BILL Holdings, Inc. (BILL) Earnings Call Transcript & Summary

Ladies and gentlemen, may I have your attention, please? Joining us for our lunch keynote today is Rene Lacerte, CEO, Bill.com; and our moderator, Josh Beck, KeyBanc Capital Markets.

First off, I just wanted to really thank everyone for their time. It's great to be live after a 2-year hiatus. So it's great to see everyone in person. And we're incredibly happy that Rene from Bill.com can join us for this lunch conversation. I think 5 years ago, we probably had a smaller room at the venue. So it's kind of nice to be on the main stage and really getting the message out to a much broader group.

So I'm just going to kind of run through a set of questions, and we'll just take it from there. But I just want to start a little bit about your background. Obviously, entrepreneurship has kind of run through your veins and your family. So just give us a little perspective on your bio and kind of how you got to the genesis of Bill.com.

Yes. Well, thank you, Josh, for having me, and thank you all for coming to learn more about the company and everything that we're doing to help SMBs. So for me, I got to know SMBs because I grew up in and around small businesses. My parents and grandparents had a number of businesses that serve SMBs. I then worked at Pricewaterhouse where I got to work on SMBs. So I got to kind of see some of the innards, right? And then built solutions for SMBs when I was at Intuit; a lot of payroll solutions, payment solutions there. And then eventually, I became an SMB when I started a company called PayCycle, which was the first online payroll company out there. And so that was 1999. And that changed everything. That's when I really experienced what the SMB experience was. And it wasn't fun. The back office was a mess. There was a lot of challenges, a lot of errors. I would say there are times when payments were late. There were times when I overpaid. There were times when I couldn't find people to talk to. I was confused. Lots and lots of challenges that I realized were no different than what my dad and granddad had gone through, and no different than lots of peers that I had talked with that were also entrepreneurs in the Valley. And then I started talking to accountants, and they had the same problem with their customers. And so that was kind of the genesis of what the idea for Bill.com is like, here's this pain that I felt viscerally, that it was not fun, it was something that had to get done, and how can I automate that. And that's something I have a passion around, technology. I have a passion around automation and efficiency. And all those things came together when I saw this pain, this real life pain that I was experiencing. And so that was the genesis of Bill. That's how it came together. We've been very focused on serving the SMB market since day 1, whether that's through our partners or through our direct relationships. And that's been quite the ride, right? We're now $600 million in revenue that we've guided to for the year. We have $200 billion in money movement that we manage. We have 135,000 core Bill customers. We've got 250,000 across the globe that we serve through our acquisitions of Invoice2go and Divvy as well, 3.2 million members in our network. So all of that pain that I saw, that's the problem that we're solving for all those customers, and it's exciting to see.

Well, great, that's a fantastic place to start. I'd like to say that the back office is the new front office. So I think if you go back 2 decades in the early phases of this conference, we had Benioff up here on stage talking about the front office. And I think, honestly, the back office has probably received less airplay, if you look at a longer horizon of tech. So just give us a little bit of the current state of affairs, how modernized, how automated is the back office today? How has that progressed? And where could it go?

Yes. One of the things that I got super excited about when I started thinking about the problem that I was experiencing at PayCycle was the fact that the back office has not been automated, and that AP and AR were 2 sides of the same coin, right? We got fortunate, you mentioned Marc Benioff, that's where [indiscernible] came from, because I was able to buy it from Marc Benioff. But the reason I bought it was because I can say, here's a bill, and that means something very different to you than it means to me. If I say here's your bill, I'm getting money. If you receive a bill, you know you're paying. So it's 2 sides of the same coin. And that ability to have transactions, be understood, and actually do something different depending on the user experience or what's needed for the person who's on that side of the transaction, that's what the cloud enabled. And so for me, when you talk about kind of the state of the cloud, the first thing that happens, I think, with technology is you take what we've already done and somewhat automate it, and you apply the technology to that. So if you think about whether it's CRM or whether it's accounting systems or whatnot, those are mostly data record-keeping applications, at least they were when they got started. And so the opportunity is -- for us is what are the processes that can be automated when you have technology such as the cloud. The ability to have a central database with the central UI that is customizable to each and every experience that a customer needs to have, to have the data that you can use to manage $200-plus billion a year, to have the data to be able to think about what are the products and services. That was the core part of the platform that I thought of back in 2006 when I started and we've been rolling it out. But when you ask the state of the cloud and adoption, it really comes back to that we're really at the beginning of this massive adoption cycle. And it's the beginning of a massive adoption cycle for, I would say, really kind of the new types of services that can happen because of centralized data. And that's all new. And as a software developer, that's the stuff that I love. Like you get to make a much bigger difference when you have this type of data available, and you get to impact customers' lives, get to create value, you get to really make a difference. And so for me, that's kind of the beginning. 2% market share of employers that have U.S. That's what we have, 135,000, now to 6 million employees in the U.S. And that's just the beginning. When you think about us across the globe, there's 70 million businesses that we think we can touch now. That's just the beginning of where we're at and the opportunity to give them more products and services that simplify their lives, which is our mission, to make it simple to connect new business. That's what's exciting.

