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2026-04-03 · earnings-review · BILL delivered its strongest quarter in two years -- a clear beat-and-raise that broke a 7-quarter YoY deceleration streak with revenue reaccelerating to 14 · Conviction 3.5/5
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# BILL -- Earnings Review Q2 FY26 (Atlas)
> Date: 2026-04-03
> Quarter: Q2 FY26 (Oct-Dec 2025), reported Feb 5, 2026
> Market cap: ~$3.85B | EV: ~$3.44B | EV/TTM Rev: 2.2x | Revenue growth: 14.4% YoY (reaccelerating from 10.4% trough)
## Verdict
BILL delivered its strongest quarter in two years -- a clear beat-and-raise that broke a 7-quarter YoY deceleration streak with revenue reaccelerating to 14.4% (core 17%), non-GAAP operating margin hitting a cycle high of 17.9%, and FCF reaching an all-time high of $91.1M. The $15.2M beat vs. guidance midpoint was the largest in the company's tracked history. This is a business executing operationally while navigating triple activist pressure and active PE buyout discussions. The anti-thesis remains the same: sub-15% total growth, compressing gross margins, and near-zero customer adds. But the data tilted bullish this quarter.
**Conviction: 3.5/5** -- Unchanged from prior analysis. The quarter was excellent, but the growth rate still disqualifies BILL from high-conviction growth positions. This remains a value-recovery play with M&A optionality.
## Qualification Gate
| Criterion | Threshold | Actual | Verdict |
|-----------|-----------|--------|---------|
| Revenue YoY growth | >30% | 14.4% total, 17% core | **FAIL** |
| Gross margin | >60% | 79.8% GAAP, 83.9% Non-GAAP | PASS |
| Revenue per quarter | >$50M | $414.7M | PASS |
| Data availability | 4+ quarters | 19 quarters | PASS |
| Share dilution | <10% annual | Shares declining -6.3% (buybacks) | PASS |
| GAAP profitability trajectory | Improving or positive | Improving: -5.2% to -4.4% op margin QoQ | PASS |
**Gate verdict: CONDITIONAL FAIL.** Revenue growth well below 30%. Full analysis warranted due to valuation, margin profile, special circumstances, and reaccelerating trajectory.
## Six-Factor Score
| Factor | Rating | Detail |
|--------|--------|--------|
| Growth | Weak | 14.4% total YoY, 17% core YoY. Below 30% threshold. However, reacceleration from 10.4%
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Preview
# BILL — Earnings Review Q2 FY26
> Date: 2026-04-06
> Quarter: Q2 FY26 (Oct-Dec 2025), reported Feb 5, 2026
> Stock price: $39.95 | Market cap: ~$4.15B | EV: ~$3.74B
---
## Verdict
**Beat-and-raise from a company I sold in August 2023. The numbers force me to pay attention again.**
I sold BILL entirely after Q4 FY23 when René Lacerte admitted "the market is maturing" and competitors were entering the space. Revenue growth was decelerating, subscription revenue was flat, and the whole thing felt like a steamboat — slow, steady, uninspiring. Two and a half years later, revenue has grown from $296M/q to $415M/q, the business is generating $91M of FCF per quarter at 22% margins, and Q2 FY26 delivered a +3.8% revenue beat — the biggest in BILL's tracked history — with a meaningful raise. Core revenue reaccelerated to +17% YoY. Transaction fees hit +20%.
This is not hypergrowth. It will never be hypergrowth again. But at 2.3x run-rate revenue for a business with 80% gross margins, 18% non-GAAP operating margins, 22% FCF margins, and accelerating core growth — the setup is interesting. Add confirmed PE buyout talks (H&F, Bloomberg) and you have asymmetric optionality.
