BILL 2027 會計年度第一季法說會：核心營收成長 14%，調升 GAAP 獲利展望

重點摘要

• BILL 公布 2027 會計年度第一季核心營收為 3.164 億美元，年增 14%。Non-GAAP 營業利益率達 39%，較去年同期擴張 1,700 個基點，季增 900 個基點。
• GAAP 淨利為 6,000 萬美元；Non-GAAP 淨利年增 70%、季增 27% 至 1.191 億美元。該公司的「40 法則」（Rule of 40）得分提升至 51%，創下 2024 會計年度以來的最高水準。
• 受同店 TPV 成長 7% 以及從價（ad valorem）交易量強勁帶動，AP/AR 核心營收成長 12%。支出與費用（Spend and expense）淨營收成長 22% 至 9,200 萬美元，高於卡片支付交易量 12% 的增幅。
• BILL 在該季推出了五項 AI 功能。已有超過 20 萬家企業在 AP、AR 以及支出與費用管理中使用了其智慧代理，而 Risk Intelligence 在上線前六週內即標記出超過 1 億美元的異常或錯誤款項。
• 管理層預期 2027 會計年度核心營收為 12.8 億至 13.1 億美元，相當於成長 11% 至 14%。同時亦將 GAAP 獲利展望上調至超過 1.8 億美元。
• 近期不確定性包括進行中的市場拓展策略（GTM）調整、信用卡受理狀況、影響高回饋合約的商業措施，以及逐步淘汰客製化 Embed 1.0 銀行解決方案的轉型過渡。

核心財務業績

業務與營運表現

BILL 在其專有基礎架構上處理的累計總支付交易量突破 2 兆美元。目前平均每天有約 10 億美元的支付款項流經該平台，其網絡成員已超過 900 萬個。

AP/AR 表現受惠於 ACH 交易更趨熱絡以及從價支付交易量的加速成長。從價 TPV 成長率達到十位數後段，整體投資組合交易量成長率較上一季加速 700 個基點。管理層將此改善主要歸功於虛擬卡、直通式處理以及一項能識別可受理卡片供應商的 AI 模型。

該公司的直銷通路持續轉向高價值客戶。近期獲取的直銷客戶中，核心 ARPU 成長率較上一季加速 800 個基點，且 BILL 理想客戶特徵群體的留存率已連續五季改善。管理層將該特徵群體定義為員工數約 200 至 250 人的企業。

多產品採用率亦有進展。同時使用 AP 與支出與費用解決方案的客戶數量年增 30%。管理層表示，同時採用兩項產品的客戶所產生的 TPV 是其他客戶的兩倍多一點，ARPU 則約為其他客戶的 1.4 倍。

支出與費用淨營收成長 22%，超越了 12% 的支付交易量成長率。隨著合約重新談判開始生效，回饋率季減 5 個基點至 128 個基點。管理層指出，軟體與醫療衛生服務表現強勁，但部分被廣告、娛樂及商務服務活動疲軟所抵銷。

BILL 宣布與 Blackbaud 建立 Embed 2.0 合作關係，將其支付功能整合至 Blackbaud Financial Edge NXT 中。現有的一家嵌入式合作夥伴在 TPV、處理件數與交易營收方面均較上一季翻倍，不過管理層強調各合作夥伴的導入進展速度各有不同。

AI 產品開發

BILL 在該季推出了 Risk Intelligence、AI 控制中心、AI 輔助引導上線、Chat with BILL 以及外部 MCP 連接器。該公司表示，AI 輔助引導上線可將平台設定時間縮短最多 50%，供應商客製化時間縮短最多 70%。

Risk Intelligence 在上線的前六週內標記了超過 1 億美元的異常或錯誤款項。BILL 估計，這些警示為客戶節省了超過 1,800 天的人工作業時間。

現有工具的採用率持續上升。已有超過 60,000 家企業使用 W-9 智慧代理，較上一季成長近 50%；而發票編碼智慧代理推出七個月內即有超過 70,000 家企業採用。在新的依帳齡付款工作流程中，無須人工介入即可完成的交易量較上一季成長超過 20%。

在內部，BILL 的風險控管部門已建構超過 100 個 AI 智慧代理。管理層估計，這些智慧代理每月為員工省下超過 1,400 小時的工作時間，相當於約八個全職員工的產能。在核保審查方面，名為 Robin 的一系列智慧代理將平均案件及客戶等待時間從約三小時大幅縮短至 12 分鐘。

BILL 還與 Visa 及 BILL Trust 展開試點合作，在買方與供應商平台之間進行受信任的 AI 智慧代理支付。該支付代理使用權杖化憑證執行買方已核准的款項；它本身不做出支付決策。

管理層財務指引

管理層預估第二季 AP/AR TPV 成長約 12%，支出與費用交易量成長約 10%。預計 AP/AR 抽成率將較上一季下降約 0.4 個基點，而支出與費用淨抽成率也因季節性因素略有下滑。

針對 2027 會計年度，Non-GAAP 營業利益展望隱含約 33% 的利潤率。以預估中位數計算，管理層表示不含浮資收益的營業利益率將較去年同期擴張約 1,000 個基點。股權獎勵支出預計約為 1.85 億美元，佔總淨營收的 13.5%，在可比基礎上低於 2026 會計年度的 17.6%。

風險與關注領域

• BILL 的重組與市場拓展轉型仍在進行中。新的業務分工、招募、培訓與激勵計畫尚未全面落實。
• 在第一季受惠於計畫性支出放緩之後，管理層預期營業費用將回歸正常水準。未來的成本包括招募、產品行銷、績效加薪、薪資稅重置，以及更高的軟體、雲端與 AI 支出。
• 支出與費用業務的表現仍面臨信用卡受理條件變化，以及涉及高回饋級別與合約之商業措施的影響。
• 從客製化 Embed 1.0 銀行解決方案轉向 Embed 2.0，預計將對財報公布的客戶數成長構成逆風。
• 由於去年同期適逢強勁的假期購物旺季活動，第二季面臨較高的基期挑戰。
• 自由現金流的同期比較仍受到與重組相關支出的影響。管理層預期從第二季起能提供更清晰的狀況。

