BOTTOMLINE TECHNOLOGIES INC - FORM 8-K - EX-99.1

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8-K - 8-K - BOTTOMLINE TECHNOLOGIES INC	d919635d8k.htm


		Exhibit 99.1

Bottomline Technologies Reports Third Quarter Results

Subscription and Transaction Revenue Highlights Third Quarter

PORTSMOUTH, N.H. – April 30, 2015 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of cloud-based payment, invoice and digital banking solutions, today reported financial results for the third quarter ended March 31, 2015.

Revenues for the third quarter were $82.0 million, an increase of $3.7 million, or 9% on a constant currency basis, from the third quarter of last year. Subscription and transaction revenues, which are primarily related to the company’s cloud platforms, increased 25% on a constant currency basis from the third quarter of last year to $42.9 million.

Gross margin for the third quarter was $47.0 million, an increase of $2.4 million from the third quarter of last year. Net loss for the third quarter was $7.8 million. Net loss per share was $0.21 in the third quarter compared to $0.12 in the third quarter of last year.

Core net income for the third quarter was $12.5 million. Core net income excludes acquisition and integration-related expenses, amortization of intangible assets, equity-based compensation, non-cash interest expense associated with our convertible notes and restructuring expenses as detailed in the reconciliation below. Core earnings per share was $0.33 in the third quarter compared to $0.34 in the third quarter of last year.

“We had a very good third quarter with solid execution and strong subscription and transaction revenue growth” said Rob Eberle, President and CEO of Bottomline Technologies. “We announced our new cyber fraud and risk management platform addressing a critical priority concern of our customers. We continue to invest in our suite of innovative cloud-based solutions which we believe will drive continued subscription and transaction revenue growth. With the strong results through the first three quarters, we are on track to complete a record year in which we will have introduced important new technologies, increased the competitive differentiation and market opportunity of our product set and positioned the company for continued growth in the years ahead.”

Revenues for the nine months ended March 31, 2015 increased 12% to $245.5 million as compared with $218.9 million last year. Subscription and transaction revenues increased 25% to $126.7 million in the nine months ended March 31, 2015. Net loss for the nine months ended March 31, 2015 was $13.1 million. Net loss per share was $0.35 for the nine months ended March 31, 2015 compared to $0.48 for the nine months ended March 31, 2014.

Core net income for the nine months ended March 31, 2015 was $41.8 million. Core net income excludes acquisition and integration-related expenses, amortization of intangible assets, equity-based compensation, restructuring expenses and non-cash interest expense associated with our convertible notes as detailed in the reconciliation below. Core earnings per share was $1.10 for the nine months ended March 31, 2015 compared to $0.86 for the nine months ended March 31, 2014.

Third Quarter Customer Highlights

•

Selected by seventeen institutions to provide Paymode-X, Bottomline’s leading cloud-based payments automation platform.

•

Chosen by seven leading organizations, including Employers Holdings, Inc. and Securitas, to provide Bottomline’s cloud-based legal spend management solutions to automate, manage and control their legal spend.

•

Signed nine new Digital Banking deals, enabling banks to accelerate innovation, grow revenues and relationships, and drive profitable growth.

•

Leading institutions, such as PMA Capital Corporation, Reliance Trust, and Marathon Oil Company, chose Bottomline’s payment automation solutions to extend their payments capabilities and improve efficiencies.

•

Companies such as Silicon Valley Bank and ABF Investments PLC selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.

Third Quarter Strategic Corporate Highlights

•

Announced the launch of a comprehensive cyber fraud and risk management solution as a result of our acquisition of Intellinx, Ltd. Headquartered in Israel, the Intellinx solutions are trusted by some of the largest organizations in the world because of its unique ability to non-invasively monitor, replay, and analyze user behavior across multiple channels, and instantly flag and stop suspicious activity.

•

Selected as winner of the Treasury Management International award for Innovation and Excellence in Cash Management for the fourth year in a row. The TMI Awards recognize banks, advisors, and technology providers who best understand the challenges that corporate treasurers face in the global treasury arena.

•

Bottomline’s Digital Banking 3.0 solutions helped customers deploy market changing technology and receive industry recognition including:

•

Best Use of IT in Wholesale & Investment Banking at the FS Tech Awards 2015 awarded to a major European bank and longstanding customer.

•

Best Digital Platform of 2015 in the Digital Strategy Awards at Innovation Enterprise’s 2015 Digital Strategy Innovation Summit awarded to a major global bank. Award presented in recognition of the best conceived digital platform, combining sophisticated digital marketing with Bottomline’s leading online account opening experience.

