UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————
FORM 10-Q
——————
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20202021
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     

Commission file number: 0-25259
——————
Bottomline Technologies, Inc.

(Exact name of registrant as specified in its charter)
——————
Delaware02-0433294
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
325 Corporate Drive03801-6808
    Portsmouth,New Hampshire
(Address of principal executive offices)(Zip Code)
 
(603) 436-0700
(Registrant’s telephone number, including area code)

Bottomline Technologies (de), Inc.
(Former name, former address and former fiscal year, if changed since last report)
——————
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol(s):Name of each exchange on which registered:
Common Stock, $.001 par value per shareEPAYThe Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No      
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No     
The number of shares outstanding of the registrant’s common stock as of October 30, 202031, 2021 was 45,113,592.45,173,486.


Table of Contents
BOTTOMLINE TECHNOLOGIES, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 20202021
TABLE OF CONTENTS
PART IPage
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.

2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Balance SheetsUnaudited Condensed Consolidated Balance SheetsUnaudited Condensed Consolidated Balance Sheets
(in thousands)
(in thousands, except per share amounts)(in thousands, except per share amounts)
September 30,June 30,September 30,June 30,
2020202020212021
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$187,215 $194,832 Cash and cash equivalents117,200 $133,932 
Cash held for customersCash held for customers7,144 6,304 Cash held for customers7,431 9,836 
Marketable securitiesMarketable securities10,210 10,209 Marketable securities8,185 10,216 
Accounts receivable net of allowances for doubtful accounts of $1,363 at September 30, 2020 and $1,336 at June 30, 202069,056 69,970 
Accounts receivable net of allowances for doubtful accounts of $988 at September 30, 2021 and $1,304 at June 30, 2021Accounts receivable net of allowances for doubtful accounts of $988 at September 30, 2021 and $1,304 at June 30, 202167,115 72,978 
Prepaid expenses and other current assetsPrepaid expenses and other current assets30,930 28,328 Prepaid expenses and other current assets37,901 34,653 
Total current assetsTotal current assets304,555 309,643 Total current assets237,832 261,615 
Property and equipment, netProperty and equipment, net67,953 67,155 Property and equipment, net66,293 68,471 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net25,197 24,712 Operating lease right-of-use assets, net28,732 27,570 
GoodwillGoodwill220,899 205,713 Goodwill242,863 246,698 
Intangible assets, netIntangible assets, net160,813 154,111 Intangible assets, net163,758 162,691 
Other assetsOther assets34,836 31,803 Other assets48,549 48,683 
Total assetsTotal assets$814,253 $793,137 Total assets$788,027 $815,728 
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$11,947 $13,422 Accounts payable$9,753 $11,428 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities45,204 48,198 Accrued expenses and other current liabilities54,470 45,925 
Customer account liabilitiesCustomer account liabilities7,144 6,304 Customer account liabilities7,431 9,836 
Deferred revenueDeferred revenue69,781 82,074 Deferred revenue75,876 88,679 
Total current liabilitiesTotal current liabilities134,076 149,998 Total current liabilities147,530 155,868 
Borrowings under credit facilityBorrowings under credit facility180,000 180,000 Borrowings under credit facility130,000 130,000 
Deferred revenue, non-currentDeferred revenue, non-current15,479 13,959 Deferred revenue, non-current11,459 12,559 
Operating lease liabilities, non-currentOperating lease liabilities, non-current21,312 20,670 Operating lease liabilities, non-current27,996 26,629 
Deferred income taxesDeferred income taxes9,862 8,656 Deferred income taxes9,702 14,574 
Other liabilitiesOther liabilities31,108 27,520 Other liabilities20,601 19,864 
Total liabilitiesTotal liabilities391,837 400,803 Total liabilities347,288 359,494 
Stockholders' equityStockholders' equityStockholders' equity
Preferred Stock, $.001 par value:Preferred Stock, $.001 par value:Preferred Stock, $.001 par value:
Authorized shares-4,000; issued and outstanding shares-NaN
Authorized shares- 4,000; issued and outstanding shares- none
Authorized shares- 4,000; issued and outstanding shares- none
— — 
Common Stock, $.001 par value:Common Stock, $.001 par value:Common Stock, $.001 par value:
Authorized shares-100,000; issued shares- 48,560 at September 30, 2020 and 48,147 at June 30, 2020; outstanding shares- 42,660 at September 30, 2020 and 42,172 at June 30, 2020
49 48 
Authorized shares-100,000; issued shares- 49,586 at September 30, 2021 and 49,294 at June 30, 2021; outstanding shares- 43,090 at September 30, 2021 and 43,237 at June 30, 2021Authorized shares-100,000; issued shares- 49,586 at September 30, 2021 and 49,294 at June 30, 2021; outstanding shares- 43,090 at September 30, 2021 and 43,237 at June 30, 202149 49 
Additional paid-in-capitalAdditional paid-in-capital783,457 764,906 Additional paid-in-capital833,563 819,392 
Accumulated other comprehensive lossAccumulated other comprehensive loss(39,381)(48,675)Accumulated other comprehensive loss(21,376)(16,081)
Treasury stock: 5,900 shares at September 30, 2020 and 5,975 shares at June 30, 2020, at cost(141,544)(143,333)
Treasury stock: 6,496 shares at September 30, 2021 and 6,057 shares at June 30, 2021, at costTreasury stock: 6,496 shares at September 30, 2021 and 6,057 shares at June 30, 2021, at cost(169,746)(150,282)
Accumulated deficitAccumulated deficit(180,165)(180,612)Accumulated deficit(201,751)(196,844)
Total stockholders' equityTotal stockholders' equity422,416 392,334 Total stockholders' equity440,739 456,234 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$814,253 $793,137 Total liabilities and stockholders' equity$788,027 $815,728 
See accompanying notes.
3

Table of Contents
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)(in thousands, except per share amounts)(in thousands, except per share amounts)
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
Revenues:Revenues:Revenues:
SubscriptionsSubscriptions$90,384 $80,066 Subscriptions$103,496 $90,384 
Software licensesSoftware licenses977 2,576 Software licenses927 977 
Service and maintenanceService and maintenance20,564 24,825 Service and maintenance18,708 20,564 
OtherOther440 709 Other474 440 
Total revenuesTotal revenues112,365 108,176 Total revenues123,605 112,365 
Cost of revenues:Cost of revenues:Cost of revenues:
SubscriptionsSubscriptions35,218 32,765 Subscriptions42,693 35,218 
Software licensesSoftware licenses90 161 Software licenses81 90 
Service and maintenanceService and maintenance10,916 13,053 Service and maintenance9,252 10,916 
OtherOther309 516 Other295 309 
Total cost of revenuesTotal cost of revenues46,533 46,495 Total cost of revenues52,321 46,533 
Gross profitGross profit65,832 61,681 Gross profit71,284 65,832 
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing25,743 25,688 Sales and marketing33,814 25,743 
Product development and engineeringProduct development and engineering18,499 18,349 Product development and engineering21,465 18,499 
General and administrativeGeneral and administrative13,626 13,345 General and administrative17,749 13,626 
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets5,029 4,950 Amortization of acquisition-related intangible assets5,071 5,029 
Total operating expensesTotal operating expenses62,897 62,332 Total operating expenses78,099 62,897 
Income (loss) from operations2,935 (651)
(Loss) income from operations(Loss) income from operations(6,815)2,935 
Other expense, netOther expense, net(780)(713)Other expense, net(897)(780)
Income (loss) before income taxes2,155 (1,364)
Provision for income taxes(1,764)(3)
Net income (loss)$391 $(1,367)
(Loss) income before income taxes(Loss) income before income taxes(7,712)2,155 
Income tax benefit (provision)Income tax benefit (provision)2,805 (1,764)
Net (loss) incomeNet (loss) income$(4,907)$391 
Basic and diluted net income (loss) per share$0.01 $(0.03)
Basic and diluted net (loss) income per shareBasic and diluted net (loss) income per share$(0.11)$0.01 
Shares used in computing net income (loss) per share:
Shares used in computing net (loss) income per share:Shares used in computing net (loss) income per share:
BasicBasic42,457 41,487 Basic43,273 42,457 
DilutedDiluted42,771 41,487 Diluted43,273 42,771 
Other comprehensive income (loss), net of tax:
Unrealized loss on available for sale securities(25)(3)
Other comprehensive income, net of tax:Other comprehensive income, net of tax:
Unrealized gain (loss) on available for sale securitiesUnrealized gain (loss) on available for sale securities(25)
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments446 (677)Change in fair value on interest rate hedging instruments416 446 
Minimum pension liability adjustmentsMinimum pension liability adjustments(233)180 Minimum pension liability adjustments(142)(233)
Foreign currency translation adjustmentsForeign currency translation adjustments9,106 (5,879)Foreign currency translation adjustments(5,570)9,106 
Other comprehensive income (loss), net of tax:9,294 (6,379)
Comprehensive income (loss)$9,685 $(7,746)
Other comprehensive (loss) income, net of tax:Other comprehensive (loss) income, net of tax:(5,295)9,294 
Comprehensive (loss) incomeComprehensive (loss) income$(10,202)$9,685 

See accompanying notes.
4

Table of Contents
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' EquityUnaudited Condensed Consolidated Statements of Stockholders' EquityUnaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)(in thousands)(in thousands)
Three Months Ended September 30, 2020
Three Months Ended September 30, 2021Three Months Ended September 30, 2021
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' EquityCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 202048,147$48$764,906$(48,675)5,975$(143,333)$(180,612)$392,334
Balance at June 30, 2021Balance at June 30, 202149,294 $49 $819,392 $(16,081)6,057 $(150,282)$(196,844)$456,234 
Issuance of common stock for employee stock purchase plan and upon exercise of stock optionsIssuance of common stock for employee stock purchase plan and upon exercise of stock options0379(75)1,7892,168Issuance of common stock for employee stock purchase plan and upon exercise of stock options— — 278 — (78)2,035 — 2,313 
Vesting of restricted stock awardsVesting of restricted stock awards24711Vesting of restricted stock awards292 — — — — — — — 
Issuance of common stock in connection with acquisition16608,1838,183
Repurchase of common stock to be held in treasuryRepurchase of common stock to be held in treasury— — — — 517 (21,499)— (21,499)
Stock compensation plan expenseStock compensation plan expense9,9899,989Stock compensation plan expense— — 13,893 — — — — 13,893 
Minimum pension liability adjustments, net of taxMinimum pension liability adjustments, net of tax(233)(233)Minimum pension liability adjustments, net of tax— — — (142)— — — (142)
Net income391391
Net lossNet loss— — — — — — (4,907)(4,907)
Cumulative effect of adoption of current expected credit loss accounting standard5656
Unrealized loss on available for sale securities, net of tax(25)(25)
Unrealized gain on available for sale securities, net of taxUnrealized gain on available for sale securities, net of tax— — — — — — 
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments446446Change in fair value on interest rate hedging instruments— — — 416 — — — 416 
Foreign currency translation adjustmentForeign currency translation adjustment9,1069,106Foreign currency translation adjustment— — — (5,570)— — — (5,570)
Balance at September 30, 202048,560$49$783,457$(39,381)5,900$(141,544)$(180,165)$422,416
Balance at September 30, 2021Balance at September 30, 202149,586 $49 $833,563 $(21,376)6,496 $(169,746)$(201,751)$440,739 


Three Months Ended September 30, 2019
Three Months Ended September 30, 2020Three Months Ended September 30, 2020
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' EquityCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 201946,995$47$721,438$(43,593)5,680$(127,095)$(171,420)$379,377
Balance at June 30, 2020Balance at June 30, 202048,147 $48 $764,906 $(48,675)5,975 $(143,333)$(180,612)$392,334 
Issuance of common stock for employee stock purchase plan and upon exercise of stock optionsIssuance of common stock for employee stock purchase plan and upon exercise of stock options13775(60)1,3992,174Issuance of common stock for employee stock purchase plan and upon exercise of stock options— — 379 — (75)1,789 — 2,168 
Vesting of restricted stock awardsVesting of restricted stock awards37700Vesting of restricted stock awards247 — — — — — 
Repurchase of common stock to be held in treasury233(10,005)(10,005)
Issuance of common stock in connection with acquisitionIssuance of common stock in connection with acquisition166 — 8,183 — — — — 8,183 
Stock compensation plan expenseStock compensation plan expense11,09911,099Stock compensation plan expense— — 9,989 — — — — 9,989 
Minimum pension liability adjustments, net of taxMinimum pension liability adjustments, net of tax180180Minimum pension liability adjustments, net of tax— — — (233)— — — (233)
Net loss(1,367)(1,367)
Cumulative effect of adoption of updated lease standard3737
Net incomeNet income— — — — — — 391 391 
Cumulative effect of adoption of current expected credit loss accounting standardCumulative effect of adoption of current expected credit loss accounting standard— — — — — — 56 56 
Unrealized loss on available for sale securities, net of taxUnrealized loss on available for sale securities, net of tax(3)(3)Unrealized loss on available for sale securities, net of tax— — — (25)— — — (25)
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments(677)(677)Change in fair value on interest rate hedging instruments— — — 446 — — — 446 
Foreign currency translation adjustmentForeign currency translation adjustment(5,879)(5,879)Foreign currency translation adjustment— — — 9,106 — — — 9,106 
Balance at September 30, 201947,385$47$733,312$(49,972)5,853$(135,701)$(172,750)$374,936
Balance at September 30, 2020Balance at September 30, 202048,560 $49 $783,457 $(39,381)5,900 $(141,544)$(180,165)$422,416 



