Subscription Revenue Growth Acceleration Highlights Second Quarter
PORTSMOUTH, N.H., Jan. 30, 2020 (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 second quarter ended December 31, 2019.
Subscription revenue was $84.1 million for the second quarter, up 18% on both a reported and constant currency basis as compared to the second quarter of last year. Subscription revenue was 75% of total revenues, up 7 percentage points from 68% a year prior. Total revenues for the second quarter were $111.7 million.
GAAP net income for the second quarter was $2.6 million, which was 2% of overall revenue. GAAP net income per share was $0.06 in the second quarter.
Adjusted EBITDA for the second quarter was $24.8 million, which was 22% of overall revenue. Core earnings per share was $0.33 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 strong results in the second quarter with 18% growth in subscription revenue," said Rob Eberle, CEO. "The acceleration of our subscription revenue growth demonstrates the strength of our product set, the quality of our execution and the size of our market opportunity. Our primary financial objective continues to be to drive subscription growth at or above the levels seen to date. Our performance in the second quarter and clear momentum give us a high degree of confidence in achieving that goal. Our business results and market leadership position us to drive strong performance and shareholder value for years to come."
Second Quarter Customer Highlights
- 21 organizations selected Paymode-X to automate their AP processes, including Guardian Elder Care and Weingarten Realty Investors, plus clients across a wide variety of industries such as public administration, construction, services and manufacturing.
- 4 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.
- 6 new customers, including LA Fitness, Hitachi and Society Insurance, chose Bottomline's legal spend management solutions to automate, manage and control their legal spend.
- Financial services companies such as Paragon Finance, APEX and digital credit card company JaJa Finance selected Bottomline's Financial Messaging solution to improve connectivity, cash management, data risk and compliance.
Second Quarter Strategic Corporate Highlights
- Announced the expansion of its Digital Banking IQ suite with the launch of its Real-Time Payments module, which enables a bank's corporate customers to send and receive real-time payments, to request a payment, and to leverage complete and integrated information.
- Announced a deployment of DBIQ Relationship Management and Insights to help digitally transform Peapack-Gladstone Bank's client experience, including a new mobile app, a new website, and new payment technology. Bottomline's platform allows the bank to provide experiences that are personalized, tailored, insightful and engaging through systems that continuously learn through embedded intelligence to deliver descriptive, predictive and prescriptive analytics.
- Continued to expand the distribution of Paymode-X by going live on NetSuite's SuiteApp marketplace, expanding Paymode-X access to thousands of potential buyers.
- Bottomline's expanded set of companies deploying its Universal Aggregator enables companies like Revolut to manage a software-based real-time payments button for its customers to use the U.K.'s Faster Payments Scheme, considered a key move to support mobile payments in the U.K.
- Awarded the "Accounts Payable / Invoicing Product of the Year" at this year's Document Manager Awards in the UK for the Company's invoice automation solution that integrates into Microsoft Dynamics 365. Bottomline was selected due to its excellence in its real-time integration capabilities.
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, 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.
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. 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.
Non-GAAP Financial Measures (Continued)
Reconciliation of Core Net Income
A reconciliation of core net income to GAAP net income for the three and six months ended December 31, 2019 and 2018 is as follows:
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (in thousands) | |||||||||||||||
