PORTSMOUTH, N.H., Jan. 30, 2014 (GLOBE NEWSWIRE) -- Bottomline Technologies (Nasdaq:EPAY), a leading provider of cloud-based payment, invoice and banking solutions, today reported financial results for the second quarter ended December 31, 2013.
Revenues for the second quarter were $73.4 million, an increase of $9.8 million, or 15%, from the second quarter of last year. Subscription and transaction revenues, which are primarily related to the company's commercial banking, legal spend management and Paymode-X cloud-based applications, increased 15% from the second quarter of last year to $34.8 million.
Gross margin for the second quarter was $41.0 million, an increase of $7.8 million from the second quarter of last year. Net loss for the second quarter was $7.3 million, or net loss per share of $0.20.
Core net income for the second quarter was $10.3 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $9.1 million, equity-based compensation of $5.5 million, non-cash pension expense of $0.2 million and non-cash interest expense of $2.8 million associated with our convertible notes. Core earnings per share was $0.28.
"We had a strong quarter with record setting revenues, subscription and transaction revenues and other key metrics. Strategically, we advanced our cloud-based solutions with several key new product releases," said Rob Eberle, President and CEO of Bottomline Technologies. "With significant customer demand and a strong sales pipeline, we see a bright future ahead. We are confident our focus on innovative cloud-based solutions will drive continued subscription and transaction revenue growth as well as gross and operating margin leverage and expansion."
Revenues for the six months ended December 31, 2013 increased 12% to $140.7 million as compared with $125.3 million last year. Subscription and transaction revenues increased 13% to $66.4 million in the six months ended December 31, 2013. Net loss for the six months ended December 31, 2013 was $13.3 million, or $0.37 per share.
Core net income for the six months ended December 31, 2013 was $20.5 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $17.5 million, equity-based compensation of $10.6 million, non-cash pension expense of $0.2 million and non-core charges of $5.6 million associated with our convertible notes. Core earnings per share was $0.55.
Second Quarter Customer Highlights
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Chosen by eight leading insurers, including Sompo Japan Insurance, Anchor General Insurance Group and Sequoia Insurance to provide Bottomline's cloud-based legal spend management solutions to automate, manage and control their legal spend.
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Leading organizations, such as 21st Century Fox, Aetna, Caesars Windsor, Guess?, Markel Corporation and Thames Water Utilities chose Bottomline's payment automation solutions.
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Companies such as Societe Generale Insurance, Banque Cantonale du Jura, and Yorkshire Building Society selected Bottomline's Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.
- Deepened relationships in the healthcare vertical with customers such as the Children's Mercy Hospital and St. Elizabeth's Medical Center.
Second Quarter Strategic Corporate Highlights
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Announced general availability of Paymode-X 2.0 – Vendor View, the first in a series of next generation platform features delivering a unique, unified and rich user experience, allowing members to monitor payments and connect directly with payers to obtain additional payment information.
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Recognized by American Banker, Bank Technology News and IDC Financial Insights to the annual FinTech100 ranking of top technology providers to financial services companies worldwide.
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Partnered with Hyland Software to create an integrated solution for advanced mobile data capture and enterprise content management technology to simplify the collection and delivery of critical healthcare data, enabling clinicians and administrative staff to spend more time with patients and less time manually entering data into a computer.
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Hosted industry executives at our second annual Healthcare Customer Insights Exchange, providing a forum for the exchange of new ideas and answers for today's challenging and rapidly evolving healthcare landscape.
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Transform, our leading document automation product, was selected at the DM Awards as the overall winner for the "Environmental Product of the Year 2013" for its ability to support organizations' drive to reduce their environmental impact by removing paper from complex business processes.
- Named to the Business NH Magazine's "Best Companies to Work For" Hall of Fame for 2013, recognizing Bottomline's outstanding commitment to employees' professional growth and development through innovative work programs, company culture and benefits.