Non-GAAP Financial Measures

We have presented supplemental non-GAAP financial measures as part of this earnings release. The presentation of this non-GAAP financial information should not be considered in isolation from, or as a substitute for, our financial results presented in accordance with GAAP. Core net income and core earnings per share are non-GAAP financial measures. Our non-GAAP financial measures exclude certain items, specifically amortization of intangible assets, impairment losses on equity investments, equity-based compensation, acquisition and integration-related expenses (including acquisition-related earn-outs), restructuring related costs, non-cash pension expenses, non-core charges associated with our convertible notes and other non-core or non-recurring gains or losses that arise from time to time. Non-core charges associated with our convertible notes consist of non-cash interest expense. Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with our business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services, integration related professional services costs and other incremental charges we incur as a direct result of our acquisition and integration efforts. Periodically, such as in periods that include significant foreign currency volatility, we present certain metrics on a “constant currency” basis, to show the impact of period to period results normalized for the impact of foreign currency rate changes. We calculate constant currency information by translating prior period financial results using current period foreign exchange rates. We believe 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, including more meaningful comparisons of financial results to historical periods and to the financial results of less acquisitive peer and competitor companies. Our executive management team uses these same non-GAAP financial measures internally to assess the ongoing performance of the company. Additionally, the same non-GAAP information is used for planning purposes, including the preparation of operating budgets and in communications with our board of directors with respect to our core financial performance. 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. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP.

A reconciliation of our GAAP results to our non-GAAP results for the three and nine months ended March 31, 2015 and 2014 is as follows:


	Three Months Ended March 31,						Nine Months Ended March 31,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
GAAP net loss	$	(7,830	)	$	(4,310	)	$	(13,060	)	$	(17,623	)
Amortization of intangible assets		8,002			4,784			22,186			18,663
Equity-based compensation		7,134			6,225			19,563			16,792
Acquisition and integration-related expenses		846			1,062			2,553			4,635
Restructuring expenses		1,074			1,015			1,346			1,060
Non-cash pension expense		21			87			42			238
Non-cash interest expense		3,061			2,871			9,038			8,479
Other non-core expense		145			—			145			—
Other income tax expense		—			978			—			—

Core net income	$	12,453		$	12,712		$	41,813		$	32,244


GAAP diluted shares		38,121			38,687			38,062			37,889
Impact of note hedges		—			(866	)		—			(440	)

Core diluted shares		38,121			37,821			38,062			37,449

The table below is a comparative summary of our total revenues and our subscription and transaction revenues shown with a constant currency growth rate:


	Three Months Ended				% Increase
	March 31,							Constant
	2015		2014		GAAP			Rates⁽¹⁾
	(in thousands)
Total Revenues	$	81,951	$	78,252		5	%		9	%
Subscription and Transaction Revenues		42,926		35,095		22	%		25	%

⁽¹⁾	Constant currency information compares results between periods assuming exchange rates had remained constant period-over-period. We calculate constant currency information by translating prior-period results using current-year GAAP foreign exchange rates.

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) powers mission-critical business transactions. We help our customers optimize financially-oriented operations and build deeper customer and partner relationships by providing a trusted and easy-to-use set of cloud-based digital banking, fraud prevention, payment, financial document, insurance, and healthcare solutions. Over 10,000 corporations, financial institutions, and banks benefit from Bottomline solutions. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit www.bottomline.com.

Bottomline Technologies, Paymode-X and the BT logo are trademarks of Bottomline Technologies (de), Inc. which are 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, including statements reflecting our expectations about our ability to execute on our growth plans. Any statements that are not statements of historical fact (including but not limited to statements containing the words “believes,” “plans,” “anticipates,” “expects,” “look forward”, “confident”, “estimates” and similar expressions) should be considered to be forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors including, among others, 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’ operational and financial results, refer to our Form 10-K for the fiscal year ended June 30, 2014 and the subsequently filed Form 10-Q’s and Form 8-K’s or amendments thereto. 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.

Media Contact:

Kevin Donovan

Bottomline Technologies

603-501-5240

kdonovan@bottomline.com

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2015			2014
Revenues:
Subscriptions and transactions	$	42,926		$	35,095
Software licenses		5,074			5,543
Service and maintenance		32,124			35,873
Other		1,827			1,741

Total revenues		81,951			78,252

Cost of revenues:
Subscriptions and transactions		19,582			17,866
Software licenses		371			505
Service and maintenance		13,675			13,942
Other		1,285			1,278


Total cost of revenues		34,913			33,591


Gross profit		47,038			44,661

Operating expenses:
Sales and marketing		20,248			19,433
Product development and engineering		12,716			10,685
General and administrative		8,882			8,718
Amortization of intangible assets		8,002			4,784


Total operating expenses		49,848			43,620


Income (loss) from operations		(2,810	)		1,041

Other expense, net		(4,600	)		(3,573	)


