Bill.com WACC - Weighted Average Cost of Capital
The WACC of Bill.com Holdings Inc (BILL) is 8.6%.
| Range | Selected | |
| Cost of equity | 8.2% - 10.2% | 9.2% |
| Tax rate | 0.9% - 4.7% | 2.8% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 7.5% - 9.7% | 8.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.94 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.2% | 10.2% |
| Tax rate | 0.9% | 4.7% |
| Debt/Equity ratio | 0.19 | 0.19 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 7.5% | 9.7% |
| Selected WACC | 8.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BILL | Bill.com Holdings Inc | 0.19 | 1.61 | 1.35 |
| APPS | Digital Turbine Inc | 0.71 | 1.38 | 0.81 |
| AVLR | Avalara Inc | 1.73 | 0.98 | 0.36 |
| BL | Blackline Inc | 0.25 | 0.92 | 0.74 |
| DBX | Dropbox Inc | 0.36 | 0.77 | 0.56 |
| ESTC | Elastic NV | 0.06 | 1.59 | 1.49 |
| FIVN | Five9 Inc | 0.58 | 1.65 | 1.05 |
| GWRE | Guidewire Software Inc | 0.02 | 0.79 | 0.78 |
| INTU | Intuit Inc | 0.03 | 0.6 | 0.59 |
| ZEN | Zendesk Inc | 0.13 | 0.87 | 0.78 |
| Low | High | |
| Unlevered beta | 0.76 | 0.79 |
| Relevered beta | 0.91 | 0.94 |
| Adjusted relevered beta | 0.94 | 0.96 |
Bill.com's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for Bill.com:
cost_of_equity (9.20%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.94) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.