10-Q 1 bill-20240331.htm 10-Q bill-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
_____________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 001-39149
_____________________
BILL LOGO.jpg
BILL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
_____________________
Delaware83-2661725
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
6220 America Center Drive, Suite 100, San Jose, CA
95002
(Address of principal executive offices)(Zip Code)
(650) 621-7700
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report )
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par valueBILLThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer xAccelerated filero
Non-accelerated filer oSmaller reporting companyo
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of April 26, 2024, the registrant had 106,137,373 shares of common stock, $0.00001 par value per share, outstanding.


BILL HOLDINGS, INC.
TABLE OF CONTENTS
Page
Item 1A.
Risk Factors

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I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses, including changes in research and development, sales and marketing, and general and administrative expenses (including any components of the foregoing), and our ability to achieve, and maintain, future profitability;
our business plan and our ability to effectively manage our growth;
our market opportunity, including our total addressable market;
our international expansion plans and ability to expand internationally;
anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;
beliefs and objectives for future operations;
our ability to further attract, retain, and expand our customer base;
our ability to develop new products and services and bring them to market in a timely manner;
the effects of seasonal trends on our results of operations;
our expectations concerning relationships with third parties, including partners;
our ability to maintain, protect, and enhance our intellectual property;
the effects of increased competition in our markets and our ability to compete effectively;
the expected costs and impacts of our recent reduction in force;
economic downturns or recessions, inflation, fluctuations in market interest rates and currency exchange rates, cybersecurity events, actual or perceived instability in the United States (U.S.) and global banking systems, and uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, and their impact on our customers, partners, vendors, employees, results of operations, liquidity, and financial condition;
future acquisitions or investments in complementary companies, products, services, or technologies;
our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;
economic and industry trends, projected growth, or trend analysis;
our ability to attract and retain qualified talent;
the increased expenses associated with being a publicly-listed and regulated company; and
the future market prices of our common stock.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in Part I, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge

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from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or to changes in our expectations, except as required by law.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
You should read this Quarterly Report on Form 10-Q and the documents that we reference herein, that we have filed with the Securities and Exchange Commission (SEC) as exhibits, with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.
In this Quarterly Report on Form 10-Q, the words "we," "us," and "our" refer to BILL Holdings, Inc. (BILL) together with its wholly-owned subsidiaries, including Bill.com, LLC (BILL standalone), DivvyPay, LLC (Divvy), and Invoice2go, LLC and Cimrid Pty, Ltd (together, Invoice2go), unless the context requires otherwise.

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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share amounts)
March 31,
2024
June 30,
2023
ASSETS
Current assets:
Cash and cash equivalents$952,474 $1,617,151 
Short-term investments837,140 1,043,110 
Accounts receivable, net29,891 28,233 
Acquired card receivables, net of allowances of $23,853 and $15,498 as of March 31, 2024 and June 30, 2023, respectively
641,861 458,650 
Prepaid expenses and other current assets256,199 170,111 
Funds held for customers3,510,918 3,355,909 
Total current assets6,228,483 6,673,164 
Non-current assets:
Operating lease right-of-use assets, net61,466 68,988 
Property and equipment, net87,300 81,564 
Intangible assets, net300,764 361,427 
Goodwill2,396,509 2,396,509 
Other assets47,736 54,366 
Total assets$9,122,258 $9,636,018 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$6,824 $8,519 
Accrued compensation and benefits27,619 32,901 
Deferred revenue17,547 26,328 
Other accruals and current liabilities263,603 194,733 
Borrowings from credit facilities, net 135,046 
Customer fund deposits3,510,918 3,355,909 
Total current liabilities3,826,511 3,753,436 
Non-current liabilities:
Deferred revenue4,156 410 
Operating lease liabilities65,023 72,477 
Borrowings from credit facilities, net180,011  
Convertible senior notes, net966,242 1,704,782 
Other long-term liabilities21,582 18,944 
Total liabilities5,063,525 5,550,049 
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock2 2 
Additional paid-in capital5,165,049 4,946,623 
Accumulated other comprehensive loss(1,507)(4,488)
Accumulated deficit(1,104,811)(856,168)
Total stockholders' equity4,058,733 4,085,969 
Total liabilities and stockholders' equity$9,122,258 $9,636,018 
See accompanying notes to condensed consolidated financial statements.

