facilitate strategic acquisitions, to repurchase our common stock or other securities, or to repay indebtedness, and do not anticipate paying any dividends on our capital stock in the foreseeable future.
Removed
Purchase of Equity Securities by the Issuer In January 2023, our board of directors approved our Share Repurchase Program of up to $300 million of shares of common stock. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.
Added
The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance. 59 Recent Sales of Unregistered Equity Securities In connection with our commercial relationship with CPA.com, Inc.
Removed
Under the Share Repurchase Program, repurchases can be made from time to time using a variety of methods, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans, in compliance with the rules of the SEC and other applicable legal requirements.
Added
(CPA.com), on April 2, 2024, we issued to CPA.com warrants (the Warrants) to purchase up to an aggregate of 150,686 shares (the Warrant Shares) of our common stock at an exercise price $0.01 per Warrant Share.
Removed
The Share Repurchase Program has a term of 12 months and does not obligate us to acquire any particular amount of shares, and it may be suspended or discontinued at any time at our discretion.
Added
The Warrants, which were issued as a result of the achievement of certain performance milestones under the commercial relationship, were subsequently net exercised in full for 150,662 shares of our common stock. The issuance of the Warrants and Warrant Shares has not been, and will not be, registered under the Securities Act of 1933, as amended (the Securities Act).
Removed
The following table provides share repurchase activity during the quarter ended June 30, 2023: Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (1) April 1 - April 30, 2023 372,254 $ 76.56 372,254 $ 244,500,240 May 1 - May 31, 2023 346,244 $ 92.76 346,244 $ 212,382,647 June 1 - June 30, 2023 — $ — — $ 212,382,647 Total 718,498 718,498 $ 212,382,647 (1) See Note 11, in Notes to Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 55 Item 6.
Added
The Warrants and the Warrant Shares were issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act. The Warrants and the Warrant Shares may not be offered or sold in the United States absent registration under or exemption from the Securities Act and any applicable state securities laws.
Added
CPA.com represented in the Warrants, among other things, that it is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act, and that the acquisition of the Warrants is for investment in its account and not with a view to the public resale or distribution within the meaning of the Securities Act.
Added
Purchase of Equity Securities by the Issuer None. Item 6. RESERVED Not applicable. 60

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents stock-based compensation recorded for the periods presented and as a percentage of total revenue: As a % of total revenue Year ended June 30, Year ended June 30, 2023 2022 2021 2023 2022 2021 Acquisition Related Awards $ 107,815 $ 100,698 $ 28,992 10 % 16 % 12 % Non-Acquisition Related Awards 205,888 96,459 42,995 19 % 15 % 18 % Total stock-based compensation $ 313,703 $ 197,157 $ 71,987 29 % 31 % 30 % The following table presents the components of our consolidated statements of operations for the periods presented as a percentage of revenue: Year ended June 30, 2023 2022 (1) 2021 (2) Revenue Subscription and transaction fees 89 % 99 % 97 % Interest on funds held for customers 11 % 1 % 3 % Total revenue 100 % 100 % 100 % Cost of revenue Service costs 14 % 16 % 24 % Depreciation and amortization of intangible assets 4 % 7 % 2 % Total cost of revenue 18 % 23 % 26 % Gross profit 82 % 77 % 74 % Operating expenses Research and development 30 % 34 % 38 % Sales and marketing 49 % 48 % 29 % General and administrative 26 % 38 % 54 % Depreciation and amortization of intangible assets 5 % 7 % 1 % Total operating expenses 110 % 127 % 122 % Loss from operations (28) % (50) % (48) % Other income (expense), net 7 % (2) % (11) % Loss before provision for (benefit from) income taxes (21) % (52) % (59) % Provision for (benefit from) income taxes — % (1) % (17) % Net loss (21) % (51) % (42) % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
Biggest changeThe following table sets forth the components of our consolidated statements of operations for the periods presented as a percentage of revenue: Year ended June 30, 2024 2023 2022 (1) Revenue Subscription and transaction fees 87 % 89 % 99 % Interest on funds held for customers 13 % 11 % 1 % Total revenue 100 % 100 % 100 % Cost of revenue Service costs 15 % 14 % 16 % Depreciation and amortization 3 % 4 % 7 % Total cost of revenue 18 % 18 % 23 % Gross profit 82 % 82 % 77 % Operating expenses Research and development 25 % 30 % 34 % Sales and marketing 37 % 49 % 48 % General and administrative 22 % 24 % 34 % Provision for expected credit losses 5 % 3 % 3 % Depreciation and amortization 4 % 5 % 7 % Restructuring 2 % — % — % Total operating expenses 95 % 110 % 127 % Operating loss (13) % (28) % (50) % Other income (expense), net 11 % 7 % (2) % Loss before provision for (benefit from) income taxes (2) % (21) % (52) % Provision for (benefit from) income taxes — % — % (1) % Net loss (2) % (21) % (51) % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021. 69 Comparison of Fiscal 2024 and 2023 Revenue Total revenue during fiscal 2024 and 2023 were as follows (amounts in thousands): Year ended June 30, Change 2024 2023 Amount % Subscription fees $ 257,143 $ 253,316 $ 3,827 2 % Transaction fees 865,590 691,394 174,196 25 % Total subscription and transaction fees 1,122,733 944,710 178,023 19 % Interest on funds held for customers 167,439 113,758 53,681 47 % Total revenue $ 1,290,172 $ 1,058,468 $ 231,704 22 % Total revenue increased by $231.7 million, or 22% during fiscal 2024 as compared to fiscal 2023, primarily due to: • a $3.8 million increase in subscription fee revenue primarily due to an increase in customers as compared to the same prior year period; • a $174.2 million increase in transaction fee revenue primarily due to increased total payment volume driven by the increase in customer adoption of our products; and • a $53.7 million increase in interest on funds held for customers primarily due to an increase in yield earned from investing customer funds as interest rates remained elevated throughout fiscal 2024.
Under our arrangements with our Issuing Banks, we must comply with their respective credit policies and underwriting procedures, and the Issuing Banks maintain ultimate authority to decide whether to issue a card or approve a transaction.
Under our arrangements with the Issuing Banks, we must comply with their respective credit policies and underwriting procedures, and the Issuing Banks maintain ultimate authority to decide whether to issue a card or approve a transaction.
