Operator: Hello, everyone. Thank you for joining us, and welcome to BILL’s fourth quarter and fiscal year 2026 earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jack Andrews, Vice President, Investor Relations. Jack, please go ahead.

Jack Andrews, Vice President, Investor Relations, BILL: Thank you. Good afternoon, everyone. Welcome to BILL’s fiscal fourth quarter 2026 earnings conference call. We issued our earnings press release a short time ago and filed the related Form 8-K with the SEC. The press release can be found on our investor relations website at investor.bill.com. Joining me on the call today are René Lacerte, Chairman, CEO, and Founder, and Rohini Jain, CFO. Our remarks today include forward-looking statements about our business, products, and expectations that involve many assumptions, risks, and uncertainties. Actual results could differ materially from those expressed or implied by such statements. On today’s call, we will also refer to both GAAP and non-GAAP financial measures. Please refer to our earnings press release and investor presentation posted today, and to our periodic reports filed with the SEC for additional information about such risks and uncertainties and for reconciliations of non-GAAP measures to GAAP.

With that, let me turn the call over to Rene.

René Lacerte, Chairman, CEO, and Founder, BILL: Thanks, Jack. Good afternoon, everyone, and thank you for joining us. Q4 was one of the most significant quarters in the history of BILL. We completed the significant organizational changes required to accelerate our transformation to be an AI-native company. We sharpened our view of the highest impact actions that power our growth, and at the same time, we drove good overall business performance in the quarter. Core revenue grew 16% year over year, while our non-GAAP operating margin exceeded 23%. With increased activity in the industry, it’s clear that BILL’s value proposition of an integrated platform continues to resonate with SMBs. I’ll first recap the highlights from Q4, then provide an update on our new organizational structure, and then introduce our key priorities for FY 2027. As I shared on our last earnings call, innovating with AI represented our top priority during the past fiscal year.

We continue to see strong momentum and adoption of our AI capabilities among our customer base. To date, we have had over 175,000 businesses using our agents to improve their financial operations across S&E and AP. The number of organizations using our W9 agents more than tripled sequentially to over 40,000. As a result, we have collected over 240,000 W9s with zero work from our customers. This agent handles outreach, collection, and validation with the IRS without anyone touching it, eliminating a job nobody wanted in the first place. Next up, BILL’s invoice coding agent, which launched in February, has already been used by over 60,000 companies to eliminate around 90% of the coding steps for a multi-line invoice. This has generated significant time savings, reducing the processing time across our AP customers by nearly half.

In addition, our touchless transactions agent became generally available at the end of April to all of our Spend & Expense customers. Already, it has automated more than 7 million transaction fields for 30,000 customers. Lastly, our Pay For You agent became generally available at the end of Q3 and completed over 30,000 card transactions without any human interaction during Q4. These examples are just some of the many AI capabilities we have and are building for customers. Given these successes, we are excited to launch major new AI-powered functionality over the coming months. The value to BILL and its customers from this technology will come from better business outcomes with greater speed, control, and efficiency. AI success is all about this, period. It is easy to drive agent creation and code completion, but it takes great domain expertise to build products that customers never knew they wanted or needed.

Our domain expertise and scale is long established. Customers know that we have built our platform to deliver better business outcomes, and that has built a brand trusted by businesses everywhere. We are making these AI investments to extend the significant value creation for SMBs that we are known for. It will help them save more time, maximize financial performance, and leverage AI with confidence. As a result, customers will spend more time on strategic work, catch risks that would otherwise been missed, and focus on growing their businesses. Our commitment to constantly innovating and delivering software that optimizes and executes the workflows and decisions that run the financial operations for our customers has a real impact. They trust us. Let me share a customer quote from Matthew May, National Accounting Managing Partner at Sora, a large accounting firm.

We handle some of the world’s most sensitive data, so our philosophy is always security first. Rather than using generic AI tools, we trust solutions from vetted tech partners like BILL, who’ve proven their security with our clients’ financial information. AI is an enabler, but only with guardrails and the right partnerships augmenting expertise and trust." When it comes to financial operations, trust is a critical factor in the purchasing decision. That trust is helping our integrated platform gain strong traction among the fastest-growing segments of SMB spend, AI-first businesses, technology services, and professional services firms. These firms are scaling quickly and need financial infrastructure that keeps pace. Customer spend on AI through BILL grew over 50% year-over-year in Q4, and TPV from our AI-first customers nearly doubled from Q3 to Q4.

AI is not only a game changer for our customers, but it is critical to how we build and operate at scale inside of BILL. We are driving more and more internal efficiencies while improving execution across the entire company. One use case is having a direct impact on our financial results. A few quarters ago, we introduced a new AI underwriting model to assist with our invoice financing applications. This new model is built on signals and patterns based on how businesses pay and receive payments within the BILL network over time. Relationship-level data allows the model to assess invoice-level risk with a precision not replicable from traditional credit bureaus. We are seeing a material impact on our invoice financing business. Both volume and revenue grew approximately 30% year over year in FY 2026, while the expected loss rate has improved by more than 50%.

This is a strong illustration of two of BILL’s key moats, our massive proprietary data set and our network. As more and more transactions are executed on our platform, our models get smarter, our risk selection improves, and we can extend more credit at better economics for the customer and us. This is a compounding advantage that grows with scale. Next, I’d like to provide an update regarding a number of organizational changes we completed during Q4. Over the last fiscal year, we have been working diligently and intently on structuring BILL for our next phase. We significantly simplified and reduced layers across the entire company. In addition, we moved from a hybrid general manager structure to a functional model. The imperative to become an AI-native organization, combined with driving speed of execution on the initiatives that drive results across the business, is the primary motivation for these changes.

