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Bottomline Technologies Reports Fourth Quarter Results
Strong Fourth Quarter Results Complete Record Year

PORTSMOUTH, NH – August 05, 2009 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the fourth quarter and fiscal year ended June 30, 2009.

Revenues for the fourth quarter were $34.9 million, an increase of $1.6 million from the third quarter. Revenues for the fourth quarter were impacted by $3.1 million on a year over year basis as a result of lower foreign exchange rates. Year over year revenue growth was 6% in the fourth quarter and 14% for the full fiscal year on a consistent currency basis.

Gross margin for the fourth quarter was $19.8 million, an increase of $1.0 million from the prior quarter. Net loss for the fourth quarter was $3.6 million, or net loss per share of $0.15.

Core net income for the fourth quarter was $5.3 million after excluding acquisition-related expenses of $4.1 million and equity-based compensation and restructuring expenses of $4.7 million. Core net income was more than double the $2.6 million reported in the fourth quarter of last year. Core earnings per share was $0.22 as compared with $0.11 last year and $0.15 in the prior quarter.

Cash flow from operations exceeded $6.5 million for the fourth quarter and $24.0 million for the year. Cash and cash equivalents were $50.3 million as of June 30, 2009.

“We had a very strong fourth quarter in terms of both reported financial results and strategic advancement,” said Rob Eberle, President and CEO of Bottomline Technologies. “I am pleased to report we have doubled our core net income from a year ago, grown our core operating margin from 7% to 15% and generated strong cash from operations. At the same time, we have increased backlog, grown our pipeline and secured new strategic relationships. We are well positioned to execute on our targeted market opportunities and look forward to successful results in the year ahead.”

Revenues for the fiscal year ended June 30, 2009 increased $6.8 million to $138.0 million as compared with $131.2 million last year. Revenues for the year were impacted by $11.0 million on a year over year basis as a result of lower foreign exchange rates. Year over year revenue growth for the year on a consistent currency basis was 14%. Net loss for the fiscal year ended June 30, 2009 was $12.3 million, or net loss per share of $0.51. Core net income for the fiscal year ended June 30, 2009 was $14.9 million, or core earnings per share of $0.62, after excluding acquisition-related expenses of $16.1 million and equity-based compensation and restructuring expenses of $11.0 million.

Fourth Quarter Customer Highlights

-
Signed a multi-year contract for Legal eXchange™, Bottomline’s Software as a Service solution for legal spend management, with one of the nation’s Top 20 property & casualty insurers.

- Welcomed significant new customers such as Canon USA, Chemical Financial Corporation, Kip McGrath Education Centres, Medavie Blue Cross, Metropolitan Pier and Exposition Authority, Michelin, Michigan State University, Royal Caribbean Cruises, Sabrix and Seahawk Drilling, which selected Bottomline solutions to increase the efficiency, security and visibility of financial transaction processes.

-Strengthened existing relationship with Raymond James Financial, which increased their investment in Bottomline’s WebSeries® Global Cash Management platform to support new cash management initiatives.

- Expanded existing deployments of Bottomline’s solutions for payment, invoice and document process automation with customers such as Aviva, Deutsche Bank, Dun & Bradstreet, EDF Energy, Illinois Secretary of State, Raytheon, Stryker Biotech, Warner Music UK, Washington Corporations, Zimmer, 20th Century Fox Film Corporation, and one of the nation’s largest publicly traded multifamily companies.

- Continued to broaden awareness for Bottomline’s capabilities and expertise within the Microsoft Dynamics® AX user community with new orders from organizations such DuBois Chemicals, Insulet Corporation, Iroko Pharmaceuticals and ZCL Composites.

- Further supported the need to transition away from paper-driven processes within the healthcare vertical through expanded implementations of Bottomline solutions among hospitals and healthcare providers such as Halifax Regional Hospital, Heritage Valley Health System, Lourdes Health Network and Montefiore Medical Center.

Fourth Quarter Strategic Corporate Highlights

-
Launched the ‘Think Green’ awards, a program designed to showcase Bottomline customers that are helping to reduce the environmental impact of paper-based processes through the use of Bottomline’s software solutions.

- Identified by research advisory firm Celent as a ‘payments powerhouse’ as part of a recent evaluation of online cash management solutions. This latest accolade from industry analysts covering financial services technology follows Aite Group’s awarding of a best-in-class ranking to Bottomline for its global cash management capabilities.

- Introduced expanded capabilities for Legal eXchange, providing corporate legal and insurance claims departments with advanced litigation management functionality for greater collaboration, efficiency and control of legal spend.

- Named, for the third year in a row, as a top technology provider serving the insurance industry. As part of the 2009 Insurer’s Choice, Bottomline was recognized for demonstrating extensive expertise on the intersection of technology and strategic business objectives, as well as a preferred vendor for helping to develop and enhance insurance products and services.



