You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this Annual Report on Form 10-K includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year end is June 30, and our fiscal quarters end on September 30, December 31, and March 31. This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on a discussion of fiscal 2026 compared to fiscal 2025. A discussion of fiscal 2025 compared to fiscal 2024 can be found under Item 7 of Part II in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on August 28, 2025, which is available free of charge on the SEC’s website at www.sec.gov and on the Investor Relations section of our corporate website at investor.bill.com. Overview BILL is the intelligent finance platform trusted by nearly half a million businesses and their accountants to manage, move, and maximize their money. BILL powers businesses ranging from fast-moving startups to growing companies with complex operations. We use artificial intelligence (AI) to deliver strategic finance capabilities in one integrated platform that includes accounts payable (AP), accounts receivable (AR), expenses, forecasting, procurement, and more. With more than 9 million network members, our platform's total payment volume represents over 1% of U.S. gross domestic product. Headquartered in San Jose, California, BILL is a trusted partner of leading U.S. financial institutions, accounting firms, and software providers. Our platform creates seamless connections between our customers, their suppliers, and their clients. Businesses on our platform generate and process invoices, streamline approvals, make and receive payments, manage employee expenses, sync with their accounting system, foster collaboration, and manage their cash flow. We have built sophisticated integrations with popular software solutions, banks, card issuers, and payment processors, enabling our customers to access these mission-critical services quickly and easily. Our integrated platform also includes BILL Spend and Expense, our spend and expense management product, which provides a solution for businesses to have charge cards, build and monitor budgets, manage payments, and eliminate the need for manual expense reports. We efficiently reach SMBs through our proven direct and indirect go-to-market strategies. We acquire new businesses to use our solutions directly through digital marketing and inside sales, and indirectly through accounting firms, financial institution partnerships and software providers. As of June 30, 2026, our partners included some of the most trusted brands in the financial services business and more than 85 of the top 100 accounting firms. As we add customers and partners, we expect our network to continue to grow organically. In fiscal 2026, we launched BILL AI, including our first suite of AI agents, which are designed to simplify and accelerate SMB workflows, including W-9 filings, customer support and assistance, touchless transactions, automatic reconciliations and complex invoice coding. We have enhanced the capabilities of our Supplier Payments Plus product with expanded digital acceptance and greater control of preferences. In addition, we launched embed partnerships with Paychex, Oracle NetSuite, and Acumatica as part of our "Embed 2.0" initiative to deploy our platform offerings as a set of embeddable capabilities through third-party platforms. We expect this approach will extend our platform's reach and offer new payment capabilities to our partners' users. Finally, we recently launched BILL Travel, our travel management offering, to empower our customers' employees to book trips and track expenses through our platform. We have grown significantly and scaled our business operations in recent years. Our revenue was $1.7 billion and $1.5 billion during fiscal 2026 and 2025, respectively, a year-over-year increase of $190.6 million. We generated net loss of $11.2 million and net income of $23.8 million during fiscal 2026 and 2025, respectively. 61 Macroeconomic and Other Factors Current macroeconomic conditions and uncertainties, including volatility in interest rates and borrowing costs, inflation and currency exchange rates, the impact of the ongoing rapid development and adoption of new AI capabilities, ongoing geopolitical conflicts and related supply chain disruptions, increases in the cost of memory, computing power, and related raw materials, and recent changes in international trading relationships, and U.S. and foreign tariff rates have impacted and could continue to impact our business and the SMBs we serve. SMBs are particularly susceptible to changes in overall economic and financial conditions, and certain SMBs may, in the event of adverse economic conditions or a recession or any inability to access financing, moderate their expenditures, shift to lower-cost methods of payment, or cease operations entirely. Reductions in interest rates by the U.S. Federal Reserve Bank may improve financial conditions for SMBs, but there can be no assurance of future rate cuts or any corresponding increase in economic activity. At the same time, such reductions in interest rates have the effect of reducing the interest on funds held for customers we generate. We intend to continue to monitor macroeconomic conditions closely and to take appropriate financial or operational actions in response to such conditions. We are committed to undertaking measures to improve organizational agility and efficiency, while also seeking to drive greater profitability. In furtherance of this commitment, we have undertaken or announced several reductions in force (RIFs) in recent periods, including a RIF impacting approximately 6% of employees in October 2025, a smaller RIF in March 2026, and an additional RIF impacting approximately 30% of our workforce in May 2026, In June 2026, we incurred the majority of the charges related to the May 2026 RIF and expect it to be substantially completed by September 30, 2026. We continue to consider appropriate actions to improve structural efficiencies and optimize operations in future periods. As part of our new operating strategy, we are transitioning to a remote-first company and expect to reduce our real property footprint in the near-term. In connection with these reductions, we may recognize impairment losses on certain lease-related assets and property and equipment. Any of these conditions or actions may have a negative impact on our future results of operations, liquidity, and financial condition. We are unable to predict the full impact that macroeconomic factors, banking sector dynamics, or ongoing global geopolitical conflicts will have on our future results of operations, liquidity, and financial condition due to numerous uncertainties, including government budget cuts and government shut downs, changes in central bank policies and interest rates, rates of inflation, the strength of the U.S. dollar, the related impact to our customers, spending businesses, subscribers, partners, and suppliers, and other factors described in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Our Revenue Model We generate revenue primarily from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user or per customer account. Our transaction revenue consists of transaction fees on a fixed or variable rate per transaction, and interchange fees. Transactions primarily include card payments, real-time payments, check payments, ACH payments, cross-border payments, pay-by-card, invoice financing, and creation of invoices. Much of our revenue comes from repeat transactions, which are an important contributor to our recurring revenue. In addition, we generate revenue from interest on funds held for customers. When we process payment transactions, the funds flow through our bank accounts, resulting in a balance of funds held for customers. The balances may fluctuate based on volume and the type of payments processed. Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, corporate bonds, asset-backed securities, municipal bonds, commercial paper, U.S. treasury securities, and U.S. agency securities. We hold these funds from the day they are withdrawn from a payer’s account to the day the funds are credited to the receiver. This revenue can fluctuate depending on the amount of customer funds held, as well as our yield on customer funds invested, which is influenced by market interest rates and our investments. 62 Our Receivables Purchases and Servicing Model We market our BILL Spend and Expense software and BILL Divvy Card, a charge card for business credit and expense management, to potential spending businesses and issue business-purpose charge cards through our card issuing partner banks (Issuing Banks). When a business applies for a BILL Divvy Card, we utilize, on behalf of the Issuing Bank, proprietary risk management capabilities to confirm the identity of the business, and perform a credit underwriting process to determine if the business is eligible for a BILL Divvy Card pursuant to our credit policies. Once approved for a BILL Divvy Card, the spending business is provided a credit limit and can use the BILL Spend and Expense software to request virtual cards or physical cards, establish budgets, and manage spend. The cards on our platform are issued by Cross River Bank, a Federal Deposit Insurance Corporation (FDIC)-insured New Jersey state chartered bank, and WEX Bank and WebBank, FDIC-insured Utah state chartered banks. Under our arrangements with the Issuing Banks, we must comply with their respective credit policies and underwriting procedures, and the Issuing Banks maintain ultimate authority to decide whether to issue a card or approve a transaction. We are responsible for all fraud and unauthorized use of a card and generally are required to hold the Issuing Bank harmless from such losses unless claims regarding fraud or unauthorized use are due to the sole gross negligence of the Issuing Bank. When a spending business completes a purchase transaction, the payment to the supplier is made by the cards' Issuing Bank. Obligations incurred by the spending business in connection with their purchase transaction are reflected as receivables on the Issuing Bank's balance sheets from the BILL Divvy Card account for the spending business. The Issuing Bank then sells a 100% participation interest in the receivable to us. Pursuant to our agreements with the Issuing Banks, we are obligated to purchase the participation interests in all of the receivables originated through our platform, and our obligations are secured by cash deposits. When we purchase the participation interests, the purchase price is equal to the outstanding principal balance of the receivable. In order to ensure we have the operational flexibility and liquidity to purchase the participation rights in the receivables, we maintain certain funding arrangements, including warehouse facilities. We typically fund some portion of these participation interest purchases by borrowing under our credit facilities, although most purchases are funded using corporate cash. Our Business Model We efficiently reach SMBs through our proven direct and indirect go-to-market strategies. We acquire them directly through digital marketing and inside sales and indirectly by partnering with leading companies that are trusted by SMBs, including accounting firms, financial institutions, and software providers. Our revenue from existing businesses using our solutions is visible and predictable. For fiscal 2026, over 87% of our subscription and transaction revenue from BILL AP/AR customers came from customers who were acquired prior to the start of the fiscal year. See "—Key Business Metrics—Businesses Using Our Solutions" below for the definition of BILL AP/AR customers. We expand within our existing customer base by adding more users, increasing transactions per customer, launching additional products, and through pricing and packaging our services. We make it easy for SMBs to try our platform through our risk-free trial program. Should an SMB choose to become a customer after the trial period, it can take several months to adapt their financial operations to fully leverage our platform. Even with a transition period, however, we believe our customer retention is strong. Excluding those customers of our financial institution partners, approximately 85% of BILL AP/AR customers as of June 30, 2025 were still customers as of June 30, 2026. Net dollar-based retention rate is an important indicator of customer satisfaction and usage of our platform, as well as potential revenue for future periods. We calculate our net dollar-based retention rate at the end of each fiscal year. We calculate our net dollar-based retention rate by starting with the revenue billed to BILL AP/AR customers in the last quarter of the prior fiscal year (Prior Period Revenue). We then calculate the revenue billed to these same customers in the last quarter of the current fiscal year (Current Period Revenue). See "—Key Business Metrics—Businesses Using Our Solutions" below for the definition of BILL AP/AR customer. Current Period Revenue includes any upsells and is net of contraction or attrition, but excludes revenue from new customers and excludes interest earned on funds held for customers. We then repeat the 63 calculation of Prior Period Revenue and Current Period Revenue with respect to each of the preceding three quarters, and aggregate the four Prior Period Revenues (the Aggregate Prior Period Revenue) and the four Current Period Revenues (the Aggregate Current Period Revenue). Our net dollar-based retention rate equals the Aggregate Current Period Revenue divided by Aggregate Prior Period Revenue. Our net dollar-based retention rate was 95%, 94%, and 92% during fiscal 2026, 2025, and 2024, respectively. The increase in fiscal 2026 when compared to fiscal 2025 was primarily due to increased revenue from businesses associated with financial institution partners and the impact of pricing changes on existing customers. The increase in fiscal 2025 when compared to fiscal 2024 was primarily due to increased revenue from businesses associated with financial institution partners and growth in total payment volume. Key Business Metrics We regularly review several metrics, including the key business metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We periodically review and revise these metrics to reflect changes in our business. We present our key business metrics on a consolidated basis, which we believe better reflects the performance of our consolidated business overall. Our key business metrics are defined following the table below and track our BILL AP/AR, BILL Spend and Expense, and Embedded Solutions and Other combined (as further defined below). The relevant metrics for each of BILL AP/AR, BILL Spend and Expense, and Embedded Solutions and Other are set forth in the footnotes to the table. The calculation of the key business metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts, or investors. As of June 30, % Growthas of June 30, 2026 2025 2024 2026 2025 Businesses using our solutions (1) 479,300 493,800 474,600 (3) % 4 % Year endedJune 30, % GrowthYear ended June 30, 2026 2025 2024 2026 2025 Total Payment Volume (billions) (2) $ 371.3 $ 329.8 $ 292.4 13 % 13 % Year endedJune 30, % GrowthYear ended June 30, 2026 2025 2024 2026 2025 Transactions processed (millions) (3) 139.4 121.3 103.8 15 % 17 % (1)As of June 30, 2026, the total number of BILL AP/AR customers was approximately 183,300; the total number of spending businesses that used our BILL Spend and Expense solution was approximately 46,500, and the total number of Embedded Solutions and Other customers was approximately 249,500. (2)During fiscal 2026, the TPV by BILL AP/AR customers was approximately $310.5 billion; the total card payment volume transacted by spending businesses that used BILL Divvy Cards was approximately $26.4 billion; and the TPV transacted by Embedded Solutions and Other customers was approximately $34.4 billion. (3)During fiscal 2026, the total number of transactions executed by BILL AP/AR customers was approximately 50.4 million; the total number of transactions executed by spending businesses that used BILL Divvy Cards was approximately 79.9 million; and the total number of transactions executed by Embedded Solutions and Other customers was approximately 9.1 million. 