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, ~~2020~~2021

☐ 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)

——————


Delaware		02-0433294
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

325 Corporate Drive		03801-6808
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 share	EPAY	The 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 filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller 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, 2020~~31, 2021 was ~~45,113,592.~~45,173,486.

Table of Contents


BOTTOMLINE TECHNOLOGIES, INC.

FORM 10-Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, ~~2020~~2021
TABLE OF CONTENTS

PART I		Page

Item 1.	Unaudited Condensed Consolidated Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3229
Item 4.	Controls and Procedures	3229
PART II

Item 1.	Legal Proceedings	3331
Item 1A.	Risk Factors	3331
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
~~Item 5.~~	O ~~ther Information~~	3331
Item 6.	Exhibits	3332
	SIGNATURE	3533

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Bottomline Technologies, Inc.	Bottomline Technologies, Inc.					Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets	Unaudited Condensed Consolidated Balance Sheets					Unaudited 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,
		2020		2020			2021		2021

ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	187,215	$	194,832	Cash and cash equivalents	117,200		$	133,932
Cash held for customers	Cash held for customers	7,144		6,304		Cash held for customers	7,431		9,836
Marketable securities	Marketable securities	10,210		10,209		Marketable securities	8,185		10,216
Accounts receivable net of allowances for doubtful accounts of $1,363 at September 30, 2020 and $1,336 at June 30, 2020		69,056		69,970
Accounts receivable net of allowances for doubtful accounts of $988 at September 30, 2021 and $1,304 at June 30, 2021						Accounts receivable net of allowances for doubtful accounts of $988 at September 30, 2021 and $1,304 at June 30, 2021	67,115		72,978
Prepaid expenses and other current assets	Prepaid expenses and other current assets	30,930		28,328		Prepaid expenses and other current assets	37,901		34,653
Total current assets	Total current assets	304,555		309,643		Total current assets	237,832		261,615
Property and equipment, net	Property and equipment, net	67,953		67,155		Property and equipment, net	66,293		68,471
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	25,197		24,712		Operating lease right-of-use assets, net	28,732		27,570
Goodwill	Goodwill	220,899		205,713		Goodwill	242,863		246,698
Intangible assets, net	Intangible assets, net	160,813		154,111		Intangible assets, net	163,758		162,691
Other assets	Other assets	34,836		31,803		Other assets	48,549		48,683
Total assets	Total assets	$	814,253	$	793,137	Total assets	$	788,027	$	815,728
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	11,947	$	13,422	Accounts payable	$	9,753	$	11,428
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	45,204		48,198		Accrued expenses and other current liabilities	54,470		45,925
Customer account liabilities	Customer account liabilities	7,144		6,304		Customer account liabilities	7,431		9,836
Deferred revenue	Deferred revenue	69,781		82,074		Deferred revenue	75,876		88,679
Total current liabilities	Total current liabilities	134,076		149,998		Total current liabilities	147,530		155,868
Borrowings under credit facility	Borrowings under credit facility	180,000		180,000		Borrowings under credit facility	130,000		130,000
Deferred revenue, non-current	Deferred revenue, non-current	15,479		13,959		Deferred revenue, non-current	11,459		12,559
Operating lease liabilities, non-current	Operating lease liabilities, non-current	21,312		20,670		Operating lease liabilities, non-current	27,996		26,629
Deferred income taxes	Deferred income taxes	9,862		8,656		Deferred income taxes	9,702		14,574
Other liabilities	Other liabilities	31,108		27,520		Other liabilities	20,601		19,864
Total liabilities	Total liabilities	391,837		400,803		Total liabilities	347,288		359,494
Stockholders' equity	Stockholders' equity					Stockholders' 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		0		0
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, 2021						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, 2021	49		49
Additional paid-in-capital	Additional paid-in-capital	783,457		764,906		Additional paid-in-capital	833,563		819,392
Accumulated other comprehensive loss	Accumulated 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 cost						Treasury stock: 6,496 shares at September 30, 2021 and 6,057 shares at June 30, 2021, at cost	(169,746)		(150,282)
Accumulated deficit	Accumulated deficit	(180,165)		(180,612)		Accumulated deficit	(201,751)		(196,844)
Total stockholders' equity	Total stockholders' equity	422,416		392,334		Total stockholders' equity	440,739		456,234
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	814,253	$	793,137	Total liabilities and stockholders' equity	$	788,027	$	815,728

See accompanying notes.

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,
		2020		2019					2021		2020

Revenues:	Revenues:							Revenues:
Subscriptions	Subscriptions	$	90,384	$	80,066			Subscriptions	$	103,496	$	90,384
Software licenses	Software licenses	977		2,576				Software licenses	927		977
Service and maintenance	Service and maintenance	20,564		24,825				Service and maintenance	18,708		20,564
Other	Other	440		709				Other	474		440
Total revenues	Total revenues	112,365		108,176				Total revenues	123,605		112,365
Cost of revenues:	Cost of revenues:							Cost of revenues:
Subscriptions	Subscriptions	35,218		32,765				Subscriptions	42,693		35,218
Software licenses	Software licenses	90		161				Software licenses	81		90
Service and maintenance	Service and maintenance	10,916		13,053				Service and maintenance	9,252		10,916
Other	Other	309		516				Other	295		309
Total cost of revenues	Total cost of revenues	46,533		46,495				Total cost of revenues	52,321		46,533
Gross profit	Gross profit	65,832		61,681				Gross profit	71,284		65,832
Operating expenses:	Operating expenses:							Operating expenses:
Sales and marketing	Sales and marketing	25,743		25,688				Sales and marketing	33,814		25,743
Product development and engineering	Product development and engineering	18,499		18,349				Product development and engineering	21,465		18,499
General and administrative	General and administrative	13,626		13,345				General and administrative	17,749		13,626
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	5,029		4,950				Amortization of acquisition-related intangible assets	5,071		5,029
Total operating expenses	Total operating expenses	62,897		62,332				Total operating expenses	78,099		62,897
Income (loss) from operations		2,935		(651)
(Loss) income from operations								(Loss) income from operations	(6,815)		2,935
Other expense, net	Other expense, net	(780)		(713)				Other expense, net	(897)		(780)
Income (loss) before income taxes		2,155		(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) income								Net (loss) income	$	(4,907)	$	391

Basic and diluted net income (loss) per share		$	0.01	$	(0.03)
Basic and diluted net (loss) income per share								Basic 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:
Basic	Basic	42,457		41,487				Basic	43,273		42,457
Diluted	Diluted	42,771		41,487				Diluted	43,273		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 securities								Unrealized gain (loss) on available for sale securities	1		(25)
Change in fair value on interest rate hedging instruments	Change in fair value on interest rate hedging instruments	446		(677)				Change in fair value on interest rate hedging instruments	416		446
Minimum pension liability adjustments	Minimum pension liability adjustments	(233)		180				Minimum pension liability adjustments	(142)		(233)
Foreign currency translation adjustments	Foreign currency translation adjustments	9,106		(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) income								Comprehensive (loss) income	$	(10,202)	$	9,685

See accompanying notes.

