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, 2021March 31, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     

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

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


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

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



Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No     
The number of shares outstanding of the registrant’s common stock as of October 31, 2021April 30, 2022 was 45,173,486.45,386,591.


Table of Contents
BOTTOMLINE TECHNOLOGIES, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2021MARCH 31, 2022
TABLE OF CONTENTS
PART IPage
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Balance SheetsUnaudited Condensed Consolidated Balance SheetsUnaudited Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)(in thousands, except per share amounts)(in thousands, except per share amounts)
September 30,June 30,March 31,June 30,
2021202120222021
ASSETSASSETSASSETS
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents117,200 $133,932 Cash and cash equivalents$117,605 $133,932 
Cash held for customersCash held for customers7,431 9,836 Cash held for customers6,807 9,836 
Marketable securitiesMarketable securities8,185 10,216 Marketable securities964 10,216 
Accounts receivable net of allowances for doubtful accounts of $988 at September 30, 2021 and $1,304 at June 30, 202167,115 72,978 
Accounts receivable net of allowances for doubtful accounts of $747 at March 31, 2022 and $1,304 at June 30, 2021Accounts receivable net of allowances for doubtful accounts of $747 at March 31, 2022 and $1,304 at June 30, 202181,027 72,978 
Prepaid expenses and other current assetsPrepaid expenses and other current assets37,901 34,653 Prepaid expenses and other current assets36,511 34,653 
Total current assetsTotal current assets237,832 261,615 Total current assets242,914 261,615 
Property and equipment, netProperty and equipment, net66,293 68,471 Property and equipment, net65,340 68,471 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net28,732 27,570 Operating lease right-of-use assets, net28,440 27,570 
GoodwillGoodwill242,863 246,698 Goodwill249,219 246,698 
Intangible assets, netIntangible assets, net163,758 162,691 Intangible assets, net157,873 162,691 
Other assetsOther assets48,549 48,683 Other assets51,442 48,683 
Total assetsTotal assets$788,027 $815,728 Total assets$795,228 $815,728 
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$9,753 $11,428 Accounts payable$16,514 $11,428 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities54,470 45,925 Accrued expenses and other current liabilities54,655 45,925 
Customer account liabilitiesCustomer account liabilities7,431 9,836 Customer account liabilities6,807 9,836 
Deferred revenueDeferred revenue75,876 88,679 Deferred revenue102,372 88,679 
Total current liabilitiesTotal current liabilities147,530 155,868 Total current liabilities180,348 155,868 
Borrowings under credit facilityBorrowings under credit facility130,000 130,000 Borrowings under credit facility130,000 130,000 
Deferred revenue, non-currentDeferred revenue, non-current11,459 12,559 Deferred revenue, non-current10,213 12,559 
Operating lease liabilities, non-currentOperating lease liabilities, non-current27,996 26,629 Operating lease liabilities, non-current26,861 26,629 
Deferred income taxesDeferred income taxes9,702 14,574 Deferred income taxes12,027 14,574 
Other liabilitiesOther liabilities20,601 19,864 Other liabilities19,196 19,864 
Total liabilitiesTotal liabilities347,288 359,494 Total liabilities$378,645 $359,494 
Stockholders' equityStockholders' equityStockholders' equity
Preferred Stock, $.001 par value:Preferred Stock, $.001 par value:Preferred Stock, $.001 par value:
Authorized shares- 4,000; issued and outstanding shares- none
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- 49,586 at September 30, 2021 and 49,294 at June 30, 2021; outstanding shares- 43,090 at September 30, 2021 and 43,237 at June 30, 202149 49 
Authorized shares-100,000; issued shares- 50,003 at March 31, 2022 and 49,294 at June 30, 2021; outstanding shares- 42,943 at March 31, 2022 and 43,237 at June 30, 2021Authorized shares-100,000; issued shares- 50,003 at March 31, 2022 and 49,294 at June 30, 2021; outstanding shares- 42,943 at March 31, 2022 and 43,237 at June 30, 202150 49 
Additional paid-in-capitalAdditional paid-in-capital833,563 819,392 Additional paid-in-capital861,617 819,392 
Accumulated other comprehensive lossAccumulated other comprehensive loss(21,376)(16,081)Accumulated other comprehensive loss(23,197)(16,081)
Treasury stock: 6,496 shares at September 30, 2021 and 6,057 shares at June 30, 2021, at cost(169,746)(150,282)
Treasury stock: 7,060 shares at March 31, 2022 and 6,057 shares at June 30, 2021, at costTreasury stock: 7,060 shares at March 31, 2022 and 6,057 shares at June 30, 2021, at cost(195,978)(150,282)
Accumulated deficitAccumulated deficit(201,751)(196,844)Accumulated deficit(225,909)(196,844)
Total stockholders' equityTotal stockholders' equity440,739 456,234 Total stockholders' equity$416,583 $456,234 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$788,027 $815,728 Total liabilities and stockholders' equity$795,228 $815,728 
See accompanying notes.
3

Table of Contents
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands, except per share amounts)(in thousands, except per share amounts)(in thousands, except per share amounts)
Three Months Ended September 30,Three Months Ended March 31,Nine Months Ended March 31,
202120202022202120222021
Revenues:Revenues:Revenues:
SubscriptionsSubscriptions$103,496 $90,384 Subscriptions$112,135 $99,939 $324,113 $283,721 
Software licensesSoftware licenses927 977 Software licenses1,006 1,092 3,086 3,871 
Service and maintenanceService and maintenance18,708 20,564 Service and maintenance18,138 19,292 55,478 59,878 
OtherOther474 440 Other557 562 1,551 1,804 
Total revenuesTotal revenues123,605 112,365 Total revenues131,836 120,885 384,228 349,274 
Cost of revenues:Cost of revenues:Cost of revenues:
SubscriptionsSubscriptions42,693 35,218 Subscriptions45,792 39,194 134,515 111,607 
Software licensesSoftware licenses81 90 Software licenses142 116 283 332 
Service and maintenanceService and maintenance9,252 10,916 Service and maintenance9,362 10,450 27,856 31,752 
OtherOther295 309 Other364 375 989 1,235 
Total cost of revenuesTotal cost of revenues52,321 46,533 Total cost of revenues55,660 50,135 163,643 144,926 
Gross profitGross profit71,284 65,832 Gross profit76,176 70,750 220,585 204,348 
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing33,814 25,743 Sales and marketing37,346 31,525 105,815 86,505 
Product development and engineeringProduct development and engineering21,465 18,499 Product development and engineering23,095 20,224 66,312 57,906 
General and administrativeGeneral and administrative17,749 13,626 General and administrative19,925 15,678 59,291 45,962 
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets5,071 5,029 Amortization of acquisition-related intangible assets5,255 5,443 15,506 15,614 
Total operating expensesTotal operating expenses78,099 62,897 Total operating expenses85,621 72,870 246,924 205,987 
(Loss) income from operations(6,815)2,935 
Other expense, net(897)(780)
(Loss) income before income taxes(7,712)2,155 
Income tax benefit (provision)2,805 (1,764)
Net (loss) income$(4,907)$391 
Loss from operationsLoss from operations(9,445)(2,120)(26,339)(1,639)
Other income ( expense), netOther income ( expense), net2,064 (1,314)327 (2,982)
Loss before income taxesLoss before income taxes(7,381)(3,434)(26,012)(4,621)
Income tax provisionIncome tax provision(143)(1,335)(3,053)(4,372)
Net lossNet loss$(7,524)$(4,769)$(29,065)$(8,993)
Basic and diluted net (loss) income per share$(0.11)$0.01 
Basic and diluted net loss per shareBasic and diluted net loss per share$(0.18)$(0.11)$(0.68)$(0.21)
Shares used in computing net (loss) income per share:
Basic43,273 42,457 
Diluted43,273 42,771 
Other comprehensive income, net of tax:
Unrealized gain (loss) on available for sale securities(25)
Shares used in computing net loss per share:Shares used in computing net loss per share:
Basic and dilutedBasic and diluted42,778 42,838 42,937 42,682 
Other comprehensive (loss) income, net of tax:Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on available for sale securitiesUnrealized (loss) gain on available for sale securities(1)— (31)
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments416 446 Change in fair value on interest rate hedging instruments1,705 614 3,028 1,526 
Minimum pension liability adjustmentsMinimum pension liability adjustments(142)(233)Minimum pension liability adjustments(142)453 (354)(111)
Foreign currency translation adjustmentsForeign currency translation adjustments(5,570)9,106 Foreign currency translation adjustments(5,274)(3,721)(9,790)19,028 
Other comprehensive (loss) income, net of tax:Other comprehensive (loss) income, net of tax:(5,295)9,294 Other comprehensive (loss) income, net of tax:(3,712)(2,650)(7,116)20,412 
Comprehensive (loss) incomeComprehensive (loss) income$(10,202)$9,685 Comprehensive (loss) income$(11,236)$(7,419)$(36,181)$11,419 

See accompanying notes.
4

Table of Contents
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' EquityUnaudited Condensed Consolidated Statements of Stockholders' EquityUnaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)(in thousands)(in thousands)
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' EquityCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 202149,294 $49 $819,392 $(16,081)6,057 $(150,282)$(196,844)$456,234 
Balance at December 31, 2021Balance at December 31, 202149,809 $50 $847,195 $(19,485)7,142 $(198,247)$(218,385)$411,128 
Issuance of common stock for employee stock purchase plan and upon exercise of stock optionsIssuance of common stock for employee stock purchase plan and upon exercise of stock options— — 278 — (78)2,035 — 2,313 Issuance of common stock for employee stock purchase plan and upon exercise of stock options— — 178 — (82)2,269 — 2,447 
Vesting of restricted stock awardsVesting of restricted stock awards292 — — — — — — — Vesting of restricted stock awards194 — — — — — — — 
Repurchase of common stock to be held in treasury— — — — 517 (21,499)— (21,499)
Stock compensation plan expenseStock compensation plan expense— — 13,893 — — — — 13,893 Stock compensation plan expense— — 14,244 — — — — 14,244 
Minimum pension liability adjustments, net of taxMinimum pension liability adjustments, net of tax— — — (142)— — — (142)Minimum pension liability adjustments, net of tax— — — (142)— — — (142)
Net lossNet loss— — — — — — (4,907)(4,907)Net loss— — — — — — (7,524)(7,524)
Unrealized gain on available for sale securities, net of tax— — — — — — 
Unrealized loss on available for sale securities, net of taxUnrealized loss on available for sale securities, net of tax— — — (1)— — — (1)
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments— — — 416 — — — 416 Change in fair value on interest rate hedging instruments— — — 1,705 — — — 1,705 
Foreign currency translation adjustmentForeign currency translation adjustment— — — (5,570)— — — (5,570)Foreign currency translation adjustment— — — (5,274)— — — (5,274)
Balance at September 30, 202149,586 $49 $833,563 $(21,376)6,496 $(169,746)$(201,751)$440,739 
Balance at March 31, 2022Balance at March 31, 202250,003 $50 $861,617 $(23,197)7,060 $(195,978)$(225,909)$416,583 


