All right, so next up, excited to have Bill.com. We've got both René and John joining us today. Guys, you've been one of the most exciting stories in B2B payments, so thanks for joining us yet again for the Communacopia Conference.
Thanks for having us.
Always good to connect.
Maybe let's kick it off on the state of the union. You just reported your fiscal year. I wanted to kinda take a step back. You know, the company's been growing users at a rapid clip for multiple years. B2B payments is still a massive opportunity, we're in the early innings. At the same time, we've also gone through our first major up and down cycle in terms of spending, adoption, and monetization. Can you kinda help separate the cyclical from the structural that's been at play, and then talk about where you think we are in that cycle?
Sure, sounds great. You know, first of all, I'd say that, you know, we've defined the category of financial operations with lots of innovation and iteration of that innovation. We constantly innovate, we constantly bring new products to market. That leads to the rapid growth that you talked about, and ultimately, our job is to, you know, skate to where the puck is gonna be. When we think about all the things that are really inherent to the growth of the business, it's the fact that we've been able to skate to where that puck is gonna be. That's enabled us to build a great, you know, large business, large market opportunity. When you think about the stuff that's cyclical, it's not really about all the things I just talked about. Everything we have is such good bones for where we're going.
And I think about the context of the question, you know, the markets. Really, our business is composed of kinda two factors, any business: how many customers, and then what's the price per customer you're getting? How many customers? You talked about that. Lots of great growth, lots of market opportunity. We've been consistent there, we've been able to drive growth there, and we've been able to drive revenue per customer over time. What we are seeing that, you know, potentially is reflective of the economy is that, you know, as the economy has its ups and downs, the overall spend on the platform is cyclical, as you say. And that has led to, you know, in the last year, I think us having a more focused attention on those parts of the business that we could influence that might be cyclical.
The examples that come up are supplier engagement, if you will. We've had suppliers show a little bit more sensitivity, starting about a year ago, into the products that they take from us. And what we did with that is we once we saw that sensitivity, we put a, you know, a focused team on understanding what the sensitivity was about and addressing those concerns. And what you saw in the second half of the year is that focused team, that clarity and alignment around, you know, understanding suppliers' needs, was able to actually work through a lot of the concerns that we had. And so we ended the year, I think, at a very strong position.
You know, some background, just to think about, that, you know, during the pandemic, again, to your point on cyclical, the pandemic, we saw 30% growth, overall in the TPV on customers year- to- year. And that kind of stabilized and went down, and now we would say it's kinda stable. And so what we see in our customer base today is more of a stable wait-and-see economy. People are just investing a little bit, investing less, like, but just kinda flattish. And that's something that, you know, when you think about the overall strength of the business, the fact that it's a massive market, that we did define the category, that we have a leadership position, that our- of innovation that continues to enhance our experience with our customers, that we're well-positioned when the macro starts to be an investing economy, which we don't...
You know, we see that hopefully coming soon, but we haven't seen it yet. And what that gives us is a position to drive multiple growth drivers that we have across the business. And we'll talk about, you know, all of those, but, you know, I think the one on the cyclical side that matters is the portfolio approach on the payment products that we have. So if you look across the business, we have, I think it's now 12 different revenue streams from different payment products, and all of them are working for us. Some obviously produce more revenue than others, but our ability to have that portfolio approach that actually drives through these cycles is something that we think is that we're uniquely positioned on, and something that we're excited about.
So you mentioned that the macro has sort of stabilized for your customers, not yet seeing signs of customer investment, but you're investing ahead of that cycle. You announced, I think, a plan to invest an incremental $45 million across the business in 2025. Can you walk through your investment priorities as we look into next year, and just how you're thinking about the payback on some of those investments?
Yeah, I think. You know, one of the images that stuck with me when I think the first time I heard this quote from Warren Buffett, there was an image attached to it, which was an oak tree with a kid sitting underneath the shade of the oak tree. And it was like, you're sitting under the shade of the oak tree today because somebody planted that seed a long time ago. And my job and John's job is, like, how do we build the best long-term business? And when we think about that, it's a balancing act of investing today, as well as reaping the profits of today. And so what we saw in the last half of the fiscal year was that we were able to drive a tremendous amount of alignment across the company that drove tremendous profitability growth.
