Bottomline Technologies Reports Third Quarter Results

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Strong Growth in Subscription and Transaction Revenue Highlights Third Quarter PORTSMOUTH, N.H., April 27, 2017 (GLOBE NEWSWIRE) -- Bottomline Technologies (NASDAQ:EPAY), a leading provider of financial technology which helps businesses pay and get ...

Strong Growth in Subscription and Transaction Revenue Highlights Third Quarter

PORTSMOUTH, N.H., April 27, 2017 (GLOBE NEWSWIRE) -- Bottomline Technologies (NASDAQ:EPAY), a leading provider of financial technology which helps businesses pay and get paid, today reported financial results for the fiscal third quarter ended March 31, 2017.

Subscription and transaction revenues, which are primarily related to the company's cloud platforms, increased 13% as compared to the third quarter of last year to $55.9 million, or 16% on a constant currency basis, which is calculated as discussed in the "Non-GAAP Financial Measures" section that follows.  Revenues overall for the third quarter were $86.1 million.

GAAP net loss for the third quarter was $6.6 million compared to a net loss of $4.2 million for the third quarter of last year. GAAP net loss per share was $0.17 in the third quarter compared to $0.11 in the third quarter of last year.

Adjusted EBITDA for the third quarter was $19.1 million, or 22% of overall revenue compared to $19.4 million, or 23% of overall revenue for the third quarter of last year. Adjusted EBITDA is calculated as discussed in the "Non-GAAP Financial Measures" section that follows.

Core net income for the third quarter was $9.0 million compared to $10.1 million for the third quarter of last year. Core earnings per share was $0.23 for the third quarter compared to $0.26 for the third quarter of last year. Core net income and core earnings per share exclude certain items as discussed in the "Non-GAAP Financial Measures" section that follows.

"We are pleased with the results for the third quarter and our outlook for the upcoming fiscal year," said Rob Eberle, President and CEO of Bottomline Technologies. "The third quarter's strong subscription and transaction revenue growth reflects the value customers are placing on our innovative payment product set and the solid performance against our profitability goals underscores our proven ability to execute. We are committed to driving shareholder value and confident that our strategic plan will deliver solid returns to our shareholders."

Revenues for the nine months ended March 31, 2017 were $255.9 million compared to $255.2 million in the nine months ended March 31, 2016.  Subscription and transaction revenues increased 13%, or 18% on a constant currency basis, to $163.6 million in the nine months ended March 31, 2017 from $144.3 million in the nine months ended March 31, 2016.  GAAP net loss for the nine months ended March 31, 2017 was $27.5 million compared to $13.7 million for the nine months ended March 31, 2016.  GAAP net loss per share was $0.73 for the nine months ended March 31, 2017 compared to $0.36 for the nine months ended March 31, 2016. 

Core net income for the nine months ended March 31, 2017 was $27.1 million compared to $29.5 million for the nine months ended March 31, 2016.  Core earnings per share for the nine months ended March 31, 2017 was $0.71 compared to $0.77 for the nine months ended March 31, 2016.

Third Quarter Customer Highlights      

  • 18 leading institutions selected Paymode-X, Bottomline's leading cloud-based payments automation platform.
     
  • 3 leading organizations, including QBE Legal, chose Bottomline's cloud-based legal spend management solutions to automate, manage and control their legal spend.  
     
  • Signed 5 new Digital Banking deals, helping banks to compete and grow their corporate and business banking franchises by deploying innovative digital capabilities.
     
  • Companies such as Leibert Corporation and Banque Cantonale du Valais selected Bottomline's Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network. 
     
  • Organizations such as Regal Entertainment Group and Chesapeake Employers Insurance Co chose Bottomline's corporate payment automation solutions to extend their payments capabilities and improve efficiencies.