分析師問答重點

管理層表示，將於第三季調整業務薪酬機制，以支持 AP 與支出與費用之間的交叉銷售。業務團隊已接受培訓，將 BILL 作為統一整合平台推介給客戶。

在 AP/AR 新增客戶方面，由於公司優先鎖定高價值客戶群體，管理層認為每季淨增約 2,500 至 3,000 家客戶是近期的合理區間。中期而言，AI 引導的上線流程以及由產品與行銷驅動的獲客策略，有望支持更高的新增數量。

管理層預期 2027 會計年度剩餘時間的同店 TPV 成長率將略高於 5%。管理層將第一季的成果歸功於 BILL 多元化的客戶基礎、涉及 AI 企業的支出增加，以及客戶組合向更大型客戶傾斜。

關於 AI 變現，管理層初期的重點在於改善引導上線、留存率、多產品採用率以及單一客戶營收貢獻。隨著更多智慧代理帶來可衡量的客戶價值，管理層也看到潛在的定價機會，但未提供具體時間表。

管理層表示，詐欺威脅持續增加，但 AI 模型與內部智慧代理正在改善防損機制。在未收緊獲客漏斗的情況下，詐欺與信用損失的降低相較於第一季預期帶來了約 200 萬美元的貢獻。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good afternoon. My name is Tyler, and I will be your conference operator today. At this time, I would like to welcome everyone to BILL's Fiscal First Quarter Conference Call. [Operator Instructions]

I will now turn the call over to Jack Andrews, Vice President, Investor Relations. You may begin your conference.

Jon Andrews

Thank you. Good afternoon, everyone. Welcome to BILL's fiscal first quarter 2027 earnings conference call. We issued our 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. Q1 was a strong quarter for BILL. We continue to drive profitable growth as core revenue grew 14% year-over-year, and our non-GAAP operating margin reached 39%. In addition to these results, I am encouraged to see momentum building across the business. As you know, we undertook significant deliberate and proactive organizational restructuring actions during FY '26. These actions were designed with one goal in mind, to accelerate our transformation to be an AI-native company. To accomplish this, we are fundamentally reshaping how BILL operates by removing friction that unleashes greater clarity, velocity and productivity. The progress we achieved in Q1 from a sales execution, product development and financial discipline perspective is a strong early indication of our progress towards this goal. I am proud of the team's ability to adapt quickly and drive these results.

BILL exists to help SMBs run their businesses by taking care of the operational headaches that plague them. That is the premise upon which I founded the company. Today, we are operating at unprecedented scale. During Q1, we surpassed $2 trillion in cumulative TPV processed on our proprietary payment infrastructure. On an average day, around $1 billion in payments flow through BILL. Behind every dollar moved our finance workflows that have been automated for our customers and risk decisions that have been automated for BILL. These include invoices captured and coded, approvals routed, vendors validated, fraud prevented and payments sent and reconciled. Our facilitation of these mission-critical workflows at massive scale gives us unique assets and a strong moat. We have captured knowledge of the workflows and pain points specific to small and midsized businesses, assemble a massive set of proprietary data, connected to a network of more than 9 million members, seamlessly integrated a robust payments infrastructure and created a valuable and differentiated ecosystem of partners. Together, we believe these assets are unparalleled and provide a strong foundation to build trusted, accurate and secure AI for the Fortune 5 million.

I'd like to provide an update on each of our three strategic priorities for FY '27. Our first and most important priority is to deliver trusted AI-native experiences for customers. Today, most SMBs and other businesses are using AI and finance, but only about 1 in 5 trusted completely. The most common concern centered around data quality and security. That BILL, we build for builders. We believe AI should take work off of our customers' places without taking control out of their hands. So we built AI, they can watch, switch off and check. It is designed to catch mistakes before the money moves. This is how we reinforce the trust customers place in BILL, and the trust the market is increasingly demanding from AI solutions.

During Q1, we launched 5 new capabilities as part of our continuous redefinition of intelligent finance. First, we introduced BILL's Risk Intelligence agent, one of the most time-consuming and frustrating errors is paying the wrong amount. These types of errors cost businesses days to resolve and create cash flow headaches. Risk Intelligence is designed to stop unusual payments before the headaches begin. It flags invoices that deviate from a vendor's billing history during AP approval and shows why. This helps finance teams correct any mistakes faster and keep money moving. It is still early, but the results are already clear. In just the first 6 weeks since launch, Risk Intelligence has flagged more than $100 million of unusual or mistaken payments for customer review. We estimate this saves customers more than 1,800 days of manual work. No customer asked for this. We built it proactively because we know our customers' workflows and their pain points.

Let me share our customer quote from Christine Remington, accounts payable manager at AdvicePeriod. "BILL's Risk Intelligence spots and calls out discrepancies. And if an amount seems off, it tells you how and why. I recently had a legal bill 33x higher than average, and BILL flagged it quickly once it hit my inbox. Now it's even easier to review and improve bills with confidence so our team can focus on the tasks that matter."

Next, we've added an AI control hub. This hub provides a centralized view where customers can monitor the actions BILL AI has taken for them, switch AI tools on or off and control how much AI does for them. According to our customer research, almost 9 and 10 finance team surveyed want centralized or in workflow control of their AI. AI Control Hub addresses this exact market need. As we continue to deliver more Agentic capabilities for our customers, this hub will play an essential role in how finance teams deploy and control AI across their business. Third, we've simplified onboarding with our AI-assisted onboarding. This agent enables new customers to get up and running on our platform faster. BILL now personalizes the business profile, recommends products based on how a business works and helps users add vendors and assign default approvers. Importantly, customers stay in control to review and adjust anything before it's applied. New users can cut platform setup time by up to 50% and vendor customization time by up to 70%. These actions and others are showing stronger engagement earlier in the customer life cycle.

