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Bottomline Technologies Reports Second Quarter Results
26% Growth in Year over Year Orders Highlights Quarter

PORTSMOUTH, NH – January 22, 2009 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the second quarter ended December 31, 2008.

Revenues for the second quarter were $34.3 million, an increase of $2.5 million from the second quarter of last year. Revenues for the second quarter were impacted by $3.3 million on a year over year basis as a result of declines in foreign exchange rates.

Gross margin for the second quarter was $19.0 million, an increase of $1.0 million from the second quarter of last year. Net loss for the second quarter was $2.9 million, or net loss per share of $0.12. During the second quarter, operating expenses of $22.0 million included acquisition-related amortization of intangible assets of $3.9 million and stock-based compensation expense of $2.2 million. Excluding these acquisition-related and stock compensation items, non-GAAP net income for the second quarter was $3.3 million, or non-GAAP net income per share of $0.14.

“Our business continues to execute and grow despite unprecedented challenges in the economy,” said Rob Eberle, President and CEO of Bottomline Technologies. “In the second quarter we recorded revenue of $34.3 million, which represents year over year growth of 18% on a consistent currency basis. Our other financial metrics were also strong with EBITDA increasing 19% from last quarter, non-GAAP EPS of $0.14 and cash and investments of $34.8 million which is up $4.4 million from the prior quarter. Of equal significance is order activity of $43.7 million in the quarter which evidences the continued broad-based demand for our offerings, and when combined with our significant backlog, positions us well for future success.”

Revenues for the six months ended December 31, 2008 increased 11% to $69.8 million as compared with $63.2 million in the same period last year. Net loss for the six months ended December 31, 2008 was $6.7 million, or net loss per share of $0.28. Excluding acquisition-related amortization of intangible assets of approximately $8.4 million and stock compensation expense of $4.4 million, non-GAAP net income for the six months ended December 31, 2008 was $6.1 million, or non-GAAP net income per share of $0.25.

Second Quarter Customer Highlights

-
Signed a multi-year contract with Frank Winston Crum Insurance for Legal eXchange™, Bottomline’s Software as a Service (SaaS) solution for legal spend management.

- Added significant new customers, including AGA Medical Corporation, Chicago Bridge & Iron, Dermalogica, Golden State Foods, Mouchel, Peet’s Coffee & Tea, Stryker Spine, Timberland, Wells Fargo Insurance Services, WestJet and a leading international hospitality company which selected Bottomline solutions to increase the security, efficiency, visibility and control of transactional processes.

- Expanded existing deployments of Bottomline’s award-winning payments and document process automation solutions at Acme Brick, AT&T Mobility, Edwards Lifesciences, Esurance, Calpine, Ingersoll Rand, Hays Specialist Recruitment, the Ministry of Justice, Mizuno, Nassau County (New York), Related Companies and SG Hambros.

- Increased adoption of the company’s advanced capabilities for document process automation within the global Microsoft Dynamics® AX community with orders from companies such as CountryMark, Gundle/SLT Environmental and RMD Metal Products.

- Broadened its presence in the healthcare vertical among hospitals and healthcare providers as Abington Memorial Hospital, Southside Regional Medical Center, West Jefferson Medical Center and Wishard Health Services extended their use of Bottomline’s payment and medical forms automation solutions.

Second Quarter Strategic Highlights

-
Announced the successful completion of a SAS 70 audit for Legal eXchange, representing an independent, third-party expert validation of the internal and external controls established by the company to operate its legal spend management solution.

- Ranked by American Banker and Financial Insights as one of the top 100 global technology providers to the banking and financial services industry in the annual FinTech 100 ranking.

- Extended its domain expertise within the ERP market by signing a partnership agreement with QAD, allowing Bottomline to offer its solutions for transactional document automation to thousands of QAD customers in North America.

- Bottomline’s Chief Technology Officer, Eric Campbell, was named one of the most influential people in the global financial services community as part of Global Finance magazine’s Who’s Who in International Treasury and Cash Management.

- Recognized as a 2008 ‘Best Company to Work For’ by Business NH Magazine.


Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
 

 Three Months Ended
December 31,  

 

 

 

2008
---------------------

2007
---------------------

Revenues:

   

Software licenses

 $ 3,597

 $ 3,393

Subscriptions and transactions

 7,744

 7,342

Service and maintenance

 20,527

 18,083

Equipment and supplies

 2,466

 3,014

 

 --------------------

 --------------------

Total revenues

 34,334

 31,832

     

Cost of revenues:

   

Software licenses

 207

 237

Subscriptions and transactions

 3,743

 3,913

Service and maintenance (1)

 9,562

 7,556

Equipment and supplies

 1,824

 2,091

 

 --------------------

-------------------- 

Total cost of revenues

 15,336

 13,797

 

 --------------------

---------------------

Gross profit

 18,998

 18,035

     

Operating expenses:

   

Sales and marketing (1)

 8,150

 7,847

Product development and engineering (1)

 5,238

 4,226

General and administrative (1)

 4,619

 4,727

Amortization of intangible assets

 3,948

 2,682

 

 --------------------

 --------------------

Total operating expenses

 21,955

 19,482

   --------------------

 --------------------

Loss from operations

 (2,957)

(1,447)

     

Other income, net

 615

 896

 

 --------------------

 --------------------

Loss before income taxes

 (2,342)

 (551)

Provision for income taxes

 527

 123

 

 --------------------

 --------------------

Net loss

 $ (2,869)

 $ (674)

     

Basic and diluted net loss per share:

 $ (0.12)

$ (0.03)

 

 --------------------

 --------------------

Shares used in computing basic and diluted net loss per share:

 24,033

 23,887

 

 --------------------

 --------------------

Non-GAAP (excludes amortization of intangible assets, acquisition-related expenses and stock compensation expense):(2)

   

Net income

 $ 3,282

 $ 4,110

---------------------

---------------------

Diluted net income per share (3)

 $ 0.14

 $ 0.17

---------------------

---------------------

     

(1) Stock-based compensation is allocated as follows:

   

Cost of revenues: service and maintenance

 $ 261

 $ 236

Sales and marketing

 648

 686

Product development and engineering

 197

 200

General and administrative

 1,097

 980

----------

----------

 

 $ 2,203

 $ 2,102

======

 ======

 

   
(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $3,948 and $2,682, and stock compensation expense of $2,203 and $2,102, for the three months ended December 31, 2008 and 2007, respectively.

(3) Shares used in computing non-GAAP diluted net income per share were 24,120 and 24,614 for the three months ended December 31, 2008 and 2007, respectively.

   


Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)

Six Months Ended

 

December 31,  

 

2008
---------------------

2007
---------------------

Revenues:

   

Software licenses

 $ 7,203

 $ 6,758

Subscriptions and transactions

 15,973

 14,184

Service and maintenance

 41,676

 35,768

Equipment and supplies

 4,988

 6,484

 

 --------------------

 --------------------

Total revenues

 69,840

 63,194

     

Cost of revenues:

   

Software licenses

 407

 425

Subsriptions and transactions    

 7,860

 7,884

Service and maintenance (1)

 19,434

 15,388

Equipment and supplies

 3,679

 4,614

 

 --------------------

 --------------------

Total cost of revenues

 31,380

 28,311

 

 --------------------

 --------------------

Gross profit

 38,460

 34,883

     

Operating expenses:

   

Sales and marketing (1)

 16,788

 15,366

Product development and engineering (1)

 10,660

 8,452

General and administrative (1)

 9,792

 9,185

Amortization of intangible assets

 8,384

 5,330

 

 --------------------

 --------------------

Total operating expenses

45,624
---------------------

38,333
---------------------

     

Loss from operations

 (7,164)

 (3,450)

     

Other income, net

 763

 1,793

 

 --------------------

 --------------------

Loss before income taxes

 (6,401)

(1,657)

Provision (benefit) for income taxes

 317

 (182)

 

 --------------------

 --------------------

Net loss

$ (6,718)

 $ (1,475)

     

Basic and diluted net loss per share:

 $ (0.28)

 $ (0.06)

 

