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Bottomline Technologies Reports Second Quarter Results

February 02, 2021

PORTSMOUTH, N.H., Feb. 02, 2021 (GLOBE NEWSWIRE) -- Bottomline Technologies (Nasdaq: EPAY), a leading provider of financial technology that makes complex business payments simple, smart and secure, today reported financial results for the second quarter ended December 31, 2020.

Subscription revenue was $93.4 million for the second quarter, up 11% as compared to the second quarter of last year. Subscription revenue was 81% of total revenues, up 6 percentage points from 75% a year prior.

Total revenues for the second quarter were $116.0 million. GAAP net loss for the second quarter was $4.6 million. GAAP net loss per share was $0.11 in the second quarter.

Adjusted EBITDA for the second quarter was $25.5 million, which was 22% of overall revenue. Core earnings per share was $0.30 for the second quarter. Adjusted EBITDA and core earnings per share are calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

“Bottomline delivered solid results in the second quarter. With an increase in transaction volumes we expect strong subscription growth in Q3 and Q4 which will put us on track for subscription revenue growth at or near our target 15-20% range in FY21” said Rob Eberle, CEO. “Strategically we made significant advancements in our product set during Q2, particularly our payments and cash life cycle platform. We are confident in our strategic plan and our ability to execute against that plan. Our focus on market leadership and subscription revenue growth positions us to drive sustained shareholder value.”  

Second Quarter Customer Highlights

  • 28 organizations selected Paymode-X to automate their AP processes, with clients spanning a wide variety of industries such as healthcare, higher education, and property management.

  • US Bank introduced AP Optimizer™, powered by Bottomline’s Paymode-X. The digital tool simplifies and transforms invoice processing and payments for businesses within a single system, reduces costs, provides rebates and connects businesses to the established Paymode-X network of 425,000 business members.

  • Bottomline’s Financial Messaging solution was selected to optimize the efficiency and effectiveness of financial transactions by LeasePlan, Redmayne Bentley, Recognise Financial, ENTRIS Banking Group, Alpian Bank, and Freie Internationale Sparkasse.

  • Three banks ranging in size from $14B to $170B selected Bottomline’s banking solutions platform to help them compete and grow their corporate and business banking franchises. A $14B community bank selected Bottomline’s DBIQ platform and CFRM solution to serve as its strategic commercial customer-facing system of engagement as it seeks to win and retain larger, more complex commercial customers. A $170B regional bank selected Bottomline’s DBIQ platform and CFRM solution, and a $130B regional bank extended Bottomline’s DBIQ platform and CFRM solution with Real Time Payments (RTP).

  • Six new customers chose Bottomline's legal spend management solutions to automate, manage and control their legal spend, including AAA Carolinas and Kinsale Insurance. In addition, 7 other customers expanded their Bottomline relationships.

  • A major UK bank adopted Bottomline’s “Pay Direct” Open Banking Payment Initiation Service to enable corporate customers to collect receivables quickly, securely and cost effectively. In addition, a leading UK business finance provider selected Bottomline to collect loan repayments from SMEs, and StepChange Charity launch a debt management program created in collaboration with the UK Government. 

Second Quarter Strategic Corporate Highlights

  • Bottomline’s innovation and Open Banking capabilities were recognized as the “Payment Solution of 2020” by the Credit & Collections Technology Awards and as the “Best B2B Payment Program of 2020” by the Emerging Payments Association.

  • Bottomline’s AML and counter terrorist finance monitoring and screening capabilities were enhanced with additional key risk data, including Politically Exposed Persons, sanction lists and adverse media entities.

  • Bottomline presented the 2020 Think Green awards to Legal Spend Management customers Allianz Global Corporate & Specialty and MAPFRE USA. The annual award is a cornerstone of Bottomline’s corporate ESG efforts and recognizes organizations leveraging Bottomline’s digital solutions to drive environmentally friendly and sustainable business practices.  

  • Launched a new online resource for small business banking - “Helping Banks Help Small Businesses” providing thought leadership to help banks identify digital transformation opportunities for their small business services.

Non-GAAP Financial Measures

We have presented supplemental non-GAAP financial measures as part of this earnings release. 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. Core net income, core earnings per share, constant currency information, adjusted EBITDA and adjusted EBITDA as a percent of revenue are all non-GAAP financial measures.

Core net income and core earnings per share exclude certain items, specifically amortization of acquisition related intangible assets, stock-based compensation, acquisition and integration-related expenses, restructuring related costs, excess depreciation expense associated with restructuring events, minimum pension liability adjustments, amortization of debt issuance costs and other costs and other non-core or nonrecurring benefits or expenses that may arise from time to time.

Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services and integration related professional services costs and other incremental charges we incur as a direct result of 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.

Adjusted EBITDA and adjusted EBITDA as a percent of revenue represent our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization and other charges as noted in the reconciliation that follows.

Our executive management team uses these same non-GAAP financial measures internally to assess the ongoing performance of the company. The same non-GAAP information is used for corporate 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. 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.