Fourth, we have launched chat with BILL to help customers understand their business better and get support with BILL. We have all experienced the power of natural language chat. Finance teams want and need the ability to engage with their tools and data at a conversation level. Chat with BILL currently in beta, enables finance teams to talk to BILL in playing language across AP, AR and SME. Customers can easily ask questions such as which vendors need paying and when, where an invoice stands, what's driving card spend, how month-end close and receivables are tracking and which bills and subscriptions recur. We expect these capabilities to grow and to continue to act as an extension of the company's finance team. Customers have relied on Chat with BILL for customer support over the last 12 months. And those AI handle support conversations have grown to 45% since launch a year ago. Moving forward, they will be able to rely on Chat with BILL the same way they would rely on any other team member.

Finally, we've created an external MCP connector for the Frontier labs. This enables customers to connect the AI chat tools they already use to build. We all know and understand that the proliferation of software tools means we need to be where our customers are. We have been building our API capabilities and thousands of developers build on BILL's APIs. This usage has grown 7x in 2 years. The learning from these customers has gone into our external MCP connectors. We are excited to share that BILL is now available in the cloud marketplace, and we expect others to follow soon.

We have seen strong adoption across our existing agents and believe these new AI capabilities will continue to add to the value we are creating for customers with AI. Adoption of our previously introduced AI functionality continues to increase among our customer base. To date, we've had over 200,000 businesses use our agents to improve their financial operations across AP, AR and SME. The number of businesses using our W9 agent increased almost 50% sequentially to over 60,000. BILL's invoice coding agent has now been used by over 70,000 businesses and just 7 months since launch. Furthermore, the number of transactions are new pay for aging completed without any human interaction during Q1 increased over 20% sequentially.

AI native is not just about capabilities and experiences for customers. It is also integral to how we build, execute and scale internal processes inside a BILL. For example, over the past year, our risk team has built more than 100 AI agents that actively perform work 24/7 across several different functions. These agents complete defined tasks on their own, such as pulling case files, drafting credit assessments or writing model documentation. Together, we estimate these agents now return over 1,400 hours per month to our teams, which is equivalent to about 8 full-time employees, while improving our results and driving real efficiency.

One specific illustration comes from our SME business. We have developed three AI agents that now work together as a suite, nick named Robin, to handle underwriting cases before an underwriter had to piece each case together by hand to decide whether to approve or change a customer's credit line. This required chasing requests through chat messages and e-mail, while pulling customer payment and behavior data from separate dashboards. Now Robin sends each request to the right underwriter, pulls the customer data into one summary and provides a one-click link to make a decision. As a result, each case and customer wait time now takes about 12 minutes instead of 3 hours. This means faster, better and more personalized experiences for SMBs and more focused team members at BILL. Our second priority is to acquire higher ROI customers, increasing the number of partners we work with through our Embed 2.0 strategy broadens our reach and strengthens the value proposition for them and their customers.

In Q1, we were pleased to announce a new strategic partnership with Blackbaud, Blackbaud is the foundational ERP for nonprofits and educational organizations. Those organizations perform some of the most meaningful work in our communities. All of us are excited that BILL will now be embedded in Blackbaud Financial Edge NXT through its payment assistant platform. Nonprofit and education finance teams will now be powered by BILL to manage their vendor payments, approvals and reconciliation without leaving systems they use and trust every day. These new capabilities are planned for a phased rollout over time. Our existing Embed partnerships are making progress as well. One partners TPV units and transaction revenue all doubled sequentially from Q4 to Q1, and we're just getting started. Partnerships take commitment from both sides and every partner's path to success looks different. As these relationships progress, we are aligning more closely on go-to-market and adding more of our ad valorem capabilities, which enhances product market fit.

Multiproduct adoption is also a key area of focus at BILL to drive ARPU expansion. We are early on this journey and are making good progress. In Q1, the number of joint customers, leveraging both our AP and spend and expense solutions grew 30% year-over-year. The value of the joint solution drives strong net revenue retention improvement from this cohort of customers. We expect to see more progress going forward as our sales team is now trained to sell BILL as a single platform, and we are in the process of implementing changes to incentives to fully align the team to drive continued success. We expect those changes to roll out for Q3.

Our third priority is to expand value through BILL's platform. One example of this is how we are extending payment solutions to the suppliers on our network. In a very short time, we worked with our partners to create what we believe is a first-of-its-kind innovative solution that creates a do-it-for-me approach for both customers and their suppliers. We worked with Visa and BILL Trust to launch the first live pilot for trusted AI agent payments between buyer and supplier platforms. Even after invoices are approved and payments are scheduled, someone still has to log into a supplier portal and type in a card number. We're changing that.

The BILL payment agent registered as a trusted agent through Visa Intelligent Commerce completes invoice payments and supplier portals using tokenized credentials. There are no shares to supplier portal logins and the agent makes no payment decisions. It only executes payments the buyer has already approved. As agents proliferate, it will be trusted agents that drive adoption. This pilot offering is a great example of how we simplify the financial operations for our customers. Agents are going to change how businesses pay each other. Control is paramount to make this happen successfully. BILL provides this control by centralizing every payment in one system and capturing every action in a complete audit trail.

Trust is nonnegotiable when it comes to Agentic Commerce. So the biggest priority for us in building the BILL payment engine was not only speed and actually, but also security. With Visa and BILL Trust friction is removed. The payments get done, the supplier gets paid faster and finance teams get their time back. This pilot shows the trust we have built in the ecosystem as well as the speed at which we are innovating. Visa, the world's largest money mover, trusted us to innovate in a short window. We developed this solution together in just four weeks. This is what it means to operate with speed, ownership and urgency.

Our ad valorem portfolio is another key driver of our growth and illustrates how we can expand value through BILL's platform. As we provide greater value for customers, this creates greater value to BILL from a monetization perspective. BILL connects and automates more B2B payments than just about anyone. We understand the solutions suppliers need, and we have a broad and robust portfolio to serve them. This enables us to solve specific supplier pain points by improving working capital and reducing manual work while monetizing TPV through multiple products. In Q1, volume growth in our [ Avalon ] portfolio accelerated sequentially by 700 basis points. One of the main contributors to that strength was increased momentum in virtual cards. Two factors drove that result. First, we are working with partners to route more of their customers' receivables as card payments utilizing straight-through processing. By identifying which invoices are [ cardable, ] we can align with supplier preferences to enable payments to arrive faster than they would have otherwise.