Third Quarter Strategic Corporate Highlights              

  • Announced the appointment of Mr. Paul H. Hough to the Board of Directors.  Mr. Hough is EVP and Deputy Chief Financial Officer of American Express.  Mr. Hough's thirty year career at American Express has included finance and general management experience in the U.S. and abroad. Currently, Mr. Hough has stewardship for financial management, risk finance, financial strategy and long range planning for the business and servicing groups. He is a member of American Express' Operating Committee and Global Management Team.
     
  • Launched a new payment fraud solution for members of the SWIFT payment network.  The solution is part of a package of measures being offered by Bottomline to help customers meet security requirements from the SWIFT payments cooperative under its recently announced Customer Security Programme (CSP.).  The new fraud solution goes beyond the mandatory controls to include real-time monitoring of user behavior and individual messages, which can stop potentially fraudulent payments before they take place.

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 and Adjusted EBITDA are non-GAAP financial measures.

Core net income and core earnings per share exclude certain items, specifically amortization of acquired intangible assets, goodwill impairment charges, stock-based compensation, acquisition and integration-related expenses, restructuring related costs, minimum pension liability adjustments, non-core charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other non-core or non-recurring gains or losses that arise from time to time.

Non-core charges associated with our convertible notes and revolving credit facility consist of the 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, integration related professional services costs and other incremental charges we incur as a direct result of acquisition and integration efforts. Global ERP system implementation costs relate to direct and incremental costs incurred in connection with our implementation of a new, global ERP solution and the related technology infrastructure.

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.

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 represents 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.

Reconciliation of Core Net Income
A reconciliation of core net income to GAAP net loss for the three and nine months ended March 31, 2017 and 2016 is as follows:

  Three Months Ended
March 31,
  Nine Months Ended
March 31,
  2017   2016   2017   2016
                               
  (in thousands)
GAAP net loss $ (6,624 )   $ (4,230 )   $ (27,478 )   $ (13,722 )
Amortization of acquired intangible assets 6,006     7,226     18,381     21,720  
Goodwill impairment charge -     -     7,529     -  
Stock-based compensation expense 7,354     7,628     24,209     23,094  
Acquisition and integration-related expenses 501     305     2,272     574  
Restructuring expenses 561     48     561     922  
Global ERP system implementation costs 2,076     1,040     6,673     1,819  
Minimum pension liability adjustments 264     66     805     140  
Amortization of debt issuance and debt discount costs 3,592     3,265     10,418     9,639  
Non-recurring tax benefit -     -     (4,461 )   -  
Tax effects on non-GAAP income (4,726 )   (5,269 )   (11,856 )   (14,640 )
Core net income $ 9,004     $ 10,079     $ 27,053     $ 29,546  

Reconciliation of Diluted Core Earnings per Share
A reconciliation of our diluted core earnings per share to our GAAP diluted net loss per share for the three and nine months ended March 31, 2017 and 2016 is as follows:

  Three Months Ended
March 31,
  Nine Months Ended
March 31,
  2017   2016   2017   2016
               
GAAP diluted net loss per share $ (0.17 )   $ (0.11 )   $ (0.73 )   $ (0.36 )
               
Plus:              
Amortization of acquired intangible assets 0.16     0.19     0.48     0.56  
Goodwill impairment charge -     -     0.20     -  
Stock-based compensation expense 0.19     0.20     0.64     0.61  
Acquisition and integration-related expenses 0.01     0.01     0.06     0.01  
Restructuring expenses 0.01     -     0.01     0.02  
Global ERP system implementation costs 0.05     0.03     0.18     0.05  
Minimum pension liability adjustments 0.01     -     0.02     -  
Amortization of debt issuance and debt discount costs 0.09     0.08     0.27     0.25  
Non-recurring tax benefit -     -     (0.12 )   -  
Tax effects on non-GAAP income (0.12 )   (0.14 )   (0.30 )   (0.37 )
               
Diluted core earnings per share $ 0.23     $ 0.26     $ 0.71     $ 0.77  
                               

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 diluted net loss per share for the three and nine months ended March 31, 2017 and 2016 is as follows:

  Three Months Ended
March 31,
  Nine Months Ended
March 31,
  2017   2016   2017   2016
Numerator:              
               
Core net income $ 9,004     $ 10,079     $ 27,053     $ 29,546  
               
Denominator:              
               
Weighted average shares used in computing diluted net loss per share for GAAP 37,965     38,101     37,891     37,959  
               
Impact of dilutive securities (stock options, restricted stock awards and employee stock purchase plan) (1) 379     556     187     553  
               
Weighted average shares used in computing diluted core earnings per share 38,344     38,657     38,078     38,512  

(1) These securities are anti-dilutive on a GAAP basis as a result of our net loss, but are considered dilutive on a non-GAAP basis in periods where we report non-GAAP net income.

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
March 31,
           
      2017     2016   GAAP   % Increase
Impact from
Currency
  Constant
Rates (2)
                                       
      (in thousands)            
Subscription and Transaction Revenues     $ 55,851       $ 49,488     13 %   3 %   16 %
Total Revenues     86,099       86,233     - %   4 %   4 %
                         
      Nine Months Ended
March 31,
           
      2017     2016   GAAP   % Increase
Impact from
Currency
  Constant
Rates (2)
                                       
      (in thousands)            
Subscription and Transaction Revenues     $ 163,627       $ 144,317     13 %   5 %   18 %
Total Revenues     255,911       255,162     - %   5 %   5 %

(2) 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.

Reconciliation of Adjusted EBITDA
A reconciliation of our adjusted EBITDA to GAAP net loss for the three and nine months ended March 31, 2017 and 2016 is as follows:

  Three Months Ended
March 31,
  Nine Months Ended
March 31,
  2017   2016   2017   2016
               
GAAP net loss $ (6,624 )   $ (4,230 )   $ (27,478 )   $ (13,722 )
               
Adjustments:              
Other expense, net 4,479     3,882     12,596     11,409  
Provision for (benefit from) income taxes (232 )   (7 )   (4,029 )   1,246  
Depreciation and amortization 4,684     3,464     12,925     9,789  
Amortization of acquired intangible assets 6,006     7,226     18,381     21,720  
Goodwill impairment charge -     -     7,529     -  
Stock-based compensation expense 7,354     7,628     24,209     23,094  
Acquisition and integration-related expenses 501     305     2,272     574  
Restructuring expenses 561     48     561     922  
Minimum pension liability adjustments 264     66     805     140  
Global ERP system implementation costs 2,076     1,040     6,673     1,819  
               
Adjusted EBITDA $ 19,069     $ 19,422     $ 54,444     $ 56,991  
                               

Reconciliation of Adjusted EBITDA as a percent of Revenue
A reconciliation of adjusted EBITDA as a percent of revenue to GAAP net loss as a percent of revenue the three and nine months ended March 31, 2017 and 2016 is as follows:

  Three Months Ended March 31,   Nine Months Ended March 31,
  2017   2016   2017   2016
               
GAAP net loss as a percent of revenue (8 %)   (5 %)   (11 %)   (5 %)
               
Adjustments:              
Other expense, net 5 %   5 %   5 %   4 %
Provision for (benefit from) income taxes 0 %   0 %   (2 %)   0 %
Depreciation and amortization 5 %   4 %   5 %   4 %
Amortization of acquired intangible assets 7 %   8 %   7 %   9 %
Goodwill impairment charge 0 %   0 %   3 %   0 %
Stock-based compensation expense 9 %   10 %   10 %   9 %
Acquisition and integration-related expenses 1 %   0 %   1 %   0 %
Restructuring expenses 1 %   0 %   0 %   0 %
Minimum pension liability adjustments 0 %   0 %   0 %   0 %
Global ERP system implementation costs 2 %   1 %   3 %   1 %
               
Adjusted EBITDA as a percent of revenue 22 %   23 %   21 %   22 %
                       

About Bottomline Technologies
Bottomline Technologies (NASDAQ:EPAY) helps businesses pay and get paid. We make complex business payments simple, secure and seamless by providing a trusted and easy-to-use set of cloud-based business payment, digital banking, fraud prevention and financial document solutions. Over 10,000 corporations, financial institutions, and banks benefit from Bottomline solutions. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit our website at 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 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 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, 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" 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, 2016 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.