So if you looked year-over-year, the operating income less float was 750% increase in one year. And so that creates, you know, a fair bit of conviction around our ability to drive profitability, our ability to actually drive adoption, which we also had, that was strong. And I think that, you know, that gives us an opportunity to think about: How have things changed? If you just look back, how have things changed for SMBs? They changed. The economy changed, went more from kinda this high growth that was post-pandemic, to kind of a little bit of a threat of a recession, to a wait and see. And our ability to kind of rise to that occasion, I think, was super important because of three investment areas that we've kinda placed on the business.
The first is that we're augmenting the overall experience that we have for, you know, market capabilities around suppliers, and that's things like virtual card, and FX, and payments across the platform. Those are things that we're automating those experiences, and that's making an impact on the business, and there's lots more to go on that. We're leveraging AI across the entire platform, and so we don't always talk about it this way, but when you think about the customer experience that we create for our customers, we start with all the documents that come into their business. We automate, we digest that, we store that, we create workflow around that. We created automated connections to suppliers.
We then do a bunch of risk management across the entire portfolio of 7.1 million on our network, and 500,000 businesses roughly on the platform. That's all because of AI, and so we continue to want to invest behind that. So we'll be investing in suppliers, we'll be investing behind AI, and then the third thing that we'll be investing behind is doubling down on accountants.
Yeah.
And so when you think about the unique position that BILL is in, over eight thousand accounting firms have used BILL and have defined a new part of their practice called CAS, Client Advisory Services. That is the fastest-growing part of every accounting practice that has it. It is growing exceptionally well, and we have helped define that category for accountants, and so we're gonna invest behind that. That's gonna be go-to-market, it's gonna be services and products, it's gonna be multi-entity, it's gonna be tools like Cash Flow Insights to help them be more strategic with their clients. And all of that investment is what we want to do on the short term, if you will. There is a long-term bet that we're investing behind, which is our embedded strategy.
What we've done over the last, you know, let's say, dozen years, is that we've always been partnered to anybody that an SMB trusts. So we have unique relationships with financial institutions. We are in many of the top banks in this country. We have great go-to-market solutions happening there, and we've learned how to embed our solution inside of another company's platform. And what we're seeing, and what we just announced with Xero back in February, was that we were gonna do that for Xero, and less than seven months later, six or seven months later, we're in beta with them. That tells you the speed at which we're able to move, and that's in a market that we're also seeing continue to expand. We don't think that's in FY 2025. Maybe we start seeing some shoots in FY 2026, but it is a long-term play.
There's way too many financial, you know, technology companies out there, and they're going to be, you know, part of other solutions to simplify the customer experience, so those are all the areas that we're investing. We're super excited about it, that this felt like the right time to make those decisions.
Great.
And our conviction ultimately went to, John and I putting money into the, you know, into the company.
Yeah
... as well as, obviously, stock buyback from the company and the board.
Yeah, makes total sense. So I wanna shift and talk a little bit about some of the recent trends in the business. John, I think you mentioned seeing some signs of stability in the customer base at earnings. How does that translate to your expectations of spending levels at kind of the company level?
Yeah. Overall, we're order of magnitude expecting TPV to grow about 10% for the year. But on a per customer basis, we're looking at kind of a flattish outlook for the year. As René mentioned, we saw TPV per customer grow order of magnitude 30% during the pandemic years, zero interest rates, stimulus, all those sorts of things. And then around the end of fiscal 2022, we saw four quarters in a row of single-digit declines in TPV per customer, 4% or 5%, something like that. For the last three quarters, we've seen pretty stable-
Mm-hmm
... trends with TPV per customer. I think we were up 2%, two quarters in a row. Last quarter, we were down 1%, and we don't see any significant pullback across most all spend categories. So that's actually a really good environment relative to where we were right in that post-pandemic, you know, shadow. So that's why we're expecting kind of flattish TPV growth. We're not expecting any major change in the economy, up or down. We do have some opportunities, though, before the economy turns, and let's say we get to B2B spend expansion, which would be a significant tailwind for us. We do see some opportunities to expand wallet share with customers. As we roll out more products, we do more things around payment innovation.