Based on these results, we believe that straight through processing can be a retention lever for suppliers who have previously expressed friction amount of card payment. Second, we have been maturing a native AI model that is deeply embedded within our core virtual card stack to optimize payment routing. This model identifies and routes payments to suppliers that are already card accepting even if they aren't explicitly flagged as such on our network, both straight-through processing and our AI model contributed roughly equally to the strong performance we saw from Virtual Card in Q1.

Our SPP offering is another key area of focus to expand value for both customers and suppliers. SPP is built for suppliers of all sizes and adoption across multiple channels is encouraging. We expect SPP volume to be an excellent complement to virtual card payments and also address a significant portion of our ACH volume over the intermediate term. We are signing an increasing variety of customers across both size and industry vertical. In Q1, these included law firms, health care and life science companies, business service providers and large technology companies. One of our early customers, DocuSign is using SPP to automate payment processing and reconciliation, supporting faster collections, fewer manual touches and lower operational risk.

Additionally, the solution transitions customers from check and off-line credit card payments to ACH, significantly reducing credit card fees and lockbox processing times. Another customer we landed in Q1 now represents our largest signed TPV deal to date. This global software company had payments arriving through a sprawl of portal accounts with fragmented processes managing multiple bank accounts, remittance e-mails and complex multi-entity reconciliation. This created operational confusion, payment delays and reconciliation nightmares. With BILL, supplier payments plus payments are consolidated into one centralized enterprise portal with user controls accelerated by moving checks to electronic payments and reconcile through integrations instead of people. Suppliers like this achieved faster collections, fewer manual touches and lower operational risk. We continue to see momentum building across our suppliers as we demonstrate increasing value from our solution.

In closing, our success in Q1, combined with the underlying actions we have taken across the company make me confident in our strategy. We are successfully attacking a large and still untapped market for financial operations. We have significantly restructured the company and raised the bar for performance while continuing to deliver on our commitments. AI is changing what's possible for us, and it shows in our product velocity, five new launches this quarter and then Visa pilot built in 4 weeks. With a strong financial foundation, we're well positioned to serve the millions of businesses that still need to help simplifying their finances.

With that, I'll turn it over to Rene.

Rohini Jain

Thanks, Rene. Q1 represented another strong quarter as we met or exceeded our guidance ranges on all key metrics. I'm pleased with our execution given this was the first full quarter after our restructuring. Before going into more detail about the quarterly performance, I'll first give an update on the three key pillars of our financial framework that we provided on our prior earnings call. First, BILL has built a durable business model, and we remain well positioned to deliver low double-digit to mid-teens core revenue growth with expanding margins over time. We achieved this outcome in Q1 as coal revenue grew 14% year-over-year, and non-GAAP operating margin expanded by 1,700 basis points.

Second, we are focused on sustaining performance as a Rule of 40 company. We define this metric as growth in total net revenue plus non-GAAP operating margin. Our Rule of 40 score in Q1 improved to 51%, achieving the highest level since FY '24. We continue to expect to exceed the Rule of 40 threshold exiting FY '27.

Third, BILL is focused on achieving meaningful GAAP profitability in FY '27 and expanding from there. Our Q1 GAAP net income of $60 million exceeded our expectations and has set a strong foundation for us to increase our GAAP profitability guidance for the year.

Turning to our Q1 results. As a reminder, this will be our first quarter reporting revenue net of rewards. Please refer to our 8-K filing from October 15 for more information on this change and the retrospective impact to our prior quarterly results. In Q1, we delivered $316.4 million in core revenue, growing 14% year-over-year. Non-GAAP operating margin was 39%, expanding 900 basis points sequentially. Non-GAAP net income was $119.1 million, representing a 27% improvement sequentially and a 70% improvement year-over-year. The large profitability beat this quarter was driven by a combination of factors that ended in a favorable result. These included a flow-through from revenue outperformance, lower fraud and credit losses and a slower-than-anticipated ramp of planned spend. Within our integrated platform, we saw double-digit growth in both APAR and spend and expense. APAR core revenue grew 12% with subscription ARPU increasing by 3.7% year-over-year. Core ARPU grew 4.1% year-over-year, an acceleration of more than 300 basis points from the prior quarter.

In the direct channel, core ARPU growth from recently acquired customers accelerated by 800 basis points sequentially as we continue to focus on acquiring higher-quality customers. Additionally, unit retention for our ideal customer profile has now improved for five straight quarters. In Q1, we added approximately 3,000 net new customers at the high end of our guidance range for the quarter. APAR transaction revenue was $137.7 million, up 12% year-over-year. We saw very strong TPV in Q1, exceeding our expectations by almost 250 basis points. This came from a combination of both strong ACH and a significant improvement in ad valorem volumes. Ad valorem TPV grew in high teens driven by strong virtual card performance. This TPV mix resulted in APAR take rate of 16.2 basis points, which expanded by 0.2 basis points, slightly ahead of our expectations.

TPV on a same-store sales basis grew 7% year-over-year, representing a sequential acceleration of 1 point and the highest since Q1 FY '23. Almost all sectors experienced better growth than last quarter. Particular areas of strength included manufacturing, administrative services and information technology. We saw lower spending in wholesale trade and health care. Customer spend to AI businesses increased over 30% year-over-year in Q1. In addition, on a same-store sales basis, spend to and from AI businesses contributed 1 point of overall 7% growth in this metric. Payment volume to or from the 4 top 50 AI companies on Bill grew more than 200% year-over-year in Q1 with nearly 40 out of the 50 active on our platform this quarter.

In spend and expense, Q1 net revenue totaled $92 million, up 22% year-over-year, outpacing card payment volume growth of 12% year-over-year. We saw strength in software and health services, which was partially offset by softness in advertising, entertainment and business services sectors. Take rate net of rewards was 134 basis points ahead of our expectations. Rewards rate was 128 basis points, down 5 basis points sequentially as our contract negotiations begin to flow through. Our focus on higher-quality TPV combined with loss improvements continues to enhance the unit economics of our SME solution.