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Table of Contents
Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended September 30,
20202019
Operating activities:
Net income (loss)$391 $(1,367)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of acquisition-related intangible assets5,029 4,950 
Stock-based compensation plan expense9,973 11,044 
Depreciation and other amortization7,699 6,092 
Deferred income tax expense (benefit)227 (368)
Provision for allowances on accounts receivable89 67 
Amortization of debt issuance costs103 103 
Amortization of premium (discount) on investments(28)
(Gain) loss on other investments(48)
Loss on disposal of equipment15 35 
(Gain) loss on foreign exchange(53)259 
Changes in operating assets and liabilities:
Accounts receivable2,349 11,025 
Prepaid expenses and other current assets(1,971)(3,268)
Operating lease right-of-use asset, net303 975 
Other assets(1,164)(1,077)
Accounts payable(824)1,214 
Accrued expenses(1,565)(571)
Operating lease liabilities146 (823)
Customer account liabilities563 1,609 
Deferred revenue(13,484)(11,969)
Other liabilities127 210 
Net cash provided by operating activities7,910 18,112 
Investing activities:
Acquisition of businesses and assets, net of cash acquired(9,892)
Purchases of other investments(87)
Issuance of note receivable(1,600)
Purchases of available-for-sale securities(2,929)(6,274)
Proceeds from sales of available-for-sale securities2,900 3,700 
Capital expenditures, including capitalization of software costs(8,628)(11,449)
Net cash used in investing activities(20,149)(14,110)
Financing activities:
Repurchase of common stock(10,005)
Repayment of notes payable(182)
Proceeds from exercise of stock options and employee stock purchase plan2,168 2,174 
Net cash provided by (used in) financing activities2,168 (8,013)
Effect of exchange rate changes on cash3,294 (1,970)
Decrease in cash, cash equivalents and restricted cash(6,777)(5,981)
Cash, cash equivalents and restricted cash at beginning of period201,136 97,801 
Cash, cash equivalents and restricted cash at end of period$194,359 $91,820 
Cash and cash equivalents at end of period$187,215 $84,751 
Cash held for customers at end of period7,144 7,069 
Cash, cash equivalents and restricted cash at end of period$194,359 $91,820 
Supplemental disclosures of non-cash investing activities:
Issuance of common stock in connection with acquisition$8,183 $

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Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended September 30,
20212020
Operating activities:
Net (loss) income$(4,907)$391 
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of acquisition-related intangible assets5,071 5,029 
Stock-based compensation plan expense13,912 9,973 
Depreciation and other amortization9,195 7,699 
Deferred income tax benefit(4,641)227 
Change in provision for allowances on accounts receivable(146)89 
Amortization of debt issuance costs103 103 
Amortization of premium on investments30 
Fair value adjustment on other investments(83)— 
Gain on other investments— (48)
Loss on disposal of equipment15 
Gain on foreign exchange(255)(53)
Changes in operating assets and liabilities:
Accounts receivable5,383 2,349 
Prepaid expenses and other current assets(3,501)(1,971)
Operating lease right-of-use asset, net(1,225)303 
Other assets(177)(1,164)
Accounts payable(904)(824)
Accrued expenses5,700 (1,565)
Operating lease liabilities1,657 146 
Customer account liabilities(2,189)563 
Deferred revenue(12,858)(13,484)
Other liabilities77 127 
Net cash provided by operating activities10,246 7,910 
Investing activities:
Acquisition of businesses and assets, net of cash acquired(115)(9,892)
Investment distributions received81 — 
Purchases of other investments(35)— 
Issuance of note receivable— (1,600)
Purchases of available-for-sale securities(900)(2,929)
Proceeds from sales of available-for-sale securities2,900 2,900 
Capital expenditures, including capitalization of software costs(11,717)(8,628)
Net cash used in investing activities(9,786)(20,149)
Financing activities:
Repurchase of common stock(20,802)— 
Proceeds from exercise of stock options and employee stock purchase plan2,313 2,168 
Net cash (used) provided in financing activities(18,489)2,168 
Effect of exchange rate changes on cash(1,108)3,294 
Decrease in cash, cash equivalents and restricted cash(19,137)(6,777)
Cash, cash equivalents and restricted cash at beginning of period143,768 201,136 
Cash, cash equivalents and restricted cash at end of period$124,631 $194,359 
Cash and cash equivalents at end of period$117,200 $187,215 
Cash held for customers at end of period7,431 7,144 
Cash, cash equivalents and restricted cash at end of period$124,631 $194,359 
Supplemental disclosures of non-cash investing activities:
Issuance of common stock in connection with acquisition$— $8,183 
Repurchases of common stock not funded in the period$697 $— 
See accompanying notes.
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Bottomline Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 20202021
Note 1—Basis of Presentation
    The accompanying unaudited condensed consolidated financial statements of Bottomline Technologies, Inc. (referred to below as we, us, our or Bottomline) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the interim financial information have been included. Operating results for the three months ended September 30, 20202021 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending June 30, 2021, particularly in light of the novel coronavirus (COVID-19) pandemic and the effect it is having on the domestic and global economies.2022. For further information, refer to the consolidated financial statements and footnotes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission on August 28, 2020.30, 2021.

Note 2—Recent Accounting Pronouncements
RecentlyAccounting Pronouncements to be Adopted Pronouncements
    Financial Instruments - Credit Losses:Interest Rate Reform: In June 2016,March 2020, the FASB issued an accounting standard update that replaces the incurred loss impairment model with an expected loss model for financial assets held at amortized cost, eliminates the concept of other-than-temporary impairment and requires credit losses associated with available-for-sale debt securities to be recorded through an allowance rather than a reduction in the amortized cost basis of the security. The changes are expected to result in earlier recognition of credit losses associated with financial assets, including trade accounts receivable. We adopted this standard on July 1, 2020, on a modified retrospective basis, with the cumulative-effect accounting consequence recorded as an adjustment to the opening balance of accumulated deficit as of the effective date. The adoption of this standard did not have a material impact on our financial statements.
Goodwill Impairment:In January 2017, the FASBFinancial Accounting Standards Board (FASB) issued an accounting standard update to simplifyaddress financial reporting related to the test for goodwill impairment which removestransition from the requirementLondon Interbank Offered Rate (LIBOR) to compare the carrying value of goodwill against its implied fair value. Under the revisedalternative reference rates. The standard an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amountprovides optional expedients and recognize an impairment chargeexceptions to existing guidance for the amount by whichaccounting of contracts and hedging relationship modified as a result of reference rate reform. We may elect to apply the carrying amount exceedsstandard prospectively to contracts modified on or before December 31, 2022. We are currently evaluating the reporting unit’s fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. We adopted this standard on July 1, 2020 and do not expectimpact the adoption of this standard towill have a material impact on our financial statements.
Income Taxes:In December 2019, the FASB issued an accounting standard update related to simplifying the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocations, basis differences for changes in ownership interest in equity method investments and the calculation of interim period income tax. The standard also simplifies other aspects of accounting for taxes. We adopted this standard on July 1, 2020 and the adoption did not have a material impact on our financial statements.

