Down 87%, Is It Time to Buy This Super Software Stock?

Bill Holdings (NYSE: BILL) has a portfolio of software products designed to streamline accounts payable, accounts receivable, and expense management workflows for almost half a million small and mid-sized businesses (SMBs).

Despite Bill's consistent revenue growth over the last few years, its stock is down 87% from its record high, which was set during the tech frenzy in 2021. It was unquestionably overvalued back then, but the stock is now trading near the cheapest level in its history.

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Bill has an enormous addressable market in front of it, so could now be the time to buy this super software stock?

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Helping small businesses streamline their bookkeeping workflows

Bill knows small business owners are time-poor. They have to manage product development, sales, marketing, and administrative tasks like bookkeeping. The company wants to put some of that time back into their pockets with its growing portfolio of software tools.

Bill's flagship product is a cloud-based inbox where business owners can upload physical copies of incoming invoices or even receive them directly in digital format. It automatically routes each invoice to the appropriate person for approval, and it can then be paid with a single click. Additionally, it automatically logs each transaction in the books thanks to integrations with leading third-party accounting software providers.

Bill also offers an accounts receivable platform where businesses can rapidly create invoices, send them to customers, and track incoming payments. Then, there is its expense management tool, which businesses can use to create budgets and track their employees' spending.

Bill had a record 488,600 business customers at the end of its fiscal 2025 third quarter (ended March 31). The company has built a large network of over 9,000 accounting firms that use its software and recommend it to their clients. Since Bill streamlines bookkeeping workflows, it makes accounting far easier at tax time, which is a win for everyone involved.

In fact, Bill said the number of new customers that came from its accounting partners soared by 60% year over year during the third quarter. This highlights how valuable those firms find Bill's software, and it also shows how incredibly important this sales channel is for the company.

A solid third quarter, but weak forward guidance

Bill generated $358.2 million in total revenue during its fiscal 2025 third quarter (ended March 31). It was an 11% increase year over year, and it was also above the high end of management's forecast of $357.5 million. Despite the good result, management reduced its full-year guidance for fiscal 2025 by $6.5 million (at the midpoint of the range) to $1.455 billion.

Macroeconomic uncertainties triggered by tariffs and global trade tensions could dent consumer spending, which would become a serious headwind for SMBs. Bill noticed its SMB customers were adjusting their spending patterns during April, which is when President Trump announced his "Liberation Day" tariffs.

Bill earns the majority of its revenue from transaction fees when SMBs make payments through its platform, so any broad slowdown in business activity could deal a blow to the company's top-line results. On the flip side, if the Trump administration delivers new trade deals with other countries, that could give economic activity a boost, which would be a tailwind for Bill. But negotiating those deals will take time, and it's very hard to predict what might be in the final agreements at this early stage.

Is Bill stock a buy?

When Bill stock peaked in 2021, its price-to-sales (P/S) ratio reached a completely unsustainable level of around 100. But the 87% decline in the stock since then, combined with the company's revenue growth, has pushed its P/S ratio down to just 3.2. That's near the cheapest level since Bill went public in 2019:

BILL PS Ratio data by YCharts

Bill stock will likely struggle to recover while economic uncertainty is simmering, especially if the company continues to issue weak revenue guidance. But there might be an opportunity here for investors who are willing to focus on a longer-term period of three to five years.

That's because Bill estimates there are more than 72 million SMBs in its addressable market around the world, which gives the company plenty of room to build on its current customer base. Plus, those businesses execute a whopping $135 trillion in payments each year, so the $318 billion that Bill is processing on an annual basis right now is a mere drop in the bucket by comparison.

Therefore, although Bill stock might underperform in the short term, it might be a compelling opportunity at the current price in light of the company's significant long-term potential.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bill Holdings. The Motley Fool has a disclosure policy.