Table of Contents


Bottomline Technologies, Inc.	Bottomline Technologies, Inc.									Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity	Unaudited Condensed Consolidated Statements of Stockholders' Equity									Unaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)	(in thousands)									(in thousands)
Three Months Ended September 30, 2020
Three Months Ended September 30, 2021										Three Months Ended September 30, 2021
		Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Accumulated Deficit	Total Stockholders' Equity		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Accumulated Deficit		Total Stockholders' Equity
		Shares	Amount			Shares	Amount				Shares	Amount						Shares	Amount
Balance at June 30, 2020		48,147	$48	$764,906	$(48,675)	5,975	$(143,333)	$(180,612)	$392,334
Balance at June 30, 2021										Balance at June 30, 2021	49,294	$	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 options	Issuance of common stock for employee stock purchase plan and upon exercise of stock options	0	—	379	—	(75)	1,789	—	2,168	Issuance of common stock for employee stock purchase plan and upon exercise of stock options	—	—		278		—		(78)	2,035		—		2,313
Vesting of restricted stock awards	Vesting of restricted stock awards	247	1	—	—	—	—	—	1	Vesting of restricted stock awards	292	—		—		—		—	—		—		—
Issuance of common stock in connection with acquisition		166	0	8,183	—	—	—	—	8,183

Repurchase of common stock to be held in treasury										Repurchase of common stock to be held in treasury	—	—		—		—		517	(21,499)		—		(21,499)
Stock compensation plan expense	Stock compensation plan expense	—	—	9,989	—	—	—	—	9,989	Stock compensation plan expense	—	—		13,893		—		—	—		—		13,893

Minimum pension liability adjustments, net of tax	Minimum pension liability adjustments, net of tax	—	—	—	(233)	—	—	—	(233)	Minimum pension liability adjustments, net of tax	—	—		—		(142)		—	—		—		(142)
Net income		—	—	—	—	—	—	391	391
Net loss										Net loss	—	—		—		—		—	—		(4,907)		(4,907)

Cumulative effect of adoption of current expected credit loss accounting standard		—	—	—	—	—	—	56	56
Unrealized loss on available for sale securities, net of tax		—	—	—	(25)	—	—	—	(25)
Unrealized gain on available for sale securities, net of tax										Unrealized gain on available for sale securities, net of tax	—	—		—		1		—	—		—		1
Change in fair value on interest rate hedging instruments	Change in fair value on interest rate hedging instruments	—	—	—	446	—	—	—	446	Change in fair value on interest rate hedging instruments	—	—		—		416		—	—		—		416
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—	—	9,106	—	—	—	9,106	Foreign currency translation adjustment	—	—		—		(5,570)		—	—		—		(5,570)
Balance at September 30, 2020		48,560	$49	$783,457	$(39,381)	5,900	$(141,544)	$(180,165)	$422,416
Balance at September 30, 2021										Balance at September 30, 2021	49,586	$	49	$	833,563	$	(21,376)	6,496	$	(169,746)	$	(201,751)	$	440,739


Three Months Ended September 30, 2019
Three Months Ended September 30, 2020										Three Months Ended September 30, 2020
		Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Accumulated Deficit	Total Stockholders' Equity		Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Accumulated Deficit		Total Stockholders' Equity
		Shares	Amount			Shares	Amount				Shares	Amount						Shares	Amount
Balance at June 30, 2019		46,995	$47	$721,438	$(43,593)	5,680	$(127,095)	$(171,420)	$379,377
Balance at June 30, 2020										Balance at June 30, 2020	48,147	$	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 options	Issuance of common stock for employee stock purchase plan and upon exercise of stock options	13	—	775	—	(60)	1,399	—	2,174	Issuance of common stock for employee stock purchase plan and upon exercise of stock options	—	—		379		—		(75)	1,789		—		2,168
Vesting of restricted stock awards	Vesting of restricted stock awards	377	0	—	—	—	—	—	0	Vesting of restricted stock awards	247	1		—		—		—	—		—		1
Repurchase of common stock to be held in treasury		—	—	—	—	233	(10,005)	—	(10,005)
Issuance of common stock in connection with acquisition										Issuance of common stock in connection with acquisition	166	—		8,183		—		—	—		—		8,183
Stock compensation plan expense	Stock compensation plan expense	—	—	11,099	—	—	—	—	11,099	Stock compensation plan expense	—	—		9,989		—		—	—		—		9,989

Minimum pension liability adjustments, net of tax	Minimum pension liability adjustments, net of tax	—	—	—	180	—	—	—	180	Minimum pension liability adjustments, net of tax	—	—		—		(233)		—	—		—		(233)
Net loss		—	—	—	—	—	—	(1,367)	(1,367)

Cumulative effect of adoption of updated lease standard		—	—	—	—	—	—	37	37
Net income										Net income	—	—		—		—		—	—		391		391
Cumulative effect of adoption of current expected credit loss accounting standard										Cumulative effect of adoption of current expected credit loss accounting standard	—	—		—		—		—	—		56		56
Unrealized loss on available for sale securities, net of tax	Unrealized 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 instruments	Change in fair value on interest rate hedging instruments	—	—	—	(677)	—	—	—	(677)	Change in fair value on interest rate hedging instruments	—	—		—		446		—	—		—		446
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—	—	(5,879)	—	—	—	(5,879)	Foreign currency translation adjustment	—	—		—		9,106		—	—		—		9,106
Balance at September 30, 2019		47,385	$47	$733,312	$(49,972)	5,853	$(135,701)	$(172,750)	$374,936
Balance at September 30, 2020										Balance at September 30, 2020	48,560	$	49	$	783,457	$	(39,381)	5,900	$	(141,544)	$	(180,165)	$	422,416

