BILL Holdings Inc

Previous wording

We are a leading financial operations platform for small and midsize businesses (SMBs). As a champion of SMBs, we are automating the future of finance so businesses can thrive. Our integrated platform helps businesses to more efficiently control their payables, receivables, and spend and expense management. Hundreds of thousands of businesses rely on BILL’s proprietary member network of millions to pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers.

Current wording

We are a leading financial operations platform for small and midsize businesses (SMBs). As a champion of SMBs, we are automating the future of finance so businesses can thrive. Our integrated platform helps businesses to more efficiently control their payables, receivables, and spend and expense management. Hundreds of thousands of businesses rely on BILL’s proprietary network of millions of members to pay or get paid faster. Headquartered in San Jose, California, we are a trusted partner of leading U.S. financial institutions, accounting firms, and accounting software providers.

Previous wording

Our purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Businesses on our platform generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting system, foster collaboration, and manage their cash. We have built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily.

Current wording

Our purpose-built, artificial intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Businesses on our platform generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting system, foster collaboration, and manage their cash flow. We have built sophisticated integrations with popular accounting software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily. Our integrated platform also includes BILL Spend and Expense, our spend and expense management product, which provides a solution for businesses to have smart corporate cards, build and monitor budgets, manage payments, and eliminate the need for manual expense reports.

Previous wording

We have grown rapidly and scaled our business operations in recent periods. Our revenue was $323.0 million and $272.6 million during the three months ended March 31, 2024 and 2023, respectively, an increase of $50.5 million, and $946.5 million and $762.5 million during the nine months ended March 31, 2024 and 2023, respectively, an increase of $184.0 million. We generated net income of $31.8 million and net loss of $31.1 million during the three months ended March 31, 2024 and 2023, respectively, and net loss of $36.5 million and $207.9 million during the nine months ended March 31, 2024 and 2023, respectively.

Current wording

We have grown rapidly and scaled our business operations in recent periods. Our revenue was $358.5 million and $305.0 million during the three months ended September 30, 2024 and 2023, respectively, an increase of $53.5 million. We generated net income of $8.9 million and a net loss of $27.9 million during the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Elevated interest rates and recent inflation in the U.S. and other markets globally have increased economic volatility and led to tightening in credit markets in the U.S. and globally. The SMBs we serve are particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may cease operations in the event of a recession or inability to access financing. The macroeconomic environment has caused our BILL standalone customers and spending businesses using BILL Spend and Expense (formerly Divvy) to moderate their expenditures and, in certain cases, shift to lower-cost methods of payment, resulting in lower payment volume growth and lower transaction fee growth than historical trends. Moreover, the rate of growth in the number of businesses using our solutions has and may continue to be impacted by the current macroeconomic environment. In addition, increased interest rates have led to an increase in interest on funds held for customers. Certain of these business impacts have accelerated in recent periods and we anticipate that they will persist in the near-term. Moreover, there can be no assurance that, in the event of a recession, demand for our products would not be adversely affected. We intend to continue to monitor macroeconomic conditions closely and to take appropriate financial or operational actions in response to such conditions.

Current wording

Elevated interest rates and inflation in the U.S. and other markets globally increased economic volatility and led to tightening in credit markets in the U.S. and globally in recent periods. The SMBs we serve are particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may cease operations in the event of a recession or inability to access financing. The macroeconomic environment has caused our BILL standalone customers and spending businesses using BILL Spend and Expense to moderate their expenditures and, in certain cases, shift to lower-cost methods of payment, resulting in lower payment volume growth and lower transaction fee growth than historical trends. Although the U.S. Federal Reserve Bank's recent action to reduce interest rates, and expectations regarding future reductions, may mitigate these conditions, there can be no assurance of future rate cuts or any corresponding increase in economic activity. Moreover, there can be no assurance that, in the event of a recession, demand for our products would not be adversely affected. We intend to continue to monitor macroeconomic conditions closely and to take appropriate financial or operational actions in response to such conditions.

