rewrite this title Bill Faces Activist Investor Pressure – Nanalyze

If you evaluated every department in an organization for its ability to be automated, the accounting folks would quickly come under scrutiny. That’s not to say their work isn’t valuable. On the contrary, the reports coming out of an accounting department drive every decision made at the C-level. That’s precisely why you want expedient information that is accurate and processes in place that ensure money is collected as expeditiously as possible. For large businesses, elaborate accounting infrastructure is a given, but for small-to-medium business (SMB), investments are often difficult to justify. That’s where Bill.com (BILL) steps in. They’ve been slowly saving companies money by automating repetitive accounting tasks, and improving reporting so that decision makers can make more informed decisions.

Acceptable Growth, Barely

Bill is quietly growing its share of the SMB market, offering cost savings to thousands of clients across the country. While their revenue growth has tapered off in recent years, it still passes the threshold of double-digit percentages which we require from any company that claims to be disruptive. Revenue guidance for 2026 points to the bare minimum of 10% year-over-year which is certainly cause for concern.

Double-digit growth meets our criteria, but it’s nothing to write home about. If this solution is supposed to save money for its customers, it should be paying for itself. As customers realize cost savings, we’d expect them to adopt more of Bill’s features, boosting the company’s net retention rate (NRR), or the change in current customer spending each year. An NRR above 100% means customers are spending more than they were a year ago.

Last year, we pointed out how Bill’s NRR had dipped below 100%, implying customers were spending less over time. That’s not at all what we want to see, and we were disappointed to find that it barely improved in 2025, up to just 94% from 92% the year before. You know it’s bad when they stop reporting it in their quarterly investor decks entirely.

Unlike traditional SaaS businesses that make money largely via subscriptions or consumption, Bill makes the bulk of their revenue from transactions, meaning NRR might not be as important as it is for “pure SaaS” firms, something we commented on last year. So, we’ll continue to monitor this metric each year, but it won’t be our key focus.

The Headwinds Keep On Blowin’

Current customers are supposed to be the low-hanging fruit for any SaaS firm, which is why we’d expect to see NRR above 100%. But perhaps Bill is more focused on capturing new customers as opposed to expanding current one? Unfortunately, that also doesn’t appear to be the case.

We thought we were done talking about ye olde “macroeconomic headwinds,” but Bill’s management is still using it as a scapegoat. In their most recent quarterly earnings report, management pointed out how net new customer additions were weaker than they had hoped, up only 5% year-over-year. They attributed this to SMBs tightening their purse strings and holding off on making any commitments for software contracts amid economic uncertainty.

Despite the stock market hitting new highs, the economy is still under a lot of pressure from persistent inflation and still-high interest rates. This weighs heavily on Bill’s small business customers. To counteract these pressures, Bill recently laid off 6% of their workforce in an effort to improve profitability. That’s generally not what we want to see from our disruptive growth stocks. The thought here is that companies that are rapidly capturing market share need a good staff of salespeople and operational experts to handle the expanding business. Layoffs could imply that Bill isn’t confident about their ability to expand their market share, at least in the near future.

Activist Investors Take a Stand

When a business isn’t living up to its potential, it’s not uncommon for activist investors to swoop in. We saw this happen with Carl Icahn and Illumina back in 2023. What you’ll usually see is a large investment firm buying up loads of shares – anywhere from 5-10% of a company’s market cap – in order to be able to have a bit of pull. Then they’ll get a few board seats and start advocating for changes in hopes of unlocking value so they can sell their investment at a profit. That’s the hope anyway.

In September 2025, an activist investor firm known as Starboard Value opened massive position in Bill stock, buying over 7 million shares and taking their total ownership to roughly 8% of the company. They then secured four seats on Bill’s board of directors (two Starboard nominees and two mutually agreed upon members) and began barking orders. The firm noted that they want to improve Bill’s growth and profitability, aiming to help the firm attain the “Rule of 40” where the company’s revenue growth percentage plus their profit margin equals 40 or more.

Shortly after Starboard made their stake, Elliot Investment Management jumped on board, taking a 5% ownership position in Bill Holdings. They pressured Bill to explore a sale, claiming the shares are undervalued and would make a good strategic acquisition for the likes of QuickBooks owner Intuit (INTU) or legacy banking software provider Fiserv (FISV). A smaller firm called Barington Capital echoed this desire, disclosing that they’d taken a $25 million position in Bill stock as well. Aside from a sale, Barington also proposed a “comprehensive cost reduction plan.”

So, we have three separate activist investors with their hands in the pot. That’s a pretty blatant sign that Bill’s execution isn’t hitting the mark. In November 2025, Bill began formally exploring a sale, hiring financial advisers to gauge interest from rivals and PE firms. As of the time this article is published, there have been no public updates.

Finding Value in Bill

While activist investment typically points to a lack of execution, it also tends to imply that a company may be undervalued. If three different outfits seem to think they can turn the ship around, there must be something there, right?

When we analyze disruptive technology stocks, we use our simple valuation ratio (SVR) which simply divides a company’s market cap by their annualized revenue. This gives us a relative gauge as to whether a tech company is fairly valued. The average of our Tech Stock Catalog hovers around 7 these days, and Bill’s current SVR is roughly half that, at 3.5. SaaS businesses tend to have higher-than-average valuations due to their strong margins and predictable revenues. The fact that Bill is somewhat of a SaaS firm with over 80% gross margins means we would expect a premium valuation, not a discount. Is the market wrong about Bill? Or has this become a turnaround story that merits an unimpressive valuation?

Conclusion

We famously do not speculate on merger and acquisition (M&A) activity. Our thesis on Bill is based on the growth of business-to-business payments, an opportunity that is said to be over $1 trillion. It has nothing to do with Bill being an attractive buyout candidate. The company is still growing, albeit slowly, in the face of macroeconomic headwinds, and still provides investors with pure-play exposure to an exciting theme. We think Bill looks attractive here, setting aside all the activist investor hoopla. If we decide to buy shares of Bill stock, our Nanalyze Premium subscribers will be the first to know.