Note 3—Revenue Recognition
    Remaining Performance Obligations
    The transaction price we allocate to remaining performance obligations that are unsatisfied, or partially unsatisfied, as of September 30, 20202021 represents contracted revenue that will be recognized in future periods. Our future performance obligations consist primarily of SaaS / stand-ready performance obligations relating to future periods, contracted but uncompleted professional services obligations and support and maintenance obligations. During the three months ended September 30, 20202021 and 2019,2020, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.
    RevenueThe transaction price allocated to remainingunsatisfied performance obligations was $416.4$461 million as of September 30, 20202021 of which we expect to recognize approximately $147.6$194.2 million over the next twelve months and the remainder thereafter. The timing of the amounts we estimate recognizing in revenue is based primarily on the estimated go-live dates of our hosted arrangements, or the date the customer has been provided access to the solution. These estimated dates can change for a variety of reasons and the timing of our recognition of revenue is affected by these changes. Once the implementation services for our hosted solutions have concluded, we generally anticipate that the amount of revenue that will be recognized after the next twelve months will be recognized in a relatively consistent amount over the following two to five year periods. We exclude from our measure of remaining performance obligations amounts related to future transactional or usage-based fees for which the value of services transferred to the customer will correspond to the amount we will invoice for those services.
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    Contract Assets and Liabilities
    The table below presents our accounts receivable, contract assets and deferred revenue balances as of September 30, 20202021 and June 30, 2020.2021.
September 30,June 30,September 30,June 30,
20202020$ Change20212021$ Change
(in thousands)(in thousands)
Contract assetsContract assets4,704 3,646 1,058 Contract assets7,329 6,627 702 
Deferred revenueDeferred revenue85,260 96,033 (10,773)Deferred revenue87,335 101,238 (13,903)
    Contract assets arise when we recognize revenue in excess of amounts billed to the customer and the right to payment is contingent on conditions other than simply the passage of time, such as the future completion of a related performance obligation. Contract assets are classified in our consolidated balance sheets as other current assets for those contract assets with recognition periods of one year or less and other assets for contract assets with recognition periods greater than one year. We assess outstanding accounts receivable and contract assets for credit loss on an ongoing basis. In estimating credit loss,losses, we pool accounts with similar risk characteristics. Accounts that do not share the same risk characteristics are assessed for credit loss on an individual basis. The
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allowance for credit losslosses is based on historical loss data, customer specific information and current market conditions and expected future economic conditions. Historically, our bad debt expense has not been significant but could be adversely affected in future periods due to the impact of the COVID-19 pandemic.significant.
Deferred revenue consists of billings or customer payments in excess of amounts recognized as revenue.
The decrease in deferred revenue at September 30, 20202021 as compared to June 30, 20202021 reflects our recognition of revenue from maintenance contracts, a significant portion of which are billed on a calendar year basis, as well as the impact of foreign exchange changes.basis.
    For the three months ended September 30, 20202021 and 2019,2020, we recognized $46.6 million and $40.3 million, and $34.0 millionrespectively, in revenue from amounts that were included in deferred revenue as of June 30, 2021 and 2020, and 2019, respectively.
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Note 4—Fair Value
Fair Values of Assets and Liabilities
    We measure fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:
Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.
Level 3: Unobservable inputs for which there is little or no market data which require us to develop our own assumptions about how market participants would price the asset or liability.
    Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.
    At September 30, 20202021 and June 30, 2020,2021, our assets and liabilities measured at fair value on a recurring basis were as follows:
September 30, 2020June 30, 2020September 30, 2021June 30, 2021
Fair Value Measurements Using Input TypesFair Value Measurements Using Input TypesFair Value Measurements Using Input TypesFair Value Measurements Using Input Types
Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
(in thousands)(in thousands)
AssetsAssetsAssets
Money market funds (cash and cash equivalents)Money market funds (cash and cash equivalents)$342 $$$342 $354 $$$354 Money market funds (cash and cash equivalents)$2,362 $— $— $2,362 $340 $— $— $340 
Available for sale securities - DebtAvailable for sale securities - DebtAvailable for sale securities - Debt
U.S. Corporate$$$$$$$$
Government - U.S. treasury securitiesGovernment - U.S. treasury securities10,147 10,147 10,148 10,148 Government - U.S. treasury securities— 8,121 — 8,121 — 10,150 — 10,150 
Total available for sale securitiesTotal available for sale securities$$10,147 $$10,147 $$10,148 $$10,148 Total available for sale securities$— $8,121 $— $8,121 $— $10,150 $— $10,150 
Preferential conversion feature (long-term)$$$532 $532 $$$$
Other investments (long-term)Other investments (long-term)550 550 514 514 Other investments (long-term)— 983 1,051 2,034 — 966 1,014 1,980 
Total assetsTotal assets$342 $10,147 $1,082 $11,571 $354 $10,148 $514 $11,016 Total assets$2,362 $9,104 $1,051 $12,517 $340 $11,116 $1,014 $12,470 
LiabilitiesLiabilitiesLiabilities
Interest rate swap (short-term)Interest rate swap (short-term)$$1,638 $$1,638 $$1,631 $$1,631 Interest rate swap (short-term)$— $1,522 $— $1,522 $— $1,564 $— $1,564 
Interest rate swap (long-term)Interest rate swap (long-term)$$2,995 $$2,995 $$3,448 $$3,448 Interest rate swap (long-term)$— $1,176 $— $1,176 $— $1,550 $— $1,550 
Total liabilitiesTotal liabilities$$4,633 $$4,633 $$5,079 $$5,079 Total liabilities$— $2,698 $— $2,698 $— $3,114 $— $3,114 
Fair Value of Financial Instruments
    We have certain financial instruments which consist of cash and cash equivalents, cash held for customers, marketable securities, accounts receivable, notes receivable, contract assets, equity securities, accounts payable, customer account liabilities, certain derivative instruments, assets related to deposits made to fund future requirements associated with Israeli severance arrangements and debt drawn on our Credit Facility.Facility (as defined in Note 11). Fair value information for each of these instruments is as follows:
•    Cash and cash equivalents, cash held for customers, accounts receivable, notes receivable, contract assets, accounts payable and customer account liabilities fair values approximate their carrying values, due to the expected duration of these instruments.
•    Marketable securities classified as held to maturity, all of which mature within one year, are recorded at amortized cost, which at September 30, 20202021 and June 30, 2020,2021, approximated fair value.
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•    Marketable debt securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of accumulated other accumulated comprehensive income (loss) in stockholders’ equity, net of tax. We use the specific identification method to determine any realized gains or losses from the sale of our marketable debt
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securities classified as available for sale. We assess securities with an amortized cost basis in excess of estimated fair value for credit loss. As of September 30, 20202021 and June 30, 2020,2021, the unrealized losses associated with available for sale securities waswere not material. No credit loss has been recorded as we do not intend to sell the investments prior to recovering their amortized costs basis.
    We have certain derivative instruments accounted for at fair value. We hold a convertible note with a preferential conversion feature which qualifies as a derivative instrument. The fair value assumptions consider the nature of the conversion feature and the expected timeline to a qualifying conversion event. We are also a party to interest rate swap instruments.    The fair value of our interest rate swaps are based on the present value of projected cash flows that will occur over the life of the instruments, after considering certain contractual terms and counterparty credit risk.
•     The carrying value of assets related to deposits we have made to fund future requirements associated with Israeli severance arrangements was $1.1 million and $1.0 million at September 30, 2020 and June 30, 2020, respectively, which approximated their fair value.
•     We hold certain other investments accounted for at fair value. The fair value of these investments was $0.6 million and $0.5$2.0 million at September 30, 20202021 and June 30, 2020,2021, respectively. The estimated fair value for approximately $1.1 million of these investments, which are in a private equity fund, are Level 3 measurements as they rely on significant unobservable inputs and, depending on the specific nature of the investment, consider such factors as pricing models that consider a comparative analysis of acquisitions and pricing multiples from market participants as well as discounted cash flow analyses. We also have certain other investments for which there is no readily determinable fair value. The carrying value of these investments was $0.5$12.0 million at September 30, 20202021 and June 30, 2020, respectively.2021, respectively, and are reported as a component of other assets. Investments for which we cannot readily determine fair value are recorded at cost, less impairment (if any), plus or minus adjustments for observable price changes.
•     We have borrowings of $180$130 million against our Credit Facility. The fair value of these borrowings, which are classified as Level 2, approximates their carrying value at September 30, 2020,2021 as the instrument carries a variable rate of interest which reflects current market rates.
Marketable Securities
    The table below presents information regarding our marketable securities by major security type as of September 30, 20202021 and June 30, 2020.2021.
September 30, 2020June 30, 2020September 30, 2021June 30, 2021
Held to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotal
(in thousands)(in thousands)
Marketable securities:Marketable securities:Marketable securities:
Government and other debt securitiesGovernment and other debt securities$63 $10,147 $10,210 $61 $10,148 $10,209 Government and other debt securities$64 $8,121 $8,185 $66 $10,150 $10,216 
Total marketable securitiesTotal marketable securities$63 $10,147 $10,210 $61 $10,148 $10,209 Total marketable securities$64 $8,121 $8,185 $66 $10,150 $10,216 
    The following table summarizes the estimated fair value of our investments in available for sale marketable securities classified by the contractual maturity date of the securities:
September 30, 20202021
(in thousands)
Due within 1 year$10,1478,121 
Due in 1 year through 5 years0 
Total$10,1478,121 
    All of our available for sale marketable securities are classified as current assets.
    The following table presents the aggregate fair values and gross unrealized losses for those available for sale investments that were in an unrealized loss position as of September 30, 20202021 and June 30, 2020,2021, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
At September 30, 2020At June 30, 2020At September 30, 2021At June 30, 2021
Less than 12 MonthsLess than 12 Months
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
(in thousands)(in thousands)
Government - U.S. treasury securitiesGovernment - U.S. treasury securities$1,917 $(1)$2,012 $(1)Government - U.S. treasury securities$5,110 $(3)$5,930 $(1)
TotalTotal$1,917 $(1)$2,012 $(1)Total$5,110 $(3)$5,930 $(1)
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Note 5—Business and Asset Acquisitions
Prior Year Acquisitions
TreasuryXpress
On January 2021 we acquired French-headquartered TreasuryXpress Holding SAS (TX) for a total purchase price of $31.9 million in cash. Additionally, we issued 66,403 shares of our common stock to certain selling stockholders of TX with vesting conditions tied to continued employment with us. These shares are compensatory and we will record share-based payment expense over their vesting period of five years.
The allocation of the purchase price remains preliminary, as we are still obtaining fair value estimates for the intangible assets acquired. As of September 30, 2021, we have recorded $20.3 million of goodwill. The goodwill is not deductible for tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of $17.3 million consisting of acquired technology, customer related assets and a trade name are being amortized over a weighted average estimated useful life of 10 years.
Our acquisition of TX, a leading provider of cloud-based treasury management solutions for corporations and banks around the world, extended our geographic presence in France, the United States and the Middle-East. The operating results of TX are an immaterial component of our Payment Platforms operating segment. TX operating results did not have a material impact on our revenue or net loss and acquisition related costs of approximately $1.7 million were recorded as a component of general and administrative expenses.
AnaSys AG
In July 2020 we acquired Switzerland-based AnaSys AG (AnaSys) for a total purchase price of $13.9 million. The purchase price consisted of a cash payment of 5.2 million Swiss Francs (approximately $5.7 million based on the foreign exchange rate in effect at the acquisition date) and 166,393 shares of our common stock valued at $8.2 million on the closing date of the transaction. Additionally, we issued 28,000 shares of our common stock to certain selling stockholders of AnaSys with vesting conditions tied to continued employment with us. These shares are compensatory and we will recordare recording share-based payment expense over their vesting period of five years.
We are still obtaining fair value estimates for the intangible assets acquired. In the preliminaryIn allocation of the purchase price, at September 30, 2020, we recorded $10.6$10.7 million of goodwill.goodwill, $6.3 million of identifiable intangible assets and a $2.8 million post retirement liability. The goodwill is not deductible for income tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets, of $6.3 million, consisting of customer and technology related assets, are being amortized over a weighted average estimated useful life of 13 years.
Our acquisition of AnaSys, a provider of financial messaging solutions, will extendextended our geographic presence in Switzerland and Germany and expandexpanded our customer base. The operating results of AnaSys are a component of our CloudBanking Solutions segment from the datesegment. AnaSys operating results did not have a material impact on our revenue or net loss and acquisition related costs of the acquisition forward.approximately $0.3 million were recorded as a component of general and administrative expenses.
FMR Systems, Inc.
In July 2020, we acquired customer assets and intellectual property from FMR Systems, Inc (FMR), a small corporate and commercial onboardingonboarding software provider, for aan up-front cash payment of $2.0 million and contingent futuredeferred cash payments of up to $0.3 million. We will leverage FMR's technology to build a next generation commercial onboarding product.
We are still obtaining fair value estimates for the intangible assets acquired. In the preliminary allocation of the purchase price at September 30, 2020, we recorded $0.4$1.0 million of goodwill. The goodwill is deductible for income tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of $2.3$1.7 million, consisting primarily of technology related assets, are being amortized over a weighted average estimated useful life of 59 years. FMR's operating results are included in our Banking Solutions segment from the acquisition date forward and all goodwill was allocated to this segment. FMR's operating results did not have a material impact on our revenue or net loss and acquisition related costs were not material.
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Note 6—Net (Loss) Income (Loss) Per Share
    The following table sets forth the computation of basic and diluted net (loss) incomeloss per share:
Three Months Ended September 30,
20202019
(in thousands, except per share amounts)
Numerator - basic and diluted:
Net income (loss)$391 $(1,367)
Denominator:
Shares used in computing basic net income (loss) per share attributable to common stockholders42,457 41,487 
Impact of dilutive securities314 
Shares used in computing diluted net income (loss) per share attributable to common stockholders42,771 41,487 
Basic and diluted net income (loss) per share attributable to common stockholders$0.01 $(0.03)
Three Months Ended September 30,
20212020
(in thousands, except per share amounts)
Numerator - basic and diluted:
Net (loss) income$(4,907)$391 
Denominator:
Shares used in computing basic (loss) income per share attributable to common stockholders43,273 42,457 
Impact of dilutive securities— 314 
Shares used in computing diluted net (loss) income per share attributable to common stockholders43,273 42,771 
Basic and diluted net (loss) income per share attributable to common stockholders$(0.11)$0.01 
For the three months ended September 30, 2019,2021, approximately 2.3 2.6 million shares of unvested restricted stock and shares underlying stock options were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive.

Note 7—Operations by Segments and Geographic Areas
Segment Information
    Operating segments are the components of our business for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer. Our operating segments are generally organized by the type of product or service offered and by geography.
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TableDuring the quarter ended September 30, 2021 we realigned our internal financial reporting to provide for more specific visibility into key product lines, which resulted in a change to our externally reportable segments. Specifically, our prior Cloud Solutions segment was renamed Payment Platforms and includes the revenue and operating results of Contents
our Paymode-X and PTX payment platforms. Our Legal Spend Management Solutions have been presented as a stand-alone operating segment, having previously been a component of our Cloud Solutions segment. Finally, our Financial Messaging solutions, previously a component of our Cloud Solutions segment, has been included as a component of our Banking Solutions segment. Our prior Payments and Documents segment has been renamed to Traditional Solutions, with no change to the composition of the revenue and operating activity included in this segment. These changes are reflected for all financial periods presented.
    Similar operating segments have been aggregated into 4the following 5 reportable segments as follows:segments:
    Cloud Solutions.Payment Platforms. Our Cloud SolutionsPayment Platforms segment provides customers withincludes our Paymode-X and PTX solutions, our largest and fastest growing payment platforms. These solutions are SaaS technology offerings that facilitate electronic payments, electronic invoicing,through which businesses can streamline the invoice-to-pay process, automate workflows accelerate approvals and spend management. Ourenhance efficiency and security. Each solution supports a variety of payment platforms (Paymode-X, PTXoptions including virtual card, ACH, check, wire and financial messaging) are included in this segment.others. These solutions are highly scalable, easy to implement, secure and cost effective and facilitate cash payment and transaction settlement between businesses, their vendors and banks. Our legal spend management solutions, which enable customers to create more efficient processes for managing invoices generated by outside law firms while offering insight into important legal spend factors such as expense monitoring and outside counsel performance, are also included within this segment.effective. Revenue within this segment is generally recognized on a subscription or transaction basis.
Banking Solutions. Our Banking Solutions segment provides solutions that are specifically designed for banking and financial institution customers. Our Banking Solutions products are sold predominantly on a hosted basis, with revenue recognized on a subscription or transaction basis.
PaymentsLegal Spend Management. Our legal spend management solutions enable customers to create more efficient processes for managing invoices generated by outside law firms while offering insight into important legal spend factors such as expense monitoring and Documents.outside counsel performance. Revenue within this segment is generally recognized on a subscription or transaction basis.
Traditional Solutions. Our Payments and DocumentsTraditional Solutions segment supplies financial business process management software solutions, including making and collecting payments, sending and receiving invoices, and generating and storing business documents. This segment also provides a range of standard professional services and equipment and supplies that complement and enhance our core software products. When licensed for on-premise deployment, software license revenue is typically recorded upon delivery of the software and commencement of the license term. If the solution is hosted by us, we typically record revenue over time. Professional services revenue is normally recorded as we perform the work and software support and maintenance revenue is recorded ratably over the support period.
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Other. Our Other segment consists of our fraud and financial crime solutions and our healthcare solutions. The Other segment loss reported below is attributable to the operating results of our fraud and financial crime solutions, which reflects the revenue contribution from thea legacy sales channel we acquired and the burden of certain other centralized costs; however, our fraud solutions are sold as part of allby several of our operating segments. Our healthcare solutions focus on eliminating paper intensive processes and providing electronic signature and mobile document capabilities to allow healthcare organizations to improve efficiency and reduce costs. Software revenue for perpetual licenses of our fraud and financial crime and healthcare products is typically recorded upon delivery of the software and commencement of the license term. Professional services revenue is recorded as we perform the work and software support and maintenance revenue is recorded ratably over the support period which is normally twelve months.
    Periodically, a sales person in one operating segment will sell products and services that are typically sold within a different operating segment. In such cases, the transaction is generally recorded by the operating segment to which the sales person is assigned. Accordingly, segment results can include the results of transactions that have been allocated to a specific segment based on the contributing sales resources, rather than the nature of the product or service. Conversely, a transaction can be recorded by the operating segment primarily responsible for delivery to the customer, even if the sales person is assigned to a different operating segment.
    Our chief operating decision maker assesses segment performance based on a variety of factors that normally include segment revenue and a segment measure of profit or loss. Each segment’s measure of profit or loss is on a pre-tax basis and excludes certain items as presented in our reconciliation of the measure of total segment profit to GAAP income (loss) before income taxes that follows. There are no inter-segment sales; accordingly, the measure of segment revenue and profit or loss reflects only revenues from external customers. The costs of certain corporate level expenses, primarily general and administrative expenses, are allocated to our operating segments based on a percentage of the segment’s revenues.
    We do not track or assign our assets by operating segment.
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    Segment information for the three months ended September 30, 20202021 and 20192020 according to the segment descriptions above, is as follows:
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Segment revenue:Segment revenue:Segment revenue:
Cloud Solutions
$64,956 $61,022 
Payment PlatformsPayment Platforms$33,807 $25,367 
Banking SolutionsBanking Solutions26,190 24,169 Banking Solutions47,681 45,229 
Payments and Documents17,396 18,578 
Legal Spend ManagementLegal Spend Management22,063 20,550 
Traditional SolutionsTraditional Solutions16,192 17,396 
OtherOther3,823 4,407 Other3,862 3,823 
Total segment revenueTotal segment revenue$112,365 $108,176 Total segment revenue$123,605 $112,365 
Segment measure of profit:
Cloud Solutions$14,597 $13,799 
Segment measure of profit (loss):Segment measure of profit (loss):
Payment PlatformsPayment Platforms$5,824 $5,755 
Banking SolutionsBanking Solutions2,956 535 Banking Solutions3,753 7,212 
Payments and Documents4,100 5,009 
Legal Spend ManagementLegal Spend Management5,208 4,586 
Traditional SolutionsTraditional Solutions3,114 4,100 
OtherOther(3,107)(1,866)Other(3,976)(3,107)
Total measure of segment profitTotal measure of segment profit$18,546 $17,477 Total measure of segment profit$13,923 $18,546 
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    A reconciliation of the total measure of segment profit to our GAAP (loss) income (loss) before income taxes is as follows:
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Total measure of segment profitTotal measure of segment profit$18,546 $17,477 Total measure of segment profit$13,923 $18,546 
Less:Less:Less:
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets(5,029)(4,950)Amortization of acquisition-related intangible assets(5,071)(5,029)
Stock-based compensation plan expenseStock-based compensation plan expense(9,973)(11,044)Stock-based compensation plan expense(13,912)(9,973)
Acquisition and integration-related expensesAcquisition and integration-related expenses(245)(1,697)Acquisition and integration-related expenses(201)(245)
Restructuring (expense) benefit(70)25 
Other non-core (expense) benefit(48)14 
Global ERP system implementation and other costs(224)
Restructuring expenseRestructuring expense(386)(70)
Other non-core expenseOther non-core expense(110)(48)
Shareholder engagement feesShareholder engagement fees(947)— 
Other expense, net of pension adjustmentsOther expense, net of pension adjustments(1,026)(965)Other expense, net of pension adjustments(1,008)(1,026)
Income (loss) before income taxes$2,155 $(1,364)
(Loss) income before income taxes(Loss) income before income taxes$(7,712)$2,155 
    The following depreciation and other amortization expense amounts are included in the measure of segment profit:
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Depreciation and other amortization expense:Depreciation and other amortization expense:Depreciation and other amortization expense:
Cloud Solutions$4,401 $3,594 
Payment PlatformsPayment Platforms$2,831 $2,387 
Banking SolutionsBanking Solutions2,752 2,095 Banking Solutions3,935 3,164 
Payments and Documents270 220 
Legal Spend ManagementLegal Spend Management1,681 1,602 
Traditional SolutionsTraditional Solutions362 270 
OtherOther276 183 Other386 276 
Total depreciation and other amortization expenseTotal depreciation and other amortization expense$7,699 $6,092 Total depreciation and other amortization expense$9,195 $7,699 


