If you want to capitalize on the transformative power of AI in fintech without getting lost in the noise, this newsletter is for you. Payment automation is revolutionizing how businesses handle financial operations, driving efficiency and growth in an increasingly digital world. That’s why we’re focusing on three standout payment automation stocks—each offering a unique way to participate in this exciting AI-driven market.
Here’s what you can expect in this newsletter:
🔹 Prefer a stable, market-leading player in financial automation?
🔹 Willing to take a guaranteed cash exit from a pending acquisition?
🔹 Looking for a technology-centric company with high growth and a clear path to profitability?
Whether you’re a cautious investor seeking stability or an aggressive one chasing rapid growth, these three fintech plays provide distinct opportunities to fit your investment style. Let’s dive in.
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Bill.com (NYSE:BILL)
Bill.com (NYSE: BILL) is a financial automation company that provides a cloud-based platform to simplify and automate back-office financial operations for small and medium-sized businesses (SMBs). By integrating with major accounting software, the company streamlines workflows, reduces manual data entry, and enhances efficiency for its clients.
Business Model and Revenue Streams
Bill.com's business model is centered on a Software-as-a-Service (SaaS) platform. Its revenue is generated from three primary sources:
- Subscription Fees: The company charges a recurring fee for access to its platform, with tiered pricing plans based on the features and services a business requires.
- Transaction Fees: A significant portion of its revenue comes from fees charged for processing payments.
- Float Revenue: Bill.com earns interest on customer funds, making this revenue sensitive to interest rate changes.
The current macroeconomic environment, particularly high interest rates, directly impacts Bill.com's float revenue. Higher rates can increase the interest earned on customer funds, positively affecting the company's financial performance. Conversely, a potential economic downturn could lead to lower transaction volumes from SMBs, which would negatively impact transaction fee revenue.
Recent Performance and Corporate Developments 📈
The company's recent results highlight both its solid performance and the challenges it faces.
Recent Quarter Financial Highlights:
- Total Revenue: Total revenue for the quarter was $383.3 million, a 12% increase year-over-year, beating analyst expectations.
- Core Revenue: Core revenue was $345.9 million, grew by 15% year-over-year.
- Profitability: The company reported a non-GAAP net income of $73.2 million.
- Customer and Transaction Metrics: The platform served over 470,000 businesses, and total payment volume increased by 11% year-over-year to $75 billion.
Strategic Initiatives and Mergers: 🤝
- No major mergers, but focus remains on platform expansion and partnerships.
- AI-powered features launched to improve payments and financial workflows.
- New Paychex partnership (Sept 2025) enhances payroll/payments for SMBs; complements existing Xero alliance.
- $300M share buyback announced (Aug 2025), showing confidence in long-term value.
Path to Profitability and Fair Value 🎯
Bill.com isn’t consistently GAAP profitable yet, as it continues investing in growth—especially in sales, marketing, and R&D. However, expanding operating margins and strong cash flow show a clear non-GAAP path to profitability. With gross margins over 80%, the company aims to scale efficiently and drive long-term earnings. Its recent $300M share buyback and cash-generating model reflect management’s confidence in this outlook.
Valuing a high-growth, non-GAAP profitable company like Bill.com is challenging, as traditional metrics can be misleading. Its value depends on future growth, a strong foothold in SMB financial automation, and a sticky platform with high switching costs. The post-Q2 2024 stock drop indicates the market may be reassessing its growth trajectory and valuation.
Analyst Estimates and Ratings
- Consensus Rating: The consensus rating from analysts is a "Buy," though with a significant number of "Hold" ratings, indicating a mixed but generally positive outlook.
- Price Target: The average 12-month price target is approximately $77.28, with a wide range of estimates from $40.00 to $200.00. This wide range reflects the uncertainty surrounding the company's growth trajectory and the potential impact of economic factors on its business.
Investor-Focused Takeaway: Is BILL Right for Your Portfolio?
Bill.com offers exposure to fintech and business automation, with strong margins, strategic partnerships, and a focus on non-GAAP profitability. While well-positioned for growth, recent stock volatility and mixed analyst views reflect the risks of investing in a growth company in a tough economy.
What to Watch in the Near Term: 📈
- Customer Growth: Slower additions may signal market saturation or SMB weakness.
- Interest Rates: Rate changes affect float revenue.
- Competition: New rivals or innovations could pressure market position.
Recommendation: Bill.com is a compelling investment for those with a long-term horizon and a high-risk tolerance. Its strong fundamentals and a clear strategy to achieve profitability make it a leader in the payment automation space. While macroeconomic factors and market sentiment may cause near-term volatility, the company's strong value proposition and expanding network effect provide a solid foundation for future growth.
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AvidXchange (NASDAQ:AVDX)
AvidXchange (NASDAQ: AVDX) is a fintech company offering cloud-based AP automation and payment solutions for U.S. middle-market businesses. Its platform streamlines the AP workflow—from invoice capture to electronic payments. By targeting the largely manual, underserved middle market, AvidXchange taps into a strong growth opportunity.