| GAAP net income | $ | 2,609 | $ | 5,969 | $ | 1,242 | $ | 5,051 | |||||||
| Amortization of acquisition-related intangible assets | 5,213 | 5,253 | 10,163 | 10,579 | |||||||||||
| Stock-based compensation plan expense | 10,965 | 9,549 | 22,009 | 21,891 | |||||||||||
| Acquisition and integration-related expenses | 1,957 | 710 | 3,654 | 1,593 | |||||||||||
| Restructuring expense | 234 | 54 | 209 | 631 | |||||||||||
| Minimum pension liability adjustments | 48 | (80 | ) | 90 | (155 | ) | |||||||||
| Amortization of debt issuance costs | 104 | 104 | 207 | 208 | |||||||||||
| Global ERP system implementation and other costs | 200 | 972 | 424 | 2,553 | |||||||||||
| Other non-core expense (benefit) | 4 | - | (10 | ) | (237 | ) | |||||||||
| Tax effects on non-GAAP income | (7,597 | ) | (7,969 | ) | (11,552 | ) | (13,976 | ) | |||||||
| Core net income | $ | 13,737 | $ | 14,562 | $ | 26,436 | $ | 28,138 | |||||||
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 six months ended December 31, 2019 and 2018 is as follows:
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| GAAP diluted net income per share | $ | 0.06 | $ | 0.14 | $ | 0.03 | $ | 0.12 | |||||||
| Plus: | |||||||||||||||
| Amortization of acquisition-related intangible assets | 0.13 | 0.13 | 0.24 | 0.25 | |||||||||||
| Stock-based compensation plan expense | 0.26 | 0.23 | 0.53 | 0.53 | |||||||||||
| Acquisition and integration-related expenses | 0.05 | 0.02 | 0.09 | 0.04 | |||||||||||
| Global ERP system implementation and other costs | - | 0.02 | 0.01 | 0.06 | |||||||||||
| Restructuring expense | 0.01 | - | 0.01 | 0.02 | |||||||||||
| Tax effects on non-GAAP income | (0.18 | ) | (0.19 | ) | (0.28 | ) | (0.34 | ) | |||||||
| Diluted core earnings per share | $ | 0.33 | $ | 0.35 | $ | 0.63 | $ | 0.68 | |||||||
Non-GAAP Financial Measures (Continued)
Reconciliation of Adjusted EBITDA
A reconciliation of our adjusted EBITDA to GAAP net income for the three and six months ended December 31, 2019 and 2018 is as follows:
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (in thousands) | |||||||||||||||
| GAAP net income | $ | 2,609 | $ | 5,969 | $ | 1,242 | $ | 5,051 | |||||||
| Adjustments: | |||||||||||||||
| Other expense, net of pension adjustments | 842 | 1,031 | 1,807 | 1,996 | |||||||||||
| Benefit from income taxes | (3,780 | ) | (3,519 | ) | (3,777 | ) | (4,853 | ) | |||||||
| Depreciation and amortization | 6,560 | 5,551 | 12,652 | 11,191 | |||||||||||
| Amortization of acquisition-related intangible assets | 5,213 | 5,253 | 10,163 | 10,579 | |||||||||||
| Stock-based compensation plan expense | 10,965 | 9,549 | 22,009 | 21,891 | |||||||||||
| Acquisition and integration-related expenses | 1,957 | 710 | 3,654 | 1,593 | |||||||||||
| Restructuring expense | 234 | 54 | 209 | 631 | |||||||||||
| Global ERP system implementation and other costs | 200 | 972 | 424 | 2,553 | |||||||||||
| Other non-core expense (benefit) | 4 | - | (10 | ) | - | ||||||||||
| Adjusted EBITDA | $ | 24,804 | $ | 25,570 | $ | 48,373 | $ | 50,632 | |||||||
Non-GAAP Financial Measures (Continued)
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 six months ended December 31, 2019 and 2018 is as follows:
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| GAAP net income as a percent of revenue | 2 | % | 6 | % | 1 | % | 2 | % | |||
| Adjustments: | |||||||||||
| Other expense, net of pension adjustments | 1 | % | 1 | % | 1 | % | 1 | % | |||
| Benefit from income taxes | (3 | %) | (3 | %) | (2 | %) | (2 | %) | |||
| Depreciation and amortization | 5 | % | 5 | % | 5 | % | 5 | % | |||
| Amortization of acquisition-related intangible assets | 5 | % | 5 | % | 5 | % | 5 | % | |||
| Stock-based compensation plan expense | 10 | % | 9 | % | 10 | % | 11 | % | |||
| Acquisition and integration-related expenses | 2 | % | 0 | % | 2 | % | 1 | % | |||
| Global ERP system implementation and other costs | 0 | % | 1 | % | 0 | % | 1 | % | |||
| Adjusted EBITDA as a percent of revenue | 22 | % | 24 | % | 22 | % | 24 | % | |||
About Bottomline Technologies
Bottomline Technologies.
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 earning's release and our associated conference call, we will be posting additional material financial information.
