Bottomline Technologies Reports Fourth Quarter Results Nasdaq:EPAY


PORTSMOUTH, N.H., Aug. 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 fourth quarter and fiscal year ended June 30, 2020.

Subscription revenue was $87.7 million for the fourth quarter, up 11%, or 12% on a constant currency basis, as compared to the fourth quarter of last year.  Subscription revenue was 79% of total revenues, up 6 percentage points from 73% a year prior. 

Total revenues for the fourth quarter were $110.6 million. GAAP net loss for the fourth quarter was $3.0 million. GAAP net loss per share was $0.07 in the fourth quarter.

Adjusted EBITDA for the fourth quarter was $23.4 million, which was 21% of overall revenue.  Core earnings per share was $0.26 for the fourth quarter.  Adjusted EBITDA and core earnings per share are calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

“We saw strong demand for our digital payment solutions which resulted in record subscription bookings in the fourth quarter and for the fiscal year,” said Rob Eberle, CEO. “We also had a record number of new Paymode-X customers in the quarter which evidences our strong competitive position, the value of our network-based business payment solution and the execution of our bank channel partners and direct sales team.  We produced strong results for the quarter, despite a decrease in our transaction-based revenues. We enter fiscal 2021 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 for years to come.” 

Fiscal 2020 Financial Highlights:

  • Subscription revenues for the year were $339.4 million, up 15%, or 16% on a constant currency basis from prior year.
  • Revenues overall for the year were $442.2 million, up 5%, or 6% on a constant currency basis from prior year.
  • GAAP net loss for the year was $9.2 million or $0.22 per share. Core earnings per share for the year was $1.17.
  • Adjusted EBITDA for the year was $95.0 million.

Fourth Quarter Customer Highlights

  • 37 organizations selected Paymode-X to automate their AP processes, with clients spanning a wide variety of industries such as healthcare, higher education, property management and public administration.
     
  • 6 banks selected Bottomline’s banking solutions platforms to help them compete and grow their corporate and business banking franchises through our intelligent engagement solutions.
     
  • 5 new customers, including Brethren Mutual, chose Bottomline’s legal spend management solutions to automate, manage and control their legal spend. 9 other customers expanded their Bottomline relationships.
     
  • Bottomline’s cloud-based payments solution PTX reached a new milestone by onboarding its 10,000th customer in 5 years since launch. PTX customers enjoy the benefits of a simple, smart and secure platform which facilitates both payments and collections, while providing leading fraud protection and preparation for Open Banking.
     
  • Metro Bank announced the enablement of Direct Debit origination for business customers through a new partnership with Bottomline.

Fourth Quarter Strategic Corporate Highlights

  • Aite recognized Bottomline as the Best-in-Class cash management technology leader in its recent report on leading providers. Digital Banking IQ led all providers in three of four categories covered – vendor stability, client strength and product features, and sharing leadership in a fourth category, client service, with one other provider.
     
  • Bottomline purchased a receivables management technology from a major financial institution and launched an initiative to leverage the purchased software platform, as well as its existing receivables capabilities inherent in its Paymode-X, Digital Banking and PTX product sets, as the foundation to develop and market a full-suite receivables management platform.
     
  • Citizens Financial Group was named a 2020 Model Bank Award winner for Commercial Banking Transformation by Celent, a global financial service research and advisory firm. The award featured Bottomline as a core technology behind Citizen’s accessOPTIMA cloud-based cash management offering.
     
  • The Bottomline 2020 Business Payments Barometer launched in June to share survey findings from 800 financial decision makers in Great Britain. Key findings from this year’s report: accelerating digitization is crucial for businesses navigating challenges posed during the COVID-19 pandemic; just 59% of businesses feel prepared for Open Banking, down 8% from 2019; and only 1 in 10 small businesses report recovering more than 50% of fraud-related losses.
  • Launched Paymode-X B2C Disbursements, which provides a light and flexible way for Paymode-X AP Automation customers to automate payments to their out of network consumer payees and business suppliers in a single, secure solution.
  • Bottomline was recognized by Ardent Partners, as a Key Solution Provider in 2020 for its Paymode-X AP Automation solution.  The award recognizes key providers in the space for their innovative solutions and the impact they have had on customer results as well as their progressive and visionary plans and roadmap.

