BOTTOMLINE TECHNOLOGIES INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - BOTTOMLINE TECHNOLOGIES INC	d69425d8k.htm

Exhibit 99.1

LOGO

Bottomline Technologies Reports Fourth Quarter Results

Record Subscription and Transaction Revenue Highlights Fourth Quarter

PORTSMOUTH, N.H. – August 11, 2015 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of cloud-based payment, invoice and digital banking solutions, today reported financial results for the fourth quarter ended June 30, 2015.

Revenues for the fourth quarter were $85.4 million, an increase of $3.7 million, or 8% on a constant currency basis, from the fourth quarter of last year. Subscription and transaction revenues, which are primarily related to the company’s cloud platforms, increased 15% on a constant currency basis from the fourth quarter of last year to $44.7 million.

Gross margin for the fourth quarter was $49.3 million, an increase of $2.8 million from the fourth quarter of last year. Net loss for the fourth quarter was $21.6 million, including the effect of a $16 million non-cash charge related to the establishment of a reserve against certain US-based deferred tax assets. Net loss per share was $0.57 in the fourth quarter compared to $0.04 in the fourth quarter of last year.

Core net income for the fourth quarter was $13.4 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $8.5 million, equity-based compensation of $7.5 million, non-cash interest expense associated with our convertible notes of $3.1 million and non-cash expense associated with a reserve established against a portion of our US deferred tax assets of $16 million. Core earnings per share was $0.35.

“We are pleased to report a strong fourth quarter which completes a record fiscal year”, said Rob Eberle, President and CEO of Bottomline Technologies. “Earlier this year we saw an opportunity to invest in several key product sets in order to extend our leadership position and drive future growth and profitability. The strong demand we saw for our offerings in the quarter confirms the technology investments we have made are well received by the market. As we enter the new fiscal year, our pipeline is strong and we are committed to executing against our plan. We are confident our efforts will drive top line growth, expanding margins and delivering shareholder value in the years to come.”

Revenues for the year ended June 30, 2015 increased 10% to $330.9 million as compared with $300.6 million for the year ended June 30, 2014. Subscription and transaction revenues increased 21% to $171.4 million in the year ended June 30, 2015 from $141.1 million in the year ended June 30, 2014. Net loss for the year ended June 30, 2015 was $34.7 million. Net loss per share was $0.92 for the year ended June 30, 2015 compared to $0.52 for the year ended June 30, 2014. Net loss for the year ended June 30, 2015 included the effect of a $16 million non-cash charge related to a reserve recorded against certain US-based deferred tax assets.

Core net income for the year ended June 30, 2015 was $55.2 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $33.2 million, equity-based compensation of $27 million, restructuring expenses of $1.3 million, non-cash interest expense associated with our convertible notes of $12.1 million and non-cash expense associated with a reserve established against a portion of our US deferred tax assets of $16 million. Core earnings per share was $1.44 for the year ended June 30, 2015 compared to $1.29 for the year ended June 30, 2014.

Fourth Quarter Customer Highlights

•

Twenty-two leading institutions selected Paymode-X, Bottomline’s leading cloud-based payments automation platform, including one of the country’s leading food processing companies as well as other leading institutions in hospitality, property management and healthcare.

•

Chosen by twelve leading organizations, including CorVel Enterprise Comp Inc. and J.C. Penney Corporation, to provide Bottomline’s cloud-based legal spend management solutions to automate, manage and control their legal spend.

•

Signed nine new Digital Banking deals, enabling banks to grow revenues and relationships by deploying innovative digital capabilities.

•

Entered into a multi-year contract to provide Bottomline’s Patient Privacy and Data Security with Cedars Sinai. This patented solution offers a non-invasive approach to monitor, replay, and analyze user behavior across multiple systems and applications.

•

Companies such as First National Bank, Dart Group Plc and Banque Cantonale de Geneve selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.

Fourth Quarter Strategic Corporate Highlights

•

Launched Digital Banking 3.0, which allows the bank to better target their sales and marketing revenues while providing the bank’s business customers with increased financial management capabilities.