That should help us increase TPV per customer, even without the economy turning. I'd say the other factor that influences our view is that we're still seeing a really good demand environment, and new customer cohorts are getting up and running pretty quickly. As we've talked previously, we are seeing our focus in slightly larger customers as we go to market start to pay off. So we expect some improvement in the results we see from the new customer cohorts in fiscal 2025.
Yeah, okay
... maybe more so than in the last couple of years.
You mentioned the larger cohorts. I know you've spoken about that with Divvy. Is that also happening on the AP platform? Sorry, spend and expense.
Yeah, that's exactly right. So, the larger customers are the core of our spend and expense product. And even on the BILL side, with the core AP product, we're finding that the value proposition resonates most with slightly larger businesses that have a little more complexity-
Yeah
... more employees involved in their processes, and frankly, more spend under management, such that the return on creating automation and efficiency is much higher for them. So that continues to be our focus.
Got it. Okay, makes sense. And then, if we turn to the guidance, I think you're expecting core revenue in the 13%-16% range. It also sounded like you expected some variability in the quarters. I think you mentioned a trough in Q2, in the December quarter. Could you help unpack what's driving that cadence over the course of the year?
Yeah, I mean, we obviously call it like we see it, take all variables into consideration with regards to our forward expectations. And the starting point is what we just talked about, overall TPV and TPV per customer. The second key variable is really around monetization, and we see that being relatively flat in the first half of the year, up a little, down a little, and then some expansion in the second half of the year. Our revenue expectations pretty much follow that, given the growth in TPV is not gonna be too significant, and we should see some expansion in the second half of the year. That's how we came up with the revenue guidance.
Okay, got it. And then I think one of the big headlines coming out of earnings, you know, you guys talked about the opportunity to accelerate the business more towards the 20% growth level, kind of exiting the year and into fiscal 2026. So could you help unpack the drivers of that acceleration? How much of that acceleration is dependent on monetization increases resuming versus things like stronger net adds and a more stable macro tape?
Yeah, the 20% also for 2026 was core revenue growth, so it excludes the float impact. We're not assuming any change in macro, right? So no tailwinds associated with B2B spend or interest rates or whatever. I think some good things could happen if we get to a stable, lower interest rate environment. I'd say there's two big variables. The first is customer acquisition. As I just mentioned, we're doing more there with larger customers. We'll see an impact of them larger in fiscal 2025. Then René mentioned our emphasis on the accountant channel, where we're really doubling down. It's an area that we've had strength for a long time. We're leaders in that space.
It's 50% or more of our customers, and we're expecting that to translate into a really nice setup for 2026 as we accelerate investments there. The other key variable is really just around monetization and payment products, and it's part of our investment thesis for 2025, enhancing existing products, rolling out new products, creating more automation, things like that, which would result in some expansion in, you know, in monetization. Not till the second half of 2025, which is part of our assumption for 2026, we'll start to see some benefits from that. So all the things we've talked about regarding, you know, virtual cards, new ACH products, IPFX, things like that, should really start to pay off heading into 2026.
Yeah. Okay. So maybe let's talk about a few of those things. You know, there's been a lot of focus on virtual card and cross-border over the past year, given some of the monetization challenges in the industry. You've been talking about newer structures, such as the invoice financing pilot. I think you also alluded to some other products around cards, so, and enhanced ACH. So could you expand on some of the things that you're doing in terms of strengthening the existing rails and, and adding new rails to the platform? And I would just add, as a side, we had the Mastercard CEO yesterday, who sounded very optimistic about the, you know, the prospect of monetization in B2B, so curious on kind of what your perspective is here.