Disaggregation of Revenue
    The tables below present our subscriptions revenue and total revenue disaggregated by major product classification for the three months ended September 30, 20202021 and 2019.2020.
Three Months Ended September 30, 2021
SubscriptionSoftwareProfessional Services, Maintenance and OtherTotal
(in thousands)
Payment Platforms
$33,504 $— $303 $33,807 
Banking Solutions40,935 77 6,669 47,681 
Legal Spend Management22,060 — 22,063 
Traditional Solutions6,026 439 9,727 16,192 
Other971 411 2,480 3,862 
Total revenues$103,496 $927 $19,182 $123,605 

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(in thousands)Three Months Ended September 30,
20202019
Subscriptions RevenueTotal RevenueSubscriptions RevenueTotal Revenue
Payment Platforms (1)
$40,248 $44,406 $35,206 $40,448 
Banking Solutions22,985 26,190 18,373 24,169 
Legal Spend Management (2)
20,550 20,550 20,574 20,574 
All other (3)
6,601 21,219 5,913 22,985 
Total revenues$90,384 $112,365 $80,066 $108,176 
Three Months Ended September 30, 2020
SubscriptionSoftwareProfessional Services, Maintenance and OtherTotal
(in thousands)
Payment Platforms
$25,280 $— $87 $25,367 
Banking Solutions37,953 104 7,172 45,229 
Legal Spend Management20,550 — — 20,550 
Traditional Solutions5,681 748 10,967 17,396 
Other920 125 2,778 3,823 
Total revenues$90,384 $977 $21,004 $112,365 
    We deriveFor the majorityquarter ended September 30, 2021 we derived 84% of our revenue from subscriptionsubscription-based arrangements. The substantial majority of our non-subscription revenue is derived from software support and maintenance fees and from professional services, with such revenue being recorded by all of our operating segments but with the largest concentration of this revenue being derived from our legacy business payments and documents products in our Payments and DocumentsTraditional Solutions segment.
    (1) Consists of our Paymode-X, PTX and financial messaging settlement network, all of which are components of our Cloud Solutions segment.
(2) Component of our Cloud Solutions segment.
(3) Consists of our legacy business payments and documents products (which are components of our Payments and Documents segment) and revenue from our Other segment.
Geographic Information
    We have presented geographic information about our revenues below. This presentation allocates revenue based on the point of sale, not the location of the customer. Accordingly, we derive revenues from geographic locations based on the location of the customer that would vary from the geographic areas listed here.
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Revenues from unaffiliated customers:Revenues from unaffiliated customers:Revenues from unaffiliated customers:
United StatesUnited States$68,981 $69,020 United States$74,994 $68,981 
United KingdomUnited Kingdom27,694 24,967 United Kingdom30,630 27,694 
SwitzerlandSwitzerland10,867 9,760 Switzerland12,395 10,867 
OtherOther4,823 4,429 Other5,586 4,823 
Total revenues from unaffiliated customersTotal revenues from unaffiliated customers$112,365 $108,176 Total revenues from unaffiliated customers$123,605 $112,365 
    Long-lived assets based on geographical location, excluding deferred tax assets and intangible assets, were as follows:
At September 30,At June 30,At September 30,At June 30,
2020202020212021
(in thousands)(in thousands)
Long-lived assets:Long-lived assets:Long-lived assets:
United StatesUnited States$67,580 $64,858 United States$80,913 $82,816 
United KingdomUnited Kingdom42,663 41,835 United Kingdom42,756 44,455 
OtherOther17,738 16,977 Other19,905 17,453 
Total long-lived assetsTotal long-lived assets$127,981 $123,670 Total long-lived assets$143,574 $144,724 

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Note 8—Income Taxes
    The income tax expense we record in any interim period is based on our estimated effective tax rate for the fiscal year for those tax jurisdictions in which we can reliably estimate that rate. The calculation of our estimated effective tax rate requires an estimate of pre-tax income by tax jurisdiction as well as total tax expense for the fiscal year. Accordingly, our annual estimated effective tax rate is subject to adjustment if there are changes to our initial estimates of total tax expense or pre-tax income, including the mix of income by jurisdiction. For those tax jurisdictions for which we are unable to reliably estimate an overall effective tax rate, we calculate income tax expense based upon the actual effective tax rate for the year-to-date period.
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Provision for Income Taxes
    We recorded income tax benefit of $2.8 million and income tax expense of $1.8 million and $3,000 for the three months ended September 30, 20202021 and 2019,2020, respectively. In the three months ended September 30, 2021, income tax benefit was primarily attributable to our U.S. operations, partially offset by tax expense attributable to our United Kingdom (UK) and Switzerland operations. In the three months ended September 30, 2020, the income tax expense was primarily attributable to our U.S., UK and Switzerland operations. In addition, we recordedoperations and a discrete tax expense of $0.7$0.7 million as a result of tax legislation enacted in the UK that increased the UK statutory UK tax rate from 17 percent to 19 percent which required us to re-value our net UK deferred tax liability balance to reflect this higher rate. In the three months ended September 30, 2019, the income tax expense recorded was principally associated with the U.S. deferred tax consequences arising from our acquisition of BankSight Software Systems, Inc., offset by an income tax benefit attributable to our loss before income tax for the three months ended September 30, 2019.percent.
    We currently anticipate that our unrecognized tax benefits will decrease within the next twelve months by approximately $0.3$0.9 million asas a result of the expiration of certain statutes of limitations associated with intercompany transactions subject to tax in multiple jurisdictions.
    We record a deferred tax asset if we believe that it is more likely than not that we will realize a future tax benefit. Ultimate realization of any deferred tax asset is dependent on our ability to generate sufficient future taxable income in the appropriate tax jurisdiction before the expiration of carryforward periods, if any. Our assessment of deferred tax asset recoverability considers many different factors including historical and projected operating results, the reversal of existing deferred tax liabilities that provide a source of future taxable income, the impact of current tax planning strategies and the availability of future tax planning strategies. We establish a valuation allowance against any deferred tax asset for which we are unable to conclude that recoverability is more likely than not.
    At September 30, 2020,2021, we had a total valuation allowance of $36.2of $42.2 million againstagainst our deferred tax assets given the uncertainty of recoverability of these amounts.
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Note 9—Goodwill and Other Intangible Assets
    Acquired intangible assets are initially recorded at fair value and tested periodically for impairment. Goodwill represents the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired and liabilities assumed in a business combination and is tested at least annually for impairment. We perform an impairment test of goodwill during the fourth quarter of each fiscal year or sooner, if indicators of potential impairment arise.
    At September 30, 2020,2021, the carrying value of goodwill for all of our reporting units was $220.9$242.9 million.
    The following tables set forth the information for intangible assets subject to amortization and for intangible assets not subject to amortization.
As of September 30, 2020As of September 30, 2021
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining LifeGross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining Life
(in thousands)(in years)(in thousands)(in years)
Amortized intangible assets:Amortized intangible assets:Amortized intangible assets:
Customer relatedCustomer related$229,526 $(163,029)$66,497 7.7Customer related$232,435 $(176,930)$55,505 7.0
Core technologyCore technology139,809 (100,178)39,631 6.9Core technology154,682 (108,336)46,346 7.3
Other intangible assetsOther intangible assets22,363 (20,296)2,067 4.6Other intangible assets23,241 (21,025)2,216 4.5
Capitalized software development costsCapitalized software development costs27,041 (15,181)11,860 1.8Capitalized software development costs29,760 (20,133)9,627 2.7
Software (1)
Software (1)
88,912 (48,154)40,758 3.4
Software (1)
111,651 (61,587)50,064 3.7
TotalTotal$507,651 $(346,838)$160,813 Total$551,769 $(388,011)$163,758 
Unamortized intangible assets:Unamortized intangible assets:Unamortized intangible assets:
GoodwillGoodwill220,899 Goodwill242,863 
Total intangible assetsTotal intangible assets$381,712 Total intangible assets$406,621 
As of June 30, 2020
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining Life
(in thousands)(in years)
Amortized intangible assets:
Customer related$219,305 $(157,008)$62,297 7.5
Core technology135,720 (97,431)38,289 7.2
Other intangible assets22,099 (19,927)2,172 4.8
Capitalized software development costs26,222 (14,047)12,175 2.9
Software (1)
84,493 (45,315)39,178 3.8
Total$487,839 $(333,728)$154,111 
Unamortized intangible assets:
Goodwill205,713 
Total intangible assets$359,824 
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As of June 30, 2021
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining Life
(in thousands)(in years)
Amortized intangible assets:
Customer related$235,366 $(175,841)$59,525 7.2
Core technology154,254 (107,008)47,246 7.5
Other intangible assets23,504 (20,984)2,520 4.8
Capitalized software development costs29,217 (18,843)10,374 2.6
Software (1)
101,898 (58,872)43,026 4.0
Total$544,239 $(381,548)$162,691 
Unamortized intangible assets:
Goodwill246,698 
Total intangible assets$409,389 
——————
(1)Software includes purchased software and software developed for internal use.
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    Estimated amortization expense for the remainder of fiscal year 20212022 and subsequent fiscal years for acquired intangible assets, capitalized software development costs and software, in each case that have been placed in service as of September 30, 2020,2021, is as follows:
Acquired Intangible AssetsCapitalized Software Development CostsSoftwareAcquired Intangible AssetsCapitalized Software Development CostsSoftware
(in thousands)(in thousands)
Remaining 2021$15,216 $3,431 $9,237 
202218,718 4,575 9,388 
Remaining 2022Remaining 2022$14,907 $3,912 $12,106 
2023202317,314 1,731 7,370 202318,821 2,371 11,505 
2024202415,511 1,001 5,733 202416,976 1,616 9,397 
2025202513,072 420 2,863 202514,510 943 6,168 
2026 and thereafter28,364 1,330 
2026202613,566 360 2,917 
2027 and thereafter2027 and thereafter25,287 601 
    Each period, for capitalized software development costs, we evaluate whether amortization expense using a ratio of revenue in the period to total expected revenue over the product’s expected useful life would result in greater amortization than as calculated under a straight-line methodology and, if that were to occur, amortization in that period would be accelerated accordingly.
    The following table represents a rollforwardroll forward of our goodwill balances, by reportable segment:
Cloud SolutionsBanking SolutionsPayments and DocumentsOtherTotalPayment PlatformsBanking SolutionsLegal Spend ManagementTraditional Solutions
Other (1)
Total
(in thousands)(in thousands)
Balance at June 30, 2020 (1)
$117,493 $39,516 $40,510 $8,194 $205,713 
Balance at June 30, 2021Balance at June 30, 2021$151,765 $40,534 $— $46,205 $8,194 $246,698 
Goodwill reclassified as a result of segment reorganizationGoodwill reclassified as a result of segment reorganization(88,767)61,310 27,457 00— 
Measurement period adjustmentMeasurement period adjustment(868)— — — — (868)
Goodwill acquired during the periodGoodwill acquired during the period10,636 398 11,034 Goodwill acquired during the period— — — — — — 
Impact of foreign currency translationImpact of foreign currency translation2,040 2,112 4,152 Impact of foreign currency translation(1,514)0— (1,453)— (2,967)
Balance at September 30, 2020 (1)
$130,169 $39,914 $42,622 $8,194 $220,899 
Balance at September 30, 2021Balance at September 30, 2021$60,616 $101,844 $27,457 $44,752 $8,194 $242,863 
——————
(1)OtherOther goodwill balance is net of $7.5 million accumulated impairment losses, previously recorded.
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Note 10—Commitments and Contingencies
Leases
We determine if any arrangement is, or contains, a lease at its inception based on whether or not we have the right to control the asset during the contract period. We are a lessee in any lease contract when we obtain the right to control the asset.
We determine the lease term by assuming the exercise of options that are reasonably certain. Leases with a lease term of 12 months or less at inception are not reflected in our balance sheet and those lease costs are expensed on a straight-line basis over the respective term. Leases with a term greater than 12 months are reflected as non-current right-of-use (ROU) assets and current and non-current lease liabilities in our consolidated balance sheets. Current lease liabilities are classified as a component of accrued expenses and other current liabilities.
As the implicit interest rate in our leases is generally not known, we use our incremental borrowing rate as the discount rate for purposes of determining the present value of our lease liabilities. Our determination of the incremental borrowing rate takes into consideration the expected term of the lease, the effect of the currency in which the lease is denominated and the rate of interest we would expect to incur on a collateralized debt instrument. At September 30, 2020,2021, our weighted average discount rate utilized for our leases was 5.3%.6.0%
When our contracts contain lease and non-lease elements, we account for both as a single lease component.
We lease office space in cities worldwide under facility leases that expire at various dates. We are typically required to pay certain incremental operating costs above the base rent for our facility leases. Our leases may include periodic payment adjustments based on changes in applicable price indexes. To the extent the adjustment is considered a fixed payment it is included in the measurement of the ROU asset and lease liability, otherwise it is recognized in the period incurred. We also have a variety of data center locations and, to a lesser extent, vehicle and equipment leases. Our facility leases represent the substantial majority of our operating leases and often include renewal options that we can exercise unilaterally. At September 30, 2020,2021, renewal options ranged from 3 months to 10 years.
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At September 30, 2020,2021, our operating leases had a weighted average remaining lease term of 6.08.4 years and we had no material capitalfinance leases.
Additional information of our lease activity, as of and for the three months ended September 30, 20202021 is as follows:
Operating leases:Three Months Ended September 30, 2020
Operating leases:2021
(in thousands)
Operating lease cost$1,9391,844 
Short-term lease cost8898 
Variable lease cost539505 
Sublease income(89)(63)
Total lease cost$2,4772,384 