Well, yes, let's follow up on that point. It's, I think, an important part of the narrative of the build-out comp story, and you started certainly with this focus, like you said, on a bill and its ability to connect a buyer and supplier and speak a common language. And you've really expanded, I think, the footprint, right? And you've got into other areas of AR, expense management. So strategically, what's the goal? How much of the back office could you potentially own? How do you think about where the platform could go?

Yes. The goal is to be the de facto standard for SMBs when it comes to financial operations. And operations to me are all around processes. It's all around the steps you take. If you go back to that pain point that got me started at PayCycle, it was walking around the office, looking at filing cabinets, trying to find documents that were misplaced, executing payments, calling banks to follow up on a payment, finding out if a check had cleared. All of these things that businesses do, those are processes, and automating that is what I wanted to do first with AP. But you can take that same mindset and look at the processes that a business uses for AR; the processes that a business uses for spend management, which is why we acquired Divvy, the processes a business uses to think about working capital and cash flow, acceleration of the invoice collection; processes around HR and payroll. These are all things that businesses have processes around, and the cloud is a game changer, right? And we, I think, are really the first platform that thought about the processes as the thing that the software was enabling. And most times, I think people are out there saying, no, let's go focus on the software, which is just reporting on the data, and we're focused on the processes and using the software to get us to the data so we can make these decisions and make these offerings. So things that we can do, they continue to extend. Those are the points that we're starting with today. There's lots more things that we see over time that we continue to add.

Great. And really, just you mentioned it in that response about SMB financial operations. SMB is a -- it's kind of a broad term, and you can define it in many different ways. So just help us understand how you define the SMB opportunity and how you think about the market size. You gave us a little bit of context, but how you frame up the SMB market as well.

Yes. The -- it is interesting. I think, one fact, and I know this fact because when we crossed $100 million in revenue, I talked to a company and I said, we are in the company of 20,000 businesses. So if you think about the U.S., it's a massive economy. 20,000 businesses have more than $100 million in revenue. And that is -- actually, it doesn't seem like that many. And then you just have to drive down to El Camino or walk down Market Street, and you see all the businesses that SMBs are out there. And so for me, the pain point I wanted to solve was the horizontal solution. And businesses aren't that different all the way up to $100 million. And so our approach has been to really build a horizontal approach that allows us to go after every segment and every vertical that applies. And if you look at the data across our customer segments, we have customers of all sizes. We have customers with no employees. We have customers with 500 employees and $100 million in revenue. We have customers that are in every vertical that you would expect. And so for me, the SMB is it's really America, right? It is the beauty of our country is that we have so much new business formation every year that leads to businesses that create value in our communities, and that's what I want to help. That's the vision, that's the passion, is really make [ advantage ] to them. And so when we look at SMBs, it's really that segment from 0 to 100. We would define mid-market for us as the $10 million to $100 million in revenue, but we obviously want to serve all of that.

Related question. How do you approach the go-to market? Obviously, it's probably evolved from the early days. You have quite a diverse and really well-performing mix of channels. So maybe just give us a little bit of the history of the acquisition model, where you're at today and kind of where you see that headed?