Yeah. It's There's a long way to go for small businesses to catch up with consumers, first, just for digital payments. Like, there's so much manual activity, and the vast majority of the payment volume that we process is still on relatively low cost and difficult-to-reconcile payment methods, which is primarily, you know, check and ACH, so there are lots of growth levers that we have. Our first, you know, priority is really enhancing existing solutions, and when we talk about virtual cards, we saw some headwinds there, some cost sensitivity that materialized in fiscal 24. And our approach is really all about automation, just making a better product experience to remove some of the human element, which has the effect of lowering cost. We signed a new partnership with a company to help us with straight-through processing.
We want to do more of that. It's a low percentage of overall transactions today, and we're just driving a better customer experience and more engagement with suppliers. As it relates to international payments, we talked previously about rolling out a new partnership to do local clearing in markets. I think we're up to eight currencies now. We're gonna have many more currencies and corridors in fiscal twenty-five. That should result in better FX transaction volume, obviously much higher monetizing. And in terms of scaling some of the newer offerings that aren't at full potential yet, we're really excited about invoice financing, our working capital solution, the first step in our working capital solutions. We're seeing good demand there. It's been in a very controlled rollout through fiscal twenty-four.
We're proving out economics, targeting returns and whatnot, and I think we're pretty excited about that. It's probably not the biggest growth driver for the business, but if you look over a multi-year period, and the additional products that could come into that category, it can be substantial.
Yeah. And just anything on the advanced ACH product? I think that's been one that's been getting a little bit more focus recently.
Yeah, there's a gap if you look at just the product portfolio between check and ACH payments and some of the card payments that we offer. And so there's room for several products to build upon some of the rails that we already have, and that's where an advanced or an enhanced ACH product would fit. There's also more card usage opportunities on the BILL AP side.
Mm-hmm.
Most of our card payments, besides virtual cards and S&E, are on S&E. And so we're doing enhancements and new products in both of those categories, and we think that will result in a significant increase in ad valorem payment penetration overall in the coming years.
Yeah.
I think, you know, part of the conviction we have around the performance of the business and what we can do is because just the number of payment products across our platform. Like I already said, we have over 12. John talked about a number of them there, and that, I guess, the understanding of that conviction kind of led to our conviction that we needed to bring some expertise in. So we brought this wonderful person in.
Right.
Mary Kay is gonna be our EVP of Payments and Financial Services. She's got, you know, twenty-plus years of background in fintech, managing that convergence of software and payments across companies like Visa and Square. She's managed the buyer-supplier relationships at Visa and Square. Like, she's done all these wonderful things. When you think about what we have and our ability to have conviction into the future, it's because we've taken payment products. We had two essential payment products when we went public, check and ACH. We just started virtual card international payments, and now we have a dozen, and all of them are in different stages, and all of them have lots of room for growth, and yet it's complex. So we needed that leadership, and we're super excited about having Mary Kay join.
Yeah, I know. That was an exciting announcement yesterday. Wanted to talk about, you know, one of the key strategic areas of investment this year around treating suppliers like customers. You know, and you've talked about this a lot, the evolution of your thinking, to think about them more as direct customers. So when you speak to suppliers over the last year, what do they tell you about what they want from BILL to help manage their AR? And then do you see product opportunities over time that are more directly focused on the suppliers?
Yeah, we definitely see opportunities to continue to do more. And I'll just start with, you know, we've got 7.1 million on our network. We're in a unique position. I think, as far as I know, it's the largest B2B network that does payments, and that's an opportunity for us to continue to leverage, you know, that relationship that we have with the suppliers to support them in their doing their business. And just as a data point, you know, roughly 1/3 of the core BILL platform revenue comes from suppliers today, and so already it's somewhat two-sided, right? And yet there's an opportunity to do more. And so what we've learned. To your question, what we've learned from suppliers is that, hey, no one wants a check.
Even the large virtual card suppliers that, you know, have said, "Hey, they're sensitive," when we actually engage and talk to them, like, "Do you want checks instead?" "No, we don't want checks." "You know, what do you want?" Well, everybody wants faster payments. Everybody wants certainty of payment. Everybody, you know, wants simpler reconciliation with their enterprise platforms, if you will, if they're large. And all that's solvable and being worked on today. It's not. It wasn't something we were working on a year ago because we were expanding the overall, you know, market that we have with the suppliers, and now we'll continue to expand that market, but also enhance, you know, their experiences for us.