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

 Three Months Ended  

 

 June 30,

 

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

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

Revenues:

   

Software licenses

 $ 2,869

 $ 4,043

Subscriptions and transactions

 7,728

 8,286

Service and maintenance

 21,946

 20,320

Equipment and supplies

 2,340

 3,366

 

 --------------------

 --------------------

Total revenues

 34,883

 36,015

     

Cost of revenues:

   

Software licenses

 225

282

Subscriptions and transactions

 3,578

 4,065

Service and maintenance (1)

 9,471

 9,685

Equipment and supplies

 1,774

 2,528

 

 --------------------

-------------------- 

Total cost of revenues

 15,048

 16,560

 

 --------------------

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

Gross profit

 19,835

 19,455

     

Operating expenses:

   

Sales and marketing (1)

 8,281

 8,962

Product development and engineering (1)

 4,694

 4,909

General and administrative (1)

 6,779

 5,496

Amortization of intangible assets

 3,590

 3,440

 

 --------------------

 --------------------

Total operating expenses

 23,344

 22,807

   --------------------

 --------------------

Loss from operations

 (3,509)

 (3,352)

     

Other (expense) income, net

 (265)

 292

 

 --------------------

 --------------------

Loss before income taxes

 (3,774)

 (3,060)

(Benefit) provision for income taxes

 (174)

 379

 

 --------------------

 --------------------

Net loss

$ (3,600) 

 $ (3,439)  

     

Basic and diluted net loss per share:

 $ (0.15) 

 $ (0.14) 

 

 --------------------

 --------------------

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

 24,212

 23,884

 

 --------------------

 --------------------

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

   

Net income

 $ 5,284 

 $ 2,576 

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

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

Diluted net income per share (3)

 $ 0.22

 $ 0.11

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

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

     

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

   

Cost of revenues: service and maintenance

 $ 309

 $ 248

Sales and marketing

 617

 744

Product development and engineering

 154

 188

General and administrative

 2,121

 1,220

----------

----------

 

 $ 3,201 

 $ 2, 400 

======

 ======

(2) Core net income excludes charges for amortization of intangible assets of $3,590 and $3,440, acquisition-related expenses of $545 and $175, restructuring costs of $1,548 and zero and stock compensation expense of $3,201 and $2,400, for the three months ended June 30, 2009 and 2008, respectively.

   
(3) Shares used in computing diluted core net income per share were 24,237 and 24,172 for the three months ended June 30, 2009 and 2008, respectively.

 

   


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

 Fiscal Years Ended

 

 June 30,

 

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

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

Revenues:

   

Software licenses

 $  13, 309

 $ 13, 949

Subscriptions and transactions

 31,196

 29,693

Service and maintenance

 84,220

 74,446

Equipment and supplies

 9,289

 13,153

 

 --------------------

 --------------------

Total revenues

138,014

131,241

     

Cost of revenues:

   

Software licenses

 821

 880

Subsriptions and transactions    

 15.045

 15,789

Service and maintenance (1)

 38,100

 33,189

Equipment and supplies

 6,875

 9,551

 

 --------------------

 --------------------

Total cost of revenues

 60,841

 59,409

 

 --------------------

 --------------------

Gross profit

 77,173

 71,832

     

Operating expenses:

   

Sales and marketing (1)

 32,517

 31,739

Product development and engineering (1)

 20,096

 17,376

General and administrative (1)

 20,915

 19,197

Amortization of intangible assets

 15,563

 11,399

 

 --------------------

 --------------------

Total operating expenses

89,091
---------------------

79,711
---------------------

     

Loss from operations

 (11,918)

 (7,879)

     

Other income, net

 443

 3,082

 

 --------------------

 --------------------

Loss before income taxes

 (11,475)

 (4,797)

Provision for income taxes

 813

464

 

 --------------------

 --------------------

Net loss

 $ (12,288)

 $ (5,261)

     

Basic and diluted net loss per share:

$ (0.51)

 $ (0.22)

 

 --------------------

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

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

 24,044

 23,825

 

 --------------------

 --------------------

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

   

Net income

 $ 14,902 

 $ 15,210 

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

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

Diluted net income per share (3)

 $ 0.62

 $ 0.63

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

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

     

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

   

Cost of revenues: service and maintenance

 $ 1,105 

 $987

Sales and marketing

 2,489

 2,841

Product development and engineering

 718

 780

General and administrative

 5,186

 4,195

-----------

-----------

 

 $ 9,498

 $  8,803

======

======

(2) Core net income excludes charges for amortization of intangible assets of $15,563 and $11,399, acquisition-related expenses of $581 and $269, restructuring costs of $1,548 and zero, and stock compensation expense of $9,498 and $8,803, for the fiscal year ended June 30, 2009 and 2008, respectively.

   
(3) Shares used in computing diluted core net income per share were 24,181 and 24,294 for the fiscal year ended June 30, 2009 and 2008, respectively.

