BILL

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How BILL rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

72%

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136

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Length

+913

words, now 29,325

New in FY2026

References to past events are provided by way of example only and are not intended to be a complete listing of such events or a representation as to whether or not such factors or similar events have occurred in the past or their likelihood of occurring in the future.
Further, additional risks beyond those summarized below or discussed elsewhere in this Annual Report on Form 10-K may apply to our activities or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate.
Certain of our other current and future product offerings, such as invoice financing, may also subject us to credit risk; • Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which, potentially augmented by AI, could expose us to material financial losses and liabilities and otherwise harm our business; • The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed; • We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results; • Our business depends, in part, on our relationships with accounting firms, financial institutions, software providers and other partners; • Our recent growth may not be indicative of our future growth, and there is no assurance that we will be able to scale our platform and infrastructure, and manage our growth effectively. • We are subject to numerous risks related to partner banks and financing arrangements with respect to our spend and expense management solution; • We use AI in our business, and any challenges with successfully developing and deploying new AI tools, properly managing the use of AI, or complying with emerging AI regulations could result in reputational harm, competitive harm, regulatory penalties, and legal liability, and adversely affect our results of operations; • Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition; • A substantial portion of our revenue is derived from interchange fees, which exposes us to potential variability in income and other risks; Our reductions in force, transition to a remote-first company, and restructuring efforts may result in unanticipated costs or consequences. • Our business could be negatively affected as a result of actions by or proposals from activist stockholders, and such activism could impact the trading value of our securities and harm our business, financial condition and results of operations; • Payments and other financial services-related regulations and oversight are material to our business.
We were incorporated in 2006 and historically have experienced net losses in most periods since inception.
We generated a net loss of $11.2 million, net income of $23.8 million, and a net loss of $28.9 million for fiscal 2026, 2025, and 2024, respectively.
As of June 30, 2026, we had an accumulated deficit of $2.1 billion.
While we have experienced significant revenue growth in recent years and achieved profitability on a GAAP basis in certain recent quarters, we are not certain whether or when we will generate sufficient revenue to sustainably maintain or enhance our profitability profile in the future.
Our costs and expenses may also increase in future periods, as a result of our investments in AI and other initiatives, which could negatively affect our future operating results if our revenue does not increase.
These customers tend to be more susceptible to negative impacts from economic downturns, recession, inflation, increases in interest rates or the cost of borrowing, changes in foreign currency exchange rates, including recent weakness in the U.S. dollar, the impact of the ongoing rapid development and adoption of new AI capabilities, ongoing geopolitical conflicts and related supply chain disruptions, increases in the cost of memory, computing power, and related raw materials, newly-imposed tariffs by the U.S. and foreign countries and other restrictions on international trade, financial market conditions, actual or perceived instability in the U.S. and global banking systems, increased fuel prices, and catastrophic events than larger, more established businesses, as SMBs typically have more limited financial resources than larger entities.
In addition, geopolitical and domestic political developments, such as certain ongoing geopolitical conflicts, changes in government spending levels, government shut downs and changes in immigration policy impacting the availability of qualified employees for the SMBs we serve, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets.
In addition to the other risks described herein, factors that may affect our operating results include the following: • fluctuations in demand for, or pricing of our platform; • our ability to attract new customers; • our ability to retain and expand utilization by our existing customers; • our ability to retain and expand our relationships with our accounting firm partners, financial institution partners and software partners, or to identify and attract new partners; • our ability to build and deploy AI-powered solutions and drive customer adoption of such solutions, as well as the amount and timing of the associated research and development expenses; • changes in customer preference for cloud-based services as a result of security breaches in the industry or privacy concerns, or other security or reliability concerns regarding our products; • fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • general economic, market, credit and liquidity conditions, both domestically and internationally, such as inflation, high interest rate and recessionary environments, government budget cuts and government shut downs, tariffs, and actual or perceived instability in the U.S. and global banking systems, as well as economic conditions specifically affecting SMBs or the industries in which our customers participate; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, as a result of general economic factors or factors specific to their businesses; • potential and existing customers choosing our competitors’ products or developing their own solutions in-house; • the development or introduction of new platforms or services that are easier to use or more advanced than our current suite of services; • our failure to adapt to new forms of payment that become widely accepted; • the adoption or retention of more entrenched or rival services in the international markets where we compete; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees, including employees acquired inorganically, and retaining and motivating existing employees; • fluctuation in market interest rates, which impacts interest earned on funds held for customers; • the effects of acquisitions and the integration of acquired technologies and products, including impairment of goodwill; • the impact of new accounting pronouncements; • security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; • the impact of the ongoing geopolitical conflicts, including any related economic sanctions and countermeasures taken by other countries, and market volatility resulting therefrom; and • awareness of our brand and our reputation in our target markets.