Three Months Ended September 30, 2020
Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' EquityCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at June 30, 202048,147 $48 $764,906 $(48,675)5,975 $(143,333)$(180,612)$392,334 
Balance at December 31, 2020Balance at December 31, 202048,856 $49 $795,630 $(25,613)6,138 $(152,299)$(184,780)$432,987 
Issuance of common stock for employee stock purchase plan and upon exercise of stock optionsIssuance of common stock for employee stock purchase plan and upon exercise of stock options— — 379 — (75)1,789 — 2,168 Issuance of common stock for employee stock purchase plan and upon exercise of stock options— — 404 — (81)2,017 — 2,421 
Vesting of restricted stock awardsVesting of restricted stock awards247 — — — — — Vesting of restricted stock awards185 — — — — — — — 
Issuance of common stock in connection with acquisition166 — 8,183 — — — — 8,183 
Stock compensation plan expenseStock compensation plan expense— — 9,989 — — — — 9,989 Stock compensation plan expense— — 11,493 — — — — 11,493 
Minimum pension liability adjustments, net of taxMinimum pension liability adjustments, net of tax— — — (233)— — — (233)Minimum pension liability adjustments, net of tax— — — 453 — — — 453 
Net income— — — — — — 391 391 
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)
Net lossNet loss— — — — — — (4,769)(4,769)
Unrealized gain on available for sale securities, net of taxUnrealized gain on available for sale securities, net of tax— — — — — — 
Change in fair value on interest rate hedging instrumentsChange in fair value on interest rate hedging instruments— — — 446 — — — 446 Change in fair value on interest rate hedging instruments— — — 614 — — — 614 
Foreign currency translation adjustmentForeign currency translation adjustment— — — 9,106 — — — 9,106 Foreign currency translation adjustment— — — (3,721)— — — (3,721)
Balance at September 30, 202048,560 $49 $783,457 $(39,381)5,900 $(141,544)$(180,165)$422,416 
Balance at March 31, 2021Balance at March 31, 202149,041 $49 $807,527 $(28,263)6,057 $(150,282)$(189,549)$439,482 
5

Table of Contents
Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
Nine Months Ended March 31, 2022
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 202149,294$49$819,392$(16,081)6,057$(150,282)$(196,844)$456,234
Issuance of common stock for employee stock purchase plan and upon exercise of stock options456(160)4,3044,760
Vesting of restricted stock awards70911
Repurchase of common stock to be held in treasury1,163(50,000)(50,000)
Stock compensation plan expense41,76941,769
Minimum pension liability adjustments, net of tax(354)(354)
Net loss(29,065)(29,065)
Change in fair value on interest rate hedging instruments3,0283,028
Foreign currency translation adjustment(9,790)(9,790)
Balance at March 31, 202250,003$50$861,617$(23,197)7,060$(195,978)$(225,909)$416,583


Nine Months Ended March 31, 2021
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Treasury StockAccumulated DeficitTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 202048,147$48$764,906$(48,675)5,975$(143,333)$(180,612)$392,334
Issuance of common stock for employee stock purchase plan and upon exercise of stock options783(156)3,8064,589
Vesting of restricted stock awards72811
Issuance of common stock in connection with acquisition1668,1838,183
Repurchase of common stock to be held in treasury238(10,755)(10,755)
Stock compensation plan expense33,65533,655
Minimum pension liability adjustments, net of tax(111)(111)
Net loss(8,993)(8,993)
Cumulative effect of adoption of current expected credit loss of accounting standard5656
Unrealized loss on available for sale securities, net of tax(31)(31)
Change in fair value on interest rate hedging instruments1,5261,526
Foreign currency translation adjustment19,02819,028
Balance at March 31, 202149,041$49$807,527$(28,263)6,057$(150,282)$(189,549)$439,482
56

Table of Contents
Bottomline Technologies, Inc.Bottomline Technologies, Inc.Bottomline Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash FlowsUnaudited Condensed Consolidated Statements of Cash FlowsUnaudited Condensed Consolidated Statements of Cash Flows
(in thousands)(in thousands)(in thousands)
Three Months Ended September 30,Nine Months Ended March 31,
2021202020222021
Operating activities:Operating activities:Operating activities:
Net (loss) income$(4,907)$391 
Net lossNet loss$(29,065)$(8,993)
Adjustments to reconcile net loss to net cash provided by operating activities:Adjustments to reconcile net loss to net cash provided by operating activities:Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets5,071 5,029 Amortization of acquisition-related intangible assets15,506 15,614 
Stock-based compensation plan expenseStock-based compensation plan expense13,912 9,973 Stock-based compensation plan expense41,848 33,644 
Depreciation and other amortizationDepreciation and other amortization9,195 7,699 Depreciation and other amortization28,955 24,290 
Gain on sale of cost-method investmentGain on sale of cost-method investment(80)— 
Deferred income tax benefitDeferred income tax benefit(4,641)227 Deferred income tax benefit(1,900)(92)
Change in provision for allowances on accounts receivableChange in provision for allowances on accounts receivable(146)89 Change in provision for allowances on accounts receivable(293)218 
Amortization of debt issuance costsAmortization of debt issuance costs103 103 Amortization of debt issuance costs332 310 
Amortization of premium on investmentsAmortization of premium on investments30 Amortization of premium on investments52 58 
Fair value adjustment on other investmentsFair value adjustment on other investments(83)— Fair value adjustment on other investments(2,576)— 
Gain on other investmentsGain on other investments— (48)Gain on other investments— (166)
Loss on disposal of equipmentLoss on disposal of equipment15 Loss on disposal of equipment38 
Gain on foreign exchange(255)(53)
(Gain) loss on foreign exchange(Gain) loss on foreign exchange(370)292 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accounts receivableAccounts receivable5,383 2,349 Accounts receivable(8,732)(5,942)
Prepaid expenses and other current assetsPrepaid expenses and other current assets(3,501)(1,971)Prepaid expenses and other current assets(2,279)(4,612)
Operating lease right-of-use asset, netOperating lease right-of-use asset, net(1,225)303 Operating lease right-of-use asset, net(972)(5,055)
Other assetsOther assets(177)(1,164)Other assets(808)(5,160)
Accounts payableAccounts payable(904)(824)Accounts payable4,338 808 
Accrued expensesAccrued expenses5,700 (1,565)Accrued expenses7,129 707 
Operating lease liabilitiesOperating lease liabilities1,657 146 Operating lease liabilities1,170 5,734 
Customer account liabilitiesCustomer account liabilities(2,189)563 Customer account liabilities(2,621)1,391 
Deferred revenueDeferred revenue(12,858)(13,484)Deferred revenue12,918 8,924 
Other liabilitiesOther liabilities77 127 Other liabilities694 (611)
Net cash provided by operating activitiesNet cash provided by operating activities10,246 7,910 Net cash provided by operating activities63,250 61,397 
Investing activities:Investing activities:Investing activities:
Acquisition of businesses and assets, net of cash acquiredAcquisition of businesses and assets, net of cash acquired(115)(9,892)Acquisition of businesses and assets, net of cash acquired(15,115)(41,331)
Investment distributions receivedInvestment distributions received81 — Investment distributions received161 — 
Purchases of other investmentsPurchases of other investments(35)— Purchases of other investments(125)(7,150)
Issuance of note receivableIssuance of note receivable— (1,600)Issuance of note receivable— (2,600)
Purchases of available-for-sale securitiesPurchases of available-for-sale securities(900)(2,929)Purchases of available-for-sale securities(900)(10,224)
Proceeds from sales of available-for-sale securitiesProceeds from sales of available-for-sale securities2,900 2,900 Proceeds from sales of available-for-sale securities10,100 10,100 
Capital expenditures, including capitalization of software costsCapital expenditures, including capitalization of software costs(11,717)(8,628)Capital expenditures, including capitalization of software costs(29,209)(24,267)
Net cash used in investing activitiesNet cash used in investing activities(9,786)(20,149)Net cash used in investing activities(35,088)(75,472)
Financing activities:Financing activities:Financing activities:
Repurchase of common stockRepurchase of common stock(20,802)— Repurchase of common stock(50,000)(10,755)
Repayment of amounts borrowed under revolving credit facilityRepayment of amounts borrowed under revolving credit facility— (50,000)
Proceeds from exercise of stock options and employee stock purchase planProceeds from exercise of stock options and employee stock purchase plan2,313 2,168 Proceeds from exercise of stock options and employee stock purchase plan4,760 4,589 
Net cash (used) provided in financing activities(18,489)2,168 
Net cash used in financing activitiesNet cash used in financing activities(45,240)(56,166)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(1,108)3,294 Effect of exchange rate changes on cash(2,278)5,849 
Decrease in cash, cash equivalents and restricted cashDecrease in cash, cash equivalents and restricted cash(19,137)(6,777)Decrease in cash, cash equivalents and restricted cash(19,356)(64,392)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period143,768 201,136 Cash, cash equivalents and restricted cash at beginning of period143,768 201,136 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$124,631 $194,359 Cash, cash equivalents and restricted cash at end of period$124,412 $136,744 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$117,200 $187,215 Cash and cash equivalents at end of period$117,605 $128,188 
Cash held for customers at end of periodCash held for customers at end of period7,431 7,144 Cash held for customers at end of period6,807 8,556 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$124,631 $194,359 Cash, cash equivalents and restricted cash at end of period$124,412 $136,744 
Supplemental disclosures of non-cash investing activities:Supplemental disclosures of non-cash investing activities:Supplemental disclosures of non-cash investing activities:
Issuance of common stock in connection with acquisitionIssuance of common stock in connection with acquisition$— $8,183 Issuance of common stock in connection with acquisition$— $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, 2021March 31, 2022
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 and nine months ended September 30, 2021March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending June 30, 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 30, 2021.
Note 2—Pending Merger
On December 16, 2021, we entered into an Agreement and Plan of Merger (as it may be amended from time to time, the Merger Agreement), with Bottomline Intermediate Holdings III, LLC (formerly known as Project RB Parent, LLC), a Delaware limited liability company (Parent), and Project RB Merger Sub, Inc., a Delaware corporation (Merger Sub). Parent and Merger Sub are affiliates of Thoma Bravo Fund XV, L.P. (the Thoma Bravo Fund), a private equity fund managed by Thoma Bravo, L.P. (Thoma Bravo). Capitalized terms not otherwise defined have the meaning set forth in the Merger Agreement.
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Bottomline (the Merger), and we will become a wholly owned subsidiary of Parent. At the Effective Time of the Merger, each outstanding share of our common stock (other than shares owned by (1) Parent or Merger Sub; (2) any subsidiary of ours; and (3) stockholders who are entitled to and who properly exercise appraisal rights under the General Corporation Law of the State of Delaware) will be converted into the right to receive $57.00 per share, less any applicable withholding taxes without interest (the Per Share Merger Consideration). All shares converted into the right to receive the Per Share Merger Consideration will no longer be outstanding and will automatically be cancelled at the Effective Time of the Merger and the holders of such shares will cease to have any rights thereto, except for the right to receive the Per Share Merger Consideration.
In connection with the Merger, on December 16, 2021, Parent entered into an equity commitment letter with the Thoma Bravo Fund (the Equity Commitment Letter), pursuant to which the Thoma Bravo Fund has committed to purchase, or cause the purchase of, an amount of equity securities of Parent at or immediately prior to the Effective Time of the Merger equal to the estimated amount of aggregate consideration that will be due and payable at closing. The Equity Commitment Letter provides, among other things, that we are an express third party beneficiary thereof in connection with our exercise of the rights related to specific performance under the Merger Agreement. The Equity Commitment Letter may not be amended, revoked, modified or terminated, and no provision thereunder may be waived, except by an instrument in writing signed by Parent, us and the Thoma Bravo Fund.
Consummation of the Merger is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, no Company Material Adverse Effect having occurred since the signing of the Merger Agreement, the expiration or termination of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), approval of the change in control over Bottomline Payment Services Limited by the Financial Conduct Authority in the United Kingdom (the FCA), and approval by Bottomline’s stockholders. Our stockholders approved the transaction at a special meeting of stockholders held on March 8,2022. The transaction is not subject to a financing condition. We and Parent made the necessary filings with the Federal Trade Commission and the Antitrust Division of the Department of Justice on December 30, 2021, and Parent submitted a change in control application with the FCA on January 20, 2022. The required waiting period under the HSR Act with respect to the Merger expired at 11:59 p.m., Eastern Time on January 31, 2022.
We have made customary representations and warranties in the Merger Agreement and have agreed to customary covenants regarding the operation of our business prior to the Effective Time of the Merger. We are also subject to customary restrictions on the ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, with customary exceptions to allow our Board of Directors to exercise its fiduciary duties.
The Merger Agreement contains certain termination rights for us and Parent. Upon termination of the Merger Agreement under specified circumstances, we will be required to pay Parent a termination fee of $78 million. Such circumstances include where the Merger Agreement is terminated in connection with our acceptance of a Superior Proposal or due to our Board of Directors changing or withdrawing its recommendation of the Merger. This termination fee will also be payable if the Merger is not consummated before December 16, 2022 or we breach our representations, warranties or covenants in a manner that would cause the related closing conditions to not be met, and prior to any such termination, a proposal to acquire at least 50% of our stock or assets is publicly known or announced and we enter into an agreement for a transaction contemplated by such proposal within one year of termination and such transaction is subsequently consummated. In addition, we will be required to reimburse Parent for up to $5 million of its expenses associated with the transaction if the Merger Agreement is terminated because the Merger is not consummated before December 16, 2022 or we breach our representations, warranties or covenants in a manner that would cause the related closing conditions to not be
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met, in each case where the termination fee is not then payable but could potentially become payable in the future under certain circumstances.
Note 3—Recent Accounting Pronouncements
Accounting Pronouncements to be Adopted
    Interest Rate Reform: In March 2020, the Financial Accounting Standards Board (FASB) issued an accounting standard update to address financial reporting related to the transition from the London Interbank Offered Rate (LIBOR) to alternative reference rates. The standard provides optional expedients and exceptions to existing guidance for the accounting of contracts and hedging relationship modified as a result of reference rate reform. We may elect to apply the standard prospectively to contracts modified on or before December 31, 2022. We are currently evaluating the impactdo not expect the adoption of this standard willto have a material impact on our financial statements.
Accounting Pronouncements Adopted
Business Combinations - Acquired Contract Assets and Contract Liabilities: In October 2021, the FASB issued an accounting standard update requiring contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers. Per the update, at the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC 606, as if it had originated the contracts. The update is effective for us on July 1, 2023, with early adoption permitted. We adopted this standard during the quarter ended December 31, 2021 and it did not have a material impact on our financial statements.
Note 3—4—Revenue Recognition
Remaining Performance Obligations
    The transaction price we allocate to remaining performance obligations that are unsatisfied, or partially unsatisfied, as of September 30, 2021March 31, 2022 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 and nine months ended September 30,March 31, 2022 and 2021, and 2020, the amount of revenue recognized from performance obligations satisfied in prior periods was not significant.
The transaction price allocated to unsatisfied performance obligations was $461$444 million as of September 30, 2021March 31, 2022 of which we expect to recognize approximately $194.2$192.7 million over the next twelve months and the remainder thereafter. The timing of the amounts we estimate recognizing in revenue is based primarily on the estimated go-live dates of our hostedSaaS arrangements, or the date the customer has been provided access to the solution. These estimated dates can change for a variety of reasons and the timing of our recognition of revenue is affected by these changes. Once the implementation services for our hostedSaaS solutions have concluded, we generally anticipate that the amount of revenue that will be recognized after the next twelve months will be recognized in a relatively consistent amount over the following two to five year periods. We exclude from our measure of remaining performance obligations amounts related to future transactional or usage-based fees for which the value of services transferred to the customer will correspond to the amount we will invoice for those services.
Contract Assets and Liabilities
    The table below presents our contract assets and deferred revenue balances as of September 30, 2021March 31, 2022 and June 30, 2021.
September 30,June 30,March 31,June 30,
20212021$ Change20222021$ Change
(in thousands)(in thousands)
Contract assetsContract assets7,329 6,627 702 Contract assets5,348 6,627 (1,279)
Deferred revenueDeferred revenue87,335 101,238 (13,903)Deferred revenue112,585 101,238 11,347 
    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 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 losses is based on historical loss data, customer specific information and current market conditions. Historically, our bad debt expense has not been significant.
Deferred revenue consists of billings or customer payments in excess of amounts recognized as revenue. The decreaseincrease in deferred revenue at September 30, 2021March 31, 2022 as compared to June 30, 2021 reflects our recognitionthe deferral of revenue from maintenance contracts, a significant portion of which are billed on a calendar year basis.