We are moving fast with strong accountability and end-to-end ownership in order to drive velocity, impact, and growth. Simply stated, we’ve built BILL to achieve what it needs to in the future. During Q4, we made some deliberate leadership changes to support this direction. I was pleased to welcome Jonathan Leaf to BILL as our new Chief Revenue Officer. Jonathan has a strong background and track record in scaling revenue organizations to serve lower and mid-market companies. He is responsible for all aspects of our go-to-market organization. In addition, Mike Cieri, who joined BILL last year, has been promoted to Chief Product Officer. He now leads the end-to-end platform experience spanning software solutions, payments, and financial services. This structure reflects how customers use all of BILL’s capabilities together across a single integrated platform. Finally, Eric Chan has been appointed Chief Technology Officer.

As BILL’s founding engineer, former CTO, and Chief Architect, Eric has exceptionally strong knowledge of our technology, the team, the current technology landscape, and operates with the speed this moment requires. We’ve done the work to assemble the right team, and are focused, energized, and positioned to win in our market. Entering FY 2027, we are focused on the following three strategic priorities. Our first and most important priority is to deliver AI-native experiences for our customers. Because this is our top priority, I’d like to spend a moment on what that means for BILL. Achieving an AI-native experience means that AI is so deeply embedded that removing it would make the product no longer work. Our success with over 175,000 customers leveraging AI capabilities is compelling.

We are making a strategic pivot to an agentic platform that automates financial operations out of the box by default for our nearly 500,000 customers. We are building new front-end experiences that remove friction so that customers can instantly realize value from AI. Our knowledge of SMB-specific pain points and workflows, combined with our proprietary data advantage, our network of over 9 million members, and our robust payments infrastructure, creates a powerful foundation to build trusted, accurate, secure AI solutions specifically aimed at the Fortune 5 million. Our second priority is to acquire higher ROI customers. One of the key areas of focus here is driving multi-product adoption. In Q4, the number of joint customers leveraging both of our AP and S&E solutions grew 35% year over year. Those who were customers both in Q4 and a year ago exhibited a net revenue retention of 111%.

Given the success we have seen, we have made a change to our go-to-market strategy in FY 2027. The entire sales team is now trained to sell BILL as a single platform rather than individual components. This is how we will engage with customers and prospects moving forward. Our Embed 2.0 strategy represents an efficient channel opportunity. We believe there is a large market for software companies interested in deploying our embedded finance solutions to support the financial operation needs of their clients. We are gaining traction with our embed partners. As an example, one of our embed partners, TPV, and units more than tripled sequentially from Q3 to Q4. In focusing on higher ROI go-to-market activities, we have made the decision to align our bank channel efforts with BILL’s broader embedded strategy. We are investing in scalable, standardized, embedded solutions.

We need all of our partners to use all of our products and experiences. Focus here will allow us to leverage one platform across all of our partners versus the multiple versions we support today. We do not expect that every existing bank channel relationship will carry forward. Our third priority is to expand value through BILL’s platform. We aim to achieve this by providing greater value for customers in terms of new product introductions and enhancements. This, in turn, should result in greater value to BILL from a monetization perspective. We have a strong track record of introducing new ad valorem payment products over time that have solved specific pain points for our customers while leading to broader monetization opportunities. One example of this is Supplier Payments Plus or SPP.

Driving adoption of our SPP offering remains a key area of focus to expand value for both customers and BILL. The early progress has not met our initial expectations. The enterprise sales motion required was new to BILL in FY 2026. Over the last year, we have invested in building out this go-to-market motion, and we are now starting to see increased deal momentum and faster implementations. Our contracts with these large customers lock in new ACH monetization and preserve virtual card volume. Our committed TPV across all of our payment offerings from these early-adopting suppliers has reached almost $800 million. Building great products is hard work. It takes vision, execution, listening to customers, and iterating over and over to create a great customer experience. We have been doing that with SPP, and the customer response is positive.

I’d like to share a case study from one of our early customers describing the value they are deriving from Supplier Payments Plus. We recently signed a business services company that is managing over $75 million in annual SMB payment volume through BILL. Prior to adopting Supplier Payments Plus, they faced a fragmented receivables operation with hundreds of separate accounts spread across multiple field locations. Half of all incoming payments were invisible to corporate treasury and posted manually with no automation. This is a painful way to run a business. After deploying BILL Supplier Payments Plus, the company consolidated 168 accounts into one centralized corporate account in just 10 weeks, with zero IT involvement and no disruption to customers or field teams. The percentage of payment transactions that are processed and settled automatically without any manual intervention jumped from 72% to 98% to 100%.

The company has recovered more than 400 hours of manual labor per month, time that is now redirected toward higher-value, customer-facing work. The customer summed it up in one word: efficient. AI dramatically expands what is possible, but the requirements of financial operation systems that serve critical functions remain the same. Accuracy, control, and security are paramount. Our wealth of proprietary data, combined with our infrastructure, scale, reliability, and experience, having moved almost $2 trillion in spend, gives BILL an advantage in the market that is not easily replicated at scale. Successfully executing hundreds of millions of transactions for hundreds of thousands of customers gives us invaluable learnings. We are uniquely positioned to develop and deliver AI-native solutions that are best tailored to address the needs of the customers we serve.

A year ago, we set out to do something hard, grow the business, return capital to shareholders, and fundamentally reshape how BILL operates, all at the same time. We did that. I couldn’t be more proud of the team given the amount of change experienced and the results delivered. The team I have beside me today is smaller, faster, and more aligned. The product we are building is the most compelling it has ever been, and the customers who trust us with their financial operations are telling us it is working. I’m excited and confident in where we are headed, and with that, I’ll turn it over to Rohini.