Yes. I think having worked with SMBs in so many different ways, like I talked about in the intro, I realized that reaching them was not an easy thing. It's actually one of the things that keeps most businesses from going after the SMB market. And so with that, I really focus on -- I want to be able to go direct, which is traditional go-to-market technology using web, so to speak, with inside sales. I want to be able to go to accounts. And the reason that accounts are important is that they are the business that businesses trust most, in addition to financial solutions. And so an accounting channel allows us to say we have 1 firm that will reach multiple clients. And we have over 5,000 firms on the platform. Those firms reach, if not tens of clients, potentially hundreds of clients each for us. And then we go to financial institutions, which again is a one-to-many, many, many, right? Like there's lots of customers in those spaces. And so for us, the channel strategy was important. Building a platform that actually could serve each of those channels independently and collectively was actually something that we did with a lot of design and thought from day 1. I had started PayCycle. I understood that there were opportunities with channel partners. And I wanted to have more capabilities when it came to the tools that we offered accounts, when it came to the tools that we offered our bank partners to be able to go after their customers. And 1 example of our partnership approach is the partnership we have with CPA.com, right? So in the early days of the company in 2008, I signed a partnership with CPA.com. I knew lots of accountants on my own, but I signed that partnership because that division of the ACPA -- ACPA serves in every 300,000 firms -- accountants across the country, 40,000 firms. They serve all of that. That division is responsible for educating and moving the industry forward when it comes to new technologies. And so CPA.com became a platform for us to reach accounting firms. That's why we have 85 of the top 100 accounting firms. That's why we have the penetration we do with the top 1,000 firms. And it gives us an opportunity to think of new services. And so the opportunity, which we announced yesterday, which we're excited about, is we've extended our partnership to be exclusive on the spend management and expense management side. So CPA.com is now using this platform that we've built, the one-stop shop that we built, to go after all of the firms that we currently have together, but to go after and help them make that transition to a spend managed solution. So leaning into the Divvy acquisition and enabling spend management and expense management into the firms that we have today to really drive adoption of the simplicity that Divvy gets.

That's fantastic. And maybe on that point, I mean, what do you see as the existing solution? In a lot of these cases, obviously, we do have new business formation, so there's kind of an open platter, if you will, for those customers. There's companies that have been around for some time. But how are the current processes working? And how do you work to drive awareness that this is something that you can improve, that there is a better solution. How do you get that message out there?

Yes. That's a great question. And it's one of the things that we get excited about is that we have the awareness capabilities to the channels that we have. The 5,000 firms across the country, the 6 of the top 10 banks, the partnerships that we have with our accounting software partners. All these things create awareness. And ultimately, the awareness is needed because the biggest thing holding businesses back is inertia. And this is just -- there's 2 things, I mean, we can talk about momentum, which is kind of the opposite of inertia, right? That's the part I love about businesses most is the momentum. And creating momentum and the scale that actually begets scale. And that's where I think we're in a unique position to do that. The inertia is combated by that momentum. You have inertia people saying, "I've got paper processes. I've got filing cabinets. I write checks today. I only write 5 checks a month. Why do I need to worry about this?" That's the inertia. And then you get people on the platform with our scale starting to interact, and it's like, "Well, yes, I'm on it, and I don't have to worry about it. I can manage my business anywhere." COVID has been a huge tailwind for this breaking through the inertia. Initially, I would say it was a gust, right? You saw that in our results in the first quarter of COVID. But since then, and it will continue to be a tailwind because businesses are used to being remote. They're used to being able to manage a business in a hybrid environment, and they need to be able to do that without the hack solutions they have today. They need to be able to use technology to be efficient. And so I would say that the inertia of the manual error-prone processes today is what people are doing. And we're breaking that down with the momentum that we have.

That's great. I want to go back to really the effects of the pandemic and kind of what we're moving through this year. There's been a variety of different impacts across industries, certainly, areas like collaboration, front office, really like customer-facing functions, a lot of attention in the early days. We're much, I think, further along in terms of companies addressing this hybrid, this kind of new world that we're living in. So what have you seen? I mean, is it more top-of-funnel activity that you're seeing across your business as people have worked through these more hybrid conditions? What have been the biggest impacts across your model?

