Bottomline Technologies Reports Record Second Quarter Results

  Bottomline Technologies Reports Record Second Quarter Results

          Record Subscription and Transaction Revenue Drives Growth

Business Wire

PORTSMOUTH, N.H. -- February 4, 2013

Bottomline Technologies (NASDAQ: EPAY), a leading provider of cloud-based
payment, invoice and banking solutions, today reported financial results for
the second quarter ended December 31, 2012.

Revenues for the second quarter were $63.6 million, an increase of $8.5
million, or 15%, from the second quarter of last year. Subscription and
transaction revenues, which are primarily related to the company’s banking,
legal spend management and Paymode-X^® cloud-based applications, increased 59%
from the second quarter of last year to $30.4 million.

Gross margin for the second quarter was $32.9 million, an increase of $2.4
million from the second quarter of last year. Net loss for the second quarter
was $7.0 million, or net loss per share of $0.20.

Core net income for the second quarter was $11.8 million. Core net income
excludes acquisition-related expenses (including amortization of intangible
assets) of $7.8 million, restructuring expenses of $0.8 million, equity-based
compensation of $4.7 million and non-core charges of $5.5 million associated
with the convertible notes we issued during the quarter. Core earnings per
share was $0.33.

“We had an outstanding quarter with record revenues, record subscription and
transaction revenues and record levels in several of our other key financial
performance metrics, and significant advancement of our strategic plan. Our
focus on cloud-based offerings is clearly paying off as evidenced by
subscription and transaction revenues of over $30 million,” said Rob Eberle,
President and CEO of Bottomline Technologies. “Strategically, we saw
significant advancement in each of our major growth drivers during the
quarter. We also completed a convertible debt offering on very favorable terms
raising $167 million in additional capital. The combination of our continued
execution, the strategic advancement of our growth plan and the additional
capital on our balance sheet is expected to drive future predictable and
profitable revenue growth for Bottomline.”

Revenues for the six months ended December 31, 2012 increased 16% to $125.3
million as compared with $107.6 million last year. Subscription and
transaction revenues increased 61% to $58.9 million in the six months ended
December 31, 2012. Net loss for the six months ended December 31, 2012 was
$7.0 million, or $0.20 per share.

Core net income for the six months ended December 31, 2012 was $22.3 million.
Core net income excludes acquisition-related expenses (including amortization
of intangible assets) of $13.8 million, restructuring expenses of $1.1
million, equity-based compensation of $8.9 million and non-core charges of
$5.5 million associated with the convertible notes we issued in December 2012.
Core earnings per share was $0.62.

Second Quarter Customer Highlights

  *Chosen by or expanded relationships with ten leading companies, including
    Aspen Insurance, Church Mutual Insurance Co., Energy Investors Funds,
    Hastings Mutual Insurance Co., Rockford Mutual Insurance Co., Roins
    Financial Services Limited, Southern California Auto Group, Syncora
    Guarantee, Inc. and Torus Insurance Company, to provide Bottomline's
    cloud-based legal spend management solutions to automate, manage and
    control their legal spend.
  *Leading organizations, such as Ally Financial, British Telecommunications
    Plc, American Express Travel Related Services Company, Cigna Corp.,
    Harvard Pilgrim Health Care, Milacron, Inc., Morgan Stanley, Ohio Valley
    Electric Corp., Omnicare, Inc., SCF Arizona, Schlumberger Technology
    Corp., The TJX Companies, Inc., Virgin Atlantic Airways Ltd. and Wheels,
    Inc., chose Bottomline’s payment automation solutions.
  *Selected for Bottomline’s leading SWIFT Access Service by customers such
    as The Bank of Tokyo-Mitsubishi UFJ Ltd., BP International Ltd., The
    Capital Markets Co. (UK) Ltd., FIBI Bank (UK) Plc, Lloyds TSB Bank Plc and
    London Metal Exchange.
  *Deepened relationships in the healthcare vertical with customers such as
    Baptist Healthcare System, Catholic Healthcare Initiatives, Cleveland
    Clinic Foundation, Harvard Pilgrim Health Care, Meridian Health System,
    San Joaquin General Hospital, Sutter Health and Temple University Health
    System.
  *Selected by Alcon Laboratories, Bushnell, Daimler Chrysler, Golden State
    Water Co., Henry Company, Mitsubishi Materials USA, Pattern Energy Group,
    Post Foods, Railworks Corporation, Red Diamond, Tiffany & Co. and UBS AG
    to provide transaction document automation solutions.