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, achieve financial targets, expand margins 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, 2019 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 December 31, | Six Months Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenues: | |||||||||||||||
| Subscriptions | $ | 84,085 | $ | 71,288 | $ | 164,151 | $ | 141,056 | |||||||
| Software licenses | 2,800 | 5,665 | 5,376 | 10,177 | |||||||||||
| Service and maintenance | 24,061 | 26,786 | 48,886 | 54,191 | |||||||||||
| Other | 745 | 1,107 | 1,454 | 1,859 | |||||||||||
| Total revenues | 111,691 | 104,846 | 219,867 | 207,283 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Subscriptions | 33,449 | 31,352 | 66,214 | 63,021 | |||||||||||
| Software licenses | 157 | 210 | 318 | 441 | |||||||||||
| Service and maintenance | 12,929 | 12,528 | 25,982 | 25,234 | |||||||||||
| Other | 504 | 891 | 1,020 | 1,415 | |||||||||||
| Total cost of revenues | 47,039 | 44,981 | 93,534 | 90,111 | |||||||||||
| Gross profit | 64,652 | 59,865 | 126,333 | 117,172 | |||||||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing | 26,988 | 22,585 | 52,676 | 45,607 | |||||||||||
| Product development and engineering | 18,279 | 16,815 | 36,628 | 33,380 | |||||||||||
| General and administrative | 14,761 | 11,904 | 28,106 | 25,769 | |||||||||||
| Amortization of acquisition-related intangible assets | 5,213 | 5,253 | 10,163 | 10,579 | |||||||||||
| Total operating expenses | 65,241 | 56,557 | 127,573 | 115,335 | |||||||||||
| Income (loss) from operations | (589 | ) | 3,308 | (1,240 | ) | 1,837 | |||||||||
| Other expense, net | (582 | ) | (858 | ) | (1,295 | ) | (1,639 | ) | |||||||
| Income (loss) before income taxes | (1,171 | ) | 2,450 | (2,535 | ) | 198 | |||||||||
| Income tax benefit | 3,780 | 3,519 | 3,777 | 4,853 | |||||||||||
| Net income | $ | 2,609 | $ | 5,969 | $ | 1,242 | $ | 5,051 | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.06 | $ | 0.15 | $ | 0.03 | $ | 0.13 | |||||||
| Diluted | $ | 0.06 | $ | 0.14 | $ | 0.03 | $ | 0.12 | |||||||
| Shares used in computing net income per share: | |||||||||||||||
| Basic | 41,693 | 40,635 | 41,590 | 40,162 | |||||||||||
| Diluted | 42,092 | 41,739 | 41,917 | 41,662 | |||||||||||
| Bottomline Technologies | |||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||
| (in thousands) | |||||||
| December 31, | June 30, | ||||||
| 2019 | 2019 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash, cash equivalents and marketable securities | $ | 90,970 | $ | 99,705 | |||
| Cash and cash equivalents, held for customers | 8,475 | 5,637 | |||||
| Accounts receivable | 67,946 | 77,285 | |||||
| Other current assets | 29,451 | 30,434 | |||||
| Total current assets | 196,842 | 213,061 | |||||
| Property and equipment, net | 71,616 | 54,541 | |||||
| Operating lease right-of-use assets, net | 24,294 | - | |||||
| Goodwill and intangible assets, net | 370,531 | 374,450 | |||||
| Other assets | 31,648 | 27,177 | |||||
| Total assets | $ | 694,931 | $ | 669,229 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 15,940 | $ | 10,947 | |||
| Accrued expenses and other current liabilities | 42,739 | 33,945 | |||||
| Customer account liabilities | 8,475 | 5,637 | |||||
| Deferred revenue | 65,166 | 75,097 | |||||
| Total current liabilities | 132,320 | 125,626 | |||||
| Borrowings under credit facility | 100,000 | 110,000 | |||||
| Deferred revenue, non-current | 13,286 | 17,062 | |||||
| Operating lease liabilities, non-current | 20,988 | - | |||||
| Deferred income taxes | 7,420 | 10,345 | |||||
| Other liabilities | 24,983 | 26,819 | |||||
| Total liabilities | 298,997 | 289,852 | |||||
| Stockholders' equity | |||||||
| Common stock | 48 | 47 | |||||
| Additional paid-in-capital | 744,359 | 721,438 | |||||
| Accumulated other comprehensive loss | (37,631 | ) | (43,593 | ) | |||
| Treasury stock | (140,701 | ) | (127,095 | ) | |||
| Accumulated deficit | (170,141 | ) | (171,420 | ) | |||
| Total stockholders' equity | 395,934 | 379,377 | |||||
| Total liabilities and stockholders' equity | $ | 694,931 | $ | 669,229 | |||
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