In the event you evaluated each division in a corporation for its skill to be automated, the accounting of us would rapidly come beneath scrutiny. That’s to not say their work isn’t precious. Quite the opposite, the experiences popping out of an accounting division drive each choice made on the C-level. That’s exactly why you need expedient data that’s correct and processes in place that guarantee cash is collected as expeditiously as doable. For giant companies, elaborate accounting infrastructure is a given, however for small-to-medium business (SMB), investments are sometimes troublesome to justify. That’s the place Invoice.com (BILL) steps in. They’ve been slowly saving firms cash by automating repetitive accounting duties, and enhancing reporting so that call makers could make extra knowledgeable selections.
Acceptable Progress, Barely
Invoice is quietly rising its share of the SMB market, providing value financial savings to 1000’s of purchasers throughout the nation. Whereas their income progress has tapered off lately, it nonetheless passes the edge of double-digit percentages which we require from any firm that claims to be disruptive. Income steerage for 2026 factors to the naked minimal of 10% year-over-year which is definitely trigger for concern.
Double-digit progress meets our standards, nevertheless it’s nothing to jot down house about. If this answer is meant to save cash for its prospects, it ought to be paying for itself. As prospects understand value financial savings, we’d anticipate them to undertake extra of Invoice’s options, boosting the corporate’s net retention rate (NRR), or the change in present buyer spending annually. An NRR above 100% means prospects are spending greater than they had been a 12 months in the past.
Final 12 months, we identified how Invoice’s NRR had dipped under 100%, implying prospects had been spending much less over time. That’s under no circumstances what we wish to see, and we had been upset to seek out that it barely improved in 2025, as much as simply 94% from 92% the 12 months earlier than. it’s dangerous once they cease reporting it of their quarterly investor decks totally.
Not like conventional SaaS companies that make cash largely by way of subscriptions or consumption, Invoice makes the majority of their income from transactions, which means NRR won’t be as essential as it’s for “pure SaaS” corporations, one thing we commented on final 12 months. So, we’ll proceed to watch this metric annually, nevertheless it gained’t be our key focus.
The Headwinds Maintain On Blowin’
Present prospects are alleged to be the low-hanging fruit for any SaaS agency, which is why we’d anticipate to see NRR above 100%. However maybe Invoice is extra targeted on capturing new prospects versus increasing present one? Sadly, that additionally doesn’t look like the case.
We thought we had been accomplished speaking about ye olde “macroeconomic headwinds,” however Invoice’s administration remains to be utilizing it as a scapegoat. Of their most up-to-date quarterly earnings report, administration identified how internet new buyer additions had been weaker than that they had hoped, up solely 5% year-over-year. They attributed this to SMBs tightening their purse strings and holding off on making any commitments for software program contracts amid financial uncertainty.
Regardless of the inventory market hitting new highs, the financial system remains to be beneath a whole lot of strain from persistent inflation and still-high rates of interest. This weighs closely on Invoice’s small enterprise prospects. To counteract these pressures, Invoice not too long ago laid off 6% of their workforce in an effort to enhance profitability. That’s typically not what we wish to see from our disruptive progress shares. The thought right here is that firms which are quickly capturing market share want workers of salespeople and operational specialists to deal with the increasing enterprise. Layoffs may suggest that Invoice isn’t assured about their skill to broaden their market share, at the very least within the close to future.
Activist Buyers Take a Stand
When a enterprise isn’t residing as much as its potential, it’s not unusual for activist buyers to swoop in. We noticed this occur with Carl Icahn and Illumina again in 2023. What you’ll normally see is a big funding agency shopping for up a great deal of shares – wherever from 5-10% of an organization’s market cap – so as to have the ability to have a little bit of pull. Then they’ll get just a few board seats and begin advocating for adjustments in hopes of unlocking worth to allow them to promote their funding at a revenue. That’s the hope anyway.
In September 2025, an activist investor agency often called Starboard Worth opened large place in Invoice inventory, shopping for over 7 million shares and taking their complete possession to roughly 8% of the corporate. They then secured 4 seats on Invoice’s board of administrators (two Starboard nominees and two mutually agreed upon members) and started barking orders. The agency famous that they wish to enhance Invoice’s progress and profitability, aiming to assist the agency attain the “Rule of 40” the place the corporate’s income progress proportion plus their revenue margin equals 40 or extra.
Shortly after Starboard made their stake, Elliot Funding Administration jumped on board, taking a 5% possession place in Invoice Holdings. They pressured Invoice to discover a sale, claiming the shares are undervalued and would make strategic acquisition for the likes of QuickBooks proprietor Intuit (INTU) or legacy banking software program supplier Fiserv (FISV). A smaller agency known as Barington Capital echoed this want, disclosing that they’d taken a $25 million place in Invoice inventory as properly. Apart from a sale, Barington additionally proposed a “complete value discount plan.”
So, we now have three separate activist buyers with their palms within the pot. That’s a fairly blatant signal that Invoice’s execution isn’t hitting the mark. In November 2025, Invoice started formally exploring a sale, hiring monetary advisers to gauge curiosity from rivals and PE corporations. As of the time this text is revealed, there have been no public updates.
Discovering Worth in Invoice
Whereas activist funding usually factors to a scarcity of execution, it additionally tends to suggest that an organization could also be undervalued. If three completely different outfits appear to suppose they will flip the ship round, there should be one thing there, proper?
After we analyze disruptive expertise shares, we use our simple valuation ratio (SVR) which merely divides an organization’s market cap by their annualized income. This offers us a relative gauge as as to whether a tech firm is pretty valued. The common of our Tech Inventory Catalog hovers round 7 nowadays, and Invoice’s present SVR is roughly half that, at 3.5. SaaS companies are likely to have higher-than-average valuations as a result of their sturdy margins and predictable revenues. The truth that Invoice is considerably of a SaaS agency with over 80% gross margins means we might anticipate a premium valuation, not a reduction. Is the market improper about Invoice? Or has this develop into a turnaround story that deserves an unimpressive valuation?
Conclusion
We famously don’t speculate on merger and acquisition (M&A) exercise. Our thesis on Invoice relies on the expansion of business-to-business funds, a possibility that’s stated to be over $1 trillion. It has nothing to do with Invoice being a lovely buyout candidate. The corporate remains to be rising, albeit slowly, within the face of macroeconomic headwinds, and nonetheless gives buyers with pure-play publicity to an thrilling theme. We predict Invoice appears engaging right here, setting apart all of the activist investor hoopla. If we determine to purchase shares of Invoice inventory, our Nanalyze Premium subscribers would be the first to know.