Non-GAAP Financial Measures (Continued)

Reconciliation of Core Net Income

A reconciliation of core net income to GAAP net income (loss) for the three and six months ended December 31, 2020 and 2019 is as follows:

  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
   
  (in thousands)
GAAP net income (loss) $ (4,615 )     $ 2,609       $ (4,224 )     $ 1,242    
Amortization of acquisition-related intangible assets 5,142       5,213       10,171       10,163    
Stock-based compensation plan expense 12,173       10,965       22,146       22,009    
Acquisition and integration-related expenses 1,095       1,957       1,340       3,654    
Restructuring expense 921       234       991       209    
Excess depreciation associated with restructuring events 528             528          
Minimum pension liability adjustments (39 )     48       (64 )     90    
Amortization of debt issuance costs 104       104       207       207    
Global ERP system implementation and other costs       200             424    
Other non-core expense (benefit) (78 )     4       (78 )     (10 )  
Tax effects on non-GAAP income (2,292 )     (7,597 )     (4,714 )     (11,552 )  
Core net income $ 12,939       $ 13,737       $ 26,303       $ 26,436    

Reconciliation of Diluted Core Earnings per Share

A reconciliation of our diluted core earnings per share to our GAAP diluted net income (loss) per share for the three and six months ended December 31, 2020 and 2019 is as follows:

  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
GAAP diluted net income (loss) per share $ (0.11 )     $ 0.06       $ (0.10 )     $ 0.03    
Plus:              
Amortization of acquisition-related intangible assets 0.12       0.13       0.24       0.24    
Stock-based compensation plan expense 0.28       0.26       0.52       0.53    
Acquisition and integration-related expenses 0.03       0.05       0.03       0.09    
Restructuring expense 0.02       0.01       0.02       0.01    
Excess depreciation associated with restructuring events 0.01             0.01          
Global ERP system implementation and other costs                   0.01    
Tax effects on non-GAAP income (0.05 )     (0.18 )     (0.11 )     (0.28 )  
Diluted core earnings per share $ 0.30       $ 0.33       $ 0.61       $ 0.63    

Non-GAAP Financial Measures (Continued)

A reconciliation of our non-GAAP weighted average shares used in computing diluted core earnings per share to our GAAP weighted average shares used in computing basic and diluted net income (loss) per share for the three and six months ended December 31, 2020 and 2019 is as follows:

  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
   
  (in thousands)
Numerator:              
Core net income $ 12,939     $ 13,737     $ 26,303     $ 26,436  
Denominator:              
Weighted average shares used in computing basic net income (loss) per share for GAAP 42,751     41,693     42,604     41,590  
Impact of dilutive securities (stock options, restricted stock awards and employee stock purchase plan) (1) 158     399     236     327  
Weighted average shares used in computing diluted core earnings per share 42,909     42,092     42,840     41,917  

(1)   These securities are dilutive on a GAAP basis in periods where we report GAAP net income. These securities are anti-dilutive on a GAAP basis in periods where we report GAAP net loss.

Reconciliation of Adjusted EBITDA
A reconciliation of our adjusted EBITDA to our GAAP net income (loss) for the three and six months ended December 31, 2020 and 2019 is as follows:

  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
   
  (in thousands)
GAAP net income (loss) $ (4,615 )     $ 2,609       $ (4,224 )     $ 1,242    
Adjustments:              
Other expense, net of pension adjustments 1,139       842       2,164       1,807    
Income tax provision 1,273       (3,780 )     3,037       (3,777 )  
Depreciation and amortization 7,805       6,560       15,504       12,652    
Amortization of acquisition-related intangible assets 5,142       5,213       10,171       10,163    
Stock-based compensation plan expense 12,173       10,965       22,146       22,009    
Acquisition and integration-related expenses 1,095       1,957       1,340       3,654    
Restructuring expense 921       234       991       209    
Excess depreciation associated with restructuring events 528             528          
Global ERP system implementation and other costs       200             424    
Other non-core expense (benefit) 48       4       96       (10 )  
Adjusted EBITDA $ 25,509       $ 24,804       $ 51,753       $ 48,373    

Adjusted EBITDA as a percent of Revenue

A reconciliation of adjusted EBITDA as a percent of revenue to GAAP net income (loss) as a percent of revenue for the three and six months ended December 31, 2020 and 2019 is as follows:

  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
GAAP net income (loss) as a percent of revenue (4 %)   2 %   (2 %)   1 %
Adjustments:              
Other expense, net of pension adjustments 1 %   1 %   1 %   1 %
Income tax provision 1 %   (3 %)   1 %   (2 %)
Depreciation and amortization 7 %   5 %   7 %   5 %
Amortization of acquisition-related intangible assets 4 %   5 %   4 %   5 %
Stock-based compensation plan expense 11 %   10 %   11 %   10 %
Acquisition and integration-related expenses 1 %   2 %   1 %   2 %
Restructuring expense 1 %   0 %   0 %   0 %
Adjusted EBITDA as a percent of revenue 22 %   22 %   23 %   22 %

About Bottomline Technologies

Bottomline Technologies (Nasdaq: EPAY) makes complex business payments simple, smart, and secure. Corporations and banks rely on Bottomline for domestic and international payments, efficient cash management, automated workflows for payment processing and bill review, and fraud detection, behavioral analytics and regulatory compliance solutions. Thousands of corporations around the world benefit from Bottomline solutions. Headquartered in Portsmouth, NH, Bottomline delights customers through offices across the U.S., Europe, and Asia-Pacific. For more information visit www.bottomline.com.

