BILL 2026 회계연도 4분기 실적발표 콘퍼런스 콜: AI 도입 및 23% Non-GAAP 마진

BILL의 2026 회계연도 4분기 실적은 두 자릿수 핵심 매출 성장과 대폭적인 이익률 확대를 동시에 기록했습니다. 경영진의 2027 회계연도 최우선 과제는 AI 네이티브 재무 운용, 고수익 고객 확보, 플랫폼 수익화 확대입니다.

핵심 요약

• 4분기 핵심 매출은 전년 동기 대비 16% 증가한 4억 50만 달러를 기록했습니다. Non-GAAP 영업이익률은 23%를 기록해 전년 동기 대비 860베이시스포인트(bps), 전분기 대비 370베이시스포인트 상승했습니다.
• 17만 5,000개 이상의 기업이 지출 및 비용 관리, 매입채무(AP) 전반에 걸쳐 BILL의 AI 에이전트를 사용했습니다. 송장 코딩 에이전트는 6만 개 이상의 기업이 도입했으며, AP 처리 시간을 절반 가까이 단축했습니다.
• AP/AR 핵심 매출은 10% 성장했으며, 지출 및 비용 관리 매출은 23% 증가한 1억 8,500만 달러를 기록했습니다. 카드 결제액은 전년 동기 대비 20% 증가했습니다.
• 경영진은 기존 회계 기준에 따라 2027 회계연도 핵심 매출이 16억 6,900만 달러에서 17억 1,900만 달러에 달해 11%~14%의 성장을 기록할 것으로 전망했습니다.
• 2027 회계연도 Non-GAAP 영업이익률은 23%~24%로 전망됩니다. 경영진은 또한 1억 2,500만 달러 이상의 GAAP 순이익을 기대하고 있으며, 2027 회계연도 종료 시점에 자체 규정한 'Rule of 40' 기준을 상회할 계획입니다.
• BILL은 4분기에 평균 35.31달러의 가격으로 약 3억 달러 규모의 자사주를 매입했습니다. 실적 발표 당시 10억 달러 규모의 자사주 매입 한도 중 4억 달러가 남아 있었습니다.

주요 재무 데이터

경영진이 언급한 4분기 수익성 상회 실적은 계획보다 조기에 진행된 인력 감축, 시점 차이 효과, 사기 및 신용 손실 감소가 반영된 결과입니다. 구조조정을 통해 약 1억 1,000만 달러의 총비용 절감이 발생했으며, 이 중 약 3,000만 달러가 재투자되어 약 8,000만 달러의 순편익이 발생한 것으로 추산됩니다.

사업 및 운용 실적

AI 도입은 BILL의 운용 전략에서 핵심적 위치를 유지했습니다. 4만 개 이상의 기업이 W-9 에이전트를 사용했으며, 이는 전분기 대비 3배 이상 증가한 수준입니다. 터치리스 거래 에이전트는 3만 명의 고객을 대상으로 700만 개 이상의 거래 필드를 자동화했으며, 결제 에이전트는 4분기 동안 인적 개입 없이 3만 건 이상의 카드 거래를 완료했습니다.

BILL은 내부적으로 송장 파이낸싱 언더라이팅에도 AI를 적용했습니다. 2026 회계연도 송장 파이낸싱 규모와 매출은 각각 약 30% 성장했으며, 예상 손실률은 50% 이상 개선되었습니다. 경영진은 이러한 개선이 BILL 네트워크 전반의 자체 결제 및 관계 데이터 덕분이라고 설명했습니다.

다중 제품 도입이 지속적으로 증가했습니다. AP 제품과 지출 및 비용 관리 제품을 모두 사용하는 고객 수는 전년 동기 대비 35% 증가했습니다. 2026 회계연도 4분기와 전년 동기 모두 이용 중인 고객들의 순매출 유지율(NRR)은 111%를 기록했습니다. 이에 따라 BILL은 영업 조직을 개별 제품 판매에서 통합 플랫폼 판매 방식으로 전환했습니다.

AP/AR TPV는 신규 확보한 대형 고객과 ACH 거래량 증가에 힘입어 경영진의 예상치를 약 300베이시스포인트 상회했습니다. 중견기업(Mid-market) 고객은 일반적으로 BILL 평균 고객보다 3배의 ARPU와 4배의 TPV를 창출하지만, ACH 비중이 높아 공시되는 테이크 레이트가 희석될 수 있습니다.