September 30, 20202021
(in thousands)
Right-of-use assets, net$25,19728,732 
Operating lease liabilities, current (1)
$6,247 7,060 
Operating lease liabilities, non-current21,31227,996 
Total operating lease liabilities$28,37234,243 
——————
(1)    Included as a component of accrued expenses and other current liabilities.
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Three Months Ended September 30, 2020
2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities$1,9211,942 
Right-of-use assets obtained in exchange for lease obligations$1,9063,065 
The increase in our ROU assets and lease liabilities during the three months ended September 30, 2021 is primarily due to a new facility lease in India.
Remaining maturities of lease liabilities at September 30, 20202021 were as follows:
For the year ending June 30,For the year ending June 30,Operating LeasesFor the year ending June 30,Operating Leases
(in thousands)(in thousands)
2021$6,383 
202220227,105 2022$6,203 
202320235,163 20236,903 
202420243,283 20244,440 
202520252,903 20254,029 
202620264,057 
ThereafterThereafter8,845 Thereafter19,261 
Total lease paymentsTotal lease payments33,682 Total lease payments44,893 
Less imputed interestLess imputed interest(5,310)Less imputed interest(10,650)
Total lease liabilitiesTotal lease liabilities$28,372 Total lease liabilities$34,243 

As of September 30, 2021, we had additional operating leases that had not yet commenced of $3.4 million. These operating leases will commence in fiscal year 2022 and have a lease term between 12 months to 13 years.


Legal Matters
    We are, from time to time, a party to legal proceedings and claims that arise out of the ordinary course of our business. We are not currently a party to any legal proceedings we believe would have a material legal proceedings.impact on our financial position or operating results.
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Note 11—Indebtedness
Credit Agreement
We are party to a credit agreement with Bank of America, N.A. and certain other lenders (the Credit Agreement) that provides for a revolving credit facility in the amount of up to $300 million (the Credit Facility) and that expires in July 2023. We have the right to request an increase of the aggregate commitments under the Credit Facility by up to an additional $150 million, subject to specified conditions. At September 30, 2020,2021, we owed $180owed $130 million under the Credit Facility.
Borrowings under the Credit Facility may be used for lawful corporate purposes of Bottomline and its subsidiaries, including acquisitions, share repurchases, capital expenditures, the repayment or refinancing of indebtedness and general corporate purposes. The Credit Facility is available for the issuance of up to $20 million of letters of credit and up to $20 million of swing line loans.
The Credit Agreement contains customary representations, warranties and covenants, including, but not limited to, material adverse events, specified restrictions on indebtedness, liens, investments, acquisitions, sales of assets, dividends and other restricted payments, and transactions with affiliates. We are required to comply with (a) a maximum consolidated net leverage ratio of 3.50 to 1.00; and (b) a minimum consolidated interest coverage ratio of 3.00 to 1.00. The Credit Agreement also contains customary events of default and related cure provisions. As of September 30, 2020,2021, we were in compliance with all covenants.
The Credit Agreement is guaranteed by us (as borrower) and certain of our existing and future domestic material restricted subsidiaries (the Guarantors) and is secured by substantially all of our domestic assets and those of the Guarantors, including a pledge of all the shares of capital stock of the Guarantors and 65% of the shares of the capital stock of our first-tier foreign subsidiaries or those of any Guarantor, in each case subject to certain exceptions as set forth in the Credit Agreement. The collateral does not include, among other things, any real property or the capital stock or any assets of any unrestricted subsidiary.
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Note 12—Derivative Instruments
Cash Flow Hedges
Interest Rate Swap Agreements
We utilize interest rate swap agreements to hedge our exposure to interest rate risk. At September 30, 2020,2021, we had 2 outstanding interest rate swap agreements with notional values of $100 million and $80 million.
The notional value of each interest rate swap agreement is expected to match the corresponding principal amount of a portion of our borrowings under the Credit Facility.
The $100 million notional value agreement is effective as of December 1, 2017 and expires on December 1, 2021. During this period, the notional amount will have a fixed interest rate of 1.9275% and CitizensCitizens Bank, National Association, as counterparty to the agreement, will pay us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments are made quarterly on a net settlement basis.
The $80 million notional value agreement is effective as of December 1, 2021 and expires on July 16, 2023. During this period, the notional amount will have a fixed interest rate of 2.125% and BankBank of America, N.A., as counterparty to the agreement, will pay us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments will be made monthly on a net settlement basis.
We designated the interest rate swaps as hedging instruments and they qualified for hedge accounting upon inception and at September 30, 2020.2021. To continue to qualify for hedge accounting, the instruments must retain a “highly effective” ability to hedge interest rate risk for borrowings under the Credit Facility. We are required to test hedge effectiveness at the end of each financial reporting period. If a derivative qualifies for hedge accounting, changes in fair value of the hedge instrument are recognized in accumulated other comprehensive income (loss) (AOCI) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. The reclassification into earnings is recorded as a component of our interest expense within other expense, net. If the instrument were to lose some or all of its hedge effectiveness, changes in fair value for the “ineffective” portion of the instrument would be recorded immediately in earnings.
The fair values of the interest rate swaps and their respective locations in our consolidated balance sheets at September 30, 20202021 and June 30, 20202021 were as follows:
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DescriptionDescriptionBalance Sheet LocationSeptember 30, 2020June 30, 2020DescriptionBalance Sheet LocationSeptember 30, 2021June 30, 2021
Derivative interest rate swapsDerivative interest rate swaps(in thousands)Derivative interest rate swaps(in thousands)
Short-term derivative liabilityShort-term derivative liabilityAccrued expenses and other current liabilities$1,638 $1,631 Short-term derivative liabilityAccrued expenses and other current liabilities$1,522 $1,564 
Long-term derivative liabilityLong-term derivative liabilityOther liabilities$2,995 $3,448 Long-term derivative liabilityOther liabilities$1,176 $1,550 
The following table presents the effect of the derivative interest rate swaps in our consolidated statement of comprehensive loss for the three months ended September 30, 20202021 and 2019.2020.
Gain (Loss) in AOCI June 30, 2020Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2020Gain (Loss) in AOCI June 30, 2021Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2021
(in thousands)(in thousands)
Derivative interest rate swapDerivative interest rate swap$(5,079)$(6)$452 $(4,633)Derivative interest rate swap$(3,114)$(53)$469 $(2,698)
Gain (Loss) in AOCI June 30, 2019Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2019Gain (Loss) in AOCI June 30, 2020Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2020
(in thousands)(in thousands)
Derivative interest rate swapDerivative interest rate swap$(1,285)$(595)$(82)$(1,962)Derivative interest rate swap$(5,079)$(6)$452 $(4,633)
——————
(1)    Recorded as interest income (expense) within other expense, net in our unaudited consolidated statements of comprehensive income (loss).
During the three months ended September 30, 2020,2021, we concluded that 0no portion of the hedges was ineffective.
We expect to reclassify approximately $1.8$1.0 million of this unrealized loss from AOCI to earnings over the next twelve months.
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Note 13—Postretirement and Other Employee Benefits
Defined Benefit Pension Plan
We sponsor defined benefit pension plans for our Swiss-based employees (the Swiss pension plans) that are governed by local regulatory requirements. The Swiss pension plans include certain minimum benefit guarantees that, under U.S. GAAP, require defined benefit plan accounting.
Net periodic pension costs for the Swiss pension plans included the following components:
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Components of net periodic costComponents of net periodic costComponents of net periodic cost
Service costService cost$765 $724 Service cost$707 $765 
Interest costInterest cost37 56 Interest cost49 37 
Prior service creditPrior service credit(83)(77)Prior service credit(119)(83)
Net actuarial lossNet actuarial loss61 118 Net actuarial loss— 61 
Expected return on plan assetsExpected return on plan assets(285)(307)Expected return on plan assets(359)(285)
Net periodic costNet periodic cost$495 $514 Net periodic cost$278 $495 
    The components of net periodic pension cost other than current service cost are presented within other expense, net in our unaudited consolidated statements of comprehensive income (loss).
Note 14—Subsequent Events
In October 2021 we acquired substantially all of the assets and assumed certain liabilities of Bora Payment Systems, LLC (Bora) for a purchase price of $15 million in cash. Through the Bora acquisition we acquired technology that will be used predominantly in our Paymode-X solution to facilitate straight through processing of payments made via virtual card. This provides a significant benefit to suppliers who process a high volume of business to business virtual card transactions. The operating results of Bora will be included as a component of our Payments Platform segment from the acquisition date forward. We anticipate that the substantial majority of the purchase price will be allocated to intangible assets including acquired technology, customer contracts and goodwill.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Without limiting the foregoing, the words may, will, should, could, expects, plans, intends, anticipates, believes, estimates, predicts, potential and similar expressions are intended to identify forward-looking statements. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us up to and including the date of this report, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II. Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. You should carefully review those factors and also carefully review the risks outlined in other documents that we file from time to time with the Securities and Exchange Commission (SEC), including Part II. Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.2021, as filed with the SEC on August 30 2021.
In the management discussion that follows, we have highlighted those changes and operating events that were the primary factors affecting period to period fluctuations. The remainder of the change in period to period fluctuations from that which is specifically discussed arises from various individually insignificant items.
Overview
We help make complex business payments simple, smart and secure. We provide solutions that are helping to accelerate the digital transformation of business payments. Corporations and banks rely on us for domestic and international payments, efficient cash management, automated workflows for payment processing and bill review, and fraud detection, behavioral analytics and regulatory compliance solutions.
We operate payment platforms that facilitate electronic payment and transaction settlement between businesses and their vendors and banks.vendors. We offer solutions that banks use to provide payment, cash management and treasury capabilities to their business customers, as well as solutions that financial institutions use to engage intelligently with customers and acquire, deepen and grow profitable relationships. Our legal spend management solutions help manage and determine the right amount to pay for legal services and claims vendor expenditures for insurance companies and other large consumers of outside legal services as well asand provide related tools and analytics for law firms themselves. Corporate customers rely on our solutions to automate payment and accounts payable processes and to streamline and manage the production and retention of electronic documents. Our fraud and risk management solutions are designed to non-invasively monitor and analyze user behavior and payment transactions to flag behavioral and data anomalies and other suspicious activity to gain protection from internal fraud and external financial crime.
Our solutions are designed to complement, leverage and extend our customers’ existing information systems, accounting applications and banking relationships so that theythe solutions can be deployed quickly and efficiently. To help our customers realize the maximum value from our products and meet their specific business requirements, we also provide professional services for training, consulting and product enhancement.
Financial Highlights
For the three months ended September 30, 2020,2021, our revenue increased to $112.4$123.6 million from $108.2$112.4 million in the same period of the prior fiscal year. Our revenue for the three months ended September 30, 20202021 was favorably impacted by $2.0 million due to the impact of foreign currency exchange rates primarily related to the British Pound Sterling, which appreciated against the U.S. Dollar as compared to the same period of the prior fiscal year. The overall revenue increase was attributable to revenue increases in our CloudPayment Platforms, Banking Solutions segmentand Legal Segment Management segments of $3.9$8.4 million, $2.5 million, and $1.5 million, respectively, partially offset by a $1.2 million revenue decrease in our Traditional Solutions segment. The increase in revenue in our Payment Platforms and Legal Spend Management segments was driven by increased subscription revenue. The increased revenue in our Banking Solutions segment of $2.0 million, partially offset by revenue decreases in our Payments and Documents and Other segments of $1.2 million and $0.6 million, respectively. The Banking Solutions segment's revenue increase was primarily due to new customer engagements and platform go-lives, as customers continued to deploy our hosted solutions. The increased revenue from our Cloud Solutions segment was primarily due to increased subscriptions revenue from our financial messaging and PTX payment platforms.
    OurWe incurred a net income was $0.4loss of $4.9 million in the three months ended September 30, 20202021 compared to net lossincome of $1.4$0.4 million in the same period of the prior fiscal year. Our net incomeloss for the three months ended September 30, 20202021, was favorably impacted by gross profit expansion of $4.2 million, modestly offset by increased operating expenses of $0.6$5.5 million and an increasea reduction in our provision for income taxes of $1.8 million. The increase in gross margins was primarily driven$4.6 million, offset by the revenue increases in our Cloud Solutions and Banking Solutions segments. Thean increase in operating expenses was primarily driven by increased general and administrative expenses of $0.3 million, product development and engineering costs of $0.2 million and sales and marketing costs of $0.1$15.2 million.
In the three months ended September 30, 20202021, we derived approximately 39% of our revenue from customers located outside of North America, principally in the United Kingdom (UK), continental Europe and the Asia-Pacific region.
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        Over the past several yearsOn an increasing basis, we have madecontinue to make strategic investments in innovative new technology offerings that we believe will enhance our competitive position, help us win new business, drive subscription revenue growth and expand our operating margins. We expect to continue to make investments in our suite of products so that we can continue to offer innovative, feature-rich technology solutions to our customers.