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 twelve months ended June 30, 2020 and 2019 is as follows:

  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
  (in thousands)
GAAP net (loss) income $ (3,003 )     $ 3,557       $ (9,229 )     $ 9,432    
Amortization of acquisition-related intangible assets 5,086       5,527       20,370       21,336    
Stock-based compensation plan expense 10,746       9,789       42,044       41,695    
Acquisition and integration-related expenses 1,007       1,682       5,647       4,648    
Restructuring expense (benefit) 713       (82 )     1,652       1,881    
Minimum pension liability adjustments 1,110       512       1,250       264    
Amortization of debt issuance costs 104       103       414       414    
Global ERP system implementation and other costs       285       485       3,395    
Other non-core (benefit) expense (471 )     550       (481 )     550    
Gain on sale of investment       (7,362 )           (7,599 )  
Tax effects on non-GAAP income (4,192 )     (187 )     (13,069 )     (19,848 )  
               
Core net income $ 11,100       $ 14,374       $ 49,083       $ 56,168    
                                       

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 twelve months ended June 30, 2020 and 2019 is as follows:

  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
               
GAAP diluted net (loss) income per share $ (0.07 )     $ 0.09       $ (0.22 )     $ 0.23    
               
Plus:              
Amortization of acquisition-related intangible assets 0.12       0.13       0.48       0.51    
Stock-based compensation plan expense 0.25       0.23       1.00       1.00    
Acquisition and integration-related expenses 0.02       0.04       0.14       0.11    
Restructuring expense 0.02             0.04       0.05    
Global ERP system implementation and other costs       0.01       0.01       0.08    
Other non-core (benefit) expense (0.01 )     0.01       (0.01 )     0.01    
Minimum pension liability adjustments 0.03       0.01       0.03       0.01    
Gain on sale of investment       (0.17 )           (0.18 )  
Amortization of debt issuance costs             0.01       0.01    
Tax effects on non-GAAP income (0.10 )     (0.01 )     (0.31 )     (0.48 )  
               
Diluted core earnings per share $ 0.26       $ 0.34       $ 1.17       $ 1.35    
                                       

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 twelve months ended June 30, 2020 and 2019 is as follows:

  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
Numerator:              
               
Core net income $ 11,100       $ 14,374       $ 49,083       $ 56,168    
               
Denominator:              
               
Weighted average shares used in computing basic net (loss) income per share for GAAP 42,078       41,214       41,770       40,612    
               
Impact of dilutive securities (stock options, restricted stock awards and employee stock purchase plan) (1) 287       599       335       1,079    
               
Weighted average shares used in computing diluted core earnings per share 42,365       41,813       42,105       41,691    

(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
    2020
  2019
  GAAP
Growth
Rate

  Impact
from
Currency

  Constant
Currency
Growth
Rates (1)

    (in thousands)
                             
Subscription Revenues   $ 87,728       $ 79,075         11   %     1   %     12   %
                                                   
                                                   
    Twelve Months Ended
June 30,

  % Increase
    2020
  2019
  GAAP
Growth
Rate
  Impact
from
Currency
  Constant
Currency
Growth
Rates (1)
    (in thousands)
                             
Subscription Revenues   $ 339,410       $ 295,633         15   %     1   %     16   %
                                                   
Total Revenues     442,221         421,962         5   %     1   %     6   %

(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 (loss) income for the three and twelve months ended June 30, 2020 and 2019 is as follows:

  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
               
GAAP net (loss) income $ (3,003 )     $ 3,557       $ (9,229 )     $ 9,432    
               
Adjustments:              
Other expense (income) and pension adjustments 1,981       (6,002 )     5,025       (3,153 )  
Income tax (benefit) provision (454 )     3,566       1,828       (2,538 )  
Depreciation and amortization 7,425       6,144       27,232       22,911    
Amortization of acquisition-related intangible assets 5,086       5,527       20,370       21,336    
Stock-based compensation plan expense 10,746       9,789       42,044       41,695    
Acquisition and integration-related expenses 1,007       1,682       5,647       4,648    
Restructuring expense (benefit) 713       (82 )     1,652       1,881    
Global ERP system implementation and other costs       285       485       3,395    
Other non-core (benefit) expense (84 )     550       (94 )     550    
               
Adjusted EBITDA $ 23,417       $ 25,016       $ 94,960       $ 100,157    
                                       

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 twelve months ended June 30, 2020 and 2019 is as follows:

  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
               
GAAP net (loss) income as a percent of revenue (3   %)   3   %   (2   %)   2   %
               
Adjustments:              
Other expense (income) and pension adjustments 2   %   (6   %)   1   %   (1   %)
Income tax provision (benefit) 0   %   3   %   0   %   (1   %)
Depreciation and amortization 7   %   6   %   6   %   6   %
Amortization of acquisition-related intangible assets 4   %   5   %   5   %   5   %
Stock-based compensation plan expense 10   %   9   %   10   %   10   %
Acquisition and integration-related expenses 1   %   2   %   1   %   1   %
Restructuring expense 0   %   0   %   0   %   1   %
Global ERP system implementation and other costs 0   %   0   %   0   %   1   %
Other non-core expense 0   %   1   %   0   %   0   %
               
Adjusted EBITDA as a percent of revenue 21   %   23   %   21   %   24   %
                               

About Bottomline

Bottomline (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 state of the art 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

BTInvestorPR

 
Bottomline Technologies
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
               
  Three Months Ended
June 30,
  Twelve Months Ended
June 30,
  2020   2019   2020   2019
Revenues:              
Subscriptions $ 87,728        $ 79,075        $ 339,410        $ 295,633     
Software licenses 1,176        2,410        8,098        16,389     
Service and maintenance 21,088        25,848        91,706        105,895     
Other 647        908        3,007        4,045     
               
Total revenues 110,639        108,241        442,221        421,962     
               
Cost of revenues:              
Subscriptions 35,533        32,823        136,417        127,467     
Software licenses 128        256        528        923     
Service and maintenance 11,439        13,116        49,955        51,168     
Other 523        700        2,186        3,161     
Total cost of revenues 47,623        46,895        189,086        182,719     
               
Gross profit 63,016        61,346        253,135        239,243     
               
Operating expenses:              
Sales and marketing 26,383        24,493        106,429        95,265     
Product development and engineering 18,391        17,097        73,019        67,364     
General and administrative 14,909        13,255        56,749        52,199     
Amortization of acquisition-related intangible assets 5,086        5,527        20,370        21,336     
Total operating expenses 64,769        60,372        256,567        236,164     
               
(Loss) income from operations (1,753 )     974        (3,432 )     3,079     
               
Other (expense) income, net (1,704 )     6,149        (3,969 )     3,815     
               
(Loss) income before income taxes (3,457 )     7,123        (7,401 )     6,894     
Income tax benefit (provision) 454        (3,566 )     (1,828 )     2,538     
               
Net (loss) income $ (3,003 )     $ 3,557        $ (9,229 )     $ 9,432     
               
Net (loss) income per share:              
Basic $ (0.07 )     $ 0.09        $ (0.22 )     $ 0.23     
Diluted $ (0.07 )     $ 0.09        $ (0.22 )     $ 0.23     
               
Shares used in computing net (loss) income per share:              
Basic 42,078        41,214        41,770        40,612     
Diluted 42,078        41,813        41,770        41,691     
                               
 
Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
  June 30,   June 30,
  2020   2019
ASSETS      
Current assets:      
Cash, cash equivalents and marketable securities $ 205,041       $ 99,705    
Cash and cash equivalents, held for customers 6,304       5,637    
Accounts receivable 69,970       77,285    
Other current assets 28,328       30,434    
       
Total current assets 309,643       213,061    
       
Property and equipment, net 67,155       54,541    
Operating lease right-of-use assets, net 24,712          
Goodwill and intangible assets, net 359,824       374,450    
Other assets 31,803       27,177    
       
Total assets $ 793,137       $ 669,229    
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 13,422       $ 10,947    
Accrued expenses and other current liabilities 48,198       33,945    
Customer account liabilities 6,304       5,637    
Deferred revenue 82,074       75,097    
       
Total current liabilities 149,998       125,626    
       
Borrowings under credit facility 180,000       110,000    
Deferred revenue, non-current 13,959       17,062    
Operating lease liabilities, non-current 20,670          
Deferred income taxes 8,656       10,345    
Other liabilities 27,520       26,819    
       
Total liabilities 400,803       289,852    
       
Stockholders’ equity      
Common stock 48       47    
Additional paid-in-capital 764,906       721,438    
Accumulated other comprehensive loss (48,675 )     (43,593 )  
Treasury stock (143,333 )     (127,095 )  
Accumulated deficit (180,612 )     (171,420 )  
       
Total stockholders’ equity 392,334       379,377    
       
Total liabilities and stockholders’ equity $ 793,137       $ 669,229    
                   

 



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