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    For the three and nine months ended September 30, 2021 and 2020,March 31, 2022, we recognized $46.6$11.7 million and $40.3$89.3 million, respectively, in revenue from amounts that were included in deferred revenue as of June 30, 2021. For the three and nine months ended March 31, 2021, we recognized $12.6 million and 2020, respectively.$81.2 million, respectively, in revenue from amounts that were included in deferred revenue as of June 30, 2020.     
Note 4—5—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, 2021March 31, 2022 and June 30, 2021, our assets and liabilities measured at fair value on a recurring basis were as follows:
September 30, 2021June 30, 2021March 31, 2022June 30, 2021
Fair Value Measurements Using Input TypesFair Value Measurements Using Input TypesFair Value Measurements Using Input TypesFair Value Measurements Using Input Types
Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
(in thousands)(in thousands)
AssetsAssetsAssets
Money market funds (cash and cash equivalents)Money market funds (cash and cash equivalents)$2,362 $— $— $2,362 $340 $— $— $340 Money market funds (cash and cash equivalents)$9,603 $— $— $9,603 $340 $— $— $340 
Available for sale securities - DebtAvailable for sale securities - DebtAvailable for sale securities - Debt— 898 — 898 — 10,150 — 10,150 
Government - U.S. treasury securities— 8,121 — 8,121 — 10,150 — 10,150 
Total available for sale securities$— $8,121 $— $8,121 $— $10,150 $— $10,150 
Other investments (long-term)Other investments (long-term)— 983 1,051 2,034 — 966 1,014 1,980 Other investments (long-term)— 792 1,380 2,172 — 966 1,014 1,980 
Interest rate swap (long-term)Interest rate swap (long-term)— 230 — 230 — — — — 
Total assetsTotal assets$2,362 $9,104 $1,051 $12,517 $340 $11,116 $1,014 $12,470 Total assets$9,603 $1,920 $1,380 $12,903 $340 $11,116 $1,014 $12,470 
LiabilitiesLiabilitiesLiabilities
Interest rate swap (short-term)Interest rate swap (short-term)$— $1,522 $— $1,522 $— $1,564 $— $1,564 Interest rate swap (short-term)$— $316 $— $316 $— $1,564 $— $1,564 
Interest rate swap (long-term)Interest rate swap (long-term)$— $1,176 $— $1,176 $— $1,550 $— $1,550 Interest rate swap (long-term)— — — — — 1,550 — 1,550 
Total liabilitiesTotal liabilities$— $2,698 $— $2,698 $— $3,114 $— $3,114 Total liabilities$— $316 $— $316 $— $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, 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 (as defined in Note 11)12). Fair value information for each of these instruments is as follows:
•    Cash and cash equivalents, cash held for customers, accounts 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, 2021March 31, 2022 and June 30, 2021, approximated fair value.
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•    Marketable debt securities classified as available for sale, which are comprised of U.S. treasury securities, are recorded at fair value. Unrealized gains and losses are included as a component of accumulated other 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 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, 2021March 31, 2022 and June 30, 2021, the unrealized losses associated with available for sale securities 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.
•    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.
•     We hold certain other investments accounted for at fair value. The fair value of these investments was $2.0 million at September 30, 2021 and June 30, 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 investments for which there is no readily determinable fair value. The carrying value of these investments was $14.4 million and $12.0 million at September 30, 2021March 31, 2022 and June 30, 2021, respectively, and are reported as a component of other assets. The increase in the carrying value of investments was due to a fair value adjustment recorded on an investment during the three months ended March 31, 2022. The fair value adjustment was based on an observable price change arising from a recent financing transaction by the investee. 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 $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, 2021March 31, 2022 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, 2021March 31, 2022 and June 30, 2021.
September 30, 2021June 30, 2021March 31, 2022June 30, 2021
Held to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotalHeld to MaturityAvailable for SaleTotal
(in thousands)(in thousands)
Marketable securities:Marketable securities:Marketable securities:
Government and other debt securitiesGovernment and other debt securities$64 $8,121 $8,185 $66 $10,150 $10,216 Government and other debt securities$66 $898 $964 $66 $10,150 $10,216 
Total marketable securitiesTotal marketable securities$64 $8,121 $8,185 $66 $10,150 $10,216 Total marketable securities$66 $898 $964 $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, 2021March 31, 2022
(in thousands)
Due within 1 year$8,121898 
Due in 1 year through 5 years— 
Total$8,121898 
    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, 2021March 31, 2022 and June 30, 2021, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
At September 30, 2021At June 30, 2021At March 31, 2022At June 30, 2021
Less than 12 MonthsLess than 12 Months
Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
(in thousands)(in thousands)
Government - U.S. treasury securitiesGovernment - U.S. treasury securities$5,110 $(3)$5,930 $(1)Government - U.S. treasury securities$898 $(2)$5,930 $(1)
TotalTotal$5,110 $(3)$5,930 $(1)Total$898 $(2)$5,930 $(1)
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Note 5—6—Business and Asset Acquisitions
Current Year Acquisitions
Bora Payment Systems, LLC
In October 2021 we acquired substantially all of the assets and assumed certain liabilities of Bora Payment Systems, LLC (Bora), a provider of electronic payment solutions for businesses, for a purchase price of $15 million in cash.
We are still obtaining fair value estimates for the intangible assets acquired. In the preliminary allocation of the purchase price at March 31, 2022, we recorded $8.1 million of goodwill. The goodwill is deductible for tax purposes and arose principally due to the anticipated future benefits arising from the acquisition. Identifiable intangible assets of $6.9 million, consisting of customer and technology related assets, are being amortized on a weighted average estimated useful life of 11 years.
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 are included as a component of our Payments Platform segment from the acquisition date forward. Bora's operating results did not have a material impact on our revenue or net loss. Acquisition related costs were recorded as a component of general and administrative expenses and were not material.
Prior Year Acquisitions
TreasuryXpress
OnIn 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 allocationWe recorded $20.4 million of the purchase price remains preliminary, as we are still obtaining fair value estimates for thegoodwill and $17.3 million of identifiable intangible assets acquired. As of September 30, 2021, we have recorded $20.3 million of goodwill.in connection with the acquisition. 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 are recording share-based payment expense over their vesting period of five years.
In allocation of the purchase price, weWe recorded $10.7 million of goodwill, $6.3 million of identifiable intangible assets and a $2.8 million post retirement liability.liability in connection with the acquisition. 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, 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, extended our geographic presence in Switzerland and Germany and expanded our customer base. The operating results of AnaSys are a component of our Banking Solutions segment. AnaSys operating results did not have a material impact on our revenue or net loss, and acquisition related costs of 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 software provider, for an up-front cash payment of $2.0 million and deferred cash payments of $0.3 million. We will leverage FMR's technology to build a next generation commercial onboarding product.
In the allocation of the purchase price weWe recorded $1.0 million of goodwill.goodwill in connection with the acquisition. 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 $1.7 million, consisting primarily of technology related assets, are being amortized over a weighted average estimated useful life of 9 years. FMR's operating results are included in our Banking Solutions segment from the acquisition date forward and all goodwill was allocated to
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this segment. FMR's operating results did not have a material impact on our revenue or net loss, and acquisition related costs were not material.
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Note 6—7—Net (Loss) IncomeLoss Per Share
    The following table sets forth the computation of basic and diluted net loss per share:
Three Months Ended September 30,
20212020
(in thousands, except per share amounts)
Numerator - basic and diluted:
Net (loss) income$(4,907)$391 
Denominator:
Shares used in computing basic (loss) income per share attributable to common stockholders43,273 42,457 
Impact of dilutive securities— 314 
Shares used in computing diluted net (loss) income per share attributable to common stockholders43,273 42,771 
Basic and diluted net (loss) income per share attributable to common stockholders$(0.11)$0.01 
Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
(in thousands, except per share amounts)
Numerator - basic and diluted:
Net loss$(7,524)$(4,769)$(29,065)$(8,993)
Denominator:
Shares used in computing basic and diluted loss per share attributable to common stockholders42,778 42,838 42,937 42,682 
Basic and diluted net loss per share attributable to common stockholders$(0.18)$(0.11)$(0.68)$(0.21)
For the three and nine months ended September 30, 2021,March 31, 2022, approximately 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. For the three and nine months ended March 31, 2021, approximately 2.3 million and 2.4 million shares, respectively, 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—8—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.
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 beenis 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 beenis 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 the following 5 reportable segments:
Payment Platforms. Our Payment Platforms segment includes our Paymode-X and PTX solutions, our largest and fastest growing payment platforms. These solutions are SaaS technology offerings through which businesses can streamline the invoice-to-pay process, automate workflows, accelerate approvals and enhance efficiency and security. Each solution supports a variety of payment options including virtual card, ACH, check, wire and others. These solutions are highly scalable, easy to implement, secure and cost 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.
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 outside counsel performance. Revenue within this segment is generally recognized on a subscription or transaction basis.
Traditional Solutions. Our 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. 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 a legacy sales channel we acquired and the burden of certain other centralized costs; however, our fraud solutions are sold 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.
    Segment information for the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 according to the segment descriptions above, is as follows:
Three Months Ended September 30,Three Months Ended March 31,Nine Months Ended March 31,
202120202022202120222021
(in thousands)(in thousands)
Segment revenue:Segment revenue:Segment revenue:
Payment PlatformsPayment Platforms$33,807 $25,367 Payment Platforms$37,994 $29,163 $107,773 $82,072 
Banking SolutionsBanking Solutions47,681 45,229 Banking Solutions51,181 47,211 148,821 136,689 
Legal Spend ManagementLegal Spend Management22,063 20,550 Legal Spend Management21,957 22,147 66,476 64,546 
Traditional SolutionsTraditional Solutions16,192 17,396 Traditional Solutions16,444 18,810 48,320 53,384 
OtherOther3,862 3,823 Other4,260 3,554 12,838 12,583 
Total segment revenueTotal segment revenue$123,605 $112,365 Total segment revenue$131,836 $120,885 $384,228 $349,274 
Segment measure of profit (loss):Segment measure of profit (loss):Segment measure of profit (loss):
Payment PlatformsPayment Platforms$5,824 $5,755 Payment Platforms$3,986 $4,267 $15,632 $16,037 
Banking SolutionsBanking Solutions3,753 7,212 Banking Solutions4,787 4,641 12,237 15,744 
Legal Spend ManagementLegal Spend Management5,208 4,586 Legal Spend Management3,820 5,550 13,496 15,792 
Traditional SolutionsTraditional Solutions3,114 4,100 Traditional Solutions4,828 5,213 11,513 13,400 
OtherOther(3,976)(3,107)Other(4,101)(3,842)(11,625)(8,894)
Total measure of segment profitTotal measure of segment profit$13,923 $18,546 Total measure of segment profit$13,320 $15,829 $41,253 $52,079 
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    A reconciliation of the total measure of segment profit to our GAAP (loss) incomeloss before income taxes is as follows:
Three Months Ended September 30,Three Months Ended March 31,Nine Months Ended March 31,
202120202022202120222021
(in thousands)(in thousands)
Total measure of segment profitTotal measure of segment profit$13,923 $18,546 Total measure of segment profit$13,320 $15,829 $41,253 $52,079 
Less:Less:Less:
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets(5,071)(5,029)Amortization of acquisition-related intangible assets(5,255)(5,443)(15,506)(15,614)
Stock-based compensation plan expenseStock-based compensation plan expense(13,912)(9,973)Stock-based compensation plan expense(14,279)(11,498)(41,848)(33,644)
Acquisition and integration-related expensesAcquisition and integration-related expenses(201)(245)Acquisition and integration-related expenses(24)(738)(367)(2,078)
Restructuring expense(386)(70)
Restructuring income (expense)Restructuring income (expense)70 (288)(987)
Excess depreciation, including associated with restructuring eventsExcess depreciation, including associated with restructuring events— — (357)(528)
Other non-core expenseOther non-core expense(110)(48)Other non-core expense(217)(52)(608)(148)
Shareholder engagement feesShareholder engagement fees(947)— Shareholder engagement fees— — (1,779)— 
Other expense, net of pension adjustments(1,008)(1,026)
(Loss) income before income taxes$(7,712)$2,155 
Asset write-offAsset write-off— — (71)— 
Costs associated with pending MergerCosts associated with pending Merger(2,990)— (6,497)— 
Other income (expense), net of pension adjustmentsOther income (expense), net of pension adjustments1,994 (1,536)56 (3,701)
Loss before income taxesLoss before income taxes$(7,381)$(3,434)$(26,012)$(4,621)
    The following depreciation and other amortization expense amounts are included in the measure of segment profit:
Three Months Ended September 30,
20212020
(in thousands)
Depreciation and other amortization expense:
Payment Platforms$2,831 $2,387 
Banking Solutions3,935 3,164 
Legal Spend Management1,681 1,602 
Traditional Solutions362 270 
Other386 276 
Total depreciation and other amortization expense$9,195 $7,699 

Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
(in thousands)
Depreciation and other amortization expense:
Payment Platforms$2,964 $2,550 $8,522 $7,393 
Banking Solutions4,255 3,558 12,230 10,016 
Legal Spend Management1,834 1,544 5,224 4,643 
Traditional Solutions410 290 1,464 830 
Other417 316 1,158 880 
Total depreciation and other amortization expense$9,880 $8,258 $28,598 $23,762 

Disaggregation of Revenue
    The tables below present our subscriptions revenue and total revenue disaggregated by major product classification for the three and nine months ended September 30, 2021March 31, 2022 and 2020.2021.
Three Months Ended September 30, 2021Three Months Ended March 31, 2022Nine Months Ended March 31, 2022
SubscriptionSoftwareProfessional Services, Maintenance and OtherTotalSubscriptionSoftwareProfessional Services, Maintenance and OtherTotalSubscriptionSoftwareProfessional Services, Maintenance and OtherTotal
(in thousands)(in thousands)
Payment Platforms
Payment Platforms
$33,504 $— $303 $33,807 Payment Platforms$37,616 $— $378 $37,994 $106,841 $— $932 $107,773 
Banking SolutionsBanking Solutions40,935 77 6,669 47,681 Banking Solutions44,351 6,829 51,181 128,380 106 20,335 148,821 
Legal Spend ManagementLegal Spend Management22,060 — 22,063 Legal Spend Management21,947 — 10 21,957 66,456 — 20 66,476 
Traditional SolutionsTraditional Solutions6,026 439 9,727 16,192 Traditional Solutions7,006 525 8,913 16,444 19,108 1,401 27,811 48,320 
OtherOther971 411 2,480 3,862 Other1,215 480 2,565 4,260 3,328 1,579 7,931 12,838 
Total revenuesTotal revenues$103,496 $927 $19,182 $123,605 Total revenues$112,135 $1,006 $18,695 $131,836 $324,113 $3,086 $57,029 $384,228 

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Three Months Ended September 30, 2020Three Months Ended March 31, 2021Nine Months Ended March 31, 2021
SubscriptionSoftwareProfessional Services, Maintenance and OtherTotalSubscriptionSoftwareProfessional Services, Maintenance and OtherTotalSubscriptionSoftwareProfessional Services, Maintenance and OtherTotal
(in thousands)(in thousands)
Payment Platforms
Payment Platforms
$25,280 $— $87 $25,367 Payment Platforms$28,950 $— $213 $29,163 $81,662 $— $410 $82,072 
Banking SolutionsBanking Solutions37,953 104 7,172 45,229 Banking Solutions40,436 66 6,709 47,211 115,687 181 20,821 136,689 
Legal Spend ManagementLegal Spend Management20,550 — — 20,550 Legal Spend Management22,144 — 22,147 64,540 — 64,546 
Traditional SolutionsTraditional Solutions5,681 748 10,967 17,396 Traditional Solutions7,582 740 10,488 18,810 18,878 2,127 32,379 53,384 
OtherOther920 125 2,778 3,823 Other827 286 2,441 3,554 2,954 1,563 8,066 12,583 
Total revenuesTotal revenues$90,384 $977 $21,004 $112,365 Total revenues$99,939 $1,092 $19,854 $120,885 $283,721 $3,871 $61,682 $349,274 
For the quarterthree and nine months ended September 30, 2021March 31, 2022, we derived 85% and 84%, respectively of our revenue from subscription-based arrangements. The majority of our non-subscription revenue is derived from software support and maintenance fees and from professional services, with the largest concentration of this revenue being derived from our legacy business payments and documents products in our Traditional Solutions 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 March 31,Nine Months Ended March 31,
202120202022202120222021
(in thousands)(in thousands)
Revenues from unaffiliated customers:Revenues from unaffiliated customers:Revenues from unaffiliated customers:
United StatesUnited States$74,994 $68,981 United States$80,423 $71,780 $234,462 $211,005 
United KingdomUnited Kingdom30,630 27,694 United Kingdom31,844 31,325 92,844 87,354 
SwitzerlandSwitzerland12,395 10,867 Switzerland13,441 12,527 38,803 35,403 
OtherOther5,586 4,823 Other6,128 5,253 18,119 15,512 
Total revenues from unaffiliated customersTotal revenues from unaffiliated customers$123,605 $112,365 Total revenues from unaffiliated customers$131,836 $120,885 $384,228 $349,274 
    Long-lived assets based on geographical location, excluding deferred tax assets and intangible assets, were as follows:
At September 30,At June 30,At March 31,At June 30,
2021202120222021
(in thousands)(in thousands)
Long-lived assets:Long-lived assets:Long-lived assets:
United StatesUnited States$80,913 $82,816 United States$79,253 $82,816 
United KingdomUnited Kingdom42,756 44,455 United Kingdom42,244 44,455 
OtherOther19,905 17,453 Other23,725 17,453 
Total long-lived assetsTotal long-lived assets$143,574 $144,724 Total long-lived assets$145,222 $144,724 