Table of Contents

Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended September 30,
2020 2019
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 assets 5,029 4,950
Stock-based compensation plan expense 9,973 11,044
Depreciation and other amortization 7,699 6,092
Deferred income tax expense (benefit) 227 (368)
Provision for allowances on accounts receivable 89 67
Amortization of debt issuance costs 103 103
Amortization of premium (discount) on investments 5 (28)
(Gain) loss on other investments (48) 0
Loss on disposal of equipment 15 35
(Gain) loss on foreign exchange (53) 259
Changes in operating assets and liabilities:
Accounts receivable 2,349 11,025
Prepaid expenses and other current assets (1,971) (3,268)
Operating lease right-of-use asset, net 303 975
Other assets (1,164) (1,077)
Accounts payable (824) 1,214
Accrued expenses (1,565) (571)
Operating lease liabilities 146 (823)
Customer account liabilities 563 1,609
Deferred revenue (13,484) (11,969)
Other liabilities 127 210
Net cash provided by operating activities 7,910 18,112
Investing activities:
Acquisition of businesses and assets, net of cash acquired (9,892) 0
Purchases of other investments 0 (87)
Issuance of note receivable (1,600) 0
Purchases of available-for-sale securities (2,929) (6,274)
Proceeds from sales of available-for-sale securities 2,900 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 0 (10,005)
Repayment of notes payable 0 (182)
Proceeds from exercise of stock options and employee stock purchase plan 2,168 2,174
Net cash provided by (used in) financing activities 2,168 (8,013)
Effect of exchange rate changes on cash 3,294 (1,970)
Decrease in cash, cash equivalents and restricted cash (6,777) (5,981)
Cash, cash equivalents and restricted cash at beginning of period 201,136 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 period 7,144 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 $ 0

~~Table of Contents~~


Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
	Three Months Ended September 30,
	2021		2020

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 assets	5,071		5,029
Stock-based compensation plan expense	13,912		9,973
Depreciation and other amortization	9,195		7,699

Deferred income tax benefit	(4,641)		227
Change in provision for allowances on accounts receivable	(146)		89
Amortization of debt issuance costs	103		103

Amortization of premium on investments	30		5
Fair value adjustment on other investments	(83)		—
Gain on other investments	—		(48)
Loss on disposal of equipment	4		15
Gain on foreign exchange	(255)		(53)
Changes in operating assets and liabilities:
Accounts receivable	5,383		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 expenses	5,700		(1,565)
Operating lease liabilities	1,657		146
Customer account liabilities	(2,189)		563
Deferred revenue	(12,858)		(13,484)
Other liabilities	77		127
Net cash provided by operating activities	10,246		7,910
Investing activities:
Acquisition of businesses and assets, net of cash acquired	(115)		(9,892)
Investment distributions received	81		—
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 securities	2,900		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 plan	2,313		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 period	143,768		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 period	7,431		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, ~~2020~~2021

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, ~~2020~~2021 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

~~Recently~~Accounting 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 FASB~~Financial Accounting Standards Board (FASB) issued an accounting standard update to ~~simplify~~address financial reporting related to the ~~test for goodwill impairment which removes~~transition from the ~~requirement~~London Interbank Offered Rate (LIBOR) to ~~compare the carrying value of goodwill against its implied fair value. Under the revised~~alternative 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 amount~~provides optional expedients and ~~recognize an impairment charge~~exceptions to existing guidance for the ~~amount by which~~accounting of contracts and hedging relationship modified as a result of reference rate reform. We may elect to apply the ~~carrying amount exceeds~~standard 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 expect~~impact 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, ~~2020~~2021 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, ~~2020~~2021 and ~~2019,~~2020, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.

~~Revenue~~The transaction price allocated to ~~remaining~~unsatisfied performance obligations was ~~$416.4~~$461 million as of September 30, ~~2020~~2021 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, ~~2020~~2021 and June 30, ~~2020.~~2021.


		September 30,	June 30,			September 30,	June 30,
		2020	2020	$ Change		2021	2021	$ Change
		(in thousands)				(in thousands)

Contract assets	Contract assets	4,704	3,646	1,058	Contract assets	7,329	6,627	702
Deferred revenue	Deferred revenue	85,260	96,033	(10,773)	Deferred revenue	87,335	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 ~~loss~~losses 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, ~~2020~~2021 as compared to June 30, ~~2020~~2021 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, ~~2020~~2021 and ~~2019,~~2020, we recognized $46.6 million and $40.3 million, ~~and $34.0 million~~respectively, 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, ~~2020~~2021 and June 30, ~~2020,~~2021, our assets and liabilities measured at fair value on a recurring basis were as follows:


		September 30, 2020								June 30, 2020									September 30, 2021								June 30, 2021
		Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types									Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
		(in thousands)																	(in thousands)
Assets	Assets																	Assets
Money market funds (cash and cash equivalents)	Money market funds (cash and cash equivalents)	$	342	$	0	$	0	$	342	$	354	$	0	$	0	$	354	Money market funds (cash and cash equivalents)	$	2,362	$	—	$	—	$	2,362	$	340	$	—	$	—	$	340
Available for sale securities - Debt	Available for sale securities - Debt																	Available for sale securities - Debt
U.S. Corporate		$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Government - U.S. treasury securities	Government - U.S. treasury securities	0		10,147		0		10,147		0		10,148		0		10,148		Government - U.S. treasury securities	—		8,121		—		8,121		—		10,150		—		10,150
Total available for sale securities	Total available for sale securities	$	0	$	10,147	$	0	$	10,147	$	0	$	10,148	$	0	$	10,148	Total available for sale securities	$	—	$	8,121	$	—	$	8,121	$	—	$	10,150	$	—	$	10,150
Preferential conversion feature (long-term)		$	0	$	0	$	532	$	532	$	0	$	0	$	0	$	0

Other investments (long-term)	Other investments (long-term)	0		0		550		550		0		0		514		514		Other investments (long-term)	—		983		1,051		2,034		—		966		1,014		1,980

Total assets	Total 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
Liabilities	Liabilities																	Liabilities
Interest rate swap (short-term)	Interest rate swap (short-term)	$	0	$	1,638	$	0	$	1,638	$	0	$	1,631	$	0	$	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)	$	0	$	2,995	$	0	$	2,995	$	0	$	3,448	$	0	$	3,448	Interest rate swap (long-term)	$	—	$	1,176	$	—	$	1,176	$	—	$	1,550	$	—	$	1,550
Total liabilities	Total liabilities	$	0	$	4,633	$	0	$	4,633	$	0	$	5,079	$	0	$	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, ~~2020~~2021 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, ~~2020~~2021 and June 30, ~~2020,~~2021, the unrealized losses associated with available for sale securities ~~was~~were 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, ~~2020~~2021 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, ~~2020~~2021 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, ~~2020~~2021 and June 30, ~~2020.~~2021.


