PORTSMOUTH, N.H., May 06, 2020 (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 third quarter ended March 31, 2020.

Subscription revenue was $87.5 million for the third quarter, up 16% as compared to the third quarter of last year. Subscription revenue was 78% of total revenues, up 7 percentage points from 71% a year prior.

Total revenues for the third quarter were $111.7 million. GAAP net loss for the third quarter was $7.5 million, or 7% of revenue. GAAP net loss per share was $0.18 in the third quarter.

Adjusted EBITDA for the third quarter was $23.2 million, which was 21% of overall revenue.  Core earnings per share was $0.27 for the third quarter.  Adjusted EBITDA and core earnings per share are calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

“Bottomline responded extraordinarily well to the COVID-19 crisis.  We are operating effectively and consistently, with a priority on the safety and well-being of the Bottomline team, supporting and delivering for our customers around the globe, and keeping our business strong” said Rob Eberle, CEO. “We had a strong and productive quarter, highlighted by continued strong subscription revenue growth, a solid bookings result, and an agile and resilient response to the initial stage of the crisis.  Our applications are mission-critical and the vast majority of our revenues are unimpacted by the pandemic’s economic disruption.  Longer term, we see an acceleration of digital transformation of business payments driving increased demand for our solution set and growth for our company.” 

During the three months ended March 31, 2020 Bottomline repurchased 90 thousand shares of common stock at a cost of $4.1 million and an average price per share of $46.14.  During the nine months ended March 31, 2020 Bottomline has repurchased 418 thousand shares of common stock at a cost of $19.1 million and for an average purchase price per share of $45.76.  Based on the continued uncertainty around the duration and severity of the COVID-19 related precautions and economic slowdown, Bottomline has suspended its share repurchase activity.  The company has $30.9 million remaining under its current repurchase authorization. 

The COVID-19 pandemic has created economic uncertainty and the extent to which the company’s future results will be impacted is difficult to estimate at this time.  On the earnings call, the company will provide its perspective on two outlooks going forward (i) quarterly results expected taking into account the full potential economic impact of the COVID-19 disruption and (ii) quarterly results which are expected to occur once the economic disruptions subsides. 

Third Quarter Customer Highlights

  • To help banks address the extraordinary volumes and demands of the Payroll Protection Program at a time when access to physical branches is limited, Bottomline repurposed its online account opening capability to offer banks a technology platform for simplified loan origination, specifically tailored to the U.S. Small Business Administration (SBA) application requirements. This platform was made available free of cost to any bank that needed it.  To date Bottomline has processed over $120 million in loan applications for 1,800 small business applicants.
     
  • 25 organizations selected Paymode-X to automate their AP processes, with clients spanning a wide variety of industries such as property management, healthcare, higher education, and public administration.
     
  • 2 banks selected Bottomline’s banking solutions platforms to help them compete and grow their corporate and business banking franchises through our innovative and intelligent engagement solution.
     
  • 3 new customers, including Gray Insurance Company, chose Bottomline's legal spend management solutions to automate, manage and control their legal spend. 11 other customers, including a top 10 AM Best P&C insurer expanded their Bottomline relationships.
     
  • A major global supplier of plastic and fiber products signed on for Bottomline’s connectivity and sanction screening solutions.
     
  • ACCA, a global professional accountancy body, turned to Bottomline for a single payment processing solution to support global payments, streamline bank access, and integrate with multiple back-office systems.

Third Quarter Strategic Corporate Highlights

  • The company’s DB IQ Insights earned the Overall Most Innovative award at the 2020 Barlow Research Monarch Innovation Awards. Insights provides commercial banks with a unique capability to understand and quickly unlock value from the data and online actions of their customers. 
     
  • Announced the availability of Bottomline’s Payments and Cash Management (PCM) 3.11, which enables corporations to streamline their payments and aggregate balance and transaction reporting information across all their banking relationships.
     
  • The company’s PTX Secure Payments received the Best Security and Anti-Fraud Development award at the UK Cards and Payments Awards. It also received the FinTech Breakthrough Award for Best Financial Transaction Security Platform. The multi-layered solution safeguards customers from external and internal payment fraud.
     