**Pattern: Beat-and-raise with guidance de-risking. Bullish setup.**
---
## The Numbers
### Revenue & Growth — Same-Quarter Comparison Grid
| Q2 | FY23 | FY24 | FY25 | **FY26** | Trend |
|---|---|---|---|---|---|
| Revenue ($M) | $260.0 | $318.5 | $362.6 | **$414.7** | Steady sequential step-ups |
| QoQ % | +13.1% | +4.4% | +1.2% | **+4.8%** | Recovery from FY25 trough |
| YoY % | +66.1% | +22.5% | +13.8% | **+14.4%** | First YoY acceleration in 8 quarters |
That's the signal. Q2 FY26 YoY of 14.4% vs Q2 FY25's 13.8% → **first YoY acceleration since Q1 FY25.** The 7-quarter deceleration streak from 32.7% (Q1 FY24) to 10.4% (Q1 FY26) is broken.
### Full Trajectory Grid (14 Quarters)
| | Q1_FY23 | Q2_FY23 | Q3_FY23 | Q4_FY23 | Q1_FY24 | Q2_FY24 | Q3_FY24 | Q4_FY24 | Q1_FY25 | Q2_FY25 | Q3_FY25 | Q4
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Rolling earnings (raw)
# BILL -- Rolling Earnings Summary
> Last updated: 2026-04-03
> Coverage window: Q1 FY25 (Sep-24) through Q2 FY26 (Dec-25)
> FY ends: June
## Financial Grid (4-Quarter Window)
| | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 |
| | Mar-25 | Jun-25 | Sep-25 | Dec-25 |
|---|---|---|---|---|
| Revenue ($M) | $358.2 | $383.3 | $395.7 | $414.7 |
| YoY % | 10.9% | 11.5% | 10.4% | **14.4%** |
| QoQ % | -1.2% | 7.0% | 3.2% | **4.8%** |
| Core Revenue ($M) | $320.3 | $345.9 | $358.0 | $375.1 |
| Core Rev YoY | +14% | +15% | +14% | **+17%** |
| GM % [GAAP] | 81.2% | 80.8% | 80.5% | **79.8%** |
| GM % [Non-GAAP] | 84.9% | 84.2% | 83.9% | **83.9%** |
| Op Margin [GAAP] | -8.1% | -5.8% | -5.2% | **-4.4%** |
| Op Margin [Non-GAAP] | 14.9% | 14.7% | 17.2% | **17.9%** |
| FCF ($M) | $90.9 | $68.5 | $82.3 | **$91.1** |
| FCF Margin | 25.4% | 17.9% | 20.8% | **22.0%** |
| EPS [Non-GAAP] | $0.50 | $0.53 | $0.61 | **$0.64** |
| Businesses Served (K) | 488.6 | 493.8 | 498.1 | **498.5** |
| TPV ($B) | $79.0 | $86.0 | $89.0 | **$95.0** |
**Trajectory:** Revenue growth bottomed at 10.4% in Q1 FY26 after 7 quarters of deceleration (from 32.7% in Q1 FY24). Q2 FY26 reaccelerated to 14.4% total / 17% core, beating guidance by $15.2M vs midpoint. Sequential momentum positive: +4.8% QoQ, best since Q4 FY25.
