EX-99.1 2 d383704dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

Bottomline Technologies Reports Third Quarter Results

Strong Growth in Subscription and Transaction Revenue Highlights Third Quarter

PORTSMOUTH, N.H. – April 27, 2017 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of financial technology which helps businesses pay and get paid, today reported financial results for the fiscal third quarter ended March 31, 2017.

Subscription and transaction revenues, which are primarily related to the company’s cloud platforms, increased 13% as compared to the third quarter of last year to $55.9 million, or 16% on a constant currency basis, which is calculated as discussed in the “Non-GAAP Financial Measures” section that follows. Revenues overall for the third quarter were $86.1 million.

GAAP net loss for the third quarter was $6.6 million compared to a net loss of $4.2 million for the third quarter of last year. GAAP net loss per share was $0.17 in the third quarter compared to $0.11 in the third quarter of last year.

Adjusted EBITDA for the third quarter was $19.1 million, or 22% of overall revenue compared to $19.4 million, or 23% of overall revenue for the third quarter of last year. Adjusted EBITDA is calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

Core net income for the third quarter was $9.0 million compared to $10.1 million for the third quarter of last year. Core earnings per share was $0.23 for the third quarter compared to $0.26 for the third quarter of last year. Core net income and core earnings per share exclude certain items as discussed in the “Non-GAAP Financial Measures” section that follows.

“We are pleased with the results for the third quarter and our outlook for the upcoming fiscal year.” said Rob Eberle, President and CEO of Bottomline Technologies. “The third quarter’s strong subscription and transaction revenue growth reflects the value customers are placing on our innovative payment product set and the solid performance against our profitability goals underscores our proven ability to execute. We are committed to driving shareholder value and confident that our strategic plan will deliver solid returns to our shareholders.”

Revenues for the nine months ended March 31, 2017 were $255.9 million compared to $255.2 million in the nine months ended March 31, 2016. Subscription and transaction revenues increased 13%, or 18% on a constant currency basis, to $163.6 million in the nine months ended March 31, 2017 from $144.3 million in the nine months ended March 31, 2016. GAAP net loss for the nine months ended March 31, 2017 was $27.5 million compared to $13.7 million for the nine months ended March 31, 2016. GAAP net loss per share was $0.73 for the nine months ended March 31, 2017 compared to $0.36 for the nine months ended March 31, 2016.

Core net income for the nine months ended March 31, 2017 was $27.1 million compared to $29.5 million for the nine months ended March 31, 2016. Core earnings per share for the nine months ended March 31, 2017 was $0.71 compared to $0.77 for the nine months ended March 31, 2016.

Third Quarter Customer Highlights

 

  •   18 leading institutions selected Paymode-X, Bottomline’s leading cloud-based payments automation platform.

 

  •   3 leading organizations, including QBE Legal, chose Bottomline’s cloud-based legal spend management solutions to automate, manage and control their legal spend.

 

  •   Signed 5 new Digital Banking deals, helping banks to compete and grow their corporate and business banking franchises by deploying innovative digital capabilities.

 

  •   Companies such as Leibert Corporation and Banque Cantonale du Valais selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.

 

  •   Organizations such as Regal Entertainment Group and Chesapeake Employers Insurance Co chose Bottomline’s corporate payment automation solutions to extend their payments capabilities and improve efficiencies.

Third Quarter Strategic Corporate Highlights

 

  •   Announced the appointment of Mr. Paul H. Hough to the Board of Directors. Mr. Hough is EVP and Deputy Chief Financial Officer of American Express. Mr. Hough’s thirty year career at American Express has included finance and general management experience in the U.S. and abroad. Currently, Mr. Hough has stewardship for financial management, risk finance, financial strategy and long range planning for the business and servicing groups. He is a member of American Express’ Operating Committee and Global Management Team.

 

  •   Launched a new payment fraud solution for members of the SWIFT payment network. The solution is part of a package of measures being offered by Bottomline to help customers meet security requirements from the SWIFT payments cooperative under its recently announced Customer Security Programme (CSP.). The new fraud solution goes beyond the mandatory controls to include real-time monitoring of user behavior and individual messages, which can stop potentially fraudulent payments before they take place.