  • The company earned a Bronze Stevie Award for 2020 Best Use of Technology in Customer Service, a prestigious recognition given the hundreds of innovative technologies considered.
     
  • Bottomline partnered with five other organizations to support a successful pilot of a request to pay messaging service from Pay.UK. Request to pay is a new, flexible way to settle transactions between businesses by providing payers the ability to more directly communicate with the biller.

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, minimum pension liability adjustments, amortization of debt issuance costs, global enterprise resource planning (ERP) system implementation 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. Global ERP system implementation and other costs relate to direct and incremental costs incurred in connection with our multi-phase implementation of a new, global ERP solution and the related technology infrastructure and costs related to our implementation of the new revenue recognition standard under US GAAP.

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 (loss) income for the three and nine months ended March 31, 2020 and 2019 is as follows:

 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
 (in thousands)
GAAP net (loss) income$(7,468) $824  $(6,226) $5,875 
Amortization of acquisition-related intangible assets5,121  5,230  15,284  15,809 
Stock-based compensation plan expense9,289  10,015  31,298  31,906 
Acquisition and integration-related expenses986  1,373  4,640  2,966 
Restructuring expense730  1,332  939  1,963 
Minimum pension liability adjustments50  (93) 140  (248)
Amortization of debt issuance costs103  103  310  311 
Global ERP system implementation and other costs61  557  485  3,110 
Other non-core benefit    (10) (237)
Tax effects on non-GAAP income2,675  (5,685) (8,877) (19,661)
Core net income$11,547  $13,656  $37,983  $41,794 

Reconciliation of Diluted Core Earnings per Share

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

 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
GAAP diluted net (loss) income per share$(0.18) $0.02  $(0.15) $0.14 
Plus:       
Amortization of acquisition-related intangible assets0.12  0.13  0.36  0.38 
Stock-based compensation plan expense0.22  0.25  0.75  0.77 
Acquisition and integration-related expenses0.03  0.03  0.11  0.07 
Restructuring expense0.02  0.03  0.02  0.05 
Global ERP system implementation and other costs  0.01  0.01  0.07 
Other non-core benefit      (0.01)
Minimum pension liability adjustments      (0.01)
Amortization of debt issuance and debt discount costs    0.01  0.01 
Tax effects on non-GAAP income0.06  (0.14) (0.21) (0.47)
Diluted core earnings per share$0.27  $0.33  $0.90  $1.00 

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 (loss) income per share for the three and nine months ended March 31, 2020 and 2019 is as follows:

 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
 (in thousands)
Numerator:       
Core net income$11,547  $13,656  $37,983  $41,794 
Denominator:       
Weighted average shares used in computing basic net (loss) income per share for GAAP41,823  40,911  41,668  40,412 
Impact of dilutive securities (shares related to conversion feature on convertible senior notes, stock options, warrants, restricted stock awards and employee stock purchase plan) (1)397  714  350  1,238 
Weighted average shares used in computing diluted core earnings per share42,220  41,625  42,018  41,650 

(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 (loss) income for the three and nine months ended March 31, 2020 and 2019 is as follows:

 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
 (in thousands)
GAAP net (loss) income$(7,468) $824  $(6,226) $5,875 
Adjustments:       
Other expense, net of pension adjustments1,237  853  3,044  2,849 
Provision (benefit) from income taxes6,059  (1,251) 2,282  (6,104)
Depreciation and amortization7,155  5,576  19,807  16,767 
Amortization of acquisition-related intangible assets5,121  5,230  15,284  15,809 
Stock-based compensation plan expense9,289  10,015  31,298  31,906 
Acquisition and integration-related expenses986  1,373  4,640  2,966 
Restructuring expense730  1,332  939  1,963 
Global ERP system implementation and other costs61  557  485  3,110 
Other non-core benefit    (10)  
Adjusted EBITDA$23,170  $24,509  $71,543  $75,141 