Turning to capital allocation. In the first quarter, we repurchased approximately $300 million of stock at an average price of $44.18 per share. 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 provide an update to the three factors shaping our near-term outlook as I had discussed last quarter. First, we are still navigating through the changes that resulted in a significant improvement in cost structure and operating margin profile. We see good signals already with our product velocity. Our go-to-market organization is coalescing under the new structure and unified single platform sale. Nonetheless, there are still some adjustments regarding our new assignments and incentive plans that are in the process of being implemented.

Second, on SME, we remain cognizant of a dynamic environment regarding card acceptance. Additionally, we are still working through the process of taking proactive commercial actions on certain high reward tiers and contracts.

Third, as Rene noted last quarter, we are concentrating our embed channel on the new Embed 2.0 platform. We continue to expect to move away from Custom 1.0 solutions we build for a small number of bank partners. We anticipate that this phenomenon will also create headwind to our overall customer count.

I will now detail our guidance that incorporates the factors I just articulated for our second quarter and fiscal year '27. For fiscal Q2 '27, we expect total revenue to be in the range of $353 million to $363 million and coal revenue to be in the range of $315.5 million to $325.5 million, reflecting 10% to 13% year-over-year growth. Here are a few key assumptions that underpin our Q2 revenue guidance. First, on volume, we expect APAR TPV volume growth to be approximately 12%. Spend and expense volume growth faces a tough compare from Q2 last year, resulting in expected volume growth to be approximately 10%.

Second, turning to monetization. We expect APAR take rate to decline by approximately 0.4 basis points from Q1 and SME net take rate to be slightly lower, both reflect typical seasonality. On the bottom line for Q2, 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 $0.97 and $1.01. These EPS figures are based on a fully diluted share count assumption of approximately 101 million shares.

Turning to full year guidance. For fiscal year 2027, we now expect total revenue in the range of $1.4 billion to $1.5 billion, reflecting 10% to 12% year-over-year growth. We expect core revenue in the range of $1.28 billion to $1.31 billion, reflecting 11% to 14% year-over-year growth. Our guidance reflects the assumptions I mentioned earlier. Turning to the bottom line. For fiscal year '27, we expect to report non-GAAP operating income in the range of $466 million to $486 million, which represents a non-GAAP operating margin of approximately 33%. This implies an ex float operating margin expansion of approximately 1,000 basis points year-over-year at the midpoint.

We expect non-GAAP net income in the range of $409 million to $425 million and non-GAAP EPS to be between $3.99 to $4.15, representing 47% year-over-year growth. These EPS figures are based on a fully diluted share count assumption of approximately 102.5 million shares. This includes dilution of approximately 12 million shares from our two outstanding convertible notes. GAAP profitability is now a key focus for BILL, and we are raising our full year outlook. We now expect more than $180 million of GAAP profit in FY '27. This includes stock-based compensation of approximately $185 million. Because of our move to net revenue reporting, we are now framing our stock-based compensation target as a percentage of total net revenue. On that basis, we expect SBC to be 13.5% in FY '27, down from 17.6% in FY '26 on an apples-to-apples basis.

Q1 was the first full quarter after the big changes in our structure and strategy, and it delivered clear proof points. We are confident and realistic about the journey ahead. the full benefits of our new go-to-market model, our actions in spend and expense and the new product experiences will show up in results over time. The foundation is in place, a durable business model, a leaner organization and an integrated platform serving a large market. We are executing with discipline, and we are excited about our path to sustained profitable growth.

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

Operator

[Operator Instructions] Your first question comes from Chris Quintero with Morgan Stanley.

分析師問答

Christopher Quintero

Congrats on nice execution here. Rene, you mentioned you're making some changes around sales incentives that's going to roll out in Q3, I think you said. But maybe could you give us a bit more color on what some of those changes are and the rationale and what you're trying to solve for there?

René Lacerte

Yes, sure, Chris. Good to hear your voice, and thank you for acknowledging the quarter. So I think when we talk about that, we've mentioned that we are very focused on multiproduct adoption and having our customers be aligned on buying the entire portfolio, if you will. So an AP customer should be taking on SME, and SME customers should be taking on AP. We've had some early experimentation, if you will. In prior quarters, we saw good success there. It has driven strong multiproduct adoption. And so we have a training that's happened across the entire sales team now to make that a reality for our customers as they come in. And so the sales incentives that we're talking about is aligning the compensation plans to make sure they're incented on the right things to drive the important things for the business. So some of this, we've already done some of the changes with respect to the move to net revenue, but we have more work to do on the multiproduct, and we expect that to roll out in Q3.

Christopher Quintero

Got it. Very helpful. And then in terms of the guidance, it looks like Q2 is what you're calling for a growth trough year and a little bit of improvement in the back half of the year. So just curious what gives you the confidence in that improvement in the back half?

René Lacerte

Yes, I'll start and let Rohini add. I mean I think the first thing on Q2 is that the year-over-year compare is a tough one. Q2 last year was exceptionally strong with the holiday season. And so we kind of are factoring that into just the fact of the way the math works. We also know that we're not done with all the restructuring efforts. And by that, I mean the teams are still adapting, adjusting to the AI native approach and incentives across the the company to kind of make that happen. The team is still executing and adapting on kind of the go-to-market changes that will will drive this multiproduct adoption. So there's just a number of things that from a restructuring perspective, we made a lot of significant progress on aligning the company on the goals moving forward and now the execution of making all those things become reality, it's something that we're working on. So Rohini, anything else you'd like to add?

Rohini Jain

Yes. I would just -- I think you captured everything. The only thing I would like to say is that we are starting to see a good velocity of product rollouts as we speak. And over the back half of the year, we would like to see some of these improvements actually drive outcomes on the top line and bottom line, for example, churn reduction from the AI onboarding improvements, the adoption of AI tools. We are seeing some very early results of those AI agents actually pre, post driving a little more stickiness with our customers as well as TPB. We're not right now sharing specific outcomes because only going to see more periods where it rolls out, but there are some really good green shoots there from a product side. And as Rene said, from the GTM side, as we complete the transformation by the end of this calendar year, the back half should start to with new people in their seats, they're fully trained and now full quota coverage as we bring in the new salespeople, we expect to start to see momentum.

