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| 8-K - RESULTS OF OPERATIONS AND FINANCIAL CONDITION - BOTTOMLINE TECHNOLOGIES INC | q2fy11earnings.htm |
Bottomline Technologies Reports Second Quarter Results
Record Revenue and Orders Drive Strong Operating Margin Highlighting Quarter
PORTSMOUTH, N.H. – January 27, 2011 – 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, 2010.
Revenues for the second quarter were $44.3 million, an increase of $4.2 million, or 10%, from the second quarter of last year. Subscriptions and transactions revenue increased 24% from the second quarter of last year to $13.0 million.
Gross margin for the second quarter was $25.3 million, an increase of $2.6 million from the second quarter of last year. Net income for the second quarter was $2.1 million, or diluted net income per share of $0.06.
Core net income for the second quarter was $8.2 million after excluding acquisition-related expenses of $3.2 million, restructuring expenses of $0.1 million and equity-based compensation of $2.9 million. Core net income increased $1.6 million, or 24%, from the second quarter of last year. Core earnings per share was $0.25.
“We had a great quarter with record orders of $64.3 million,” said Rob Eberle, President and CEO of Bottomline Technologies. “The strong orders drove results which were well ahead of our expectations for the quarter. Strategically, we signed a major Canadian bank and expanded the Software as a Service (SaaS) based solutions we offer through the acquisition of SMA Financial. I am proud of our team’s execution and excited by our future prospects.”
Revenues for the six months ended December 31, 2010 increased 13% to $86.3 million as compared with $76.7 million in the same period last year. Net income for the six months ended December 31, 2010 was $4.7 million, or net income per share of $0.15.
Core net income for the six months ended December 31, 2010 was $16.8 million after excluding acquisition-related expenses of $6.5 million, restructuring expenses of $0.1 million and equity-based compensation of $5.4 million. Core net income grew by 25% as compared with the $13.4 million reported for the six months ended December 31, 2009. Core earnings per share was $0.51 for the six months ended December 31, 2010.
Second Quarter Customer Highlights
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Chosen by a leading Canadian bank to provide an innovative, next generation cash management solution that will be deployed for multiple market segments.
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Selected by The Bank of England to deliver a WebSeries® payments hub, enabling the central bank of the U.K. to manage their payments more efficiently.
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Leading companies including AXIS Specialty U.S. Services, Kaiser Foundation Hospitals, Nautilus Insurance Company, Pennsylvania Lumbermens Mutual Insurance Company and Tokio Marine Management chose Legal eXchange®, Bottomline’s SaaS-based invoice automation solution for the legal industry.
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Expanded relationships with existing payments, invoice and document automation customers Ally Financial, Cascade Corporation, CORESTAFF Services, CB Richard Ellis, CVS Caremark Corporation, Hewlett-Packard, Kaiser Permanente, Motorola, Nike Team Sports, Norbain SD Limited, Pearson Shared Services Limited, Raymond James Financial, Trek Bicycle Corporation and the University of Arizona.
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Increased penetration into the healthcare vertical by adding new customers, FirstHealth Moore Regional Hospital and Madison Memorial Hospital, and deepening relationships with Baptist Health South Florida, Iasis Healthcare, Johnson & Johnson Medical Limited, Merck, Nautilus Healthcare Management Group and Trinity Health.
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Second Quarter Strategic Corporate Highlights
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Acquired SMA Financial Ltd, a provider of SaaS–based connectivity to SWIFT for the automation of payments and financial messaging.
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Announced corporate cash management mobile banking capabilities for payments and information reporting.
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Named to the FinTech 100 by American Banker, Bank Technology News and the research firm, IDC Financial Insights; also named to the Software 500 by Software Magazine.
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Recognized as a “Best Company to Work For” by Business NH Magazine.
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Chief Technology Officer, Eric Campbell and Director of Global Marketing, Marcus Hughes were named to the 2010 “Who’s Who in Treasury and Cash Management,” by Global Finance magazine.