Business Model and Revenue Streams
AvidXchange's business model is built on a two-sided network that connects businesses with their suppliers. This network effect is a key competitive advantage, as it makes the platform more valuable for both buyers and suppliers the more they use it. The company's revenue streams are diverse:
- Subscription Fees: A recurring fee charged to businesses for using the AP automation software.
- Transaction Fees: A fee based on the volume and value of payments processed through the AvidPay Network.
- Float Revenue: AvidXchange earns interest on funds it holds on behalf of customers before they are paid out.
The current macroeconomic policies, specifically high interest rates, have been a tailwind for the company's float revenue, bolstering its financial performance. However, a potential economic slowdown or recession could negatively impact transaction volumes from its middle-market customers, which would, in turn, affect transaction fee revenue.
Recent Performance and Corporate Developments 📈
Q2 2025 Financial Highlights: 💰
AvidXchange reported its Q2 2025 results in August, showing a mix of growth and the impact of one-time costs related to the merger.
- Total Revenue: Total revenue was $110.6 million, a 5.2% increase year-over-year, which was slightly above analyst expectations.
- Net Loss: The company reported a GAAP net loss of $(9.5) million, a swing from a net income of $0.4 million in the prior year. This was primarily due to $6.4 million in transaction costs related to the merger.
- Non-GAAP Performance: The company showed strong non-GAAP net income of $10.7 million and an adjusted EBITDA of $17.4 million.
- Key Metrics: Total payment volume grew 4.1% to $21.5 billion, and transaction yield improved to $5.50.
Strategic Initiatives and Mergers: 🤝
AvidXchange is set to be acquired by TPG and Corpay in a $2.2 billion all-cash deal ($10/share), announced in May 2025. The deal will take the company private and is expected to close in Q4 2025.
Path to Profitability and Fair Value 🎯
AvidXchange reached its first GAAP net income in Q4 2024, showing progress toward profitability and strong platform scalability. While the pending acquisition shifts short-term focus, it reflects acquirers’ confidence in the company’s long-term potential. With shares trading near the $10 buyout price, there’s limited upside unless the deal falls through—an unlikely outcome.
Analyst Estimates and Ratings
Given the pending acquisition, analyst ratings and price targets have largely converged around the buyout price.
- Consensus Rating: The consensus rating is generally a "Hold" as the stock price is at or near the agreed-upon acquisition value.
- Price Target: Most recent analyst price targets are set at $10.00, aligning with the acquisition terms.
Investor-Focused Takeaway: Is AVDX Right for Your Portfolio?
For investors looking for a growth stock with future potential, AvidXchange is no longer an option due to its pending acquisition. The stock has effectively become a special situation play, with its price anchored to the $10 buyout offer. The key consideration for current shareholders is whether to hold for the transaction to close or to sell now to free up capital. For new investors, the stock offers almost no potential for price appreciation.
What to Watch in the Near Term: 📈
- Acquisition Close: Monitor news regarding the completion of the merger, which is expected in the fourth quarter of 2025.
- Regulatory Approvals: Watch for any potential delays or issues with regulatory approvals, though none are currently anticipated.
- Trading Discrepancy: A slight difference between the stock price and the $10 offer may exist due to the time value of money and the minor risk of the deal not closing.
Recommendation:
AvidXchange is not a viable growth stock investment at this time. Its valuation is capped by the acquisition price. For current investors, holding until the deal closes and receiving the cash payout is the most likely course of action. For those seeking new positions, the stock offers negligible upside and is no longer a growth play in the fintech automation space.
Marqeta (NASDAQ:MQ)
Marqeta (NASDAQ: MQ) is a global card issuing platform that powers embedded finance through its API-first technology. It enables clients—such as fintechs and financial institutions—to create and manage custom virtual, physical, and tokenized card programs with real-time payment controls.
Business Model and Revenue Streams 📦
Marqeta's business model is centered on a usage-based revenue model, primarily earning money from transaction and processing fees.
- Interchange & Processing Fees: Main revenue from a percentage of transaction volume ("take rate").
- Platform & Service Fees: Earned from access fees, fraud monitoring, and other services.
- Float Revenue: Interest earned on held customer funds; boosted by high interest rates.
The current macroeconomic policies and a potentially softer economic environment could impact Marqeta's business. A slowdown in consumer spending would directly affect the total payment volume (TPV) processed on its platform, thus reducing its transaction-based revenue. However, the company's expansion into new verticals like embedded finance and credit card issuing aims to offset these risks.
Recent Performance and Corporate Developments 📈
Marqeta has demonstrated solid financial performance in recent quarters, making progress toward its profitability goals.
Q2 2025 Financial Highlights: 💰
- Total Revenue: Total revenue for the quarter was $150.4 million, a 20% increase year-over-year, beating analyst expectations.