 

   


Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 

 June 30,

June 30, 

 

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

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

     

Assets

   

Current assets:

   

Cash, cash equivalents and short-term investments

 $ 50,303 

 $ 35,373

Accounts receivable

23,118 

 28,747

Other current assets

 5,531

 6,157

 

 ------------------------

 ------------------------

Total current assets

 78,952

 70,277

     

Property and equipment, net

 10,106

 11,840

Intangible assets, net

 89,589

 115,414

Other assets

 4,504

 1,235

 

 ------------------------

 ------------------------

Total assets

 $ 183,151 

 $ 198,766 

   ===============  ==============

Liabilities and stockholders' equity

   

Current liabilities:

   

Accounts payable

 $ 5,955

 $ 8,856

Accrued expenses

 9,290

 10,997

Deferred revenue and deposits

 33,029

 30,621

 

 ------------------------

 ----------------------

Total current liabilities

 48,274

 50,474

     

Deferred revenue, non current

 10,213

 3,856

Deferred income taxes

 2,263

 4,179

Other liabilities

 1,852

 1,992

 

 ------------------------

 ----------------------

Total liabilities

 62,602

 60,501

     

Stockholders' equity

 

Common stock

 27

 26

Additional paid-in-capital

 287,082

 277,660

Accumulated other comprehensive (loss) income

 (4,920)

 7,766

Treasury stock

 (24,360)

 (22,195)

Accumulated deficit

 (137,280)

 (124,992)

 

 ------------------------

 ----------------------

Total stockholders' equity

 120,549

 138,265

 

 ------------------------

 ----------------------

Total liabilities and stockholders' equity

 $ 183,151 

 $ 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, acquisition-related expenses, and restructuring costs 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  

 

June 30, 

 

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

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

Revenues:

   

Software licenses

 $ 2,869

 $ 4,043

Subscriptions and transactions

 7,728

 8,286

Service and maintenance

 21,946

 20,320

Equipment and supplies

 2,340

 3,366

 

 --------------------

 --------------------

Total revenues

 34,883

 36,015

     

Cost of revenues:

   

Software licenses

 225

 282

Subscriptions and transactions

 3,475

 4,065

Service and maintenance

 8,893

 9,434

Equipment and supplies

 1,774

 2,528

 

 --------------------

-------------------- 

Total cost of revenues

 14,367

 16,309

 

 --------------------

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

Gross profit

 20,516

 19,706

     

Operating expenses:

   

Sales and marketing

 7,344

 8,184

Product development and engineering

 4,351

 4,717

General and administrative

 3,446

 4,142

 

 --------------------

 --------------------

Total operating expenses

 15,141

 17,043

   --------------------

 --------------------

Core income from operations

 5,375

 2,663

     

Other (expense) income, net

 (265)

 292

 

 --------------------

 --------------------

Core income before income taxes

 5,110

 2,955

(Benefit) provision for income taxes

 (174)

 379

 

 --------------------

 --------------------

Core net income

 $ 5,284 

 $ 2,576 

     

Diluted core net income per share:

 $  0.22

 $ 0.11 



 

Non-GAAP 
Fiscal Years Ended  

 

June 30, 

 

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

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

Revenues:

   

Software licenses

 $ 13,309

 $ 13,949

Subscriptions and transactions

 31,196

 29,693

Service and maintenance

 84,220

 74,446

Equipment and supplies

 9,289

 13.153

 

 --------------------

 --------------------

Total revenues

 138,014

 131,241

     

Cost of revenues:

   

Software licenses

 821

 880

Subscriptions and transactions

 14,942

 15,786

Service and maintenance

 36,724

 32,180

Equipment and supplies

 6,875

 9,551

 

 --------------------

-------------------- 

Total cost of revenues

 59,362

 58,387

 

 --------------------

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

Gross profit

 78,652

 72,844

     

Operating expenses:

   

Sales and marketing

 29,709

 28,832

Product development and engineering

 19,189

 16,581

General and administrative

 14,482

 14,839

 

 --------------------

 --------------------

Total operating expenses

 63,380

 60,252

   --------------------

 --------------------

Core income from operations

 15,272

 12,592

     

Other income, net

 443

 3,082

 

 --------------------

 --------------------

Core income before income taxes

 15,715

 15,674

Provision for income taxes

 813

 464

 

 --------------------

 --------------------

Core net income

 $  14,902

 $ 15, 210 

     

Diluted core income per share:

 $ 0.62 

 $ 0.63 


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, equity-based compensation, acquisition-related expenses, and restructuring related costs. 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 month periods and fiscal years ended June 30, 2009 and 2008 is as follows:

 Three Months Ended
 June 30,
(in thousands)

Fiscal Years Ended
June 30,
(in thousands)


 


 

 


 

GAAP net loss    

$ (3,600) 

$  (3,439)
 

 $ (12,288)

 $ (5,261) 

Amortization of intangible assets    

3,590
 

 3,440

 15,563

11,399
 

Equity-based compensation

3,201

2,400

9,498

8,803

Acquisition-related expenses   

 545

 175

 581

 269

Restructuring costs

1,548
 

-
 

1,548
 

-
 

Core net income

$ 5,284 
 

$ 2,576
 

$  14,902
 

$ 15,210
 

For purposes of “consistent currency basis” presentation, Bottomline has applied a conversion rate of 1.97 USD to 1.00 GBP and 0.94 USD to 1.00 AUD.


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, WebSeries, 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, December 31, 2008 and March 31, 2009 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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