 --------------------

---------------------

Shares used in computing basic and diluted net loss per share:

 23,958

 23,745

 

 --------------------

 --------------------

Non-GAAP (excludes amortization of intangible assets, acquisiton-related expenses and stock compensation expense):(2)

   

Net income

 $ 6,114

 $ 7,883

---------------------

---------------------

Diluted net income per share (3)

 $ 0.25

 $ 0.32

---------------------

---------------------

     

(1) Stock-based compensation is allocated as follows:

   

Cost of revenues: service and maintenance

 $ 521

 $ 468

Sales and marketing

 1,343

 1,297

Product development and engineering

 400

 383

General and administrative

 2,149

 1,880

-----------

-----------

 

 $ 4,413

 $ 4,028

======

======

 

   
(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $8,384 and $5,330, acquisition-related expenses of $35 and zero, and stock compensation expense of $4,413 and $4,028, for the six months ended December 31, 2008 and 2007, respectively.

(3) Shares used in computing non-GAAP diluted net income per share were 24,210 and 24,382 for the six months ended December 31, 2008 and 2007, respectively.

   


Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 

December 31,  

June 30, 

 

2008
------------------------

2008
----------------------

     

Assets

   

Current assets:

   

Cash, cash equivalents and short-term investments

$                    34,759 

$                 35,373 

Accounts receivable

26,798 

28,747 

Other current assets

4,501 

6,157 

 

 ------------------------

 ------------------------

Total current assets

66,058 

70,277 

     

Property and equipment, net

10,721 

11,840 

Intangible assets, net

93,752 

115,414 

Other assets

2,757 

1,235 

 

 ------------------------

 ------------------------

Total assets

$                 173,288 

$               198,766 

   ===============  ==============

Liabilities and stockholders' equity

   

Current liabilities:

   

Accounts payable

$                      6,095 

$                    8,856 

Accrued expenses

9,040 

10,997 

Deferred revenue

31,520 

30,621 

 

 ------------------------

 ----------------------

Total current liabilities

46,655 

50,474 

     

Deferred revenue, non current

7,281 

3,856 

Deferred income taxes

2,386 

4,179 

Other liabilities

1,606 

1,992 

 

 ------------------------

 ----------------------

Total liabilities

57,928 

60,501 

     

Stockholders' equity

 

 

Common stock

26 

26 

Additional paid-in-capital

282,405 

277,660 

Accumulated other comprehensive (loss) income

(11,143) 

7,766 

Treasury stock

(24,218) 

(22,195) 

Accumulated deficit

(131,710) 

(124,992) 

 

 ------------------------

 ----------------------

Total stockholders' equity

115,360 

138,265 

 

 ------------------------

 ----------------------

Total liabilities and stockholders' equity

$                 173,288 

$               198,766 

===============

==============

Non-GAAP Financial Statements

Bottomline has presented supplemental non-GAAP statements of operations as part of this earnings release. The non-GAAP statements of operations exclude certain non-cash items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses. The presentation of this information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes that these supplemental non-GAAP statements of operations are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same non-GAAP financial statements internally to assess the ongoing performance of the company. Since this information is not in accordance with GAAP, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies. All amounts are in thousands, except per share amounts.


 

Non-GAAP 
Three Months Ended  

 

December 31, 

 

2008
---------------------

2007
---------------------

Revenues:

   

Software licenses

$              3,597 

$              3,393 

Subscriptions and transactions

7,744 

7,342 

Service and maintenance

20,527 

18,083 

Equipment and supplies

2,466 

3,014 

 

 --------------------

 --------------------

Total revenues

34,334 

31,832 

     

Cost of revenues:

   

Software licenses

207

237 

Subscriptions and transactions

3,743 

3,913 

Service and maintenance

9,301 

7,320 

Equipment and supplies

1,824 

2,091 

 

 --------------------

-------------------- 

Total cost of revenues

15,075 

13,561 

 

 --------------------

---------------------

Gross profit

19,259 

18,271 

     

Operating expenses:

   

Sales and marketing

7,502 

7,161 

Product development and engineering

5,041 

4,026 

General and administrative

3,522 

3,747 

 