64 Businesses Using Our Solutions We define businesses using our solutions as the summation of: (A) businesses that use our core BILL accounts payable and receivable platform (BILL AP/AR), (B) spending businesses that use our BILL Spend and Expense product, and (C) businesses that access our solutions through our embedded partners' platforms and other indirect sales channels (including our financial institution partners), and Invoice2go subscribers (Embedded Solutions and Other). Businesses using more than one of our solutions are included separately in the total for each solution utilized; as of June 30, 2026, this included approximately 21,400 businesses. Businesses using our solutions during a trial period are not counted as new businesses using our solutions during that period. If an organization has multiple entities billed separately for the use of our solutions, each entity is counted as a business using our solutions. Businesses using our solutions exclude certain network members utilizing limited features of our platform, such as those that only receive payments. The number of businesses using our solutions in the table above represents the total number of businesses using our solutions at the end of each fiscal year. Total Payment Volume To grow revenue from businesses using our solutions, we must deliver a product experience that helps them automate their back-office financial operations. The more they use and rely upon our product offerings to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the aggregate value of transactions that businesses using our solutions are completing on our platform and is an indicator of our ability to generate revenue from businesses using our solutions. We define TPV as the total value of transactions that we process on our platform during a particular period, comprising transactions from BILL AP/AR customers, BILL Divvy Card transactions, and transactions executed by Embedded Solutions and Other customers. Our calculation of TPV is presented gross of payments that may be subsequently reversed. Such reversals accounted for less than 2% of TPV during each of fiscal 2026, 2025, and 2024. Transactions Processed We define transactions processed as the total number of payments initiated and processed through our platform during a particular period. Payment transactions include checks, ACH payments, card payments, Invoice2go subscriber transactions, real-time payments, pay by card, invoice financing, and cross-border payments. Components of Results of Operations Revenue We generate revenue primarily from subscription and transaction fees. Subscription fees are fixed at a monthly or annual rate per user or per customer account for the use of our platform to process transactions. Transaction fees are fees collected for each transaction processed, on either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, card payments, real-time payments, pay by card, invoice financing, cross-border payments, and the creation of invoices. Transaction fees also include interchange fees paid by suppliers accepting card payments. Fixed transaction fees are set at a fixed charge per payment transaction, while variable transaction fees are generally calculated based on a percentage of the dollar amount of the payment transaction. Our contracts with SMB and accounting firm customers provide them with access to the functionality of our cloud-based payments platform to process transactions. These contracts are either monthly contracts paid in arrears or upfront, or annual arrangements paid up front. We charge our SMB and accounting firm customers subscription fees to access our platform either based on the number of users or per customer account and the level of service. We generally also charge these customers transaction fees based on transaction volume and the category of transaction. The contractual price for subscription and transaction services is based on either negotiated fees or the rates published on our website. Revenue recognized excludes amounts collected on behalf of third parties, such as sales taxes collected and remitted to governmental authorities. 65 We enable our SMB and accounting firm customers to make virtual card payments to their suppliers. We also facilitate the extension of credit to spending businesses through the BILL Spend and Expense product in the form of BILL Divvy Cards. The spending businesses utilize the credit on BILL Divvy Cards as a means of payment for goods and services provided by their suppliers. Virtual card payments and BILL Divvy Cards are originated through agreements with the Issuing Banks. Our agreements with the Issuing Banks allow for card transactions on the Mastercard and Visa networks. For each virtual card and BILL Divvy Card transaction, suppliers are required to pay interchange fees to the issuer of the card. Based on our agreements with the Issuing Banks, we recognize the interchange fees as revenue gross or net of fees paid to the Issuing Banks based on our determination of whether we are the principal or the agent under the agreements. We also enter into multi-year contracts with financial institution customers to provide them with access to our cloud-based payments platform. These contracts typically include fees for initial implementation services that are paid during the period the implementation services are provided as well as fees for subscription and transaction processing services, which are subject to guaranteed minimum fees that are paid over the contract term. These contracts enable the financial institutions to provide their customers with access to online bill pay services through the financial institutions’ online platforms. Implementation services are required up-front to establish an infrastructure that allows the financial institutions’ online platforms to communicate with our online platform. A financial institution’s customers cannot access online bill pay services until implementation is complete. The total consideration in these contracts varies based on the number of users and transactions to be processed. In addition, we generate revenue from interest on funds held for customers. Interest on funds held for customers consists of the interest that we earn from customer funds while payment transactions are clearing. Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, corporate bonds, asset-backed securities, municipal bonds, commercial paper, U.S. treasury securities, and U.S. agency securities, until those payments are cleared and credited to the intended recipient. Service Costs and Expenses Service costs – Service costs consist primarily of costs that are directly attributed to processing customers’ and spending businesses' transactions (such as the cost of printing checks, postage for mailing checks, fees associated with the issuance and processing of card transactions, net of card network incentives, and fees for processing payments), personnel-related costs, including stock-based compensation expenses, for our customer success and payment operations teams, outsourced support services for our customer success team, direct and amortized costs for implementing and integrating our cloud-based platform with our customers’ systems, and cloud payments infrastructure costs. We expect that service costs will increase in absolute dollars, but may fluctuate as a percentage of revenue from period to period, as we continue to invest in growing our business and based on whether or not we are the principal or the agent under arrangements with third parties. Research and development (R&D) – R&D expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for our R&D teams, incurred in developing new products or enhancing existing products, and allocated overhead costs. We expense a substantial portion of R&D expenses as incurred. We believe that delivering new and enhanced functionality is critical to attract new customers and expand our relationship with existing customers. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction, and to attract new customers. We expect our R&D expenses to increase in absolute dollars, but they may fluctuate as a percentage of revenue from period to period as we expand our R&D team to develop new products and product enhancements, including continued investments in our AI tools and offerings, such as AI agents. We capitalize certain internal-use software development costs that are attributable to developing new products and adding incremental functionality to our platform and amortize such costs into service costs over the estimated life of the new product or incremental functionality, which is generally three years. Sales and marketing – Sales and marketing expenses consist primarily of rewards expense in connection with our card rewards programs, personnel-related expenses, including stock-based compensation expenses, for our sales and marketing teams, sales commissions, marketing program expenses, travel-related expenses, and costs to market and promote our platform through advertisements, marketing events, partnership arrangements, direct customer acquisition, and allocated overhead costs. Sales commissions that are 66 incremental to obtaining new customer contracts are deferred and amortized ratably over the estimated period of our relationship with new customers. We focus our sales and marketing efforts on generating awareness of our company, platform, and products, creating sales leads, and establishing and promoting our brand. We plan to continue investing in sales and marketing efforts by driving our go-to-market strategies, building our brand awareness, and sponsoring additional marketing events; however, we will adjust our sales and marketing spend level as needed, as the spend may fluctuate from period to period, in response to changes in the economic environment. General and administrative – General and administrative expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, for finance, corporate business operations, risk management, legal and compliance, human resources, and information technology functions, costs incurred for external professional services, losses from fraud, and allocated overhead costs. We expect to incur additional general and administrative expenses as we explore various growth initiatives, which include incurring higher costs for professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of revenue from period to period. Provision for expected credit losses – Provision for expected credit losses represents the amount of expense required to maintain the allowance for expected credit losses on our consolidated balance sheets, which represents management’s estimate of expected credit losses. In the event that our receivables outperform expectation and/or we reduce our expectation of credit losses in future periods, we may release reserves and thereby reduce the provision for expected credit losses. The provision is determined based on our estimate of expected credit losses on acquired card receivables, loans held for investment and accounts receivable on our balance sheets, changes in our estimate of expected credit losses on receivables outstanding and loans held for investment as of the end of the period and the net charge-offs incurred in the period. Depreciation and amortization – Depreciation and amortization consists of depreciation and amortization of property and equipment, and amortization of acquired intangibles, such as developed technology, and customer relationships. Amortization of capitalized internal-use software costs paid in cash is excluded. Restructuring – Restructuring costs consist primarily of employee severance and other employment termination benefits related to the RIFs. Additionally, these costs include other costs related to the execution of our efforts to improve organizational agility and efficiency, while also seeking to drive greater profitability. Refer to Note 15 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. Other income, net – Other income, net consists primarily of interest income on our corporate funds, gain on debt extinguishment and interest expense on our borrowings (including amortization of debt discount and issuance costs). Provision for income taxes – Income tax expense consists of U.S. federal, state and foreign income taxes. We maintain a full valuation allowance against our U.S. federal, state and Australian net deferred tax assets as we have concluded that it is more likely than not that we will not realize our net deferred tax assets. 67 Results of Operations The following table sets forth our results of operations together with the dollar and percentage change for the periods presented (amounts in thousands): Year ended June 30, Change (2026 compared to 2025) Change (2025 compared to 2024) 2026 2025 2024 Amount % Amount % Revenue Subscription and transaction fees (1) $ 1,504,749 $ 1,300,804 $ 1,122,733 $ 203,945 16 % $ 178,071 16 % Interest on funds held for customers 148,411 161,766 167,439 (13,355) (8) % (5,673) (3) % Total revenue 1,653,160 1,462,570 1,290,172 190,590 13 % 172,398 13 % Cost of revenue Service costs (1) 265,808 229,805 189,894 36,003 16 % 39,911 21 % Depreciation and amortization (2) 49,487 42,298 44,722 7,189 17 % (2,424) (5) % Total cost of revenue 315,295 272,103 234,616 43,192 16 % 37,487 16 % Gross profit 1,337,865 1,190,467 1,055,556 147,398 12 % 134,911 13 % Operating expenses Research and development (1) 300,571 340,059 336,754 (39,488) (12) % 3,305 1 % Sales and marketing (1) 616,211 543,711 478,540 72,500 13 % 65,171 14 % General and administrative (1) 299,410 281,913 277,662 17,497 6 % 4,251 2 % Provision for expected credit losses 71,056 72,749 60,105 (1,693) (2) % 12,644 21 % Depreciation and amortization (2) 33,169 32,637 49,072 532 2 % (16,435) (33) % Restructuring (1) 90,895 — 27,587 90,895 100 % (27,587) 100 % Total operating expenses 1,411,312 1,271,069 1,229,720 140,243 11 % 41,349 3 % Operating loss (73,447) (80,602) (174,164) 7,155 (9) % 93,562 (54) % Other income, net 63,316 111,012 147,845 (47,696) (43) % (36,833) (25) % Income (loss) before provision for income taxes (10,131) 30,410 (26,319) (40,541) (133) % 56,729 (216) % Provision for income taxes 1,110 6,611 2,559 (5,501) (83) % 4,052 158 % Net income (loss) $ (11,241) $ 23,799 $ (28,878) $ (35,040) (147) % $ 52,677 (182) % (1) Includes stock-based compensation charged to revenue and expenses as follows (amounts in thousands): Year ended June 30, Change (2026 compared to 2025) Change (2025 compared to 2024) 2026 2025 2024 Amount % Amount % Revenue - subscription and transaction fees $ 2,449 $ 2,329 $ 1,831 $ 120 5 % $ 498 27 % Cost of revenue - service costs 8,554 9,627 9,309 (1,073) (11) % 318 3 % Research and development 92,456 107,603 103,382 (15,147) (14) % 4,221 4 % Sales and marketing 32,752 39,992 49,070 (7,240) (18) % (9,078) (19) % General and administrative 78,082 82,981 81,209 (4,899) (6) % 1,772 2 % Restructuring 15,485 — 3,574 15,485 100 % (3,574) 100 % Total stock-based compensation $ 229,778 $ 242,532 $ 248,375 $ (12,754) (5) % $ (5,843) (2) % (2) Depreciation and amortization does not include amortization of capitalized internal-use software costs paid in cash of $33.9 million, $14.5 million, and $9.4 million during each of the years ended June 30, 2026, 2025, and 2024, respectively, which are included in service costs and general and administrative in the consolidated statements of operations. 