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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 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. Shares used in computing core earnings per share are calculated using the treasury stock method, which assumes full exercise of in-the-money stock options and warrants and full vesting of restricted stock. A reconciliation of the GAAP results to the non-GAAP results for the three and six month periods ended December 31, 2010 and 2009 is as follows:
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Three Months Ended
December 31,
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Six Months Ended
December 31,
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(in thousands)
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(in thousands)
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2010
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2009
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2010
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2009
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GAAP net income
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$ | 2,065 | $ | 704 | $ | 4,740 | $ | 1,876 | ||||||||
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Amortization of intangible assets
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2,905 | 3,361 | 5,787 | 6,667 | ||||||||||||
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Equity-based compensation
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2,851 | 2,400 | 5,422 | 4,308 | ||||||||||||
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Acquisition-related expenses
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309 | 127 | 749 | 529 | ||||||||||||
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Restructuring expenses
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60 | - | 60 | - | ||||||||||||
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Core net income
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$ | 8,190 | $ | 6,592 | $ | 16,758 | $ | 13,380 | ||||||||
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 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 year ended June 30, 2010 and any subsequently filed Form 10-Q’s, 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)
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Three Months Ended
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December 31,
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2010
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2009
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Revenues:
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Software licenses
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$ | 4,180 | $ | 3,787 | ||||
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Subscriptions and transactions
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13,031 | 10,469 | ||||||
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Service and maintenance
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24,952 | 23,775 | ||||||
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Equipment and supplies
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2,119 | 2,091 | ||||||
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Total revenues
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44,282 | 40,122 | ||||||
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Cost of revenues:
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||||||||
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Software licenses
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214 | 321 | ||||||
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Subscriptions and transactions (1)
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6,748 | 5,160 | ||||||
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Service and maintenance (1)
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10,404 | 10,405 | ||||||
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Equipment and supplies
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1,635 | 1,590 | ||||||
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Total cost of revenues
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19,001 | 17,476 | ||||||
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Gross profit
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25,281 | 22,646 | ||||||
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Operating expenses:
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Sales and marketing (1)
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9,257 | 8,825 | ||||||
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Product development and engineering (1)
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5,476 | 4,753 | ||||||
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General and administrative (1)
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4,545 | 4,248 | ||||||
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Amortization of intangible assets
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2,905 | 3,361 | ||||||
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Total operating expenses
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22,183 | 21,187 | ||||||
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Income from operations
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3,098 | 1,459 | ||||||
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Other income (expense), net
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32 | (93 | ) | |||||
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Income before income taxes
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3,130 | 1,366 | ||||||
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Provision for income taxes
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1,065 | 662 | ||||||
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Net income
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$ | 2,065 | $ | 704 | ||||
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Basic net income per share attributable to common stockholders
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$ | 0.07 | $ | 0.03 | ||||
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Diluted net income per share attributable to common stockholders
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$ | 0.06 | $ | 0.03 | ||||
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Shares used in computing basic net income per share:
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31,330 | 25,092 | ||||||
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Shares used in computing diluted net income per share:
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33,253 | 25,933 | ||||||
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Core net income (excludes amortization of intangible assets, acquisition-related expenses, restructuring expenses and stock compensation expense):(2)
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Net income
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$ | 8,190 | $ | 6,592 | ||||
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Diluted net income per share (3)
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$ | 0.25 | $ | 0.25 | ||||
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(1) Stock-based compensation is allocated as follows:
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Cost of revenues: subscriptions and transactions
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$ | 118 | $ | 61 | ||||
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Cost of revenues: service and maintenance
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474 | 444 | ||||||
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Sales and marketing
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994 | 838 | ||||||
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Product development and engineering
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419 | 329 | ||||||
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General and administrative
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846 | 728 | ||||||
| (2) Core net income excludes charges for amortization of intangible assets of $2,905 and $3,361, acquisition-related expenses of $309 and $127, restructuring expenses of $60 and zero and stock compensation expense of $2,851 and $2,400, for the three months ended December 31, 2010 and 2009, respectively. | ||||||||
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(3) Shares used in computing diluted core net income per share were 33,253 and 26,687 for the three months ended December 31, 2010 and 2009, respectively.