And so when you think about the overall supplier network, it's not just about virtual cards, it's instant transfer, which enables a business to get paid today versus two days from now or three days from now. It's working capital, the invoice financing I referenced, which a business can get paid up to 45 days early because of that product. It's the ability to select what currency you want and to have local currency. And all these things are about choice for suppliers, and we've said this from the beginning, that choice is what customers want, whether the customers are paying you directly or paying you as a result of the payment they receive, you have to give them choice.
And so that's been our consistency since we started the company, and it's what we've done and we'll continue to do, and we think it creates a massive platform that enables lots of opportunity to grow.
Yeah, makes a lot of sense. You know, we've heard from you and other players in the industry about, you know, elevated levels of churn in VCC volumes for accounts payable, even in normal times, I guess, but especially over the past year. And, you know, straight-through processing, you know, has been kind of widely cited as being one solve for that. So, you know, what do you think needs to happen to drive more sticky acceptance for that product? And can it be solved completely with technology? Is there a pricing dynamic around the cost of acceptance that also needs to change? Yeah.
Yeah, we, we called out cost sensitivity probably starting in the November quarter, and it, and it's real. There is some level of ongoing spend attrition, if you will. With BILL, it stays on the platform, so it's not that we don't see attrition on virtual cards that goes elsewhere. So we have an opportunity to still address that spend. And I'd say ROI matters for suppliers, particularly the larger suppliers who are working with much higher volumes, and they have more complex systems that need to be integrated with. Some of the friction with the product that leads to attrition is related to price, but there's also a lot of human involvement in some of the payment products, particularly virtual cards, and that increases the overall cost of acceptance.
As René mentioned, we're investing a lot to reduce the manual work involved in that and increase automation. Over time, that's gonna help with increasing the ROI. I'd say absolute price changes could be a complement to product improvements and other things that we're doing to help improve the stickiness really of a product like that. I'd say one of the interesting things about BILL is like virtual cards are important, but it's one of many levers that we have to scale payment monetization and ultimately grow, you know, transaction per revenue. We have new ad valorem products that are coming. We talked about scaling FX.
We're doing a good job with S&E cross-sell, which brings more card payments into the BILL platform, and obviously these virtual card improvements.
Yeah. So I wanted to maybe switch gears and talk through distribution. You know, I wanted to ask about how your thoughts on distribution have evolved. You know, 500 million SMBs, a lot of potential customers. You had the foresight to go after the accounting channel early, you know, that continues to be a huge source of referrals. How do you think about the long tail of micro SMBs? You know, and when you think about your embedded software partners, like Xero, the FI channel, you also have competitors who go in after that market directly. How do you think about how that part of the market continues to evolve?
Yeah, I think. I mean, I grew up in and around SMBs. I just love, I love serving them. They do great things for our communities, and yet they're exceptionally hard to find, right? And this is the thing that's one of the unique assets that BILL's built, is that we have a lot of them. And how do we find them? Well, we have a diversified ecosystem strategy. We go direct. That gets us some very strong customers and early adopters that we can learn from. We go to accountants. We've changed a whole category for accountants. We've enabled them to actually create revenue streams that they never had before, get back into being strategic advisors to their customers.
We go to partners, and both accountants and partners, because that's who businesses trust, and we've been doing this now for a dozen years with banks and software companies, and then we go through our network, and all of those things work together, so when I think about kind of the micro end of the business or the smaller end, the SMB, you know, that's not the most cost-efficient way for us to go direct. That's why we have the partner strategy. It's why we have accountants. It's why we have the opportunity to kind of bring those people into the fold, give them the value and the services that they deserve and they need. That only happens because we have a partner strategy.
Now, what I will say is that, you know, when you think about the competitive landscape, is we're the only company that's doing all four of those extremely well. We go to market in all those ways. We serve our customers, we find them, we deliver value, they come back, they bring more clients. That happens over and over and over again because we developed a core competence in actually doing these things. And having the trust with our customers and our partners in the ecosystem is something that's very hard to build, that we've been able to build over time. So we think that to get the long tail, if you will, I think is part of the question, it's gonna be through our embed strategy.