Previous wording

Any of these conditions or actions may have a negative impact on our future results of operations, liquidity, and financial condition. We are unable to predict the full impact that macroeconomic factors, banking sector dynamics, or ongoing global geopolitical conflicts will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including changes in central bank policies and interest rates, rates of inflation, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, the impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Current wording

Any of these conditions or actions may have a negative impact on our future results of operations, liquidity, and financial condition. We are unable to predict the full impact that macroeconomic factors, banking sector dynamics, or ongoing global geopolitical conflicts will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including changes in central bank policies and interest rates, rates of inflation, the impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Previous wording

We market our BILL Spend and Expense software and BILL Divvy Corporate Cards (which, collectively, we previously referred to as our Divvy solutions) to potential spending businesses, and issue business-purpose charge cards through our card issuing partner banks (Issuing Banks). When a business applies for a BILL Divvy Corporate Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Corporate Card pursuant to our credit policies. Once approved for a BILL Divvy Corporate Card the spending business is provided a credit limit and can use the BILL Spend and Expense software to request virtual cards or physical cards, establish budgets, and manage spend.

Current wording

We market our BILL Spend and Expense software and BILL Divvy Corporate Card, a charge card for business expenses, to potential spending businesses and issue business-purpose charge cards through our card issuing partner banks (Issuing Banks). When a business applies for a BILL Divvy Corporate Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Corporate Card pursuant to our credit policies. Once approved for a BILL Divvy Corporate Card the spending business is provided a credit limit and can use the BILL Spend and Expense software to request virtual cards or physical cards, establish budgets, and manage spend.

Previous wording

When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank's balance sheet from the BILL Divvy Corporate Card account for the spending business. The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits. When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable.

Current wording

When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank's balance sheets from the BILL Divvy Corporate Card account for the spending business. The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits. When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable.

Previous wording

In order to purchase the participation rights in the receivables, we maintain a variety of funding arrangements, including warehouse facilities and, from time-to-time, other purchase arrangements with a diverse set of funding sources. We typically fund some portion of these participation interest purchases by borrowing under our credit facilities, although we may also fund purchases using corporate cash.

Current wording

In order to purchase the participation rights in the receivables, we maintain certain funding arrangements, including warehouse facilities. We typically fund some portion of these participation interest purchases by borrowing under our credit facilities, although we may also fund purchases using corporate cash.

Previous wording

We regularly review several metrics, including the key business metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We periodically review and revise these metrics to reflect changes in our business. We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL standalone, BILL Spend and Expense, and Invoice2go solutions combined. The relevant metrics for each of BILL standalone, BILL Spend and Expense, and Invoice2go, respectively, are set forth in the footnotes to the table. The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors.

Current wording

We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL AP/AR, BILL Spend and Expense, and Embedded Solutions and Other combined (as further defined below). The relevant metrics for each of BILL AP/AR, BILL Spend and Expense, and Embedded Solution and Other are set forth in the footnotes to the table. The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors.

Previous wording

(1)As of March 31, 2024, the total number of BILL standalone customers was approximately 210,700; the total number of spending businesses that used our BILL Spend and Expense solution was approximately 33,500; and the total number of Invoice2go subscribers was approximately 220,700.

Current wording

(1)As of September 30, 2024, the total number of BILL AP/AR customers was approximately 156,100; the total number of spending businesses that used our BILL Spend and Expense solution was approximately 36,400; and the total number of Embedded Solutions and Other customers was approximately 283,700.

Previous wording

(2)During the three months ended March 31, 2024, the total payment volume (TPV) transacted by BILL standalone customers was approximately $66.8 billion; the total card payment volume transacted by spending businesses that used BILL Divvy Corporate Cards was approximately $4.4 billion; and the TPV transacted by Invoice2go subscribers was approximately $239.1 million. During the nine months ended March 31, 2024, TPV transacted by BILL standalone customers was approximately $203.1 billion; the total card payment volume transacted by spending businesses that used BILL Divvy

Current wording

(2)During the three months ended September 30, 2024, the total payment volume (TPV) transacted by BILL AP/AR customers was approximately $67.7 billion; the total card payment volume transacted by spending businesses that used BILL Divvy Corporate Cards was approximately $5.1 billion; and the TPV transacted by Embedded Solutions and Other customers was approximately $7.1 billion.