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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2024202320242023
Revenue
Subscription and transaction fees$281,294 $239,495 $821,428 $685,201 
Interest on funds held for customers41,734 33,060 125,080 77,284 
Total revenue323,028 272,555 946,508 762,485 
Cost of revenue
Service costs43,845 37,897 135,988 109,683 
Depreciation and amortization of intangible assets (1)
11,167 10,953 33,427 31,742 
Total cost of revenue55,012 48,850 169,415 141,425 
Gross profit268,016 223,705 777,093 621,060 
Operating expenses
Research and development81,594 78,761 257,145 232,791 
Sales and marketing118,105 115,350 354,808 398,658 
General and administrative81,573 71,719 252,482 207,837 
Depreciation and amortization of intangible assets (1)
12,262 12,093 37,403 36,149 
Restructuring2,104  27,195  
Total operating expenses295,638 277,923 929,033 875,435 
Operating loss(27,622)(54,218)(151,940)(254,375)
Other income, net59,801 23,622 118,026 46,591 
Income (loss) before provision for income taxes32,179 (30,596)(33,914)(207,784)
Provision for income taxes370 542 2,559 70 
Net income (loss)$31,809 $(31,138)$(36,473)$(207,854)
Net income (loss) per share attributable to common stockholders:
Basic$0.30 $(0.29)$(0.34)$(1.96)
Diluted$0.00 $(0.29)$(0.34)$(1.96)
Weighted-average number of common shares used to compute net income (loss) per share attributable to common stockholders:
Basic105,436 106,597 106,045 105,843 
Diluted
111,176 106,597 106,045 105,843 
(1) Depreciation expense does not include amortization of capitalized internal-use software costs paid in cash.

See accompanying notes to condensed consolidated financial statements.

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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2024202320242023
Net income (loss)$31,809 $(31,138)$(36,473)$(207,854)
Other comprehensive income (loss):
Net unrealized gain (loss) on investments in available-for-sale securities(1,744)3,178 2,981 7,034 
Comprehensive income (loss)$30,065 $(27,960)$(33,492)$(200,820)

See accompanying notes to condensed consolidated financial statements.

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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands)
Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Accumulated
deficit
Total
stockholders'
equity
SharesAmount
Balance at June 30, 2023
106,550 $2 $4,946,623 $(4,488)$(856,168)$4,085,969 
Issuance of common stock upon exercise of stock options and release of restricted stock units
634 — 2,946 — — 2,946 
Issuance of common stock under the employee stock purchase plan
91 — 7,846 — — 7,846 
Repurchase and retirement of common stock(160)— — — (16,068)(16,068)
Stock-based compensation— — 64,606 — — 64,606 
Other comprehensive income— — — 675 — 675 
Net loss— — — — (27,861)(27,861)
Balance at September 30, 2023107,115 2 5,022,021 (3,813)(900,097)4,118,113 
Issuance of common stock upon exercise of stock options and release of restricted stock units
689 — 2,106 — — 2,106 
Repurchase and retirement of common stock, including excise tax(2,723)— — — (196,675)(196,675)
Stock-based compensation— — 64,672 — — 64,672 
Other comprehensive income— — — 4,050 — 4,050 
Net loss— — — — (40,421)(40,421)
Balance at December 31, 2023105,081 2 5,088,799 237 (1,137,193)3,951,845 
Issuance of common stock upon exercise of stock options and release of restricted stock units, net of shares withheld and retired for tax and excise tax
727 — (206)— 573 367 
Issuance of common stock under the employee stock purchase plan
134 — 8,649 — — 8,649 
Unwind of capped calls— — 8,502 — — 8,502 
Stock-based compensation— — 59,305 — — 59,305 
Other comprehensive loss— — — (1,744)— (1,744)
Net income— — — — 31,809 31,809 
Balance at March 31, 2024105,942 $2 $5,165,049 $(1,507)$(1,104,811)$4,058,733 