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COVID-19
The United States and the global communities in which we operate continue to face challenges posed by the COVID-19 pandemic. We, likeRecently, restrictions have been re-implemented by government bodies and private businesses as disease variants became more prevalent. Like many companies we have been encouraged by the increased availability of vaccines, however there remains significant uncertainty over the duration of the pandemic itself; particularly as the virus continues to evolve. Since March 2020 we have continued to suspend virtually all companies, have suspended travel for employees, temporarily closed our offices generally remain closed and since mid-March 2020, have requested that our employees have continued to work remotely. We have been operating effectively under our remote work model, which we anticipate continuing for the foreseeable future to ensure the safety and well-being of our employees.remotely in most geographies.
While we are operatingcontinue to operate effectively throughduring this challenge,challenging period, the full impact of the COVID-19 pandemic on our business and operating resultsthe global economy remains uncertain. There is no recent, comparable event that provides instruction to the myriad of impacts that COVID-19 may ultimately have. The ultimate consequences will depend on many factors outside of our control, including the availability and effectiveness of vaccines and therapeutics and the ultimate duration and severity of the pandemic anditself; including the economic downturn that it has created.impact of the emerging COVID variants.
Beginning in March 2020 we started to observe a reduction in certainCertain of our transactional based revenue streams, principally in ourspecifically those arising through Paymode-X and Legal Spend Management, solutions. Since March 2020,were the most significantly impacted during the prior fiscal year. We have continued to observe that transaction volumes for Paymode-X have continued to return to more normalized levels. Legal Spend Management transaction volumes remained constrained during the prior fiscal year but we have observedsaw some modest improvement during the fourth quarter of the past fiscal year and we recorded a modest negative impact to new software license sales and professional services revenues since interacting directly with customersrevenue increase in either a sales setting or an on-site professional services setting is difficult in this environment. Discretionary software purchases are also being delayed or deferred in many cases. However, the majority of our revenues are recurring which we believe continues to offer significant protection from the pandemic’s economic disruptions in the short term. We continue to believe that our existing financial position will allow us to manage the impact of COVID-19Legal Spend Management for the foreseeable future.
We remain very optimistic for the longer term. We have observed that one consequence of this crisis has been an increase in the demand for digital transformation, particularly for the mission critical applications we provide.quarter ended September 30, 2021 as compared to September 30, 2020. We are at the centerencouraged by these trends and are hopeful that it supports a conclusion that a sustained recovery of that transformation with our product set and overall market position and we plan to extend our competitive advantage through this challenge and emerge stronger than before.volumes is underway.
Critical Accounting Policies and Significant Judgments and Estimates
We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because they involve areas of financial reporting that require us to make judgments and estimates about matters that are uncertain at the time we make the estimate and different estimates - which also would have been reasonable - could have been used.
The critical accounting policies and estimates we identified in our most recent Annual Report on Form 10-K for the fiscal year ended June 30, 20202021 related to revenue recognition, the valuation of goodwill and intangible assets, the valuation of acquired deferred revenue, capitalized software costs and income taxes. There have been no changes to the critical accounting policies from those we disclosed in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.2021.
It is important that the discussion of our operating results that follows be read in conjunction with the critical accounting policies disclosed in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020,2021, as filed with the SEC on August 28, 2020.30, 2021.
Recent Accounting Pronouncements
For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, please refer to Note 2 Recent Accounting Pronouncements to our unaudited consolidated financial statements included in Part I. Item 1 of this Quarterly Report on Form 10-Q.
Results of Operations
Three Months Ended September 30, 20202021 Compared to the Three Months Ended September 30, 20192020
Segment Information
Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer.
During the quarter ended September 30, 2021 we realigned our internal financial reporting to provide for more specific visibility into key product lines which resulted in a change to our externally reportable segments. Specifically, our prior Cloud Solutions segment was renamed Payment Platforms and includes the revenue and operating results of our Paymode-X and PTX payment platforms. Our Legal Spend Management Solutions have been presented as a stand-alone operating segment, having previously been a component of our Cloud Solutions segment. Finally, our Financial Messaging solutions, previously a component of our Cloud Solutions segment, has been included as a component of our Banking Solutions segment. Our prior Payments and Documents segment has been renamed to Traditional Solutions, with no change to the composition of the revenue and operating activity included in this segment. These changes are reflected for all financial periods presented.

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    Our operating segments are organized principally by the type of product or service offered and by geography. Similar operating segments have been aggregated into four reportable segments: Cloud Solutions, Banking Solutions, Payments and Documents and Other.
The following tables represent our segment revenues and our measure of segment profit (loss):
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended September 30,Increase (Decrease)
Between Periods
20202019$ Change Inc (Dec)% Change Inc (Dec)20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(Dollars in thousands)
Segment revenue:Segment revenue:Segment revenue:
Cloud Solutions$64,956 $61,022 $3,934 6.4 %
Payment PlatformsPayment Platforms$33,807 $25,367 $8,440 33.3 %
Banking SolutionsBanking Solutions26,190 24,169 2,021 8.4 %Banking Solutions47,681 45,229 2,452 5.4 %
Payments and Documents17,396 18,578 (1,182)(6.4)%
Legal Spend ManagementLegal Spend Management22,063 20,550 1,513 7.4 %
Traditional SolutionsTraditional Solutions16,192 17,396 (1,204)(6.9)%
OtherOther3,823 4,407 (584)(13.3)%Other3,862 3,823 39 1.0 %
Total segment revenueTotal segment revenue$112,365 $108,176 $4,189 3.9 %Total segment revenue$123,605 $112,365 $11,240 10.0 %
Segment measure of profit (loss):Segment measure of profit (loss):Segment measure of profit (loss):
Cloud Solutions$14,597 $13,799 $798 5.8 %
Payment PlatformsPayment Platforms$5,824 $5,755 $69 1.2 %
Banking SolutionsBanking Solutions2,956 535 2,421 452.5 %Banking Solutions3,753 7,212 (3,459)(48.0)%
Payments and Documents4,100 5,009 (909)(18.1)%
Legal Spend ManagementLegal Spend Management5,208 4,586 622 13.6 %
Traditional SolutionsTraditional Solutions3,114 4,100 (986)(24.0)%
OtherOther(3,107)(1,866)(1,241)(66.5)%Other(3,976)(3,107)(869)(28.0)%
Total measure of segment profitTotal measure of segment profit$18,546 $17,477 $1,069 6.1 %Total measure of segment profit$13,923 $18,546 $(4,623)(24.9)%
A reconciliation of the total measure of segment profit to our GAAP (loss) income (loss) before income taxes is as follows:
Three Months Ended September 30,Three Months Ended September 30,
2020201920212020
(in thousands)(in thousands)
Total measure of segment profitTotal measure of segment profit$18,546 $17,477 Total measure of segment profit$13,923 $18,546 
Less:Less:Less:
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets(5,029)(4,950)Amortization of acquisition-related intangible assets(5,071)(5,029)
Stock-based compensation plan expenseStock-based compensation plan expense(9,973)(11,044)Stock-based compensation plan expense(13,912)(9,973)
Acquisition and integration-related expensesAcquisition and integration-related expenses(245)(1,697)Acquisition and integration-related expenses(201)(245)
Restructuring expenseRestructuring expense(70)25 Restructuring expense(386)(70)
Other non-core (expense) benefit(48)14 
Global ERP system implementation and other costs— (224)
Other non-core expenseOther non-core expense(110)(48)
Shareholder engagement feesShareholder engagement fees(947)— 
Other expense, net of pension adjustmentsOther expense, net of pension adjustments(1,026)(965)Other expense, net of pension adjustments(1,008)(1,026)
Income (loss) before income taxes$2,155 $(1,364)
(Loss) income before income taxes(Loss) income before income taxes$(7,712)$2,155 