Note 8—9—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 an income tax benefitprovision of $2.8$0.1 million and income tax expense of $1.8$1.3 million for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively. In the three months ended September 30,March 31, 2022 and 2021, the income tax benefitprovision was primarily attributable to our U.S. operations, partially offset by tax expense attributable to our, United Kingdom (UK) and Switzerland operations.
We recorded an income tax provision of $3.1 million and $4.4 million for the nine months ended March 31, 2022 and 2021, respectively. In the threenine months ended September 30, 2020,March 31, 2022 and 2021, the income tax expenseprovision was primarily attributable to our U.S., UK and Switzerland operations and aoperations. In addition, in the nine months ended March 31, 2021, we recorded discrete tax expense of $0.7 million as a result of tax legislation enacted in the UK that increased the statutory UK statutory tax rate from 17 percent to 19 percent.percent, which required us to re-value our net UK deferred tax liability balance to reflect this higher rate.
We currently anticipate that our unrecognized tax benefits will decrease within the next twelve months by approximately $0.9$0.8 million as 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, 2021,March 31, 2022, we had a total valuation allowance of $42.2$47.0 million against our deferred tax assets given the uncertainty of recoverability of these amounts.
Note 9—10—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, 2021,March 31, 2022, the carrying value of goodwill for all of our reporting units was $242.9$249.2 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, 2021As of March 31, 2022
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining LifeGross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining Life
(in thousands)(in years)(in thousands)(in years)
Amortized intangible assets:Amortized intangible assets:Amortized intangible assets:
Customer relatedCustomer related$232,435 $(176,930)$55,505 7.0Customer related$231,430 $(181,974)$49,456 6.6
Core technologyCore technology154,682 (108,336)46,346 7.3Core technology160,545 (112,263)48,282 7.0
Other intangible assetsOther intangible assets23,241 (21,025)2,216 4.5Other intangible assets23,236 (21,353)1,883 4.1
Capitalized software development costsCapitalized software development costs29,760 (20,133)9,627 2.7Capitalized software development costs30,854 (22,807)8,047 2.9
Software (1)
Software (1)
111,651 (61,587)50,064 3.7
Software (1)
121,146 (70,941)50,205 3.6
TotalTotal$551,769 $(388,011)$163,758 Total$567,211 $(409,338)$157,873 
Unamortized intangible assets:Unamortized intangible assets:Unamortized intangible assets:
GoodwillGoodwill242,863 Goodwill249,219 
Total intangible assetsTotal intangible assets$406,621 Total intangible assets$407,092 
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As of June 30, 2021
Gross Carrying AmountAccumulated AmortizationNet Carrying ValueWeighted Average Remaining Life
(in thousands)(in years)
Amortized intangible assets:
Customer related$235,366 $(175,841)$59,525 7.2
Core technology154,254 (107,008)47,246 7.5
Other intangible assets23,504 (20,984)2,520 4.8
Capitalized software development costs29,217 (18,843)10,374 2.6
Software (1)
101,898 (58,872)43,026 4.0
Total$544,239 $(381,548)$162,691 
Unamortized intangible assets:
Goodwill246,698 
Total intangible assets$409,389 
——————
(1)Software includes purchased software and software developed for internal use.
    Estimated amortization expense for the remainder of fiscal year 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, 2021,March 31, 2022, is as follows:
Acquired Intangible AssetsCapitalized Software Development CostsSoftwareAcquired Intangible AssetsCapitalized Software Development CostsSoftware
(in thousands)(in thousands)
Remaining 2022Remaining 2022$14,907 $3,912 $12,106 Remaining 2022$5,226 $1,363 $4,607 
2023202318,821 2,371 11,505 202319,351 2,609 13,533 
2024202416,976 1,616 9,397 202417,508 1,853 11,046 
2025202514,510 943 6,168 202515,044 1,181 7,652 
2026202613,566 360 2,917 202614,103 597 4,389 
2027 and thereafter2027 and thereafter25,287 601 2027 and thereafter28,389 120 1,117 
    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 roll forward of our goodwill balances, by reportable segment:
Payment PlatformsBanking SolutionsLegal Spend ManagementTraditional Solutions
Other (1)
TotalPayment PlatformsBanking SolutionsLegal Spend ManagementTraditional Solutions
Other (1)
Total
(in thousands)(in thousands)
Balance at June 30, 2021Balance at June 30, 2021$151,765 $40,534 $— $46,205 $8,194 $246,698 Balance at June 30, 2021$151,765 $40,534 $— $46,205 $8,194 $246,698 
Goodwill reclassified as a result of segment reorganizationGoodwill reclassified as a result of segment reorganization(88,767)61,310 27,457 00— Goodwill reclassified as a result of segment reorganization(88,767)61,310 27,457 00— 
Measurement period adjustmentMeasurement period adjustment(868)— — — — (868)Measurement period adjustment(859)— — — — (859)
Goodwill acquired during the periodGoodwill acquired during the period— — — — — — Goodwill acquired during the period8,078 — — — — 8,078 
Impact of foreign currency translationImpact of foreign currency translation(1,514)0— (1,453)— (2,967)Impact of foreign currency translation(1,940)— — (2,758)— (4,698)
Balance at September 30, 2021$60,616 $101,844 $27,457 $44,752 $8,194 $242,863 
Balance as of March 31, 2022Balance as of March 31, 2022$68,277 $101,844 $27,457 $43,447 $8,194 $249,219 
——————
(1)Other goodwill balance is net of $7.5 million accumulated impairment losses, previously recorded.
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Note 10—11—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, 2021,March 31, 2022, our weighted average discount rate utilized for our leases was 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, 2021,March 31, 2022, renewal options ranged from 3 months to 10 years.
At September 30, 2021,March 31, 2022, our operating leases had a weighted average remaining lease term of 8.48.0 years and we had no material finance leases.
Additional information of our lease activity, as of and for the three and nine months ended September 30, 2021March 31, 2022 is as follows:
Three Months Ended September 30,
Operating leases:2021
(in thousands)
Operating lease cost$1,844 
Short-term lease cost98 
Variable lease cost505 
Sublease income(63)
Total lease cost$2,384 
Three Months Ended March 31,Nine Months Ended March 31,
Operating leases:20222022
(in thousands)
Operating lease cost$1,899 $5,563 
Short-term lease cost51 249 
Variable lease cost551 1,396 
Sublease income— (97)
Total lease cost$2,501 $7,111 


September 30, 2021March 31, 2022
(in thousands)
Right-of-use assets, net$28,73228,440 
Operating lease liabilities, current (1)
6,2476,857 
Operating lease liabilities, non-current27,99626,861 
Total operating lease liabilities$34,24333,718 
——————
(1)    Included as a component of accrued expenses and other current liabilities.
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ThreeNine Months Ended September 30,March 31,
2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities$1,9426,171 
Right-of-use assets obtained in exchange for lease obligations$3,0655,743 
The increase in our ROU assets and lease liabilities during the threenine months ended September 30, 2021March 31, 2022 is primarily due to a new facility leaseleases in India.India and renewed data center leases in the U.K., U.S, Switzerland and Singapore.
Remaining maturities of lease liabilities at September 30, 2021March 31, 2022 were as follows:
For the year ending June 30,For the year ending June 30,Operating LeasesFor the year ending June 30,Operating Leases
(in thousands)(in thousands)
20222022$6,203 2022$2,552 
202320236,903 20238,010 
202420244,440 20245,097 
202520254,029 20254,287 
202620264,057 20264,293 
ThereafterThereafter19,261 Thereafter19,328 
Total lease paymentsTotal lease payments44,893 Total lease payments43,567 
Less imputed interestLess imputed interest(10,650)Less imputed interest(9,849)
Total lease liabilitiesTotal lease liabilities$34,243 Total lease liabilities$33,718 

As of September 30, 2021,March 31, 2022, we had additional operating leases that had not yet commenced of $3.4$2.6 million. These operating leases will commence in fiscal year 2022 and have a lease term between 12 months3 to 13 years.