Previous wording

(3)During the three months ended March 31, 2024, the total number of transactions executed by BILL standalone customers was approximately 11.8 million; the total number of transactions executed by spending businesses that used BILL Divvy Corporate Cards was approximately 13.5 million; and the total number of transactions executed by Invoice2go subscribers was approximately 0.3 million. During the nine months ended March 31, 2024, the total number of transactions executed by BILL standalone customers was approximately 35.5 million; the total number of transactions executed by spending businesses that used BILL Divvy Corporate Cards was approximately 39.6 million; and the total number of transactions executed by Invoice2go subscribers was approximately 0.9 million.

Current wording

(3)During the three months ended September 30, 2024, the total number of transactions executed by BILL AP/AR customers was approximately 11.7 million; the total number of transactions executed by spending businesses that used BILL Divvy Corporate Cards was approximately 15.3 million; and the total number of transactions executed by Embedded Solutions and Other customers was approximately 1.6 million.

Previous wording

For the purposes of measuring our key business metrics, we define businesses using our solutions as the summation of: (A) businesses that are either billed directly by us or for which we bill our partners for use of our core BILL accounts payable and receivable platform during a particular period (BILL standalone customers), (B) spending businesses that use our BILL Spend and Expense management products during the period, and (C) Invoice2go subscribers during the period. We consider the businesses using our solutions metric to better represent the performance and scale of our business as it currently exists. Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2023, this included approximately 7,200 businesses. Businesses using our solutions during a trial period are not counted as new businesses using our solutions during that period. If an organization has multiple entities billed separately for the use of our solutions, each entity is counted as a business using our solutions. The number of businesses using our solutions in the table above represents the total number of businesses using our solutions at the end of each fiscal quarter.

Current wording

We define businesses using our solutions as the summation of: (A) businesses that use our core BILL accounts payable and receivable platform (BILL AP/AR), (B) spending businesses that use our BILL Spend and Expense product, and (C) businesses that access our solutions through our embedded partners' platforms and other indirect sales channels (including our financial institution partners), and Invoice2go subscribers (Embedded Solutions and Other). Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2024, this included approximately 11,500 businesses. Businesses using our solutions during a trial period are not counted as new businesses using our solutions during that period. If an organization has multiple entities billed separately for the use of our solutions, each entity is counted as a business using our solutions. Businesses using our solutions exclude certain network members utilizing limited features of our platform, such as those that only receive payments. The number of businesses using our solutions in the table above represents the total number of businesses using our solutions at the end of each fiscal quarter.

Previous wording

To grow revenue from businesses using our solutions, we must deliver a product experience that helps them automate their back-office financial operations. The more they use and rely upon our product offerings to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions. We define TPV as the total value of transactions that we process on our platform during a particular period, comprised of transactions from BILL standalone customers, BILL Divvy Corporate Card transactions, and transactions executed by Invoice2go subscribers. Our calculation of TPV includes payments that are subsequently reversed. Such payments comprised less than 2% of TPV during each of the three and nine months ended March 31, 2024 and 2023.

Current wording

To grow revenue from businesses using our solutions, we must deliver a product experience that helps them automate their back-office financial operations. The more they use and rely upon our product offerings to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions. We define TPV as the total value of transactions that we process on our platform during a particular period, comprising transactions from BILL AP/AR customers, BILL Divvy Corporate Card transactions, and transactions executed by Embedded Solutions and Other customers. Our calculation of TPV includes payments that are subsequently reversed. Such payments comprised less than 2% of TPV during each of the three months ended September 30, 2024 and 2023.

Previous wording

Subscription fees are fixed monthly or annually and charged to customers for the use of our platform to process transactions. Subscription fees are generally charged either on a per user or per customer account per period basis, normally monthly or annually. Transaction fees are fees collected for each transaction processed, on either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, card payments, real-time payments, pay by card, invoice financing and cross-border payments, and the creation of invoices. Transaction fees also include interchange fees paid by suppliers accepting card payments. Fixed transaction fees are set at a fixed charge per payment transaction, while variable transaction fees are generally calculated based on a percentage of the dollar amount of the payment transaction.