Rohini Jain, CFO, BILL: Thanks, René. Before getting into the details of our quarterly results, I’d like to make some comments upfront regarding how we view the longer-term financial trajectory for BILL. During my first year here, many investor conversations have focused on the importance of providing a financial framework for how we view both growth and margin opportunities over time. There are three key pillars to our framework that I’d like to share now. First, BILL has built a durable business model, and we are well-positioned to deliver low double digits to mid-teens core revenue growth with expanding margins over time. Second, we are focused on driving progress towards the Rule of 40. We define this metric as growth in total revenue less rewards plus non-GAAP operating margin. This is a measure we believe better reflects our underlying unit economics and improves comparability to peers.

Our actions in FY 2026 have positioned us to be a Rule of 40 company, and we expect to exceed this threshold exiting FY 2027. Third, BILL is focused on achieving meaningful GAAP profitability in FY 2027 and expanding from there. Now let’s dive into the financial results for the quarter. in Q4, we delivered $400.5 million in core revenue, growing 16% year-over-year. Non-GAAP operating margin was 23%, expanding 370 basis points sequentially and 860 basis points year-over-year. Non-GAAP net income was $94 million, representing a 22% improvement sequentially and a 53% improvement year-over-year. The large profitability beat this quarter was driven by earlier-than-planned workforce reduction timing and lower fraud and credit losses. Within our integrated platform, we saw double-digit growth in both AP/AR and Spend & Expense. AP/AR core revenue grew 10% with subscription ARPU increasing by 1.4% year-over-year.

Mid-market core ARPU from newly acquired customer cohorts grew 31% year-over-year as we continue to focus on higher quality customers. In Q4, we added approximately 1,800 net new customers, which is below recent trends. In addition to our decision to deliberately prioritize signing the right customers for BILL, the organizational restructuring impacted this result. We decided to exit salespeople earlier than originally planned in order to familiarize the remaining sales team with their new pipeline and quota opportunities. Under Jonathan’s leadership, we have moved quickly to a single platform selling motion with tighter execution across the team. The early indicators in Q1 are already trending in the right direction, which gives us confidence. AP/AR transaction revenue was $131 million, up 10% year-over-year. We saw very strong TPV in Q4, exceeding our expectations by approximately 300 basis points.

This came mainly from newly acquired larger customers and their ACH volumes. This TPV mix resulted in an AP/AR take rate of 16.0, which contracted by 0.5 basis points. Normalizing for the large ACH TPV beat, take rate would have been in line with our Q3 guidance. TPV on a same-store sales basis grew 6% year-over-year, representing a sequential acceleration of 2 points and highest since Q1 FY 2023. By industry vertical, we saw increased spending in manufacturing, administrative services, information technology, and construction. We saw decreased spending in retail trade and wholesale trade. Customer spend on AI increased over 50% year-over-year in Q4. In Spend & Expense, Q4 revenue totaled $185 million, up 23% year-over-year. Card payment volume grew 20% year-over-year. Travel, entertainment, and health and services drove that growth, more than offsetting the slight softness in advertising spend.

Take rate for the quarter came in at 261 basis points, reflecting a favorable mix of high interchange verticals. Reward rate was 133 basis points, up 3 basis points sequentially, driven by higher than expected volume in our top reward tier from a concentrated group of customers. We have renegotiated those commercial contracts moving forward. S&E fraud and credit losses continue to improve over time, driven by AI-enabled enhancements to our fraud platform and underwriting. In Q4, as a percentage of TPV, it improved nearly 6 basis points sequentially. Turning to capital allocation. In the fourth quarter, we repurchased approximately $300 million of stock at an average price of $35.31 per share. We have now retired approximately 15 million shares, representing close to 14% of our common stock outstanding since our Q3 earnings call.

As of today, we have $400 million remaining on our $1 billion repurchase authorization announced in May. Given our confidence in BILL’s durable growth profile and free cash flow generation, we expect to execute the remaining authorization within the parameters we have established. Before turning to formal guidance, I want to highlight three factors that are shaping our near-term outlook. First, we are navigating through a lot of change. In our go-to-market organization specifically, we are in our first quarter of a new sales motion under new leadership, unified around a single platform sale. Second, on S&E, we are monitoring a dynamic environment regarding card acceptance that may impact a small number of merchants. Additionally, we are taking proactive commercial actions on certain higher reward tiers and contracts. Third, as René noted, we are concentrating our embed channel on new Embed 2.0 platform.

This means moving away from custom 1.0 solutions we built for a small number of bank partners. This is a deliberate choice to consolidate on a scalable and standardized embedded platform that supports our full product suite. Given these aspects, we believe a measure of prudence is appropriate in our forward outlook. I also want to address an accounting presentation change we are making. Beginning in Q1 of fiscal year 2027, we will present revenue net of rewards expense. Rewards expense will be recognized as a reduction of subscription and transaction fees rather than as a sales and marketing expense. This voluntary change better reflects the unit economics of our spend and expense business. It will sharpen focus on the right customer segments, improve comparability with our peer group, and will help us drive profitable growth. The change has no impact on the operating income or net income.

Total revenue and total operating expenses will each be reduced by the same amount. We will begin reporting under this new presentation in Q1. I will now detail our guidance for our first quarter and fiscal year 2027. In light of this accounting change, we will guide to our historical presentation of revenue and rewards today. However, beginning with Q1 of fiscal year 2027, our guidance framework will be presented on a revenue net of rewards basis only. For fiscal Q1 2027, on a historical presentation of revenue basis, we expect total revenue to be in the range of $432.5 million-$442.5 million, and core revenue to be in the range of $398 million-$408 million, reflecting 11%-14% year-over-year growth. For fiscal Q1 2027, we expect the rewards expense to be $92.5 million, implying a core revenue net of rewards growth rate of 10%-14%.