		September 30, 2020						June 30, 2020							September 30, 2021						June 30, 2021
		Held to Maturity		Available for Sale		Total		Held to Maturity		Available for Sale		Total			Held to Maturity		Available for Sale		Total		Held to Maturity		Available for Sale		Total
		(in thousands)													(in thousands)
Marketable securities:	Marketable securities:													Marketable securities:
Government and other debt securities	Government 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 securities	Total 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, ~~2020~~2021
	(in thousands)
Due within 1 year	$	~~10,147~~8,121
Due in 1 year through 5 years	0—
Total	$	~~10,147~~8,121

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, ~~2020~~2021 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, 2020				At June 30, 2020					At September 30, 2021				At June 30, 2021
		Less than 12 Months									Less than 12 Months
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
		(in thousands)									(in thousands)
Government - U.S. treasury securities	Government - U.S. treasury securities	$	1,917	$	(1)	$	2,012	$	(1)	Government - U.S. treasury securities	$	5,110	$	(3)	$	5,930	$	(1)
Total	Total	$	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 record~~are 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 preliminary~~In 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 extend~~extended our geographic presence in Switzerland and Germany and ~~expand~~expanded our customer base. The operating results of AnaSys are a component of our ~~Cloud~~Banking Solutions ~~segment from the date~~segment. 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 ~~onboarding~~onboarding software provider, for aan up-front cash payment of $2.0 million and ~~contingent future~~deferred 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) income~~loss per share:

Three Months Ended September 30,
2020 2019
(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 stockholders 42,457 41,487
Impact of dilutive securities 314 0
Shares used in computing diluted net income (loss) per share attributable to common stockholders 42,771 41,487
Basic and diluted net income (loss) per share attributable to common stockholders $ 0.01 $ (0.03)


	Three Months Ended September 30,
	2021		2020
	(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 stockholders	43,273		42,457
Impact of dilutive securities	—		314
Shares used in computing diluted net (loss) income per share attributable to common stockholders	43,273		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.

~~Table~~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 ~~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 Solutions~~Payment Platforms segment ~~provides customers with~~includes 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. Our~~enhance efficiency and security. Each solution supports a variety of payment ~~platforms (Paymode-X, PTX~~options 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.

~~Payments~~Legal 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 Documents~~Traditional 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 ~~the~~a legacy sales channel we acquired and the burden of certain other centralized costs; however, our fraud solutions are sold ~~as part of all~~by 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, ~~2020~~2021 and ~~2019~~2020 according to the segment descriptions above, is as follows:


		Three Months Ended September 30,					Three Months Ended September 30,
		2020		2019					2021		2020
		(in thousands)				(in thousands)
Segment revenue:	Segment revenue:							Segment revenue:
Cloud Solutions		$	64,956	$	61,022
Payment Platforms								Payment Platforms	$	33,807	$	25,367
Banking Solutions	Banking Solutions	26,190		24,169				Banking Solutions	47,681		45,229
Payments and Documents		17,396		18,578
Legal Spend Management								Legal Spend Management	22,063		20,550
Traditional Solutions								Traditional Solutions	16,192		17,396
Other	Other	3,823		4,407				Other	3,862		3,823
Total segment revenue	Total 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 Platforms								Payment Platforms	$	5,824	$	5,755
Banking Solutions	Banking Solutions	2,956		535				Banking Solutions	3,753		7,212
Payments and Documents		4,100		5,009
Legal Spend Management								Legal Spend Management	5,208		4,586
Traditional Solutions								Traditional Solutions	3,114		4,100
Other	Other	(3,107)		(1,866)				Other	(3,976)		(3,107)
Total measure of segment profit	Total 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,
		2020		2019					2021		2020
		(in thousands)				(in thousands)
Total measure of segment profit	Total 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 assets	Amortization of acquisition-related intangible assets	(5,029)		(4,950)				Amortization of acquisition-related intangible assets	(5,071)		(5,029)
Stock-based compensation plan expense	Stock-based compensation plan expense	(9,973)		(11,044)				Stock-based compensation plan expense	(13,912)		(9,973)
Acquisition and integration-related expenses	Acquisition 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		0		(224)
Restructuring expense								Restructuring expense	(386)		(70)
Other non-core expense								Other non-core expense	(110)		(48)

Shareholder engagement fees								Shareholder engagement fees	(947)		—
Other expense, net of pension adjustments	Other 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,
		2020		2019					2021		2020
		(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 Platforms								Payment Platforms	$	2,831	$	2,387
Banking Solutions	Banking Solutions	2,752		2,095				Banking Solutions	3,935		3,164
Payments and Documents		270		220
Legal Spend Management								Legal Spend Management	1,681		1,602
Traditional Solutions								Traditional Solutions	362		270
Other	Other	276		183				Other	386		276
Total depreciation and other amortization expense	Total 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, ~~2020~~2021 and ~~2019.~~2020.



	Three Months Ended September 30, 2021
	Subscription		Software		Professional Services, Maintenance and Other		Total
	(in thousands)
Payment Platforms	$	33,504	$	—	$	303	$	33,807
Banking Solutions	40,935		77		6,669		47,681
Legal Spend Management	22,060		—		3		22,063
Traditional Solutions	6,026		439		9,727		16,192
Other	971		411		2,480		3,862
Total revenues	$	103,496	$	927	$	19,182	$	123,605

1513

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(in thousands) Three Months Ended September 30,
2020 2019
Subscriptions Revenue Total Revenue Subscriptions Revenue Total Revenue
Payment Platforms (1)
$ 40,248 $ 44,406 $ 35,206 $ 40,448
Banking Solutions 22,985 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
	Subscription		Software		Professional Services, Maintenance and Other		Total
	(in thousands)
Payment Platforms	$	25,280	$	—	$	87	$	25,367
Banking Solutions	37,953		104		7,172		45,229
Legal Spend Management	20,550		—		—		20,550
Traditional Solutions	5,681		748		10,967		17,396
Other	920		125		2,778		3,823
Total revenues	$	90,384	$	977	$	21,004	$	112,365