 
Bottomline Technologies
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
                       
    Three Months Ended
March 31,
    Nine Months Ended
March 31,
    2017     2016     2017     2016
Revenues:                      
Subscriptions and transactions   $ 55,851       $ 49,488       $ 163,627       $ 144,317  
Software licenses   2,735       5,777       8,348       15,754  
Service and maintenance   26,344       29,100       79,937       89,797  
Other   1,169       1,868       3,999       5,294  
                       
Total revenues   86,099       86,233       255,911       255,162  
                       
Cost of revenues:                      
Subscriptions and transactions   25,867       22,461       74,535       64,568  
Software licenses   265       165       589       741  
Service and maintenance   12,607       13,276       39,308       39,545  
Other   835       1,317       2,891       3,807  
Total cost of revenues   39,574       37,219       117,323       108,661  
                       
Gross profit   46,525       49,014       138,588       146,501  
                       
Operating expenses:                      
Sales and marketing   18,976       20,419       57,176       62,854  
Product development and engineering   13,057       11,934       39,074       34,959  
General and administrative   10,863       9,790       35,339       28,035  
Amortization of intangible assets   6,006       7,226       18,381       21,720  
Goodwill impairment charge   -       -       7,529       -  
Total operating expenses   48,902       49,369       157,499       147,568  
                       
Loss from operations   (2,377 )     (355 )     (18,911 )     (1,067 )
                       
Other expense, net   (4,479 )     (3,882 )     (12,596 )     (11,409 )
                       
Loss before income taxes   (6,856 )     (4,237 )     (31,507 )     (12,476 )
Income tax provision (benefit)   (232 )     (7 )     (4,029 )     1,246  
                       
Net loss   $ (6,624 )     $ (4,230 )     $ (27,478 )     $ (13,722 )
                       
Basic and diluted net loss per share:   $ (0.17 )     $ (0.11 )     $ (0.73 )     $ (0.36 )
                       
Shares used in computing basic and diluted net loss per share:   37,965       38,101       37,891       37,959  

Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
    March 31,     June 30,
    2017     2016
ASSETS          
Current assets:          
Cash, cash equivalents and marketable securities   $ 140,940       $ 132,383  
Accounts receivable   62,333       61,773  
Other current assets   17,678       22,385  
           
Total current assets   220,951       216,541  
           
Property and equipment, net   53,909       51,029  
Goodwill and intangible assets, net   336,231       366,958  
Other assets   17,945       16,682  
           
Total assets   $ 629,036       $ 651,210  
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable   $ 9,268       $ 10,218  
Accrued expenses   26,210       27,512  
Deferred revenue   77,384       74,332  
Convertible senior notes   180,141       -  
           
Total current liabilities   293,003       112,062  
           
Convertible senior notes   -       169,857  
Deferred revenue, non current   20,795       19,086  
Deferred income taxes   15,008       28,147  
Other liabilities   27,186       27,271  
           
Total liabilities   355,992       356,423  
           
Stockholders' equity          
Common stock   42       42  
Additional paid-in-capital   616,119       591,800  
Accumulated other comprehensive loss   (43,955 )     (37,668 )
Treasury stock   (88,129 )     (75,832 )
Accumulated deficit   (211,033 )     (183,555 )
           
Total stockholders' equity   273,044       294,787  
           
Total liabilities and stockholders' equity   $ 629,036       $ 651,210  

Media Contact:
Rick Booth
Bottomline Technologies
603-501-6270
rbooth@bottomline.com




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Bottomline Technologies, Inc. via Globenewswire

Source(s) : Bottomline Technologies, Inc.

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