68 The following table sets forth the components of our consolidated statements of operations for the periods presented as a percentage of revenue: Year ended June 30, 2026 2025 2024 Revenue Subscription and transaction fees 91 % 89 % 87 % Interest on funds held for customers 9 % 11 % 13 % Total revenue 100 % 100 % 100 % Cost of revenue Service costs 16 % 16 % 15 % Depreciation and amortization 3 % 3 % 3 % Total cost of revenue 19 % 19 % 18 % Gross profit 81 % 81 % 82 % Operating expenses Research and development 18 % 23 % 25 % Sales and marketing 37 % 37 % 37 % General and administrative 19 % 20 % 22 % Provision for expected credit losses 4 % 5 % 5 % Depreciation and amortization 2 % 2 % 4 % Restructuring 5 % — % 2 % Total operating expenses 85 % 87 % 95 % Operating loss (4) % (6) % (13) % Other income, net 4 % 8 % 11 % Income (loss) before provision for income taxes — % 2 % (2) % Provision for income taxes — % — % — % Net income (loss) — % 2 % (2) % Comparison of Fiscal 2026 and 2025 Revenue The following table sets forth our revenue during fiscal 2026 and 2025, respectively (amounts in thousands): Year ended June 30, Change 2026 2025 Amount % BILL AP/AR $ 236,048 $ 218,289 $ 17,759 8 % Embedded Solutions and Other 57,498 53,847 3,651 7 % Subscription fees $ 293,546 $ 272,136 $ 21,410 8 % BILL AP/AR 504,068 449,493 54,575 12 % BILL Spend and Expense 675,552 555,016 120,536 22 % Embedded Solutions and Other 31,583 24,159 7,424 31 % Transaction fees 1,211,203 1,028,668 182,535 18 % Total subscription and transaction fees 1,504,749 1,300,804 203,945 16 % Interest on funds held for customers 148,411 161,766 (13,355) (8) % Total revenue $ 1,653,160 $ 1,462,570 $ 190,590 13 % Total revenue increased by $190.6 million, or 13%, during fiscal 2026 as compared to fiscal 2025, primarily due to: 69 •a $182.5 million increase in transaction fee revenue primarily due to increased total payment volume driven by the increase in customer adoption of our BILL AP/AR and BILL Spend and Expense products; and •a $21.4 million increase in subscription fee revenue primarily due to an increase in BILL AP/AR customers as compared to the same prior year period; offset by •a $13.4 million decrease in interest on funds held for customers primarily due to lower yield driven by the decrease in interest rates. Cost of Revenue, Gross Profit, and Gross Margin Cost of revenue, gross profit, and gross margin during fiscal 2026 and 2025, respectively, were as follows (amounts in thousands): Year ended June 30, Change 2026 2025 Amount % Cost of revenue: Service costs $ 265,808 $ 229,805 $ 36,003 16 % Depreciation and amortization (1) 49,487 42,298 7,189 17 % Total cost of revenue 315,295 272,103 43,192 16 % Gross profit $ 1,337,865 $ 1,190,467 $ 147,398 12 % Gross margin 80.9% 81.4% (1) Consists of depreciation of property and equipment and amortization of developed technology, excluding amortization of capitalized internal-use software costs paid in cash of $31.3 million, $14.5 million, and $9.4 million during each of the years ended June 30, 2026, 2025, and 2024, respectively, which are included in service costs in the consolidated statements of operations. Service costs increased by $36.0 million during fiscal 2026 as compared to fiscal 2025, primarily due to: •a $21.1 million increase in direct costs associated with the processing of our customers' payment transactions and data hosting services, which were driven by the increase in customer adoption of our products; and •a $21.0 million increase in other costs, primarily from a $16.8 million increase in amortization of capitalized internal-use software costs and a $4.6 million increase in software licenses and subscriptions; offset by •a $5.2 million decrease in personnel-related costs including stock-based compensation expense, primarily driven by our RIFs executed during the current fiscal year. Gross margin decreased to 80.9% during fiscal 2026 from 81.4% during fiscal 2025, primarily due to higher amortization of capitalized internal-use software costs paid in cash, partially offset by lower personnel-related costs, including stock-based compensation expense. Research and Development Expenses Research and development expenses decreased by $39.5 million during fiscal 2026 as compared to fiscal 2025, primarily due to the following: •a $33.0 million decrease due to a higher number of initiatives subject to capitalization of internal-use software costs; and •a $12.0 million decrease in personnel-related costs, including stock-based compensation expense, primarily driven by our RIFs executed during the current fiscal year; offset by •a $4.2 million increase in other costs, primarily from a $2.3 million increase in software licenses and subscriptions and a $0.9 million increase in shared overhead. 70 Sales and Marketing Expenses Sales and marketing expenses increased by $72.5 million during fiscal 2026 as compared to fiscal 2025, primarily due to the following: •a $75.6 million increase in rewards expense in connection with our BILL Divvy Cards as a result of increased transaction volume. Rewards expense increased from 49% to 51% as a percentage of revenue from spend and expense interchange fees primarily due to higher reward rates; and •a $3.0 million increase in advertising spend, marketing initiatives, software subscription expenses, and shared overhead; offset by •a $7.2 million decrease in stock-based compensation expense, primarily driven by our RIFs executed during the current fiscal year. General and Administrative Expenses General and administrative expenses increased by $17.5 million during fiscal 2026 as compared to fiscal 2025, primarily due to the following: •a $13.0 million increase in consulting fees for outside services, including fees related to shareholders' activism; and •a $5.7 million increase in other costs, primarily due to a $2.6 million increase in amortization of capitalized internal-use software costs and a $2.4 million increase in software licenses and subscriptions; and •a $3.7 million increase in losses from fraud driven by the increase in the volume of transactions processed during the fiscal year; offset by •a $5.2 million decrease in personnel-related expense, including stock-based compensation expense, primarily driven by our RIFs executed during the current fiscal year. Provision for Expected Credit Losses Provision for expected credit losses decreased by $1.7 million during fiscal 2026 as compared to fiscal 2025. Provision for expected credit losses from loans held for investment decreased by $10.6 million, primarily due to improvements in the delinquency performance of loans held for investment, and a decrease in estimated loss rates in fiscal 2026 compared to fiscal 2025, partially offset by portfolio growth. Provision for expected credit losses from acquired card receivables increased by $9.0 million, primarily due to portfolio growth and the prior year release of $5.7 million of the credit loss allowance related to credit loss methodology, partially offset by improvements in delinquency performance. Depreciation and Amortization Depreciation and amortization increased by $7.7 million during fiscal 2026 as compared to fiscal 2025, primarily due to higher amortization of capitalized internal-use software costs during the current fiscal year. Restructuring Restructuring charges increased by $90.9 million during fiscal 2026, from none in fiscal 2025, due to the RIFs undertaken during the current fiscal year. Refer to Note 15 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 71 Other Income, Net Other income, net decreased by $47.7 million during fiscal 2026 as compared to fiscal 2025, primarily due to the following: •a $40.6 million decrease due to the absence of gain on debt extinguishment resulting from the partial repurchases of our 2025 Notes and 2027 Notes; and •a $6.6 million decrease due to interest expense from the new 2025 Credit Facility (as defined in Liquidity and Capital Resources below). Provision for Income Taxes Provision for income taxes decreased by $5.5 million during fiscal 2026 as compared to fiscal 2025, primarily due to the One Big Beautiful Bill Act (OBBBA) repeal of the requirement to capitalize R&E expenditures, which resulted in a federal taxable loss position and lower state income taxes in states that have conformed to the OBBBA. Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different from similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP metrics to help investors understand our financial performance from management's perspective. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry. We also periodically review our non-GAAP financial measures and may revise these measures to reflect changes in our business or otherwise. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit as gross profit minus depreciation and amortization, and stock-based compensation and related payroll taxes charged to cost of revenue. Non-GAAP gross margin is defined as non-GAAP gross profit, divided by total revenue. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. The following table shows a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our gross profit and gross margin for the periods presented (amounts in thousands): 72 Year ended June 30, 2026 2025 2024 Revenue $ 1,653,160 $ 1,462,570 $ 1,290,172 Gross profit 1,337,865 1,190,467 1,055,556 Add: Depreciation and amortization (1) 49,487 42,298 44,722 Stock-based compensation and related payroll taxes charged to cost of revenue 8,834 9,920 9,594 Non-GAAP gross profit $ 1,396,186 $ 1,242,685 $ 1,109,872 Gross margin 80.9 % 81.4 % 81.8 % Non-GAAP gross margin 84.5 % 85.0 % 86.0 % (1) Consists of depreciation of property and equipment and amortization of developed technology, excluding amortization of capitalized internal-use software costs paid in cash of $31.3 million, $14.5 million, and $9.4 million during each of the years ended June 30, 2026, 2025, and 2024, respectively, which are included in service costs in the consolidated statements of operations. Free Cash Flow Free cash flow is a non-GAAP measure defined as net cash provided by operating activities, adjusted by purchases of property and equipment and capitalization of internal-use software costs. We believe free cash flow is an important liquidity measure of the cash that is generated, after incurring operating expenses, purchases of property and equipment and capitalization of internal-use software costs, for future operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash in the ordinary course of business. One limitation of free cash flow is that it does not reflect our future contractual commitments. Additionally, free cash flow does not represent the total increase or decrease in our cash balance for a given period. Once our business needs and obligations are met, cash can be used to maintain strong balance sheets and invest in future growth. The following table provides a reconciliation of our free cash flow to net cash provided by operating activities for the periods presented (in thousands): Year ended June 30, 2026 2025 2024 Net cash provided by operating activities $ 415,832 $ 350,644 $ 278,771 Purchases of property and equipment (3,334) (4,335) (976) Capitalization of internal-use software costs (57,822) (33,767) (19,917) Free cash flow $ 354,676 $ 312,542 $ 257,878 Liquidity and Capital Resources As of June 30, 2026, our principal sources of liquidity were our cash and cash equivalents of $1.0 billion, our available-for-sale short-term investments of $0.9 billion, and our available undrawn Revolving Credit Facilities (as defined below) of $270.0 million. Our cash equivalents are comprised primarily of money market funds, certificates of deposit, and investments in debt securities with original maturities of three months or less at the time of purchase. Our short-term investments are comprised primarily of available-for-sale investments in corporate bonds, certificates of deposit, asset-backed securities, municipal bonds, and U.S. treasury securities with original maturities of more than three months. Our corporate deposits held at large multinational financial institutions and U.S. national or regional banks may at times exceed federally insured limits. We monitor the financial strength of the financial institutions with which we do business to ensure they are financially sound and present minimal credit risk. We further believe the associated risk of concentration for our investments is mitigated by holding a diversified portfolio of highly rated investments consisting of the money market funds and short-term debt securities described above. We have a total borrowing capacity of $600.0 million from our Revolving Credit Facilities, and have drawn $330.0 million under the Revolving Credit Facilities (as defined below), as of June 30, 2026. Our principal uses of cash are funding our operations and other working capital requirements, including the contractual and other obligations discussed below. 73 We believe that our cash, cash equivalents, and short-term investments will be sufficient to meet our working capital requirements for at least the next 12 months. In the future, we may attempt to raise additional capital through the sale of equity securities or through additional equity-linked or debt financing arrangements to fund future operations or obligations, including the repayment of outstanding convertible senior notes. We may also seek to raise additional capital from these offerings or financings on an opportunistic basis when we believe there are suitable opportunities for doing so. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by incurring additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may have terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives. As of June 30, 2026, our principal commitments to settle our contractual obligations consisted of our 2027 Notes, 2030 Notes (as defined below), and outstanding borrowings from our Revolving Credit Facilities, as further discussed below. For additional discussion about our Notes and Revolving Credit Facilities, refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In addition, we have minimum commitments under our noncancellable operating lease agreements and agreements with certain vendors. Refer to Note 14 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In May 2026, we announced that our board of directors authorized the repurchase of up to $1.0 billion in shares of our outstanding common stock, which authorization includes unused amounts under the August 2025 Share Repurchase Program (the 2026 Share Repurchase Authorization). Pursuant to this authorization, we may repurchase such shares from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. This authorization has a term of 24 months, may be suspended, discontinued or modified at any time, and does not obligate us to acquire any amount of common stock. For additional discussion about our share repurchase program activity during the period and shares available for future repurchases, refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Depending on market conditions, our liquidity requirements, contractual restrictions, and other factors, we may consider initiating additional share repurchase programs or repurchasing additional Notes. Cash Flows Below is a summary of our consolidated cash flows for the periods presented (in thousands): Year ended June 30, 2026 2025 2024 Net cash provided by (used in): Operating activities $ 415,832 $ 350,644 $ 278,771 Investing activities $ (28,598) $ (817,390) $ (409,374) Financing activities $ (172,835) $ 666,522 $ (742,599) Net Cash Provided by Operating Activities Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user or per customer account. Our transaction revenue is comprised of transaction fees on a fixed or variable rate per type 74 of transaction. We also