Loss before income taxes		(7,410	)		(2,532	)
Provision for income taxes		420			1,778


Net loss	$	(7,830	)	$	(4,310	)

Basic and diluted net loss per share	$	(0.21	)	$	(0.12	)


Shares used in computing basic and diluted net loss per share:		37,762			37,081


Core net income (excludes amortization of intangible assets, acquisition and integration-related expenses, restructuring expenses, equity-based compensation expense, non-core charges associated with our convertible notes and other non-core items):⁽¹⁾
Core net income	$	12,453		$	12,712

Diluted core net income per share⁽²⁾	$	0.33		$	0.34

¹⁾

Core net income excludes charges for amortization of intangible assets of $8,002 and $4,784, acquisition and integration-related expenses of $846 and $1,062, restructuring expenses of $1,074 and $1,015, equity-based compensation of $7,134 and $6,225, non-cash pension expense of $21 and $87, non-core charges associated with our convertible notes of $3,061 and $2,871 and other non-core expenses of $145 and $978 for the three months ended March 31, 2015 and 2014, respectively.

²⁾

Shares used in computing diluted core earnings per share were 38,121 and 37,821 for the three months ended March 31, 2015 and 2014, respectively. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP.

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)


	Nine Months Ended
	March 31,
	2015			2014
Revenues:
Subscriptions and transactions	$	126,662		$	101,489
Software licenses		16,155			15,744
Service and maintenance		97,264			96,564
Other		5,438			5,109

Total revenues		245,519			218,906

Cost of revenues:
Subscriptions and transactions		58,699			49,964
Software licenses		1,138			1,263
Service and maintenance		39,647			40,434
Other		3,855			3,789


Total cost of revenues		103,339			95,450


Gross profit		142,180			123,456

Operating expenses:
Sales and marketing		58,995			53,699
Product development and engineering		35,427			28,363
General and administrative		25,962			25,328
Amortization of intangible assets		22,186			18,663


Total operating expenses		142,570			126,053


Loss from operations		(390	)		(2,597	)

Other expense, net		(11,834	)		(11,004	)


Loss before income taxes		(12,224	)		(13,601	)
Provision for income taxes		836			4,022


Net loss		(13,060	)		(17,623	)

Basic and diluted net loss per share	$	(0.35	)	$	(0.48	)


Shares used in computing basic and diluted net loss per share:		37,723			36,654


Core net income (excludes amortization of intangible assets, acquisition and integration-related expenses, restructuring expenses, equity-based compensation expense, non-cash pension expense and non-core charges associated with our convertible notes):⁽¹⁾
Core net income	$	41,813		$	32,244

Diluted core net income per share⁽²⁾	$	1.10		$	0.86

¹⁾

Core net income excludes charges for amortization of intangible assets of $22,186 and $18,663, acquisition and integration-related expenses of $2,553 and $4,635, restructuring expenses of $1,346 and $1,060, equity-based compensation of $19,563 and $16,792, non-cash pension expense of $42 and $238, non-core charges associated with our convertible notes of $9,038 and $8,479 and other non-core expense of $145 and $0 for the nine months ended March 31, 2015 and 2014, respectively.

²⁾

Shares used in computing diluted core earnings per share were 38,062 and 37,449 for the nine months ended March 31, 2015 and 2014, respectively. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP.

Bottomline Technologies

Unaudited Condensed Consolidated Balance Sheets

(in thousands)


	March 31,			June 30,
	2015			2014
Assets
Current assets:
Cash, cash equivalents and marketable securities	$	140,327		$	191,478
Accounts receivable		64,214			61,064
Other current assets		31,488			28,238


Total current assets		236,029			280,780

Property and equipment, net		41,737			35,901
Goodwill and intangible assets, net		399,701			372,495
Other assets		11,300			11,167


Total assets	$	688,767		$	700,343


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,657		$	16,283
Accrued expenses		24,165			25,542
Deferred revenue		70,644			66,571


Total current liabilities		108,466			108,396

Convertible senior notes		156,945			148,795
Deferred revenue, non-current		16,750			15,997
Deferred income taxes		31,629			23,537
Other liabilities		15,145			16,192


Total liabilities		328,935			312,917

Stockholders’ equity
Common stock		40			39
Additional paid-in-capital		552,182			530,377
Accumulated other comprehensive income (loss)		(18,365	)		6,816
Treasury stock		(31,738	)		(20,579	)
Accumulated deficit		(142,287	)		(129,227	)


Total stockholders’ equity		359,832			387,426


Total liabilities and stockholders’ equity	$	688,767		$	700,343

BOTTOMLINE TECHNOLOGIES INC - FORM 8-K - EX-99.1 - April 30, 2015

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