Our principal commitments to settle our contractual obligations consist of our 2027 Notes, 2025 Notes, and outstanding borrowings from our Revolving Credit Facility as further discussed below. For additional discussion about our Notes and Revolving Credit Facility, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Our principal commitments to settle our contractual obligations consist of our 2025 Notes, outstanding borrowings from our Revolving Credit Facility and 2027 Notes as further discussed below. For additional discussion about our Notes and Revolving Credit Facility, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For additional discussion about our 2027 Notes and the capped call transactions, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 2025 Notes On November 30, 2020, we issued $1.15 billion in aggregate principal amount of our 0% convertible senior notes due on December 1, 2025.
For additional discussion about our 2027 Notes and the capped call transactions, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 2025 Notes On November 30, 2020, we issued $1.15 billion in aggregate principal amount of our 0% convertible senior notes due on December 1, 2025 (the 2025 Notes).
If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock.
If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock.
Sales and marketing – Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for our sales and marketing teams, rewards expense in connection with our card rewards programs, sales commissions, marketing program expenses, travel-related expenses, and costs to market and promote our platform through advertisements, marketing events, partnership 62 arrangements, direct customer acquisition, and allocated overhead costs.
Sales and marketing – Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for our sales and marketing teams, rewards expense in connection with our card rewards programs, sales commissions, marketing program expenses, travel-related expenses, and costs to market and promote our platform through advertisements, marketing events, partnership arrangements, direct customer acquisition, and allocated overhead costs.
The 2027 Notes are senior, unsecured obligations, will not accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 1, 2027.
The 2027 Notes are senior, unsecured obligations, will not 75 accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 1, 2027.
The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits.
The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured 62 by cash deposits.
Interest is earned from interest-bearing deposit accounts, certificates of deposit, corporate bonds, asset-backed securities, municipal bonds, money market funds, commercial paper, and U.S. Treasury securities, until those payments are cleared and credited to the intended recipient.
Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, corporate bonds, asset-backed securities, municipal bonds, commercial paper, U.S. treasury securities, and U.S. agency securities, until those payments are cleared and credited to the intended recipient.
Our Revenue Model We generate revenue primarily from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue consists of transaction fees and interchange income on a fixed or variable rate per transaction.
Our Revenue Model We generate revenue primarily from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue consists of transaction fees and interchange fees on a fixed or variable rate per transaction.
Based on our agreements with the Issuing Banks, we recognize the interchange fees as revenue gross or net of rebates received from the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements.
Based on our agreements with the 65 Issuing Banks, we recognize the interchange fees as revenue gross or net of rebates received from the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements.
We use these models and assumptions to determine the reserve rates applicable to the outstanding acquired card receivable balances to estimate reserves for expected credit losses. Based on historical loss experience, the probability of default decreases over time, therefore the attribute used to segment the portfolio is the length of time since an account’s credit limit origination.
We use these models and assumptions to determine the reserve rates applicable to the outstanding acquired card receivables balances to estimate reserves for expected credit losses. Based on historical loss experience, the probability of default decreases over time, therefore the attribute used to segment the portfolio is the length of time since an account’s credit limit origination.
As of June 30, 2023, our partners included some of the most trusted brands in the financial services business, including more than 85 of the top 100 accounting firms and seven of the top ten largest financial institutions for SMBs in the United States (U.S.), including Bank of America, JPMorgan Chase, Wells Fargo Bank, and American Express.
As of June 30, 2024, our partners included some of the most trusted brands in the financial services business, including more than 85 of the top 100 accounting firms and seven of the top ten largest financial institutions for SMBs in the United States (U.S.), including Bank of America, JPMorgan Chase, Wells Fargo Bank, and American Express.
When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank’s balance sheet from the Divvy card account for the spending business.
When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank's balance sheet from the BILL Divvy Corporate Card account for the spending business.
When a business applies for a Divvy card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a Divvy card pursuant to our credit policies.
When a business applies for a BILL Divvy Corporate Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Corporate Card pursuant to our credit policies.
Credit Losses on Acquired Card Receivables We acquire card receivables pursuant to our contracts with certain Issuing Banks. The acquired card receivable portfolio consists of a large group of smaller balances from spending businesses across a wide range of industries.
Expected Credit Losses on Acquired Card Receivables We acquire card receivables pursuant to our contracts with certain Issuing Banks. The acquired card receivables portfolio consists of a large group of smaller balances from spending businesses across a wide range of industries.
The SMBs we serve may be particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may cease operations in the event of a recession or inability to access financing.
The SMBs we serve are particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may cease operations in the event of a recession or inability to access financing.
Recent Accounting Pronouncements See “The Company and its Significant Accounting Policies” Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of June 30, 2023. 74
Recent Accounting Pronouncements See “The Company and its Significant Accounting Policies” Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of June 30, 2024.
We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL standalone, Divvy, and Invoice2go solutions combined.
We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL standalone, BILL Spend and Expense, and Invoice2go solutions combined.
Transactions primarily include card payments, real-time payments, check payments, ACH payments, cross-border payments, and creation of invoices. Much of our revenue comes from repeat transactions, which are an important contributor to our recurring revenue. In addition, we generate revenue from interest on funds held for customers.
Transactions primarily include card payments, real-time payments, check payments, ACH payments, cross-border payments, pay-by-card, invoice financing, and creation of invoices. Much of our revenue comes from repeat transactions, which are an important contributor to our recurring revenue. In addition, we generate revenue from interest on funds held for customers.
Excluding those customers of our financial institution partners, approximately 86% of BILL standalone customers as of June 30, 2022 were still customers as of June 30, 2023. Net Dollar-Based Retention Rate Net dollar-based retention rate is an important indicator of customer satisfaction and usage of our platform, as well as potential revenue for future periods.
Excluding those customers of our financial institution partners, approximately 83% of BILL standalone customers as of June 30, 2023 were still customers as of June 30, 2024. Net Dollar-Based Retention Rate Net dollar-based retention rate is an important indicator of customer satisfaction and usage of our platform, as well as potential revenue for future periods.
For fiscal 2023, over 87% of ou r subscription and transaction revenue from BILL standalone customers came from customers who were acquired prior to the start of the fiscal year. See "— Key Business Metrics—Businesses Using Our Solutions " below for the definition of BILL standalone customers .
