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 Bottomline Technologies Reports Fourth Quarter Results
   Thursday, August 08, 2019 4:00:00 PM ET

PORTSMOUTH, N.H., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Bottomline Technologies (Nasdaq:EPAY), a leading provider of financial technology that helps make complex business payments simple, smart and secure, today reported financial results for the fourth quarter ended June 30, 2019.

Subscription and transaction revenues were $79.1 million for the fourth quarter, up 11%, or 13% on a constant currency basis, as compared to the fourth quarter of last year.  Revenues overall for the fourth quarter were $108.2 million, up 2%, or 3% on a constant currency basis, as compared to the fourth quarter of last year.  Constant currency growth is calculated as discussed in the “Non-GAAP Financial Measures” section that follows. 



GAAP net income for the fourth quarter was $3.6 million, which was 3% of overall revenue. GAAP net income per share was $0.09 in the fourth quarter.

Adjusted EBITDA for the fourth quarter was $25.0 million, which was 23% of overall revenue.  Core earnings per share was $0.34 for the fourth quarter.  Adjusted EBITDA and core earnings per share are calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

“Bottomline delivered a solid fourth quarter performance,” said Rob Eberle, President and CEO. “We had notable customer wins across our banking and business payments platforms as customers continued to choose Bottomline for innovative and highly secure business payments solutions. Our product strategy and execution are targeted to drive sustained growth for years to come.”

Fiscal 2019 Financial Highlights:

  • Subscription and transaction revenues for the year were $295.6 million, up 13%, or 14% on a constant currency basis from prior year.
  • Revenues overall for the year were $422.0 million, up 7%, or 8% on a constant currency basis from prior year.
  • GAAP net income for the year was $9.4 million compared to a GAAP net income of $9.3 million the prior year. GAAP net income per share was $0.23 in the year compared to a GAAP net income per share of $0.24 in the prior year.
  • Adjusted EBITDA for the year was $100.2 million, up from $93.7 million last year
  • Core earnings per share for the year was $1.35 compared to $1.27 in the prior year.

Fourth Quarter Customer Highlights

  • 22 organizations, including one of the largest auto manufacturers, a major athletic shoe and apparel brand, a leading grocer, several hospitals and healthcare providers, and two well-known universities selected Paymode-X to provide AP automation, increase cyber security and earn cash rebates.
     
  • 6 banks selected Bottomline’s banking solutions platforms to help them compete and grow their corporate and business banking franchises by deploying innovative digital capabilities.
     
  • 5 organizations, including SunPoint Holdings and Aspen Insurance (UK), chose Bottomline's legal spend management solutions to automate, manage and control their legal spend.  
     
  • Companies such as Helvetische Bank and Crown Agents Bank selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions.

Fourth Quarter Strategic Corporate Highlights

  • Visa announced its B2B Visa Connect solution in partnership with Bottomline, giving financial institutions the ability to quickly and securely process high-value corporate cross-border payments globally.
     
  • Announced a new offering to the Bottomline Legal Solutions platform, PartnerSelect – Law Firm Analytics. The new capabilities are designed to help law firms manage carrier relationships and gain insight into case assignments, performance and billing compliance.
     
  • Released the 2019 B2B Payments and Working Capital Management Strategies Survey. Results show that across the B2B payments landscape, partnering with fintechs will be the strategy of choice for a majority of banks and a growing number of corporates.
     
  • Announced partnership with Starling Bank to launch the Real Time Payments Express Service to the market, enabling banks and corporates to send and receive payments in real time to any UK bank account.
     
  • Launched PTX Account Visibility in the UK, a value-add offering that enables corporates to access multiple bank account balances, transactions and statement information in one place.
     
  • Launched Bottomline’s fourth annual Business Payments Barometer research report , which gauges the pulse of corporate payments across businesses in Great Britain.

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, 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, non-core charges associated with certain debt instruments, global enterprise resource planning (ERP) system implementation and other costs, and other non-core or non-recurring benefits or expenses that may arise from time to time.

Non-core charges associated with our debt instruments consist of amortization of debt issuance and debt discount costs. 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.

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.

