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Bottomline Technologies Reports Second Quarter Results

PORTSMOUTH, N.H., Jan. 29, 2015 (GLOBE NEWSWIRE) -- Bottomline Technologies (Nasdaq:EPAY), a leading provider of cloud-based payment, invoice and digital banking solutions, today reported financial results for the second quarter ended December 31, 2014.

Revenues for the second quarter were $82.2 million, an increase of $8.8 million, or 12%, from the second quarter of last year. Subscription and transaction revenues, which are primarily related to the company's cloud platforms, increased 23% from the second quarter of last year to $42.9 million.

Gross margin for the second quarter was $48.1 million, an increase of $7.1 million from the second quarter of last year. Net loss for the second quarter was $2.0 million. Net loss per share was $0.05 in the second quarter compared to $0.20 in the second quarter of last year.

Core net income for the second quarter was $15.4 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $8.3 million, equity-based compensation of $6.1 million and non-cash interest expense of $3.0 million associated with our convertible notes. Core earnings per share was $0.41 in the second quarter compared to $0.28 in the second quarter of last year.

"We had a strong second quarter with record setting revenue, subscription and transaction revenue and other key metrics" said Rob Eberle, President and CEO of Bottomline Technologies. "Our results for the quarter confirm our strategic direction and plan. The investments we are making across key product sets will further extend our competitive advantage and expand our market opportunity. Our growing customer base, increased revenue opportunities and focus on delivering innovative, market-leading solutions, including our recently announced cyber fraud and risk management platform, position us well for continued future growth."

Revenues for the six months ended December 31, 2014 increased 16% to $163.6 million as compared with $140.7 million last year. Subscription and transaction revenues increased 26% to $83.7 million in the six months ended December 31, 2014. Net loss for the six months ended December 31, 2014 was $5.2 million. Net loss per share was $0.14 for the six months ended December 31, 2014 compared to $0.37 for the six months ended December 31, 2013.

Core net income for the six months ended December 31, 2014 was $29.4 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $15.9 million, equity-based compensation of $12.4 million, restructuring expenses of $0.3 million and non-cash interest expense of $6.0 million associated with our convertible notes. Core earnings per share was $0.77 for the six months ended December 31, 2014 compared to $0.55 for the six months ended December 31, 2013.

Second Quarter Customer Highlights

  • Selected by sixteen institutions to provide Paymode-X, Bottomline's leading cloud-based payments automation platform.
  • Chosen by eight leading organizations, including RSUI Group, Inc. and Germania Insurance Company, to provide Bottomline's cloud-based legal spend management solutions to automate, manage and control their legal spend.
  • Signed eleven new Digital Banking deals, enabling the banks to improve their digital presence and increase customer acquisition through digital channels.
  • Leading institutions, such as Shelter Insurance Company, John Muir Physician Network, and Steria Ltd, chose Bottomline's payment automation solutions to extend their payments capabilities and improve efficiencies.
  • Companies such as London Stock Exchange and British Telecom selected Bottomline's Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.

Second Quarter Strategic Corporate Highlights

  • Named a member of the FinTech Forward 100 list of the leading financial technology providers in the world. The company was also recognized as one of the top 10 digital service companies within the FinTech Forward list.
  • Appointed Ken D'Amato to the company's Board of Directors. Mr. D'Amato is currently the Chief Administrative Officer and Managing Director, Global Equity and Fixed Income, at Manulife Asset Management.

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. 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 six months ended December 31, 2014 and 2013 is as follows:

Three Months Ended
December 31,
Six Months Ended
December 31,
(in thousands) (in thousands)
2014 2013 2014 2013
GAAP net loss $ (1,962) $ (7,265) $ (5,230) $ (13,313)
Amortization of intangible assets 7,000 8,174 14,184 13,879
Equity-based compensation 6,098 5,535 12,429 10,567
Acquisition and integration-related expenses 1,280 903 1,707 3,573
Restructuring expenses (benefit) (14) (10) 272 45
Non-cash pension expense 24 151 21 151
Non-cash interest expense 3,012 2,827 5,977 5,608
Core net income $ 15,438 $ 10,315 $ 29,360 $ 20,510
GAAP diluted shares 37,996 37,911 38,033 37,491
Impact of note hedges -- (455) -- (227)
Core diluted shares 37,996 37,456 38,033 37,264

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 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.

Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
December 31,
2014 2013
Revenues:
Subscriptions and transactions $ 42,865 $ 34,845
Software licenses 5,423 5,463
Service and maintenance 32,180 31,369
Other 1,757 1,728
Total revenues 82,225 73,405
Cost of revenues:
Subscriptions and transactions 19,789 16,754
Software licenses 372 392
Service and maintenance 12,688 13,973
Other 1,264 1,285
Total cost of revenues 34,113 32,404
Gross profit 48,112 41,001
Operating expenses:
Sales and marketing 19,545 18,024
Product development and engineering 11,030 9,271
General and administrative 8,803 8,124
Amortization of intangible assets 7,000 8,174
Total operating expenses 46,378 43,593
Income (loss) from operations 1,734 (2,592)
Other expense, net (3,587) (3,391)
Loss before income taxes (1,853) (5,983)
Provision for income taxes 109 1,282
Net loss $ (1,962) $ (7,265)
Basic and diluted net loss per share $ (0.05) $ (0.20)
Shares used in computing basic and diluted net loss per share: 37,759 36,667
Core net income (excludes amortization of intangible assets, acquisition and integration-related expenses, restructuring benefit, equity-based compensation expense, non-core charges associated with our convertible notes and other non-core items):(1)
Core net income $ 15,438 $ 10,315
Diluted core net income per share(2) $ 0.41 $ 0.28

1) Core net income excludes charges for amortization of intangible assets of $7,000 and $8,174, acquisition and integration-related expenses of $1,280 and $903, restructuring benefit of $14 and $10, equity-based compensation of $6,098 and $5,535, non-cash pension expense of $24 and $151 and non-core charges associated with our convertible notes of $3,012 and $2,827 for the three months ended December 31, 2014 and 2013, respectively.

2) Shares used in computing diluted core earnings per share were 37,996 and 37,456 for the three months ended December 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)
Six Months Ended
December 31,
2014 2013
Revenues:
Subscriptions and transactions $ 83,736 $ 66,394
Software licenses 11,081 10,201
Service and maintenance 65,140 60,691
Other 3,611 3,368
Total revenues 163,568 140,654
Cost of revenues:
Subscriptions and transactions 39,117 32,098
Software licenses 767 758
Service and maintenance 25,972 26,492
Other 2,570 2,511
Total cost of revenues 68,426 61,859
Gross profit 95,142 78,795
Operating expenses:
Sales and marketing 38,747 34,266
Product development and engineering 22,711 17,678
General and administrative 17,080 16,610
Amortization of intangible assets 14,184 13,879
Total operating expenses 92,722 82,433
Income (loss) from operations 2,420 (3,638)
Other expense, net (7,234) (7,431)
Loss before income taxes (4,814) (11,069)
Provision for income taxes 416 2,244
Net loss (5,230) (13,313)
Basic and diluted net loss per share $ (0.14) $ (0.37)
Shares used in computing basic and diluted net loss per share: 37,703 36,441
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 $ 29,360 $ 20,510
Diluted core net income per share(2) $ 0.77 $ 0.55

1) Core net income excludes charges for amortization of intangible assets of $14,184 and $13,879, acquisition and integration-related expenses of $1,707 and $3,573, restructuring expenses of $272 and $45, equity-based compensation of $12,429 and $10,567, non-cash pension expense of $21 and $151 and non-core charges associated with our convertible notes of $5,977 and $5,608 for the six months ended December 31, 2014 and 2013, respectively.

2) Shares used in computing diluted core earnings per share were 38,033 and 37,264 for the six months ended December 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)
December 31, June 30,
2014 2014
Assets
Current assets:
Cash, cash equivalents and marketable securities $ 187,283 $ 191,478
Accounts receivable 56,589 61,064
Other current assets 25,340 28,238
Total current assets 269,212 280,780
Property and equipment, net 39,276 35,901
Goodwill and intangible assets, net 341,433 372,495
Other assets 10,009 11,167
Total assets $ 659,930 $ 700,343
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 11,158 $ 16,283
Accrued expenses 21,686 25,542
Deferred revenue 57,948 66,571
Total current liabilities 90,792 108,396
Convertible senior notes 154,180 148,795
Deferred revenue, non-current 16,040 15,997
Deferred income taxes 21,691 23,537
Other liabilities 13,348 16,192
Total liabilities 296,051 312,917
Stockholders' equity
Common stock 40 39
Additional paid-in-capital 543,761 530,377
Accumulated other comprehensive income (loss) (15,235) 6,816
Treasury stock (30,230) (20,579)
Accumulated deficit (134,457) (129,227)
Total stockholders' equity 363,879 387,426
Total liabilities and stockholders' equity $ 659,930 $ 700,343

CONTACT: Media Contact: Kevin Donovan Bottomline Technologies 603-501-5240 kdonovan@bottomline.com

Source:Bottomline Technologies, Inc.