For fiscal 2024, over 89% of ou r subscription and transaction revenue from BILL standalone customers came from customers who were acquired prior to the start of the fiscal year. See "— Key Business Metrics—Businesses Using Our Solutions " below for the definition of BILL standalone customers .
Our cash proceeds from our investing activities consist primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments. Additionally, the increase or decrease in our net cash from investing activities is impacted by the net change in acquired card receivable balances.
Our cash proceeds from our investing activities consist primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments and repayments of loans held for investment. Additionally, the increase or decrease in our net cash from investing activities is impacted by the net change in acquired card receivable balances.
Provision for (benefit from) income taxes – Income tax expense consists of U.S. federal, state and foreign income taxes.
Provision for (benefit from) income taxes – Income tax expense consist of U.S. federal, state and foreign income taxes.
Our net dollar-based retention rate equals the Aggregate Current Period Revenue divided by Aggregate Prior Period Revenue. Our net doll ar-based retention rate was 111%, 131%, and 124% during fiscal 2023, 2022, and 2021, respectively.
Our net dollar-based retention rate equals the Aggregate Current Period Revenue divided by Aggregate Prior Period Revenue. Our net doll ar-based retention rate was 92%, 111%, and 131% during fiscal 2024, 2023, and 2022, respectively.
The transactions that have been authorized but not cleared totaled $68.6 million as of June 30, 2023 and have not been recorded on our consolidated balance sheets. We have off-balance sheet credit exposures with these authorized but not cleared transactions; however, our expected credit losses with respect to these transactions were not material as of June 30, 2023.
The transactions that have been authorized but not cleared totaled $27.2 million as of June 30, 2024 and have not been recorded on our consolidated balance sheets. We have off-balance sheet credit exposures with these authorized but not cleared transactions; however, our expected credit losses with respect to these transactions were not material as of June 30, 2024.
Obligations under the Revolving Credit Facility are secured by receivables generated by our Divvy charge card and certain related collateral. Our Revolving Credit Facility matures in June 2024 and the outstanding borrowings are payable on or before the maturity date.
Obligations under the Revolving Credit Facility are secured by receivables generated by our BILL Divvy Corporate Card and certain related collateral. Our Revolving Credit Facility matures in June 2026 and the outstanding borrowings are payable on or before the maturity date.
A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 can be found under Item 7 of Part II in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the SEC on August 22, 2022, which is available free of charge on the SEC’s website at www.sec.gov and on the Investor Relations section of our corporate website at investor.bill.com.
A discussion of fiscal 2023 compared to fiscal 2022 can be found under Item 7 of Part II in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC on August 29, 2023, which is available free of charge on the SEC’s website at www.sec.gov and on the Investor Relations section of our corporate website at investor.bill.com.
We have a total borrowing commitment of $225.0 million from our Revolving Credit Facility and have drawn $135.0 million as of June 30, 2023. Our principal uses 69 of cash are funding our operations and other working capital requirements, including the contractual and other obligations discussed below.
We have a total borrowing commitment of $300.0 million from our Revolving Credit Facility and have drawn $180.0 million as of June 30, 2024. Our principal uses of cash are funding our operations and other working capital requirements, including the contractual and other obligations discussed below.
Other income (expenses), net – Other income (expenses), net consists primarily of interest income on our corporate funds, interest expense on our borrowings (including amortization issuance costs) and the lower of cost or market adjustment on card receivables sold and held for sale.
Other income (expense), net – Other income (expense), net consist primarily of interest income on our corporate funds, gain on debt extinguishment, interest expense on our borrowings (including amortization of issuance costs) and the lower of cost or market adjustment on card receivables sold and held for sale.
Depreciation and amortization of intangible assets – Depreciation and amortization of intangible assets consist of depreciation of property and equipment, and amortization of acquired intangibles, such as developed technology, customer relationship, and trade names. Amortization of capitalized internal-use software costs are excluded.
Depreciation and amortization – Depreciation and amortization consist of depreciation and amortization of property and equipment, and amortization of acquired intangibles, such as developed technology, customer relationship, and trade names. Amortization of capitalized internal-use software costs paid in cash are excluded.
Revolving Credit Facility We have a total borrowing commitment of $225.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Divvy Peach, LLC, Goldman Sachs Bank USA, and the lenders party thereto (the Revolving Credit Facility), of which we borrowed $135.0 million as of June 30, 2023.
Revolving Credit Facility We have a total borrowing commitment of $300.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Divvy Peach, LLC, Goldman Sachs Bank USA and the lenders party thereto (as amended to date, the Revolving Credit Facility), of which we borrowed $180.0 million as of June 30, 2024.
When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable. In order to purchase the participation rights in the receivables, we maintain a variety of funding arrangements, including warehouse facilities and, from time-to-time, other purchase arrangements with a diverse set of funding sources.
When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable. In order to purchase the participation rights in the receivables, we maintain certain funding arrangements, including warehouse facilities and, from time-to-time, other purchase arrangements with third-party funding sources.
Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2023, this included approximately 7,200 businesses. Businesses using our solutions during a trial period are not counted as new businesses using our solutions during that period.
Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2024, this included approximately 11,500 businesses. Businesses 64 using our solutions during a trial period are not counted as new businesses using our solutions during that period.
Our 73 models use past loss experience to estimate the probability of default and exposure at default by aged balances. We also estimate the likelihood and magnitude of recovery of previously written off ca rd receivables based on historical recovery experience.
Our models use past loss experience to estimate the probability of default and exposure at default by aged balances. We also estimate the likelihood and magnitude of recovery of previously charged-off loans based on historical recovery experience.
The following table presents a reconciliation of our free cash flow to net cash provided by (used in) operating activities for the periods presented (in thousands) : Year ended June 30, 2023 2022 (1) 2021 (2) Net cash provided by (used in) operating activities $ 187,768 $ (18,093) $ 4,623 Purchases of property and equipment (7,589) (5,377) (18,902) Capitalization of internal-use software costs (23,614) (10,259) (2,304) Free cash flow $ 156,565 $ (33,729) $ (16,583) (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
The following table provides a reconciliation of our free cash flow to net cash provided by (used in) operating activities for the periods presented (in thousands) : Year ended June 30, 2024 2023 2022 (1) Net cash provided by (used in) operating activities $ 278,771 $ 187,768 $ (18,093) Purchases of property and equipment (976) (7,589) (5,377) Capitalization of internal-use software costs (19,917) (23,614) (10,259) Free cash flow $ 257,878 $ 156,565 $ (33,729) (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
Non-GAAP gross margin is defined as non-GAAP gross profit, divided by total revenue. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations.