~~We derive~~For the ~~majority~~quarter ended September 30, 2021 we derived 84% of our revenue from ~~subscription~~subscription-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 Documents~~Traditional 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,
		2020		2019					2021		2020
		(in thousands)				(in thousands)
Revenues from unaffiliated customers:	Revenues from unaffiliated customers:							Revenues from unaffiliated customers:
United States	United States	$	68,981	$	69,020			United States	$	74,994	$	68,981
United Kingdom	United Kingdom	27,694		24,967				United Kingdom	30,630		27,694
Switzerland	Switzerland	10,867		9,760				Switzerland	12,395		10,867
Other	Other	4,823		4,429				Other	5,586		4,823
Total revenues from unaffiliated customers	Total 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,
		2020		2020			2021		2021
		(in thousands)					(in thousands)
Long-lived assets:	Long-lived assets:					Long-lived assets:
United States	United States	$	67,580	$	64,858	United States	$	80,913	$	82,816
United Kingdom	United Kingdom	42,663		41,835		United Kingdom	42,756		44,455
Other	Other	17,738		16,977		Other	19,905		17,453
Total long-lived assets	Total 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 a~~nd $3,000~~ for the three months ended September 30, ~~2020~~2021 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 recorded~~operations 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 o~~f $36.2~~of $42.2 million ag~~ainst~~against 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, 2020								As of September 30, 2021
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life
		(in thousands)						(in years)		(in thousands)						(in years)
Amortized intangible assets:	Amortized intangible assets:								Amortized intangible assets:
Customer related	Customer related	$	229,526	$	(163,029)	$	66,497	7.7	Customer related	$	232,435	$	(176,930)	$	55,505	7.0
Core technology	Core technology	139,809		(100,178)		39,631		6.9	Core technology	154,682		(108,336)		46,346		7.3
Other intangible assets	Other intangible assets	22,363		(20,296)		2,067		4.6	Other intangible assets	23,241		(21,025)		2,216		4.5
Capitalized software development costs	Capitalized software development costs	27,041		(15,181)		11,860		1.8	Capitalized software development costs	29,760		(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
Total	Total	$	507,651	$	(346,838)	$	160,813		Total	$	551,769	$	(388,011)	$	163,758
Unamortized intangible assets:	Unamortized intangible assets:								Unamortized intangible assets:
Goodwill	Goodwill					220,899			Goodwill					242,863
Total intangible assets	Total intangible assets					$	381,712		Total intangible assets					$	406,621

As of June 30, 2020
Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Life
(in thousands) (in years)
Amortized intangible assets:
Customer related $ 219,305 $ (157,008) $ 62,297 7.5
Core technology 135,720 (97,431) 38,289 7.2
Other intangible assets 22,099 (19,927) 2,172 4.8
Capitalized software development costs 26,222 (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:
Goodwill 205,713
Total intangible assets $ 359,824

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	As of June 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life
	(in thousands)						(in years)
Amortized intangible assets:
Customer related	$	235,366	$	(175,841)	$	59,525	7.2
Core technology	154,254		(107,008)		47,246		7.5
Other intangible assets	23,504		(20,984)		2,520		4.8
Capitalized software development costs	29,217		(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:
Goodwill					246,698
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 ~~2021~~2022 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 Assets		Capitalized Software Development Costs		Software			Acquired Intangible Assets		Capitalized Software Development Costs		Software
		(in thousands)							(in thousands)
Remaining 2021		$	15,216	$	3,431	$	9,237
2022		18,718		4,575		9,388
Remaining 2022								Remaining 2022	$	14,907	$	3,912	$	12,106
2023	2023	17,314		1,731		7,370		2023	18,821		2,371		11,505
2024	2024	15,511		1,001		5,733		2024	16,976		1,616		9,397
2025	2025	13,072		420		2,863		2025	14,510		943		6,168
2026 and thereafter		28,364		7		1,330
2026								2026	13,566		360		2,917
2027 and thereafter								2027 and thereafter	25,287		8		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 ~~rollforward~~roll forward of our goodwill balances, by reportable segment:


		Cloud Solutions		Banking Solutions		Payments and Documents		Other		Total			Payment Platforms		Banking Solutions		Legal Spend Management		Traditional 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, 2021												Balance at June 30, 2021	$	151,765	$	40,534	$	—	$	46,205	$	8,194	$	246,698
Goodwill reclassified as a result of segment reorganization												Goodwill reclassified as a result of segment reorganization	(88,767)		61,310		27,457		0		0		—
Measurement period adjustment												Measurement period adjustment	(868)		—		—		—		—		(868)
Goodwill acquired during the period	Goodwill acquired during the period	10,636		398		0		0		11,034		Goodwill acquired during the period	—		—		—		—		—		—
Impact of foreign currency translation	Impact of foreign currency translation	2,040		0		2,112		0		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, 2021												Balance at September 30, 2021	$	60,616	$	101,844	$	27,457	$	44,752	$	8,194	$	242,863

——————

(1)~~Other~~Other 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 ~~6.0~~8.4 years and we had no material ~~capital~~finance leases.

Additional information of our lease activity, as of and for the three months ended September 30, ~~2020~~2021 is as follows:

~~Operating leases:~~

Three Months Ended September 30, ~~2020~~

Operating leases:

2021

(in thousands)

Operating lease cost

~~1,939~~1,844

Short-term lease cost

8898

Variable lease cost

~~539~~505

Sublease income

~~(89)~~(63)

Total lease cost

~~2,477~~2,384

September 30, ~~2020~~2021

(in thousands)

Right-of-use assets, net

~~25,197~~28,732

Operating lease liabilities, current (1)

$6,247

~~7,060~~

Operating lease liabilities, non-current

~~21,312~~27,996

Total operating lease liabilities

~~28,372~~34,243

——————

(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

~~1,921~~1,942

Right-of-use assets obtained in exchange for lease obligations

~~1,906~~3,065

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, ~~2020~~2021 were as follows:


For the year ending June 30,	For the year ending June 30,	Operating Leases		For the year ending June 30,	Operating Leases
		(in thousands)			(in thousands)
2021		$	6,383
2022	2022	7,105		2022	$	6,203
2023	2023	5,163		2023	6,903
2024	2024	3,283		2024	4,440
2025	2025	2,903		2025	4,029
2026				2026	4,057
Thereafter	Thereafter	8,845		Thereafter	19,261
Total lease payments	Total lease payments	33,682		Total lease payments	44,893
Less imputed interest	Less imputed interest	(5,310)		Less imputed interest	(10,650)
Total lease liabilities	Total 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 $180~~owed $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 Ci~~tizens~~Citizens 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 B~~ank~~Bank 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, ~~2020~~2021 and June 30, ~~2020~~2021 were as follows:

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Description	Description	Balance Sheet Location	September 30, 2020		June 30, 2020		Description	Balance Sheet Location	September 30, 2021		June 30, 2021
Derivative interest rate swaps	Derivative interest rate swaps		(in thousands)				Derivative interest rate swaps		(in thousands)

Short-term derivative liability	Short-term derivative liability	Accrued expenses and other current liabilities	$	1,638	$	1,631	Short-term derivative liability	Accrued expenses and other current liabilities	$	1,522	$	1,564
Long-term derivative liability	Long-term derivative liability	Other liabilities	$	2,995	$	3,448	Long-term derivative liability	Other 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, ~~2020~~2021 and ~~2019.~~2020.


		Gain (Loss) in AOCI June 30, 2020		Amount 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			Gain (Loss) in AOCI June 30, 2021		Amount 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 swap	Derivative 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, 2019		Amount 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, 2019			Gain (Loss) in AOCI June 30, 2020		Amount 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 swap	Derivative 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,
		2020		2019					2021		2020
		(in thousands)				(in thousands)
Components of net periodic cost	Components of net periodic cost							Components of net periodic cost
Service cost	Service cost	$	765	$	724			Service cost	$	707	$	765
Interest cost	Interest cost	37		56				Interest cost	49		37
Prior service credit	Prior service credit	(83)		(77)				Prior service credit	(119)		(83)
Net actuarial loss	Net actuarial loss	61		118				Net actuarial loss	—		61
Expected return on plan assets	Expected return on plan assets	(285)		(307)				Expected return on plan assets	(359)		(285)
Net periodic cost	Net 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 as~~and 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 ~~they~~the 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, ~~2020~~2021 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 ~~Cloud~~Payment Platforms, Banking Solutions ~~segment~~and 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.~~

~~Our~~We incurred a net ~~income was $0.4~~loss of $4.9 million in the three months ended September 30, ~~2020~~2021 compared to net ~~loss~~income of ~~$1.4~~$0.4 million in the same period of the prior fiscal year. Our net ~~income~~loss for the three months ended September 30, ~~2020~~2021, 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 increase~~a 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. The~~an 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, ~~2020~~2021, 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 years~~On an increasing basis, we ~~have made~~continue 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, like~~Recently, 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 operating~~continue to operate effectively ~~through~~during this ~~challenge,~~challenging period, the full impact of the COVID-19 pandemic on our business and ~~operating results~~the 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 ~~and~~itself; 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 certain~~Certain of our transactional ~~based~~ revenue streams, ~~principally in our~~specifically 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 observed~~saw 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 customers~~revenue 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 center~~encouraged 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, ~~2020~~2021 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, ~~2020~~2021 Compared to the Three Months Ended September 30, ~~2019~~2020

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
		2020		2019		$ Change Inc (Dec)		% Change Inc (Dec)					2021		2020		$ 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 Platforms												Payment Platforms	$	33,807	$	25,367	$	8,440	33.3	%
Banking Solutions	Banking Solutions	26,190		24,169		2,021		8.4	%			Banking Solutions	47,681		45,229		2,452		5.4	%
Payments and Documents		17,396		18,578		(1,182)		(6.4)	%
Legal Spend Management												Legal Spend Management	22,063		20,550		1,513		7.4	%
Traditional Solutions												Traditional Solutions	16,192		17,396		(1,204)		(6.9)	%
Other	Other	3,823		4,407		(584)		(13.3)	%			Other	3,862		3,823		39		1.0	%
Total segment revenue	Total 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 Platforms												Payment Platforms	$	5,824	$	5,755	$	69	1.2	%
Banking Solutions	Banking Solutions	2,956		535		2,421		452.5	%			Banking Solutions	3,753		7,212		(3,459)		(48.0)	%
Payments and Documents		4,100		5,009		(909)		(18.1)	%
Legal Spend Management												Legal Spend Management	5,208		4,586		622		13.6	%
Traditional Solutions												Traditional Solutions	3,114		4,100		(986)		(24.0)	%
Other	Other	(3,107)		(1,866)		(1,241)		(66.5)	%			Other	(3,976)		(3,107)		(869)		(28.0)	%
Total measure of segment profit	Total 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,
		2020		2019					2021		2020
		(in thousands)				(in thousands)
Total measure of segment profit	Total 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 assets	Amortization of acquisition-related intangible assets	(5,029)		(4,950)				Amortization of acquisition-related intangible assets	(5,071)		(5,029)
Stock-based compensation plan expense	Stock-based compensation plan expense	(9,973)		(11,044)				Stock-based compensation plan expense	(13,912)		(9,973)
Acquisition and integration-related expenses	Acquisition and integration-related expenses	(245)		(1,697)				Acquisition and integration-related expenses	(201)		(245)
Restructuring expense	Restructuring 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 expense								Other non-core expense	(110)		(48)

Shareholder engagement fees								Shareholder engagement fees	(947)		—
Other expense, net of pension adjustments	Other 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~~

~~Revenues~~Revenue from our ~~Cloud Solutions~~Payment Platforms segment increased ~~$3.9~~$8.4 million for the three months ended September 30, ~~2020~~2021 as compared to the same period in the prior fiscal year due to increased subscription revenue of ~~$4.7~~$8.2 million ~~from~~driven 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 platform~~since 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, ~~2020~~2021 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 ~~general~~product development expenses of $3.7 million and ~~administrative expenses.~~$1.5 million, respectively. We expect revenue and profit for the ~~Cloud Solutions~~Payment Platforms segment to continue to increase in fiscal year ~~2021~~2022 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, ~~2020~~2021 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 license~~professional 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 $2.4~~decreased $3.5 million for the three months ended September 30, ~~2020~~2021 as compared to the same period in the prior fiscal year ~~primarily~~ due to the increases in revenue ~~increases~~and 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 ~~2021~~2022 as compared to fiscal year ~~2020.~~2021.

