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Bottomline Technologies Reports Third Quarter Results 
29% Growth in Year over Year Orders Highlights Quarter

PORTSMOUTH, NH – April 23, 2009 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the third quarter ended March 31, 2009.

Revenues for the third quarter were $33.3 million, an increase of $1.3 million from the third quarter of last year. Revenues for the third quarter were impacted by $3.6 million on a year over year basis as a result of declines in foreign exchange rates. Year over year revenue growth on a consistent currency basis was 15%.

Gross margin for the third quarter was $18.9 million, an increase of $1.4 million from the third quarter of last year. Net loss for the third quarter was $2.0 million, or net loss per share of $0.08. Excluding acquisition-related amortization of intangible assets of $3.6 million and stock-based compensation expense of $1.9 million, core net income for the third quarter was $3.5 million, or core earnings per share of $0.15.

“We had a strong quarter evidencing the value of our product set, execution of our team and strength of our business model,” said Rob Eberle, President and CEO of Bottomline Technologies. “The strategic highlight of the quarter was our selection by one of the world’s largest financial institutions representing an important endorsement of our technology and a significant contractual relationship. From an operating perspective we continue to execute, delivering a strong step up in profit with EBITDA, excluding stock compensation expense, increasing 25% from the prior quarter and core operating income up 32% from the prior quarter. We continue to generate meaningful cash and ended the quarter with cash and investments of $41 million, up over $6 million from the prior quarter. Perhaps most telling, we recorded orders of $44.2 million in the quarter despite the continuing challenges of the economic environment. With our signed backlog and continued customer focus, we expect to report increasing profit levels in Q4 and beyond.”

Revenues for the nine months ended March 31, 2009 increased $7.9 million to $103.1 million as compared with $95.2 million in the same period last year. Revenues for the nine month period were impacted by $7.7 million on a year over year basis as a result of declines in foreign exchange rates. Year over year revenue growth for the nine month period on a consistent currency basis was 16%. Net loss for the nine months ended March 31, 2009 was $8.7 million, or net loss per share of $0.36. Excluding acquisition-related amortization of intangible assets of approximately $12.0 million and stock compensation expense of $6.3 million, core net income for the nine months ended March 31, 2009 was $9.6 million, or core earnings per share of $0.40.

Third Quarter Customer Highlights

-
 
Signed a major contract with one of the world’s largest financial services firms to provide advanced capabilities for global cash management.

- Broadened existing relationship with Bank of America through new initiatives for international payments leveraging Bottomline’s global cash management platform.

- Signed new multi-year contracts for Legal eXchange™, Bottomline’s Software as a Service solution for legal spend management, with West Bend Mutual Insurance Company and Country Mutual Insurance Company.

- Added significant new customers, including Baldor Electric, Home Service USA, Hydranautics, InterfaceFLOR, Pearson, OSCO Construction Group, The Redpath Group, Teekay Shipping and Wright Medical Technology which selected Bottomline solutions to increase the security, efficiency, visibility and control of transactional processes.

- Expanded existing deployments of Bottomline’s payments, invoice and document process automation solutions at Allen & Overy, BNP Paribas, Cano Petroleum, CIGNA, Employers Insurance Company of Nevada, Johnson & Johnson, Johnson Controls, Lindt & Sprungli, The NORDAM Group, OptumHealth Bank, PACCAR, Target Corporation and United Technologies Corporation.

- Continued to strengthen our presence within healthcare as hospitals and healthcare organizations such as Catholic Healthcare Initiatives, Sutter Health, Tuomey Healthcare System and the nation’s third largest public healthcare system either selected, or expanded existing implementations of, Bottomline’s solutions for medical forms automation.

- Increased adoption of our document process automation solutions among organizations standardized on the Microsoft Dynamics® portfolio of ERP systems with new orders from companies such as Caltex, Snack Brands Australia, Flow International and SIFCO Industries.

Third Quarter Strategic Highlights

-
Awarded a patent for advanced capabilities enabling the secure, unattended transmission of payments and reporting information. Leveraging Web services, these patented capabilities help ensure the seamless communication of transactions and information such as securities confirmations and check issuance files between corporate treasury departments and their banking partners.

