So far, so good.
That’s the theme Thursday (Dec. 12) from initial public offering (IPO) land for Bill.com, the business payments platform that just went public, pricing its shares at $22, seeking to raise more than $200 million. Shares of the B2B payments firm spiked 61 percent on its first day of trading.
As of early Thursday afternoon, those shares were up to $35 on the first day of trading. The pricing “gives [Bill.com] a market capitalization of $1.56 billion, including the underwriters’ option,” according to Reuters. “The fast-growing company saw revenue surge 67 percent to $108.4 million in the year ended June 30 from a year earlier, while limiting net loss, which edged up only 1.7 percent to $7.3 million.”
Bill.com, which launched 13 years ago, focuses on small and medium-sized businesses (SMBs), according to Bill.com CEO Rene Lacerte, speaking on CNBC on Thursday. Such companies are generally still “stuck with paper, the manual process of stick notes — and that takes them time (away) from doing what they really want to be doing,” Lacerte said. He used his own experience as a co-founder of PayCycle and as part of the small business group at Intuit to boost that point. “I’ve lived that mess,” he said.
Moving From Cash
Why are smaller businesses so slow to adopt digital back-office and payments process?
“Cash is king,” he told CNBC. Businesses tend to stretch out invoicing cycles and employ other cash-and-check enabled strategies, too. “We actually take that digital world and bring that to the paper process,” Lacerte said.
The company announced in September that its transaction processing volume increased 216 percent, with total payment volume growing 258 percent. “The company has processed transactions worth $70 billion in fiscal 2019 and has over 81,000 customers as of December, according to regulatory filings,” Reuters reported.
Business Insider first reported in June that Bill.com had planned to go public following an $88 million funding round that valued the company at $1 billion. JPMorgan and Franklin Templeton participated in that investment, which followed a $100 million round in 2017. Two unnamed sources told Business Insider at the time that Bill.com had been meeting with bankers ahead of its IPO filing, though they noted the company had not yet decided on a timeline to go public.
Last month, Bill.com announced a slew of updates to its corporate payments platform designed to ease friction for both payers and payees in business-to-business (B2B) transactions. Those updates included the integration of a purchase order-to-payment workflow, elevated customer support services, expanded cross-border payment capabilities and the introduction of a VIP program for businesses using Bill.com’s international payment services.
In August, the company announced that former PayPal executive Josh Goines would lead the firm’s strategy in relationships with technology firms. As senior vice president of strategic partnerships, Goines is driving Bill.com’s collaboration with Intuit and large financial institutions, as well as seeking out new partnership opportunities for the firm.
Bill.com hopes to gain traction among middle-market companies, and evidence of that recently came from enhancements to its offerings for middle-market companies, aimed at reducing friction in both accounts receivable (AR) and accounts payable (AP).
The company’s press release noted a range of enhancements — including purchase order-to-payment workflow, improved customer support, expanded global payment capabilities and the launch of a VIP program for customers using its international payment services.
Its Purchase Orders (POs) function connects business clients to a digital platform, allowing them to connect POs generated from Oracle NetSuite or Sage Intacct, integrate them directly into the Bill.com platform, then compare and reconcile POs and invoices in a single portal. The solution also automatically routes POs for approval and payment to prevent back-and-forth communication between PO creators and accounts payable teams, the company explained.
Bill.com’s expanded global payment capabilities broaden its cross-border transaction reach into new markets, now supporting 106 currencies in more than 130 countries. The integration of its VIP program is targeted toward middle-market companies with a high volume of global transactions, and includes access to personalized services, exchange-rate analysis and special FX rates. The company has also enhanced its Intelligent Virtual Assistant solution, using artificial intelligence to automatically set up payments to migrate data directly from an invoice into the required payment field for their clients.
As PYMNTS research has confirmed, B2B payments are a big source of innovation, a trend that seems likely to continue into the 2020s, via not only Bill.com, of course, but from other players. You can bet on much more movement toward digital in this vital part of the global economy.