Our revenue could be impacted by fluctuations in foreign currency rates in the future, especially if our revenue through our international operations and international payments grows as a percentage of our revenue or our international operations increase.
Our revenue could be impacted by fluctuations in foreign currency rates in the future, especially if our revenue through our international operations and international payments grows as a percentage of our revenue or our international operations increase. In addition, interest on funds held for customers could be impacted by changes in interest rates.
(2) Includes the results of Divvy from the acquisition date on June 1, 2021. Net Cash Provided by (Used in) Operating Activities Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers.
Net Cash Provided by (Used in) Operating Activities Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers.
Additionally, we evaluate whether to include qualitative reserves to cover losses that are expected but may not be adequately represented in the quantitative methods or the economic assumptions.
Additionally, management evaluates whether to include qualitative reserves to cover credit losses that are expected but may not be adequately represented in the quantitative methodology or the economic assumptions.
Service Costs and Expenses Service costs – Service costs consist primarily of personnel-related costs, including stock-based compensation expenses, for our customer success and payment operations teams, outsourced support services for our customer success team, costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, fees for processing payments, such as ACH, checks, and cross-border wires), direct and amortized costs for implementing and integrating our cloud-based platform into our customers’ systems, costs for maintaining, optimizing, and securing our cloud payments infrastructure, amortization of capitalized internal-use developed software related to our platform, fees on the investment of customer funds, and allocation of overhead costs.
Service Costs and Expenses Service costs – Service costs consist primarily of personnel-related costs, including stock-based compensation, for our customer success and payment operations teams, costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, fees for processing payments), outsourced support services for our customer success team, direct and amortized costs for implementing and integrating our cloud-based platform into our customers’ systems, and cloud payments infrastructure costs.
(2) During fiscal 2023, the total payment volume transacted by BILL standalone customers was approximately $251.5 billion; the total card payment volume transacted by spending businesses that used Divvy cards was approximately $13.4 billion; and the total payment volume transacted by Invoice2go subscribers was approximately $1.1 billion.
(2) During fiscal 2024, the total payment volume transacted by BILL standalone customers was approximately $273.9 billion; the total card payment volume transacted by spending businesses that used BILL Divvy Corporate Cards was approximately $17.5 billion; and the total payment volume transacted by Invoice2go subscribers was approximately $1.1 billion.
The attribution method used involves judgment and impacts the timing of revenue recognition. Business Combinations We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired and liabilities assumed by the acquiree at the acquisition date.
Business Combinations We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired and liabilities assumed by the acquirer at the acquisition date.
When we process payment transactions, the funds flow through our bank accounts, resulting in a balance of funds held for customers. This balance is determined by volume and the type of payments processed.
When we process payment transactions, the funds flow through our bank accounts, resulting in a balance of funds held for customers. The balances may fluctuate based on volume and the type of payments processed.
W e are unable to predict the full impact that macroeconomic factors, banking sector dynamics or the ongoing impacts of the COVID-19 pandemic will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including the duration of the pandemic, the actions that may be taken by government authorities across the U.S. or other countries, changes in central bank policies and interest rates, rates of inflation, the impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “ Risk Factors ” in Part I, Item 1A of this Annual Report on Form 10-K.
We are unable to predict the full impact that macroeconomic factors, banking sector dynamics, or ongoing global geopolitical conflicts will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including changes in central bank policies and interest rates, rates of inflation, the impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “ Risk Factors ” in Part I, Item 1A of this Annual Report on Form 10-K.
We define TPV as the total value of transactions that we process on our platform during a particular period, including transactions from BILL standalone customers, Divvy card transactions, and transactions executed by Invoice2go subscribers. Our calculation of TPV includes payments that are subsequently reversed. Such payments comprised less than 2% of TPV during each of fiscal 2023, 2022, and 2021.
We define TPV as the total value of transactions that we process on our platform during a particular period, comprising transactions from BILL standalone customers, BILL Divvy Corporate Card transactions, and transactions executed by Invoice2go subscribers. Our calculation of TPV includes payments that are subsequently reversed.
(3) During fiscal 2023, the total number of transactions executed by BILL standalone customers was approximately 44.3 million; the total number of transactions executed by spending businesses that used Divvy cards was approximately 39.5 million; and the total number of transactions executed by Invoice2go subscribers was approximately 1.3 million.
(3) During fiscal 2024, the total number of transactions executed by BILL standalone customers was approximately 48.2 million; the total number of transactions executed by spending businesses that used BILL Divvy Corporate Cards was approximately 54.4 million; and the total number of transactions executed by Invoice2go subscribers was approximately 1.3 million.
The following table presents a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our gross profit and gross margin for the periods presented (amounts in thousands) : 68 Year ended June 30, 2023 2022 (1) 2021 (2) Revenue $ 1,058,468 $ 641,959 $ 238,265 Gross profit $ 864,491 $ 496,955 $ 176,459 Add: Depreciation and amortization of intangible assets (3) 42,967 39,508 5,230 Stock-based compensation charged to expenses and related payroll taxes 9,428 5,599 3,309 Non-GAAP gross profit $ 916,886 $ 542,062 $ 184,998 Gross margin 81.7 % 77.4 % 74.1 % Non-GAAP gross margin 86.6 % 84.4 % 77.6 % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
The following table shows a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our gross profit and gross margin for the periods presented (amounts in thousands) : Year ended June 30, 2024 2023 2022 (1) Revenue $ 1,290,172 $ 1,058,468 $ 641,959 Gross profit 1,055,556 864,491 496,955 Add: Depreciation and amortization (2) 44,722 42,967 39,508 Stock-based compensation and related payroll taxes charged to cost of revenue 9,594 9,428 5,599 Non-GAAP gross profit $ 1,109,872 $ 916,886 $ 542,062 Gross margin 81.8 % 81.7 % 77.4 % Non-GAAP gross margin 86.0 % 86.6 % 84.4 % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions.
The more they use and rely upon our product offerings to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions.