## Promise Tracker
| Promise | Made | Due | Status | Notes |
|---------|------|-----|--------|-------|
| FY26 revenue $1,631-$1,651M | Q2 FY26 | Jun-26 | Active | Raised from initial FY26 guide. H1 FY26 actual: $810.4M = 49.4% of midpoint. On track. |
| Q3 FY26 revenue $397.5-$407.5M | Q2 FY26 | Mar-26 | Active | Pending next earnings |
| Non-GAAP op income FY26 $274-$286.5M | Q2 FY26 | Jun-26 | Active | H1 FY26 actual: $142.3M = 50.8% of midpoint. On track. |
| Investor day H1 2026 | Starboard agreement | H1 2026 | Active | Not yet held as of Apr 2026 |
| $300M buyback | Q4 FY25 | Ongoing | In progress | $133M in Q2 FY26, ~$215M+ total in FY25 |
## Language Shift Monitor
| Topic | Q4 FY25 (Aug-25) | Q2 FY26 (Feb-26) | Shift |
|-------|-------------------|-------------------|-------|
| Growth narrative | "Pivotal year" / "scale advantage" | "Strong Q2" / "significant beat" / "rapid innovation" | More confident. Beat-and-raise language replacing aspirational framing. |
| AI emphasis | "AI momentum in FY26" | "Leveraging AI to eliminate unnecessary workflows" / "touchless B2B transactions" | Concretizing. AI moving from vision to product-specific claims. |
| Activist response | Defensive — "defends performance" | Cooperative — "open to M&A deals" | Softening. Shifted from defense to engagement. |
| Profitability | "Driving growth and expanding profitability" | "Accelerated core revenue while strengthening margin profile" | Consistent. Both revenue and margin emphasis maintained. |
## Analyst Concern Tracker
| Concern | First Raised | Status | Latest Data Point |
|---------|-------------|--------|-------------------|
| Revenue deceleration | Q3 FY24 | **Partially resolved** | Q2 FY26 reacceleration to 14.4% (core 17%), but still far from 20%+ |
| Gross margin compression | Q1 FY25 | **Active** | 7 consecutive quarters of decline (83.0% -> 79.8%). Non-GAAP stabilized at 83.9% for 2 quarters. |
| Customer acquisition stalling | Q4 FY25 | **Active** | 498.5K businesses (+5% YoY). Q2 FY26 net adds only +400 (near-zero). Growth entirely ARPU-driven. Embed 2.0 is the strategic response. |
| Float revenue sensitivity | FY24 | **Active** | $39.5M in Q2 FY26, partially recovered from $37.4M trough. Rate-dependent. |
| Activist distraction | 2025 | **Active** | Three concurrent activists. Board refreshed. Investor day committed. H&F buyout talks confirmed (Bloomberg, Feb 6). |
## Quarter Verdicts
| Quarter | Verdict |
|---------|---------|
| Q3 FY25 (Mar-25) | Weak. Revenue declined sequentially (-1.2% QoQ). YoY growth 10.9%. Trough quarter for the business. |
| Q4 FY25 (Jun-25) | Stabilizing. Revenue $383.3M (+12% YoY). Non-GAAP op margin dipped to 14.7%. New CFO appointed. |
| Q1 FY26 (Sep-25) | Mixed. Revenue growth hit YoY trough at 10.4% but non-GAAP op margin recovered to 17.2%. Beat guidance. |
| Q2 FY26 (Dec-25) | **Strong.** Beat-and-raise. Revenue reaccelerated to 14.4% total / 17% core. All-time highs in revenue, FCF, non-GAAP op income. Guidance raised. |
## Source Log
| Date | Persona | What was changed |
|------|---------|-----------------|
| 2026-04-02 | atlas | Created _ROLLING.md. Populated 4-quarter financial grid, promise tracker, language shift monitor, analyst concern tracker, and quarter verdicts from scout brief data and press releases (Q4 FY24, Q4 FY25, Q2 FY26). |
| 2026-04-03 | atlas | Earnings review Q2 FY26. Filled missing KPI data in grid (Q3 FY25, Q1 FY26 core revenue, businesses served, TPV, margins, EPS). Updated analyst concerns with Q2 data. Noted H&F buyout talks confirmed. Beat amount corrected to $15.2M vs midpoint. |
| 2026-04-06 | wsm | Earnings review Q2 FY26. Confirmed reacceleration thesis. Added valuation context ($39.95, mkt cap $4.15B, EV/rev 2.3x). Noted transaction revenue +20% YoY as key bullish signal. Customer add stall (+400) is #1 concern. Watchlist — evaluating after Q3 (Apr 30). Framework learning: 2023 exit was premature; deceleration from hypergrowth ≠ thesis break. |