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, core earnings per share, constant currency information and Adjusted EBITDA are non-GAAP financial measures.

Core net income and core earnings per share exclude certain items, specifically amortization of acquired intangible assets, goodwill impairment charges, stock-based compensation, acquisition and integration-related expenses, restructuring related costs, minimum pension liability adjustments, non-core charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other non-core or non-recurring gains or losses that arise from time to time.

Non-core charges associated with our convertible notes and revolving credit facility consist of the amortization of debt issuance and debt discount costs. Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with 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 acquisition and integration efforts. Global ERP system implementation costs relate to direct and incremental costs incurred in connection with our implementation of a new, global ERP solution and the related technology infrastructure.

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.

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.

Adjusted EBITDA represents our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization, and other charges, as noted in the reconciliation that follows.

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.

Non-GAAP Financial Measures (Continued)

 

Reconciliation of Core Net Income

A reconciliation of core net income to GAAP net loss for the three and nine months ended March 31, 2017 and 2016 is as follows:

 

     Three Months Ended
March 31,		      Nine Months Ended
March 31,		  
     2017      2016      2017      2016  
     (in thousands)  

GAAP net loss

    $ (6,624 )     $ (4,230 )     $ (27,478 )     $ (13,722 ) 

Amortization of acquired intangible assets

      6,006        7,226        18,381        21,720  

Goodwill impairment charge

      —          —          7,529        —    

Stock-based compensation expense

      7,354        7,628        24,209        23,094  

Acquisition and integration-related expenses

      501        305        2,272        574  

Restructuring expenses

      561        48        561        922  

Global ERP system implementation costs

      2,076        1,040        6,673        1,819  

Minimum pension liability adjustments

      264        66        805        140  

Amortization of debt issuance and debt discount costs

      3,592        3,265        10,418        9,639  

Non-recurring tax benefit

      —          —          (4,461 )       —    

Tax effects on non-GAAP income

      (4,726 )       (5,269 )       (11,856 )       (14,640 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Core net income

    $ 9,004      $ 10,079      $ 27,053      $ 29,546  
  

 

 

     

 

 

     

 

 

     

 

 

  

Reconciliation of Diluted Core Earnings per Share

A reconciliation of our diluted core earnings per share to our GAAP diluted net loss per share for the three and nine months ended March 31, 2017 and 2016 is as follows:

 

     Three Months Ended
March 31,		      Nine Months Ended
March 31,		  
     2017      2016      2017      2016  

GAAP diluted net loss per share

    $ (0.17 )     $ (0.11 )     $ (0.73 )     $ (0.36 ) 

Plus:

            

Amortization of acquired intangible assets

      0.16        0.19        0.48        0.56  

Goodwill impairment charge

      —          —          0.20        —    

Stock-based compensation expense

      0.19        0.20        0.64        0.61  

Acquisition and integration-related expenses

      0.01        0.01        0.06        0.01  

Restructuring expenses

      0.01        —          0.01        0.02  

Global ERP system implementation costs

      0.05        0.03        0.18        0.05  

Minimum pension liability adjustments

      0.01        —          0.02        —    

Amortization of debt issuance and debt discount costs

      0.09        0.08        0.27        0.25  

Non-recurring tax benefit

      —          —          (0.12 )       —    

Tax effects on non-GAAP income

      (0.12 )       (0.14 )       (0.30 )       (0.37 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Diluted core earnings per share

    $ 0.23      $ 0.26      $ 0.71      $ 0.77  
  

 

 

     

 

 

     

 

 

     

 

 

  

Non-GAAP Financial Measures (Continued)

 

A reconciliation of our non-GAAP weighted average shares used in computing diluted core earnings per share to our GAAP weighted average shares used in computing diluted net loss per share for the three and nine months ended March 31, 2017 and 2016 is as follows:

 

     Three Months Ended
March 31,		      Nine Months Ended
March 31,		  
     2017      2016      2017      2016  

Numerator:

            

Core net income

    $ 9,004      $ 10,079      $ 27,053      $ 29,546  
  

 

 

     

 

 

     

 

 

     

 

 

  

Denominator:

            

Weighted average shares used in computing diluted net loss per share for GAAP

      37,965        38,101        37,891        37,959  

Impact of dilutive securities (stock options, restricted stock awards and employee stock purchase plan) (1)

      379        556        187        553  
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted average shares used in computing diluted core earnings per share

      38,344        38,657        38,078        38,512  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(1)  These securities are anti-dilutive on a GAAP basis as a result of our net loss, but are considered dilutive on a non-GAAP basis in periods where we report non-GAAP net income.