It's gonna enable, as more and more companies look to financial operations as a cornerstone of how they serve their customers, we wanna be there. We've already done this for banks, we'll do it for people like Xero, we'll do it for other companies. We're in a unique position to bring all that learning from all those different ways into an experience that nobody else has that learning to be able to do, and we think it's gonna be a huge opportunity for us as we move out a couple of years here.
Yeah, I mean, I feel like I should have asked this to kind of frame this, but, you know, we talk about 500 million SMBs, kind of the backbone of the economy, and we lump them all into one category when... So how do you look at the customer size? What is the micro SMB? What is that core BILL customer that you acquire directly?
Yeah, I mean, if you go back to kind of, you know, general employment numbers, you know, let's say 80% are less than 20 employees. You know, probably 50%-60% of our customers are less than 20, so we already skew a little bit larger, for customers, but we have customers of all sizes. So we say our sweet spot, really, you know, across the platform is, you know, 5-50 in the core BILL, and probably, you know, up to 250 in the, you know, overall category, that we look at. So definitely customers below $5 million, definitely customers above $250 million, but, you know, focus area is that 5-50.
Got it.
Which is, by the way, most of the businesses out there.
Yep. So I wanted to talk a little bit more on the integrated platform. Could you talk a little bit about how the platform has evolved from kind of two separate entities, the AP platform and the Spend Expense platform, to be an integrated product? How does that impact the customer experience, and then your ability to introduce various products to each side of the ecosystem?
Yeah, the goal when I started the company, and all of us have at BILL, is to just eliminate the financial headaches of financial operations, and so that means everything that leads up to a transaction needs to be automated, has to be simplified, and we did that first with AP and AR. Now, we've added spend and expense, and then we're adding the layer of insight and forecasting from the Finmark acquisition, so the opportunity for us to create, you know, a unified experience, which we do now have, and now to continue to enhance that unified experience, we think is unique, and so some of the things, for example, that we've done in the cross-pollination is, you know, spend and expense had great budgeting, well, now that's cross-pollinating into the AP part of the platform.
We had great workflow, and we had great opportunity inside of the BILL workflow to be able to cross-pollinate that into the spend and expense workflow. And now we're taking the Cash Flow Insights and forecasting and making that a part of all of it. So lots of ways for us to continue to create a simpler experience of all that financial, mundane tasks that no business really knows how to do, that we can actually just automate for them. So that's really the focus and good progress happening.
Yeah. So sticking with spend and expense then, you know, that business continued to drive a lot of growth, the fastest growing part of the business right now. I think volume's growing, you know, high 20s exiting the year. Can you talk about the competitive dynamics in that business? And I find it interesting that you have a more robust, competitive set in that business, and yet you are continuing to grow quite rapidly, no signs of slowing down. So what do you think is helping to differentiate the offering?
I mean, one, it's a vast market. We're very early days there, much earlier than the AP side. And, you know, we had the advantage when we were making a decision to think about spend and expenses, because on the BILL platform, we saw activity starting to happen, a small cohort of customers. But then we were able to look and see what they were using, we talked to them about their usage of the different platforms they were using, and Divvy came out on top. Like, customers just loved that experience. And so, we knew we had a really unique opportunity to take the capabilities that the team had there and extend that into our base. And so there's kind of three, I would say, competitive advantages that we see. One, it's a differentiated software offering.
is, it's kind of leads with software, and it's something that we think is unique. Two, S&E is really, you know, being part of our portfolio and leveraging the resources we have at scale. And three, it would be the distribution capabilities that we have. Again, unique distribution capabilities, I just talked about that. But, you know, if you think about the installed base we have to market to, we have a partnership with CPA.com, which is, you know, part of the AICPA, the exclusive partnership to actually have this marketed to accounts. We talked about what we've done with accounts over the last 15-17 years, creating a new category for them. We know how to do that. We're gonna do that. It's gonna be a cornerstone of how we build the business.