The -- a number of things come to mind. It is the early adopters, the visionaries, the people who are on the platform; accountants are a good example. Some of those firms are like, "You know what, I'm just all in." And so you see some of the success and the results we have because they realize this is such a strong benefit, not just because, yes, they can manage the business remotely. But we do more than just that, right? We give businesses time back, which matters a lot. 50% of the time savings that they would have from managing the back office if they're on Bill.com platform. That's a lot of time. We also give them comfort in understanding their business better. And so as an example, accounting firms are seeing, wow, I can be more thoughtful, more strategic with my clients if they're on the Bill platform. Some of that came from the impetus of COVID. And some of that is obviously just our platform, and that allows us to extend. So when we look at kind of the impact of where COVID is at and what it's doing, it is driving definitely awareness about the need to be digital. The analog world is in the past, except for my turntable at home. And that transition has really changed a lot of things for businesses and their mindset about what they expect. And I think the other thing that we're seeing, which is irrespective of COVID, is that more and more digital solutions are available, and it changes our expectation. The example I sometimes give is if you happen to drive a Model X Tesla, you put your foot on the brake and the car door shuts. That's a process that was automated. That's not driving. That's a process that was automated. And that's what we're doing for software everywhere in the back office. All those processes that somebody used to throw the filing down the door shut, we've automated that. It's locked. It's secured. It's sealed. And that's an awareness that people don't have. Like, well, if it's not easy to do that, why can't it be that easy to do this. My back office is a mess, it's full of pain, I'm going to fix it.

Good to hear. Switching gears a little bit to network effects. I think it's a really powerful force in technology. And I think if you look across all of the sectors, you have really good examples of peer-to-peer network effects when you think about the Internet. Some of the fintech companies do have 2-sided networks, and in many cases, it's really more one or the other. But you really have both, and it's quite unique when you think about what you're doing for buyers and suppliers. So help us understand what type of moat that offers you as well as just what type of synergies it helps you unlock between those 2 ecosystems.

Yes, that's a great question. So first, I'll just explain some for those that don't use the Bill product, how the network effect happens, right? So if you use us for the payables, when you bring in the invoice, we then invite the vendor to receive the payment electronically. If you use us for the invoicing, we then invite the customer to make a payment electronically. So that creates this network where we have 3.2 million entities that are paying and getting paid on the Bill.com platform. And what happens is, over time that number grows. And that means that when a customer signs up for Bill, the first time they sign up, there's more entities that we can auto connect. That means it's a simpler user experience the first time. So this is that comment I said earlier that scale begets scale, right? That opportunity to leverage the data we have, to create those auto connections, to be able to make these things happen so customers don't have to actually think about it or do anything, that they're just connected to their buyers and suppliers so they can actually transact. That's why I think one of the beauties of our business models, we're in the middle of the transaction. When you're in the middle of the transaction, you see everything coming and going. You have all sorts -- and we'll get to questions about data and what we can do with it. But that's the power of the network, is that we are in the middle, and we can help businesses transact faster, more efficiently, more securely. We can help them connect with their suppliers and their buyers. And that happens not just with what we do on a direct basis, but again, it's part of the network effects that we have because of our channel strategy. Having the ability to have the accounts, having the ability to have the financial institutions, all of those network effects happen in those channels as well. And so as we continue to get more and more customers, we'll have more and more in the network, which means a better experience for all of our customers across all of our channels. And that, to me, is a network effect and an opportunity for us to continue to sell new products and services in. We've already started selling some products and services in, whether it's the Instant Transfer or the Supplier Enablement on our Vendor Direct program, the virtual cards that we do, or the FX capabilities we have. These are all things that we're selling into one side of the network that didn't come to us. So it's just all opportunity, and it's something that we're super excited about.

Well, you teed up my next question, mentioning the data assets you have. It was definitely a topic that came up yesterday on our breakfast keynote, as one of the byproducts of this rising digitization that we've seen the last couple of years is there's a lot more data out there, and there's a lot more of an opportunity to leverage AI, ML, gain intelligence, gain insights and really make it actionable. So how are you harvesting your data assets, right, to improve the value of your solution and create a win for the customers?