Legal Matters
    On January 19, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Shiva Stein v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00481 (the Stein Complaint). On January 21, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Jeffrey D. Justice, II v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00586 (the Justice Complaint). On January 26, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Chau Le v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00670 (the Le Complaint).
The Stein complaint, the Justice complaint, and the Le complaint all allege that the preliminary proxy statement issued in connection with the Merger omits material information or contains misleading disclosures and that, as a result, (i) all of the defendants violated Section 14(a) of the Securities Exchange Act of 1934 (the Exchange Act) and (ii) all of our directors violated section 20(a) of the Exchange Act. The Le Complaint also alleges that our directors breached their fiduciary duties of care, loyalty and good faith by, among other things, causing us to enter into the transactions contemplated by the Merger Agreement as a result of an inadequate sale process, agreeing to preclusive deal mechanisms and filing a materially misleading and incomplete preliminary proxy statement. The Le Complaint also alleges that we aided and abetted these purported breaches of fiduciary duties.
The Stein complaint, the Justice complaint, and the Le complaint all seek, among other things, (i) injunctive relief preventing the consummation of the transactions contemplated by the Merger Agreement; (ii) rescission or rescissory damages in the event the transactions contemplated by the Merger Agreement have been implemented; (iii) dissemination of a proxy statement that does not omit material information or contain any misleading disclosures; (iv) a declaration that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act (except the Stein Complaint and the Le Complaint) or that our directors violated their fiduciary duties (except the Stein Complaint and the Justice Complaint); (v) to direct the defendants to account to plaintiff for all damages suffered (except the Justice Complaint); and (vi) an award of plaintiff’s expenses, including attorneys’ and experts’ fees.
On February 7, 2022, a purported stockholder of Bottomline also made a demand pursuant to Section 220 of the DGCL (the Initial 220 Demand) to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement.
The Initial 220 Demand, the Stein Complaint, the Justice Complaint, and the Le Complaint were resolved by our filing on February 25, 2022 of a supplement to our definitive proxy statement. The supplement to our proxy statement included certain informational disclosures requested by the plaintiffs and the Initial 220 Demand, and the parties are attempting to negotiate a resolution to these claims.
In addition, on February 28, 2022, another purported stockholder of Bottomline made a demand pursuant to Section 220 of the DGCL to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement. On March
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23, 2022, that purported stockholder filed a complaint pursuant to Section 220 of the DGCL in the Court of Chancery of the State of Delaware against us, captioned Teamsters Local 237 Additional Security Benefit Fund v. Bottomline Technologies, Inc., Case No. 2022-0275. The complaint seeks (i) to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement in order to investigate the process leading to the Merger Agreement and the independence of our directors and officers and to value our shares and (ii) an award of plaintiff’s expenses, including attorneys’ fees. The parties are in the process of attempting to negotiate a resolution to these claims and must provide a status update to the Court on or before June 3, 2022.
We believe the claims asserted in each of the complaints are without merit. However, given the inherently unpredictable nature of litigation, we are unable to predict the possible range of outcomes of these complaints.
Additional lawsuits may be filed against us, our Board of Directors, Parent and/or Merger Sub in connection with the transactions contemplated by the Merger Agreement.
We are, from time to time, a party to other legal proceedings and claims that arise out ofin the ordinary course of our business.
We are not currently a party to any legal proceedings we believe would have a material impact on our financial position or operating results.
Note 11—12—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, 2021,March 31, 2022, we owed $130$130.0 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, 2021,March 31, 2022, 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—13—Derivative Instruments
Cash Flow Hedges
Interest Rate Swap Agreements
We utilize an interest rate swap agreements to hedge our exposure to interest rate risk. At September 30, 2021,March 31, 2022, we had 21 outstanding interest rate swap agreements with a notional valuesvalue of $100 million and $80 million.
The notional value of eachour 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 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 iswas 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 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 had a $100 million notional value agreement which expired on December 1, 2021. From December 1, 2017 through December 1, 2021, the notional amount had a fixed interest rate of 1.9275% and Citizens Bank, National Association, as counterparty to the agreement, paid us interest at a floating rate based on the 1 month USD-LIBOR-BBA swap rate on the notional amount. Interest payments were made quarterly 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, 2021.March 31, 2022. 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
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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, 2021March 31, 2022 and June 30, 2021 were as follows:
DescriptionDescriptionBalance Sheet LocationSeptember 30, 2021June 30, 2021DescriptionBalance Sheet LocationMarch 31, 2022June 30, 2021
Derivative interest rate swapsDerivative interest rate swaps(in thousands)Derivative interest rate swaps(in thousands)
Long-term derivative assetLong-term derivative assetOther assets$230 $— 
Short-term derivative liabilityShort-term derivative liabilityAccrued expenses and other current liabilities$1,522 $1,564 Short-term derivative liabilityAccrued expenses and other current liabilities$316 $1,564 
Long-term derivative liabilityLong-term derivative liabilityOther liabilities$1,176 $1,550 Long-term derivative liabilityOther liabilities$— $1,550 
The following table presents the effect of the derivative interest rate swaps in our consolidated statement of comprehensive loss for the threenine months ended September 30, 2021March 31, 2022 and 2020.2021.
Gain (Loss) in AOCI June 30, 2021Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2021Gain (Loss) in AOCI June 30, 2021Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI March 31, 2022
(in thousands)(in thousands)
Derivative interest rate swapDerivative interest rate swap$(3,114)$(53)$469 $(2,698)Derivative interest rate swap$(3,114)$1,712 $1,316 $(86)
Gain (Loss) in AOCI June 30, 2020Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI September 30, 2020Gain (Loss) in AOCI June 30, 2020Amount of Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
Amount of (Gain) Loss Reclassified from AOCI into Net Loss (Effective Portion) (1)
Gain (Loss) in AOCI March 31, 2021
(in thousands)(in thousands)
Derivative interest rate swapDerivative interest rate swap$(5,079)$(6)$452 $(4,633)Derivative interest rate swap$(5,079)$171 $1,355 $(3,553)
——————
(1)    Recorded as interest income (expense) within other expense, net in our unaudited condensed consolidated statements of comprehensive income (loss).
During the three and nine months ended September 30, 2021,March 31, 2022, we concluded that no portion of the hedges was ineffective.
We expect to reclassify approximately $1.0$0.3 million of this unrealized loss from AOCI to earnings over the next twelve months.
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Note 13—14—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 March 31,Nine Months Ended March 31,
202120202022202120222021
(in thousands)(in thousands)
Components of net periodic costComponents of net periodic costComponents of net periodic cost
Service costService cost$707 $765 Service cost$703 $793 $2,114 $2,351 
Interest costInterest cost49 37 Interest cost49 38 147 113 
Prior service creditPrior service credit(119)(83)Prior service credit(118)(84)(355)(251)
Net actuarial lossNet actuarial loss— 61 Net actuarial loss— 62 — 185 
Expected return on plan assetsExpected return on plan assets(359)(285)Expected return on plan assets(358)(302)(1,076)(888)
Net periodic costNet periodic cost$278 $495 Net periodic cost$276 $507 $830 $1,510 
    The components of net periodic pension cost other than current service cost are presented within other expense, net in our unaudited condensed 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, 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.
Pending Merger
On December 16, 2021, we entered into a Merger Agreement (See Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q) to be acquired by the private equity investment firm Thoma Bravo for $57.00 in cash per outstanding common share. Consummation of the Merger is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments.
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. 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 determine the right amount to pay for legal services and claims for insurance companies and other large consumers of outside legal services 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 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 threenine months ended September 30, 2021,March 31, 2022, our revenue increased to $123.6$384.2 million from $112.4$349.3 million in the same period of the prior fiscal year. Our revenue for the threenine months ended September 30, 2021March 31, 2022 was favorably impacted by $2.0$1.3 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 Payment Platforms, Banking Solutions and Legal SegmentSpend Management segments of $8.4$25.7 million, $2.5$12.1 million, and $1.5$1.9 million, respectively, partially offset by a $1.2$5.1 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.revenue driven by increased transactional volumes and the impact of new customers using these solutions. The increased revenue in our Banking Solutions segment was primarily due to new customer engagements and platform go-lives, as customers continuedcontinue to deploytransition to our hosted solutions. The decrease in revenue in our Traditional Solutions segment was due to decreased professional services, maintenance revenue and software revenue, as customers transitioned to our newer hosted and subscription based solutions.
We incurred a net loss of $4.9$29.1 million in the threenine months ended September 30, 2021March 31, 2022 compared to net incomeloss of $0.4$9.0 million in the same period of the prior fiscal year. Our net loss for the threenine months ended September 30, 2021,March 31, 2022 was favorably impacteddriven by gross profit expansionan increase in costs of $5.5subscription revenue of $22.9 million attributable to our Payment Platforms, Banking Solutions and a reduction in our provision for income taxes of $4.6 million, offset byLegal Spend Management segments and an increase in operating expenses of $15.2$40.9 million. The increase in operating expenses was driven by an increase in
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sales and marketing costs of $19.3 million and product development and engineering costs of $8.4 million, as we continued to invest in our sales channel and new product innovation. General and administrative costs increased by $13.3 million, of which $8.3 million was related to our pending Merger and shareholder engagement initiatives. The increase in costs were partially offset by the $35.0 million revenue increase discussed above and a $3.9 million reduction in cost of professional services and maintenance revenues.
In the threenine months ended September 30, 2021,March 31, 2022, we derived approximatelyapproximately 39% of our revenue from customers located outside of North America, principally in the United Kingdom (UK), continental Europe and the Asia-Pacific region.
On an increasingperiodic basis, we 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. Recently,Earlier in the fiscal year, restrictions have beenwere re-implemented by government bodies and private businesses as disease variants became more prevalent. Like many companies we have been encouraged byprevalent, most notably the increased availability of vaccines, however thereomicron variant. There remains significant uncertainty over the duration of the pandemic itself;itself, particularly as the virus continues to evolve. Since March 2020 we have continued to suspend virtually all travel for employees, our offices generally remain closed and our employees have continued to work remotely in most geographies.
While we continue to operate effectively during this challenging period, the full impact of the COVID-19 pandemic on our business and the global economy remains uncertain. 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 itself;itself, including the impact of the emerging COVID variants.variants that have emerged or that may emerge in the future.
Certain of our transactional revenue streams, specifically those arising through Paymode-X and Legal Spend Management, 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 saw some modest improvement during the fourth quarter of the past fiscal year and we recorded a revenue increase in Legal Spend Management for the quarter ended September 30, 2021 as compared to September 30, 2020. We are encouraged by these trends and are hopeful that it supports a conclusion that a sustained recovery of 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, 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 and estimates 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, 2021, as filed with the SEC on August 30, 2021.
It is important that the discussion of our operating results that follows be read in conjunction with the critical accounting policies and estimates 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, 2021, as filed with the SEC on August 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 23 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 and Nine Months Ended September 30, 2021March 31, 2022 Compared to the Three and Nine Months Ended September 30, 2020March 31, 2021
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 beenis 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
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Solutions segment, has beenis 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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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 March 31,Increase (Decrease)
Between Periods
Nine Months Ended March 31,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(in thousands)
Segment revenue:Segment revenue:Segment revenue:
Payment PlatformsPayment Platforms$33,807 $25,367 $8,440 33.3 %Payment Platforms$37,994 $29,163 $8,831 30.3 %$107,773 $82,072 $25,701 31.3 %
Banking SolutionsBanking Solutions47,681 45,229 2,452 5.4 %Banking Solutions51,181 47,211 3,970 8.4 %148,821 136,689 12,132 8.9 %
Legal Spend ManagementLegal Spend Management22,063 20,550 1,513 7.4 %Legal Spend Management21,957 22,147 (190)(0.9)%66,476 64,546 1,930 3.0 %
Traditional SolutionsTraditional Solutions16,192 17,396 (1,204)(6.9)%Traditional Solutions16,444 18,810 (2,366)(12.6)%48,320 53,384 (5,064)(9.5)%
OtherOther3,862 3,823 39 1.0 %Other4,260 3,554 706 19.9 %12,838 12,583 255 2.0 %
Total segment revenueTotal segment revenue$123,605 $112,365 $11,240 10.0 %Total segment revenue$131,836 $120,885 $10,951 9.1 %$384,228 $349,274 $34,954 10.0 %
Segment measure of profit (loss):Segment measure of profit (loss):Segment measure of profit (loss):
Payment PlatformsPayment Platforms$5,824 $5,755 $69 1.2 %Payment Platforms$3,986 $4,267 $(281)(6.6)%$15,632 $16,037 $(405)(2.5)%
Banking SolutionsBanking Solutions3,753 7,212 (3,459)(48.0)%Banking Solutions4,787 4,641 146 3.1 %12,237 15,744 (3,507)(22.3)%
Legal Spend ManagementLegal Spend Management5,208 4,586 622 13.6 %Legal Spend Management3,820 5,550 (1,730)(31.2)%13,496 15,792 (2,296)(14.5)%
Traditional SolutionsTraditional Solutions3,114 4,100 (986)(24.0)%Traditional Solutions4,828 5,213 (385)(7.4)%11,513 13,400 (1,887)(14.1)%
OtherOther(3,976)(3,107)(869)(28.0)%Other(4,101)(3,842)(259)(6.7)%(11,625)(8,894)(2,731)(30.7)%
Total measure of segment profitTotal measure of segment profit$13,923 $18,546 $(4,623)(24.9)%Total measure of segment profit$13,320 $15,829 $(2,509)(15.9)%$41,253 $52,079 $(10,826)(20.8)%
A reconciliation of the total measure of segment profit to our GAAP (loss) incomeloss before income taxes is as follows:
Three Months Ended September 30,Three Months Ended March 31,Nine Months Ended March 31,
202120202022202120222021