Operator

Your next question comes from the line of Tian-Tsin Huang with JPMorgan.

Tien-Tsin Huang

With the -- I'm just curious with the restructuring. I know there's a lot of moving pieces. Are you achieving the net savings that you intended to get to at this point, I guess, 6 months out, maybe 1 quarter post implementation. And I'm curious also with some of the product velocity, I know Rene mentioned five products and the Visa deal. On the partner front, do you feel like there's more to come in terms of product velocity improving? Where are you in the pacing there?

René Lacerte

Yes. Thank you, Tien-Tsin. I'll start. And again, I think we can add some more color, especially on the first part of your question. But the first thing I would say is that -- this was a significant amount of change, a material amount of change across the company. And we, I think, demonstrated in Q1 the strength of the business and durability of the business to be able to produce the results we did. I am especially excited by the product velocity, having the five internal agents come out as well as the work that we did with Visa on their intelligent commerce like that's a super strong product velocity in the quarter. And I would say that all of us inside the company feel that we're just getting started. I mean the first thing we did from a restructuring perspective, was to align all of the payments and all of the front-end experiences under 1 product leader, and that's Mike Cherry. I'm super excited about the work that his team is doing. We also brought in Eric as our CTO and the combination of the two is driving more product velocity. I would say both of them feel like they would say that we're kind of in the early days of the capabilities that they're testing out with the teams, and we have a lot of confidence that we can drive more in the future. So excited and look forward to what we'll be able to do in the rest of the year. and excited about what I'm seeing from an AI native experience from the teams. A vast majority of our code now, obviously, is being written from an AI perspective. So we have a lot of tools to unleash and super excited about it. But I'll let Rohini kind of take the first part of your question.

Rohini Jain

Yes,Tien-Tsin. Nice to hear your voice again. So -- regarding OpEx, you would see in our numbers that from Q4 to Q1 fiscal, we saw a pretty material drop in -- and we had guided to the savings that we anticipated, but we beat our operating income guide for Q1 by about $22 million in total, out of which approximately half came from OpEx. So we actually fairly overdelivered in terms of the OpEx outcomes within Q1. But I also want to clarify that I wouldn't expect that to be our new baseline by any means because we exited post material restructuring. We had talked about how we cut in a little bit deeper in certain areas to be able to bring the right skill sets and such. So we have a little bit of backfill opportunity that we need to execute, and then additionally, we're putting out a lot of product in the market, and we want to lean into that product releases by putting marketing behind it so that the customers actually see those product releases and the benefits of it. So there's going to be some uptick in the marketing spending. And then the usual run the business cost increases through the year, which will include the merit increases, payroll tax resets and the normal software, cloud AI type of increases. So I would say that Q1 was more than what we expected, and then we're going to start to normalize into the back half. .

Tien-Tsin Huang

Okay. So that's good detail. Just my follow-up then very quickly. I think Rohini,you mentioned you saw lower fraud costs there. I'm curious if that's structural. Is that BILL being a little bit more careful. What are you seeing there on the underwriting side in front?

Rohini Jain

Yes. Tien-Tsin, if you look at the environment with AI and everything else, the incoming fraud pressure continues to increase and all the work that our risk teams are doing now with fewer resources, but much higher use of AI models or AI in their models we are able to prevent a lot of that and continue to show the trajectory improving sequentially quarter-over-quarter on our fraud and loss performances. Now we saw, I think, approximately $2 million or so improvement versus what we had expected in Q1 from fraud credit losses improvement, but that's really driven by not us doing anything with the funnel, but more so just improving how we control the losses coming through and catch them before.

René Lacerte

One thing I would just add is we have a pretty massive amount of data to actually train the AI that actually does this work. And I think we mentioned in the prepared remarks that we have over 100 agents inside of our risk teams that are actually doing this work and helping us become more effective. So we're obviously have a strong position from a platform perspective, and we have a strong position from the capabilities as we leverage the knowledge that we've learned into the AI capabilities that are available.

Operator

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

Kenneth Suchoski

I wanted to ask on spend and expense just the rewards rate step down to the -- I think it was 128 you mentioned some of that was contract renegotiations starting to flow through. And then at the same time, I think on our math, gross take rate, take that up to I think it was 262 basis points from 260 basis point. So just walk through how sustainable both of those are, meaning is there more to come on the rewards side as you work through the higher rewards tiers. And then on the gross take rate side, is that lift mix? Or is it pricing? And then just any commentary on the underlying KPIs because we noticed the the growth slowed a little bit on the net adds side as well as the TPV side?

Rohini Jain

Go ahead. Yes. I can start and then Rene, if you want, you can add more color. So starting out on the SME business overall, I want to repeat some of the metrics that we posted for the quarter. So in Q1, our TPV grew about 12%. Our net revenue grew at 22% and the rewards rate grew at 9%. And this 9% is actually less than half of revenue growth and 3 points lower than TPV growth, which really points to very strong quality of TPB coming into Q1. We've been implementing a lot of changes in the go-to-market motions, how we think about contracts within SME space and how do we make this business grow in a profitable and durable fashion and some of the compensation changes that we laid out this quarter especially on the post-sale side very quickly started to show results. It's actually really impressive how quickly the teams were able to sort of adapt to the new structure and start to execute. And we're seeing extremely high quality TPV come through. Having said that, there has been in Q4, some disruption in roles that people are playing the quotas they have, they have to start kind of making new relationships and going to new sets of customers. So we will expect the customer counts and SME to continue to improve from here on and the TPP to start growing. But we do also in Q2 face a little bit of a tougher comp. So we are adjusting the guide for that. But overall, I'm actually really happy with the quality of TPP delivered in Q1.

René Lacerte

And the only thing I would add to Rohini's comments is that the deliberate actions we took across the business obviously have an impact. And I think we all know that, but the restructuring and the changes and losing obviously some sales folks now we're retraining new people and they're in seats and they're starting to get active. So I think the opportunity for us, and that's why I called out that the results we had in Q1, I think all of us, I mean I feel very, very proud of the team. because we're able to deliver it. We do know that the restructuring is not done. We have a lot of work to do when it comes to enabling our teams to continue to have the alignment that they have as well as to leverage the capabilities and the new comp plans and all the things that guys mentioned. So I think we believe in the market and believe there's a lot of opportunity in front of us.