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 and core earnings per share are non-GAAP financial measures. These non-GAAP financial measures exclude certain items, specifically amortization of intangible assets, impairment losses on equity investments, equity-based compensation, acquisition and integration-related expenses (including acquisition-related earn-outs), restructuring related costs, non-cash pension expense and non-core charges associated with our convertible notes. Non-core charges associated with our convertible notes consist of non-cash interest expense as well as gains or losses on derivative instruments issued in conjunction with the notes. Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with our business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services, integration related professional services costs and other charges we incur as a direct result of our acquisition and integration efforts. 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. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP. A reconciliation of the GAAP results to the non-GAAP results for the three and six months ended December 31, 2013 and 2012 is as follows:
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Three Months Ended December 31, (in thousands) |
Six Months Ended December 31, (in thousands) |
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| 2013 | 2012 | 2013 | 2012 | |
| GAAP net loss | $ (7,265) | $ (7,040) | $ (13,313) | $ (7,022) |
| Amortization of intangible assets | 8,174 | 5,201 | 13,879 | 9,513 |
| Equity-based compensation | 5,535 | 4,734 | 10,567 | 8,941 |
| Acquisition and integration-related expenses | 903 | 2,565 | 3,573 | 4,280 |
| Restructuring expenses (benefit) | (10) | 834 | 45 | 1,130 |
| Non-cash pension expense | 151 | -- | 151 | -- |
| Net loss on derivative instruments | -- | 4,917 | -- | 4,917 |
| Non-cash interest expense | 2,827 | 547 | 5,608 | 547 |
| Core net income | $ 10,315 | $ 11,758 | $ 20,510 | $ 22,306 |
| GAAP diluted shares | 37,911 | 36,115 | 37,491 | 35,871 |
| Impact of note hedges | (455) | -- | (227) | -- |
| Core diluted shares | 37,456 | 36,115 | 37,264 | 35,871 |
About Bottomline Technologies
Bottomline Technologies (Nasdaq:EPAY) provides cloud-based payment, invoice and banking solutions to corporations, financial institutions and banks around the world. The company's solutions are used to streamline, automate and manage processes involving payments, invoicing, global cash management, supply chain finance and transactional documents. Organizations trust Bottomline to meet their needs for cost reduction, competitive differentiation and optimization of working capital. Headquartered in the United States, Bottomline also maintains offices in 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 may be registered in certain jurisdictions. All other brand/product names are trademarks of their respective holders.
Cautionary Language
This press release 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 growth plans and improve our gross and operating margins. 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" 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, 2013 and any 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.
| Bottomline Technologies | ||
| Unaudited Condensed Consolidated Statements of Operations | ||
| (in thousands, except per share amounts) | ||
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Three Months Ended December 31, |
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| 2013 | 2012 | |
| Revenues: | ||
| Subscriptions and transactions | $ 34,845 | $ 30,361 |
| Software licenses | 5,463 | 5,469 |
| Service and maintenance | 31,369 | 25,735 |
| Other | 1,728 | 2,044 |
| Total revenues | 73,405 | 63,609 |
| Cost of revenues: | ||
| Subscriptions and transactions | 16,754 | 16,238 |
| Software licenses | 392 | 617 |
| Service and maintenance | 13,973 | 11,977 |
| Other | 1,285 | 1,540 |
| Total cost of revenues | 32,404 | 30,372 |
| Gross profit | 41,001 | 33,237 |
| Operating expenses: | ||
| Sales and marketing | 18,024 | 15,955 |
| Product development and engineering | 9,271 | 8,426 |
| General and administrative | 8,124 | 6,467 |
| Amortization of intangible assets | 8,174 | 5,201 |
| Total operating expenses | 43,593 | 36,049 |
| Loss from operations | (2,592) | (2,812) |
| Other expense, net | (3,391) | (5,502) |
| Loss before income taxes | (5,983) | (8,314) |
| Provision (benefit) for income taxes | 1,282 | (1,274) |
| Net loss | $ (7,265) | $ (7,040) |
| Basic and diluted net loss per share | $ (0.20) | $ (0.20) |
| Shares used in computing basic and diluted net loss per share: | 36,667 | 35,284 |