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Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
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Six Months Ended
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December 31,
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2010
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2009
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Revenues:
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Software licenses
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$ | 7,642 | $ | 6,750 | ||||
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Subscriptions and transactions
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24,565 | 18,750 | ||||||
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Service and maintenance
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50,004 | 46,910 | ||||||
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Equipment and supplies
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4,110 | 4,268 | ||||||
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Total revenues
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86,321 | 76,678 | ||||||
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Cost of revenues:
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Software licenses
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429 | 540 | ||||||
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Subscriptions and transactions (1)
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13,121 | 9,038 | ||||||
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Service and maintenance (1)
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20,833 | 20,125 | ||||||
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Equipment and supplies
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3,155 | 3,211 | ||||||
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Total cost of revenues
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37,538 | 32,914 | ||||||
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Gross profit
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48,783 | 43,764 | ||||||
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Operating expenses:
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Sales and marketing (1)
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17,811 | 16,708 | ||||||
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Product development and engineering (1)
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10,488 | 8,843 | ||||||
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General and administrative (1)
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9,280 | 8,538 | ||||||
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Amortization of intangible assets
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5,787 | 6,667 | ||||||
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Total operating expenses
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43,366 | 40,756 | ||||||
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Income from operations
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5,417 | 3,008 | ||||||
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Other income, net
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315 | 128 | ||||||
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Income before income taxes
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5,732 | 3,136 | ||||||
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Provision for income taxes (4)
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992 | 1,260 | ||||||
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Net income
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$ | 4,740 | $ | 1,876 | ||||
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Basic net income per share attributable to common stockholders
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$ | 0.15 | $ | 0.07 | ||||
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Diluted net income per share attributable to common stockholders
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$ | 0.15 | $ | 0.07 | ||||
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Shares used in computing basic net income per share:
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31,042 | 24,747 | ||||||
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Shares used in computing diluted net income per share:
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32,619 | 25,372 | ||||||
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Core net income (excludes amortization of intangible assets, acquisition-related expenses, restructuring expenses and stock compensation expense):(2)
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Net income
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$ | 16,758 | $ | 13,380 | ||||
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Diluted net income per share (3)
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$ | 0.51 | $ | 0.52 | ||||
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(1) Stock-based compensation is allocated as follows:
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Cost of revenues: subscriptions and transactions
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$ | 224 | $ | 114 | ||||
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Cost of revenues: service and maintenance
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883 | 749 | ||||||
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Sales and marketing
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1,844 | 1,487 | ||||||
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Product development and engineering
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778 | 533 | ||||||
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General and administrative
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1,693 | 1,425 | ||||||
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(2) Core net income excludes charges for amortization of intangible assets of $5,787 and $6,667, acquisition-related expenses of $749 and $529, restructuring expenses of $60 and zero and stock compensation expense of $5,422 and $4,308, for the six months ended December 31, 2010 and 2009, respectively.
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(3) Shares used in computing diluted core net income per share were 32,619 and 25,882 for the six months ended December 31, 2010 and 2009, respectively.
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(4) Includes a discrete tax benefit of $937 recorded in the three months ended September 30, 2010.
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Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
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December 31,
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June 30,
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2010
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2010
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Assets
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Current assets:
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Cash, cash equivalents and short-term investments
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$ | 143,997 | $ | 122,809 | ||||
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Accounts receivable
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36,840 | 26,019 | ||||||
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Other current assets
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8,139 | 8,910 | ||||||
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Total current assets
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188,976 | 157,738 | ||||||
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Property and equipment, net
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14,342 | 14,561 | ||||||
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Intangible assets, net
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99,304 | 95,466 | ||||||
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Other assets
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667 | 1,617 | ||||||
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Total assets
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$ | 303,289 | $ | 269,382 | ||||
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Liabilities and stockholders' equity
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Current liabilities:
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Accounts payable
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$ | 6,549 | $ | 5,857 | ||||
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Accrued expenses
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10,062 | 9,715 | ||||||
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Deferred revenue
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42,807 | 37,461 | ||||||
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Total current liabilities
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59,418 | 53,033 | ||||||
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Deferred revenue, non-current
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2,991 | 2,738 | ||||||
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Deferred income taxes
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2,266 | 1,432 | ||||||
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Other liabilities
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1,940 | 1,788 | ||||||
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Total liabilities
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66,615 | 58,991 | ||||||
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Stockholders' equity
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Common stock
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34 | 32 | ||||||
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Additional paid-in-capital
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393,235 | 375,700 | ||||||
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Accumulated other comprehensive loss
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(6,289 | ) | (9,358 | ) | ||||
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Treasury stock
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(21,720 | ) | (22,657 | ) | ||||
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Accumulated deficit
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(128,586 | ) | (133,326 | ) | ||||
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Total stockholders' equity
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236,674 | 210,391 | ||||||
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Total liabilities and stockholders' equity
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$ | 303,289 | $ | 269,382 | ||||