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Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders'
equity
SharesAmount
Balance at June 30, 2022104,731 $2 $4,598,737 $(10,217)$(544,828)$4,043,694 
Issuance of common stock upon exercise of stock options and release of restricted stock units835 — 3,901 — — 3,901 
Issuance of common stock under the employee stock purchase plan67 — 8,494 — — 8,494 
Stock-based compensation— — 73,352 — — 73,352 
Other comprehensive loss— — — (270)— (270)
Net loss— — — — (81,640)(81,640)
Balance at September 30, 2022105,633 2 4,684,484 (10,487)(626,468)4,047,531 
Issuance of common stock upon exercise of stock options and release of restricted stock units
663 — 4,316 — — 4,316 
Issuance of common stock as consideration for an acquisition40 — 3,376 — — 3,376 
Stock-based compensation— — 119,604 — — 119,604 
Other comprehensive income— — — 4,126 — 4,126 
Net loss— — — — (95,076)(95,076)
Balance at December 31, 2022106,336 2 4,811,780 (6,361)(721,544)4,083,877 
Issuance of common stock upon exercise of stock options and release of restricted stock units596 — 2,643 — — 2,643 
Issuance of common stock under the employee stock purchase plan115 — 9,385 — — 9,385 
Repurchase and retirement of common stock(359)— — — (27,000)(27,000)
Stock-based compensation— — 63,392 — 63,392 
Other comprehensive income— — — 3,178 — 3,178 
Net loss— — — — (31,138)(31,138)
Balance at March 31, 2023106,688 $2 $4,887,200 $(3,183)$(779,682)$4,104,337 
See accompanying notes to condensed consolidated financial statements.

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BILL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(36,473)$(207,854)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation190,036 255,717 
Amortization of intangible assets60,663 59,984 
Depreciation of property and equipment10,167 7,907 
Amortization of capitalized internal-use software costs6,332 3,009 
Amortization of debt issuance costs5,174 5,217 
Accretion of discount on investments in marketable debt securities(39,285)(23,710)
Accretion of discount on loans held for investment (5,531)(9)
Provision for credit losses on acquired card receivables and other financial assets47,279 23,685 
Gain on debt extinguishment(35,715) 
Non-cash operating lease expense6,590 7,114 
Deferred income taxes(126)(1,169)
Other1,787 1,357 
Changes in assets and liabilities:
Accounts receivable(3,795)(9,969)
Prepaid expenses and other current assets5,413 (7,477)
Other assets(2,068)(2,040)
Accounts payable(1,898)(1,265)
Other accruals and current liabilities6,812 9,639 
Operating lease liabilities(7,559)(7,711)
Other long-term liabilities(2,617)(272)
Deferred revenue(5,035)(4,740)
Net cash provided by operating activities200,151 107,413 
Cash flows from investing activities:
Cash paid for acquisition, net of acquired cash and cash equivalents (28,902)
Purchases of corporate and customer fund short-term investments(2,042,849)(2,394,518)
Proceeds from maturities of corporate and customer fund short-term investments1,857,220 2,510,829 
Proceeds from sale of corporate and customer fund short-term investments1,539 11,607 
Purchases of loans held for investment(218,943)(537)
Principal repayments of loans held for investment191,861 325 
Acquired card receivables, net(139,850)(198,244)
Purchases of property and equipment(771)(6,499)
Capitalization of internal-use software costs(14,595)(17,231)
Proceeds from beneficial interest  2,080 
Other 1,167 
Net cash used in investing activities(366,388)(119,923)
Cash flows from financing activities:
Payments for repurchase of convertible senior notes
(710,931) 
Proceeds from unwind of capped calls10,252  
Customer fund deposits liability and other155,376 (46,092)
Prepaid card deposits(20,776)21,064 
Repurchase of common stock(211,902)(24,001)
Proceeds from line of credit borrowings45,000 60,000 
Proceeds from exercise of stock options6,525 10,860 
Tax withholdings related to net share settlements of equity awards(1,681) 
Proceeds from issuance of common stock under the employee stock purchase plan16,495 17,879 
Contingent consideration payout(10,762) 
Net cash provided by (used in) financing activities(722,404)39,710 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(397)12 
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents(889,038)27,212 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period4,224,841 3,542,715 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$3,335,803 $3,569,927 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents$952,474 $1,590,560 
Restricted cash included in other current assets153,031 96,823 
Restricted cash included in other assets5,297 6,724 
Restricted cash and restricted cash equivalents included in funds held for customers2,225,001 1,875,820 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$3,335,803 $3,569,927 
See accompanying notes to condensed consolidated financial statements.