Here are a few key assumptions that underpin our Q1 revenue guidance. First, on volume, we expect AP/AR TPV growth to be in line with FY 2026 volume growth. For spend and expense, we are assuming year-over-year volume growth of mid-teens in Q1. Second, turning to monetization, we expect AP/AR take rate in line with Q4, as we expect higher ACH TPV growth trends to continue. Moving to spend and expense, we expect the take rate to be approximately 260 basis points. On the bottom line for Q1, we expect to report non-GAAP operating income in the range of $112.5 million-$117.5 million. We expect non-GAAP EPS to be between $0.96 and $1. These EPS figures are based on fully diluted share count assumption of approximately 102 million shares.

Turning to full-year guidance for fiscal year 2027, on a historical revenue presentation basis, we expect total revenue in the range of $1.807 billion-$1.857 billion, reflecting 9%-12% year-over-year growth. We expect core revenue in the range of $1.669 billion-$1.719 billion, reflecting 11%-14% year-over-year growth. One modeling point to flag is that Q2 FY 2027 faces our highest prior year comparison, and we expect this to represent the trough of our growth trajectory for the year. Our guidance reflects three points of year-over-year growth headwind, two points from S&E dynamics, and one point from bank channels. For fiscal 2027, we expect the rewards expense to be $401.5 million, implying a core revenue net of rewards growth rate of 10%-14%. Turning to bottom line.

For fiscal 2027, we expect to report non-GAAP operating income in the range of $421 million-$451 million, which represents a 23%-24% range in non-GAAP operating margin. This implies an ex-float operating margin expansion of approximately 590 basis points at the midpoint. We expect non-GAAP net income in the range of $370.5 million-$394.5 million, and non-GAAP EPS to be between $3.56-$3.79, representing 33% year-over-year growth. These EPS figures are based on fully diluted share count assumptions of approximately 104 million shares. This accounts for the $600 million share repurchases completed under our $1 billion authorization. As we mentioned, GAAP profitability is now a key focus area. We expect to generate well over $125 million of GAAP profits for the full year. Included in this guide is an expectation for stock-based compensation expenses to be approximately $190 million.

As a percentage of total revenue, we expect stock-based compensation to represent 10% in fiscal year 2027, down from 14% in fiscal year 2026. A year ago, we were a company with questions around profitability. Today, that question is answered. We are a leaner organization with a sharper focus. Exiting Q4 2026, we are a Rule of 40 company, driving strong revenue growth and GAAP profitability. We have made deliberate decisions to trade low-quality revenue for durable high-quality growth, anchored in AI-led initiatives, stronger unit economics, and a platform our customers trust. FY 2027 is about executing against that foundation. Now we will open up the call for Q&A.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question, and if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tien-tsin Huang with J.P. Morgan. Your line is now opening. Please go ahead.

Tien-tsin Huang, Analyst, J.P. Morgan: Thanks a lot. Good afternoon. Good results here. I was going to ask on the restructuring charge maybe, and that came in on the higher side. Just to get to that charge, where did everything land versus what we talked about last quarter in terms of headcount reduction, savings run rate, and reinvestments? I know you gave some initial views there. Where did you land, and what’s the assumption and the timeline for realization in FY 2027?

Rohini Jain, CFO, BILL: Hi, Tien. Thank you so much for the question. Let me start by just letting you know the restructuring efforts went exactly as we had planned. We had given you an initial estimate of about $110 million of gross saving. We came very close to that number, so that’s good. We had given a range of investments back into the business of about 20-30. We are right now anchoring those investments on the number 30. So that puts our net benefit from this at around $80 million.

Tien-tsin Huang, Analyst, J.P. Morgan: Okay. Terrific. Then maybe for you, René, just thinking big picture here. I heard the go-to-market change, and you brought in the CRO as you talked about. Any big learnings worth sharing here from whether it be the employees or the clients that you talk to, or your partners, given the reorg? Love to hear your thoughts on that.

René Lacerte, Chairman, CEO, and Founder, BILL: Yeah, thank you, Tien-Tsin. Yeah, it’s a great question. I think the way that you’re starting to hear us talk and the way that we’re executing is really across the platform. We started on day one to build a platform, the platform that makes doing business simple. We started with workflow. We started then adding AP, AR, S&E, but we do so much more than that. I think the go-to-market changes that you’re referencing and the momentum and energy that we’re feeling inside the company is that the platform capabilities we have matter to our customers. They matter to our partners. They matter because that’s how you get the most value out of the experience. When I look at the last 12 months, we did really, really important work that unified the platform and the organization. They go hand in hand.

We’ve aligned both the products and the go-to-market organizations to specifically sell all of AP and S&E customer experiences. They’re now fully integrated across a new modern UI. We are leveraging that customer experience to start selling that platform. You heard me talk about that. We are seeing results. 35% growth in the multi-product adoption is great in the course of the year. That success has accelerated our change from a go-to-market perspective to really look at the totality of the offering that we have and to make sure that the marketing, the selling, the supporting is thinking about a unified platform approach. The tight organizational changes that we made during the year are both supporting the shift and are in concert with this belief that the platform is the key to driving customer satisfaction and success.

Given what we’ve already seen, the excitement that we have across the impact only increases when we think about the broader platform that we’re building. When you ask the question, what’s giving you confidence, momentum or energy here, it is really this platform. Just to step back, we see this really resonating with customers. It resonates because financial operations is complex. There’s a lot of moving pieces with that. If you think about a customer who doesn’t want to have to make a lot of decisions about their financial operations, the same way they don’t want to have to make the decisions about building their own car. They’d rather buy a fully loaded and finished product. We at BILL are the masters at simplifying that complexity behind financial operations.

We are increasingly becoming the fully loaded finished product for our customers. So the core products that customers come for, we know that. That’s the AP, that’s the S&E, but we also know they come for way more than that. They come for all the payment capabilities. Just to give you an example about how the platform just was extended to create more value for our customers in the past year, in the midst of all the restructuring that we’ve done, we now have SPP, a new product, new platform extension that really is taking advantage of the multi-sided network that we have with over 9 million connections. Close to $400 billion in annual spend in the data that actually allows us to understand what matters to our suppliers and really how to go target those suppliers.

