Corporates' Shifting Expectations Fuel Optimism For Billtrust's First Earnings Report
This time last year, amid the sudden onset of the pandemic, accounts receivable technology company Billtrust had instituted a hiring freeze and clamped down on company spend.
One year later, Founder and CEO Flint Lane delivered Billtrust's first earnings call as a public entity, following last October's announcement that the FinTech would become the latest in a long — and growing — line of firms pursuing a public listing via special purpose acquisition company (SPAC).
Announcing its Fourth Quarter and Full Year 2020 figures on Tuesday (March 23), the company revealed it exceeded its net revenues and gross margin goals. While its successes can be partially attributed to the firm's "aggressive" growth strategy, as Lane described it, Billtrust's metrics reflect a current ecosystem in which B2B FinTechs are finding new growth opportunities as organizations dig their heels into payments digitization — a trend that may entice more B2B FinTechs to go public, too.
Enhancing Functionality
Positioned as an accounts receivable technology firm, Billtrust takes a "land and expand" strategy to growth, Flint said, working to have a head across the accounts receivable (AR) and broader B2B payments ecosystem through product offerings like its Business Payments Network (BPN). Reflecting on the 2020 highlights for the firm, the CEO pointed to product enhancements that supported the firm's growth last year, with new functionality also reflecting an intensifying demand among corporate FinTech users for better features and user experiences.
The debut of its Pay On Email offering supports integrated payment functionality at the point of emailed invoicing, while upgrades to its Cash Application tool introduced support for greater automation via machine learning.
Beyond added features, Billtrust is also fueling company growth via collaborations and developing a B2B payments ecosystem. Collaborating with FinTechs on the accounts payable side, like AvidXchange, allows the firm's BPN to secure greater transaction volume while working with partners like Visa positions the company to capitalize on the growing adoption of commercial cards, which Flint said make up the vast majority of transaction volume on the BPN.
"B2B payments are fundamentally broken in the U.S," said Flint, pointing to key friction points like the continued use of checks and the inability for corporates to seamlessly migrate supplier payments to electronic methods. "If you want to pay your friend electronically, you can simply pay them through a service like Venmo. You don't call them up and ask who they bank with."
It's a mindset that continues to reflect the need to not only digitize B2B payments but to inject automation and efficiency into the workflows surrounding that transaction, from invoicing through to reconciliation, as corporate calls for a better payment experience grow louder.
Going Public
Billtrust's decision to go public came at a particularly poignant time in B2B payments history as cloud-based services went from a "nice to have" to a "need to have" during the pandemic. Flint said during Tuesday's call that he expects that momentum to continue in 2021, with those tailwinds supporting a slight upwards revision in the company's 2021 outlook.
"We're in the very early stages of monetizing the shift to electronic payments," he stated.
The company expects total revenue, net revenue, adjusted gross profit and adjusted gross margin all to increase year-over-year in 2021, though noted its EBITDA, which came in at a loss of $2.2 million for 2020, is expected to see those losses increase to between $14 million and $16 million (largely attributed to the costs of going public).
The accelerated momentum of the electronic B2B payments ecosystem isn't just good news for Billtrust. Indeed, amid the SPAC boom, it may entice other B2B FinTechs to go public and capitalize on key trends like corporates' growing interest in commercial cards and increased eagerness to embrace integrated solutions.
Recent data from SPAC Research revealed recently that SPACs have already raised more within the first quarter of 2021 than they did in the entirety of 2020, so far hitting $131.1 billion.
In a potential sign of more to come, Reuters reported this week that B2B payments technology company and Billtrust partner AvidXchange is next on the docket, noting the company is seeking a $7 billion valuation via initial public offering (not SPAC) sometime in the year's second quarter.