generate cash from the interest earned on both corporate funds and funds held in trust on behalf of customers. Our primary uses of cash in our operating activities include payments for employees' salaries and related costs, payments to third parties to fulfill our payment transactions, payments to sales and marketing partners, payments for card rewards expenses, and other general corporate expenditures. Net cash provided by operating activities increased to $415.8 million during fiscal 2026 compared to $350.6 million during fiscal 2025. The net change was primarily driven by growth in subscription and transaction revenue, partially offset by higher operating expenditures, lower interest earned on funds held for customers, and cash payments related to our restructuring plan. Net Cash Used in Investing Activities Our cash usage for our investing activities consists primarily of purchases of corporate and customer fund available-for-sale investments, purchases of loans held for investment, and capitalization of internal-use software. Our cash proceeds from our investing activities consist primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments and repayments of loans held for investment. Additionally, the increase or decrease in our net cash from investing activities is impacted by the net change in acquired card receivables. Our net cash used in investing activities was $28.6 million during fiscal 2026 compared to net cash used of $817.4 million during fiscal 2025. The net change was primarily due to the decrease in purchases of corporate and customer fund short-term investments, and a net decrease in cash used for loans held for investment, and partially offset by the decrease in proceeds from maturities of corporate and customer short-term investments, the increase in capitalization of internal-use software costs, and net increase in acquired card receivables. Net Cash Provided by (Used in) Financing Activities Our cash usage for our financing activities consists primarily of repurchases of shares of common stock and repayments of convertible senior notes. Our cash proceeds from our financing activities consist primarily of proceeds from line of credit borrowings, and employee purchases of our common stock under our employee stock purchase plan. Additionally, the increase or decrease in our net cash from financing activities is impacted by the change in customer fund deposits liability and prepaid card deposits. Our net cash used in financing activities was $172.8 million during fiscal 2026 compared to net cash provided by financing activities of $666.5 million during fiscal 2025. The net change was primarily due to the absence of proceeds from issuance of convertible senior notes, the increase in our repurchase of common stock, the increase in tax withholdings related to net share settlements of equity awards, and the increase in customer fund deposit liability, offset by the decrease in payments for repurchase and settlement of convertible senior notes, the proceeds from line of credit borrowings, and the absence of purchase of capped calls. 2030 Notes On December 6, 2024, we issued $1.4 billion in aggregate principal amount of our 0% convertible senior notes due on April 01, 2030. The 2030 Notes are senior, unsecured obligations, and will not accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 01, 2030. The 2030 Notes are convertible by the holders at their option during any calendar quarter after December 31, 2024 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130.00% of the $119.45 per share initial conversion price. If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock. For additional discussion about our 2030 Notes and the capped call transactions, refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 75 2027 Notes On September 24, 2021, we issued $575.0 million in aggregate principal amount of our 0% convertible senior notes due on April 1, 2027 (the 2027 Notes). The 2027 Notes are senior, unsecured obligations, will not accrue interest unless we determine to pay special interest, and are convertible on or after January 1, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date on April 1, 2027. The 2027 Notes are convertible by the holders at their option during any calendar quarter after December 31, 2021 under certain circumstances, including if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the $414.80 per share initial conversion price. If the note holders exercise their right to convert, our current intent is to settle such conversion through a combination settlement involving a repayment of the principal portion in cash and the balance in shares of common stock. In December 2024, in connection with the issuance of our 2030 Notes, we entered into privately negotiated transactions with certain holders of our 2027 Notes to repurchase $451.5 million aggregate principal amount of our 2027 Notes for an aggregate cash repurchase price of $408.6 million, inclusive of transaction costs. Following the repurchases, we cancelled the repurchased 2027 Notes and, after such cancellation, $123.5 million aggregate principal amount of 2027 Notes remains outstanding. For additional discussion about our 2027 Notes and the capped call transactions, refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 2025 Notes On November 30, 2020, we issued $1.15 billion in aggregate principal amount of our 0% convertible senior notes due on December 1, 2025 (the 2025 Notes). The 2025 Notes were senior, unsecured obligations, would not accrue interest unless we determine to pay special interest, and were convertible on or after September 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date on December 1, 2025. In December 2024, in connection with the issuance of our 2030 Notes, we entered into privately negotiated transactions with certain holders of our 2025 Notes to repurchase $133.9 million aggregate principal amount of our 2025 Notes for an aggregate cash repurchase price of $130.8 million, inclusive of transaction costs. In addition, in fiscal 2025, we entered into privately negotiated transactions with certain holders of our 2025 Notes to repurchase $982.7 million aggregate principal amount of our 2025 Notes for an aggregate cash repurchase price of $932.6 million, inclusive of transaction costs. On December 1, 2025, upon maturity of the 2025 Notes, we settled the remaining $33.5 million aggregate principal amount of the 2025 Notes in cash. For additional discussion about our 2025 Notes and the capped call transactions, refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revolving Credit Facilities 2021 Credit Facility We have a total borrowing capacity of $300.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Divvy Peach, LLC, Goldman Sachs Bank USA and the lenders party thereto (as amended to date, the 2021 Credit Facility), of which we have borrowed $180.0 million as of June 30, 2026. Revolving loans under the 2021 Credit Facility bear interest at a rate per annum determined by reference to the applicable three-month secured overnight financing rate or a base rate, plus an applicable margin of 1.95%. Obligations under the 2021 Credit Facility are secured by receivables generated by our BILL Divvy Card and certain related collateral, and subject to a limited guarantee by BILL Holdings, Inc. The 2021 Credit Facility matures in May 2028. We have amended our 2021 Credit Facility, from time to time, most recently in October 2025, as further discussed under Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 76 2025 Credit Facility We have a total borrowing capacity of $300.0 million pursuant to our Revolving Credit and Security Agreement, by and between our subsidiary, Odin Financing, LLC, JPMorgan Chase Bank, N.A. and the lenders party thereto (the 2025 Credit Facility, and together with the 2021 Credit Facility, the Revolving Credit Facilities), of which we have borrowed $150.0 million as of June 30, 2026. Revolving loans under the 2025 Credit Facility bear interest at a rate per annum determined by reference to the applicable one-month secured overnight financing rate or a base rate, plus an applicable margin of 1.80%. Obligations under the 2025 Credit Facility are secured by receivables generated by our BILL Divvy Card and certain related collateral, and subject to a limited guarantee by BILL Holdings, Inc. The 2025 Credit Facility matures in November 2027. For additional discussion about the 2025 Credit Facility, refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Off-Balance Sheet Arrangements We are contractually obligated to purchase all card receivables from U.S.