Yes. The first thing is I've been in the business of moving money for, actually, 30 years, which really dates me. But a long time. And you don't move money well. It's a necessity, if you want to move money well, to actually leverage data. There's a lot of data that we use on our platform to manage the $200-plus billion in money movement that we're doing right now. And to be able to do that, we leverage the data around the buyer and supplier transactions across the entire network that I just talked about. So that's the first area that I would say that we're leveraging data right now that people may not realize, but it does support obviously the business model and our ability to grow and add more customers in any of our channels because of that. The next area I would say is obviously creating better customer experiences. It's a super important part of any business. And so we have the ability with our data to be able to capture all the invoice information, often the invoices without any data entry. And so the ability for a customer to take a picture with their phone and to have that go into a workflow so that, that bill can be processed, approved and eventually paid without anybody doing data entry, that's because of the data across the network and the platform that we've built. So that's another example. And then the third example I'll leave folks with is, then you can use the data to offer other products and services. And so the other products and services that we've done to date, international payments. We use the data on our platform to see which vendors that we had, even though we weren't making payments to them internationally, which vendors were in our database because they seek with their accounting software that had international addresses. We then were able to go say, there's a product opportunity there. Let's launch that product. Let's now market to those customers because we know that data is there. So that's one way of using data to add a product and a service that matters to them. We also are using it obviously, and we'll continue to use it with what we're doing with Divvy and the spend management, which is really an extension of credit. It might be short term, but it's an extension of saying, "Hey, let's use the spend management card that we have with the Bill Divvy platform to be able to manage all the expenses so that you can actually control those budgets." That leads to things like invoice acceleration, working capital term loans, all of that data is going to be necessary for us to do that well and to do that in a way that's differentiated.

How would you describe where you are on the journey of leveraging your data for the benefit of the customer? Obviously, you said you've been moving money for a long time, your whole career. You have hundreds of billions of dollars of volume. I mean do you still think we're still in the very early stages of what can be done with this asset? Or how would you characterize that?

I would say we are definitely in the very early stages of understanding how to leverage data and automate processes. And I thought that way actually for over 20 years, right? It was before the Internet, actually, I remember a dinner conversation with my dad and my grandfather and we were talking about software. And we're talking about the change in time that they had seen, from punch cards to PCs essentially. And I didn't really even know about the Internet then. This is in like '93. I'm like, "It's going to go so much faster, guys." And it really is. And so I don't think I can predict where that data is going to make a difference. I know that we will use data to automate processes that have never been automated before. And that's powerful. That gives people back time that matters. That gives people strategic advantage in their business. That gives people so much more than just, hey, that's software. It gives them something they never had before. And that's what gets me motivated every morning to get out of bed and do a better job tomorrow than I did today.

Fantastic. Maybe shifting gears a little bit to the business model. You obviously have a unique combination of subscription software and fintech payments, transaction revenue, whatever you may want to call it. And I think if you look back 5 years ago, there were quite a few questions on, is it additive to bring these 2 together? Should they be distinct? Yes, I think the conversation has evolved quite a bit. I think people are much more so focused on some of the, right, ARPU uplift you can get, some of the retention benefits. And I think what ultimately is probably a much higher lifetime value. So just help us understand about how you think and approach the business model and maybe where you see it headed over time?

Yes. Yes. So being in business is really all about creating value. That's creating value for employees, for customers and for shareholders. And when you think about creating value for customers, it really -- this goes back to my days from an accountant at Pricewaterhouse, there's this thing called the matching principle. You at least want to understand from a business perspective where the value is being created so that you can then maximize that part of the business. And so subscription revenue, we create value with the software that we have. It saves people time. It creates a different experience in how they think about their business. That's value creation. We should get paid for that. This is the way I thought about it back in 2006. We create value by executing on a transaction. I don't have to worry about that anymore. I don't have to worry about calling the bank to follow up on a transaction to cancel a payment. I can just do that with my software now. That's value. So we create value there. So the idea all along was to match and to really understand, so we can understand our unit economics and really be able to drive the right thing for the business. I think the opportunity, as we've scaled and grown is how do you come up with the right price and strategy across the entirety of the business because there's so much more we can do given the strength that we see in our subscription business and the strength we see in our transaction business. And so to me, it's that blending and managing the business from a strategic perspective, that we are in a unique position because we're doing both well right now.

Excellent. And I think you all have done a really good job with the disclosures, so [ good for you ] and John, and really laying out the model so that investors can, right, articulate their own understanding of the business. Internally, what metrics, what KPIs are the most important in your mind? Where do you think investors should pay very close attention when they think about evaluating the performance of your business?