As we add customers and partners, we expect our network to continue to grow organically. We have grown rapidly and scaled our business operations in recent periods. Our revenue was $1.1 billion and $642.0 million during fiscal 2023 and 2022, respectively, an increase of $416.5 million.
As we add customers and partners, we expect our network to continue to grow organically. We have grown rapidly and scaled our business operations in recent periods. Our revenue was $1.3 billion and $1.1 billion during fiscal 2024 and 2023, respectively, a year-over-year increase of $231.7 million.
Our research and development expenses decreased to 30% as a percentage of revenue during fiscal 2023 from 34% during fiscal 2022, primarily due to a higher revenue growth rate but a relatively lower increase in personnel-related expenses as a percentage of revenue and decrease in consulting costs during fiscal 2023 compared to fiscal 2022.
Our research and development expenses decreased to 25% as a percentage of revenue during fiscal 2024 from 30% during fiscal 2023, primarily due to a higher revenue growth rate but a relatively lower increase in personnel-related expenses, including stock-based compensation, as a percentage of revenue.
Subscription fees are fixed monthly or annually and charged to customers for the use of our platform to process transactions. Subscription fees are generally charged either on a per user or per customer account per period basis, normally monthly or annually. Transaction fees are fees collected for each transaction processed, on either a fixed or variable fee basis.
Components of Results of Operations Revenue We generate revenue primarily from subscription and transaction fees. Subscription fees are fixed monthly or annually and charged to customers for the use of our platform to process transactions. Subscription fees are generally charged either on a per user or per customer account per period basis, normally monthly or annually.
We acquire new businesses to use our solutions directly through digital marketing and inside sales, and indirectly through accounting firms and financial institution partnerships.
We efficiently reach SMBs through our proven direct and indirect go-to-market strategies. We acquire new businesses to use our solutions directly through digital marketing and inside sales, and indirectly through accounting firms and financial institution partnerships.
Net cash provided by operating activities was $187.8 million during fiscal 2023 compared to a net cash used of $18.1 million during fiscal 2022. The net cash provided during fiscal 2023 was due mainly to the increase in our revenue during the year.
Net cash provided by operating activities increased to $278.8 million during fiscal 2024 compared to $187.8 million during fiscal 2023. The net change was due mainly to the increase in our revenue during the year.
Provision for Income Taxes Provision for income taxes during fiscal year ended June 30, 2023, consists of the reduction to the net deferred tax liability, offset by an estimated cash tax liability as a result of the mandatory R&D capitalization by the Tax Cuts and Jobs Act of 2017, which was effective beginning fiscal 2023.
Provision for Income Taxes Provision for income taxes during fiscal year ended June 30, 2024, consists of a current federal and state tax liability as a result of the mandatory R&D capitalization by the Tax Cuts and Jobs Act of 2017, which became effective for us beginning fiscal 2023.
(5) Includes Divvy metrics from the acquisition date on June 1, 2021. 60 Businesses Using Our Solutions For the purposes of measuring our key business metrics, we define businesses using our solutions as the summation of: (A) customers that are either billed directly by us or for which we bill our partners for our BILL standalone products during a particular period, (B) spending businesses that use Divvy's spend and expense management products during the period, and (C) Invoice2go subscribers during the period.
Businesses Using Our Solutions For the purposes of measuring our key business metrics, we define businesses using our solutions as the summation of: (A) businesses that are either billed directly by us or for which we bill our partners for use of our core BILL accounts payable and receivable platform during a particular period (BILL standalone customers), (B) spending businesses that use our BILL Spend and Expense product during the period, and (C) Invoice2go subscribers during the period.
We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment and capitalization of internal-use software costs, for operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash.
We believe free cash flow is an important liquidity measure of the cash (if any) that is generated, after incurring operating expenses, purchases of property and equipment and capitalization of internal-use software costs, for future operational expenses and investment in our business.
Our net cash provided by investing activities was $259.3 million during fiscal 2023 compared to net cash used of $1.1 billion during fiscal 2022 due primarily to the increase in proceeds from maturities of corporate and customer short-term investments, partially offset by the increase in acquired card receivables.
Our net cash used in investing activities was $409.4 million during fiscal 2024 compared to net cash provided of $259.3 million during fiscal 2023. The net change was primarily due to the decrease in proceeds from maturities of corporate and customer short-term investments.
As of June 30, % Growth as of June 30, 2023 2022 (4) 2021 (5) 2023 2022 Businesses using our solutions (1) 461,000 400,100 131,900 15 % 203 % Year ended June 30, % Growth Year ended June 30, 2023 2022 (4) 2021 (5) 2023 2022 Total Payment Volume (amounts in billions) (2) $ 266.0 $ 228.1 $ 140.7 17 % 62 % Year ended June 30, % Growth Year ended June 30, 2023 2022 (4) 2021 (5) 2023 2022 Transactions processed (in millions) (3) 85.1 62.9 30.6 35 % 105 % (1) As of June 30, 2023, the total number of BILL standalone customers was approximately 201,000; the total number of spending businesses that used Divvy's spend and expense management products was approximately 29,200, and the total number of Invoice2go subscribers was approximately 230,800.
As of June 30, % Growth as of June 30, 2024 2023 2022 (4) 2024 2023 Businesses using our solutions (1) 474,600 461,000 400,100 3 % 15 % Year ended June 30, % Growth Year ended June 30, 2024 2023 2022 (4) 2024 2023 Total Payment Volume (amounts in billions) (2) $ 292.4 $ 266.0 $ 228.1 10 % 17 % Year ended June 30, % Growth Year ended June 30, 2024 2023 2022 (4) 2024 2023 Transactions processed (in millions) (3) 103.8 85.1 62.9 22 % 35 % (1) As of June 30, 2024, the total number of BILL standalone customers was approximately 222,000; the total number of spending businesses that used our BILL Spend and Expense solution was approximately 34,800, and the total number of Invoice2go subscribers was approximately 217,800.
Free Cash Flow Free cash flow is defined as net cash provided by (used in) operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs.
(2) Consists of depreciation of property and equipment and amortization of developed technology, excluding amortization of capitalized internal-use software costs paid in cash. Free Cash Flow Free cash flow is a non-GAAP measure defined as net cash provided by (used in) operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs.
We generally also charge these customers transaction fees based on transaction volume and the category of transaction. The contractual price for subscription and transaction services is based on either negotiated fees or the rates published on our website.