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BILL HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Bill.com, Inc. was incorporated in the State of Delaware in April 2006. Bill.com Holdings, Inc. was incorporated in the State of Delaware in August 2018 (and renamed BILL Holdings, Inc. in February 2023). In November 2018, Bill.com, Inc. consummated a reorganization with BILL Holdings, Inc., resulting in the latter becoming the parent entity of Bill.com, Inc. BILL Holdings, Inc. and its wholly-owned subsidiaries are collectively referred to as the “Company”.
The Company is a provider of software-as-a-service, cloud-based payments, and spend and expense management products, which allow users to automate accounts payable and accounts receivable transactions, enable businesses to easily connect with their suppliers and/or customers to do business, eliminate expense reports, manage cash flows, and improve back-office efficiency.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and were prepared in conformity with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all normal and recurring adjustments that are, in the opinion of management, necessary to state fairly the Company’s financial position, results of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the periods presented. The results of operations for the three and nine months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2024 or for any other future annual or interim period. The unaudited condensed consolidated balance sheet as of June 30, 2023 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis. All intercompany accounts and transactions have been eliminated.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (2023 10-K).
Segment Reporting
The Company operates as one operating segment because its chief operating decision maker, who is the Chief Executive Officer, reviews its financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance. The Company's long-lived assets are mainly located in the United States (U.S.) and revenue is mainly generated in the U.S. Long-lived assets outside the U.S. are not material as of March 31, 2024 and June 30, 2023. Total revenue from external customers outside of the U.S. was approximately 2% of consolidated total revenue during each of the three and nine months ended March 31, 2024 and 2023.
Reclassification
Certain accounts in the prior period condensed consolidated statements of cash flows were reclassified to conform with the current year presentation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make various estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Management regularly assesses these estimates, including, but not limited to useful lives of long-lived assets; capitalization of internal-use

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software costs; incremental borrowing rates for right-of-use operating lease assets and operating lease liabilities; the estimate of credit losses on accounts receivable, acquired card receivables and other financial assets; accrual for rewards; variable consideration used in revenue recognition for certain contracts; benefit periods used to amortize deferred costs; reserve for losses on funds held for customers; inputs used to value certain stock-based compensation awards; and valuation of deferred tax assets. The Company evaluates these estimates and assumptions and adjusts them accordingly. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements.
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Cash and cash equivalents consist of cash in banks, highly liquid investments with maturities of three months or less at the time of purchase.
Restricted cash consists of (i) amounts restricted under deposit account control agreements, (ii) minimum cash balances that are required to be maintained by certain banks, (iii) cash collateral required by the Company’s lessors to satisfy letter of credit requirements under its lease agreements, (iv) cash collateral required by a bank in connection with the Company’s money transmission activities, and (v) cash in bank and cash deposits held by payment processing companies included in funds held for customers.
Restricted cash equivalents consist of highly liquid investments with maturities of three months or less at the time of purchase that are included in funds held for customers.
Except for the restricted cash included in funds held for customers, the current and non-current portion of the restricted cash is included in prepaid expenses and other current assets and in other assets, respectively, in the accompanying condensed consolidated balance sheets.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, restricted cash, restricted cash equivalents, short-term investments, accounts receivable, and acquired card receivables (collectively referred to as Financial Assets). The Company maintains its cash, cash equivalents, restricted cash, restricted cash equivalents and short-term investments with large multinational financial institutions that may at times exceed federally insured limits. Management believes that the financial institutions with which the Company does business are financially sound with minimal credit risk. Management further believes the associated risk of concentration for the Company’s investments is mitigated by holding a diversified portfolio of highly rated investments consisting of money market funds and short-term debt securities.
The Company performs credit evaluations to verify the credit quality of its Financial Assets and determine any at-risk receivables. As of March 31, 2024 and June 30, 2023, the allowance for expected credit losses related to accounts receivable and acquired card receivables totaled approximately $24.1 million and $15.9 million, respectively. These amounts do not include the immaterial allowance for expected credit losses on the purchase of card receivables that have been authorized but not cleared at the end of the periods.
There were no customers that exceeded 10% of the Company’s total revenue during the three and nine months ended March 31, 2024 and 2023.
Foreign Currency
The functional currency of the Company's foreign subsidiaries is the U.S. dollar, which is the Company's reporting currency. Gains and losses from the remeasurement of transactions denominated in foreign currencies other than the functional currency of the foreign subsidiaries are included in other income, net in the accompanying condensed consolidated statements of operations.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies described in the 2023 10-K, except as noted below:

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Restructuring
The Company records a liability for involuntary employee termination benefits when management has committed to a plan that establishes the terms of the arrangement and that plan has been communicated to employees. Costs to terminate a contract before the end of the term are recognized on the termination date, and costs that will continue to be incurred in a contract for the remaining term without economic benefit are recognized as of the cease-use date.
New Accounting Pronouncements and Disclosure Rules Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Reportable Segments (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses, including public entities with a single operating or reportable segment. The updated standard is effective for our annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted. This ASU will result in the required additional disclosures being included in our consolidated financial statements retrospectively, to all periods presented, once adopted.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The updated standard will be effective for annual periods beginning in fiscal 2026. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In March 2024, the SEC adopted final rule under SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors. In April 2024, the SEC issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules. This rule will require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements will apply for annual periods beginning in fiscal 2026. The Company is currently evaluating the impact on the final rule to determine its impact on the Company's Annual Reports on Form 10-K.
NOTE 2 – REVENUE
The Company generates revenue primarily from subscription and transaction fees. The table below shows the Company’s revenue from subscription and transaction fees, which are disaggregated by sales channel, and revenue from interest on funds held for customers (in thousands).
Three Months Ended
March 31,
Nine Months Ended
March 31,
2024202320242023
Small-to-midsize businesses, accounting firms, spending businesses and other
$273,860 $227,573 $803,909 $652,800 
Financial institutions7,434 11,922 17,519 32,401 
Total subscription and transaction fees281,294 239,495 821,428 685,201 
Interest on funds held for customers41,734 33,060 125,080 77,284 
Total revenue$323,028 $272,555 $946,508 $762,485 
Deferred revenue
Fees from customers with which the Company has annual or multi-year contracts are generally billed in advance. These fees are initially recorded as deferred revenue and subsequently recognized as revenue as the performance obligation is satisfied. During the three and nine months ended March 31, 2024, the Company recognized $3.7 million and $20.5 million of revenue, respectively, that was included in the deferred revenue balance as of June 30, 2023.

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Remaining performance obligations
The Company has performance obligations associated with commitments in customer contracts for future services that have not yet been recognized as revenue. As of March 31, 2024, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied), including deferred revenue, was approximately $98.1 million. Of the total remaining performance obligations, the Company expects to recognize approximately 82% within two years and 18% over the subsequent three to five years. The Company determines remaining performance obligations at a point in time based on contracts with customers. The Company evaluates its customer relationships on an ongoing basis, and may selectively renegotiate certain terms of its agreements with financial institutions, accounting firms and SMBs. The Company is currently in discussions with a customer to potentially amend the existing contract. This customer represented approximately 42% of the total remaining performance obligation amount as of March 31, 2024. Accordingly, this amount is subject to change resulting from any potential amendments. There were no subsequent events that would materially impact the amount of the remaining performance obligations as of March 31, 2024. However, actual amounts and timing of revenue recognized may differ due to subsequent contract modifications, renewals, and/or terminations.
Unbilled revenue
Unbilled revenue consists of revenue recognized that has not been billed to the customers yet. The unbilled revenue amounted to $16.6 million and $14.0 million as of March 31, 2024 and June 30, 2023, respectively, and is included in accounts receivable, net in the accompanying condensed consolidated balance sheets.
NOTE 3 – FAIR VALUE MEASUREMENT
The Company measures and reports its cash equivalents, short-term investments, funds held for customers that are invested in money market funds and marketable debt securities, and contingent consideration at fair value. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:
Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.
In determining fair value, the Company utilizes quoted market prices, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value.

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The following tables set forth the fair value of assets and liabilities that were measured at fair value on a recurring basis based on the three-tier fair value hierarchy as of the dates presented (in thousands):
March 31, 2024
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market funds$352,954 $ $ $352,954 
Corporate bonds 10,913  10,913 
Certificates of deposit 1,952  1,952 
352,954 12,865  365,819 
Short-term investments:
Corporate bonds 394,497  394,497 
U.S. treasury securities 271,941  271,941 
Asset-backed securities 78,338  78,338 
Certificates of deposit 61,607  61,607 
U.S. agency securities 30,757  30,757 
 837,140  837,140 
Funds held for customers:
Restricted cash equivalents:
Money market funds917,948   917,948 
Corporate bonds 239,513  239,513 
917,948 239,513  1,157,461 
Short-term investments:
Corporate bonds 964,256  964,256 
U.S. treasury securities 187,654  187,654 
Certificates of deposit 74,909  74,909 
Asset-backed securities 51,264  51,264 
 1,278,083  1,278,083 
Total assets measured at fair value$1,270,902 $2,367,601 $ $3,638,503 