Current wording

Subscription fees are fixed monthly or annually and charged to customers for the use of our platform to process transactions. Subscription fees are generally charged either on a per user or per customer account per period basis, normally monthly or annually. Transaction fees are fees collected for each transaction processed, on either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, card payments, real-time payments, pay by card, invoice financing, cross-border payments, and the creation of invoices. Transaction fees also include interchange fees paid by suppliers accepting card payments. Fixed transaction fees are set at a fixed charge per payment transaction, while variable transaction fees are generally calculated based on a percentage of the dollar amount of the payment transaction.

Previous wording

We enable our SMB and accounting firm customers to make virtual card payments to their suppliers. We also facilitate the extension of credit to spending businesses in the form of BILL Divvy Corporate Cards. The spending businesses utilize the credit on BILL Divvy Corporate Cards as a means of payment for goods and services provided by their suppliers. Virtual card payments and BILL Divvy Corporate Cards are originated through agreements with our Issuing Banks. Our agreements with the Issuing Banks allow for card transactions on the Mastercard and Visa networks. For each virtual card and BILL Divvy Corporate Card transaction, suppliers are required to pay interchange fees to the issuer of the card. Based on our agreements with the Issuing Banks, we recognize the interchange fees as revenue gross or net of rebates received from the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements.

Current wording

We enable our SMB and accounting firm customers to make virtual card payments to their suppliers. We also facilitate the extension of credit to spending businesses in the form of BILL Divvy Corporate Cards. The spending businesses utilize the credit on BILL Divvy Corporate Cards as a means of payment for goods and services provided by their suppliers. Virtual card payments and BILL Divvy Corporate Cards are originated through agreements with the Issuing Banks. Our agreements with the Issuing Banks allow for card transactions on the Mastercard and Visa networks. For each virtual card and BILL Divvy Corporate Card transaction, suppliers are required to pay interchange fees to the issuer of the card. Based on our agreements with the Issuing Banks, we recognize the interchange fees as revenue gross or net of rebates received from the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements.

Previous wording

Service costs– Service costs consist primarily of personnel-related costs, including stock-based compensation cost, for our customer success and payment operations teams, costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, fees for processing payments), outsourced support services for our customer success team, direct and amortized costs for implementing and integrating our cloud-based platform into our customers’ systems and cloud payments infrastructure costs. We expect that service costs will increase in absolute dollars, but may fluctuate as a percentage of revenue from period to period, as we continue to invest in growing our business.

Current wording

Service costs– Service costs consist primarily of personnel-related costs, including stock-based compensation, for our customer success and payment operations teams, costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, net of card network incentives, fees for processing payments), outsourced support services for our customer success team, direct and amortized costs for implementing and integrating our cloud-based platform into our customers’ systems, and cloud payments infrastructure costs. We expect that service costs will increase in absolute dollars, but may fluctuate as a percentage of revenue from period to period, as we continue to invest in growing our business.

Previous wording

General and administrative – General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for finance, corporate business operations, risk management, legal and compliance, human resources, information technology, costs incurred for external professional services, provision for expected credit losses, losses from fraud, and allocated overhead costs. We expect to incur additional general and administrative expenses as we explore various growth initiatives, which include incurring higher costs for professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of revenue from period to period.

Current wording

General and administrative – General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for finance, corporate business operations, risk management, legal and compliance, human resources, information technology, costs incurred for external professional services, losses from fraud, and allocated overhead costs. We expect to incur additional general and administrative expenses as we explore various growth initiatives, which include incurring higher costs for professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of revenue from period to period.

Previous wording

Depreciation and amortization of intangible assets – Depreciation and amortization of intangible assets consist of depreciation of property and equipment, and amortization of acquired intangibles, such as developed technology, customer relationship, and trade names. Amortization of capitalized internal-use software costs paid in cash are excluded.

Current wording

Depreciation and amortization – Depreciation and amortization consist of depreciation and amortization of property and equipment, and amortization of acquired intangibles, such as developed technology, customer relationship, and trade names. Amortization of capitalized internal-use software costs paid in cash are excluded.