~~Payments and Documents~~Legal Spend Management

Revenues from our ~~Payments and Documents~~Legal Spend Management segment ~~decreased $1.2~~increased $1.5 million for the three months ended September 30, ~~2020~~2021 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 cost~~the decrease in revenues discussed above and an increase in subscription costs of ~~revenue and increased sales and marketing,~~$0.1 million, product development ~~and engineering~~expense 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
2020 2019 $ Change Inc (Dec) % Change Inc (Dec)
(Dollars in thousands)
Revenues:
Subscriptions $ 90,384 $ 80,066 $ 10,318 12.9 %
Software licenses 977 2,576 (1,599) (62.1) %
Service and maintenance 20,564 24,825 (4,261) (17.2) %
Other 440 709 (269) (37.9) %
Total revenues $ 112,365 $ 108,176 $ 4,189 3.9 %
As % of total revenues:
Subscriptions 80.4 % 74.0 %
Software licenses 0.9 % 2.4 %
Service and maintenance 18.3 % 22.9 %
Other 0.4 % 0.7 %
Total revenues 100.0 % 100.0 %

~~Subscriptions~~

~~Revenues from subscriptions increased $10.3~~year. Segment profit decreased $0.9 million for the three months ended September 30, ~~2020~~2021 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
	2021			2020			$ Change Inc (Dec)		% Change Inc (Dec)
	(Dollars in thousands)
Revenues:
Subscriptions	$	103,496		$	90,384		$	13,112	14.5	%
Software licenses	927			977			(50)		(5.1)	%
Service and maintenance	18,708			20,564			(1,856)		(9.0)	%
Other	474			440			34		7.7	%
Total revenues	$	123,605		$	112,365		$	11,240	10.0	%

As % of total revenues:
Subscriptions	83.7		%	80.4		%
Software licenses	0.8		%	0.9		%
Service and maintenance	15.1		%	18.3		%
Other	0.4		%	0.4		%
Total revenues	100.0		%	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 ~~increases~~an increase in subscriptions revenue from our ~~Cloud Solutions,~~Payment Platforms, Banking Solutions, and ~~Payments and Documents~~Legal 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 ~~2021~~2022 due to ~~revenue increases in~~the 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, ~~2020~~2021 as compared to the same period in the prior fiscal ~~year. The overall revenue decrease was~~year, primarily due ~~principally~~ to ~~decreases in software~~decreased revenue from our ~~Payments and Documents segment of $0.6 million, Banking~~Traditional Solutions segment of ~~$0.5~~$0.3 million, ~~and~~offset 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 than~~and 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, ~~2020~~2021 as compared to the same period in the prior fiscal ~~year. The overall revenue decrease was~~year, primarily due ~~principally~~ to ~~decreases in~~decreased revenue from our Traditional Solution and Banking Solutions ~~segment~~segments 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 will~~and 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
		2020			2019			$ Change Inc (Dec)		% Change Inc (Dec)					2021			2020			$ Change Inc (Dec)		% Change Inc (Dec)
		(Dollars in thousands)										(Dollars in thousands)
Cost of revenues:	Cost of revenues:													Cost of revenues:
Subscriptions	Subscriptions	$	35,218		$	32,765		$	2,453	7.5	%			Subscriptions	$	42,693		$	35,218		$	7,475	21.2	%
Software licenses	Software licenses	90			161			(71)		(44.1)	%			Software licenses	81			90			(9)		(10.0)	%
Service and maintenance	Service and maintenance	10,916			13,053			(2,137)		(16.4)	%			Service and maintenance	9,252			10,916			(1,664)		(15.2)	%
Other	Other	309			516			(207)		(40.1)	%			Other	295			309			(14)		(4.5)	%
Total cost of revenues	Total 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 ~~decreased~~increased to ~~39%~~41% as a percentage of subscriptions revenues in the three months ended September 30, ~~2020~~2021 as compared to ~~41% of subscriptions revenues~~39% in the three months ended September 30, ~~2019~~2020 due to ~~the~~year-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 ~~2021~~2022 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 ~~were~~remained 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 will~~are expected to remain ~~relatively consistent in fiscal year 2021.~~inconsequential.

Service and Maintenance

~~Table of Contents~~

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 consistent~~decreased to 49% in the three months ended September 30, 2021 as compared to 53% in the three months ended September 30, 2020, ~~as compared~~reflecting 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 slightly~~remain 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
		2020			2019			$ Change Inc (Dec)		% Change Inc (Dec)					2021			2020			$ Change Inc (Dec)		% Change Inc (Dec)
		(Dollars in thousands)										(Dollars in thousands)
Operating expenses:	Operating expenses:													Operating expenses:
Sales and marketing	Sales and marketing	$	25,743		$	25,688		$	55	0.2	%			Sales and marketing	$	33,814		$	25,743		$	8,071	31.4	%
Product development and engineering	Product development and engineering	18,499			18,349			150		0.8	%			Product development and engineering	21,465			18,499			2,966		16.0	%
General and administrative	General and administrative	13,626			13,345			281		2.1	%			General and administrative	17,749			13,626			4,123		30.3	%
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	5,029			4,950			79		1.6	%			Amortization of acquisition-related intangible assets	5,071			5,029			42		0.8	%
Total operating expenses	Total 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 marketing	Sales and marketing	22.9		%	23.7		%							Sales and marketing	27.4		%	22.9		%
Product development and engineering	Product development and engineering	16.5		%	17.0		%							Product development and engineering	17.4		%	16.5		%
General and administrative	General and administrative	12.1		%	12.3		%							General and administrative	14.4		%	12.1		%
Amortization of acquisition-related intangible assets	Amortization of acquisition-related intangible assets	4.5		%	4.6		%							Amortization of acquisition-related intangible assets	4.1		%	4.5		%
Total operating expenses	Total operating expenses	56.0		%	57.6		%							Total operating expenses	63.3		%	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, ~~2020~~2021 as compared to the three months ended September 30, ~~2019~~2020 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 costs~~expense 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, ~~2020~~2021, as compared to the three months ended September 30, ~~2019~~2020 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 ~~increase~~remain 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, ~~2020~~2021 as compared to the three months ended September 30, ~~2019~~2020 primarily due ~~primarily~~ to an increase in employee related costs of ~~$1.5~~$2.7 million, ~~offset by decreased acquisition~~depreciation expense of $0.4 million, restructuring expense of $0.3 million and ~~integration related expenses~~facility 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.~~