•

Deployed Legal-X 11, which provides increased capabilities for insurance companies to manage legal spend.

•

Launched Bottomline’s Patient Privacy and Data Security for Healthcare to address critical gaps in safeguarding sensitive patient data.

•

Announced a one-million share stock repurchase program to be completed by December 31, 2015.

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, equity-based compensation, acquisition and integration-related expenses, restructuring related costs, non-cash pension expenses, non-core charges associated with our convertible notes, charges related to reserves established or released against our deferred tax assets 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. Periodically, such as in periods that include significant foreign currency volatility, we present certain metrics on a “constant currency” basis, to show the impact of period to period results normalized for the impact of foreign currency rate changes. We calculate constant currency information by translating prior period financial results using current period foreign exchange rates.

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.

Non-GAAP Financial Measures Continued

A reconciliation of our GAAP results to our non-GAAP results for the three and twelve months ended June 30, 2015 and 2014 is as follows:


	Three Months Ended June 30,						Twelve Months Ended June 30,
	(in thousands)						(in thousands)
	2015			2014			2015			2014
GAAP net loss	$	(21,620	)	$	(1,481	)	$	(34,680	)	$	(19,104	)
Amortization of intangible assets		8,197			7,579			30,383			26,242
Equity-based compensation		7,462			6,029			27,025			22,821
Acquisition and integration-related expenses		282			732			2,835			5,367
Restructuring expenses (benefit)		(49	)		311			1,297			1,371
Other non-core (income) expense		(69	)		—			76			—
Non-cash pension expense		14			93			56			331
Non-cash interest expense		3,111			2,918			12,149			11,397
Non-core income tax benefit		—			(1,301	)		—			—
Record US deferred tax asset valuation allowance		16,034			—			16,034			—

Core net income	$	13,362		$	14,880		$	55,175		$	48,425


GAAP diluted shares		38,662			38,073			38,212			37,936
Impact of note hedges		—			(142	)		—			(366	)

Core diluted shares		38,662			37,931			38,212			37,570

The table below is a comparative summary of our total revenues and our subscription and transaction revenues shown with a constant currency growth rate:


	Three Months Ended				% Increase
	June 30,							Constant Rates ⁽¹⁾
	2015		2014		GAAP			Constant Rates ⁽¹⁾
	(in thousands)

Total Revenues	$	85,370	$	81,679		5	%		8	%
Subscription and Transaction Revenues		44,699		39,614		13	%		15	%

¹⁾	Constant currency information compares results between periods assuming exchange rates had remained constant period-over-period. We calculate constant currency information by translating prior- period results using current-year GAAP foreign exchange rates.

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, achieve future growth and profitability, and expand margins. 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 the 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:

Rick Booth

Bottomline Technologies

603-501-6270

rbooth@bottomline.com

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)


	Three Months Ended June 30,
	2015			2014
Revenues:
Subscriptions and transactions	$	44,699		$	39,614
Software licenses		5,752			5,025
Service and maintenance		32,919			34,967
Other		2,000			2,073


Total revenues		85,370			81,679

Cost of revenues:
Subscriptions and transactions		20,698			19,256
Software licenses		445			339
Service and maintenance		13,447			14,029
Other		1,512			1,594


Total cost of revenues		36,102			35,218


Gross profit		49,268			46,461

Operating expenses:
Sales and marketing		21,156			19,008
Product development and engineering		11,758			11,362
General and administrative		8,530			8,393
Amortization of intangible assets		8,197			7,579


Total operating expenses		49,641			46,342


Income (loss) from operations		(373	)		119

Other expense, net		(3,719	)		(3,540	)


Loss before income taxes		(4,092	)		(3,421	)
Provision (benefit) for income taxes		17,528			(1,940	)


Net loss	$	(21,620	)	$	(1,481	)

Basic and diluted net loss per share	$	(0.57	)	$	(0.04	)


