Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the second quarter ended December 31, 2011.

Revenues for the second quarter were $55.1 million, an increase of $10.8 million, or 24%, from the second quarter of last year. Subscriptions and transactions revenue increased 46% from the second quarter of last year to $19.1 million.

Gross margin for the second quarter was $30.5 million, an increase of $5.3 million from the second quarter of last year. Net income for the second quarter was $2.5 million, or net income per share of $0.07.

Core net income for the second quarter was $9.5 million. Core net income increased $1.3 million from the second quarter of last year. Core net income excludes acquisition-related expenses, including amortization of intangible assets, of $3.6 million and equity-based compensation of $3.4 million. Core earnings per share was $0.27.

"We are pleased to report a very good quarter highlighted by strong financial performance and outstanding sales results," said Rob Eberle, President and CEO of Bottomline Technologies. "Driven by 46% growth in subscription and transaction revenues and record orders, our second quarter revenue increased 24% to $55.1 million. The leadership position of our SaaS-based offerings was evident particularly in the record thirteen new legal spend management customers we signed during the quarter. We continue to focus our time, attention and investment on innovative cloud-based solutions which provide exceptional value to our customers and compelling economics for Bottomline. With the continued advancement of our strategic plan, we are excited about our long term prospects."

Revenues for the six months ended December 31, 2011 increased 25% to $107.6 million as compared with $86.3 million in the same period last year. Net income for the six months ended December 31, 2011 was $4.2 million, or net income per share of $0.12.

Core net income for the six months ended December 31, 2011 was $18.4 million after excluding acquisition-related expenses of $7.6 million, restructuring expenses of $0.1 million and equity-based compensation of $6.5 million. Core earnings per share was $0.53 for the six months ended December 31, 2011.

Second Quarter Customer Highlights

  • Chosen by thirteen leading insurance companies and corporations, including Western Guaranty Fund Services, FCCI Insurance Group and Mountain States Insurance Group, to provide Bottomline's SaaS-based technology to automate, manage and control their legal spend.
  • Selected by a leading global bank to provide innovative cash management capabilities to improve its competitive position and better serve its clients.
  • Leading organizations, including Aviva Life and Annuity Company, CEVA Logistics, CIGNA, Constellation Energy Group, EGA Insurance, Herbalife, Lions Club International, L'Oreal, Marks & Spencer Financial Services, National Steel & Shipbuilding, Nationwide Building Society, Oppenheimer & Co., Philadelphia Insurance, The Related Companies, Sampora Company Limited, State Street, Teck Resources, Travelex America and Turner Industries Group, chose Bottomline's payment automation solutions.
  • Selected for SWIFT connectivity and expertise by leading organizations including Barclays Bank, Manulife Financial, Diageo Great Britain, F & C Management Limited, Golden Crown Finance, Mediolanum Asset Management Limited, Moneynet International Money Transfers, Origo Secure Internet Services, Royal Skandia, The Bank of Tokyo-Mitsubishi UFJ, The Co-Operative Bank and VocaLink.
  • Deepened relationships in the healthcare vertical with customers including Asante Health Systems, San Joaquin General Hospital, John Muir Health, Novartis Pharmaceuticals and Peconic Bay Medical Center.

Second Quarter Strategic Corporate Highlights

  • Announced the acquisition of Logical Progression, an early stage company focused on the development of mobile solutions for the healthcare industry, and IDT Ltd., a longtime partner and reseller of Bottomline's document automation solutions.
  • Named a "Leader in Innovation" in Transaction Banking by Financial-i magazine.
  • Hosted a Legal Spend Management Customer Symposium to foster collaboration among the many leading organizations who utilize the company's legal spend management solutions.
  • For the sixth consecutive year, the company was named to the FinTech 100, an annual ranking of top technology providers completed by American Banker and Bank Technology News.
  • Named a "Best Company to Work For" by Business NH Magazine. This was the fourth year in a row the company has been recognized as a "Best Company to Work For" finalist.

Bottomline has presented supplemental non-GAAP financial measures as part of this earnings release. Core net income and core earnings per share are non-GAAP financial measures. The 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) and restructuring related costs. The presentation of this non-GAAP financial information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes 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. Bottomline's 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 the 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 month periods ended December 31, 2011 and 2010 is as follows:

   
Three Months Ended

December 31,

Six Months Ended

December 31,

(in thousands)   (in thousands)
  2011     2010     2011     2010
GAAP net income $ 2,464   $ 2,065 $ 4,205   $ 4,740
Amortization of intangible assets 3,433 2,905 7,317 5,787
Equity-based compensation 3,373 2,851 6,538 5,422
Acquisition-related expenses 177 309 301 749
Restructuring expenses   24     60     51     60
Core net income $ 9,471   $ 8,190   $ 18,412   $ 16,758
 

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) provides collaborative payment, invoice and document automation 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 these solutions 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, WebSeries, Legal eXchange, Allegient Systems, Paymode-X, Transform, 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 may be trademarks of their respective owners.