Yeah. So, you know, you've been giving kind of relatively frequent updates on the cross-sell between the AP platform and the spend and expense platform. I think the latest number was 11,500 dual users. That was up from 7,000 last year. Where are you seeing these customers coming in from? Are these dual users coming in the door buying both products? Are they Divvy over... Are they spend and expense over to AP or the other way? And just how do you see that cross-sell action evolving over time?
We see all of it. The majority is a BILL customer taking on the spend and expense experience. But we see opportunities to do, one, the front door for both, and obviously, the spend expense customers getting on the BILL platform. I would say that, you know, we are learning and feel really good about the progress, just a lot more opportunity for us to continue to hone that motion.
Yeah, makes sense. I wanted to talk about Finmark. I think it's been almost two years since you acquired the business with the goal of kind of accelerating the cash flow management, sort of office of the CFO type products. How have the solutions from that acquisition evolved, and what's been the latest kind of receptivity from customers?
Yeah. So we have, you know, early days of integration, and customers are definitely using it. I was just at our accountant council several weeks ago, and consistently, what I heard from the top accountants on our platform was, now that we do all these other things, for them to be able to do more for their clients, as well as enhance their relationships with more clients, they need that oversight, that insight, the cash flow. And so they're super excited about what we've started to pull in from Finmark, and they have lots of ideas about what else we can do with that. And you know it gives us an opportunity to kind of leverage again, the distribution and experiences that we have with the software platform that we're building.
Yeah. So then switching gears to talk about the long-term model. You've got the announced $45 million investment plan for this year. What is your vision for balancing profitability and growth from here? And, you know, how do you think about when it's time to target more sustained profitability on a GAAP basis?
Yeah, we made an important decision to pull forward some investments from 2026 to 2025. That's the $45 million that you mentioned, and the basis of that is twofold. One, we're going after a large market opportunity that's still emerging. It's not a mature market. There's millions of SMBs and trillions of spend, and we're in a unique position to go capture that. And two, we've made a lot of progress with the business in solving the needs of SMBs and creating operating leverage as we go, and you saw that in our results from fiscal 2024. So, investing ahead of 2026, pulling those dollars into 2025, does have an impact on FY 2025 profitability, though we are increasing ex-float profitability in 2025 slightly.
But we think it ultimately helps us re-accelerate revenue growth faster, which gives us more levers to continue to scale the business and improve profitability. Over time, we are very focused on increasing profitability. You'll see us expand ex float profitability again, get back to expansion in 2026, and that's on a path towards achieving GAAP profitability over the longer term.
Got it. And then just lastly, on capital allocation, you know, you announced the buyback authorization with earnings. You've also had, you know, notable management buys in the open market recently. You know, the business is also generating significant amounts of free cash flow annually. How are you thinking about further capital allocation from here?
Yeah, our priorities are first and foremost grounded in supporting the organic growth of the business. As we've talked about, you know, throughout this session, there's definitely potential for what I would call opportunistic or tuck-in M&A that could help us move even faster in some of our priority areas. We're obviously also supporting our S&E business as it relates to the credit component of that. Over time, you'll see us rely more on third-party financing sources than our BILL balance sheet. And over time, just trying to optimize the structure. Obviously, we retired about roughly $1 billion in our 2025 converts.
In recent quarters, we announced a new $300 million buyback program after completing a $300 million repurchase in fiscal 2024, which has obviously a positive effect on dilution. We're gonna continue to invest to scale the business, while also thinking about shareholder returns.
Yeah.
Yeah, I would say, like, we just see a tremendous opportunity in front of us, right? The market, the executional rigor that we have inside the company, and it's not just John and I. Multiple board members have been buying stock over the last year.
Sure.
What that tells you, and what it tells you. You know, I think when we think about it internally is that, you know, our deep commitment to actually driving success, like it's, we're here for the long haul, and it also tells us that this is a great opportunity. The stock is undervalued at this point, so, in our opinion, and so we think there's plenty of opportunity for upside there.
Great. Well, I think with that, we're out of time, but thank you for joining us today.
Thank you.
Really appreciate it.