(in thousands)(in thousands)
Total measure of segment profitTotal measure of segment profit$13,923 $18,546 Total measure of segment profit$13,320 $15,829 $41,253 $52,079 
Less:Less:Less:
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets(5,071)(5,029)Amortization of acquisition-related intangible assets(5,255)(5,443)(15,506)(15,614)
Stock-based compensation plan expenseStock-based compensation plan expense(13,912)(9,973)Stock-based compensation plan expense(14,279)(11,498)(41,848)(33,644)
Acquisition and integration-related expensesAcquisition and integration-related expenses(201)(245)Acquisition and integration-related expenses(24)(738)(367)(2,078)
Restructuring expense(386)(70)
Restructuring income (expense)Restructuring income (expense)70 (288)(987)
Excess depreciation, including associated with restructuring eventsExcess depreciation, including associated with restructuring events— — (357)(528)
Other non-core expenseOther non-core expense(110)(48)Other non-core expense(217)(52)(608)(148)
Shareholder engagement feesShareholder engagement fees(947)— Shareholder engagement fees— — (1,779)— 
Other expense, net of pension adjustments(1,008)(1,026)
(Loss) income before income taxes$(7,712)$2,155 
Asset write-offAsset write-off— — (71)— 
Costs associated with pending MergerCosts associated with pending Merger(2,990)— (6,497)— 
Other income (expense), net of pension adjustmentsOther income (expense), net of pension adjustments1,994 (1,536)56 (3,701)
Loss before income taxesLoss before income taxes$(7,381)$(3,434)$(26,012)$(4,621)
Payment Platforms
Revenue from our Payment Platforms segment increased $8.4$8.8 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year due to increased subscription revenue of $8.2$8.7 million driven by both increased transactional volumes and the impact of new customers that have adopted our platforms since the corresponding quarter of the prior fiscal year. Segment
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profit increased $0.1decreased $0.3 million for the three months ended September 30, 2021March 31, 2022 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$3.3 million and operating expenses of $5.6$5.9 million which related primarily to increased sales and marketing expenses and product development expenses of $3.7$4.4 million and $1.5$1.3 million, respectively. We expect revenue and profit for the
Revenues from our Payment Platforms segment to continue to increase in fiscal yearincreased $25.7 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, 2021.primarily due to increased subscription revenue of $25.2 million driven by both increased transactional volumes and the impact of new customers that have adopted our platform since the corresponding period of the prior fiscal year. Segment profit decreased $0.4 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, as the increase in revenue described above was offset in part by an increase in operating expenses of $17.1 million primarily related to sales and marketing expenses of $11.6 million, product development expenses of $4.2 million, and general and administrative expenses of $1.3 million and increased cost of revenues of $9.0 million primarily related to subscriptions costs.
Banking Solutions
Revenues from our Banking Solutions segment increased $2.5$4.0 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to increased subscriptions revenue of $3.0 million, partially offset
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by decreased professional service and maintenance revenue of $0.5$3.9 million. The increase in subscriptions revenue was primarily related to our existing customer base expanding on or converting to our newer, more technologically advanced SaaS platforms and as a result of ourthe continued deployment of our newer banking solutions to new and existing customers. The decrease in professional services revenue was primarily driven by our business strategy, which remains focused on a subscription revenue model rather than one-time license events, which frequently require distinct professional services. The increase in revenue described above was partially offset by increased cost of revenues of $2.2$1.2 million, primarily related to subscription costs, and operating expenses of $3.7$2.7 million. The increase in operating expenses was primarily due to increased sales and marketing expenses, and product development expenses, and general and administrative expenses of $1.9$1.4 million, $0.8 million and $1.1$0.5 million, respectively. Segment profit decreased $3.5increased $0.1 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year due to the increases in revenue and expenses described above. We expect revenue to continue to increase and profit to remain relatively consistent for the
Revenues from our Banking Solutions segment in fiscal yearincreased $12.1 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, 2021.primarily due to increased subscriptions revenue and service revenue of 12.7 million and $2.3 million, respectively, partially offset by decreased maintenance revenue of $2.8 million. The increase in subscriptions revenue was primarily related to our existing customer base expanding on or converting to our newer, more technologically advanced SaaS platforms and as a result of the continued deployment of our newer banking solutions to new and existing customers. The increase in revenue described above was offset by increased cost of revenues of $6.5 million, primarily related to subscription costs, and operating expenses of $9.1 million. The increase in operating expenses was primarily due to increased sales and marketing expenses of $4.8 million, product development and engineering costs of $2.3 million and general and administrative expenses of $2.1 million. Segment profit decreased $3.5 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year due to the increases in revenue and expenses described above.
Legal Spend Management
Revenues from our Legal Spend Management segment increased $1.5decreased $0.2 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, due to a decreased in subscription revenue driven by lower transactional volumes during the quarter. Segment profit decreased $1.7 million for the three months ended March 31, 2022 as compared to the same period in the prior fiscal year due to an increase in cost of revenues of $1.0 million, primarily related to subscription costs and an increase in operating expenses of $0.6 million, primarily due to $0.2 million in product development and engineering costs and $0.2 million in general and administrative expenses.
Revenues from our Legal Spend Management segment increased $1.9 million for the nine months ended March 31, 2022 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 quarterperiod of the prior fiscal year. Segment profit increased $0.6decreased $2.3 million for the threenine months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, due toas the increase in subscription revenue discussed above and a decrease in product development expenses of $0.3 million, partiallywas offset by an increase in cost of revenues of $0.6$2.4 million, primarily related to subscriptions, and operating expenses of $1.8 million, primarily related primarily to sales and marketing expenseexpenses of $0.4 million, product development expenses of $0.4 million 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.$1.0 million.
Traditional Solutions
Revenues from our Traditional Solutions segment decreased $1.2$2.4 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to decreased professional service and maintenance revenue of $1.3 $1.6 million and subscriptions revenue of $0.6 million. The decrease in professional service and maintenance revenue was driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions. The decrease in subscription revenue was due to lower transactional volume in the quarter. Segment profit decreased $0.4 million for the three months ended March 31, 2022 as compared to the same period in the prior fiscal year, as the decrease in revenues discussed above was partially offset by a decrease in cost of revenue of $0.8 million related primarily to subscription and professional service and maintenance costs, and a decrease in operating costs of $1.2 million, primarily related to sales and marketing expenses.
Revenues from our Traditional Solutions segment decreased $5.1 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to decreased professional service and maintenance revenue of $4.4
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million and software revenue of $0.3$0.7 million, partially offset by increased subscriptions revenue of $0.3$0.2 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 $1.0$1.9 million for the threenine months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due toas the decrease in revenues discussed above and an increase in subscription costs of $0.1 million, product development expense of $0.2 million and general and administrative expense of $0.2 million,were partially offset by a decrease in costs of revenue of $2.3 million primarily associated with professional service and maintenance costs, and a decrease in operating expenses of $0.8 million. We expect revenuemillion, primarily related to sales and profit to decrease slightly for the Traditional Solutions segment in fiscal year 2022, primarily due to decreased service, maintenance and software licenses.marketing expenses.
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. Segment profit decreased $0.9increased $0.7 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to increased subscription revenue and software revenue of $0.4 and $0.2 million, respectively. Segment profit decreased $0.3 million for the three months ended March 31, 2022 as compared to the same period in the prior fiscal year primarily due to an increase in cost of revenue of $0.5 million primarily related to professional services and maintenance costs, and increased operating expenses of $0.5 million primarily related to product development expenses, partially offset by the increase in revenue discussed above.
Revenues from our Other segment increased $0.3 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to an increase in subscription revenue. Segment profit decreased $2.7 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year primarily due to an increase in cost of revenue of $1.3 million primarily related to subscriptions, professional service and maintenance costs, and increased operating expenses of $0.6$1.7 million primarily related to sales and marketing. We expect Other segment revenue to continue to decrease in fiscal year 2022 as compared to fiscal year 2021 as our fraud solutions are increasingly sold by other segments while certain centralized costs continue to be bornemarketing and product development expenses, partially offset by the Other segment.
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increase in revenue discussed above.
Revenues by category
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended March 31,Increase (Decrease)
Between Periods
Nine Months Ended March 31,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(in thousands)
Revenues:Revenues:Revenues:
SubscriptionsSubscriptions$103,496$90,384$13,11214.5 %Subscriptions$112,135$99,939$12,19612.2 %$324,113$283,721$40,39214.2 %
Software licensesSoftware licenses927977(50)(5.1)%Software licenses1,0061,092(86)(7.9)%3,0863,871(785)(20.3)%
Service and maintenanceService and maintenance18,70820,564(1,856)(9.0)%Service and maintenance18,13819,292(1,154)(6.0)%55,47859,878(4,400)(7.3)%
OtherOther474440347.7 %Other557562(5)(0.9)%1,5511,804(253)(14.0)%
Total revenuesTotal revenues$123,605$112,365$11,24010.0 %Total revenues$131,836$120,885$10,9519.1 %$384,228$349,274$34,95410.0 %
As % of total revenues:As % of total revenues:As % of total revenues:
SubscriptionsSubscriptions83.7 %80.4 %Subscriptions85.1 %82.7 %84.4 %81.2 %
Software licensesSoftware licenses0.8 %0.9 %Software licenses0.7 %0.9 %0.8 %1.1 %
Service and maintenanceService and maintenance15.1 %18.3 %Service and maintenance13.8 %16.0 %14.4 %17.1 %
OtherOther0.4 %0.4 %Other0.4 %0.4 %0.4 %0.6 %
Total revenuesTotal revenues100.0 %100.0 %Total revenues100.0 %100.0 %100.0 %100.0 %
Subscriptions
Revenues from subscriptions increased $13.1$12.2 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year. The overall revenue increase was driven by an increase in subscriptions revenue from our Payment Platforms and Banking Solutions segments of $8.7 million and $3.9 million, respectively, due to the impact of customers going live on or expanding their use of our hosted solutions and the continued impact of customers converting to our newer, subscription based solutions.
Revenues from subscriptions increased $40.4 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year. The overall revenue increase was driven by an increase in subscriptions revenue from our Payment Platforms, Banking Solutions and Legal Spend Management segments of $8.2$25.2 million, $2.5$12.7 million, and $1.5$1.9 million, respectively, due to the impact of customers going live on or expanding their use of our hosted solutions and the continued impact of customers converting to our newer subscription based solutions.
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Software Licenses
Revenues from software licenses remained relatively consistent for the three months ended March 31, 2022 as compared to the same period in the prior fiscal year. We expect subscriptions revenues toanticipate that software license arrangements will continue to increasebe de-emphasized in fiscal year 2022 dueorder to focus on the continued adoptionconversion of our customers to our hosted and subscription based offerings.
Software Licensessolutions.
Revenues from software licenses slightly decreased for the threenine months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to decreased revenue from our Traditional Solutions segment of $0.3 million, offset by an increase in revenue in our Other segment of $0.3$0.7 million. The decrease in software license revenue was driven by the continued conversion of our customers to our hosted and subscription based solutions and our continued de-emphasis of deployed, perpetual license solutions. We expect software license revenues to continue to decrease in fiscal year 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 $1.9$1.2 million for the three months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to decreased revenue from our Traditional SolutionSolutions segment of $1.6 million driven by the continued conversion of our customers to our hosted and subscription based solutions rather than deployed, perpetual license solutions.
Revenues from service and maintenance decreased $4.4 million for the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to decreased revenue from our Traditional Solutions and Banking Solutions segments of $1.3$4.4 million and $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 decreasesolutions, partially offset by an increase in fiscal year 2022, primarily due torevenue in our continued emphasis on our hosted solutions.Payment Platforms segment of $0.5 million.
Other
Our other revenues consist principally of equipment and supplies sales, which remained and are expected to remain minor components of our overall revenue.
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Cost of revenues by category
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended March 31,Increase (Decrease)
Between Periods
Nine Months Ended March 31,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(in thousands)
Cost of revenues:Cost of revenues:Cost of revenues:
SubscriptionsSubscriptions$42,693$35,218$7,475 21.2 %Subscriptions$45,792$39,194$6,598 16.8 %$134,515$111,607$22,908 20.5 %
Software licensesSoftware licenses8190(9)(10.0)%Software licenses14211626 22.4 %283332(49)(14.8)%
Service and maintenanceService and maintenance9,25210,916(1,664)(15.2)%Service and maintenance9,36210,450(1,088)(10.4)%27,85631,752(3,896)(12.3)%
OtherOther295309(14)(4.5)%Other364375(11)(2.9)%9891,235(246)(19.9)%
Total cost of revenuesTotal cost of revenues$52,321$46,533$5,788 12.4 %Total cost of revenues$55,660$50,135$5,525 11.0 %$163,643$144,926$18,717 12.9 %
Gross Profit ($)Gross Profit ($)$71,284$65,832$5,452 8.3 %Gross Profit ($)$76,176$70,750$5,426 7.7 %$220,585$204,348$16,237 7.9 %
Gross Profit (%)Gross Profit (%)57.7 %58.6 %Gross Profit (%)57.8 %58.5 %57.4 %58.5 %
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 increased slightly to 41% as a percentage of subscriptions revenues in the three months ended September 30, 2021March 31, 2022 as compared to 39% in the three months ended September 30, 2020March 31, 2021 due to year-over-year cost of revenue increases as we continued to grow our subscription revenue streams. We expect subscriptions
Subscriptions costs increased to 42% as a percentage of subscriptions revenues will decrease slightly in fiscal yearthe nine months ended March 31, 2022 as a resultcompared to 39% in the nine months ended March 31, 2021 due to year-over-year cost of increased revenue contribution fromincreases as we continued to grow our cloud-based banking, legal spend management and Paymode-X solutions.