Cautionary Language

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are 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' financial results, refer to the Company's Form 10-K for the fiscal year ended June 30, 2011 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,
  2011     2010
Revenues:
Software licenses $ 4,402 $ 4,180
Subscriptions and transactions 19,054 13,031
Service and maintenance 29,667 24,952
Equipment and supplies   1,971     2,119
 
Total revenues 55,094 44,282
 
Cost of revenues:
Software licenses 529 214
Subscriptions and transactions 9,215 6,748
Service and maintenance 13,239 10,404
Equipment and supplies   1,565     1,635
 
Total cost of revenues   24,548     19,001
 
Gross profit 30,546 25,281
 
Operating expenses:
Sales and marketing 11,430 9,257
Product development and engineering 5,932 5,476
General and administrative 4,912 4,545
Amortization of intangible assets   3,433     2,905
 
Total operating expenses   25,707     22,183
 
Income from operations 4,839 3,098
 
Other income, net   28     32
 
Income before income taxes 4,867 3,130
Provision for income taxes   2,403     1,065
 
Net income $ 2,464 $ 2,065
 
Basic net income per share attributable to common stockholders $ 0.07   $ 0.07
Diluted net income per share attributable to common stockholders $ 0.07   $ 0.06
 
Shares used in computing basic net income per share: 34,160 31,330
Shares used in computing diluted net income per share:   35,090     33,253
 
Core net income (excludes amortization of intangible assets, acquisition-related expenses, restructuring expenses and stock compensation expense):(1)
Core net income $ 9,471   $ 8,190
Diluted core net income per share $ 0.27   $ 0.25
 

(1) Core net income excludes charges for amortization of intangible assets of $3,433 and $2,905, acquisition-related expenses of $177 and $309, restructuring expenses of $24 and $60 and equity-based compensation of $3,373 and $2,851, for the three months ended December 31, 2011 and 2010, respectively.

 
 

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

   
Six Months Ended
December 31,
  2011       2010
Revenues:
Software licenses $ 8,435 $ 7,642
Subscriptions and transactions 36,648 24,565
Service and maintenance 58,516 50,004
Equipment and supplies   3,971       4,110
 
Total revenues 107,570 86,321
 
Cost of revenues:
Software licenses 964 429
Subscriptions and transactions 18,300 13,121
Service and maintenance 25,399 20,833
Equipment and supplies   3,136       3,155
 
Total cost of revenues   47,799       37,538
 
Gross profit 59,771 48,783
 
Operating expenses:
Sales and marketing 22,672 17,811
Product development and engineering 11,864 10,488
General and administrative 9,845 9,280
Amortization of intangible assets   7,317       5,787
 
Total operating expenses   51,698       43,366
 
Income from operations 8,073 5,417
 
Other (expense) income, net   (85 )     315
 
Income before income taxes 7,988 5,732
Provision for income taxes (1)   3,783       992
 
Net income $ 4,205 $ 4,740
 
Basic net income per share attributable to common stockholders $ 0.12     $ 0.15
Diluted net income per share attributable to common stockholders $ 0.12     $ 0.15
 
Shares used in computing basic net income per share: 33,935 31,042
Shares used in computing diluted net income per share:   34,966       32,619
 
Core net income (excludes amortization of intangible assets, acquisition-related expenses, restructuring expenses and stock compensation expense):(2)
Core net income $ 18,412     $ 16,758
Diluted core net income per share $ 0.53     $ 0.51
 

(1) The income tax expense for the six months ended December 31, 2010 includes a discrete tax benefit of $937.

(2) Core net income excludes charges for amortization of intangible assets of $7,317 and $5,787, acquisition-related expenses of $301 and $749, restructuring expenses of $51 and $60 and equity-based compensation of $6,538 and $5,422, for the six months ended December 31, 2011 and 2010, respectively.

 
 

Bottomline Technologies

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

   
December 31, June 30,
  2011       2011  
 
Assets
Current assets:
Cash, cash equivalents and short-term investments $ 131,394 $ 112,017
Accounts receivable 46,368 41,535
Other current assets   18,156       15,308  
 
Total current assets 195,918 168,860
 
Property and equipment, net 17,111 16,098
Intangible assets, net 166,104 173,073
Other assets   3,466       5,303  
 
Total assets $ 382,599     $ 363,334  
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 7,756 $ 8,971
Accrued expenses 16,831 18,706
Deferred revenue   42,441       40,510  
 
Total current liabilities 67,028 68,187
 
Deferred revenue, non-current 4,313 5,438
Deferred income taxes 2,099 2,208
Other liabilities   1,803       1,827  
 
Total liabilities 75,243 77,660
 
Stockholders' equity
Common stock 36 35
Additional paid-in-capital 427,797 408,375
Accumulated other comprehensive loss (6,928 ) (4,524 )
Treasury stock (20,321 ) (20,779 )
Accumulated deficit   (93,228 )     (97,433 )
 
Total stockholders' equity   307,356       285,674  
 
Total liabilities and stockholders' equity $ 382,599     $ 363,334  

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