~~Table of Contents~~

~~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
		2020		2019		$ Change Inc (Dec)		% Change Inc (Dec)					2021		2020		$ Change Inc (Dec)		% Change Inc (Dec)
		(Dollars in thousands)								(Dollars in thousands)
Interest income	Interest income	$	100	$	223	$	(123)	(55.2)	%			Interest income	$	23	$	100	$	(77)	(77.0)	%
Interest expense	Interest expense	(1,258)		(750)		(508)		(67.7)	%			Interest expense	(1,066)		(1,258)		192		15.3	%
Other income (expense), net	Other income (expense), net	378		(186)		564		303.2	%			Other income (expense), net	146		378		(232)		(61.4)	%
Other expense, net	Other 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 ~~increase~~slight decrease in interest expense in the three months ended September 30, ~~2020~~2021 as compared to the three months ended September 30, ~~2019~~2020 is a result of ~~an increase~~a 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 ~~expense~~benefit of ~~$1.8~~$2.8 million and ~~$3,000~~income tax expense of $1.8 million for the three months ended September 30, ~~2020~~2021 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 ~~historically~~consistently 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.

O~~One~~ne 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 ~~ending~~ended September 30, ~~2020~~2021 and June 30, ~~2020~~2021 and a summary of our cash activity for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 are summarized in the tables below:


		September 30,		June 30,			September 30,		June 30,
		2020		2020			2021		2021
		(in thousands)					(in thousands)
Cash and cash equivalents	Cash and cash equivalents	$	187,215	$	194,832	Cash and cash equivalents	$	117,200	$	133,932
Marketable securities	Marketable securities	10,210		10,209		Marketable securities	8,185		10,216
Borrowings under credit facility	Borrowings under credit facility	180,000		180,000		Borrowings under credit facility	130,000		130,000

~~Table of Contents~~


	Three Months Ended September 30,
	2021		2020
	(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,
2020 2019
(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 activities 2,168 (8,013)
Effect of exchange rates on cash 3,294 (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, ~~2020~~2021 from June 30, ~~2020~~2021 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 fund~~in 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 ~~effect~~purchase of ~~foreign exchange rates on cash~~available 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 ~~decide~~decided 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. ~~Increases~~Decreases primarily in the foreign currency exchange rate of the British Pound Sterling to the U.S. Dollar ~~increased~~decreased 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 ~~decreased~~increased by ~~$10.2~~$2.3 million in the three months ended September 30, ~~2020~~2021 as compared to the same period in the prior fiscal ~~year. The decrease was~~year, primarily ~~related~~due to ~~a decrease~~an increase in cash ~~flows generated from the change in~~provided 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 decrease~~cash used in ~~the cash flows from the change in accounts payable~~customer 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 ~~increase~~decrease in net cash used in investing activities for the three months ended September 30, ~~2020~~2021 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 ~~note~~decrease 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 decrease~~an 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.

~~Table of Contents~~

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements during the three months ended September 30, ~~2020.~~

2021.

~~Table of Contents~~

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, ~~2020~~2021 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, ~~2020~~2021 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, ~~2020~~2021 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:


Period	Total 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, 2021	162,524	42.06		162,524	43,161,000
September 1, 2021 - September 30, 2021	354,440	41.36		354,440	28,501,000
Total	516,964	$	41.59	516,964

——————

(1)On August ~~5, 2019,~~ ~~we announced that~~16, 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 requirements~~expiration date of the ~~Securities Act of 1933,~~repurchase authority, as ~~amended (Securities Act) provided~~we disclosed on a Form 8-K filed on August 17, 2021 we intend to complete the program by ~~Section 4(a)(2) of~~December 31, 2021. However, we retain the ~~Securities Act. No underwriters were involved in~~ability 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 Number~~

~~Description~~

~~Form~~

~~File No.~~

~~Exhibit~~

~~Filing Date~~

~~Filed Herewith~~

~~3.1~~

~~Amended and Restated Certificate of Incorporation of the Registrant, as amended.~~

~~3.2~~

~~Amended and Restated By-Laws of the Registrant, as amended.~~

~~31.1~~

~~Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer~~

~~31.2~~

~~Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer~~

~~32.1~~

~~Section 1350 Certification of Principal Executive Officer~~

~~32.2~~

~~Section 1350 Certification of Principal Financial Officer~~

~~101.INS~~

~~Inline 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 Document~~

101.CAL**

~~Inline XBRL Taxonomy Calculation Linkbase Document~~

101.DEF**

~~Inline XBRL Taxonomy Definition Linkbase Document~~

101.LAB**

~~Inline XBRL Taxonomy Label Linkbase Document~~

101.PRE**

~~Inline XBRL Taxonomy Presentation Linkbase Document~~

~~104~~

~~Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)~~

Incorporated by Reference

Exhibit Number

Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

10.1

Letter Agreement, dated as of July 22, 2021, between the Company and John Kelly

8-K

000-25259

10.1

07/23/2021

10.2

Letter Agreement, dated as of October 20, 2021, between the Company, Clearfield Capital Management LP and Sachem Head Capital Management LP

8-K

000-25259

10.1

10/20/2021

10.3

Amended and Restated Exec utive Retention Agreement , dated September 21, 2021 , between t h e Registrant and Bruce Bowden

31.1

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2

Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1

Section 1350 Certification of Principal Executive Officer

32.2

Section 1350 Certification of Principal Financial Officer

101.INS

Inline 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 Document

101.CAL**

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF**

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB**

Inline XBRL Taxonomy Label Linkbase Document

101.PRE**

Inline XBRL Taxonomy Presentation Linkbase Document

104

Cover 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, ~~2020~~2021 and June 30, ~~2020,~~2021, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, (iii) Unaudited Consolidated Statements of Stockholders' Equity for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 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, ~~2020~~2021	By:	/s/ ~~RICHARD D. BOOTH~~A. BRUCE BOWDEN
			~~Richard D. Booth~~A. Bruce Bowden
			Chief Financial Officer and Treasurer
			(Principal Financial and Accounting Officer)

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	As of June 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Life
	(in thousands)						(in years)
Amortized intangible assets:
Customer related	$	219,305	$	(157,008)	$	62,297	7.5
Core technology	135,720		(97,431)		38,289		7.2
Other intangible assets	22,099		(19,927)		2,172		4.8
Capitalized software development costs	26,222		(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:
Goodwill					205,713
Total intangible assets					$	359,824