Similarly, our recently-introduced BILL Cash Accounts, which offer high-yield returns on customer cash deposited into such accounts, among other features, require expenditures by us.
In the event BILL Cash Account holders do not utilize our platform's product offerings more broadly, our operating results could be adversely affected.
We recently launched BILL AI, including our first suite of AI agents, which are designed to simplify and accelerate SMB workflows, including W-9 filings, customer support and assistance, touchless transactions, automatic reconciliations and complex invoice coding.
The success of these new agentic AI offerings will depend in part on our ability to deliver them in a way that is both compelling to our customers and cost-effective, and if new or existing customers do not use our AI agents, our business, operating results and financial condition could be adversely affected.
We previously announced the launch of several Embed 2.0 partnerships, including with Paychex, Oracle NetSuite and Acumatica.
The accuracy of these risk models and the ability to manage credit risk related to our cards may also be affected by legal or regulatory requirements, competitors’ actions, changes in consumer behavior, changes in the economic environment, policies of our card-issuing partner banks (Issuing Banks), and other factors.
The non-payment rate among spending businesses may increase due to, among other factors, changes to underwriting standards, risk models not accurately predicting the creditworthiness of a business, or a decline in economic conditions, such as a recession, high inflation, government shut downs or government austerity programs.
Invoices are typically repaid within a short period, but those that remain outstanding beyond a defined term are assessed interest, and we may incur losses.
Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which, potentially augmented by AI, could expose us to material financial losses and liabilities and otherwise harm our business.
The techniques that may be used to perpetrate fraud on our platform are continually evolving, and we expend considerable resources to continue to monitor and combat them.
The recent and widespread adoption of AI tools increases the risk of fraudulent activity or other incidents instigated by malicious third parties on our platform and on those of our partners.
Such policies, procedures, techniques, and processes may also contain errors, or our employees or agents may commit mistakes or errors in judgment as a result of which we may suffer large financial losses.
As techniques used to perpetrate fraud on our platform become more sophisticated with the use of AI, our teams must similarly evolve to combat such techniques, and we may need to modify our products or services to mitigate fraud risks.
The market for cloud-based software that automates the financial back-office is highly fragmented, competitive, and rapidly evolving, particularly in light of recent advances in AI.
Our success will depend, to a substantial extent, on the widespread adoption of our AI-powered automated back-office solutions as alternatives to existing solutions or adoption by customers that are not using any such solutions at all.
Our competitors in the payments software space range from large corporations that predominantly focus on enterprise resource planning solutions, to smaller niche suppliers of solutions that focus exclusively on document management, workflow management, accounts payable, accounts receivable, spend and expense management, and/or electronic bill presentment and payment, to companies that offer industry-specific payments solutions.
With the introduction of new technologies and market entrants, including AI-native firms, we expect that the competitive environment will remain intense going forward.
In addition, Brex, recently acquired by Capital One, and Ramp, firms primarily known for offering spend and expense management products, introduced bill payment products in recent periods.
While we believe our platform offers much greater functionality than these products, there can be no assurance that QuickBooks customers will not opt to change providers for certain accounts payable services in the future, or that our ability to win, retain and expand our footprint with BILL Divvy Card spending business will not be challenged by these competing offerings.
Additionally, the rapid development and adoption of AI may further intensify competition, lower barriers to entry, shorten product development cycles, and make certain features and functionality easier for existing or new competitors to replicate or offer at lower cost.
Competitors may use AI to enhance their existing offerings, develop and deploy new products more quickly, improve implementation or support or bundle AI-enabled capabilities with broader platforms.
Further, customers' expectations regarding automation, accuracy, ease of use, speed of implementation and breadth of workflow coverage may continue to increase as AI capabilities evolve.
If we are unable to develop, deploy and maintain AI-powered solutions in a timely and cost-effective manner or if our competitors are more successful in doing so, our ability to attract and retain customers could be adversely affected.
We compete on several factors, including: • product features, quality, breadth, and functionality; • data asset size; • the depth, breadth, quality, reliability and ease of use of AI-powered offerings, including agents; • ease of deployment; • ability to integrate with leading accounting and banking technology infrastructures; • ability to automate processes; • cloud-based delivery architecture; • advanced security and control features; • risk management, exception process handling, and regulatory compliance leadership, as evidenced by our money transmitter licenses in all required U.S. jurisdictions and in Canada; • brand recognition; and • pricing and total cost of ownership.
As of June 30, 2026, we had approximately 479,300 businesses using our solutions and TPV processed was approximately $371.3 billion, $329.8 billion, and $292.4 billion during fiscal 2026, 2025, and 2024, respectively.
We have grown to considerable scale and seek to continue this growth.
These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war or other geopolitical conflicts.
For example, while the sudden closure of SVB in March 2023 did not have a material direct impact on our business, it introduced a potential risk of loss because we held certain corporate and customer funds at SVB.
For fiscal 2026, 2025, and 2024, we generated $148.4 million, $161.8 million, and $167.4 million, respectively, in revenue from interest earned on funds held in trust on behalf of customers while payment transactions were clearing, or approximately 9%, 11%, and 13% of our total revenue for such periods, respectively.

and 96 more.