- Appointed Marcus Hughes to the newly created role of Director of Global Marketing. In this role, Mr. Hughes will be responsible for expanding Bottomline’s brand in North America, Europe and Asia-Pacific as well as play a major role in the company’s ongoing plans for product innovation. Recognized globally as an authority on payment technologies, trade finance, financial supply chain and treasury, Mr. Hughes previously held several senior-level positions with a number of European banks, including most recently head of global trade services at Banco Santander.

- Recognized by Law Technology News for its role in enabling Vulcan Materials to accelerate law firm invoice review cycles and optimize legal spend management processes. As part of the publication’s 2008 Technology Awards, Vulcan Materials’ Legal eXchange-powered initiative earned the award for ‘Most Innovative Use of Technology by an In-House Legal Department.’

- Received a best-in-class ranking for its global cash management capabilities by research advisory firm Aite Group as part of a recent vendor evaluation.

- Delivered executive-level presentations at NACHA’s PAYMENTS 2009 conference on best practice implementation of enterprise payment hubs and the development of vertical market payment strategies. Joining Bottomline for these sessions were customers Raymond James Financial and UMB Bank.

- Announced Peter Fortune, Bottomline’s COO and President of Bottomline Europe, plans to retire from Bottomline on May 15, 2009.

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

 Three Months Ended
March 31,   

 

 

 

2009
---------------------

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

Revenues:

   

Software licenses

 $ 3,237

 $ 3,149

Subscriptions and transactions

 7,495

 7,223

Service and maintenance

 20,599

 18,359

Equipment and supplies

 1,960

 3,301

 

 --------------------

 --------------------

Total revenues

 33,291

 32,032

     

Cost of revenues:

   

Software licenses

 189

 173

Subscriptions and transactions

 3,607

 3,839

Service and maintenance (1)

 9,194

 8,117

Equipment and supplies

 1,423

 2,409

 

 --------------------

-------------------- 

Total cost of revenues

 14,413

 14,538

 

 --------------------

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

Gross profit

 18,878

 17,494

     

Operating expenses:

   

Sales and marketing (1)

 7,449

 7,411

Product development and engineering (1)

 4,742

 4,016

General and administrative (1)

 4,344

 4,516

Amortization of intangible assets

 3,589

 2,629

 

 --------------------

 --------------------

Total operating expenses

 20,124

 18,572

   --------------------

 --------------------

Loss from operations

 (1,246)

 (1,078)

     

Other (expense) income, net

 (53)

 998

 

 --------------------

 --------------------

Loss before income taxes

 (1,299)

 (80)

Provision for income taxes

 671

 267

 

 --------------------

 --------------------

Net loss

 $ (1,970)

 $ (347)

     

Basic and diluted net loss per share:

 $ (0.08)

$ (0.01)

 

 --------------------

 --------------------

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

 24,047

 23,927

 

 --------------------

 --------------------

Core net income (excludes amortization of intangible assets, acquisition-related expenses and stock compensation expense):(2)

   

Net income

 $ 3,504

$ 4,751

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

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

Diluted net income per share (3)

 $ 0.15

 $0.20

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

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

     

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

   

Cost of revenues: service and maintenance

 $ 276

 $ 271

Sales and marketing

 528

 800

Product development and engineering

 165

 209

General and administrative

 916

 1,095

----------

----------

 

 $ 1,885

 $ 2,375

======

 ======

(2) Core net income excludes charges for amortization of intangible assets of $3,589 and $2,629, acquisition-related expenses of zero and $94, and stock compensation expense of $1,885 and $2,375, for the three months ended March 31, 2009 and 2008, respectively.

   
(3) Shares used in computing diluted core net income per share were 24,066 and 24,238 for the three months ended March 31, 2009 and 2008, respectively.

