(INVOICE -6.56%) has been one of the most popular tech stocks in the market for the past few months, so the selloff in early 2022 has hit the company hard. Shares have fallen nearly 30% from their all-time highs set in November 2021, but even after that the long-term story tells an attractive tale: shares are still up more than 530% since its IPO listed at the end of 2019. was a big winner because of its unique offering that has been used by thousands of businesses, but this business comes with a lot of risk. As it helps small and medium-sized businesses (SMBs) become more digital when it comes to their internal financial operations, there are concerns about how might fare over the next five years. Investors might make it a small bet in their portfolio, but it’s not an obvious investment.

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A big winner solves a huge problem in the SMB space. When it comes to financial back-office operations for small businesses, over 90% of the work is still done manually. As a business grows, it becomes more difficult to manually track all of its cash inflows and outflows. Not only is manual tracking tedious, but it can also lead to errors and take time to develop the actual business. has created a system where SMBs can track, pay and collect money digitally. This allowed customers to spend 50% less time paying their bills, by automating these processes. Now employees can focus on the business, not internal operations.

The company sells its products primarily through accounting firms, which has proven to be a successful strategy. After all, if only has to sell to one accounting firm and that firm recommends its products to dozens of its SMB customers, that’s a major ROI. The company has partnered with more than 85% of the top 100 US accounting firms and more than 5,400 firms in total. has soared over 500% in just over two years as a public company, and that’s because the company has had major success. Its organic customer count reached 135,000 in the second quarter of 2022, which ended December 31, 2021. The company derives the majority of its revenue from transactions conducted on its platform, so its total payment volume growth of 62% year over year in the second quarter resulted in strong revenue growth. On an organic basis, its revenue increased 85% year over year.

The risks ahead

Despite this success, there is considerable risk with this venture. The first concern is that is burning a lot of money. In the first six months of its fiscal year 2022, its free cash flow burn exceeded $41 million, which was up 60% from the prior year period. That was over 26% of revenue, and with the deterioration, that’s not a good sign.

Company partnerships are a great way to win customers, but it’s also risky. If a major accounting firm were to stop promoting products, it could result in a significant loss of customers. This happened at the end of 2018 when he lost 5,000 clients because an accounting firm decided to end his partnership. Another source where the company gains a lot of customers is Intuitive (INTU -5.81%). With this partnership, gained thousands of customers, but Intuit could decide to build its own version of and end its partnership. Considering Intuit is a leading accounting software platform for SMBs, it has the potential to cut off an important customer acquisition channel for the company.

The final concern is the rating. Even after this tech selloff, it is trading at a valuation of 50x sales. Considering that many technology stocks – like Amplitude – are now trading at a low or high single-digit price-to-sales ratio, this company could be cut in half and remain expensive.

Is a buy? is tackling a market that includes nearly 20 million SMBs worldwide, but that business isn’t a screaming buy today. Its dependence on Intuit and its large accounting partners could become a problem if any of them decide to end their partnership. On the other hand, Intuit is known for expanding its reach into the SMB space, so it’s not unrealistic for them to create a competing solution.

The other reason you might want to wait today is free cash flow consumption. While the company has nearly $2.8 billion in cash and investments on its balance sheet, a cash-consuming business is very risky, especially when its cash burn increases. Although may continue to see success over the next few years, it would be wise to stay away until its cash flow recovers.