Second Quarter Strategic Corporate Highlights

  *Successfully closed an upsized 1.5% convertible notes offering that
    resulted in net proceeds of approximately $167 million.
  *Announced that Paymode-X^®, the company’s business-to-business settlement
    network, has surpassed 200,000 vendors and expanded payment capabilities
    to 23 currencies.
  *Selected by Aite Group in its 2012 Cash Management Vendor Analysis for the
    “Greatest Global Success” and “Vendor to Watch” awards and by Treasury
    Management International for its 2012 TMI Award for Innovation and
    Excellence in Payments.
  *Announced the general availability of C-Series^® version 3.5, the latest
    C-Series release for corporate payments and cash management.
  *Recognized for the fifth year in a row as a “Best Company to Work For” by
    Business NH Magazine.

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-related expenses (including acquisition-related earn-outs),
restructuring related costs and non-core charges associated with the
convertible notes we issued in December 2012. Non-core charges associated with
our convertible notes consist of non-cash interest expense as well as gains or
losses on derivative instruments arising from the notes. Acquisition-related
expenses include legal and professional fees and other 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 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 in respect of 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. A reconciliation of the GAAP results to
the non-GAAP results for the three and six months ended December 31, 2012 and
2011 is as follows:

                            Three Months Ended         Six Months Ended
                                                  
                            December 31,               December 31,
                            (in thousands)             (in thousands)
                             2012       2011     2012       2011
GAAP net income (loss)      $ (7,040 )   $ 2,464   $ (7,022 )   $ 4,205
Amortization of               5,201          3,433       9,513          7,317
intangible assets
Equity-based                  4,734          3,373       8,941          6,538
compensation
Acquisition-related           2,565          177         4,280          301
expenses
Restructuring expenses        834            24          1,130          51
Net loss on derivative        4,917          -           4,917          -
instruments
Non-cash interest            547        -        547        -
expense
Core net income             $ 11,758    $ 9,471   $ 22,306    $ 18,412
                                                                        

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) provides cloud-based payment, invoice
and 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, C-Series 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, including statements
reflecting our expectations about our ability to drive future predictable and
profitable revenue growth. 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, 2012 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,
                                                        2012       2011
Revenues:                                                          
Subscriptions and transactions                         $ 30,361       $ 19,054
Software licenses                                        5,469          4,402
Service and maintenance                                  25,735         29,667
Equipment and supplies                                  2,044      1,971
                                                                      
Total revenues                                           63,609         55,094
                                                                      
Cost of revenues:
Subscriptions and transactions                           16,573         9,215
Software licenses                                        617            529
Service and maintenance                                  11,977         13,239
Equipment and supplies                                  1,540      1,565
                                                                      
Total cost of revenues                                  30,707     24,548
                                                                      
Gross profit                                             32,902         30,546
                                                                      
Operating expenses:
Sales and marketing                                      15,620         11,430
Product development and engineering                      8,426          5,932
General and administrative                               6,467          4,912
Amortization of intangible assets                       5,201      3,433
                                                                      
Total operating expenses                                35,714     25,707
                                                                      
Income (loss) from operations                            (2,812 )       4,839
                                                                      
Other income (expense), net                             (5,502 )    28
                                                                      
Income (loss) before income taxes                        (8,314 )       4,867
Provision (benefit) for income taxes                    (1,274 )    2,403
                                                                      
Net income (loss)                                      $ (7,040 )     $ 2,464
                                                                      
Basic net income (loss) per share attributable to      $ (0.20  )   $ 0.07
common stockholders
Diluted net income (loss) per share attributable       $ (0.20  )   $ 0.07
to common stockholders
                                                                      
Shares used in computing basic net income (loss)         35,284         34,160
per share:
Shares used in computing diluted net income (loss)      35,284     35,090
per share:
                                                                      
Core net income (excludes amortization of
intangible assets, acquisition-
related expenses, restructuring expenses, stock
compensation expense
and non-core charges associated with our
convertible notes):^(1)
Core net income                                        $ 11,758    $ 9,471
Diluted core net income per share^(2)                  $ 0.33      $ 0.27

1) Core net income excludes charges for amortization of intangible assets of
$5,201 and $3,433, acquisition-related expenses of $2,565 and $177,
restructuring expenses of $834 and $24, equity-based compensation of $4,734
and $3,373 and non-core charges associated with our convertible notes of
$5,464 and zero for the three months ended December 31, 2012 and 2011,
respectively.