서플라이어 페이먼츠 플러스(SPP)는 BILL에 엔터프라이즈 영업이 생소했던 만큼 초기 예상보다 더디게 진행되었습니다. 하지만 초기 공급업체 계약의 약정 TPV는 8억 달러 가까이에 달했습니다. 경영진은 이들 계약이 가상 카드 활동을 유지하면서 새로운 ACH 거래량을 수익화한다고 밝혔습니다.

경영진 가이던스

BILL은 2027 회계연도 1분기부터 리워드 비용을 차감한 순매출을 공시할 예정입니다. 리워드는 영업 및 마케팅 비용이 아닌 구독 및 거래 수수료의 차감 항목으로 기록됩니다. 경영진은 이러한 변경으로 영업이익이나 순이익에 영향을 미치지 않으면서 매출과 영업비용이 동일한 금액만큼 감소할 것이라고 밝혔습니다.

2027 회계연도에 대해 경영진은 1억 2,500만 달러 이상의 GAAP 순이익을 예상합니다. 주식 기반 보상은 2026 회계연도의 14%에서 감소한 총매출의 10% 수준인 약 1억 9,000만 달러로 예상됩니다.

경영진은 2027 회계연도 2분기가 전년 동기 대비 가장 어려운 기저 효과에 직면하며 해당 연도 성장 궤적의 저점을 기록할 것으로 예상하고 있습니다. 장기적으로 회사의 목표 프레임워크는 이익률 확대와 함께 10%대 초반에서 10%대 중반의 핵심 매출 성장을 지향합니다.

리스크 및 주시할 점

• 시장 진출(Go-To-Market) 조직이 새로운 리더십 하에 운용되고 통합 플랫폼 영업 모델로 전환됨에 따라 단기적인 교육, 파이프라인 및 실행 리스크가 발생하고 있습니다.
• 경영진은 2027 회계연도 성장의 역풍으로 3퍼센트포인트를 반영했습니다. 이 중 2퍼센트포인트는 지출 및 비용 관리 역학에서, 1퍼센트포인트는 은행 채널에서 기인합니다.
• 대형 광고 플랫폼의 카드 결제 승인 방식 변경으로 인해 대규모 거래를 일으키는 일부 고객군의 지출 및 비용 관리 결제액이 감소할 수 있습니다.
• BILL은 특정 고리워드 상업 계약에 대한 재협상을 진행하고 있으며, 순수익 구조를 개선하기 위해 수익성이 낮은 거래량을 기꺼이 포기하겠다는 입장입니다.
• 회사는 맞춤형 은행 채널 솔루션에서 표준화된 Embed 2.0 플랫폼으로 전환하고 있습니다. 경영진은 기존의 모든 은행과의 관계가 지속될 것으로 기대하지는 않는다고 밝혔습니다.
• 엔터프라이즈 고객의 더 긴 영업 및 구현 요건을 반영함에 따라 SPP의 초기 진행 상황은 초기 예상치에 미치지 못했습니다.

애널리스트 Q&A 주요 내용

경영진은 AI 수익화가 초기에는 특히 첫 90일 동안의 고객 전환율 및 유지율 향상에 집중될 것이라고 밝혔습니다. 시간이 지남에 따라 BILL은 계정당(per-seat) 과금 방식에서 플랫폼 수수료, 에이전트 가치 기반의 구독 요금제, 일부 사용량 기반 요금 체계로 이동할 것으로 기대하고 있습니다.

수익성과 관련해 로히니 자인(Rohini Jain) 최고재무책임자(CFO)는 리스크, 고객 서비스, 엔지니어링 분야에서의 AI 기반 생산성 향상을 다음 영업 레버리지의 원천으로 꼽았습니다. 매출 성장과 제품 단위 경제성 향상 역시 추가적인 이익률 확대를 뒷받침할 것으로 전망됩니다.

경영진은 시간이 지남에 따라 AP/AR 테이크 레이트가 4분기 수준을 유지하거나 약간 상회할 것으로 예상하고 있습니다. 강한 ACH 성장은 공시되는 테이크 레이트에 압박을 줄 수 있지만, 더 큰 TPV는 매출 및 운용 수익(float income) 기회를 창출합니다.

4분기에 약 1,800개의 AP/AR 고객이 순증한 데 이어 경영진은 1분기 초반 트렌드가 개선되고 있다고 언급했습니다. 절대적인 고객 수 증대보다 우량 고객 확보에 계속 우선순위를 두면서 1분기 순증 규모를 2,500개~3,000개로 전망했습니다.