Gone since FY2025

Additional risks beyond those summarized below or discussed elsewhere in this Annual Report on Form 10-K, may apply to our activities or operations as currently conducted or as we may conduct them in the future or in the markets in which we operate or may in the future operate.
Certain of our other current and future product offerings, such as invoice financing, may also subject us to credit risk; • Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which could expose us to material financial losses and liabilities and otherwise harm our business; • The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed; • We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results; • Our business depends, in part, on our relationships with accounting firms; • Our business depends, in part, on our business relationships with financial institutions; • Our recent growth may not be indicative of our future growth, and there is no assurance that we will be able to scale our platform and infrastructure, and manage our growth effectively. • We are subject to numerous risks related to partner banks and financing arrangements with respect to our spend and expense management solution; • We use artificial intelligence in our business, and any challenges with successfully developing and deploying new AI tools or properly managing the use of AI could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations; • Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition; • Payments and other financial services-related regulations and oversight are material to our business.
We were incorporated in 2006 and have mostly experienced net losses since inception.
We generated net income of $23.8 million for fiscal 2025, and net losses of $28.9 million, and $223.7 million for fiscal 2024, and 2023, respectively.
As of June 30, 2025, we had an accumulated deficit of $1.5 billion.
While we have experienced significant revenue growth in recent years and achieved profitability on a GAAP basis in certain recent quarters and in our most recent fiscal year, we are not certain whether or when we will generate sufficient revenue to sustainably maintain or enhance our profitability profile in the future.
We also expect our costs and expenses to increase in future periods, which could negatively affect our future operating results if our revenue does not increase.
These customers tend to be more susceptible to negative impacts from economic downturns, recession, inflation, increases in interest rates or the cost of borrowing, changes in foreign currency exchange rates, including recent weakness in the U.S. dollar, newly-imposed tariffs by the U.S. and foreign countries and other restrictions on international trade and supply chains, financial market conditions, actual or perceived instability in the U.S. and global banking systems, increased fuel prices, and catastrophic events than larger, more established businesses, as SMBs typically have more limited financial resources than larger entities.
In addition, geopolitical and domestic political developments, such as ongoing global geopolitical conflicts, changes in government spending levels, and changes in immigration policy impacting the availability of qualified employees for the SMBs we serve, can increase levels of political and economic unpredictability globally and increase the volatility of global financial markets.
In addition to the other risks described herein, factors that may affect our operating results include the following: • fluctuations in demand for, or pricing of our platform; • our ability to attract new customers; • our ability to retain and expand utilization by our existing customers; • our ability to retain and expand our relationships with our accounting firm partners, financial institution partners and software provider partners, or to identify and attract new partners; • our ability to build and deploy AI-powered solutions and the amount and timing of the associated research and development expenses; • changes in customer preference for cloud-based services as a result of security breaches in the industry or privacy concerns, or other security or reliability concerns regarding our products; • fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors; • general economic, market, credit and liquidity conditions, both domestically and internationally, such as inflation, high interest rate and recessionary environments, tariffs, and actual or perceived instability in the U.S. and global banking systems, as well as economic conditions specifically affecting SMBs or the industries in which our customers participate; • changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions, as a result of general economic factors or factors specific to their businesses; • potential and existing customers choosing our competitors’ products or developing their own solutions in-house; • the development or introduction of new platforms or services that are easier to use or more advanced than our current suite of services; • our failure to adapt to new forms of payment that become widely accepted; • the adoption or retention of more entrenched or rival services in the international markets where we compete; • our ability to control costs, including our operating expenses; • the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions; • the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges; • the amount and timing of costs associated with recruiting, training, and integrating new employees, including employees acquired inorganically, and retaining and motivating existing employees; • fluctuation in market interest rates, which impacts interest earned on funds held for customers; • the effects of acquisitions and the integration of acquired technologies and products, including impairment of goodwill; • the impact of new accounting pronouncements; • security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; • the impact of the ongoing geopolitical conflicts, including any related economic sanctions and countermeasures taken by other countries, and market volatility resulting therefrom; and • awareness of our brand and our reputation in our target markets.
In addition, we expect to continue to incur significant additional expenses due to the costs of operating as a public company.
