EX-99.1 2 d719262dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Bottomline Technologies Reports Third Quarter Results

Strong Revenue Growth Highlights Third Quarter

PORTSMOUTH, N.H. – May 1, 2014 – 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, 2014.

Revenues for the third quarter were $78.3 million, an increase of $13.8 million, or 21%, from the third quarter of last year. Subscription and transaction revenues, which are primarily related to the company’s digital banking, legal spend management and Paymode-X cloud-based applications, increased 22% from the third quarter of last year to $35.1 million.

Gross margin for the third quarter was $44.7 million, an increase of $10.5 million from the third quarter of last year. Net loss for the third quarter was $4.3 million, a net loss per share of $0.12.

Core net income for the third quarter was $12.7 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $5.8 million, equity-based compensation of $6.2 million, restructuring expenses of $1.0 million, non-cash interest expense of $2.9 million associated with our convertible notes and other non-core expenses of $1.1 million. Core earnings per share was $0.34.

“We had an outstanding quarter with record financial results in all our key performance metrics,” said Rob Eberle, President and CEO of Bottomline Technologies. “Strategically, we broadened our technology set and the innovative capabilities we offer our customers, particularly our cloud-based solutions which offer the most compelling proposition for customers and an attractive recurring revenue stream for Bottomline. With the strong results through the first three quarters, we are well positioned to complete a record year and drive long-term growth for our company and shareholders.”

Revenues for the nine months ended March 31, 2014 increased 15% to $218.9 million as compared with $189.7 million last year. Subscription and transaction revenues increased 16% to $101.5 million in the nine months ended March 31, 2014. Net loss for the nine months ended March 31, 2014 was $17.6 million, or $0.48 per share.

Core net income for the nine months ended March 31, 2014 was $32.2 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $23.3 million, equity-based compensation of $16.8 million, restructuring expenses of $1.1 million, non-cash interest expense of $8.5 million associated with our convertible notes and other non-core expenses of $0.2 million. Core earnings per share was $0.86.


Third Quarter Customer Highlights

 

    Chosen by 13 leading organizations, including Atlantic Casualty Insurance Co, Freestone Insurance and Publix Super Markets to provide Bottomline’s cloud-based legal spend management solutions to automate, manage and control their legal spend.

 

    Leading institutions, such as the County of Sonoma, Tokio Marine Insurance and TUI UK Ltd, chose Bottomline’s payment automation solutions to extend their payments capabilities and improve efficiencies.

 

    Companies such as The Saudi Investment Bank, Truphone and Western Union selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.

 

    Deepened relationships in the healthcare vertical with customers such as Catholic Healthcare Partners, St. Dominic/Jackson Memorial Hospital and The Spartanburg Regional Healthcare System.

Third Quarter Strategic Corporate Highlights

 

    Announced the acquisition of Andera, a provider of cloud-based customer acquisition solutions for banks, extending Bottomline’s digital banking platform. Andera’s online account origination capabilities allow financial institutions to accelerate revenue growth through new customer engagement.

 

    Acquired Rationalwave Analytics, an early-stage predictive analytics company that will extend the innovation offered to customers using Bottomline’s data rich applications.

 

    The annual Legal Spend Management Customer Insights Exchange, a Bottomline Technologies sponsored forum for new technology, best practices and business strategies, was held in Nashville with significant industry representation including attendance by many of the largest P&C insurers.

 

    Deployed the latest release of Legal-X, further extending our market leading position with new dashboard features, self-service administration capabilities and additional functionality to simplify decision making and increase productivity.

 

    Announced the newest release of Bottomline Mobile Banking, an innovative mobile app that fully integrates with a company’s commercial banking and cash management solutions, allowing banks to strengthen relationships and build brand value.

~ more ~


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. These 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 expense, 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 as well as gains or losses on derivative instruments issued in conjunction with the notes. 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 charges we incur as a direct result of our acquisition and integration efforts. Other income tax expense for the quarter ended March 31, 2014 relates to the tax effects of certain adjustments made to our initial accounting for intangible assets recorded in connection with our acquisition of Sterci in August 2013. 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 the GAAP results to the non-GAAP results for the three and nine months ended March 31, 2014 and 2013 is as follows:

 

    

Three Months Ended

March 31,

   

Nine Months Ended

March 31,

 
     (in thousands)     (in thousands)  
     2014     2013     2014     2013  

GAAP net loss

   $ (4,310   $ (3,559   $ (17,623   $ (10,581

Amortization of intangible assets

     4,784        5,162        18,663        14,675   

Equity-based compensation

     6,225        4,591        16,792        13,532   

Acquisition and integration-related expenses

     1,062        3,165        4,635        7,445   

Restructuring expenses

     1,015        62        1,060        1,192   

Non-cash pension expense

     87        —          238        —     

Net (gain) loss on derivative instruments

     —          (482     —          4,435   

Non-cash interest expense

     2,871        2,695        8,479        3,242   

Other income tax expense

     978        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Core net income

   $ 12,712      $ 11,634      $ 32,244      $ 33,940   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP diluted shares

     38,687        36,503        37,889        36,081   

Impact of note hedges

     (866     —          (440     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Core diluted shares

     37,821        36,503        37,449        36,081   
  

 

 

   

 

 

   

 

 

   

 

 

 


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, 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, 2013 and any 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,
 
     2014     2013  

Revenues:

    

Subscriptions and transactions

   $ 35,095      $ 28,749   

Software licenses

     5,543        7,048   

Service and maintenance

     35,873        26,809   

Other

     1,741        1,838   
  

 

 

   

 

 

 