We generally also charge these customers transaction fees based on transaction volume and the category of transaction. The contractual price for subscription and transaction services is based on either negotiated fees or the rates published on our website. Revenue recognized excludes amounts collected on behalf of third parties, such as sales taxes collected and remitted to governmental authorities.
Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.
The current tax liability was offset by the reduction to the net deferred tax liability. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance.
For additional discussion about our 2025 Notes and the capped call transactions, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Refer to Note 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on the Restructuring Plan.
In January 2023, our board of directors authorized the repurchase of up to $300.0 million of our outstanding shares of common stock (the Share Repurchase Program).
In January 2023, our board of directors authorized the repurchase of up to $300.0 million of our outstanding shares of common stock (the January 2023 Share Repurchase Program). We completed the repurchase of shares with an aggregate value equal to the full authorized amount under the January 2023 Share Repurchase Program by December 31, 2023.
Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.
Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth.
The relevant metrics for each of BILL standalone, Divvy, and Invoice2go, respectively, are set forth in the footnotes to the table. The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors.
The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors.
Our sales and marketing expenses increased to 49% as a percentage of revenue during fiscal 2023 from 48% during fiscal 2022, primarily due to higher rewards expense and stock-based compensation expense recognized during fiscal 2023.
Our sales and marketing expenses decreased to 37% as a percentage of revenue during fiscal 2024 from 49% during fiscal 2023, primarily due to a higher revenue growth rate and decreases in personnel-related expenses, including stock-based compensation, recognized during fiscal 2024.
We maintain a full valuation allowance against our U.S. federal, state and Australian net deferred tax assets as we have concluded that it is not more likely than not that we will realize our net deferred tax assets. 63 Results of Operations The following table sets forth our results of operations together with the dollar and percentage change for the periods presented (amounts in thousands): Year ended June 30, Change (2023 compared to 2022) Change (2022 compared to 2021) 2023 2022 (1) 2021 (2) Amount % Amount % Revenue Subscription and transaction fees (4) $ 944,710 $ 633,365 $ 232,255 $ 311,345 49 % $ 401,110 173 % Interest on funds held for customers 113,758 8,594 6,010 105,164 1224 % 2,584 43 % Total revenue 1,058,468 641,959 238,265 416,509 65 % 403,694 169 % Cost of revenue Service costs (4) 151,010 105,496 56,576 45,514 43 % 48,920 86 % Depreciation and amortization of intangible assets (3) 42,967 39,508 5,230 3,459 9 % 34,278 655 % Total cost of revenue 193,977 145,004 61,806 48,973 34 % 83,198 135 % Gross profit 864,491 496,955 176,459 367,536 74 % 320,496 182 % Operating expenses Research and development (4) 314,632 219,818 89,503 94,814 43 % 130,315 146 % Sales and marketing (4)(5) 515,858 307,151 67,935 208,707 68 % 239,216 352 % General and administrative (4) 281,278 241,174 128,116 40,104 17 % 113,058 88 % Depreciation and amortization of intangible assets (3) 48,496 45,630 4,872 2,866 6 % 40,758 837 % Total operating expenses 1,160,264 813,773 290,426 346,491 43 % 523,347 180 % Loss from operations (295,773) (316,818) (113,967) 21,045 (7) % (202,851) 178 % Other income (expense), net 72,856 (13,861) (25,370) 86,717 (626) % 11,509 (45) % Loss before provision for (benefit from) income taxes (222,917) (330,679) (139,337) 107,762 (33) % (191,342) 137 % Provision for (benefit from) income taxes 808 (4,318) (40,617) 5,126 (119) % 36,299 (89) % Net loss $ (223,725) $ (326,361) $ (98,720) $ 102,636 (31) % $ (227,641) 231 % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
We maintain a full valuation allowance against our U.S. federal, state and Australian net deferred tax assets as we have concluded that it is more likely than not that we will not realize our net deferred tax assets. 67 Results of Operations The following table sets forth our results of operations together with the dollar and percentage change for the periods presented (amounts in thousands): Year ended June 30, Change (2024 compared to 2023) Change (2023 compared to 2022) 2024 2023 2022 (1) Amount % Amount % Revenue Subscription and transaction fees (2) $ 1,122,733 $ 944,710 $ 633,365 $ 178,023 19 % $ 311,345 49 % Interest on funds held for customers 167,439 113,758 8,594 53,681 47 % 105,164 1224 % Total revenue 1,290,172 1,058,468 641,959 231,704 22 % 416,509 65 % Cost of revenue Service costs (2) 189,894 151,010 105,496 38,884 26 % 45,514 43 % Depreciation and amortization (3) 44,722 42,967 39,508 1,755 4 % 3,459 9 % Total cost of revenue 234,616 193,977 145,004 40,639 21 % 48,973 34 % Gross profit 1,055,556 864,491 496,955 191,065 22 % 367,536 74 % Operating expenses Research and development (2) 336,754 314,632 219,818 22,122 7 % 94,814 43 % Sales and marketing (2) 478,540 515,858 307,151 (37,318) (7) % 208,707 68 % General and administrative (2) (4) 277,662 249,054 221,030 28,608 11 % 28,024 13 % Provision for expected credit losses (4) 60,105 32,224 20,144 27,881 87 % 12,080 60 % Depreciation and amortization (3) 49,072 48,496 45,630 576 1 % 2,866 6 % Restructuring 27,587 — — 27,587 100 % — — % Total operating expenses 1,229,720 1,160,264 813,773 69,456 6 % 346,491 43 % Operating loss (174,164) (295,773) (316,818) 121,609 (41) % 21,045 (7) % Other income (expense), net 147,845 72,856 (13,861) 74,989 103 % 86,717 (626) % Loss before provision for (benefit from) income taxes (26,319) (222,917) (330,679) 196,598 (88) % 107,762 (33) % Provision for (benefit from) income taxes 2,559 808 (4,318) 1,751 217 % 5,126 (119) % Net loss $ (28,878) $ (223,725) $ (326,361) $ 194,847 (87) % $ 102,636 (31) % (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
The macroeconomic environment has caused our BILL standalone customers and Divvy spending businesses to moderate their expenditures, which has resulted in lower payment volume growth through our solutions than historical trends, which in turn has led to lower transaction fee growth than historical trends.