실적 발표 통화 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to BILL's Fourth Quarter and Fiscal Year 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Jack Andrews, Vice President, Investor Relations. Jack, please go ahead.

Jon Andrews

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 Rene 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

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 0 award 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 multiline 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 through all of our spend and expense customers. Already, it has automated more than 7 million transaction fields for 30,000 customers.

Lastly, our [ Pay 40 ] 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 customers from this technology will confirm 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 be missed and focused 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 Manager Partner at [ Sorin ], 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 embedded tech partners like BILL, who have 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 singles and patterns based on how businesses pay and receive payments within the build network over time.

Relationship level data allows the model to assess invoice level risk with a precision not replica 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 '26 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 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 end mid-market companies. He is responsible for all aspects of our go-to-market organization. In addition, Mike Cherry, who joined BILL last year has been promoted as 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 our focus, energize and position to win in our market. Entering FY '27, we are focused on the following 3 strategic priorities: our first and most important priority is to deliver AI 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 products 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 or nearly 0.5 million 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 multiproduct adoption. In Q4, the number of joint customers leveraging both of our AP and spending expense 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 '27. 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's 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. And 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 and is embedded solutions. We need all of our partners to use all of our products and experiences. Focus here will allow us to leverage a 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 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 '26. 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 adoptive 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 SPP. We recently signed a business services company that is managing over $75 million in annual SMB payment volume through BILL. Prior to adopting SPP, they face 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 1 centralized corporate account in just 10 weeks, with 0 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 experience 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

Thanks, Rene. 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 3 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-digit 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 '26 have positioned us to be a Rule of 40 company, and we expect to exceed this threshold exiting FY '27. Third, BILL is focused on achieving meaningful GAAP profitability in FY '27 and expand it from there.

Now let's dive into the financial results for the quarter. In Q4, we delivered $400.5 million in coal 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 in 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 TPDX 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 '23. 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 and 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 rewards 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, the 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 3 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 Rene 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 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 '27. 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 '27, our guidance framework will be presented on a revenue net of rewards basis only. For fiscal Q1 '27, on a historical presentation of revenue basis, we expect total revenue to be in the range of $432.5 million to $442.5 million. and coal revenue to be in the range of $398 million to $408 million, reflecting 11% to 14% year-over-year growth. For fiscal Q1 '27, we expect the rewards expense to be $92.5 million, implying a core revenue net of rewards growth rate of 10% to 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 '26 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 to $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 to $1.857 billion, reflecting 9% to 12% year-over-year growth. We expect coal revenue in the range of $1.669 billion to $1.719 billion, reflecting 11% to 14% year-over-year growth. One modeling point to flag is that Q2 FY '27 faces our highest prior year comparison, and we expect this to represent the trough of our growth trajectory for the year.

Our guidance reflects 3 points of year-over-year growth headwind, 2 points from S&E dynamics and 1 point from bank channels. For fiscal '27, we expect the rewards expense to be $401.5 million, implying a coal revenue net of rewards growth rate of 10% to 14%. Turning to bottom line. For fiscal 2027, we expect to report non-GAAP operating income in the range of $421 million to $451 million which represents a 23% to 24% range in non-GAAP operating margin. This implies an explode operating margin expansion of approximately 590 basis points at the midpoint. We expect non-GAAP net income in the range of $370.5 million to $394.5 million and non-GAAP EPS to be between $3.56 to $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 '27, down from 14% in fiscal year '26.

A year ago, we were company with questions around profitability. Today, that question is answered. We are a leaner organization with a sharper focus. Exiting Q4 '26, 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 '27 is about executing against that foundation.

And now we'll open up the call for Q&A.

Operator

[Operator Instructions] Your first question comes from the line of Tien-Tsin Huang with JPMorgan.

질의응답

Tien-Tsin Huang

Good results here. I think I was going to ask on the restructuring charge maybe and that came in on the higher side. But just to get to that charge, we're doing everything land versus what we talked about last quarter in terms of head count reduction, savings run rate and reinvestments. I know you gave some initial views there. Where did you land? And what's the assumption in the time line for realization in fiscal '27?

Rohini Jain

Thank you so much for the question. And let me start by just letting you know the restructuring efforts went exactly as we had planned. So we had given you an initial estimate of about $110 million of gross savings. We came very, very close to that number. So that's good. We had given a range of investments back into the business of about $20 million to $30 million. We are right now anchoring those investments on the number [ $30 million ]. So that was our net benefit from this at around $80 million.

