GlobeNewswire Inc | Feb 2, 2021 04:00PM EST

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 Bottomlines 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. -- Bottomlines 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 Bottomlines banking solutions platform to help them compete and grow their corporate and business banking franchises. A $14B community bank selected Bottomlines 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 Bottomlines DBIQ platform and CFRM solution, and a $130B regional bank extended Bottomlines 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 Bottomlines 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 launchadebt management program created in collaboration with the UK Government.

Second Quarter Strategic Corporate Highlights

-- Bottomlines 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. -- Bottomlines 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 Bottomlines corporate ESG efforts and recognizes organizations leveraging Bottomlines 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 Six Months Ended December31, December31, 2020 2019 2020 2019 (in thousands)GAAP net income (loss) $ (4,615 ) $ 2,609 $ (4,224 ) $ 1,242 Amortization ofacquisition-related 5,142 5,213 10,171 10,163 intangible assetsStock-basedcompensation plan 12,173 10,965 22,146 22,009 expenseAcquisition andintegration-related 1,095 1,957 1,340 3,654 expensesRestructuring expense 921 234 991 209 Excess depreciationassociated with 528 ? 528 ? restructuring eventsMinimum pension (39 ) 48 (64 ) 90 liability adjustmentsAmortization of debt 104 104 207 207 issuance costsGlobal ERP systemimplementation and ? 200 ? 424 other costsOther non-core expense (78 ) 4 (78 ) (10 ) (benefit)Tax effects on (2,292 ) (7,597 ) (4,714 ) (11,552 ) non-GAAP incomeCore 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 Six Months Ended December31, December31, 2020 2019 2020 2019GAAP diluted net income $ (0.11 ) $ 0.06 $ (0.10 ) $ 0.03 (loss) per sharePlus: Amortization ofacquisition-related 0.12 0.13 0.24 0.24 intangible assetsStock-based compensation 0.28 0.26 0.52 0.53 plan expenseAcquisition andintegration-related 0.03 0.05 0.03 0.09 expensesRestructuring expense 0.02 0.01 0.02 0.01 Excess depreciationassociated with 0.01 ? 0.01 ? restructuring eventsGlobal ERP systemimplementation and other ? ? ? 0.01 costsTax effects on non-GAAP (0.05 ) (0.18 ) (0.11 ) (0.28 ) incomeDiluted core earnings per $ 0.30 $ 0.33 $ 0.61 $ 0.63 share

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 Six Months Ended December31, December31, 2020 2019 2020 2019 (in thousands)Numerator: Core net income $ 12,939 $ 13,737 $ 26,303 $ 26,436 Denominator: Weighted averageshares used incomputing basic net 42,751 41,693 42,604 41,590 income (loss) pershare for GAAPImpact of dilutivesecurities (stockoptions, restricted 158 399 236 327 stock awards andemployee stockpurchase plan) ^(1)Weighted averageshares used in 42,909 42,092 42,840 41,917 computing diluted coreearnings per share

(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 EBITDAA 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 Six Months Ended December31, December31, 2020 2019 2020 2019 (in thousands)GAAP net income (loss) $ (4,615 ) $ 2,609 $ (4,224 ) $ 1,242 Adjustments: Other expense, net of 1,139 842 2,164 1,807 pension adjustmentsIncome tax provision 1,273 (3,780 ) 3,037 (3,777 ) Depreciation and 7,805 6,560 15,504 12,652 amortizationAmortization ofacquisition-related 5,142 5,213 10,171 10,163 intangible assetsStock-basedcompensation plan 12,173 10,965 22,146 22,009 expenseAcquisition andintegration-related 1,095 1,957 1,340 3,654 expensesRestructuring expense 921 234 991 209 Excess depreciationassociated with 528 ? 528 ? restructuring eventsGlobal ERP systemimplementation and ? 200 ? 424 other costsOther non-core expense 48 4 96 (10 ) (benefit)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 Six Months Ended Ended December31, December31, 2020 2019 2020 2019GAAP net income (loss) as a percent of (4 %) 2 % (2 %) 1 %revenueAdjustments: 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 4 % 5 % 4 % 5 %intangible assetsStock-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 Bottomlines 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-Qs and Form 8-Ks 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 todays date or to reflect the occurrence of unanticipated events.

Media Contact:Rick BoothBottomline Technologies603.501.6270rbooth@bottomline.com

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Bottomline TechnologiesUnaudited Condensed Consolidated Statement of Operations(in thousands, except per share amounts) Three Months Ended Six Months Ended December31, December31, 2020 2019 2020 2019Revenues: Subscriptions $ 93,398 $ 84,085 $ 183,782 $ 164,151 Software licenses 1,802 2,800 2,779 5,376 Service and 20,022 24,061 40,586 48,886 maintenanceOther 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 10,386 12,929 21,302 25,982 maintenanceOther 551 504 860 1,020 Total cost of 48,258 47,039 94,791 93,534 revenuesGross profit 67,766 64,652 133,598 126,333 Operating expenses: Sales and marketing 29,237 26,988 54,980 52,676 Product development 19,183 18,279 37,682 36,628 and engineeringGeneral and 16,658 14,761 30,284 28,106 administrativeAmortization ofacquisition-related 5,142 5,213 10,171 10,163 intangible assetsTotal operating 70,220 65,241 133,117 127,573 expensesIncome (loss) from (2,454 ) (589 ) 481 (1,240 ) operationsOther expense, net (888 ) (582 ) (1,668 ) (1,295 ) Loss before income (3,342 ) (1,171 ) (1,187 ) (2,535 ) taxesIncome tax (1,273 ) 3,780 (3,037 ) 3,777 (provision) benefitNet 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 incomputing net income (loss) pershare:Basic 42,751 41,693 42,604 41,590 Diluted 42,751 42,092 42,604 41,917

Bottomline TechnologiesUnaudited Condensed Consolidated Balance Sheets(in thousands) December31, June 30, 2020 2020ASSETS Current assets: Cash, cash equivalents and marketable $ 140,355 $ 205,041 securitiesCash 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 45,626 48,198 liabilitiesCustomer 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