The accuracy of these risk models and the ability to manage credit risk related to our cards may also be affected by legal or regulatory requirements, competitors’ actions, changes in consumer behavior, changes in the economic environment, policies of Issuing Banks, and other factors.
The non-payment rate among spending businesses may increase due to, among other factors, changes to underwriting standards, risk models not accurately predicting the creditworthiness of a business, or a decline in economic conditions, such as a recession, high inflation or government austerity programs.
Invoices are typically repaid within a short period, but those that remain outstanding beyond a defined term are assessed interest and, in some cases, may incur losses.
Our risk management efforts may not be effective to prevent fraudulent activities by our customers, subscribers, spending businesses, or their counterparties, or other third parties which could expose us to material financial losses and liabilities and otherwise harm our business.
The techniques used to perpetrate fraud on our platform are continually evolving, and we expend considerable resources to continue to monitor and combat them.
Our risk management policies, procedures, techniques, and processes may contain errors, or our employees or agents may commit mistakes or errors in judgment as a result of which we may suffer large financial losses.
As techniques used to perpetrate fraud on our platform evolve, we may need to modify our products or services to mitigate fraud risks.
The market for cloud-based software that automates the financial back-office is highly fragmented, competitive, and constantly evolving.
Our success will depend, to a substantial extent, on the widespread adoption of our cloud-based automated back-office solution as an alternative to existing solutions or adoption by customers that are not using any such solutions at all.
Our competitors in the cloud-based software space range from large corporations that predominantly focus on enterprise resource planning solutions, to smaller niche suppliers of solutions that focus exclusively on document management, workflow management, accounts payable, accounts receivable, spend and expense management, and/or electronic bill presentment and payment, to companies that offer industry-specific payments solutions.
With the introduction of new technologies and market entrants, we expect that the competitive environment will remain intense going forward.
In addition, Brex and Ramp, firms primarily known for offering spend and expense management products, introduced bill payment products in recent periods.
While we believe our platform offers much greater functionality than these products, there can be no assurance that QuickBooks customers will not opt to change providers for certain accounts payable services in the future, or that our ability to win, retain and expand our footprint with BILL Divvy Card customers will not be challenged by these competing offerings.
We compete on several factors, including: • product features, quality, breadth, and functionality; • data asset size and ability to leverage AI to grow faster and smarter; • ease of deployment; • ease of integration with leading accounting and banking technology infrastructures; • ability to automate processes; • cloud-based delivery architecture; • advanced security and control features; • risk management, exception process handling, and regulatory compliance leadership; • brand recognition; and • pricing and total cost of ownership.
As of June 30, 2025, we had approximately 493,800 businesses using our solutions and TPV processed was approximately $329.8 billion, $292.4 billion, and $266.0 billion during fiscal 2025, 2024, and 2023, respectively.
We have grown rapidly to considerable scale and seek to continue this growth.
These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war (such as the ongoing conflict in Ukraine and recent developments in the Middle East) or other geopolitical conflicts.
For example, the sudden closure of SVB in March 2023 introduced a potential risk of loss because we held certain corporate and customer funds at SVB.
For fiscal 2025, 2024, and 2023, we generated $161.8 million, $167.4 million, and $113.8 million, respectively, in revenue from interest earned on funds held in trust on behalf of customers while payment transactions were clearing, or approximately 11%, 13%, and 11% of our total revenue for such periods, respectively.
Our business depends, in part, on our relationships with accounting firms.
Our relationships with our more than 9,000 accounting firm partners contribute a significant portion of our total revenue.
Our business depends, in part, on our business relationships with financial institutions.
We enter into partnering relationships with financial institutions pursuant to which they offer our services to their customers.
Launching a product offering with our financial institution partners entails integrating our platform with our partners’ websites and apps, which requires significant engineering resources and time to design, deploy, and maintain, and requires developing associated sales and marketing strategies and programs.
With financial institution partners, the decision to roll out our product offering typically requires several levels of management and technical personnel approval by our partners and is frequently subject to budget constraints.
In addition, once we have successfully launched a product offering with a financial institution partner, lower than anticipated customer adoption or unanticipated ongoing system integration costs could result in lower than anticipated profit margins, which could have an adverse impact on our business, financial position, and operating results.
We may not be able to attract new financial institution partners if our potential partners favor our competitors’ products or services over our platform or choose to compete with our products directly.
Further, many of our existing financial institution partners have greater resources than we do and could choose to develop their own solutions to replace ours.
Moreover, certain financial institutions may elect to focus on other market segments and decide to terminate their SMB-focused services.

and 76 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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