 --------------------

 --------------------

Total operating expenses

16,065 

14,934 

   --------------------

 --------------------

Non-GAAP income from operations

3,194 

3,337 

     

Other income, net

615 

896 

 

 --------------------

 --------------------

Non-GAAP income before income taxes

3,809 

4,233 

Provision for income taxes

527 

123 

 

 --------------------

 --------------------

Non-GAAP net income

$              3,282 

$              4,110 

     

Diluted non-GAAP net income per share:

$                0.14 

$                0.17 



 

Non-GAAP 
Six Months Ended
December 31,  

 

 

 

2008
---------------------

2007
---------------------

Revenues:

   

Software licenses

$              7,203 

$              6,758 

Subscriptions and transactions

15,973 

14,184 

Service and maintenance

41,676 

35,768 

Equipment and supplies

4,988 

6,484 

 

 --------------------

 --------------------

Total revenues

69,840 

63,194 

     

Cost of revenues:

   

Software licenses

407 

425 

Subscriptions and transactions

7,860 

7,884 

Service and maintenance

18,913 

14,920 

Equipment and supplies

3,679 

4,614 

 

 --------------------

-------------------- 

Total cost of revenues

30,859 

27,843 

 

 --------------------

---------------------

Gross profit

38,981 

35,351 

     

Operating expenses:

   

Sales and marketing

15,445 

14,069 

Product development and engineering

10,260 

8,069 

General and administrative

7,608 

7,305 

 

 --------------------

 --------------------

Total operating expenses

33,313 

29,443 

   --------------------

 --------------------

Non-GAAP income from operations

5,668 

5,908 

     

Other income, net

763 

1,793 

 

 --------------------

 --------------------

Non-GAAP income before income taxes

6,431 

7,701 

Provision (benefit) for income taxes

317 

(182) 

 

 --------------------

 --------------------

Non-GAAP net income

$              6,114 

$              7,883 

     

Diluted non-GAAP net income per share:

$                0.25 

$                0.32 


Bottomline has presented supplemental non-GAAP financial measures and statements as part of this earnings release. The non-GAAP financial measures and statements exclude certain non-cash items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses. The presentation of this non-GAAP financial information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes that these supplemental non-GAAP financial measures are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same non-GAAP financial measures and statements internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies. A reconciliation of the GAAP results to the non-GAAP results for the three and six month periods ending December 31, 2008 and 2007 is as follows:

 Three Months Ended
December 31, 
(in thousands)

Six Months Ended
December 31,
(in thousands)

2008
 

2007
 

2008
 

2007
 

GAAP net loss    

$ (2,869) 

$ (674)
 

 $ (6,718)

$ (1,475)
 

Amortization of intangible assets    

3,948
 

 2,682

8,384
 

 5,330

Acquistion-related expenses

-
 

 -

 35

-
 

Stock compensation expense

2,203
 

2,102
 

4,413
 

4,028
 

Non-GAAP net income

$ 3,282
 

$ 4,110
 

$ 6,114
 

$ 7,883
 



About Bottomline Technologies
Bottomline Technologies (NASDAQ: EPAY) provides cloud-based payment, invoice and digital banking solutions to corporations, financial institutions and banks around the world. The company’s solutions are used to streamline, automate and manage processes involving payments, invoicing, global cash management, supply chain finance and transactional documents. Organizations trust Bottomline to meet their needs for cost reduction, competitive differentiation and optimization of working capital. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit www.bottomline.com.


Bottomline Technologies, Legal eXchange and the BT logo are trademarks of Bottomline Technologies (de), Inc. which may be registered in certain jurisdictions. All other brand/product names are trademarks of their respective holders.

Cautionary Language
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are competition, market demand, technological change, strategic relationships, recent acquisitions, international operations and general economic conditions. For additional discussion of factors that could impact Bottomline Technologies' financial results, refer to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and the Company’s Annual Report on Form 10-K for the year ended June 30, 2008 on file with the SEC. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.

Company Contact:
Kevin Donovan
Bottomline Technologies
603.501.5240
kdonovan@bottomline.com

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