That data is what is behind the development of SPP, and nobody else has this data today. When we think about the platform play, what’s giving me energy, what’s giving me confidence, it is seeing that the combined product mindset capabilities that we have in the company and the platform capabilities we have from the shared data capabilities that we have. We’re doing stuff that nobody else can do. We have a really interesting opportunity. We see that in invoice financing. You can see from the prepared remarks that we’re able to now extend, obviously, into small suppliers to help them get their funds faster. They don’t have to wait. We can only do that because of the data graph we have. It’s unique.

It enables us to make real-time offers based on patterns and documents that we see across the largest B2B payment network that we know of. No one else has this capability at this scale today. The third thing I would like to call out from a platform perspective is more looking forward and how we think about BILL Cash. Again, it is a reminder of how we have built a platform that actually solves the financial complexities that are behind the operations of any business. Payments require speed, they require clarity, and they require a clean audit trail. BILL Cash delivers that as faster same-day payments. We have perfect visibility into every transaction when it is a BILL Cash transaction. No FI has that. No accounting software has that today.

We are in a position to continue to create value for our customers and to really reinforce the trust and confidence that they have in our platform with BILL Cash. Now, it is early days on BILL Cash, and already I think we are seeing strong, good adoption from our early customers. One of the most important factors that we are seeing in that adoption is that they are moving spend that was offline, spend that was never on the BILL platform before, and it is now becoming online. When you combine all the capabilities that we have from a core front end, the front door of AP, S&E, and AR, you add all the payment capabilities and the extensions that we are doing with suppliers and cash management on BILL Cash, and the ability for us to now start selling that platform, that is what gets us excited.

It is something that we have been building a long time to make happen. We know that the scale that we have begets scale, and we know that we have got a very large, successful, and profitable business that we can invest from. We are now 100% aligned, thanks to the restructuring, on how to go make that happen. A lot of things that are underneath that go-to-market consolidation, if you will, but it all comes back to the platform.

Tien-tsin Huang, Analyst, J.P. Morgan: Good. I can feel the energy, Rene. Thank you.

René Lacerte, Chairman, CEO, and Founder, BILL: Thank you.

Operator: Your next question comes from the line of Scott Berg with Needham & Company. Your line is open. Please go ahead.

Scott Berg, Analyst, Needham & Company: Hi, everyone. Nice quarter and nice board guide here. We have two questions. Rene, we will start off with all the AI usage in the platform. Your adoption rates are impressive, and the real-life use cases are equally impressive in how they are saving your customers time. How do you think about the monetization strategy of your AI efforts going forward now that you have some, I guess, more concrete usage data and understanding how customers are going to use both the existing functionality and the innovations you spoke about in the pipeline coming out this year?

René Lacerte, Chairman, CEO, and Founder, BILL: Thank you, Scott. I think this is obviously a really important part of the strategic direction of the company. The pivot to really becoming AI native gives us lots of opportunities. The first and foremost thing to think about is that we are sitting on a massive opportunity. There are millions of businesses that need financial operational help, and we are in a position with the platform that we have to go reach them and support them in ways that they never knew was possible. So the first thing from an AI perspective is going to be building the capabilities to actually drive significant improvement and opportunities around customer retention and adoption in the early stages of their life cycle with us.

One of the ways that you will see the monetization is that we will be really tracking and hold ourselves accountable to driving better conversion, better retention, if you will, in the first 90 days. But the other thing that you will see us thinking about is the strategic rationale from a pricing perspective. The reason I broke these up here is there is obviously customers that matter, and then there is obviously the revenue per customer. On the revenue per customer, we have been, I would say, tactical with some price increases in the last year. But as we roll out these AI capabilities, we are going to really be strategic.

One of the things that we know is that we are going to be inclined to move customers from a per-seat basis to really a platform fee, to really understanding the capabilities and the value that we are providing them, as well as a usage consumption fee, if you will. Those are, I would say, the direction that we are moving towards. Agents will be grouped into different subscription tiers based on the value that they are creating for our customers. And obviously, we will have some consumption based as we roll these out. A lot of opportunity coming in the future, and obviously it is predicated on us getting the agents that actually completely simplify the experience for SMBs, move them from a do it yourself approach to the do it for me approach, and we think that is the key thing to the AI strategy.

Scott Berg, Analyst, Needham & Company: Very helpful, Rene. Thank you. From a follow-up, Rohini, we have modeled this out a couple times what your operating margin and structure will look like in this post reduction in force environment. Your Rule of 40 is, I think, a great strategy to be achieving here as you get through the year. But where does incremental leverage in the model come from? Because we look at the model X rewards as well, and we think you will be exiting this year at an already relatively high rate. There is always some additional room to move those margins up over time, but where does that incremental next step come from now that this phase is in the background?

Rohini Jain, CFO, BILL: Thank you for the question. The way I think about it, we have done a lot of work in expanding the operating margins over the last year. I think this was the third year in a row that we doubled our operating margin ex float. We want to continue in expanding the margins. We did a lot of work on labor related OpEx and some on the other OpEx in the last year. Where the additional opportunities will continue to come from is the AI-led productivity. We are starting out on that journey. We are starting to see some good examples across our risk teams, across CS teams, across engineering teams, but we would expect to see that mature further and drive additional operating leverage. Additionally, we are going to really move our focus on revenue growth.

We have now really taken a very focused approach to durable and profitable revenue prioritization, and you will continue to see that happen through the year. The easiest way to grow margin is to grow revenue, really. I think driving the right product structure, making sure that the economics behind the product itself are robust, those would be our next moves.