| Core net income (excludes amortization of intangible assets, acquisition and integration-related expenses, restructuring expenses, equity-based compensation expense, non-cash pension expense and non-core charges associated with our convertible notes):(1) | ||
| Core net income | $ 10,315 | $ 11,758 |
| Diluted core net income per share(2) | $ 0.28 | $ 0.33 |
| 1) Core net income excludes charges for amortization of intangible assets of $8,174 and $5,201, acquisition and integration-related expenses of $903 and $2,565, restructuring expenses (benefit) of ($10) and $834, equity-based compensation of $5,535 and $4,734, non-cash pension expense of $151 and zero and non-core charges associated with our convertible notes of $2,827 and $5,464 for the three months ended December 31, 2013 and 2012, respectively. | ||
| 2) Shares used in computing diluted core earnings per share were 37,456 and 36,115 for the three months ended December 31, 2013 and 2012, respectively. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP. | ||
| Bottomline Technologies | ||
| Unaudited Condensed Consolidated Statements of Operations | ||
| (in thousands, except per share amounts) | ||
|
Six Months Ended December 31, |
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| 2013 | 2012 | |
| Revenues: | ||
| Subscriptions and transactions | $ 66,394 | $ 58,908 |
| Software licenses | 10,201 | 10,168 |
| Service and maintenance | 60,691 | 52,190 |
| Other | 3,368 | 4,032 |
| Total revenues | 140,654 | 125,298 |
| Cost of revenues: | ||
| Subscriptions and transactions | 32,098 | 30,224 |
| Software licenses | 758 | 1,026 |
| Service and maintenance | 26,492 | 24,271 |
| Other | 2,511 | 3,062 |
| Total cost of revenues | 61,859 | 58,583 |
| Gross profit | 78,795 | 66,715 |
| Operating expenses: | ||
| Sales and marketing | 34,266 | 30,428 |
| Product development and engineering | 17,678 | 16,732 |
| General and administrative | 16,610 | 13,028 |
| Amortization of intangible assets | 13,879 | 9,513 |
| Total operating expenses | 82,433 | 69,701 |
| Loss from operations | (3,638) | (2,986) |
| Other expense, net | (7,431) | (5,456) |
| Loss before income taxes | (11,069) | (8,442) |
| Provision (benefit) for income taxes | 2,244 | (1,420) |
| Net loss | (13,313) | (7,022) |
| Basic and diluted net loss per share | $ (0.37) | $ (0.20) |
| Shares used in computing basic and diluted net loss per share: | 36,441 | 35,097 |
| Core net income (excludes amortization of intangible assets, acquisition and integration-related expenses, restructuring expenses, equity-based compensation expense, non-cash pension expense and non-core charges associated with our convertible notes):(1) | ||
| Core net income | $ 20,510 | $ 22,306 |
| Diluted core net income per share(2) | $ 0.55 | $ 0.62 |
| 1) Core net income excludes charges for amortization of intangible assets of $13,879 and $9,513, acquisition and integration-related expenses of $3,573 and $4,280, restructuring expenses of $45 and $1,130, equity-based compensation of $10,567 and $8,941, non-cash pension expense of $151 and zero and non-core charges associated with our convertible notes of $5,608 and $5,464 for the six months ended December 31, 2013 and 2012, respectively. | ||
| 2) Shares used in computing diluted core earnings per share were 37,264 and 35,871 for the six months ended December 31, 2013 and 2012, respectively. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP. | ||
| Bottomline Technologies | ||
| Unaudited Condensed Consolidated Balance Sheets | ||
| (in thousands) | ||
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December 31, 2013 |
June 30, 2013 |
|
| Assets | ||
| Current assets: | ||
| Cash, cash equivalents and marketable securities | $ 205,598 | $ 293,077 |
| Accounts receivable | 52,174 | 44,430 |
| Other current assets | 17,562 | 15,243 |
| Total current assets | 275,334 | 352,750 |
| Property and equipment, net | 28,652 | 23,631 |
| Goodwill and intangible assets, net | 330,473 | 192,068 |
| Other assets | 12,611 | 17,073 |
| Total assets | $ 647,070 | $ 585,522 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Accounts payable | $ 10,957 | $ 8,933 |
| Accrued expenses | 24,127 | 16,070 |
| Deferred revenue | 49,353 | 47,184 |
| Total current liabilities | 84,437 | 72,187 |
| Convertible senior notes | 143,598 | 138,582 |
| Deferred revenue, non-current | 12,950 | 9,104 |
| Deferred income taxes | 20,584 | 5,457 |
| Other liabilities | 14,428 | 3,443 |
| Total liabilities | 275,997 | 228,773 |
| Stockholders' equity | ||
| Common stock | 39 | 38 |
| Additional paid-in-capital | 512,338 | 499,182 |
| Accumulated other comprehensive income (loss) | 3,300 | (10,460) |
| Treasury stock | (21,168) | (21,888) |
| Accumulated deficit | (123,436) | (110,123) |
| Total stockholders' equity | 371,073 | 356,749 |
| Total liabilities and stockholders' equity | $ 647,070 | $ 585,522 |