Yes. The -- one of the things I love about our business is that we have high visibility. Back to the last question on subscription transaction, we have high visibility and performance. So one data point that we do track is repeat transactions. So 80% of the transactions that happen are going to go between the same buyer, supplier again in the future. That's because those relationships happen and so we know that. And that allows us to predict revenue across quarters and years and all that, and that's super, super helpful. But ultimately, when we look at our metrics, probably the most important thing that we can do is make sure that you start with the customer. And so from a customer perspective, growth matters. So we track the acquisition in each of the channels that we have. Satisfaction matters. The experience that a customer gets. What's the time to solve the question when they have an issue. All those things are tracked. From a revenue perspective, which is obviously the result of having customers, you get revenue. Again, we track growth. We track the adoption of new products and services. We track the retention across the net revenue retention across the business. And the examples of these types of things that we track for customer satisfaction engagement and usage would be time saved, north of 50%. What is the -- how many firms tell us that they save more than 5 hours a month -- accounting firms. That's 90%. What is the percentage of the TPV that we're getting from the customer that we understand. These are things that matter, but the revenue retention -- net revenue retention, which has been 124%; the customer retention on an annual basis is 85%; the engagement of TPV, making sure that, that's growing at $400,000 a quarter now. These are the types of metrics that we track. Obviously, the dashboard is going to be multiple pages, but just to give folks a flavor, those are the things that matter.

Fantastic. I wanted to go back to Divvy. You brought that up a number of times in this conversation. Help us understand really how you are approaching M&A more broadly, and really what made this particular deal check all the boxes and proceed.

Yes. So value creation, right? Where is the value creation that we can have for our customers, for our employees and for shareholders? So in the case of an acquisition, it really was value creation for customers and shareholders. And ultimately, long term, creating new experiences for employees and growth opportunities for employees across both companies is important. So I would say what checked all the boxes is that they created an amazingly simple product that did something that was only possible, again, because of the cloud, right? So I think the thing that's interesting is what are people doing because of the cloud, not because they need to get to the cloud. It's very different. The cloud enables different things in technology, and that's where innovation happens. And so they did that. They figured out how to issue virtual cards that you can control from your mobile phone independently across all of your employee base. That's pretty powerful. That allows you to enable spend management, and it allows you to enable lots of different opportunities for your employees to be empowered to actually grow the business. So that software is very elegant. The controls they had in place, everything they did was great. Then you could see the success that they were having in the market, tremendous success in the market, which means that there is value creation because customers are wanting that. You can see the success, obviously, from a revenue perspective, which means there's an opportunity for us to continue to create that same leverage into our customer base. So we have now 135,000 businesses on the core Bill platform. The opportunity to sell the Divvy solution into that was something that was super exciting. And we're just in the beginning days of figuring that out and working on that. And then I would say the employee base, right? It's like the employee of the culture of the Divvy team was super, super strong on urgency and having a need to get to a solution today versus tomorrow, having the ability to kind of drive adoption of new things, all of that was really good. And the value is matched in line with our team's value. So it's something that was -- it feels like a no-brainer at this point. And it was, when we got to the decision, that was our first acquisition. So we had to be very thoughtful about it.

Excellent. And how do you approach the integration process? Like you said, you've done very little, if at all, M&A in the past. So it's, in some ways, new muscle with respect to integrating another organization. So how have you approached that? Maybe what have been some of the early learnings there?

Yes. The most important thing that we can do to create value for customers is to create one experience. Having one platform that enables a customer to be able to manage their financial operations that go from AP to spend management, expense management and AR, that's the thing that's going to make a difference. And so the first thing that we've done is start to integrate with single sign-on and similar user experiences, and that will get more and more robust as time goes on. That enables us that ability to have more confidence in selling through the product as well as selling in the market and going to market with that solution of being a one-stop shop. And so I think the things that really excite me about the opportunity is that businesses are asking for this. They're saying, "I don't want 20 different things to log in to." Just -- I could ask for show of hands, how many people like logging into the 20 websites you need to do to manage your personal life. It is a pain in the butt, right? You got this vendor, you got that, blah, blah, blah. If you have one place to go and just have everything, that means you can focus on the things that are more important in your life, which is not the back office. So the things that we've learned is, one, lean in the opportunities, which we are definitely leaning into the opportunity, integrate as quickly as possible, do that well. And then really think long term on the strategy. What is it that we are selling? We are selling the one-stop shop solution to help you manage the financial operations. You don't get to be the de facto standard for financial operations unless you build it and sell it. And that's our goal, and that's where we're focused.

And how do you define the line between something that you can achieve through a partnership. I'm sure that was an option with maybe them or others? And then what is something that you need to have in the platform natively owned under the Bill.com brand?

