1 Spectacular Growth Stock Down 84% You Might Regret Not Buying on the Dip

Bill.com (NYSE: BILL) offers a portfolio of software products designed to help small and mid-sized businesses (SMBs) handle their accounts payable, accounts receivable, and expense management workflows more efficiently.

When the company went public in December 2019, it was investing heavily in growth, which led to soaring revenues. Investors were thrilled with that strategy, even though it caused steep losses at the bottom line, and they sent Bill.com stock soaring from $22 to $334 within two years -- an eye-popping gain of more than 1,400%.

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However, Bill.com since shifted its strategy to prioritize profitability instead of growth, forcing investors to reconsider its valuation. As a result, its stock is down 84% from its record high. The company still has a gigantic addressable market in front of it, so here's why the dip could be a great buying opportunity for long-term investors.

Streamlining time-consuming workflows

Bill.com's flagship product is a cloud-based digital inbox where businesses can receive or upload their incoming invoices in order to eliminate paper trails. It also allows them to pay each invoice with a single click, and it automatically logs the transactions in the books, thanks to integrations with most leading accounting software platforms. One accounting firm customer says this tool has reduced the time it spends on bookkeeping by 70%.

Bill.com acquired Invoice2go in 2021, which handles the other side of the accounts equation. It enables businesses to instantly generate invoices, send them to clients, and track incoming payments. Bill.com also expanded this platform to include invoice financing, so business owners can unlock cash flow, even if customers are late making payments.

Divvy (which is now called Spend and Expense) was acquired by Bill.com in 2021. Its platform helps businesses track expenses in real time, which is especially useful for those that give their employees corporate credit cards. Plus, it offers a budgeting tool that can be used to place restrictions on certain types of spending, so business owners aren't hit with any surprises.

At the end of the fiscal 2025 second quarter (ended Dec. 31), Bill.com served a record 481,300 customers across all of its platforms. The company partnered with over 8,500 accounting firms that recommend its software to their clients. Since it streamlines every aspect of the bookkeeping process, it makes every accountant's job easier, so it's a win-win for all parties.

Slowing revenue growth, but a big improvement at the bottom line

Bill.com generated $362.6 million in total revenue during the fiscal 2025 second quarter. It was above the company's forecast of $358 million, and it even prompted management to slightly increase its full-year revenue guidance for fiscal 2025. However, it represented year-over-year growth of just 14%, which was the slowest quarterly pace since Bill.com went public:

BILL Operating Revenue (Quarterly YoY Growth) data by YCharts

Bill.com pulled back on costs over the last couple of years, which is part of the reason for its slowing top-line growth. While its marketing spending ticked higher in the fourth quarter, the company's total operating expenses declined by 3.1% from a year ago. Simply put, reducing the amount of money flowing out of the business while the amount coming in continues to grow (even modestly) will lead to higher profits.

As a result, Bill.com's net income came in at $33.5 million during Q4, which was a positive swing from the $40.4 million net loss it delivered in the year-ago period. It also represented 353% growth from the $8.9 million profit the company generated in the fiscal 2025 first quarter three months earlier.

BILL Net Income (Quarterly) data by YCharts

Although many investors will be disappointed that Bill.com isn't growing its quarterly revenue by triple-digit percentages any longer, the company's current strategy will create a more sustainable business over the long term. It will reduce the need for additional financing or even equity raises, which dilute existing shareholders, while granting management more flexibility to invest in growth in the future.

Bill.com stock is near the cheapest level in its history

Since Bill.com doesn't have a full year of profitability under its belt yet, we can't value its stock using the traditional price-to-earnings (P/E) ratio. However, we can use the price-to-sales (P/S) ratio, which measures a company's revenue against its market capitalization.

As of this writing, Bill.com stock trades at a P/S ratio of 4.1, which is near its cheapest level since going public. It's also a massive 85% discount to its long-term average of 28.8, although that figure is skewed by the 2021 period when its P/S ratio topped 100, which was a completely unsustainable level:

BILL PS Ratio data by YCharts

Bill.com believes there are more than 72 million small- and medium-sized businesses in its global addressable market, which complete over $136 trillion worth of transactions each year. Since the company serves just 481,300 businesses right now, it hasn't even scratched the surface of that enormous opportunity.

Based on its current valuation, I think Bill.com stock could be a great buy for investors willing to hold it for the next three to five years. The company is likely to continue growing into its addressable market, but it could also become a profitability machine over that timeframe if the current trajectory of its bottom line is anything to go by.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bill Holdings. The Motley Fool has a disclosure policy.