Payment Platforms

Cloud Solutions
RevenuesRevenue from our Cloud SolutionsPayment Platforms segment increased $3.9$8.4 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year due to increased subscription revenue of $4.7$8.2 million fromdriven by both increased transactional volumes and the impact of new customers that have adopted our financial messaging and PTX payment platforms partially offset by decreased revenue from our Paymode-X payment platformsince the corresponding quarter of $0.8 million.the prior fiscal year. Segment profit increased $0.8$0.1 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year as the revenue increases described above were offset in part by increased cost of subscription revenue of $2.9 million and operating expenses of $2.4$5.6 million related primarily to increased sales and marketing expenses and generalproduct development expenses of $3.7 million and administrative expenses.$1.5 million, respectively. We expect revenue and profit for the Cloud SolutionsPayment Platforms segment to continue to increase in fiscal year 20212022 as compared to fiscal year 2020 as a result of increased revenue from our payment platforms and our legal spend management solutions.
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2021.
Banking Solutions
Revenues from our Banking Solutions segment increased $2.0$2.5 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year, primarily due to increased subscriptions revenue of $4.6$3.0 million, partially offset
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by decreased professional service and maintenance revenue of $2.1 million and decreased software license revenue of $0.5 million. The increase in subscriptions revenue was primarily related to our existing customer base expanding on or converting to our more technologically advanced SaaS platforms and as a result of our continued deployment of our newer banking solutions.solutions to new and existing customers. The decrease in software licenseprofessional services revenue was primarily driven by the evolution of our business strategy, which isremains focused on a subscription revenue model rather than one-time license events.events, which frequently require distinct professional services. The increase in revenue described above was offset by increased cost of revenues of $2.2 million, primarily related to subscription costs, and operating expenses of $3.7 million. The increase in operating expenses was primarily due to increased sales and marketing expenses and product development expenses of $1.9 million and $1.1 million, respectively. Segment profit increased $2.4decreased $3.5 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year primarily due to the increases in revenue increasesand expenses described and decreased operating expenses associated with sales and marketing and product development costs of $0.8 million and $0.1 million, respectively, partially offset by increased general and administrative expenses of $0.3 million.above. We expect revenue to continue to increase and profit to remain relatively consistent for the Banking Solutions segment in fiscal year 20212022 as compared to fiscal year 2020.2021.
Payments and DocumentsLegal Spend Management
Revenues from our Payments and DocumentsLegal Spend Management segment decreased $1.2increased $1.5 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year, due to increased subscription revenue driven by increased transactional volumes and the impact of new customers using these solutions since the corresponding quarter of the prior fiscal year. Segment profit increased $0.6 million for the three months ended September 30, 2021 as compared to the same period in the prior fiscal year, due to the increase in subscription revenue discussed above and a decrease in product development expenses of $0.3 million, partially offset by an increase in cost of revenues of $0.6 million and operating expenses related primarily to sales and marketing expense and general and administrative expense of $0.2 million and $0.4 million, respectively. We expect revenue and profit to continue to increase for the Legal Spend Management segment in fiscal year 2022 as compared to fiscal year 2021.
Traditional Solutions
Revenues from our Traditional Solutions segment decreased $1.2 million for the three months ended September 30, 2021 as compared to the same period in the prior fiscal year, primarily due to decreased professional service and maintenance revenue of $1.1$1.3 million and decreased software licenses revenue of $0.6$0.3 million, partially offset by increased subscriptions revenue of $0.8$0.3 million. The decrease in professional service and maintenance revenue and software revenue was driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. Segment profit decreased $0.9$1.0 million for the three months ended September 30, 2020 as compared to the same period in the prior fiscal year, due to the revenue decrease described above and increased operating expenses of $0.5 million primarily related to increased sales and marketing and product development and engineering costs, partially offset by decreased cost of revenue of $0.8 million. We expect revenue to increase and profit to remain consistent for the Payments and Documents segment in fiscal year 2021.
Other
Revenues from our Other segment decreased for the three months ended September 30, 2020 as compared to the same periods in the prior fiscal year. Segment profit decreased $1.2 million for the three months ended September 30, 2020,2021 as compared to the same period in the prior fiscal year, primarily due to decreased software license revenue, increased costthe decrease in revenues discussed above and an increase in subscription costs of revenue and increased sales and marketing,$0.1 million, product development and engineeringexpense of $0.2 million and general and administrative costs.expense of $0.2 million, partially offset by a decrease in costs of revenue associated with professional service and maintenance of $0.8 million. We expect Other segment revenue to remain consistent and profit to decrease slightly for the Traditional Solutions segment in fiscal year 2022, primarily due to decreased service, maintenance and software licenses.
Other
Revenues from our Other segment remained at relatively consistent levels for the three months ended September 30, 2021 as compared to the same period in the prior fiscal year 2020.
Revenues by category
Three Months Ended September 30,Increase (Decrease)
Between Periods
20202019$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)
Revenues:
Subscriptions$90,384 $80,066 $10,318 12.9 %
Software licenses977 2,576 (1,599)(62.1)%
Service and maintenance20,564 24,825 (4,261)(17.2)%
Other440 709 (269)(37.9)%
Total revenues$112,365 $108,176 $4,189 3.9 %
As % of total revenues:
Subscriptions80.4 %74.0 %
Software licenses0.9 %2.4 %
Service and maintenance18.3 %22.9 %
Other0.4 %0.7 %
Total revenues100.0 %100.0 %
Subscriptions
Revenues from subscriptions increased $10.3year. Segment profit decreased $0.9 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year primarily due to increased cost of revenue of $0.3 million primarily related to subscriptions and increased operating expenses of $0.6 million primarily related to sales and marketing. We expect Other segment revenue to continue to decrease in fiscal year 2022 as compared to fiscal year 2021 as our fraud solutions are increasingly sold by other segments while certain centralized costs continue to be borne by the Other segment.
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Revenues by category
Three Months Ended September 30,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)
Revenues:
Subscriptions$103,496$90,384$13,11214.5 %
Software licenses927977(50)(5.1)%
Service and maintenance18,70820,564(1,856)(9.0)%
Other474440347.7 %
Total revenues$123,605$112,365$11,24010.0 %
As % of total revenues:
Subscriptions83.7 %80.4 %
Software licenses0.8 %0.9 %
Service and maintenance15.1 %18.3 %
Other0.4 %0.4 %
Total revenues100.0 %100.0 %
Subscriptions
Revenues from subscriptions increased $13.1 million for the three months ended September 30, 2021 as compared to the same period in the prior fiscal year. The overall revenue increase was driven by increasesan increase in subscriptions revenue from our Cloud Solutions,Payment Platforms, Banking Solutions, and Payments and DocumentsLegal Spend Management segments of $5.0$8.2 million, $4.6$2.5 million, and $0.8$1.5 million, respectively, due to the
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impact of customers going live on our hosted solutions and the continued impact of customers converting to our subscription based solutions. We expect subscriptions revenues to continue to increase in fiscal year 20212022 due to revenue increases inthe continued adoption of our Banking Solutions segment and our financial messaging and PTX payment platforms.subscription based offerings.
Software Licenses
Revenues from software licenses slightly decreased $1.6 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year. The overall revenue decrease wasyear, primarily due principally to decreases in softwaredecreased revenue from our Payments and Documents segment of $0.6 million, BankingTraditional Solutions segment of $0.5$0.3 million, andoffset by an increase in revenue in our Other segment of $0.4$0.3 million. The decrease in software license revenue was predominantly driven by the continued conversion of our customers to our hosted and subscription based solutions rather thanand our continued de-emphasis of deployed, perpetual license solutions. We expect software license revenues to continue to decrease in fiscal year 2021,2022, as we continue to emphasize our subscription based solutions rather than on-premise software deployments.
Service and Maintenance
Revenues from service and maintenance decreased $4.3$1.9 million for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year. The overall revenue decrease wasyear, primarily due principally to decreases indecreased revenue from our Traditional Solution and Banking Solutions segmentsegments of $2.1 million, Payments and Documents Solutions segment of $1.1$1.3 million and Cloud Solutions segment of $1.0$0.5 million, respectively, driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. We expect service and maintenance revenues will continue to decrease in fiscal year 2021 as a result of decreased services revenue from our Payments and Documents and Banking Solutions segments and financial messaging solutions,2022, primarily due to our continued emphasis on our hosted solutions.
Other
Our other revenues consist principally of equipment and supplies sales, which remained minor components of our overall revenue. We expect that other revenues willand are expected to remain minor components of our overall revenue during fiscal year 2021.revenue.
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Cost of revenues by category
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended September 30,Increase (Decrease)
Between Periods
20202019$ Change Inc (Dec)% Change Inc (Dec)20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(Dollars in thousands)
Cost of revenues:Cost of revenues:Cost of revenues:
SubscriptionsSubscriptions$35,218$32,765$2,453 7.5 %Subscriptions$42,693$35,218$7,475 21.2 %
Software licensesSoftware licenses90161(71)(44.1)%Software licenses8190(9)(10.0)%
Service and maintenanceService and maintenance10,91613,053(2,137)(16.4)%Service and maintenance9,25210,916(1,664)(15.2)%
OtherOther309516(207)(40.1)%Other295309(14)(4.5)%
Total cost of revenuesTotal cost of revenues$46,533$46,495$38 0.1 %Total cost of revenues$52,321$46,533$5,788 12.4 %
Gross Profit ($)Gross Profit ($)$65,832$61,681$4,151 6.7 %Gross Profit ($)$71,284$65,832$5,452 8.3 %
Gross Profit (%)Gross Profit (%)58.6 %57.0 %Gross Profit (%)57.7 %58.6 %
Subscriptions
Subscriptions costs include salaries and other related costs for our professional services teams as well as costs related to our hosting infrastructure such as depreciation and facilities related expenses. Subscriptions costs decreasedincreased to 39%41% as a percentage of subscriptions revenues in the three months ended September 30, 20202021 as compared to 41% of subscriptions revenues39% in the three months ended September 30, 20192020 due to theyear-over-year cost of revenue increases as we continued to grow our subscription revenue expansion from our hosted solutions.streams. We expect subscriptions costs as a percentage of subscriptions revenues will continue to decrease slightly in fiscal year 20212022 as a result of increased revenue contribution from our cloud-based banking, legal spend management and Paymode-X solutions.