Previous wording

Other income, net – Other income, net consists primarily of interest income on our corporate funds, gain on debt extinguishment, change on mark to market derivatives, interest expense on our borrowings (including amortization issuance costs) and the lower of cost or market adjustment on card receivables sold and held for sale.

Current wording

Other income, net – Other income, net consist primarily of interest income on our corporate funds, gain on debt extinguishment and interest expense on our borrowings (including amortization of issuance costs).

Previous wording

Provision for income taxes – Income tax expense consists of U.S. federal, state and foreign income taxes. We maintain a full valuation allowance against our U.S. federal, state and Australian net deferred tax assets, as we have concluded that it is more likely than not that we will not realize our net deferred tax assets.

Current wording

Provision for income taxes – Income tax expense consist of U.S. federal, state and foreign income taxes. We maintain a full valuation allowance against our U.S. federal, state and Australian net deferred tax assets, as we have concluded that it is more likely than not that we will not realize our net deferred tax assets.

Previous wording

(2)Includes stock-based compensation charged to revenue and expenses as follows (amounts in thousands):

Current wording

(1)Includes stock-based compensation charged to revenue and expenses as follows (amounts in thousands):

Previous wording

(4) Consists of acquisition related equity awards (Acquisition Related Awards), which include equity awards assumed and retention equity awards granted to certain employees of acquired companies in connection with acquisitions, modified equity awards in connection with the Restructuring Plan (Restructuring Awards), and non-acquisition related equity awards (Non-Acquisition Related Awards), which include all other equity awards granted to existing employees and non-employees in the ordinary course of business. The following table summarizes stock-based compensation recorded for the periods presented and as a percentage of total revenue (amounts in thousands):

Current wording

Consists of acquisition related equity awards (Acquisition Related Awards), which include equity awards assumed and retention equity awards granted to certain employees of acquired companies in connection with acquisitions, and non-acquisition related equity awards (Non-Acquisition Related Awards), which include all other equity awards granted to existing employees and non-employees in the ordinary course of business. The following table summarizes stock-based compensation recorded for the periods presented and as a percentage of total revenue (amounts in thousands):

Previous wording

(1)Depreciation expense does not include amortization of capitalized internal-use software costs paid in cash.

Current wording

(2)Depreciation and amortization do not include amortization of capitalized internal-use software costs paid in cash.

Previous wording

Comparison of the three and nine months ended March 31, 2024 and 2023

Current wording

Comparison of the three months ended September 30, 2024 and 2023

Previous wording

The following table sets forth our revenue during the three and nine months ended March 31, 2024 and 2023, respectively (amounts in thousands):

Current wording

The following table sets forth our revenue during the three months ended September 30, 2024 and 2023, respectively (amounts in thousands):

Previous wording

•a $43.0 million and $131.3 million increase, respectively, in transaction fee revenue primarily due to increased total payment volume driven by the increase in customer adoption of our products;

Current wording

•a $44.8 million increase in transaction fee revenue primarily due to increased total payment volume driven by the increase in customer adoption of our products;

Previous wording

•a $5.0 million increase during the nine months ended March 31, 2024 in subscription fee revenue primarily due to an increase in customers as compared to the same prior year period.

Current wording

•a $5.0 million increase during the three months ended September 30, 2024 in subscription fee revenue primarily due to an increase in customers as compared to the same prior year period; and

Previous wording

Cost of revenue, gross profit, and gross margin during the three and nine months ended March 31, 2024 and 2023 were as follows (amounts in thousands):

Current wording

Cost of revenue, gross profit, and gross margin during the three months ended September 30, 2024 and 2023 were as follows (amounts in thousands):

Previous wording

Service costs increased by $5.9 million and $26.3 million during the three and nine months ended March 31, 2024, respectively, as compared to the prior year periods, primarily due to:

Current wording

Service costs increased by $8.7 million during the three months ended September 30, 2024, respectively, as compared to the prior year period, primarily due to:

Previous wording

•a $6.1 million and $19.7 million increase, respectively, in direct costs associated with the processing of payments made by businesses using our solutions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increased adoption of new product offerings, and an increase in the volume of transactions;