Yes. One of the ways we define it is time to market. And if you think about the services that we've rolled out, which have been very strong organic growth for us, and you know the numbers quite well, right? But the international payments, the Vendor Direct, which is our virtual card program Instant Transfer, these are all products we were able to roll out on our own; and within a year, start getting revenue; and within 2 years, getting meaningful revenue, right? So when we looked at spend management, we looked at the pace of change that was happening there. As an example, we're like, we might be able to go build that, but by the time we get there, they will have done something different. And time to market matters. So I would say the analysis being built by partner is always going to be time to market. That's going to be one of the key components. It's going to be the quality of the team. It's going to be, okay, can that team also help us do other things with our platform? And it's going to be lots of things around how do we sell that through the channel. Again, that's probably going to be time to market. But just an alignment on what the vision and mission is. And I can't remember when it was and who said it first in our conversation, but in talking with Blake, like one-stop shop, like we both were talking about it a year ago before we did the deal, right? So.

Sounds like some very strong alignment there. Shifting gears a little bit to the path to profitability. This is a discussion that has certainly come up more frequently than it did, say, pre the rise in rates that we've seen. How do you think about the balance between that path and obviously executing on this underpenetrated market and driving growth? How do you balance that?

Super important, right? And I'll just step back a little bit, right? I had an engineering degree in college. My first job was accounting. The reason I did that is out of all the recruiting I did, the only person that told me anything that made sense was a guy named [ David Sweet ], who was a tax accountant at Pricewaterhouse. And he said, the language of business is accounting. I think someday you might start a business based on your family's history. And he's right. The language of business is accounting. So the reason I say that, that's in my roots. I went to work at Pricewaterhouse. Unit economics, that's the most important thing to get right. Building a business model that can work at scale and understanding how to do that, that's what you have to get right. And we did that from day 1. I was thinking about that, and it was in our roots to kind of think about the unit economics. And so what I would say right now about the path to profitability, what we've just shown last quarter, we tripled revenue year-over-year, and we were near breakeven on a non-GAAP basis. Pretty powerful, right? Adding all that revenue and yet we're growing and not actually spending too much below the bottom line, right? And so that capability to kind of drive that type of business model, when you have the growth in front of us, we're always going to invest in growth. But we are always going to watch and manage the unit economics to make sure that we know how to manage the business profitably in the future when we need to be. And that's something that I think we've done -- have got the right background for and the right foundation to be able to drive the profitability as we need to.

And following up maybe on the unit economic piece of that. You obviously are a much different scale. You're spending a lot more across sales and marketing than you were a few years ago. How has the payback trended? And what gives you the confidence to remain kind of at a healthy clip of investment from here?

Yes. So we've been able to increase -- increase might be the wrong word. We've been able to keep our payback targets where we want them because we've been able to increase the revenue and the investment and grow units as well. If you look across the business, which you know well, we've been growing the unit adoption. We've been growing the revenue adoption, and that allows us to kind of invest more and still maintain the payback that we're comfortable with, right? So that's been our focus. 5-quarter payback is kind of our target, and that's something that we feel really good about being able to deliver and drive and understand with all the different channels that we have, how to kind of make that a successful for the business as we scale.

And related to that question, as you have more entry points, if you will, to get into the SMB financial operations versus, say, 5 years ago, has it improved maybe the access to getting a new customer? And has it changed the rate maybe at which you're landing the customer? Are they starting with 1 product, adopting more? How has the entry point and the expand part of the equation changed as your platform has evolved?

I think the thing that's changed is our ability to understand the overall value of the customer over time. That does impact what customer acquisition opportunities we take in day 1. And so what we've seen is that we've been able to drive tremendous volume diversion on the international payments. Same on the Vendor Direct. We're just in the early days of Instant Transfer. And what that means is that there are more opportunities to drive other types of customer acquisition, whether it's through awareness or through partnerships or whatnot. And so again, what I get excited about is 2% of U.S. employers use Bill.com today. There's such a big market in front of us. It's such a greenfield. We're in a strong position. We're leading that opportunity for us to kind of continue to scale the business, like I said, because scale begets scale. That puts us in a unique position. And responsibility to go do that and to leverage the dollars, the capital market has given us to be able to do that effectively and efficiently.