2) Shares used in computing diluted core earnings per share were 36,115 and
35,090 for the three months ended December 31, 2012 and 2011, respectively.

                                                
                                                   
Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                                                   
                                                   Six Months Ended
                                                   December 31,
                                                    2012        2011    
Revenues:                                                       
Subscriptions and transactions                     $ 58,908        $ 36,648
Software licenses                                    10,168          8,435
Service and maintenance                              52,190          58,516
Equipment and supplies                              4,032       3,971   
                                                                   
Total revenues                                       125,298         107,570
                                                                   
Cost of revenues:
Subscriptions and transactions                       30,844          18,300
Software licenses                                    1,026           964
Service and maintenance                              24,271          25,399
Equipment and supplies                              3,062       3,136   
                                                                   
Total cost of revenues                              59,203      47,799  
                                                                   
Gross profit                                         66,095          59,771
                                                                   
Operating expenses:
Sales and marketing                                  29,808          22,672
Product development and engineering                  16,732          11,864
General and administrative                           13,028          9,845
Amortization of intangible assets                   9,513       7,317   
                                                                   
Total operating expenses                            69,081      51,698  
                                                                   
Income (loss) from operations                        (2,986  )       8,073
                                                                   
Other expense, net                                  (5,456  )    (85     )
                                                                   
Income (loss) before income taxes                    (8,442  )       7,988
Provision (benefit) for income taxes                (1,420  )    3,783   
                                                                   
Net income (loss)                                  $ (7,022  )     $ 4,205
                                                                   
Basic net income (loss) per share attributable     $ (0.20   )   $ 0.12    
to common stockholders
Diluted net income (loss) per share                $ (0.20   )   $ 0.12    
attributable to common stockholders
                                                                   
Shares used in computing basic net income            35,097          33,935
(loss) per share:
Shares used in computing diluted net income         35,097      34,966  
(loss) per share:
                                                                   
Core net income (excludes amortization of
intangible assets, acquisition-
related expenses, restructuring expenses,
stock compensation expense
and non-core charges associated with our
convertible notes):^(1)
Core net income                                    $ 22,306     $ 18,412  
Diluted core net income per share^(2)              $ 0.62       $ 0.53    

1) Core net income excludes charges for amortization of intangible assets of
$9,513 and $7,317, acquisition-related expenses of $4,280 and $301,
restructuring expenses of $1,130 and $51, equity-based compensation of $8,941
and $6,538 and non-core charges associated with our convertible notes of
$5,464 and zero for the six months ended December 31, 2012 and 2011,
respectively.

2) Shares used in computing diluted core earnings per share were 35,871 and
34,966 for the six months ended December 31, 2012 and 2011, respectively.

                                                              
                                                                   
Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
                                                                   
                                                  December 31,   June 30,
                                                  2012             2012
                                                                   
Assets
Current assets:
Cash, cash equivalents and short-term             $ 280,891        $ 124,862
investments
Accounts receivable                                 48,916           45,344
Other current assets                               17,009       15,465  
                                                                   
Total current assets                                346,816          185,671
                                                                   
Property and equipment, net                         22,461           19,756
Intangible assets, net                              206,763          177,941
Derivative instruments                              47,817           -
Other assets                                       14,405       9,003   
                                                                   
Total assets                                      $ 638,262     $ 392,371 
                                                                   
Liabilities and stockholders' equity
Current liabilities:
Accounts payable                                  $ 9,733          $ 8,841
Accrued expenses                                    16,793           17,170
Deferred revenue                                   45,762       41,304  
                                                                   
Total current liabilities                           72,288           67,315
                                                                   
Convertible senior notes                            133,741          -
Derivative instruments                              64,009           -
Deferred revenue, non-current                       8,365            7,072
Deferred income taxes                               6,574            1,641
Other liabilities                                  3,042        2,157   
                                                                   
Total liabilities                                   288,019          78,185
                                                                   
Stockholders' equity
Common stock                                        38               37
Additional paid-in-capital                          478,737          438,732
Accumulated other comprehensive loss                (3,224   )       (6,564  )
Treasury stock                                      (22,558  )       (22,291 )
Accumulated deficit                                (102,750 )    (95,728 )
                                                                   
Total stockholders' equity                         350,243      314,186 
                                                                   
Total liabilities and stockholders' equity        $ 638,262     $ 392,371 

Contact:

Bottomline Technologies
Kevin Donovan, 603-501-5240
kdonovan@bottomline.com
 
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