Non-GAAP Financial Measures (Continued)

Reconciliation of Core Net Income

A reconciliation of core net income to GAAP net income for the three and twelve months ended June 30, 2019 and 2018 is as follows:

 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
  
 (in thousands)
GAAP net income$3,557  $11,483  $9,432  $9,328 
Amortization of acquisition-related intangible assets5,527  5,368  21,336  22,076 
Stock-based compensation plan expense9,789  9,068  41,695  34,200 
Acquisition and integration-related expenses1,682  968  4,648  2,564 
Restructuring expense (benefit)(82) 19  1,881  1,495 
Minimum pension liability adjustments512  (11) 264  24 
Amortization of debt issuance and debt discount costs103  109  414  6,502 
Legal settlement  1,269    1,269 
Global ERP system implementation and other costs285  1,457  3,395  6,430 
Other non-core expense (benefit) (1)550  (3,850) 550  (3,850)
Gain on sale of investment(7,362) (2,419) (7,599) (2,419)
Non-recurring tax benefit (2)  (3,637)   (8,039)
Tax effects on non-GAAP income(187) (5,659) (19,848) (19,694)
        
Core net income$14,374  $14,165  $56,168  $49,886 

(1) Consists of non-core expenses and benefits that arise from time to time. The non-core benefit for the three and twelve months ending June 30, 2018 relates primarily to non-recurring other income of $3.7 million recorded in connection with an investment sale.
(2) The non-recurring tax benefit in the three and twelve months ended June 30, 2018 reflects the net tax benefit recorded as a result of the U.S. Tax Cuts and Jobs Act, principally from the revaluation of U.S.-based deferred tax liabilities.

Reconciliation of Diluted Core Earnings per Share

A reconciliation of our diluted core earnings per share to our GAAP diluted net income per share for the three and twelve months ended June 30, 2019 and 2018 is as follows:

 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
        
GAAP diluted net income per share$0.09  $0.28  $0.23  $0.24 
        
Plus:       
Amortization of acquisition-related intangible assets0.13  0.13  0.51  0.56 
Stock-based compensation plan expense0.23  0.23  1.00  0.87 
Acquisition and integration-related expenses0.04  0.03  0.11  0.06 
Restructuring expense    0.05  0.04 
Global ERP system implementation and other costs0.01  0.04  0.08  0.16 
Other non-core expense (benefit)0.01  (0.10) 0.01  (0.10)
Minimum pension liability adjustments0.01    0.01   
Gain on sale of investment(0.17) (0.06) (0.18) (0.06)
Amortization of debt issuance and debt discount costs    0.01  0.17 
Legal settlement  0.03    0.03 
Non-recurring tax benefit  (0.09)   (0.20)
Tax effects on non-GAAP income(0.01) (0.14) (0.48) (0.50)
        
Diluted core earnings per share$0.34  $0.35  $1.35  $1.27 

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 per share for the three and twelve months ended June 30, 2019 and 2018 is as follows:

 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
Numerator:       
        
Core net income$14,374  $14,165  $56,168  $49,886 
        
Denominator:       
        
Weighted average shares used in computing basic net income per share for GAAP41,214  38,743  40,612  38,227 
        
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)599  1,573  1,079  1,099 
        
Weighted average shares used in computing diluted core earnings per share41,813  40,316  41,691  39,326 

(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.

Constant Currency Reconciliation

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
June 30,
 % Increase
 2019 2018 GAAP
Growth
Rate
 Impact
from
Currency
 Constant
Currency
Growth
Rates (1)
 (in thousands)      
Subscription and transaction Revenues$79,075  $71,084  11% 2% 13%
          
Total Revenues108,241  106,469  2% 1% 3%


 Twelve Months Ended
June 30,
 % Increase
 2019 2018 GAAP
Growth
Rate
 Impact
from
Currency
 Constant
Currency
Growth
Rates (1)
        
 (in thousands)      
Subscription and transaction Revenues$295,633  $262,363  13% 1% 14%
          
Total Revenues421,962  394,096  7% 1% 8%

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

Non-GAAP Financial Measures (Continued)

Reconciliation of Adjusted EBITDA

A reconciliation of our adjusted EBITDA to GAAP net income for the three and twelve months ended June 30, 2019 and 2018 is as follows:

 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
        
GAAP net income$3,557  $11,483  $9,432  $9,328 
        
Adjustments:       
Other expense (income), net (1)(6,514) (4,582) (3,417) 4,706 
Income tax provision (benefit)3,566  (4,172) (2,538) (8,203)
Depreciation and amortization6,144  5,356  22,911  19,994 
Amortization of acquisition-related intangible assets5,527  5,368  21,336  22,076 
Stock-based compensation plan expense9,789  9,068  41,695  34,200 
Acquisition and integration-related expenses1,682  968  4,648  2,564 
Restructuring expense (benefit)(82) 19  1,881  1,495 
Minimum pension liability adjustments512  (11) 264  24 
Legal settlement  1,269    1,269 
Global ERP system implementation and other costs285  1,457  3,395  6,430 
Other non-core expense (benefit)550  (150) 550  (150)
        
Adjusted EBITDA$25,016  $26,073  $100,157  $93,733 

(1) On July 1, 2018, we adopted an accounting standard update that changes the classification of certain pension related items. Accordingly, pension related benefits of approximately $0.2 million and $0.7 million were reclassified from income from operations to other expense, net for the three and twelve months ended June 30, 2018, respectively, in our consolidated statement of operations. For purposes of the reconciliation of adjusted EBITDA, we have presented pension related adjustments discretely, not as a component of other expense, net.