Operator: Your next question comes from the line of Chris Quintero with Morgan Stanley. Your line is open. Please go ahead.

Chris Quintero, Analyst, Morgan Stanley: Hey, Rene. Hey, Rohini Jain. Thank you for taking the questions here. I want to ask about the TPV upside, especially on the AP/AR side in the quarter. Could you maybe just unpack a little bit more of the details around what really surprised you to the upside there, the drivers of that outperformance. We’ve heard from the airlines talking about some travel inflation, so curious if that was any impact. I think, Rene, you talked about AI spend on BILL being up 50% year-over-year in Q4. Just curious if you can unpack all those drivers again for us.

Rohini Jain, CFO, BILL: Yeah, absolutely. As I look at Q4 and the large overperformance on TPV, I would come back to how strong our ACH product is. It’s really best in class, and we continue to see usage across ACH continuing to increase. Our product gets better and better. So that’s where we saw a majority of the uptick from. Now, if you compare that to the verticals where we are seeing upside within our AP/AR platform, we are seeing construction, the manufacturing side, some of these verticals that are very tied to the new AI flywheel that we are seeing in spending. So big ticket items, construction, manufacturing type of verticals doing really well. That’s impacting the ACH TPV growth as well. Additionally, one very interesting dynamic is now emerging, which is our mid-market customers have some really large ticket size transactions that come on the platform.

Which, they have more ACH, they have generally lower take rates than the rest of our portfolio, but they’re extremely valuable customers to us because their ARPU is three times more than an average customer at BILL. Their TPV is four times more. As we continue to grow the mid-market segment of our business, we will see some of this dynamic continue to happen. One thing I would like to highlight is this additional TPV that’s flowing through the system is actually giving us good benefit in terms of flow-over performance. You guys saw in Q4 we beat flow by close to $3 million. This is not due to the rate fluctuations, it’s really because of more TPV flowing through the systems. I think this is just the flywheel of the product that René was talking about as well. We have multiple ways to monetize.

Hope that helps.

Chris Quintero, Analyst, Morgan Stanley: Yes, very helpful. I wanted to follow up on subscription revenue. That line item, the growth rate there had been stuck around this mid-single digit type of range for a few quarters now, and in the past two quarters you’ve seen it accelerate up to 11% this quarter. Just curious if you can unpack what are some of the drivers there and considerations around that performance?

Rohini Jain, CFO, BILL: Yeah, absolutely. On the specifically subscription ARPU side over the last couple of quarters, we did see a sequential uptick which broke the trend of flattish trend that we had seen in the past, and that’s exciting. It was just showing we’re going upmarket a little bit. We were doing some tactical changes with the pricing as well, so that was starting to show up as a combination. What we continue to also see from a subscription ARPU side is the biggest number of customer adds that we get continue to be from the accounting channel. There’s a mixed element that plays out there where we continue to add a smaller set of customers at a faster clip, and obviously the bigger customers are fewer in numbers, although much higher in ARPU. So there is a little bit of that dynamic that will play out into the subscription number.

Having said that, what we really focus on is the core ARPU or the total ARPU of the customer we are bringing in. As we rethink strategically what our pricing models and frameworks are going forward based on usage and capacity usage, et cetera, this will continue to be more important. How many customers are we getting in and how are we monetizing them, which is the ARPU. The core ARPU actually sequentially grew again 3% versus the last quarter, which continues to be a good trend.

Chris Quintero, Analyst, Morgan Stanley: Excellent. Appreciate the color, Irani.

Rohini Jain, CFO, BILL: Thank you.

Operator: Your next question comes from the line of Will Nance with Goldman Sachs. Your line is open. Please go ahead.

Will Nance, Analyst, Goldman Sachs: Hey, thank you for taking the question. I wanted to follow up on some of the commentary on ACH volumes and maybe tie it back to some of the longer-term thoughts on growth that I think you talked about, Irani, in the prepared remarks. When we think about the longer-term growth rate, I think the guidance this year calls for a relatively flat take rate I think you said, and you called out some drivers there, ACH volumes from larger customers as well as maybe some changes in virtual card acceptance in the near term. Maybe you can help unpack a little bit. Over the long term, how do you think about monetization and ad valorem mix over time, and is take rate expansion still part of that algorithm over time?

Or as you think about pricing and the answer that you just gave, are there other ways to monetize consumption-based pricing beyond explicitly charging for some of the payment volume? Just curious how that thought process overall. Thanks.

Rohini Jain, CFO, BILL: Yes. Thank you for that question. There are a couple of things that you mentioned, and some of them actually are AP/AR dynamics and some of them S&E dynamics. I am going to try and unpack them one by one. Let’s talk about S&E from a take rate perspective. We talked about some of the acceptance challenges more from an S&E side. We do not see that on the AP/AR side. From that perspective, we do have a slight reduction in the volume growth rate on S&E, but on S&E, the take rate range we have given to you in the past is 250 to 260, and we expect the quarter and then going forward to be on the higher end of that range. So that is where the revenue growth from an S&E perspective is going to be modeled.

From AP/AR perspective, our ACH TPV continues to do much better than our expectations, which is kind of an isolated variable. Ad valorem TPV continues to grow at a healthy clip as well as we are seeing some of our established portfolio items are doing well, and the emerging portfolio continues to add to that growth as well. So I feel good about that. Just the math of the take rate because of the outsized ACH performance is compressing the number a little bit. As we think about it, I would say a lot of the growth in the AP/AR will be based on the TPV and monetizing that TPV through multiple ways, and a bigger TPV number monetized at the same rate still gives you the growth. So flat to slightly up take rate from what we were at in Q4 is how I would guide you.