Total revenues

     78,252        64,444   

Cost of revenues:

    

Subscriptions and transactions

     17,866        16,851   

Software licenses

     505        952   

Service and maintenance

     13,942        11,081   

Other

     1,278        1,383   
  

 

 

   

 

 

 

Total cost of revenues

     33,591        30,267   
  

 

 

   

 

 

 

Gross profit

     44,661        34,177   

Operating expenses:

    

Sales and marketing

     19,433        16,215   

Product development and engineering

     10,685        8,454   

General and administrative

     8,718        6,554   

Amortization of intangible assets

     4,784        5,162   
  

 

 

   

 

 

 

Total operating expenses

     43,620        36,385   
  

 

 

   

 

 

 

Income (loss) from operations

     1,041        (2,208

Other expense, net

     (3,573     (2,652
  

 

 

   

 

 

 

Loss before income taxes

     (2,532     (4,860

Provision (benefit) for income taxes

     1,778        (1,301
  

 

 

   

 

 

 

Net loss

   $ (4,310   $ (3,559

Basic and diluted net loss per share

   $ (0.12   $ (0.10
  

 

 

   

 

 

 

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

     37,081        35,644   
  

 

 

   

 

 

 

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 charges):(1)

    

Core net income

   $ 12,712      $ 11,634   
  

 

 

   

 

 

 

Diluted core net income per share(2)

   $ 0.34      $ 0.32   
  

 

 

   

 

 

 

 

1)  Core net income excludes charges for amortization of intangible assets of $4,784 and $5,162, acquisition and integration-related expenses of $1,062 and $3,165, restructuring expenses of $1,015 and $62, equity-based compensation of $6,225 and $4,591, non-core charges associated with our convertible notes of $2,871 and $2,213 and other non-core charges of $1,065 and zero for the three months ended March 31, 2014 and 2013, respectively.
2)  Shares used in computing diluted core earnings per share were 37,821 and 36,503 for the three months ended March 31, 2014 and 2013, 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,
 
     2014     2013  

Revenues:

    

Subscriptions and transactions

   $ 101,489      $ 87,657   

Software licenses

     15,744        17,216   

Service and maintenance

     96,564        78,999   

Other

     5,109        5,870   
  

 

 

   

 

 

 

Total revenues

     218,906        189,742   

Cost of revenues:

    

Subscriptions and transactions

     49,964        47,075   

Software licenses

     1,263        1,978   

Service and maintenance

     40,434        35,352   

Other

     3,789        4,445   
  

 

 

   

 

 

 

Total cost of revenues

     95,450        88,850   
  

 

 

   

 

 

 

Gross profit

     123,456        100,892   

Operating expenses:

    

Sales and marketing

     53,699        46,643   

Product development and engineering

     28,363        25,186   

General and administrative

     25,328        19,582   

Amortization of intangible assets

     18,663        14,675   
  

 

 

   

 

 

 

Total operating expenses

     126,053        106,086   
  

 

 

   

 

 

 

Loss from operations

     (2,597     (5,194

Other expense, net

     (11,004     (8,108
  

 

 

   

 

 

 

Loss before income taxes

     (13,601     (13,302

Provision (benefit) for income taxes

     4,022        (2,721
  

 

 

   

 

 

 

Net loss

     (17,623     (10,581

Basic and diluted net loss per share

   $ (0.48   $ (0.30
  

 

 

   

 

 

 

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

     36,654        35,279   
  

 

 

   

 

 

 

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 charges):(1)

    

Core net income

   $ 32,244      $ 33,940   
  

 

 

   

 

 

 

Diluted core net income per share(2)

   $ 0.86      $ 0.94   
  

 

 

   

 

 

 

 

1)  Core net income excludes charges for amortization of intangible assets of $18,663 and $14,675, acquisition and integration-related expenses of $4,635 and $7,445, restructuring expenses of $1,060 and $1,192, equity-based compensation of $16,792 and $13,532, non-core charges associated with our convertible notes of $8,479 and $7,677 and other non-core charges of $238 and zero for the nine months ended March 31, 2014 and 2013, respectively.
2)  Shares used in computing diluted core earnings per share were 37,449 and 36,081 for the nine months ended March 31, 2014 and 2013, 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,
2014
    June 30,
2013
 

Assets

    

Current assets:

    

Cash, cash equivalents and marketable securities

   $ 224,788      $ 293,077   

Accounts receivable

     59,563        44,430   

Other current assets

     17,019        15,243   
  

 

 

   

 

 

 

Total current assets

     301,370        352,750   

Property and equipment, net

     30,982        23,631   

Goodwill and intangible assets, net

     330,477        192,068   

Other assets

     13,996        17,073   
  

 

 

   

 

 

 

Total assets

   $ 676,825      $ 585,522   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 11,427      $ 8,933   

Accrued expenses

     27,663        16,070   

Deferred revenue

     64,784        47,184   
  

 

 

   

 

 

 

Total current liabilities

     103,874        72,187   

Convertible senior notes

     146,173        138,582   

Deferred revenue, non-current

     12,156        9,104   

Deferred income taxes

     19,433        5,457   

Other liabilities

     14,834        3,443   
  

 

 

   

 

 

 

Total liabilities

     296,470        228,773   

Stockholders’ equity

    

Common stock

     39        38   

Additional paid-in-capital

     523,890        499,182   

Accumulated other comprehensive income (loss)

     4,751        (10,460

Treasury stock

     (20,579     (21,888

Accumulated deficit

     (127,746     (110,123
  

 

 

   

 

 

 

Total stockholders’ equity

     380,355        356,749   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 676,825      $ 585,522