Constant Currency Reconciliation

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
March 31,		                     
     2017      2016      GAAP     % Increase
Impact from
Currency		     Constant
Rates (2)		  
     (in thousands)                     

Subscription and Transaction Revenues

    $ 55,851      $ 49,488        13 %      3 %      16 % 

Total Revenues

      86,099        86,233        —   %      4 %      4 % 
     Nine Months Ended
March 31,		                     
     2017      2016      GAAP     % Increase
Impact from
Currency		     Constant
Rates (2)		  
     (in thousands)                     

Subscription and Transaction Revenues

    $ 163,627      $ 144,317        13 %      5 %      18 % 

Total Revenues

      255,911        255,162        —   %      5 %      5 % 

 

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

Non-GAAP Financial Measures (Continued)

 

Reconciliation of Adjusted EBITDA

A reconciliation of our adjusted EBITDA to GAAP net loss for the three and nine months ended March 31, 2017 and 2016 is as follows:

 

     Three Months Ended
March 31,		      Nine Months Ended
March 31,		  
     2017      2016      2017      2016  

GAAP net loss

    $ (6,624 )     $ (4,230 )     $ (27,478 )     $ (13,722 ) 

Adjustments:

            

Other expense, net

      4,479        3,882        12,596        11,409  

Provision for (benefit from) income taxes

      (232 )       (7 )       (4,029 )       1,246  

Depreciation and amortization

      4,684        3,464        12,925        9,789  

Amortization of acquired intangible assets

      6,006        7,226        18,381        21,720  

Goodwill impairment charge

      —          —          7,529        —    

Stock-based compensation expense

      7,354        7,628        24,209        23,094  

Acquisition and integration-related expenses

      501        305        2,272        574  

Restructuring expenses

      561        48        561        922  

Minimum pension liability adjustments

      264        66        805        140  

Global ERP system implementation costs

      2,076        1,040        6,673        1,819  
  

 

 

     

 

 

     

 

 

     

 

 

  

Adjusted EBITDA

    $ 19,069      $ 19,422      $ 54,444      $ 56,991  
  

 

 

     

 

 

     

 

 

     

 

 

  

Reconciliation of Adjusted EBITDA as a percent of Revenue

A reconciliation of adjusted EBITDA as a percent of revenue to GAAP net loss as a percent of revenue the three and nine months ended March 31, 2017 and 2016 is as follows:

 

     Three Months Ended
March 31,		     Nine Months Ended
March 31,		  
     2017     2016     2017     2016  

GAAP net loss as a percent of revenue

      (8 %)      (5 %)      (11 %)      (5 %) 

Adjustments:

         

Other expense, net

      5 %      5 %      5 %      4 % 

Provision for (benefit from) income taxes

      0 %      0 %      (2 %)      0 % 

Depreciation and amortization

      5 %      4 %      5 %      4 % 

Amortization of acquired intangible assets

      7 %      8 %      7 %      9 % 

Goodwill impairment charge

      0 %      0 %      3 %      0 % 

Stock-based compensation expense

      9 %      10 %      10 %      9 % 

Acquisition and integration-related expenses

      1 %      0 %      1 %      0 % 

Restructuring expenses

      1 %      0 %      0 %      0 % 

Minimum pension liability adjustments

      0 %      0 %      0 %      0 % 

Global ERP system implementation costs

      2 %      1 %      3 %      1 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA as a percent of revenue

      22 %      23 %      21 %      22 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) helps businesses pay and get paid. We make complex business payments simple, secure and seamless by providing a trusted and easy-to-use set of cloud-based business payment, digital banking, fraud prevention and financial document 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 our website at 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.

