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No. of Recommendations: 6
Mike, first you write:

2. Rapid Revenue Growth: yep, 46% (previous quarter compared to the same quarter a year ago).
I typically do a quick check to see if revenue growth is accelerating. In the case of BILL, it’s not. at least not in the latest quarterly: YoY growth of the previous quarter compared to the same quarter a year ago was 50%.

Second you classify revenue as core and interest

When looking at revenue, I think you need to back out the interest float revenue to get to the real growth numbers and prospects. The float revenue is basically just a nice additional source of revenue that they get from the float of payments.

And third you show the revenue with core increasing from 61% to 63%:

Q2 Q3 2Q-3Q 2Q(YOY) 3Q(YOY)
Core $33.0m $36.1m 9.5% 61% 63%
Interest $ 6.1m $ 5.1m -16.0% 10% -16%
Total $39.1m $41.2m 5.4% 50% 46%

The point I'm trying to make is that the order of the presentation plants a negative image in the reader's mind, slowing revenue growth rate is a growth stock killer! But the reality of the core business is that core revenue growth rate is increasing but that is buried in the middle of the post. From a growth investor's point of view, interest rate volatility is noise pure and simple. In fact, it might be proper accounting to move interest float income from top line "Revenue" to near the bottom "Other Income and Expenditures." It depends entirely on how you view the business, it would not be moved to the bottom at a financial institution. This is the kind of thing that separates GAAP from real accounting.


But this brings up a question in my mind, if Bill manages clients' money, how much risk does that add to the investment thesis? Any idea how to address that question?


Denny Schlesinger
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