-based Issuing Banks including authorized transactions that have not cleared. The transactions that have been authorized but not cleared totaled $78.6 million as of June 30, 2026 and have not been recorded on our consolidated balance sheets. We have off-balance sheet credit exposures with these authorized but not cleared transactions; however, our expected credit losses with respect to these transactions were not material as of June 30, 2026. Other than our expected credit loss exposure on the card transactions that have not cleared, we had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources as of June 30, 2026. As of June 30, 2026, we, in partnership with the Issuing Banks and the Originating Bank Partner, had approximately $4.4 billion in unused credit available to spending businesses using BILL Divvy Card product and borrowers using our invoice financing product. While this balance represents the total unused credit available, historical trends and current expectations indicate that the unused credit will likely not be fully utilized by spending businesses using BILL Divvy Card product and borrowers using our invoice financing product at any one time. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting estimates are most important to understanding and evaluating our reported financial results. Expected Credit Losses on Acquired Card Receivables We acquire card receivables pursuant to our contracts with certain Issuing Banks. The acquired card receivables portfolio consists of a large group of smaller balances from spending businesses across a wide range of industries. The allowance for expected credit losses reflects our estimate of uncollectible balances resulting from credit losses and is based on the determination of the amount of expected credit losses inherent in the acquired card receivables as of the reporting date. An estimate of lifetime expected credit losses is performed by incorporating historical loss experience, as well as current and future economic conditions over a reasonable and supportable period beyond the balance sheet date. In estimating expected credit losses, we use models that entail a significant amount of judgment. The primary areas of judgment used in measuring the 77 quantitative components of our reserves relate to the attributes used to segment the portfolio, the determination of the historical loss experience look-back period, and the weighting of historical loss experience by monthly cohort. We use these models and assumptions to determine the reserve rates applicable to the outstanding acquired card receivables balances to estimate reserves for expected credit losses. Based on historical loss experience, the probability of default varies by credit limit sizes, therefore the attribute used to segment the portfolio is the credit limit size of spending businesses. Our models use past loss experience to estimate the probability of default and exposure at default by credit limit size and aged balances. We also estimate the likelihood and magnitude of recovery of previously charged-off loans based on historical recovery experience. Additionally, management evaluates whether to include qualitative reserves to cover credit losses that are expected but may not be adequately represented in the quantitative methodology or the economic assumptions. The qualitative reserves address possible limitations within the models or factors not included within the models, such as macroeconomic conditions, changes in underwriting strategies, the nature and volume of the portfolio, and the volume and severity of past due accounts. We review our assumptions periodically and the amount of allowance that we recorded may be impacted by actual performance of the acquired card receivables and changes in any of the assumptions used. In general, we charge-off card receivables after the balance becomes 120 days delinquent. Goodwill We continually evaluate our current and estimated future financial results, macroeconomic environment and industry-specific conditions, which are subject to many uncertainties, including the impact of tariffs, volatility related to changes in rates of inflation, interest rates, the strength of the U.S. dollar, and the potential for a slowing economy. These conditions, if sustained or exacerbated, could negatively impact the estimated fair value of our single reporting unit, and we may be required to perform a quantitative goodwill impairment test in a future period, which could result in a non-cash impairment charge. Spending Businesses Rewards Our BILL Spend and Expense product allows spending businesses to earn rewards based on transaction volume. The amount of rewards that a spending business earns varies based on the terms and conditions of the rewards program. The majority of our rewards are earned and paid based on fixed rates and are not subject to estimation uncertainty. The remaining rewards are earned through our reward points program and may be redeemed at varying rates based on the redemption method selected by the spending business. Redemption methods include statement credits, cash, travel, and gift cards. Determining a liability for the earned and outstanding rewards is a subjective process that requires the use of estimates and the exercise of significant judgment. We estimate the ultimate redemption cost of rewards points based on historical redemption trends. Our current assumption is that substantially all rewards earned will eventually be redeemed. We use the weighted-average redemption cost during the previous 12 months, adjusted as appropriate for recent changes in redemption costs, including changes related to the mix of rewards redeemed, to estimate future redemption costs. While the rewards liability is sensitive to changes in assumptions for redemption costs and involves significant judgment, we believe historical performance is the best indication of future rewards redemption behavior and therefore, it is the primary basis for our estimate. Deferred Tax Valuation Allowance Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss, capital loss, and tax credit carryforwards. We evaluate the realizability of our deferred tax assets on a quarterly basis to determine whether a valuation allowance is necessary and reduce such assets to the amount that is more likely than not to be realized. This evaluation requires significant judgment and involves the consideration of all available positive and negative evidence, primarily our profitability in future periods and ongoing prudent and feasible tax planning strategies. Given our recent results and expected future results, sufficient positive evidence may exist in a future period to support the conclusion that all or a portion of the valuation allowance will no longer be required. The release would result in the recognition of material federal and state deferred tax assets and a corresponding decrease to income tax expense and the effective tax rate in the period the release is recorded. The timing and amount of the valuation allowance release could vary based on our assessment of all available evidence. 78 Recent Accounting Pronouncements See “The Company and its Significant Accounting Policies” in Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of June 30, 2026.