Current wording

•a $9.4 million increase in direct costs associated with the processing of payments made by businesses using our solutions, which were driven by the increase in the number of customers, and an increase in the volume of transactions;

Previous wording

•a $3.4 million and $9.0 million increase, respectively, in costs for consultants and temporary contractors, shared overhead, and other costs; offset by

Current wording

•a $2.7 million increase in costs for consultants and temporary contractors, shared overhead, and other costs; offset by

Previous wording

•a $3.5 million and $2.4 million decrease, respectively, in personnel-related costs due to the decrease in service cost personnel resulting from our reduction-in-force announced in December 2023.

Current wording

•a $3.4 million decrease in personnel-related costs due to the decrease in service cost personnel resulting from our reduction-in-force announced in December 2023.

Previous wording

Research and development expenses increased by $2.8 million and $24.4 million during the three and nine months ended March 31, 2024, respectively, as compared to the prior year periods, primarily due to a $2.6 million and $24.2 million increase, respectively, in personnel-related costs, including stock-based compensation expense.

Current wording

Research and development expenses decreased by $10.4 million during the three months ended September 30, 2024, as compared to the prior year period, primarily due to a $9.3 million decrease in personnel-related costs, including stock-based compensation expense, resulting from our reduction-in-force announced in December 2023.

Previous wording

Our research and development expenses decreased to 24% and 26% as a percentage of revenue during the three and nine months ended March 31, 2024, respectively, from 30% and 31% during the prior year periods, respectively, primarily due to a higher revenue growth rate but a relatively lower increase in personnel-related expenses, including stock-based compensation, as a percentage of revenue.

Current wording

Our research and development expenses decreased to 21% as a percentage of revenue during the three months ended September 30, 2024 from 29% during the prior year period primarily due to revenue growth and a decrease in personnel-related expenses, including stock-based compensation, as a percentage of revenue.

Previous wording

•a $11.1 million increase in rewards expense in connection with the rewards program through our BILL Divvy Corporate Cards as a result of increased transaction volume. Rewards expense decreased from 48% to 47% as a percentage of revenue from spend and expense interchange fee primarily due to lower rewards redemption rate;

Current wording

•a $10.3 million increase in rewards expense in connection with the rewards program through our BILL Divvy Corporate Cards as a result of increased transaction volume. Rewards expense decreased from 49% to 47% as a percentage of revenue from spend and expense interchange fees primarily due to lower rewards redemption rate; offset by

Previous wording

•a $7.2 million increase during the nine months ended March 31, 2024 in personnel-related expenses resulting from the hiring of additional general and administrative personnel and higher average cost per employee; and

Current wording

•a $3.9 million decrease in personnel-related expenses resulting from our reduction-in-force announced in December 2023; and

Previous wording

•a $0.8 million and $10.6 million increase, respectively, in consulting fees for outside services, and temporary contractors who provided general and administrative services;

Current wording

•a $3.6 million decrease in consulting fees for outside general and administrative services.

Previous wording

Our general and administrative expenses decreased to 25% as a percentage of our total revenue during the three months ended March 31, 2024 from 26% during the prior year period, primarily due to a higher revenue growth rate but a decrease in personnel-related costs as a percentage of revenue. Our general and administrative expenses remained flat at 27% as a percentage of revenue during the nine months ended March 31, 2024 and March 31, 2023.

Current wording

Our general and administrative expenses decreased to 19% as a percentage of our total revenue during the three months ended September 30, 2024 from 24% during the prior year period, primarily due to the revenue growth rate and a decrease in personnel-related costs as a percentage of revenue.

Previous wording

Provision for income taxes during the three and nine months ended March 31, 2024 pertained mainly to an estimated cash tax liability resulting from the capitalization of R&D costs for federal and certain state tax purposes for the year ending June 30, 2024, offset, in part, by a reduction to the net deferred tax liability, as a result of our current year losses.

Current wording

Provision for income taxes during the three months ended September 30, 2024 pertained mainly to an estimated cash tax liability resulting primarily from the capitalization of R&D costs for federal and certain state tax purposes for the year ending June 30, 2025.