Software Licenses
Software license costs consist of expenses incurred by us to distribute our software products and related documentation and costs of licensing third party software that is incorporated into or sold with certain of our products. Software license costs as a percentage of software license revenues wereremained at 9% in the three months ended September 30, 2020 as compared to 6% of software license revenue in the three months ended September 30, 2019 due to the decrease in software license revenue discussed above.2021 and 2020. Overall, software license costs remain inconsequential and we expect software license costs as a percentage of software license revenues willare expected to remain relatively consistent in fiscal year 2021.inconsequential.
Service and Maintenance
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Service and maintenance costs include salaries and other related costs for our customer service, maintenance and help desk support staffs, as well as third party contractor expenses used to complement our professional services team. Service and maintenance costs as a percentage of service and maintenance revenues remained consistentdecreased to 49% in the three months ended September 30, 2021 as compared to 53% in the three months ended September 30, 2020, as comparedreflecting a shift in resources to the three months ended September 30, 2019 due primarily to the overall revenue decreases discussed above, offset by a decrease in cost of revenue.our hosted and subscription based products. We expect that service and maintenance costs will remain relatively consistent in fiscal year 2021.2022.
Other
Other costs include the costs associated with equipment and supplies that we resell, as well as freight, shipping and postage costs associated with the delivery of our products. These remain minor components of our business.We expect other costs as a percentage of other revenues will decrease slightlyremain consistent in fiscal year 2021.2022.
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Operating Expenses
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended September 30,Increase (Decrease)
Between Periods
20202019$ Change Inc (Dec)% Change Inc (Dec)20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(Dollars in thousands)
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing$25,743$25,688$55 0.2 %Sales and marketing$33,814$25,743$8,071 31.4 %
Product development and engineeringProduct development and engineering18,49918,349150 0.8 %Product development and engineering21,46518,4992,966 16.0 %
General and administrativeGeneral and administrative13,62613,345281 2.1 %General and administrative17,74913,6264,123 30.3 %
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets5,0294,95079 1.6 %Amortization of acquisition-related intangible assets5,0715,02942 0.8 %
Total operating expensesTotal operating expenses$62,897$62,332$565 0.9 %Total operating expenses$78,099$62,897$15,202 24.2 %
As % of total revenues:As % of total revenues:As % of total revenues:
Sales and marketingSales and marketing22.9 %23.7 %Sales and marketing27.4 %22.9 %
Product development and engineeringProduct development and engineering16.5 %17.0 %Product development and engineering17.4 %16.5 %
General and administrativeGeneral and administrative12.1 %12.3 %General and administrative14.4 %12.1 %
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets4.5 %4.6 %Amortization of acquisition-related intangible assets4.1 %4.5 %
Total operating expensesTotal operating expenses56.0 %57.6 %Total operating expenses63.3 %56.0 %
Sales and Marketing
Sales and marketing expenses consist primarily of salaries and other related costs for sales and marketing personnel, sales commissions, travel, public relations and marketing materials and trade show participation. Sales and marketing expenses increased slightly$8.1 million in the three months ended September 30, 20202021 as compared to the three months ended September 30, 20192020 primarily due to an increase in employee related costs of $1.6 million, offset by decreased travel related costs of $0.9$6.3 million and decreased marketing related costsexpense of $0.6$0.9 million. We expect sales and marketing expenses as a percentage of total revenues will increase slightly in fiscal year 2021.2022.
Product Development and Engineering
Product development and engineering expenses consist primarily of personnel costs to support product development, which consists of enhancements and revisions to our products as well as initiatives related to new product development. Product development and engineering expenses increased $3.0 million in the three months ended September 30, 20202021, as compared to the three months ended September 30, 20192020 primarily due to an increase in headcount related costs of $0.4 million as we continued to invest in the development of innovative, feature-rich products, partially offset by decreased travel related costs of $0.2$2.5 million. We expect product development and engineering expenses as a percentage of total revenues will increaseremain relatively consistent in fiscal year 2021.2022.
General and Administrative
General and administrative expenses consist primarily of salaries and other related costs for operations and finance employees and legal and accounting services. General and administrative expenses increased slightly$4.1 million in the three months ended September 30, 20202021 as compared to the three months ended September 30, 20192020 primarily due primarily to an increase in employee related costs of $1.5$2.7 million, offset by decreased acquisitiondepreciation expense of $0.4 million, restructuring expense of $0.3 million and integration related expensesfacility costs of $1.4$0.2 million. We expect general and administrative expenses as a percentage of total revenues will remain relatively consistent in fiscal year 2021.
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Amortization of Acquisition-related Intangible Assets
We amortize our acquired intangible assets in proportion to the estimated rate at which the asset provides economic benefit to us. Accordingly, amortization expense rates are often higher in the earlier periods of an asset’s estimated life. The increase in amortization expense in the three months ended September 30, 2020 as compared to the three months ended September 30, 2019 occurred as a result of increased expense from intangible assets associated with our recent acquisitions. We expect that total amortization expense for acquired intangible assets for the remainder of fiscal year 2021 will be approximately $15.2 million.2022.
 Other Expense, Net
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended September 30,Increase (Decrease)
Between Periods
20202019$ Change Inc (Dec)% Change Inc (Dec)20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(Dollars in thousands)
Interest incomeInterest income$100 $223 $(123)(55.2)%Interest income$23 $100 $(77)(77.0)%
Interest expenseInterest expense(1,258)(750)(508)(67.7)%Interest expense(1,066)(1,258)192 15.3 %
Other income (expense), netOther income (expense), net378 (186)564 303.2 %Other income (expense), net146 378 (232)(61.4)%
Other expense, netOther expense, net$(780)$(713)$(67)(9.4)%Other expense, net$(897)$(780)$(117)(15.0)%
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The components of other expense, net are as depicted above and remain minimal overall components of our operations. The increaseslight decrease in interest expense in the three months ended September 30, 20202021 as compared to the three months ended September 30, 20192020 is a result of an increasea decrease in borrowings under our line of credit arrangement commencing in March,during the three month period ending September 2021 as compared to September 2020.
Provision for Income Taxes
We recorded income tax expensebenefit of $1.8$2.8 million and $3,000income tax expense of $1.8 million for the three months ended September 30, 20202021 and 2019,2020, respectively. Please refer to Note 8 Income Taxes to our unaudited consolidated financial statements included in Part I. Item 1 of this Quarterly Report on Form 10-Q for further discussion.
Liquidity and Capital Resources
We are party to a credit agreement with Bank of America, N.A. and certain other lenders that provides for a credit facility in the amount of up to $300 million (the Credit Facility). We have the right to request an increase to the aggregate commitments to the Credit Facility of up to an additional $150 million, subject to specified conditions. The Credit Facility expires in July 2023. At September 30, 2020,2021, borrowings were $180$130 million and we were in compliance with all covenants.
We have financed our operations primarily from cash provided by operating activities, the sale of our common stock and debt proceeds. We have historicallyconsistently generated positive operating cash flows. We believe that the cash generated from our operations and the cash and cash equivalents we have on hand will be sufficient to meet our operating requirements for the foreseeable future. If our existing cash resources along with cash generated from operations is insufficient to satisfy our operating requirements, we may need to sell additional equity or debt securities or seek other financing arrangements.
OOnene of our financial goals is to maintain and improve our capital structure. The key metrics we focus on in assessing the strength of our liquidity for the periods endingended September 30, 20202021 and June 30, 20202021 and a summary of our cash activity for the three months ended September 30, 20202021 and 20192020 are summarized in the tables below:
September 30,June 30,September 30,June 30,
2020202020212021
(in thousands)(in thousands)
Cash and cash equivalentsCash and cash equivalents$187,215 $194,832 Cash and cash equivalents$117,200 $133,932 
Marketable securitiesMarketable securities10,210 10,209 Marketable securities8,185 10,216 
Borrowings under credit facilityBorrowings under credit facility180,000 180,000 Borrowings under credit facility130,000 130,000 
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Three Months Ended September 30,
20212020
(in thousands)
Cash provided by operating activities$10,246 $7,910 
Cash used in investing activities(9,786)(20,149)
Cash (used in) provided by financing activities(18,489)2,168 
Effect of exchange rates on cash(1,108)3,294 
Three Months Ended September 30,
20202019
(in thousands)
Cash provided by operating activities$7,910 $18,112 
Cash used in investing activities(20,149)(14,110)
Cash provided by (used in) financing activities2,168 (8,013)
Effect of exchange rates on cash3,294 (1,970)
Cash, cash equivalents and marketable securities. At September 30, 2020,2021, our cash and cash equivalents of $187.2$117.2 million consisted primarily of cash deposits held at major banks and money market funds. The $7.6$16.7 million decrease in cash and cash equivalents at September 30, 20202021 from June 30, 20202021 was primarily due to cash used to repurchase common stock of $20.8 million, to fund capital expenditures, including capitalization of software costs of $8.6$3.1 million, and the negative effect of foreign exchange rates on cash of $4.4 million, partially offset by an increase in cash generated from operations of $2.3 million, a decrease in cash used to fundin business and asset acquisitions, net of cash acquired of $9.9$9.8 million, partially offset by cash generated from operations a decrease in funds used to issue notes receivable of $7.9$1.6 million and the effectpurchase of foreign exchange rates on cashavailable for sale securities of $3.3$2.0 million.
Cash, cash equivalents and marketable securities included approximately $72.3$35.9 million held by our foreign subsidiaries as of September 30, 2020.2021. We continue to permanently reinvest the earnings, if any, of our international subsidiaries other than the UK, Switzerland, and India and one of our Australian subsidiaries; therefore we do not provide for U.S. income taxes that could result from the distribution of foreign earnings from our international subsidiaries other than the UK, Switzerland and India.aforementioned. If our reinvestment plans were to change based on future events and we decidedecided to repatriate amounts from other international subsidiaries, to fund our domestic operations, those amounts would generally become subject to state tax in the U.S. to the extent there were cumulative profits in the foreign subsidiary from which the distribution to the U.S. was made.made and we could be further subject to withholding tax.
Cash and cash equivalents held by our foreign subsidiaries are denominated in currencies other than U.S. Dollars. IncreasesDecreases primarily in the foreign currency exchange rate of the British Pound Sterling to the U.S. Dollar increaseddecreased our overall cash balances by
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approximately $3.3$1.1 million for the three months ended September 30, 2020.2021. Further changes in the foreign currency exchange rates of the British Pound Sterling and other currencies could have a significant effect on our overall cash balances, however, we continue to believe that our existing cash balances, even in light of the foreign currency volatility we frequently experience, are adequate to meet our operating requirements for the foreseeable future.
At September 30, 2021, our deferred tax assets have been fully reserved since, given the available evidence, it was deemed more likely than not that these deferred tax assets would not be realized.
Operating Activities. Operating cash flow is derived by adjusting our net income or loss for non-cash operating items, such as depreciation and amortization, stock-based compensation plan expense, deferred income tax benefits or expenses and changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations. Cash generated from operations decreasedincreased by $10.2$2.3 million in the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year. The decrease wasyear, primarily relateddue to a decreasean increase in cash flows generated from the change inprovided by accounts receivable of $8.7$3.0 and accrued expenses of $7.3 million, partially offset by the increase in our net loss for the three months ended September 30, 2021 of $5.3 million and a decreasecash used in the cash flows from the change in accounts payablecustomer liabilities of $2.0$2.8 million.
        At September 30, 2020, a substantial portion of our deferred tax assets have been reserved since, given the available evidence, it was deemed more likely than not that these deferred tax assets would not be realized.
Investing Activities. Investing cash flows consist primarily of capital expenditures, inclusive of capitalized software costs, investment purchases and sales and cash used for the acquisition of businesses and assets. The $6.0$10.4 million increasedecrease in net cash used in investing activities for the three months ended September 30, 20202021 as compared to the same period in the prior fiscal year was primarily due to a decrease in cash used to fund business and asset acquisitions, net of cash acquired, of $9.9$9.8 million, and the issuance of a notedecrease in cash used to fund notes receivable of $1.6 million and to purchase available for sale securities of $2.0 million, partially offset by a decreasean increase in cash used for capital expenditures of $2.8 million and a decrease in cash used for the purchase of available for sale securities of $3.3$3.1 million.
Financing Activities. Financing cash flows consist primarily of cash inflows as a result of borrowings under our revolving credit facility and proceeds from the sale of shares of common stock through employee equity incentive plans, offset by repurchases of our common stock.
Contractual Obligations
    For The increase in cash used in financing activities of $20.7 million was due to an increase in cash used to repurchase common stock of $20.8 million during the three months ended September 30, 2020,2021.
Contractual Obligations
During the three months ended September 30, 2021, we entered into a new facility lease in India, increasing our contractual obligations by $2.7 million. Other than the new facility lease, there have been no other material changes to the contractual obligations from that which was disclosed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.2021.
Our estimate of unrecognized tax benefits for which cash settlement may be required is $2.2 $2.3 million. As of September 30, 2020,2021, we are unable to estimate the timing of future cash outflows, if any, associated with these liabilities as we do not currently anticipate settling any of these tax positions with cash payment in the foreseeable future.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements during the three months ended September 30, 2020.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to a variety of risks, including interest rate changes, foreign currency exchange rate fluctuations, and derivative instruments classification and fair value changes. We have not entered into any foreign currency hedging transactions or other instruments to minimize our exposure to foreign currency exchange rate fluctuations nor do we presently plan to in the future.
We are a party to interest rate swap agreements which we designated as hedge instruments to minimize our exposure to interest rate fluctuations under our Credit Facility.
There has been no material change to our exposure to market risk from that which was disclosed in Item 7A of our Annual Report on Form 10-K for the fiscal year ended June 30, 20202021 as filed with the SEC on August 28, 2020,30, 2021, which is incorporated herein by reference.

Item 4. Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2020.2021. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide
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only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation of our disclosure controls and procedures as of September 30, 2020,2021, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
No changes in our internal control over financial reporting occurred during the fiscal quarter ended September 30, 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION

Item 1. Legal Proceedings
We are, from time to time, a party to legal proceedings and claims that arise in the ordinary course of our business. We do not believe that there are claims or proceedings pending against us for which the ultimate resolution would have a material effect on, or require further disclosure in, our financial statements.

Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors identified in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 20202021 before making an investment decision involving our common stock. These risk factors could materially affect our business, financial condition or results of operations and could cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report on Form 10-Q or elsewhere by management from time to time. The COVID-19 pandemic has created additional risks to those we normally face in operating our business, including those discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties may also impact our business operations. There have been no material changes to the risk factors disclosed in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about purchases by us of our common stock during the quarter ended September 30, 2021:
PeriodTotal Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2021 - July 31, 2021— $— — $50,000,000 
August 1, 2021 - August 31, 2021162,524 42.06 162,524 43,161,000 
September 1, 2021 - September 30, 2021354,440 41.36 354,440 28,501,000 
Total516,964 $41.59 516,964 
——————
(1)On August 5, 2019, we announced that16, 2021, our board of directors authorized a repurchase program of our common stock for an aggregate repurchase price not to exceed $50 million. This program expires on August 5, 2021.
    On July 29, 2020, we issued 166,393 shares of our common stock as purchase consideration in connection with our acquisition of AnaSys AG (Anasys). We also issued 28,000 shares of our common stock to certain selling stockholders of AnaSys with vesting conditions tied to continued employment with us. These shares were issued in reliance upon16, 2022. Notwithstanding the exemption from the registration requirementsexpiration date of the Securities Act of 1933,repurchase authority, as amended (Securities Act) providedwe disclosed on a Form 8-K filed on August 17, 2021 we intend to complete the program by Section 4(a)(2) ofDecember 31, 2021. However, we retain the Securities Act. No underwriters were involved inability to adjust the program at any such issuances.time.

Item 5. Other Information
On November 4, 2020, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, as amended (the “Amended and Restated Certificate of Incorporation”), with the Secretary of State of the State of Delaware changing the name of our company from “Bottomline Technologies (de), Inc.” to “Bottomline Technologies, Inc.” effective at 4:00 p.m. Eastern Time on November 4, 2020. Under Section 242 of the Delaware General Corporation Law, the name change does not require stockholder approval. The name change does not affect the rights of our stockholders and there were no changes to the Amended and Restated Certificate of Incorporation other than to reflect the name change. Our common stock will continue to trade on The Nasdaq Global Select Market under the symbol “EPAY,” and its CUSIP number will not change.
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Item 6. Exhibits
Incorporated by Reference
Exhibit NumberDescriptionFormFile No.ExhibitFiling DateFiled Herewith
3.1X
3.2X
  31.1X
  31.2X
  32.1X
  32.2X
101.INSInline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**Inline XBRL Taxonomy Extension Schema DocumentX
101.CAL**Inline XBRL Taxonomy Calculation Linkbase DocumentX
101.DEF**Inline XBRL Taxonomy Definition Linkbase DocumentX
101.LAB**Inline XBRL Taxonomy Label Linkbase DocumentX
101.PRE**Inline XBRL Taxonomy Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
Incorporated by Reference
Exhibit NumberDescriptionFormFile No.ExhibitFiling DateFiled Herewith
10.18-K000-2525910.107/23/2021
10.28-K000-2525910.110/20/2021
10.3X
  31.1X
  31.2X
  32.1X
  32.2X
101.INSInline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**Inline XBRL Taxonomy Extension Schema DocumentX
101.CAL**Inline XBRL Taxonomy Calculation Linkbase DocumentX
101.DEF**Inline XBRL Taxonomy Definition Linkbase DocumentX
101.LAB**Inline XBRL Taxonomy Label Linkbase DocumentX
101.PRE**Inline XBRL Taxonomy Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
**    submitted electronically herewith
Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of September 30, 20202021 and June 30, 2020,2021, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 20202021 and 2019,2020, (iii) Unaudited Consolidated Statements of Stockholders' Equity for the three months ended September 30, 20202021 and 2019,2020, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 20202021 and 20192020 and (v) Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURE
    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                Bottomline Technologies, Inc.                     
    
Date:November 9, 20202021By:          /s/ RICHARD D. BOOTHA. BRUCE BOWDEN
                    Richard D. BoothA. Bruce Bowden
            Chief Financial Officer and Treasurer
       (Principal Financial and Accounting Officer)

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