Nate Svensson, Analyst, Deutsche Bank: Got it. That is very helpful. On the rewards change, obviously, I think that makes a lot of sense. I thought you said it would be netted against both subscription and transaction revenue. I am just wondering if you could clarify that. Does it not all go through transaction? Then separately, how are you thinking about breaking that out? Do you expect to disclose that separately and talk about the rewards rate going forward? Or do you expect to largely talk about S&E dynamics as a net take rate from here on out? Thanks.

Rohini Jain, CFO, BILL: Yeah. Just to clarify, the way we will talk about our revenue will be net of what you see today as gross revenue line, minus the rewards dollars number. So that will be our net revenue. We use those words just because it is exactly what we externally report, so more of an accounting thing. So it will be the net revenue. We will give periodic color to the performance of rewards as well. But the way I think about rewards, it is a really great incentive and a tool for us to drive the right customers onto the platform. We are not in the business of trying to win on rewards basis only. The business we want to bring to our company is one that is profitable or one we are incentivizing our customer to use many products that, again, align with what René had said about the platform approach.

Nate Svensson, Analyst, Deutsche Bank: Got it. Appreciate it. End question.

Rohini Jain, CFO, BILL: Yes.

Operator: Your next question comes from the line of Andrew Schmidt with KeyBanc Capital Markets. Your line is open. Please go ahead.

Andrew Schmidt, Analyst, KeyBanc Capital Markets: Hi, Rene. Hi, Rohini. Thank you for taking the questions. I just want to dig into the FY 2027 core revenue outlook for a moment. I think it’s 11%-14%, just how you’re reporting today. I think you called out 2 points from S&E dynamics, 1 point from the bank channel. I think it sounds like you’re also baking in some prudence from go-to-market and reorg implications. Maybe just help us understand what’s recurring, what’s non-recurring, and then sort of level set us in terms of how you think about the ongoing rate of growth for the business over the intermediate term, considering some of these things seem transitory. Thanks so much.

Rohini Jain, CFO, BILL: Yeah, I can take that question. Thank you. As I think about the S&E business overall, there are some short-term dynamics. We have the change in the approach that we are taking, both from net revenue perspective as well as the whole team is now selling all of the products. We don’t have a separate S&E sales team and a separate AP sales team. Which means that there is training involved, there’s ramping, there’s structures changing, incentive changing, all of that. So it takes time to ramp some of that up to its full potential. So those are some of the things that are transitionary. I talked a little bit about the impact of one of the larger platforms and the card acceptance issues. Again, very concentrated towards some of the bigger customers. So we’ll see some impact from that, also transitionary.

Over time, the net approach should help us get back to strong growth levels, and drive more profitability in the business than we had in the past. So some of these dynamics that I talked about are in a shorter term, and that’s why as I opened my scripted remarks, I had mentioned that the range in the midterm that we think of is low double digits to mid-teens.

Andrew Schmidt, Analyst, KeyBanc Capital Markets: Got it. Thank you for that, Rohini. Very helpful. If I could just ask a follow-up just on the net new adds on BILL AP/AR. Understanding that there was some disruption inter-quarter from the reorg and things like that, just want to clarify what you’re seeing. Was there any sort of demand dynamics at play or do you think it was all sort of self-driven? As we think about just FY 2027, the trajectory for net new adds, it sounds like that’s improving even inter-quarter. Can you just talk about the expectation in terms of how that should trend, understanding there’s a lot of changes going on that are working through. Thank you so much.

Rohini Jain, CFO, BILL: Sure. Happy to talk about that. Just as a reminder, we have been talking for the last couple of quarters that we have a deliberate focus on the ICP or our ideal customer profile. We want to continue to focus on slightly bigger customers than we have in the past, which then is a trade-off between the number of customers we are getting on the platform and the quality of the customers we’re getting. We had indicated in the last earnings or two that we expect the trend to be not in line with what we had seen in the past and slightly lower. We continue to be on that path. Nothing has changed in that regard. What has changed was the material organizational restructuring and the sales motion that we are now getting into.

What I mentioned earlier in my remarks also was that in July, we started to see some green shoots in recovery within the numbers, which we’re actually quite pleased about. As I think about the quarter, I could see us land in the range of 2,500 to 3,000, having made a large part of that recovery towards the number that we want to get to, which will be sort of higher than this range over the remaining part of the year. But this is the range I’m expecting for the quarter.

Andrew Schmidt, Analyst, KeyBanc Capital Markets: Got it. That makes a lot of sense. Thank you so much.

Rohini Jain, CFO, BILL: Welcome.

Operator: Your next question comes from the line of Nate Svensson with Deutsche Bank. Your line is open. Please go ahead.

Nate Svensson, Analyst, Deutsche Bank: Hi. Thanks for the question. Renee, I wanted to ask about the second key priority you laid out in your prepared remarks of acquiring the higher ROI customers. It sounds like the 35% growth you are seeing in the adoption of AP/AR and Spend & Expense is coming before all of these go-to-market changes. I was hoping you could put some guardrails around how to think about these go-to-market changes, and how they can help improve the already strong trajectory of growth that you are seeing today. Then just maybe the second one on that topic is just around the bank channel partners. Could you maybe talk a little bit more about the decision to move away from the small number of those bank partners and then maybe beyond that, the success you are seeing with the Embed 2.0 opportunities that can help offset that?

René Lacerte, Chairman, CEO, and Founder, BILL: Okay. Thank you, Nate, for the question. I think the summary I would say is that we understood our data and that is why Rohini just mentioned we focused on our larger customers, the larger SMBs that are on the platform, ones with more than 20 payments, for example. That focus means that we are, I would say, honing the product offerings for those customers as well as the go-to-market motions for those customers. One of those honing exercises was to sell the platform that we worked so hard to build. We are seeing, like I said, early success. That success under Jonathan’s leadership, we are positioned now to kind of leverage that success across the entire go-to-market team.