Tien-Tsin Huang

Okay. Terrific. And then maybe for you, Rene, 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 of the clients that you talk to your partners, given the reorg, love to hear your thoughts on that.

René Lacerte

Yes. Thank you, Tien-Tsin. Yes, 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 1 to build a platform and the platform that makes doing business simple. We started with workflow. We started then adding AP, AR, SNE, but we do so much more than that.

And I think the go-to-market changes that you're referencing and kind of 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. And so 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 SNE customer experiences. They are 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. And then we are seeing results. I mean, 35% growth in the multiproduct adoption is great in the course of the year.

And 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.

And 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. And so again, when you ask the question, like what's kind of giving you confidence, momentum or energy here, it is really this platform. And just like to step back, we see this really resonating with customers. And it resonates because financial operations is complex. There's a lot of moving pieces with that.

And if you think about a customer, 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 would rather buy a fully loaded than finished product. And so we, at BILL, are the masters at simplifying that complexity behind financial operations. And we are increasingly, increasingly becoming the fully loaded finished product for our customers. So the core products the 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. And 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 multisided network that we have with over 9 million connections, close to $400 billion in annual spend and 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. And so when we think about the platform play and again, 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 that 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. And simply put, no one else has this capability at this scale today. The third thing I'd like to call out from a platform perspective is more looking forward in how we think about build cash. Again, it's a reminder of how we have built a platform that actually solves the financial complexities that are behind the operations of any business.

So payments require speed, they require clarity and they require a comedian audit trail. And BILL cash delivers that. It's fast or same-day payments. We have perfect visibility into every transaction when it's a BILL cash transaction. No FI has that. No accounting software has that today, and we're 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 build cash.

Now it's early days on billed cash and already, I think we are seeing strong, good adoption from our early customers. And one of the most important factors that we're seeing in that adoption is that they are moving spend that was off-line, spend that was never on the BILL platform before, and it's now becoming online. And so 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're doing suppliers and cash management, unbilled cash. And the ability for us to now start selling that platform that's what gets us excited.

It's something that we've been building a long time to make happen. And we know that the scale that we have, we get scale, and we know that we have got a very large, successful and profitable business that we can invest from. And we're now 100% line, thanks to the restructuring on how to go make that happen. So a lot of things that are kind of underneath that go-to-market consolidation, if you will, but it all comes back to the platform.

Operator

Your next question comes from the line of Scott Berg with Needham & Company.

Scott Berg

I guess 2 questions. Rene, we'll start off with all the AI usage on the platform. Your adoption rates are impressive and realized use cases are equally impressive, how they're saving your customers' time. How do you think about the monetization strategy of your AI efforts so going forward, now that you have some for high-grade [indiscernible] data and understanding how customers you use, you have both the existing functionality and the innovation you spoke about in the pipeline coming out this year.

René Lacerte

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. But 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.

And 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. So one of the ways that you'll see the monetization is that we will be really tracking holder sales 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 of from a pricing perspective. And so the reason I broke these up here is there's obviously customers that matter and then there's obviously the revenue per customer. And on the revenue per customer, we've been, I would say, tactical with some price increases in the last year. But as we roll out these AI capabilities, we're going to really be strategic. And 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're providing them as well as the usage consumption fee, if you will.

And so those are, I would say, the kind of the direction that we're moving towards. Agents will be grouped into different subscription tiers based on the value that they're creating for our customers. And obviously, we will have some consumption based as we roll these out. So a lot of opportunity coming in the future, and obviously, it's 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's the key thing to the AI strategy.

Scott Berg

Very helpful, Rene. From a follow-up we modeled this out a couple of times, what your operating kind of margin and structure will look like in this post-reduction in force environment in 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'll be exiting this year at an already relatively high rate. There's always some additional room to move those margins up over time. But what does that incremental kind of next step come from now that this phase is kind of in the background?

Rohini Jain

Yes. Thank you for the question. And 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. So we want to continue in expanding the margins. We did a lot of work on labor-related OpEx and some on the other effects in the last year, where the additional opportunities will continue to come from is the AI led productivity.

So we're starting out on that journey. We're 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're 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.

And the easiest way to grow margin is to grow revenue, really. So I think driving the right product structure, making sure that the economics behind the product itself are robust. Those will be our next move.

Operator

Your next question comes from the line of Chris Quintero with Morgan Stanley.