Adjusted EBITDA as a percent of Revenue

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

 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
GAAP net (loss) income as a percent of revenue(7%) 1%  (2%) 2% 
Adjustments:       
Other expense, net of pension adjustments1%  1%  1%  1% 
Provision (benefit) from income taxes5%  (1%) 1%  (2%)
Depreciation and amortization7%  5%  6%  5% 
Amortization of acquisition-related intangible assets5%  5%  5%  5% 
Stock-based compensation plan expense8%  9%  10%  10% 
Acquisition and integration-related expenses1%  1%  1%  1% 
Restructuring expense1%  1%  0%  1% 
Global ERP system implementation and other costs0%  1%  0%  1% 
Adjusted EBITDA as a percent of revenue21%  23%  22%  24% 

About Bottomline Technologies

Bottomline Technologies (Nasdaq: EPAY) helps make complex business payments simple, smart, and secure. Corporations and banks rely on us for state of the art domestic and international payments, efficient cash management, payment processing, 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 earning’s 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” 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, 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, 2019 and the subsequently filed Form 10-Q’s and Form 8-K’s or amendments thereto. 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), including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on Bottomline, our customers and third parties. 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

Bottomline Technologies
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
        
 Three Months Ended
March 31,
 Nine Months Ended
March 31,
 2020 2019 2020 2019
Revenues:       
Subscriptions$87,531  $75,502  $251,682  $216,558 
Software licenses1,546  3,802  6,922  13,979 
Service and maintenance21,732  25,856  70,618  80,047 
Other906  1,278  2,360  3,137 
Total revenues111,715  106,438  331,582  313,721 
Cost of revenues:       
Subscriptions34,670  31,623  100,884  94,644 
Software licenses82  226  400  667 
Service and maintenance12,534  12,818  38,516  38,052 
Other643  1,046  1,663  2,461 
Total cost of revenues47,929  45,713  141,463  135,824 
Gross profit63,786  60,725  190,119  177,897 
Operating expenses:       
Sales and marketing27,370  25,165  80,046  70,772 
Product development and engineering18,000  16,887  54,628  50,267 
General and administrative13,734  13,175  41,840  38,944 
Amortization of acquisition-related intangible assets5,121  5,230  15,284  15,809 
Total operating expenses64,225  60,457  191,798  175,792 
(Loss) income from operations(439) 268  (1,679) 2,105 
Other expense, net(970) (695) (2,265) (2,334)
Loss before income taxes(1,409) (427) (3,944) (229)
Income tax (provision) benefit(6,059) 1,251  (2,282) 6,104 
Net (loss) income$(7,468) $824  $(6,226) $5,875 
Net (loss) income per share:       
Basic$(0.18) $0.02  $(0.15) $0.15 
Diluted$(0.18) $0.02  $(0.15) $0.14 
Shares used in computing net (loss) income per share:       
Basic41,823  40,911  41,668  40,412 
Diluted41,823  41,625  41,668  41,650 


Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 March 31, June 30,
 2020 2019
ASSETS   
Current assets:   
Cash, cash equivalents and marketable securities$182,287  $99,705 
Cash and cash equivalents, held for customers6,590  5,637 
Accounts receivable78,271  77,285 
Other current assets30,333  30,434 
Total current assets297,481  213,061 
Property and equipment, net69,832  54,541 
Operating lease right-of-use assets, net23,953   
Goodwill and intangible assets, net360,537  374,450 
Other assets28,769  27,177 
Total assets$780,572  $669,229 
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$12,830  $10,947 
Accrued expenses and other current liabilities40,893  33,945 
Customer account liabilities6,590  5,637 
Deferred revenue86,236  75,097 
Total current liabilities146,549  125,626 
Borrowings under credit facility180,000  110,000 
Deferred revenue, non-current14,479  17,062 
Operating lease liabilities, non-current19,991   
Deferred income taxes9,251  10,345 
Other liabilities27,407  26,819 
Total liabilities397,677  289,852 
Stockholders' equity   
Common stock48  47 
Additional paid-in-capital754,140  721,438 
Accumulated other comprehensive loss(50,351) (43,593)
Treasury stock(143,333) (127,095)
Accumulated deficit(177,609) (171,420)
Total stockholders' equity382,895  379,377 
Total liabilities and stockholders' equity$780,572  $669,229 

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