Adjusted EBITDA as a percent of Revenue

A reconciliation of GAAP net income as a percent of revenue to adjusted EBITDA as a percent of revenue for the three and twelve months ended June 30, 2019 and 2018 is as follows:

 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
        
GAAP net income as a percent of revenue3% 11% 2% 2%
        
Adjustments:       
Other expense (income), net(6%) (4%) (1%) 1%
Income tax provision (benefit)3% (4%) (1%) (2%)
Depreciation and amortization6% 5% 6% 5%
Amortization of acquisition-related intangible assets5% 5% 5% 6%
Stock-based compensation plan expense9% 8% 10% 8%
Acquisition and integration-related expenses2% 1% 1% 1%
Restructuring expense0% 0% 1% 0%
Global ERP system implementation and other costs0% 1% 1% 2%
Other non-core expense1% 0% 0% 0%
Legal settlement0% 1% 0% 1%
        
Adjusted EBITDA as a percent of revenue23% 24% 24% 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 .

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.

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 contains "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 and increase shareholder value.  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,” “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. 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, 2018 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 Statement of Operations
(in thousands, except per share amounts)
        
 Three Months Ended
June 30,
 Twelve Months Ended
June 30,
 2019 2018 2019 2018
Revenues:       
Subscriptions and transactions$79,075  $71,084  $295,633  $262,363 
Software licenses2,410  2,158  16,389  10,277 
Service and maintenance25,848  29,675  105,895  114,926 
Other908  3,552  4,045  6,530 
        
Total revenues108,241  106,469  421,962  394,096 
        
Cost of revenues:       
Subscriptions and transactions32,823  31,672  127,467  117,076 
Software licenses256  183  923  815 
Service and maintenance13,116  13,324  51,168  52,519 
Other700  734  3,161  3,032 
Total cost of revenues46,895  45,913  182,719  173,442 
        
Gross profit61,346  60,556  239,243  220,654 
        
Operating expenses:       
Sales and marketing24,493  22,840  95,265  86,095 
Product development and engineering17,097  15,519  67,364  57,500 
General and administrative13,255  14,280  52,199  49,869 
Amortization of acquisition-related intangible assets5,527  5,368  21,336  22,076 
Total operating expenses60,372  58,007  236,164  215,540 
        
Income from operations974  2,549  3,079  5,114 
        
Other income (expense), net6,149  4,762  3,815  (3,989)
        
Income before income taxes7,123  7,311  6,894  1,125 
Income tax benefit (provision)(3,566) 4,172  2,538  8,203 
        
Net income$3,557  $11,483  $9,432  $9,328 
        
Net income per share:       
Basic$0.09  $0.30  $0.23  $0.24 
Diluted$0.09  $0.28  $0.23  $0.24 
        
Shares used in computing net income per share:       
Basic41,214  38,743  40,612  38,227 
Diluted41,813  40,316  41,691  39,326 


Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
 June 30, June 30,
 2019 2018
ASSETS   
Current assets:   
Cash, cash equivalents and marketable securities$99,705  $131,872 
Cash and cash equivalents, held for customers5,637  2,753 
Accounts receivable77,285  74,305 
Other current assets30,434  19,781 
    
Total current assets213,061  228,711 
    
Property and equipment, net54,541  28,895 
Goodwill and intangible assets, net374,450  361,809 
Other assets27,177  16,553 
    
Total assets$669,229  $635,968 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$10,947  $10,251 
Accrued expenses and other current liabilities33,945  34,994 
Customer account liabilities5,637  2,753 
Deferred revenue75,097  75,356 
    
Total current liabilities125,626  123,354 
    
Borrowings under credit facility110,000  150,000 
Deferred revenue, non-current17,062  23,371 
Deferred income taxes10,345  8,367 
Other liabilities26,819  19,944 
    
Total liabilities289,852  325,036 
    
Stockholders' equity   
Common stock47  45 
Additional paid-in-capital721,438  678,549 
Accumulated other comprehensive loss(43,593) (30,633)
Treasury stock(127,095) (129,914)
Accumulated deficit(171,420) (207,115)
    
Total stockholders' equity379,377  310,932 
    
Total liabilities and stockholders' equity$669,229  $635,968 
        

BTInvestorPR 

BT-logo-web-full-color.png

Source: Bottomline Technologies, Inc.


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