 

   


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

 Nine Months Ended

 

March 31, 

 

2009
---------------------

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

Revenues:

   

Software licenses

 $ 10,440

 $ 9,906

Subscriptions and transactions

 23,468

 21,407

Service and maintenance

 62,275

 54,127

Equipment and supplies

 6,948

 9,786

 

 --------------------

 --------------------

Total revenues

 103,131

 95,226

     

Cost of revenues:

   

Software licenses

 596

 598

Subsriptions and transactions    

 11,468

 11,723

Service and maintenance (1)

 28,628

 23,504

Equipment and supplies

 5,101

 7,024

 

 --------------------

 --------------------

Total cost of revenues

 45,793

 42,849

 

 --------------------

 --------------------

Gross profit

 57,338

 52,377

     

Operating expenses:

   

Sales and marketing (1)

 24,236

 22,777

Product development and engineering (1)

 15,402

 12,468

General and administrative (1)

 14,136

 13,702

Amortization of intangible assets

 11,973

 7,958

 

 --------------------

 --------------------

Total operating expenses

65,747
---------------------

56,905
---------------------

     

Loss from operations

 (8,409)

 (4,528)

     

Other income, net

 709

 2,790

 

 --------------------

 --------------------

Loss before income taxes

(7,700)

 (1,738)

Provision for income taxes

 988

 84

 

 --------------------

 --------------------

Net loss

 $ (8,688)

 $ (1,822)

     

Basic and diluted net loss per share:

 $ (0.36)

 $ (0.08)

 

 --------------------

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

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

 23,988

 23,806

 

 --------------------

 --------------------

Core net income (excludes amortization of intangible assets, acquisiton-related expenses and stock compensation expense):(2)

   

Net income

 $  9,618

 $ 12,634

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

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

Diluted net income per share (3)

 $ 0.40

 $ 0.52

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

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

     

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

   

Cost of revenues: service and maintenance

 $ 796

 $ 740

Sales and marketing

 1,872

 2,097

Product development and engineering

 564

 592

General and administrative

 3,066

 2,975

-----------

-----------

 

 $ 6,298

 $ 6,404

======

======

(2) Core net income excludes charges for amortization of intangible assets of $11,973 and $7,958, acquisition-related expenses of $35 and $94, and stock compensation expense of $6,298 and $6,404, for the nine months ended March 31, 2009 and 2008, respectively. 

   
(3) Shares used in computing diluted core net income per share were 24,162 and 24,334 for the nine months ended March 31, 2009 and 2008, respectively.

 

   


Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 

 March 31,

June 30,

 

2009
------------------------

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

     

Assets

   

Current assets:

   

Cash, cash equivalents and short-term investments

 $ 40,999

 $ 35,373

Accounts receivable

 23,068

 28,747

Other current assets

 4,649

 6,157

 

 ------------------------

 ------------------------

Total current assets

 68,716

 70,277

     

Property and equipment, net

 10,094

 11,840

Intangible assets, net

 88,629

 115,414

Other assets

 3,628

 1,235

 

 ------------------------

 ------------------------

Total assets

 $ 171, 067

 $ 198,766

   ===============  ==============

Liabilities and stockholders' equity

   

Current liabilities:

   

Accounts payable

 $ 5,182

 $ 8,856

Accrued expenses

 7,667

 10,997

Deferred revenue

 31,169

 30,621

 

 ------------------------

 ----------------------

Total current liabilities

 44,018

 50,474

     

Deferred revenue, non current

 9,256

 3,856

Deferred income taxes

 2,276

 4,179

Other liabilities

 1,586

 1,992

 

 ------------------------

 ----------------------

Total liabilities

 57,136

 60,501

     

Stockholders' equity

 

 

Common stock

 26

 26

Additional paid-in-capital

 283,898

 277,660

Accumulated other comprehensive (loss) income

 (12,355)

 7,766

Treasury stock

 (23,958)

 (22,195)

Accumulated deficit

(133,680)

 (124,992)

 

 ------------------------

 ----------------------

Total stockholders' equity

 113,931

 138,265

 