- Total Processing Volume (TPV): TPV grew 29% year-over-year to $91 billion, signaling strong demand across its key verticals.
- Gross Profit: Gross profit was $104.1 million, a 31% increase from the prior year. The gross margin expanded to 69%.
- Profitability: The company reported a small GAAP net loss of $(0.6) million, a significant improvement from the prior year's period, and a positive adjusted EBITDA of $29 million.
Strategic Initiatives and Mergers: 🤝
In August 2025, Marqeta announced the successful completion of its acquisition of TransactPay, a European e-money institution. This acquisition will strengthen Marqeta's card program management capabilities in the UK and European Union, helping it to serve customers more effectively in these regions and streamline the process of launching new payment products.
Additionally, Marqeta announced a new partnership with Klarna to power a new debit card in the U.S. This collaboration highlights Marqeta's continued strength in the buy now, pay later (BNPL) and lending spaces.
Path to Profitability and Fair Value 🎯
Marqeta is on a clear path to profitability. While it has not yet achieved consistent GAAP profitability, its improving adjusted EBITDA and expanding gross margins demonstrate a strong focus on cost discipline and operating leverage. The company's management has stated a goal of reaching GAAP breakeven by 2026. The company’s strategy involves:
With a high-growth business model, traditional valuation metrics can be complex to apply. The company's value is heavily tied to its ability to continue to grow TPV and diversify its revenue streams, ultimately leading to sustained profitability.
Analyst Estimates and Ratings
- Consensus Rating: The consensus rating from analysts is a "Buy", with a mixed distribution of ratings including "Strong Buy" and "Hold."
- Price Target: The average 12-month price target is approximately $7.03, suggesting a potential upside from the current share price. However, analyst opinions vary widely, with a broad range of price targets reflecting the company's volatile nature.
Investor-Focused Takeaway: Is MQ Right for Your Portfolio?
Marqeta offers an intriguing investment opportunity in the fintech space, particularly for those interested in the future of embedded finance and digital payments. Its Q2 2025 performance and strategic moves, like the TransactPay acquisition, signal a maturing business that is making significant strides toward profitability. However, investors should be aware of the ongoing risk of customer concentration and potential macroeconomic headwinds.
What to Watch in the Near Term: 📈
- Client Diversification: Monitor the growth of Marqeta's non-Block TPV.
- European Growth: Watch for updates on the integration of TransactPay and the impact on the company's European revenue and customer base.
- Path to Profitability: Continue to track adjusted EBITDA and progress toward the GAAP breakeven target to confirm the company's financial discipline.
Recommendation:
Marqeta is viewed as a long-term growth investment backed by analyst support and strong momentum in the digital payments sector. The company's strategic acquisition and focus on operational efficiency strengthen its position. While its high-growth profile and market volatility require a higher risk tolerance, the company's improving financial performance and expanding market presence make it a compelling stock for the AI era of financial automation.
A Final Word on Your Investment Decision
Bill.com (BILL), AvidXchange (AVDX), and Marqeta (MQ) offer three distinct pathways to invest in the fintech payment automation sector—each with different maturity levels, risk profiles, and growth potential. These stocks present unique opportunities based on your investment strategy and risk tolerance.
Bill.com (BILL) – Leading SMB financial automation platform
✔ Strong SaaS business with diversified revenue streams and expanding customer base
✔ Focused on non-GAAP profitability with improving margins and cash flow
✔ Strategic partnerships and and a $300M share buyback signal long-term confidence, AI-driven product innovation fuel growth
➤ Best for: Long-term investors seeking scalable fintech exposure with a clear path to profitability
AvidXchange (AVDX) – Middle-market AP automation poised for privatization
✔ Targeting an underserved middle market with a scalable two-sided network
✔ Progressing toward profitability, with recent GAAP net income milestone
✔ Pending $2.2B acquisition signals confidence but caps near-term upside
➤ Best for: Current shareholders looking for deal closure; not ideal for new growth investors
Marqeta (MQ) – Global card issuing and embedded finance innovator
✔ API-first platform powering virtual, physical, and tokenized card programs
✔ Rapid TPV growth and expanding gross margins indicate strong operational leverage
✔ Strategic acquisitions and partnerships enhance market position and European footprint
➤ Best for: Growth-focused investors comfortable with volatility and long-term profitability goals
Investor Insight:
🔹 Want a proven, subscription-based fintech leader with strong fundamentals? → Bill.com (BILL)
🔹 Hold for acquisition close; avoid new positions → AvidXchange (AVDX)
🔹 Seeking growth in embedded finance and card issuing? → Marqeta (MQ)
Your decision should reflect your investment goals and comfort with risk. Each company offers a different angle on financial automation—from B2B operations and middle-market logistics to modern payments and embedded finance. Choose the one that best aligns with your strategy.
We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.
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