Christopher Quintero

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? Won't really surprise 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. And I think, Rene, you talked about AI spend on BILL being up 50% year-over-year in Q4. So just curious if you can unpack the drivers here for us.

Rohini Jain

Yes, absolutely. So as I look at Q4 and the large overperformance on TPV, I would come back to how strong our ACH product is, it's only 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 are extremely valuable customers to us because their ARPU is 3x more than an average customer at BILL. The TPV is 4x more.

So 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'd be float by close to $2 million. And this is not due to the rate fluctuations. It's really because of more TPV flowing through the system. And I think this is just the flywheel of the product that Rene was talking about as well. We have multiple ways to monetize.

Christopher Quintero

Yes. Very helpful. And then I wanted to follow up on subscription revenue. That line item, the growth rate there had been kind of stuck around this mid-single-digit type of range for a few quarters now. And in the past 2 quarters, you've seen it accelerate up to 11% this quarter. So I was just curious if you can unpack what are some of the drivers there and considerations around that performance.

Rohini Jain

Yes, absolutely. On the specifically subscription ARPU side, over the last couple of quarters, we did see an sequential uptick, which drove the trend of flattish trend that we have seen in the past. And that's exciting. It was just showing we are going upmarket a little bit. We are -- we were doing some tactical changes with the pricing as well. So that was starting to go up as a combination.

What we continue to also see from a subscription ARPU side is larger -- the biggest number of customer adds that we get continue to be from the accounting channel. There is a mix 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 for the total ARPU of the customer we're bringing in. And 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. So the core ARPU actually sequentially grew again 3% versus the last quarter, which continues to be a good trend.

Operator

Your next question comes from the line of Will Nance with Goldman Sachs.

William Nance

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 already in the prepared remarks. I'm just -- 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 volume from larger customers as well as maybe some changes in virtual card acceptance in the near term. So 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 kind of monetize consumption-based pricing beyond explicitly charging for some of the payment volumes? Curious how that thought process over the long.

Rohini Jain

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'm going to try and unpack them one by one. So we've talked -- 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 don't see that on the AP/AR side. And 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've 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's 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.

So 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 uptake rate from what we were at in Q4 is how I would guide you.

William Nance

Got it. That's very helpful. And just on the rewards change, obviously, I think that makes a lot of sense. I thought you said being netted against both subscription and transaction revenue. Just wondering if you could clarify that. Does it not all go through transactions? And then just separately, how do you think about breaking that out? Like do you expect to disclose that separately and talk about the rewards rate going forward? Or do you expect to largely talk about F&E dynamics as they kind of just like a net take rate from here on out?

Rohini Jain

Yes. So just to clarify, the way we'll talk about our revenue will be net of what you see today as gross revenue line, minus the robust dollars number. So that will be our net revenue. We use those words just because it's 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's 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's profitable or when we are incentivizing our customers to use many products that aligned with what Rene has said about the platform approach.

Operator

Your next question comes from the line of Andrew Schmidt with KeyBanc Capital Markets.

Andrew Schmidt

I just want to dig into the FY '27 core revenue outlook for a moment. I think it's 11% to 14%. Just how you're reporting today. But I think you called out 2 points from S&E dynamics, 1 point from the bank channel. And then I think you also -- 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 nonrecurring? 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?

Rohini Jain

Yes, I can take that question. Thank you. So as I think about the S&E business overall, right, we -- there are some short-term dynamics. We have the change in the approach that we are taking, both from a 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. So which means that there is training involved, there's ramping the 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, we -- 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 we open, as I opened my scripted remarks, I had mentioned that the range in the midterm that we think of is low double-digit still mid-teens.

Andrew Schmidt

Got it. Very helpful. And then if I could just ask a follow-up just on the net new adds on BILL AP/AR. Understanding that there was some disruption in your quarter from the reorg and things like that. I 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? And then as we think about just FY '27, the trajectory for net new adds. It sounds like that's improving even intra-quarter. Maybe just talk about the expectation in terms of stature trend, understanding there's a lot of changes going on that are working through.

Rohini Jain

Sure. happy to talk about that. So 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 comer profile. We want to continue to focus on slightly better customers that we have in the past, which then is a trade-off between the number of customers we're getting on the platform and the quality of the customers beginning. So we had indicated in the last earnings or 2 that we expect the trend to be not in line with what we had seen in the past and slightly lower.

