BILL's Q3 Results: Can Revenue Growth Overcome Earnings Slump?
12min read BILL Holdings (BILL) is set to report its fiscal third-quarter 2025 results on May 8, a critical moment for investors seeking clarity on the company’s ability to balance strong revenue growth with deteriorating profitability. The stakes are high: while the SMB financial operations market continues to expand, margin pressures and intensifying competition threaten to keep the stock in the doldrums. Here’s what to watch for.
Revenue Growth Amid Earnings Decline
BILL’s top-line momentum remains intact. The company expects Q3 revenue between $352.5 million and $357.5 million, a 9-11% year-over-year increase, aligning with Wall Street’s $355.3 million consensus estimate. This growth is fueled by a growing SMB customer base—481,300 businesses as of Q2 2025, up from 365,000 a year earlier—and rising transaction volume, which hit $84 billion (13% YoY) across 30 million transactions (17% YoY).
But profitability is another story. Analysts project non-GAAP earnings of 35–38 cents per share, a 40% drop from the prior year’s 63 cents, with full-year 2025 estimates now at $1.83 per share—a 36.7% decline from 2024’s $2.91. The widening gap between revenue and earnings reflects rising operational costs, including investments in partnerships and product development, as well as competitive pricing pressures.
Market Opportunity and Competitive Risks
BILL operates in a fast-growing SMB financial services sector. A 2025 survey of 354 SMBs found that 60% prioritize cash flow management, a core strength of BILL’s platform. New features like embedded 1099 functionality and partnerships with banks like Regions Financial have expanded its offerings, while its network of 30 million transactions monthly underscores its dominance in AP/AR automation.
Yet competition is heating up. Rival Intuit (INTU) has launched Tap to Pay on iPhone, a direct competitor to BILL’s payment processing tools. Intuit’s shares have outperformed BILL’s in 2025, rising 4.8% versus BILL’s 50% decline, signaling investor skepticism about its ability to maintain margins. Meanwhile, newer players like Ramp and Brex are eroding market share in SMB credit and spend management.
Key Challenges Ahead
- Margin Sustainability: Analysts project BILL’s earnings to shrink further, with a -8.6% CAGR through 2027, unless it curtails costs or raises prices.
- Cybersecurity Gaps: 29% of SMBs lack confidence in fraud protection, creating an opportunity for BILL—but only if it invests in advanced security features.
- Adoption Hurdles: New tools like 1099 filing remain underused, with just 5% of customers leveraging them. Scaling adoption could unlock untapped revenue streams.
Conclusion: A Hold with Long-Term Potential
BILL’s Q3 results will hinge on whether revenue growth can offset margin pressures. The company’s 481,300 SMB customers and strategic partnerships (e.g., with Adyen and Xero) position it as a market leader in financial automation. However, the stock’s 50% YTD decline reflects investor frustration with the 36.7% drop in annual earnings estimates and competition from entrenched rivals like Intuit.
While the Zacks #3 “Hold” rating is justified in the near term, the long-term outlook remains positive. The SMB financial tech market is projected to grow at a double-digit CAGR, driven by digital transformation needs. If BILL can stabilize margins—perhaps by trimming costs or introducing premium pricing for security-conscious SMBs—it could regain momentum. For now, though, investors should tread cautiously: the path to profitability remains rocky, and the competition is relentless.
Final Note: Monitor Q3’s gross margin percentage and customer retention metrics closely—they’ll reveal whether the company is making progress toward sustainable growth.