How do you allocate your time? Obviously, there's -- like you mentioned, it's very low single-digit penetration. You have a growing product suite, but you have limited time in your day. You get -- work 24 hours a day, so you've got to prioritize a bit. How do you prioritize? And what do you find the most energy and focus of your efforts as we look in the coming years?

Yes. I think as the company scales, more and more of my time gets spent on longer-term challenges, if you will, right? Those challenges might be M&A. Those challenges might be thinking about people and organizational development over time. Those challenges might be just general strategy. All of that means I got to stay connected to our customers and to our employees. And that's -- and ultimately, because you asked where the energy comes from, I started the company really for 2 reasons. You could say it's 1 reason, was to make other people happy. The people, the constituents I wanted to make happy were employees and customers, and now, shareholders. That's why I started the company, was to really make a difference because I felt I had something to give back. And so when I can spend time with those constituents, that's when I get the energy. I hear what they need, whether that's obviously what customers need, what employees need from a great culture, what investors need from a public stock, those are all things that help me understand how I can make bigger difference than I've made today.

Wanted to ask about talent. Obviously, tech talent has always been tough to come by. It seems like in the last 2 years, with a little bit more of a hybrid environment, it's maybe even tougher to come by. So how do you manage that? What's the process that you are undertaking just to ensure that you have an appropriately deep bench and the right tech folks on the staff?

Yes. Ultimately, I believe that people joined the company for 2 reasons. They like to win and they like that fun. We all like to be on the team that's winning. We all like the root for a team that's winning. And we like to have fun doing that. And I realized that at PayCycle, and that was the first company I had started. And I realized that in order to make sure that employees could have fun, you had to really think about the values and the culture differently. So values can't, in my opinion, be aspirational. They have to be foundational. They have to be defined how you're going to work together, and they have to be a part of the process of interviewing so that people are aligned and they know ahead of time, this is a place that matters to me and vice versa. And so I spent as much time thinking about the values and the culture of Bill.com before I started Bill.com as I did on the product and the strategy to go to market. And so that gives us, I think, a unique opportunity 16 years later to kind of continue to lead with those values. They have not changed, right? We're passionate about what we do, how we do it. We're dedicated to each other and to our customers. We're authentic with no -- we show up how we are. We're humble with no ego. And we like to have fun together. And when you interview people around those values and say, this is the pallet that you get to go paint with, there is an alignment that actually creates a reason people come to you. So yes, compensation is a challenge in the Valley. It always has been and always will be. But when you have these types of assets and you can show them through the market and what we're doing in the market that we are winning right now, now you've got the combination of we are winning and we are having fun, people want to go be a part of that. And so that's the goal that I have, is to create that environment so that we don't have to compete just on compensation, that we can compete on the environment that we do, the work the employees get to have an opportunity to experience, and ultimately do the best work of their lives and accelerate their careers whatever they want to do next.

Fantastic. We are coming up on time. So maybe just to close things out, I'm not going to put you on the spot with a bold prediction. But just curious on either a technology or kind of Bill.com-specific factor that you think could happen in the next few years, but just people underappreciate. Obviously, you have lots of investor conversations, and you can really see what's happening in your market very deeply. Any big disconnects or anything that really stands out to you?

For our business, it's the breadth of the platform with the intention that we built behind it to support multiple channels that I think investors always have a hard time -- not a hard time, it just takes time for them to understand. Like the moat there is strong and it's something that we're proud of, and we're making them bigger every day with new products and services and more agreements, channel agreements like we just announced with CPA.com, and Bank of America, right? So these are things that I think are super important. It leads to this notion of scale begets scale and the opportunity with our network. I think that is something that is always are. Like tipping points or something you predict or talk about in the past, not in the future. You can predict, but you only know if you had that when you look back, right? And so I think this moment in time of the acceleration, the tailwind that COVID has provided, the exacerbation of manual processes that COVID has shone a light on, that is going to be something that we look back and say, that's when people started really thinking about how do I have a hybrid environment? How do I manage my business remotely? And so I think the impact is going to be -- it's going to be real, and it's going to be something that changes the way business gets done, and that's why I'm here.

Well, that's a great way to close. Rene, I really wanted to -- appreciate you for the time in joining us on the keynote. It's been a very fun discussion. And everyone in the audience, we also really appreciate you joining, and anyone on the webcast. I hope everybody has a great close to the conference. And thank you, everybody, for joining.

Thank you. Thanks, Josh.