Kenneth Suchoski

And just on that restructuring point, I mean, I think the -- just in terms of how it relates to APAR net adds, obviously, putting up good numbers, 3,000 net adds in the quarter. I think that's at the high end of the range that you framed previously up from last quarter as well. Is 3,000 the right sort of run rate for the rest of the year? Is there anything that would drive that higher or lower from here?

Rohini Jain

Ken, let me actually, again, put a little bit of this in context. So we are focused on driving what we believe is our growth algorithm, which includes the customers and the ARPU. We talked a little bit about in my prepared remarks about ARPU, which grew 4.1% year-over-year. And then as a reminder, we are really focusing our sales teams to go after the ICP that we have defined, which is about 200 to 250 headcount businesses. And as we hone in on this ICP, we would look at probably a rough range of 2,500 to 3,000 that seems appropriate. We have some initial proof points like I mentioned, 800 basis points of acceleration in the first quarter of delivery from our new direct customer ads. So that will continue, and that will be balanced in the short term with the range that I just mentioned from a net adds perspective. Over the midterm, we have a lot of actions like AI-led products with AI onboarding, the new product-led and marketing-led motions as they start to kick in over the midterm, we'll see that number start to tick up.

Operator

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

Andrew Schmidt

Congrats on the progress here. It's good to see. Maybe just start off with the question on just cash flow. Obviously, with margins stepping up, free cash flow should start to ramp pretty meaningfully. Obviously, this year, there's probably some transformation-related expenses. But is there a way to think about free cash flow conversion or growth over time? Do you think it becomes more important, especially as the margins start to pick up here?

Rohini Jain

Yes, I can take that question. So thank you for that very important top of mind, free cash flow metric as we continue to improve GAAP profitability as we continue to improve the operating income and the discipline within the company. So in Q4 and in Q1 this year, we had some volatility in terms of the restructuring and the payouts of the restructured employees in such happening. There are some dynamics that are disrupting the natural flow of how would I say, free cash flow to revenue ratios. But as we go forward from Q2 onwards, we'll start to talk a little bit more about that in a more stable format. So stay tuned for that.

Andrew Schmidt

Got it. And then, Rene, you mentioned sort of AI benefiting the virtual card acceptance process, routing, identifying suppliers except card street processing, obviously, a benefit. When I think about AI, I also think about the benefits of supplier enablement in terms of accelerating the payments network. I'm wondering if that's an opportunity if you've deployed that today because it's obviously a very manual process, and there seems to be a big opportunity to really accelerate that. So I'm just curious if it's something that's being explored?

René Lacerte

Yes. Thank you, Andrew, for your question. And I think just stepping back, kind of similar to the risk commentary at the platform we have, the size and scale and the reach that we have enable us to actually learn a ton about what suppliers need and want and we are executing on those learnings. And so what you saw with virtual card is us understanding the need for straight-through processing, understanding how do we identify this to quickly help them get a faster payment. And I would say on supplier enablement, we have a number of things that we are doing on this front. You think about the SPP product, the Supplier Payments Plus, this is a lot about enabling for very large receivers of payments from build customers. If you think about the scale that we have and the ability to kind of go in and talk to the largest receivers in our network, it makes a difference. And what we mentioned in the quarter is that we have suppliers from all different professional verticals coming on is because of the enablement we have on that side. Now that's just the payment piece. The other thing that we do on the supplier enablement is what we've done with the W9 Agent. So the W9 Agent goes out and collects the cap of the needs for a filing purpose of doing a 1099 and does that all agentically without our customers having to do anything and suppliers just fill in a few fields. So very powerful opportunities. And so to your question, like are there some opportunities for us to drive AI into supplier enablement, 100%. And I think we're uniquely positioned to drive success there because of the size and scale that we have.

Operator

Your next question comes from the line of Darrin Peller with Wolfe Research.

Darrin Peller

We were pretty impressed by the 7 points of [ Avalar ] TPV acceleration, especially on the outperformance of what we were seeing in virtual card. Just when you put it into context over the past few years, we see has been a bit more of a headwind. So it sounds like this growth vector might have reaccelerated. Is that the right way to think about it? And how does that change your plans around SPP, if anything? Just curious a little more context and color there would be helpful.

René Lacerte

Thank you, Darrin, for the question. I think this really is a testament to the team and just working and learning what it is that suppliers need. And really, the straight-through processing, we have some partnerships there. We've done some work internally. That has been something that's super important. One of the things I probably should have mentioned in one of the earlier comments on this is part of the reason for the Visa work that we did under Intelligent Commerce is that we believe that Visa obviously is not going anywhere. They're going to continue to listen to their suppliers and merchants and understand what needs are necessary for them to take more card payments. And one of the things that they heard is that it's too hard for customers to log into a portal and then put in a car. And so what we've done now and we are the first to pilot this is we've enabled our customers to authorize a payment, could be on their mobile phone, could be in the web app doesn't matter where as soon as they authorize it, the Visa agent will take over and make sure that, that payment is executed without anybody going into supplier portal. The reason I bring up that example is some of the friction we've seen in virtual card has been kind of the friction of how they receive the payment. And this is going to actually streamline that and simplify that. So there's a lot of things we're doing, that's one example. The example of straight-through processing is another the example of how we're identifying the suppliers that take card and want to take hard more accurately using AI, that's a third example. There's a lot of opportunity. It all takes a platform and the size of the data that we have to be able to make this successful. And I think the teams are doing, like I said, a very strong job at executing.

Darrin Peller

Yes. That's great to hear. One quick follow-up. We joined your product demo today around your new AI offerings, some of which you also listed here. So it's exciting to see those. But help us understand what we can actually meaningfully see a benefit to your -- whether it's revenue or some of your KPIs, and this has changed your way of thinking of pricing or packaging at all?

