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| 8-K - FORM 8-K - BOTTOMLINE TECHNOLOGIES INC | d479438d8k.htm |
Exhibit 99.1
Bottomline Technologies Reports Record Second Quarter Results
Record Subscription and Transaction Revenue Drives Growth
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. |
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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 December 31, (in thousands) |
Six Months Ended December 31, (in thousands) |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| GAAP net income (loss) |
$ | (7,040 | ) | $ | 2,464 | $ | (7,022 | ) | $ | 4,205 | ||||||
| Amortization of intangible assets |
5,201 | 3,433 | 9,513 | 7,317 | ||||||||||||
| Equity-based compensation |
4,734 | 3,373 | 8,941 | 6,538 | ||||||||||||
| Acquisition-related expenses |
2,565 | 177 | 4,280 | 301 | ||||||||||||
| Restructuring expenses |
834 | 24 | 1,130 | 51 | ||||||||||||
| Net loss on derivative instruments |
4,917 | — | 4,917 | — | ||||||||||||
| Non-cash interest expense |
547 | — | 547 | — | ||||||||||||
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| Core net income |
$ | 11,758 | $ | 9,471 | $ | 22,306 | $ | 18,412 | ||||||||
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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.
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)
| Three Months Ended December 31, |
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| 2012 | 2011 | |||||||
| Revenues: |
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| 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 | ||||||
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| Total revenues |
63,609 | 55,094 | ||||||
| Cost of revenues: |
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| 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 | ||||||
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| Total cost of revenues |
30,707 | 24,548 | ||||||
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| Gross profit |
32,902 | 30,546 | ||||||
| Operating expenses: |
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| 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 | ||||||
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| Total operating expenses |
35,714 | 25,707 | ||||||
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| Income (loss) from operations |
(2,812 | ) | 4,839 | |||||
| Other income (expense), net |
(5,502 | ) | 28 | |||||
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| Income (loss) before income taxes |
(8,314 | ) | 4,867 | |||||
| Provision (benefit) for income taxes |
(1,274 | ) | 2,403 | |||||
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| Net income (loss) |
$ | (7,040 | ) | $ | 2,464 | |||
| Basic net income (loss) per share attributable to common stockholders |
$ | (0.20 | ) | $ | 0.07 | |||
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| Diluted net income (loss) per share attributable to common stockholders |
$ | (0.20 | ) | $ | 0.07 | |||
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| Shares used in computing basic net income (loss) per share: |
35,284 | 34,160 | ||||||
| Shares used in computing diluted net income (loss) per share: |
35,284 | 35,090 | ||||||
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| 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) |
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| Core net income |
$ | 11,758 | $ | 9,471 | ||||
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| Diluted core net income per share(2) |
$ | 0.33 | $ | 0.27 | ||||
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| 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, |
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| 2012 | 2011 | |||||||
| Revenues: |
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| 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 | ||||||
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| Total revenues |
125,298 | 107,570 | ||||||
| Cost of revenues: |
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| 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 | ||||||
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| Total cost of revenues |
59,203 | 47,799 | ||||||
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| Gross profit |
66,095 | 59,771 | ||||||
| Operating expenses: |
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| 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 | ||||||
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| Total operating expenses |
69,081 | 51,698 | ||||||
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| Income (loss) from operations |
(2,986 | ) | 8,073 | |||||
| Other expense, net |
(5,456 | ) | (85 | ) | ||||
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| Income (loss) before income taxes |
(8,442 | ) | 7,988 | |||||
| Provision (benefit) for income taxes |
(1,420 | ) | 3,783 | |||||
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| Net income (loss) |
$ | (7,022 | ) | $ | 4,205 | |||
| Basic net income (loss) per share attributable to common stockholders |
$ | (0.20 | ) | $ | 0.12 | |||
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| Diluted net income (loss) per share attributable to common stockholders |
$ | (0.20 | ) | $ | 0.12 | |||
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| Shares used in computing basic net income (loss) per share: |
35,097 | 33,935 | ||||||
| Shares used in computing diluted net income (loss) per share: |
35,097 | 34,966 | ||||||
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| 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) |
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| Core net income |
$ | 22,306 | $ | 18,412 | ||||
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| Diluted core net income per share(2) |
$ | 0.62 | $ | 0.53 | ||||
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| 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, 2012 |
June 30, 2012 |
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| Assets |
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| Current assets: |
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| Cash, cash equivalents and short-term investments |
$ | 280,891 | $ | 124,862 | ||||
| Accounts receivable |
48,916 | 45,344 | ||||||
| Other current assets |
17,009 | 15,465 | ||||||
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| 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 | ||||||
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| Total assets |
$ | 638,262 | $ | 392,371 | ||||
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| Liabilities and stockholders’ equity |
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| Current liabilities: |
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| Accounts payable |
$ | 9,733 | $ | 8,841 | ||||
| Accrued expenses |
16,793 | 17,170 | ||||||
| Deferred revenue |
45,762 | 41,304 | ||||||
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| 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 | ||||||
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| Total liabilities |
288,019 | 78,185 | ||||||
| Stockholders’ equity |
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| 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 | ) | ||||
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| Total stockholders’ equity |
350,243 | 314,186 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 638,262 | $ | 392,371 | ||||
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