The macroeconomic environment has caused our BILL standalone customers and spending businesses using BILL Spend and Expense to moderate their expenditures and, in certain cases, shift to lower-cost methods of payment, resulting in lower payment volume growth and lower transaction fee growth than historical trends.
Key Business Metrics We regularly review several metrics, including the key business metrics presented in the table below (as well as the additional metrics described in "Our Business Model "), to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We periodically review and revise these metrics to reflect changes in our business.
For BILL standalone customers acquired during fiscal 2023, the average payback period was approximately six quarters. 63 Key Business Metrics We regularly review several metrics, including the key business metrics presented in the table below (as well as the additional metrics described in "Our Business Model "), to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions.
Net Cash Provided by Financing Activities Our cash proceeds from our financing activities consist primarily of proceeds from line of credit borrowings, exercises of stock options, increase in prepaid card deposits, employee purchases of our common stock under our Employee Stock Purchase Plan (ESPP) and proceeds from public offerings of our common stock and issuance of convertible notes.
Net Cash Provided by (Used in) Financing Activities Our cash proceeds from our financing activities consist primarily of proceeds from line of credit borrowings, employee purchases of our common stock under our Employee Stock Purchase Plan (ESPP). Our cash usage for our financing activities consists primarily of the repurchase of convertible senior notes and repurchases of shares.
Other than our expected credit loss exposure on the card transactions that have not cleared, we had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources as of June 30, 2023. 72 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP.
Other than our expected credit loss exposure on the card transactions that have not cleared, we had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources as of June 30, 2024. 76 As of June 30, 2024, we, in partnership with the Issuing Banks and the Originating Bank Partner, had approximately $2.8 billion in unused credit available to spending businesses and borrowers using our invoice financing product.
Cash Flows Below is a summary of our consolidated cash flows for the periods presented (in thousands): Year ended June 30, 2023 2022 (1) 2021 (2) Net cash provided by (used in): Operating activities $ 187,768 $ (18,093) $ 4,623 Investing activities $ 259,285 $ (1,127,302) $ (1,426,890) Financing activities $ 235,110 $ 2,878,566 $ 1,639,583 70 (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
Depending on market conditions, our liquidity requirements, contractual restrictions, and other factors, we may consider initiating additional share repurchase programs or repurchasing additional Notes. 74 Cash Flows Below is a summary of our consolidated cash flows for the periods presented (in thousands): Year ended June 30, 2024 2023 2022 (1) Net cash provided by (used in): Operating activities $ 278,771 $ 187,768 $ (18,093) Investing activities $ (409,374) $ 259,285 $ (1,127,302) Financing activities $ (742,599) $ 235,110 $ 2,878,566 (1) Includes the results of Invoice2go from the acquisition date on September 1, 2021.
Once approved for a Divvy card, the spending business is provided a credit limit and can use the Divvy software to request virtual cards or physical cards. 58 The majority of cards on our platform are issued by Cross River Bank, a Federal Deposit Insurance Corporation (FDIC)-insured New Jersey state chartered bank, and WEX Bank, an FDIC-insured Utah state chartered bank.
The majority of cards on our platform are issued by Cross River Bank, a Federal Deposit Insurance Corporation (FDIC)-insured New Jersey state chartered bank, and WEX Bank, an FDIC-insured Utah state chartered bank.
We generated net losses of $223.7 million and $326.4 million during fiscal 2023 and 2022, respectively. Macroeconomic and Other Factors Ongoing interest rate increases and persistent inflation in the U.S. and other markets globally have increased the risk of an economic recession and volatility and dislocation in the capital and credit markets in the U.S. and globally.
We generated net losses of $28.9 million and $223.7 million during fiscal 2024 and 2023, respectively. Macroeconomic and Other Factors Elevated interest rates and recent inflation in the U.S. and other markets globally have increased economic volatility and led to tightening in credit markets in the U.S. and globally.
The qualitative reserves address possible limitations within the models or factors not included within the models, such as external conditions, changes in underwriting strategies, the nature and volume of the portfolio, and the volume and severity of past due accounts.
The qualitative reserves address possible limitations within the models or factors not included within the models, such as external conditions, changes in underwriting strategies, the nature and volume of the portfolio, and the volume and severity of past due accounts. 77 We review our assumptions periodically and the amount of allowance that we recorded may be impacted by actual performance of the acquired card receivables and changes in any of the assumptions used.
Hundreds of thousands of businesses rely on BILL to more efficiently control their payables, receivables, and spend and expense management. Our network connects millions of members so they can pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers.
Hundreds of thousands of businesses rely on BILL’s proprietary network of millions of members to pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers. Our purpose-built, AI-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients.
See "— Key Business Metrics—Businesses Using Our Solutions " below for the definition of BILL standalone customer . For BILL standalone customers acquired during fiscal 2022, the average payback period was approximately five quarters.
See "— Key Business Metrics—Businesses Using Our Solutions " below for the definition of BILL standalone customer .
This revenue can fluctuate depending on the amount of customer funds held, as well as our yield on customer funds invested, which is influenced by market interest rates and our investments. Our Receivables Purchases and Servicing Model We market Divvy charge cards to potential spending businesses and issue business-purpose charge cards through our card issuing partner banks (Issuing Banks).
This revenue can fluctuate depending on the amount of customer funds held, as well as our yield on customer funds invested, which is influenced by market interest rates and our investments.
(2) Includes the results of Divvy from the acquisition date on June 1, 2021. Liquidity and Capital Resources As of June 30, 2023 , our principal sources of liquidity were our cash and cash equivalents of $1.6 billion, our available-for-sale short-term investments of $1.0 billion, and our available undrawn Revolving Credit Facility (as defined below) of $90.0 million.
Liquidity and Capital Resources As of June 30, 2024 , our principal sources of liquidity were our cash and cash equivalents of $985.9 million, our available-for-sale short-term investments of $601.5 million, and our available undrawn Revolving 73 Credit Facility (as defined below) of $120.0 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results. 76 Inflation Risk We do not believe that inflation had a material effect on our cash flows and operating results during fiscal 2023.