In connection with this earning’s release and our associated conference call, we will be posting additional material financial information (such as financial results, non-GAAP financial projections and non-GAAP to GAAP reconciliations) within the “Investors” section of our website at www.bottomline.com/us/about/investors.

Cautionary Language

This press release contains “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 strategic plans, achieve future growth and profitability, expand margins and increase shareholder value. 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, 2016 and the subsequently filed Form 10-Qs and Form 8-Ks 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:

Rick Booth

Bottomline Technologies

603-501-6270

rbooth@bottomline.com

Bottomline Technologies

Unaudited Condensed Consolidated Statement of Operations

(in thousands, except per share amounts)

 

     Three Months Ended
March 31,		     Nine Months Ended
March 31,		  
     2017     2016     2017     2016  

Revenues:

         

Subscriptions and transactions

    $ 55,851     $ 49,488     $ 163,627     $ 144,317  

Software licenses

      2,735       5,777       8,348       15,754  

Service and maintenance

      26,344       29,100       79,937       89,797  

Other

      1,169       1,868       3,999       5,294  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenues

      86,099       86,233       255,911       255,162  

Cost of revenues:

         

Subscriptions and transactions

      25,867       22,461       74,535       64,568  

Software licenses

      265       165       589       741  

Service and maintenance

      12,607       13,276       39,308       39,545  

Other

      835       1,317       2,891       3,807  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total cost of revenues

      39,574       37,219       117,323       108,661  
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      46,525       49,014       138,588       146,501  

Operating expenses:

         

Sales and marketing

      18,976       20,419       57,176       62,854  

Product development and engineering

      13,057       11,934       39,074       34,959  

General and administrative

      10,863       9,790       35,339       28,035  

Amortization of intangible assets

      6,006       7,226       18,381       21,720  

Goodwill impairment charge

      —         —         7,529       —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      48,902       49,369       157,499       147,568  
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss from operations

      (2,377 )      (355 )      (18,911 )      (1,067 ) 

Other expense, net

      (4,479 )      (3,882 )      (12,596 )      (11,409 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before income taxes

      (6,856 )      (4,237 )      (31,507 )      (12,476 ) 

Income tax provision (benefit)

      (232 )      (7 )      (4,029 )      1,246  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss

    $ (6,624 )    $ (4,230 )    $ (27,478 )    $ (13,722 ) 

Basic and diluted net loss per share:

    $ (0.17 )    $ (0.11 )    $ (0.73 )    $ (0.36 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

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

      37,965       38,101       37,891       37,959  
  

 

 

    

 

 

    

 

 

    

 

 

  

Bottomline Technologies

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

     March 31,     June 30,  
     2017     2016  

ASSETS

     

Current assets:

     

Cash, cash equivalents and marketable securities

    $ 140,940     $ 132,383  

Accounts receivable

      62,333       61,773  

Other current assets

      17,678       22,385  
  

 

 

    

 

 

  

Total current assets

      220,951       216,541  

Property and equipment, net

      53,909       51,029  

Goodwill and intangible assets, net

      336,231       366,958  

Other assets

      17,945       16,682  
  

 

 

    

 

 

  

Total assets

    $ 629,036     $ 651,210  
  

 

 

    

 

 

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

    $ 9,268     $ 10,218  

Accrued expenses

      26,210       27,512  

Deferred revenue

      77,384       74,332  

Convertible senior notes

      180,141       —    
  

 

 

    

 

 

  

Total current liabilities

      293,003       112,062  

Convertible senior notes

      —         169,857  

Deferred revenue, non current

      20,795       19,086  

Deferred income taxes

      15,008       28,147  

Other liabilities

      27,186       27,271  
  

 

 

    

 

 

  

Total liabilities

      355,992       356,423  

Stockholders’ equity

     

Common stock

      42       42  

Additional paid-in-capital

      616,119       591,800  

Accumulated other comprehensive loss

      (43,955 )      (37,668 ) 

Treasury stock

      (88,129 )      (75,832 ) 

Accumulated deficit

      (211,033 )      (183,555 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      273,044       294,787  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 629,036     $ 651,210