In connection with this earnings release and our associated conference call, we will be posting additional material financial information (such as financial results, non-GAAP financial projections and non-GAAP to GAAP reconciliations) within the “Investors” section of our website at www.bottomline.com/us/about/investors.

Cautionary Language

This press release and our responses to questions on our conference call discussing our quarterly results 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 strategic plans, achieve future growth and profitability, achieve financial goals, expand margins and increase shareholder value. Any statements that are not statements of historical fact (including but not limited to statements containing the words “likely,” “should,” “may,” “believes,” “plans,” “anticipates,” “expects,” “forecasts,” “look forward”, “opportunities,” “confident”, “trends,” “future,” “estimates,” “targeted,” “on track” and similar expressions) should be considered to be forward-looking statements. Statements about the effects of the current and near-term market and macroeconomic environment on Bottomline, including on its business, operations, financial performance and prospects, may constitute forward-looking statements, and are based on assumptions that involve risks and uncertainties that are subject to change based on various important factors (some of which are beyond Bottomline’s control). 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, and including the potential effects of the COVID-19 pandemic on any of the foregoing. 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, 2020 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 to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events.

Media Contact:
Rick Booth
Bottomline Technologies
603.501.6270
rbooth@bottomline.com

BTInvestorPR




Bottomline Technologies
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
               
  Three Months Ended
December 31,
  Six Months Ended
December 31,
  2020   2019   2020   2019
Revenues:              
Subscriptions $ 93,398       $ 84,085       $ 183,782       $ 164,151    
Software licenses 1,802       2,800       2,779       5,376    
Service and maintenance 20,022       24,061       40,586       48,886    
Other 802       745       1,242       1,454    
Total revenues 116,024       111,691       228,389       219,867    
Cost of revenues:              
Subscriptions 37,195       33,449       72,413       66,214    
Software licenses 126       157       216       318    
Service and maintenance 10,386       12,929       21,302       25,982    
Other 551       504       860       1,020    
Total cost of revenues 48,258       47,039       94,791       93,534    
Gross profit 67,766       64,652       133,598       126,333    
Operating expenses:              
Sales and marketing 29,237       26,988       54,980       52,676    
Product development and engineering 19,183       18,279       37,682       36,628    
General and administrative 16,658       14,761       30,284       28,106    
Amortization of acquisition-related intangible assets 5,142       5,213       10,171       10,163    
Total operating expenses 70,220       65,241       133,117       127,573    
Income (loss) from operations (2,454 )     (589 )     481       (1,240 )  
Other expense, net (888 )     (582 )     (1,668 )     (1,295 )  
Loss before income taxes (3,342 )     (1,171 )     (1,187 )     (2,535 )  
Income tax (provision) benefit (1,273 )     3,780       (3,037 )     3,777    
Net income (loss) $ (4,615 )     $ 2,609       $ (4,224 )     $ 1,242    
Net income (loss) per share:              
Basic $ (0.11 )     $ 0.06       $ (0.10 )     $ 0.03    
Diluted $ (0.11 )     $ 0.06       $ (0.10 )     $ 0.03    
Shares used in computing net income (loss) per share:              
Basic 42,751       41,693       42,604       41,590    
Diluted 42,751       42,092       42,604       41,917    




Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
  December 31,   June 30,
  2020   2020
ASSETS      
Current assets:      
Cash, cash equivalents and marketable securities $ 140,355       $ 205,041    
Cash and cash equivalents, held for customers 9,680       6,304    
Accounts receivable 73,044       69,970    
Other current assets 33,402       28,328    
Total current assets 256,481       309,643    
Property and equipment, net 68,470       67,155    
Operating right-of-use assets, net 23,203       24,712    
Goodwill and intangible assets, net 386,288       359,824    
Other assets 44,194       31,803    
Total assets $ 778,636       $ 793,137    
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 12,141       $ 13,422    
Accrued expenses and other current liabilities 45,626       48,198    
Customer account liabilities 9,680       6,304    
Deferred revenue 71,499       82,074    
Total current liabilities 138,946       149,998    
Borrowings under credit facility 130,000       180,000    
Deferred revenue, non-current 14,624       13,959    
Operating lease liabilities, non-current 20,133       20,670    
Deferred income taxes 10,313       8,656    
Other liabilities 31,633       27,520    
Total liabilities 345,649       400,803    
Stockholders' equity      
Common stock 49       48    
Additional paid-in-capital 795,630       764,906    
Accumulated other comprehensive loss (25,613 )     (48,675 )  
Treasury stock (152,299 )     (143,333 )  
Accumulated deficit (184,780 )     (180,612 )  
Total stockholders' equity 432,987       392,334    
Total liabilities and stockholders' equity $ 778,636       $ 793,137    


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Source: Bottomline Technologies, Inc.
Categories: Press Releases
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