Positioning ourselves to sell the platform, which you heard me talk about at the beginning, I think is a super important part of how we focus on the higher ROI customers that are in the portfolio and capable of coming into the business. Our focus is always going to be on delivering great customer experiences and driving value for them, extending that. That focus also applies to our partners. When we looked at the restructuring work that we did, we knew that we needed to create more focus across the business. It is paramount, it is imperative, you name the word. It is super critical that we have teams aligned and that we leverage the teams and the resources and the attention in a focused path so that we can execute well.

That exercise led us to look at individual, I would say, product experiences. Our approach with the bank channel over the last dozen or so years has been more custom than we would like and more custom than we would do today. That means we have multiple platforms that make it challenging to be able to actually offer all of the capabilities that BILL has for all of their customers. Our decision was really to lean in on this focus initiative across the company and to say, "This is where we are going to invest. This is where we are going to spend time analyzing and working how to drive more results to the business." That is the Embed 2.0 platform that actually enables the entire platform for those customers. We are super excited about leveraging our platform into our partners.

But we know we got to be disciplined in our approach to how we do that. As we made those decisions, we expect that not all of the banks will be able to make it.

Nate Svensson, Analyst, Deutsche Bank: Helpful color. Just for a follow-up, I wanted to ask on SPP. I think in the prepared remarks, you said the initial rollout hadn’t quite met your expectations, some of that related to the different enterprise sales motion. Maybe you could talk more about some of the roadblocks you ran into and how you think the recent changes in go-to-market are going to help improve the trajectory for SPP in FY 2027 and beyond. I think you also mentioned that the contracts are going to preserve virtual card volume. I was hoping for more color on what specifically is in those contracts that will allow you to maintain virtual card volume while adding the sort of incremental ACH volumes on top of that.

René Lacerte, Chairman, CEO, and Founder, BILL: Yeah. I think probably the most important thing in any customer offering is to get the customer experience right. We have spent a lot of time talking with suppliers, analyzing the data. Like I mentioned about our platform, the data we have is unique, and understanding the payments and the flows and understanding how we can make their experiences better. The case study I gave, somebody with hundreds of accounts across BILL going down to one with no IT involvement, that’s actually because of great product work. I think from a go-to-market perspective, having the right product is important, and that’s part of the go-to-market, but then also having the right sales motion. Enterprise sales is different than what we’ve ever done before.

I think we knew that, and I think the learning year is that it just sometimes takes a little bit more time than you would like. But I feel very good about what we’ve learned and the opportunity to kind of extend that. If you look at the number we called out there, $800 million under contract from a TPV perspective. That’s strong growth from the last time that we talked about this. Really to your question around the virtual card, the under contract is important. These suppliers have received payments across all of our payment modalities, and so having an experience for them that is consistent is important. It’s also important for us that if the customer wants to use a card, that that card goes through, as an example.

That commitment is an important part of the conversations we have with these suppliers, and it’s something that we’ll continue to work with them to make sure they’re getting the value that they need out of those experiences.

Nate Svensson, Analyst, Deutsche Bank: Thanks, Rene.

René Lacerte, Chairman, CEO, and Founder, BILL: Thank you.

Operator: Your final question comes from the line of Ken Suchoski with Autonomous Research. Your line is open. Please go ahead.

Ken Suchoski, Analyst, Autonomous Research: Hey, good afternoon. Thanks for taking the question. I was just wondering if you can give us some more color on the dynamic you mentioned regarding the Spend & Expense card acceptance that is impacting volume growth. Is that just acceptance by the large ad providers like Meta and Google? Do we have 4 quarters of slightly slower growth and then we are sort of ticking back higher once we lap that dynamic? Any thoughts there would be great. Thank you.

Rohini Jain, CFO, BILL: Yeah, that is what we are referring to on the S&E side. Just to clarify a little bit more, we talked about 2 points of headwind coming from that piece of the business, and this is just a part of it. There is other dynamics of us moving from gross to net and leaving on the table some of the less profitable volume, et cetera, that is playing in, and a bigger part of that. That is exactly right. Then here we would lap that as it. The rollout is slow, and it is quite concentrated into small number of customers that have large volume. If you look at the same impact on a net basis, it will be much smaller because they are also the higher reward customers.

Ken Suchoski, Analyst, Autonomous Research: Mm-hmm. Okay, that makes sense. Maybe just for my follow-up, I think you are expecting to exceed the Rule of 40 threshold exiting fiscal year 2027. I think if our math is right, we are at the Rule of 35 in fiscal 1Q based off of your guidance. Just curious, how do we get to something above that Rule of 40 threshold exiting fiscal year 2027? Is it mostly on the adjusted EBIT side, or could we see core revenue growth accelerate throughout the rest of the year and into next year? Thank you.

Rohini Jain, CFO, BILL: In my prepared remarks up front, I actually defined our Rule of 40, and the definition we use is in line with how we will report revenue going forward. It is the net revenue growth percentage, along with the total operating margin of the company. If you add those 2, we were at a Rule of 40 math-wise, in Q4. There will be in-quarter fluctuations, but we will exit FY 2027 exceeding the 40 number.

Ken Suchoski, Analyst, Autonomous Research: Okay. All right. Thank you very much.

Rohini Jain, CFO, BILL: You’re welcome.

Operator: We have reached the end of the Q&A session. I will now turn the call back to René Lacerte, Chairman, CEO, and Founder, for closing remarks.

René Lacerte, Chairman, CEO, and Founder, BILL: Thank you everyone for joining. FY 2026 was a pivotal year for BILL. We accomplished a lot restructuring the company, executing a significant share buyback, and we are well positioned to drive profitable growth, leveraging our platform and AI. All of us at BILL are super excited about the future and look forward to continuing to update you on our progress as we go forward. Thank you.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.