René Lacerte

Yes. I mean, I definitely -- in some ways, I mean, AI changes everything. But if you think about running a business that always comes down to kind of two things. You got to add customers and you got to have a good price per customer. And so we think of AI applying in both of those cases. So with respect to adding customers, the AI onboarding that we talked about is super important. We think that's something that's going to streamline the adoption, if you will, in the early days and actually we do the attrition that we see and actually increase retention from those early customers. So we have a very, very large funnel and this gives us an opportunity to kind of really leverage that. I would say that the other part of the funnel that we're focused on is and Rene has mentioned that we're going to be investing in marketing as we roll out the AI capabilities, we are going to be spending behind our marketing efforts, our go-to-market efforts to really make sure customers know what it is that we do, just like to the demo show that you attended today, we've got to do obviously more of that and reach customers where they are and help them understand the strength of the capabilities that we built a BILL. So that's the second thing on kind of the overall customer adoption piece. But the other side, which I talked about is adding revenue per customer. And so the multiproduct adoption, which we've talked about a lot, we talked about it from a sales go-to-market perspective, some of that's going to come from AI. Some of that's going to come from us making sure that we understand what it is that customers need and want. And some of that's going to be product placement, product like growth across the portfolio of payment products we have. that will drive revenue for us. And so when we think about all the opportunities that we have, the first thing that we want to focus on is driving customer adoption, then we want to drive obviously, the revenue per customer. And we would say the combination of these two is what we call at scale monetization because we have such large size and scale. Once we get those two working together, every point of difference makes a meaningful impact in real time to our business. So that's the first thing we're doing from an AI perspective. That said, all these other agents that we have worked on, and there are obviously a number that we've talked about over 20,000 customers today using -- having used our agents, and there'll be more agents that we put out there. We know that there's an opportunity as we execute on those agents and deliver the value for our customers, that there's an opportunity to drive pricing opportunities there. And so what we believe is that as we do this, we'll be able to execute this going forward.

Operator

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

Christopher Svensson

I wanted to ask about the really nice same-store sales TPV. I think you said highest in 4 years, maybe, obviously, tons of headlines around interest rates, health of businesses, inflation, et cetera. So maybe you could talk more about what's driving that really strong same-store sales growth. How specific is this to build because of the good product loss that you're seeing and vertical exposure? Or is this maybe more macro trends that you're benefiting from? And then just any way to think about what is embedded in the guide from a same-store sales perspective?

Rohini Jain

Thank you for the question. I'll take a stab at it and then Rene, you could jump in. And so I want to start out by saying, yes, we're really pleased with the same-store sale number of 7%. And one, again, I think I've mentioned this before. What I really like about the BILL portfolio is it's very diversified. And under the very diversified portfolio, we see a lot of puts and takes and some of the headwinds that you mentioned there are some industries and sectors that see that headwind, but then we have a bunch of others that could be led by AI spending or ancillary areas like construction or some of the IT technology type of spend, that continues to grow within our portfolio as well. And a couple of areas that we are seeing the impact of inflation on our wholesale, retail, et cetera, that are not going as fast. So I would say, because we are the sort of a horizontal player and have a very diversified portfolio, we do end up seeing healthy growth rates with sectors offsetting each other. And as per the -- what is baked into the guide, so I would expect a little more than 5% going into the remaining part of the year, which is kind of in line with how we're thinking about TPV trends as well.

René Lacerte

And the only thing I would add to Rohini's comments is I think probably close to about a year ago, we started talking about our ideal customer profile actually being a larger customer. And so we've been working on that. You're seeing some of the impact of that work, which is we're actually finding the right customers that get the value out of BILL, just as a refresher, the ideal customer profile for BILL is some customers between 200 and 250 employees. There is a lot of customers out there that are in that size. We are uniquely and intently focused on that. We see that more than any others. And I think that's some of the impact on driving the TPV as well as the ARPU growth of the business.

Rohini Jain

Yes, I actually missed that comment. And that's primarily, I think, from an internal side, what we are doing is the mix into higher ARPU customer is rapidly evolving. And most of the attrition that we see is in the lowest ARPU categories. So you can see the overall composition of our customers get stronger every quarter.

Christopher Svensson

That's great color and bleeds into what I wanted to ask about next, which was ARPU, you saw acceleration both in core ARPU, I think, 300 basis points larger cohort 800 basis points, obviously been a huge focus for you, but how should we think about the sustainability of that acceleration in ARPU through the remainder of the year? Just kind of talk about the runway you have to keep pushing this higher, especially as you continue with that move-up market.

Rohini Jain

Yes. We talk about ARPU in a couple of different contexts. One is the subscription and one is the total. The bigger prize for us is really the total ARPU. We bring in customers, and we monetize them through all the different products that we have. So although on the subscription side, you would see we had taken some pricing actions, we will start to lap early in Q1, you will see that starting to flatten a little bit compared to where we are today because of that lapping. But from the total ARPU perspective, we expect to continue to see increases, they're not going to be linear, depending on the composition within the quarter, how the spend is going. We are also quite aware of going into Q4 holiday quarter last quarter -- last year, the holiday quarter was really strong, and we've got some really good tailwinds. So we're watching the sentiment of spending closely in the coming quarters. But Overall, we continue to expect to expand our go with stronger customers as well as continue to grow [indiscernible] that I gave out.

René Lacerte

The other point that's adding to ARPU growth is our success with MPA. So if you think about the multiproduct adoption, one of the things that we see as cross-sold customers had a little over 2x the TPV, and the ARPU for joint customers is around 1.4x. So these are things that just why our strategy is what it is. We think there's a lot of opportunity with product velocity that we have, the go-to-market changes that we have, that we'll be able to continue to drive this type of adoption throughout the year.

Operator

And we've reached the end of the question-and-answer session. I will now turn the call back to Rene Lacerte for closing remarks.

René Lacerte

Thank you, everyone, for joining the call today. During the quarter, we made meaningful progress on our restructuring efforts and becoming an AI-native company. We are excited by the progress and no, we are not done. We look forward to updating you on our progress in February. Thank you, and have a good night.

Operator

That concludes today's conference call. You may now disconnect.