Bill Holdings (NYSE:BILL) jumped more than 13% in premarket trading on Wednesday after multiple media outlets reported that the payments and financial automation software provider is exploring strategic alternatives, including a potential sale.
According to Bloomberg News and Reuters, the San Jose, California-based firm has engaged a financial advisor to assess interest from both larger industry peers and private equity firms, people familiar with the matter said.
The move comes as activist investor Starboard Value LP, which revealed an 8.5% stake in Bill Holdings in early September, continues to pressure the company for operational improvements and governance changes. Starboard has publicly criticized Bill’s slow core revenue growth and profitability lag compared to competitors.
In October, Starboard released a detailed analysis showing that Bill’s adjusted core EBITDA margin stood at 9%, compared with a median of around 29% among peers, and highlighted a “Rule of 40” score of roughly 21%, significantly below the 40–50% benchmark considered healthy in the software-as-a-service sector. The “Rule of 40” combines a company’s revenue growth and profit margin to measure its balance between expansion and efficiency.
Following this activist pressure, Bill Holdings and Starboard reached a cooperation agreement last month that resulted in a board overhaul, adding four new independent directors, including Starboard’s Peter Feld.
Despite the recent reports, no final decision has been made, and Bill could ultimately decide to remain independent, according to both Bloomberg and Reuters. The company currently holds a market capitalization of about $4.7 billion, though its stock has fallen more than 44% year-to-date.
In a note to clients, Truist Securities analysts Matthew Coad and Lucas Ramadan commented that the development “does not come as too much of a surprise”, given Bill’s “digestible size” with an enterprise value near $5 billion, its underperforming shares, and consistent free cash flow generation. The analysts also noted that the company’s organic growth story remains “intact.”
With Bill’s shares trading around $54 in premarket, the analysts estimated that any potential sale could come at “a fair amount higher than that.”