So 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. So what I mentioned earlier in my remarks also was that in July, and we started to see some great and recovery within the numbers, which we are actually quite eased about. And as I think about the quarter, I could see us land at 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.

Operator

Your next question comes from the line of Nate Svensson with Deutsche Bank.

Christopher Svensson

Rene, I wanted to ask about the second key priority you laid out in your prepared remarks of acquiring the higher ROI customers. So I mean, it sounds like the 35% growth you're seeing in the adoption of AP/AR and spend in expenses coming before all of these go-to-market changes. So I was hoping you could put some guardrails around kind of how to think about these go-to-market changes and how they can help improve the already strong trajectory growth that you're seeing today?

And 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're seeing with the incremental 2.0 opportunities that can help offset that?

René Lacerte

Okay. Thank you, Nate, for the question. Yes, I think the summary, I would say, is that we understood our data, and that's why Rohini just mentioned, we focused on our larger customers, the larger SMBs are on the platform ones with more than 20 payments, for example. And 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. And what we -- one of those honing exercises was to sell the platform that we were so hard to build. And we are seeing, like I said, early success.

That success has under Jonathan's leadership, we are positioned now to kind of leverage that success across the entire go-to-market team. And so 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. So our focus is always going to be on filtering great customer experiences and driving value for them, extending that and that focus also applies to our partners.

And so when we looked at the restructuring work that we did, we knew that we needed to create more focus across the business. It's paramount, it's imperative, you named the word, like it is super critical that we have teams aligned and that we leverage the teams and the resources and the attention and a focused path so that we can execute well. And so that exercise led us to look at individual, I would say, product experiences and our approach with the bank channel over the last dozen or so years, has been more custom than we would like and more customer than we would do today. And 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.

And so our decision was really to lean in on this focus initiative across the company and to say, this is where we're going to invest. This is where we're going to spend time, analyzing and working how to drive more results of the business, and that's the Embed 2.0 platform, that actually enables the entire platform for those customers. And so 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. And so as we made those decisions, we expect that not all of the banks will be able to make it.

Christopher Svensson

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 tightened your expectations, some of that related to the different enterprise sales motion. So 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 fiscal '27 and beyond. I think you also mentioned that the contracts are going to preserve virtual card volumes. I was hoping for more color on kind of 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

Yes. I think probably the most important thing in any customer offering is to get the customer experience right. And so we have spent a lot of time talking with suppliers, analyzing the data, like I mentioned, about our platform and 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 build going down to one with no IT involvement. That's actually because of great product work.

And so 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. And 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 strong growth from the last time that we talked about this.

And really, to your question around the virtual card, the under contract is important. These suppliers have -- you've received payments across all of our payment modalities. And so having an experience for them that is consistent is important. And it's also important for us that if the customer wants to use a card that the card goes through as an example. And so that commitment is an important part of the conversations we have with the 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.

Operator

Your final question comes from the line of Ken Suchoski with Autonomous Research.

Kenneth Suchoski

I was just wondering if you can give us some more color on the dynamic you mentioned regarding the spend and expense card acceptance that's impacting volume growth. Is that just acceptance by the large ad providers like Meta and Google? And I guess do we have 4 quarters of slightly slower growth and then we're sort of ticking back higher once we lap that dynamic? Any thoughts there would be great.

Rohini Jain

Yes, that's what we're referring to on the S&E side. I talked about -- 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 because there's other dynamics of us moving from gross to net and leading on the table some of the less profitable volume, et cetera, that is playing in a big new part of that. That's exactly right.

And then here, we would lose that as it in the rollout low and it's quite concentrated to small number of customers that have large volume. But if you look at the same impact on a net basis, it will be much smaller because they're also the higher reward customers.

Kenneth Suchoski

Okay. That makes sense. And maybe just for my follow-up, I think you're expecting to exceed the Rule of 40 threshold exiting fiscal year '27. I think if our math is right, we're at the Rule of 35 in fiscal 1Q based off of your guidance. So just curious how do we get to something above that Rule of 40 threshold exiting fiscal year '27? 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?

Rohini Jain

So in my prepared remarks upfront, I actually defined our Rule of 40. And the definition we use is in line with how we will report revenue going forward. So it is the net revenue growth percentage along with the total operating margin of the company. So if you add those 2, we were at a Rule of 40 at wise in Q4. And there will be in-quarter fluctuations, but we will exit FY '27, exceeding the number.

Operator

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

René Lacerte

Thank you, everyone, for joining FY '20 was a typical 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 in 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.