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June 30, 2023
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market funds$1,131,621 $ $ $1,131,621 
Corporate bonds 45,301  45,301 
U.S. treasury securities44,856   44,856 
Certificates of deposit 2,578  2,578 
1,176,477 47,879  1,224,356 
Short-term investments:
Corporate bonds 479,483  479,483 
U.S. treasury securities408,368   408,368 
U.S. agency securities 57,967  57,967 
Asset-backed securities 51,193  51,193 
Certificates of deposit 46,099  46,099 
408,368 634,742  1,043,110 
Funds held for customers:
Restricted cash equivalents:
Money market funds713,469   713,469 
713,469   713,469 
Short-term investments:
Corporate bonds 433,920  433,920 
Certificates of deposit 233,291  233,291 
U.S. treasury securities81,074   81,074 
Asset-backed securities 70,661  70,661 
U.S. agency securities 27,458  27,458 
81,074 765,330  846,404 
Total assets measured at fair value$2,379,388 $1,447,951 $ $3,827,339 
Liabilities
Contingent consideration(1)
$ $ $(12,035)$(12,035)
Total liabilities measured at fair value$ $ $(12,035)$(12,035)
(1) The Company used the probability-weighted discounted cash flow method to estimate the contingent consideration. The significant inputs used in the fair value measurement of the contingent consideration are the probability of payout and discount rate. As these inputs are not based on observable market data, the liability represents a Level 3 measurement within the fair value hierarchy.
There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
The fair values of the Company’s Level 1 instruments were derived from quoted market prices and active markets for these specific instruments.
The valuation techniques used to measure the fair values of Level 2 instruments were derived from non-binding market consensus prices that were corroborated with observable market data, quoted market prices for similar instruments, or pricing models.
The Company had $575.0 million and $401.8 million in aggregate principal amount of its 0% convertible senior notes due in 2027 (2027 Notes) and in 2025 (2025 Notes, together with the 2027 Notes, the Notes),

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respectively, outstanding as of March 31, 2024. The Company carries the Notes at par value, less the unamortized issuance costs in the accompanying condensed consolidated balance sheets. The estimated fair value of the 2027 Notes and 2025 Notes, which is presented for disclosure purposes only, was approximately $495.9 million and $374.3 million, respectively, as of March 31, 2024. The fair value was based on a market approach, which represents a Level 2 valuation estimate. The market approach was determined based on the actual bids and offers of the Notes in an over-the-counter market as of the last day of trading prior to the end of the period.
The Company's financial instruments not measured and recorded at fair value, includes cash, restricted cash, acquired cards receivables, interest receivable, incentive receivables and borrowings from revolving credit facility, are carried at amortized cost, which approximates their fair value. If these financial instruments were measured at fair value in the financial statements, cash would be classified as Level 1; restricted cash, interest receivables, incentive receivables and borrowings from revolving credit facility would be classified as Level 2 and the acquired cards receivables would be classified as Level 3 in the fair value hierarchy.
NOTE 4 – SHORT-TERM INVESTMENTS AND FUNDS HELD FOR CUSTOMERS
The following table summarizes the assets underlying short-term investments and funds held for customers as of the dates presented (in thousands):
March 31,
2024
June 30,
2023
Short-term investments:
Available-for-sale debt securities$837,140 $1,043,110 
Total short-term investments837,140 1,043,110 
Funds held for customers:
Restricted cash1,071,256 1,793,088 
Restricted cash equivalents1,157,461 713,469 
Funds receivable11,903 12,822 
Available-for-sale debt securities1,278,083 846,404 
Total funds held for customers3,518,703 3,365,783 
Less - income earned by the Company included in other current assets(7,785)(9,874)
Total funds held for customers, net of income earned by the Company$3,510,918 $3,355,909 
Income earned by the Company that is included in other current assets represents interest income, accretion of discount (offset by amortization of premium), and net unrealized gains on customer funds that were invested in money market funds and short-term marketable debt securities. The Company contractually earns income from these investments, which are expected to be transferred into the Company’s corporate deposit account upon sale or settlement of the associated investment, and are not considered funds held for customers.