Shares used in computing basic and diluted net loss per share:		38,056			37,374


Core net income ⁽¹⁾	$	13,362		$	14,880

Diluted core net income per share⁽²⁾	$	0.35		$	0.39

¹⁾

Core net income excludes charges for amortization of intangible assets of $8,197 and $7,579, acquisition and integration-related expenses of $282 and $732, restructuring expenses (benefit) of ($49) and $311, equity-based compensation of $7,462 and $6,029, non-cash pension expense of $14 and $93, expense to record a US deferred tax asset valuation allowance of $16,034 and $0, other non-core benefits of $69 and $1,301 and non-core charges associated with our convertible notes of $3,111 and $2,918 for the three months ended June 30, 2015 and 2014, respectively.

²⁾

Shares used in computing diluted core earnings per share were 38,662 and 37,931 for the three months ended June 30, 2015 and 2014, 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)


	Twelve Months Ended June 30,
	2015			2014
Revenues:
Subscriptions and transactions	$	171,361		$	141,103
Software licenses		21,907			20,769
Service and maintenance		130,183			131,531
Other		7,438			7,182


Total revenues		330,889			300,585

Cost of revenues:
Subscriptions and transactions		79,397			69,220
Software licenses		1,583			1,602
Service and maintenance		53,094			54,463
Other		5,367			5,383


Total cost of revenues		139,441			130,668


Gross profit		191,448			169,917

Operating expenses:
Sales and marketing		80,151			72,707
Product development and engineering		47,185			39,725
General and administrative		34,492			33,721
Amortization of intangible assets		30,383			26,242


Total operating expenses		192,211			172,395


Loss from operations		(763	)		(2,478	)

Other expense, net		(15,553	)		(14,544	)


Loss before income taxes		(16,316	)		(17,022	)
Provision for income taxes		18,364			2,082


Net loss		(34,680	)		(19,104	)

Basic and diluted net loss per share	$	(0.92	)	$	(0.52	)


Shares used in computing basic and diluted net loss per share:		37,806			36,834


Core net income ⁽¹⁾	$	55,175		$	48,425

Diluted core net income per share⁽²⁾	$	1.44		$	1.29

¹⁾

Core net income excludes charges for amortization of intangible assets of $30,383 and $26,242, acquisition and integration-related expenses of $2,835 and $5,367, restructuring expenses of $1,297 and $1,371, equity-based compensation of $27,025 and $22,821, non-cash pension expense of $56 and $331, expense to record a US deferred tax asset valuation allowance of $16,034 and $0, other non-core expense of $76 and $0 and non-core charges associated with our convertible notes of $12,149 and $11,397 for the twelve months ended June 30, 2015 and 2014, respectively.

²⁾

Shares used in computing diluted core earnings per share were 38,212 and 37,570 for the twelve months ended June 30, 2015 and 2014, 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)


	June 30, 2015			June 30, 2014

Assets
Current assets:
Cash, cash equivalents and marketable securities	$	144,388		$	191,478
Accounts receivable		65,140			61,064
Other current assets		19,713			28,238


Total current assets		229,241			280,780

Property and equipment, net		47,579			35,901
Goodwill and intangible assets, net		400,650			372,495
Other assets		11,014			11,167


Total assets	$	688,484		$	700,343


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	11,623		$	16,283
Accrued expenses		24,436			25,542
Deferred revenue		70,383			66,571


Total current liabilities		106,442			108,396

Convertible senior notes		159,760			148,795
Deferred revenue, non-current		17,624			15,997
Deferred income taxes		35,542			23,537
Other liabilities		20,578			16,192


Total liabilities		339,946			312,917

Stockholders’ equity
Common stock		40			39
Additional paid-in-capital		560,083			530,377
Accumulated other comprehensive income (loss)		(13,511	)		6,816
Treasury stock		(34,167	)		(20,579	)
Accumulated deficit		(163,907	)		(129,227	)


Total stockholders’ equity		348,538			387,426


Total liabilities and stockholders’ equity	$	688,484		$	700,343

BOTTOMLINE TECHNOLOGIES INC - FORM 8-K - EX-99.1 - August 11, 2015

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