February may be the month of love, but for investors it falls at the heart of an important earnings season. The roller coaster so far has been heightened by the fact that the market is in the midst of a sell-off, with the tech sector leading the decline.

But it’s not all bad, as some companies have managed to post incredibly strong financial results, highlighting great long-term opportunities for investors. Bill.com (NYSE:BILL) is one of them, crushing all expectations in the second quarter of its fiscal year 2022.

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Serving small businesses

Bill.com is a cloud-based payment platform focused on streamlining accounts payable management. It solves a critical problem for business operators who are short on time by offering a digital inbox that consolidates their incoming invoices in one central location.

When a business receives a high volume of invoices, it can often lose track of payments because the paper trail tends to get messy. And even after paying the invoices, the operator must manually record the transaction in the company’s accounting system. This whole process is time consuming and extremely inefficient.

Bill.com’s digital inbox allows users to pay bills with a single click, and its integration with most major accounting software providers means it automatically posts transactions to the books. It removes several steps from the typical process and the company estimates that it saves business owners 50% of the time normally spent managing their accounts payable.

But thanks to two key acquisitions in 2021, the company has expanded into new verticals. He now owns Divvy, a cloud-based expense management and budgeting platform for businesses, and Invoice2go, an invoice generation tool that helps businesses manage incoming payments. Both of these additions have already made strong contributions to Bill.com’s results.

Bill.com’s growth soars

The company has two primary revenue streams: 68% of revenue is generated from transactions, based on the volume of payments processed by Bill.com, and 31% is from subscriptions businesses pay to use the company’s platforms.

Bill.com increased its transaction fees by 313% year over year in the second quarter of fiscal 2022 and its subscription fees by 85%. Together, they combined to drive significant growth in total company revenue.

Metric

T2 fiscal 2021

T2 fiscal 2022

Growth

Total income

$54 million

$156 million

190%

Data source: Bill.com.

Bill.com also added 26,000 customers to its core platform during the quarter, bringing its total to 135,000. This is in addition to 223,000 subscribers using Invoice2go and 15,500 paying businesses on the Divvy platform.

The company’s rapid growth prompted it to revise its forecast to investors, now estimating that it will generate up to $600 million in revenue for all of fiscal 2022 (which ends June 30), against $541 million that it expected just three months ago in its Q1 Report.

A major long-term opportunity

Bill.com pursues a truly huge total addressable market. He estimates his opportunity in the United States alone could be 6 million business customers, with an annual payment volume of $25 trillion. And globally, it could serve up to 20 million business customers, generating $125 trillion in payment volume.

Although the company is not yet profitable, its strong second-quarter result reduced its expected net loss for the full year to $0.43 per share from $0.77 in the previous quarter. And that actually generated a break even result in the second quarter on an adjusted basis, further underscoring that the company is heading in the right direction.

To top it off, Wall Street is extremely bullish on Bill.com. Of the 17 analysts covering its stock, 15 have a buy rating, with two recommending a hold – but none advising a sell. Their consensus price target is $309 per share, which is up 27% from Tuesday morning prices. But a business Piper Sandlerthinks it could climb to $380, which is 56% higher than where it is trading today.

The short term looks promising for this company, but patient investors with a long-term view could reap far greater rewards.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.