 ------------------------

 ----------------------

Total liabilities and stockholders' equity

 $ 171,067

 $ 198,766

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

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

Non-GAAP Financial Statements
Bottomline has presented supplemental non-GAAP statements of operations as part of this earnings release. Core income, which excludes certain items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses, is a non-GAAP financial measure. The presentation of this information should not be considered in isolation from, or as a substitute for, our financial results presented in accordance with GAAP. Bottomline believes this supplemental presentation is useful to investors because it provides an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same 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  

 

 March 31,

 

2009
---------------------

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

Revenues:

   

Software licenses

 $ 3,237

 $ 3,149

Subscriptions and transactions

 7,495

 7,223

Service and maintenance

 20,599

 18,359

Equipment and supplies

 1,960

 3,301

 

 --------------------

 --------------------

Total revenues

 33,291

 32,032

     

Cost of revenues:

   

Software licenses

 189

 173

Subscriptions and transactions

 3,607

 3,836

Service and maintenance

 8,918

 7,827

Equipment and supplies

 1,423

 2,409

 

 --------------------

-------------------- 

Total cost of revenues

 14,137

 14,245

 

 --------------------

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

Gross profit

 19,154

 17,787

     

Operating expenses:

   

Sales and marketing

 6,921

 6,579

Product development and engineering

 4,577

 3,795

General and administrative

 3,428

 3,393

 

 --------------------

 --------------------

Total operating expenses

 14,926

 13,767

   

 

Core income from operations

 4,228

 4,020

     

Other (expense) income, net

 (53)

 998

 

 --------------------

 --------------------

Core income before income taxes

 4,175

 5,018

Provision for income taxes

 671

 267

 

 --------------------

 --------------------

Core net income

 $ 3,504

 $ 4, 751

     

Diluted core net income per share:

$ 0.15 

 $ 0.20



 

Non-GAAP 
Nine Months Ended  

 

March 31,

 

2009
---------------------

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

Revenues:

   

Software licenses

 $ 10,440

 $ 9,906

Subscriptions and transactions

 23,468

 21,407

Service and maintenance

 62,275

 54,127

Equipment and supplies

 6,948

 9,786

 

 --------------------

 --------------------

Total revenues

 103,131

 95,226

     

Cost of revenues:

   

Software licenses

 596

 598

Subscriptions and transactions

 11,468

 11,720

Service and maintenance

 27,831

 22,747

Equipment and supplies

 5,101

 7,024

 

 --------------------

-------------------- 

Total cost of revenues

 44,996

 42,089

 

 --------------------

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

Gross profit

 58,135

 53,137

     

Operating expenses:

   

Sales and marketing

 22,364

 20,647

Product development and engineering

 14,838

 11,864

General and administrative

 11,036

 10,698

 

 --------------------

 --------------------

Total operating expenses

 48,238

 43,209

   --------------------

 --------------------

Core income from operations

 9,897

 9,928

     

Other income, net

 709

 2,790

 

 --------------------

 --------------------

Core income before income taxes

 10,606

 12,718

Provision for income taxes

 988

 84

 

 --------------------

 --------------------

Core net income

 $ 9,618

 $ 12,634

     

Diluted core net income per share:

 $ 0.40

 $ 0.52


Bottomline has presented supplemental non-GAAP financial measures and statements as part of this earnings release. Core net income is a non-GAAP financial measure. The non-GAAP financial measures and statements exclude certain 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 nine month periods ended March 31, 2009 and 2008 is as follows:

 Three Months Ended
March 31,
(in thousands)

Nine Months Ended
March 31,
(in thousands)

2009
 

2008
 

2009
 

2008
 

GAAP net loss $ (1,970)

$ (347)
 

 $ (8,688)

$ (1,822)
 

Amoritization of intangible assets

3,589
 

 2,629

11,973
 

7,958
 

Acquisition-related expenses    

-
 

 94

 35

 94

Stock Compensation expense   

1,885
 

2,375
 

6,298
 

 6,404

Core net income

$ 3,504
 

 $ 4,751

$ 9,618
 

$ 12,634
 



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 Reports on Form 10-Q for the quarters ended September 30, 2008 and December 31, 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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