Biggest changeIf the value of the U.S. dollar weakens relative to the foreign currencies, this may have an unfavorable effect on our cash flows and operating results. We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results. 80
In addition, our ability to manage credit risk or collect amounts owed to us may be adversely affected by legal or regulatory changes (such as restrictions on collections or changes in bankruptcy laws, and minimum payment regulations). We rely principally on the creditworthiness of spending businesses for repayment of card receivables and therefore have limited recourse for collection.
In addition, our ability to manage credit risk 79 or collect amounts owed to us may be adversely affected by legal or regulatory changes (such as restrictions on collections or changes in bankruptcy laws, and minimum payment regulations). We rely principally on the creditworthiness of spending businesses for repayment of card receivables and therefore have limited recourse for collection.
Unrealized gains or losses on our marketable debt securities are due primarily to interest rate fluctuations from the time the securities were purchased. We account for both fixed and variable rate securities at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss) since we classify our marketable debt securities as available for sale.
Unrealized gains or losses on our marketable debt securities are due primarily to interest rate fluctuations from the time the securities were purchased. We account for both fixed and variable rate securities at fair value with unrealized gains and losses recorded in accumulated other comprehensive loss since we classify our marketable debt securities as available-for-sale.
We limit credit risk by investing in investment-grade 75 securities as rated by Moody’s, Standard & Poor’s, or Fitch, by investing only in securities that mature in the near-term, and by limiting concentration in securities other than U.S. Treasuries. Investment in securities of issuers with short-term credit ratings must be rated A-2/P-2/F2 or higher.
We limit credit risk by investing in investment-grade securities as rated by Moody’s, Standard & Poor’s, or Fitch, by investing only in securities that mature in the near-term, and by limiting concentration in securities other than U.S. Treasuries. Investment in securities of issuers with short-term credit ratings must be rated A-2/P-2/F2 or higher.
Funds that we hold for customers are held in non-interest and interest-bearing bank deposits, money market funds, certificates of deposit, commercial paper, other corporate notes, and U.S. Treasury securities. We recognize interest earned from funds held for customers as revenue. We do not pay interest to customers.
Funds that we hold for customers are held in non-interest and interest-bearing bank deposits, money market funds, certificates of deposit, commercial paper, 78 other corporate notes, and U.S. treasury securities. We recognize interest earned from funds held for customers as revenue. We do not pay interest to customers.
Any material increases in delinquencies and losses beyond our current estimates could have a material adverse impact on us. Although we make estimates to provide for credit losses in our outstanding portfolio of card receivables, these estimates may differ from actual losses.
Any material increases in delinquencies and losses beyond our current estimates could have a material adverse impact on us. Although we make estimates to provide for expected credit losses in our outstanding portfolio of card receivables, these estimates may differ from actual losses.
As of June 30, 2023, we borrowed $135.0 million from our Revolving Credit Facility. Because the interest rate on our borrowings is indexed to SOFR, which is a floating rate mechanism, our interest cost may increase if market interest rates rise. A hypothetical 1% increase or decrease in interest rates would not have a material effect on our financial results.
As of June 30, 2024, we borrowed $180.0 million from our Revolving Credit Facility. Because the interest rate on our borrowings is indexed to SOFR, which is a floating rate mechanism, our interest cost may increase if market interest rates rise. A hypothetical 1.0%-5.0% increase or decrease in interest rates would not have a material effect on our financial results.
Securities in our corporate portfolio may not mature beyond two years from purchase, and securities held in our customer fund accounts may not mature beyond 13 months from purchase. No more than 5% of invested funds, either corporate or customer, may be held in the issues of a single corporation.
Securities in our corporate portfolio may not mature beyond two years from purchase, and securities held in our customer fund accounts may not mature beyond 37 months from purchase, based on the effective maturity date. No more than 5% of invested funds, either corporate or customer, may be held in the issues of a single corporation.
We classify all of our investments in marketable securities as available-for-sale. As part of our customer funds investment strategy, we use funds collected daily from our customers to satisfy the obligations of other unrelated customers, rather than liquidating investments purchased with previously collected funds.
As part of our customer funds investment strategy, we use funds collected daily from our customers to satisfy the obligations of other unrelated customers, rather than liquidating investments purchased with previously collected funds.
The annualized interest rate earned on our corporate investment portfolio and funds held for customers increased to 3.51% during fiscal 2023 compared to 0.29% during fiscal 2022 due primarily to the changes in the short-term interest rate environment during fiscal 2023.
The annualized interest rate earned on our corporate investment portfolio and funds held for customers increased to 5.07% during fiscal 2024 compared to 3.51% during fiscal 2023 due primarily to the changes in the short-term interest rate environment during fiscal 2023 that remained elevated throughout fiscal 2024.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our overall investment portfolio is comprised of corporate investments and funds held for customers. Our corporate investments are invested in cash and cash equivalents and investment-grade fixed income marketable securities. These assets are available for corporate operating purposes and mature within 24 months from the date of purchase.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our overall investment portfolio is comprised of corporate investments and funds held for customers. Our corporate investments are invested in cash and cash equivalents and investment-grade fixed income marketable securities.
Our customer funds assets are invested in money market funds that maintain a constant net asset value, other cash equivalents, and highly liquid, investment-grade fixed income marketable securities, with maturities of up to 13 months from the time of purchase. Our investment policy governs the types of investments we make.
The funds held for customers are invested in money market funds that maintain a constant net asset value, other cash equivalents, and highly liquid, investment-grade fixed income marketable securities, with maturities of up to 37 months from the time of purchase based on the effective maturity date.
Our customer funds assets are invested with safety of principal as the primary objective. As secondary objectives, we seek to provide liquidity and diversification and maximize interest income.
These assets are available for corporate operating purposes and mature within 24 months from the date of purchase based on the effective maturity date. The funds held for customers are invested with safety of principal as the primary objective. As secondary objectives, we seek to provide liquidity and diversification and maximize interest income.
Removed
If the value of the U.S. dollar weakens relative to the foreign currencies, this may have an unfavorable effect on our cash flows and operating results.
Added
Certain types of investments may have effective maturity dates different from contractual maturity dates. Our investment policy governs the types of investments we make. We classify all of our investments in marketable securities as available-for-sale.
Removed
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through increase in prices of our product offerings. The Inflation Reduction Act was enacted on August 16, 2022 and includes a number of provisions that may impact us in the future.
Removed
We have assessed these impacts for the current reporting period, and conclude that the new law does not have a material impact on our fiscal 2023 financial statements. 77

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