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The following table summarizes the estimated fair value of available-for-sale debt securities included within funds held for customers and short-term investments as of the dates presented (in thousands):
March 31, 2024
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Short-term investments:
Corporate bonds$394,730 $357 $(590)$394,497 
U.S. treasury securities272,320 8 (387)271,941 
Asset-backed securities78,262 118 (42)78,338 
Certificates of deposit61,607   61,607 
U.S. agency securities30,802 6 (51)30,757 
Total short-term investments$837,721 $489 $(1,070)$837,140 
Funds held for customers:
Corporate bonds$964,944 $26 $(714)$964,256 
Certificates of deposit74,909   74,909 
Asset-backed securities51,304 4 (44)51,264 
U.S. treasury securities187,676  (22)187,654 
Total funds held for customers$1,278,833 $30 $(780)$1,278,083 
June 30, 2023
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Short-term investments:
Corporate bonds$481,658 $207 $(2,382)$479,483 
U.S. treasury securities409,586 42 (1,260)408,368 
U.S. agency securities58,166  (199)57,967 
Asset-backed securities51,321 8 (136)51,193 
Certificates of deposit46,099   46,099 
Total short-term investments$1,046,830 $257 $(3,977)$1,043,110 
Funds held for customers:
Corporate bonds$433,936 $18 $(34)$433,920 
Certificates of deposit233,290 1  233,291 
Asset-backed securities70,993  (332)70,661 
U.S. agency securities27,484 5 (31)27,458 
U.S. treasury securities81,309 1 (236)81,074 
Total funds held for customers$847,012 $25 $(633)$846,404 
The amortized cost and fair value amounts for short-term investments include accrued interest receivables of $5.6 million and $4.3 million as of March 31, 2024 and June 30, 2023, respectively. The amortized cost and fair value amounts for funds held for customers include accrued interest receivable of $4.8 million and $6.9 million as of March 31, 2024 and June 30, 2023, respectively.

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The following table summarizes fair value of the Company's available-for-sale debt securities by remaining contractual maturity as of the dates presented (in thousands):
March 31,
2024
June 30,
2023
Due within one year$1,856,999 $1,543,379 
Due in 1 year through 5 years258,224 346,135 
Total$2,115,223 $1,889,514 
As of March 31, 2024, approximately 310 out of approximately 610 investments in available-for-sale debt securities were in an unrealized loss position. The following table shows gross unrealized losses and fair values for those investments that were in an unrealized loss position as of the dates presented (in thousands):
March 31, 2024
Less than 12 months12 months or longerTotal
Fair valueUnrealized
losses
Fair valueUnrealized
losses
Fair valueUnrealized
losses
Short-term investments:
Corporate bonds$153,102 $(486)$30,842 $(103)$183,944 $(589)
U.S. treasury securities196,269 (287)31,491 (100)227,760 (387)
Asset-backed securities22,624 (29)2,554 (14)25,178 (43)
U.S. agency securities25,940 (51)  25,940 (51)
Total short-term investments$397,935 $(853)$64,887 $(217)$462,822 $(1,070)
Funds held for customers:
Corporate bonds$451,361 $(679)$ $ $451,361 $(679)
Asset-backed securities30,076 (34)6,555 (9)36,631 (43)
U.S. treasury securities297,385 (58)  297,385 (58)
Total funds held for customers$778,822 $(771)$6,555 $(9)$785,377 $(780)
June 30, 2023
Less than 12 months12 months or longerTotal
Fair valueUnrealized
losses
Fair valueUnrealized
losses
Fair valueUnrealized
losses
Short-term Investments:
Corporate bonds$213,373 $(1,421)$83,189 $(961)$296,562 $(2,382)
U.S. treasury securities199,440 (976)14,286 (284)213,726 (1,260)
Asset-backed securities35,719 (103)2,707 (33)38,426 (136)
U.S. agency securities57,967 (199)  57,967 (199)
Total short-term investments$506,499 $(2,699)$100,182 $(1,278)$606,681 $(3,977)
Funds held for customers:
Corporate bonds$34,530 $(34)$ $ $34,530 $(34)
Asset-backed securities59,128 (258)11,533 (74)70,661 (332)
U.S. agency securities22,494 (31)  22,494 (31)
U.S. treasury securities74,888 (236)