subscription revenue streams.
Software Licenses
Software license costs consist of expenses incurred 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 asremained a percentageminor component of software license revenues remained at 9%our overall cost of software license revenue infor both the three and nine months ended September 30, 2021ending March 31, 2022 and 2020. Overall, software license costs remain and are expected to remain inconsequential.2021.
Service and Maintenance
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
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costs as a percentage of service and maintenance revenues decreased to 49%52% in the three months ended September 30, 2021March 31, 2022 as compared to 53%54% in the three months ended September 30, 2020,March 31, 2021, reflecting a shift in resources to our hosted and subscription based products. We expect thatproducts, the costs of which are included in subscriptions costs of revenues.
Service and maintenance costs as a percentage of service and maintenance revenues decreased to 50% in the nine months ended March 31, 2022 as compared to 53% in the nine months ended March 31, 2021, reflecting a shift in resources to our hosted and subscription based products, the costs will remain relatively consistentof which are included in fiscal year 2022.subscriptions costs of revenue.
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 cost components of our business. We expect other costs as a percentage of other revenues will remain consistent in fiscal year 2022.
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Operating Expenses
Three Months Ended September 30,Increase (Decrease)
Between Periods
Three Months Ended March 31,Increase (Decrease)
Between Periods
Nine Months Ended March 31,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)(in thousands)
Operating expenses:Operating expenses:Operating expenses:
Sales and marketingSales and marketing$33,814$25,743$8,071 31.4 %Sales and marketing$37,346$31,525$5,821 18.5 %$105,815$86,505$19,310 22.3 %
Product development and engineeringProduct development and engineering21,46518,4992,966 16.0 %Product development and engineering23,09520,2242,871 14.2 %66,31257,9068,406 14.5 %
General and administrativeGeneral and administrative17,74913,6264,123 30.3 %General and administrative19,92515,6784,247 27.1 %59,29145,96213,329 29.0 %
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets5,0715,02942 0.8 %Amortization of acquisition-related intangible assets5,2555,443(188)(3.5)%15,50615,614(108)(0.7)%
Total operating expensesTotal operating expenses$78,099$62,897$15,202 24.2 %Total operating expenses$85,621$72,870$12,751 17.5 %$246,924$205,987$40,937 19.9 %
As % of total revenues:As % of total revenues:As % of total revenues:
Sales and marketingSales and marketing27.4 %22.9 %Sales and marketing28.3 %26.1 %27.5 %24.8 %
Product development and engineeringProduct development and engineering17.4 %16.5 %Product development and engineering17.5 %16.7 %17.3 %16.6 %
General and administrativeGeneral and administrative14.4 %12.1 %General and administrative15.1 %13.0 %15.4 %13.2 %
Amortization of acquisition-related intangible assetsAmortization of acquisition-related intangible assets4.1 %4.5 %Amortization of acquisition-related intangible assets4.0 %4.5 %4.0 %4.5 %
Total operating expensesTotal operating expenses63.3 %56.0 %Total operating expenses64.9 %60.3 %64.2 %59.1 %
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 $8.1$5.8 million in the three months ended September 30, 2021March 31, 2022 as compared to the three months ended September 30, 2020March 31, 2021, primarily due to an increase in employee related costs of $6.3$4.4 million, and marketing expense of $0.9 million and travel costs of $0.2 million. We expect sales
Sales and marketing expenses increased $19.3 million in the nine months ended March 31, 2022 as a percentagecompared to the nine months ended March 31, 2021, primarily due to an increase in employee related costs of total revenues will increase slightly in fiscal year 2022.$14.8 million, marketing expense of $2.3 million, equipment related costs of $0.4 million, third party services of $0.4 million and travel costs of $0.5 million.
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$2.9 million in the three months ended September 30, 2021,March 31, 2022 as compared to the three months ended September 30, 2020March 31, 2021, primarily due to an increase in headcount related costs of $2.5$2.3 million. We expect product
Product development and engineering expenses increased $8.4 million in the nine months ended March 31, 2022 as a percentagecompared to the nine months ended March 31, 2021, primarily due to an increase in headcount related costs of total revenues will remain relatively consistent$6.9 million and an increase in fiscal year 2022.third party technology costs and depreciation expense of $0.4 million.
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 $4.1$4.2 million in the three months ended September 30, 2021March 31, 2022 as compared to the three months ended September 30, 2020March 31, 2021, primarily due to an increase in employeeMerger related costs of $2.7 million, depreciation expense of $0.4 million, restructuring expense of $0.3$3.0 million and facility costs of $0.2 million. We expect general and administrative expenses asto a percentage of total revenues will remain relatively consistent in fiscal year 2022.
Other Expense, Net
Three Months Ended September 30,Increase (Decrease)
Between Periods
20212020$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)
Interest income$23 $100 $(77)(77.0)%
Interest expense(1,066)(1,258)192 15.3 %
Other income (expense), net146 378 (232)(61.4)%
Other expense, net$(897)$(780)$(117)(15.0)%
lesser extent, employee related costs.
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General and administrative expenses increased $13.3 million in the nine months ended March 31, 2022 as compared to the nine months ended March 31, 2021, primarily due to Merger related costs of $6.5 million, costs associated with shareholder engagement initiatives of $1.8 million and to a lesser extent, employee related costs.
Other Expense, Net
Three Months Ended March 31,Increase (Decrease)
Between Periods
Nine Months Ended March 31,Increase (Decrease)
Between Periods
20222021$ Change Inc (Dec)% Change Inc (Dec)20222021$ Change Inc (Dec)% Change Inc (Dec)
(Dollars in thousands)
Interest income$33 $37 $(4)(10.8)%$78 $232 $(154)(66.4)%
Interest expense(941)(993)52 5.2 %(3,028)(3,574)546 15.3 %
Other income (expense), net2,972 (358)3,330 930.2 %3,277 360 2,917 810.3 %
Other expense, net$2,064 $(1,314)$3,378 257.1 %$327 $(2,982)$3,309 111.0 %
The components of other expense, net are as depicted above and remain minimal overall components of our operations.above. The slight decrease in interest expense in the three and nine months ended September 30, 2021March 31, 2022 as compared to the three and nine months ended September 30, 2020March 31, 2021, respectively, is a result of a decrease in borrowings under our line of credit arrangement during the three month period ending September 2021and nine months ended March 31, 2022 as compared to September 2020.the three and nine months ended March 31, 2021. The increase in other income in the three and nine month period ended March 31, 2022 is due to a $2.5 million unrealized gain on an equity investment we hold.
Provision for Income Taxes
We recorded an income tax benefitprovision of $2.8$0.1 million and income tax expense of $1.81.3 million for the three months ended September 30,March 31, 2022 and 2021, respectively. We recorded an income tax provision of $3.1 million and $4.4 million for the nine months ended March 31, 2022 and 2020,2021, respectively. Please refer to Note 89 Income Taxes to our unaudited condensed 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, 2021,March 31, 2022, borrowings were $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 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.
One 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 ended September 30, 2021March 31, 2022 and June 30, 2021 and a summary of our cash activity for the threenine months ended September 30,March 31, 2022 and 2021 and 2020 are summarized in the tables below:
September 30,June 30,March 31,June 30,
2021202120222021
(in thousands)(in thousands)
Cash and cash equivalentsCash and cash equivalents$117,200 $133,932 Cash and cash equivalents$117,605 $133,932 
Marketable securitiesMarketable securities8,185 10,216 Marketable securities964 10,216 
Borrowings under credit facilityBorrowings under credit facility130,000 130,000 Borrowings under credit facility130,000 130,000 
Three Months Ended September 30,
20212020
(in thousands)
Cash provided by operating activities$10,246 $7,910 
Cash used in investing activities(9,786)(20,149)
Cash (used in) provided by financing activities(18,489)2,168 
Effect of exchange rates on cash(1,108)3,294 
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Nine Months Ended March 31,
20222021
(in thousands)
Cash provided by operating activities$63,250 $61,397 
Cash used in investing activities(35,088)(75,472)
Cash used in financing activities(45,240)(56,166)
Effect of exchange rates on cash(2,278)5,849 
Cash, cash equivalents and marketable securities. At September 30, 2021,March 31, 2022, our cash and cash equivalents of $117.2$117.6 million consisted primarily of cash deposits held at major banks and money market funds. The $16.7$16.3 million decrease in cash and cash equivalents at September 30, 2021March 31, 2022 from June 30, 2021 was primarily due to cash used to repurchase common stock of $20.8$50.0 million, to fund capital expenditures, including capitalization of software costs of $3.1$29.2 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 into fund business and asset acquisitions, net of cash acquired of $9.8$15.1 million, a decrease in funds used to issue notes receivablepartially offset by cash generated from operations of $1.6$63.3 million, andproceeds from the purchasesale of available for sale securities of $2.0$10.1 million. and proceeds from our employee stock purchase plan of $4.8 million.
Cash, cash equivalents and marketable securities included approximately $35.9 $72.3 million held by our foreign subsidiaries as of September 30, 2021.March 31, 2022. We continue to permanently reinvest the earnings, if any, of our international subsidiaries other than the UK, Switzerland India and one of our Australian subsidiaries;India; 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 aforementioned. If our reinvestment plans were to change based on future events and we decided to repatriate amounts from other international subsidiaries, 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 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. Decreases primarily in the foreign currency exchange rate of the British Pound Sterling to the U.S. Dollar decreased our overall cash balances by
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approximately $1.1$2.3 million for the threenine months ended September 30, 2021.March 31, 2022. 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,March 31, 2022, 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 increased by $2.3$1.9 million in the threenine months ended September 30, 2021March 31, 2022 as compared to the same period in the prior fiscal year, primarily due to an increase in cash provided by changes in accounts receivable of $3.0payable and accrued expenses of $7.3$10.0 million, prepaid and current assets of $2.3 million and other assets of $4.4 million, deferred revenue of $4.0 million, partially offset by the increase in our net loss for the threenine months ended September 30, 2021March 31, 2022 of $5.3 million and cash used in customer liabilities of $2.8$20.1 million.
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 $10.4$40.4 million decrease in net cash used in investing activities for the threenine months ended September 30, 2021March 31, 2022 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 $9.8$26.2 million and notes receivable of $2.6 million, a decrease in cash used to fund notes receivable of $1.6 million and to purchase available for sale securities of $2.0$9.3 million and to purchase other investments of $7.0 million, partially offset by an increase in cash used forto fund capital expenditures, inclusive of $3.1software costs of $4.9 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. The increasedecrease in cash used in financing activities of $20.7$10.9 million was due to a decrease in cash used to repay debt of $50.0 million, offset by an increase in cash used to repurchase common stock of $20.8$39.2 million during the threenine months ended September 30, 2021.March 31, 2022.
Contractual Obligations
During the threenine months ended September 30, 2021,March 31, 2022, we entered into a new facility leaseleases in India and renewed leases for data centers in the US, UK and Switzerland, increasing our contractual obligations by $2.7$6.2 million. Other than thethese new facility lease,leases, 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, 2021, as filed with the SEC on August 30, 2021.
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Our estimate of unrecognized tax benefits for which cash settlement may be required is $2.3$2.4 million. As of September 30, 2021,March 31, 2022, 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.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements during the three months ended September 30, 2021.
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 an interest rate swap agreementsagreement which we designated as a hedge instrumentsinstrument 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, 2021 as filed with the SEC on August 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, 2021.March 31, 2022. 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, 2021,March 31, 2022, 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, 2021March 31, 2022 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
On January 19, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Shiva Stein v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00481 (the Stein Complaint). On January 21, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Jeffrey D. Justice, II v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00586 (the Justice Complaint). On January 26, 2022, a purported stockholder of Bottomline filed a lawsuit in the United States District Court for the Southern District of New York against us and our directors, captioned Chau Le v. Bottomline Technologies, Inc., et al., Case No. 1:22-cv-00670 (the Le Complaint).
The Stein complaint, the Justice complaint, and the Le complaint all allege that the preliminary proxy statement issued in connection with the Merger omits material information or contains misleading disclosures and that, as a result, (i) all of the defendants violated Section 14(a) of the Securities Exchange Act of 1934 (the Exchange Act) and (ii) all of our directors violated section 20(a) of the Exchange Act. The Le Complaint also alleges that our directors breached their fiduciary duties of care, loyalty and good faith by, among other things, causing us to enter into the transactions contemplated by the Merger Agreement as a result of an inadequate sale process, agreeing to preclusive deal mechanisms and filing a materially misleading and incomplete preliminary proxy statement. The Le Complaint also alleges that we aided and abetted these purported breaches of fiduciary duties.
The Stein complaint, the Justice complaint, and the Le complaint all seek among other things, (i) injunctive relief preventing the consummation of the transactions contemplated by the Merger Agreement; (ii) rescission or rescissory damages in the event the transactions contemplated by the Merger Agreement have been implemented; (iii) dissemination of a proxy statement that does not omit material information or contain any misleading disclosures; (iv) a declaration that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act (except the Stein Complaint and the Le Complaint) or that our directors violated their fiduciary duties (except the Stein Complaint and the Justice Complaint); (v) to direct the defendants to account to plaintiff for all damages suffered (except the Justice Complaint); and (vi) an award of plaintiff’s expenses, including attorneys’ and experts’ fees.
On February 7, 2022, a purported stockholder of Bottomline also made a demand pursuant to Section 220 of the DGCL (the Initial 220 Demand) to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement.
The Initial 220 Demand, the Stein Complaint, the Justice Complaint, and the Le Complaint were resolved by our filing on February 25, 2022 of a supplement to our definitive proxy statement. The supplement to our proxy statement included certain informational disclosures requested by the plaintiffs and the Initial 220 Demand, and the parties are attempting to negotiate a resolution to these claims.
In addition, on February 28, 2022, another purported stockholder of Bottomline made a demand pursuant to Section 220 of the DGCL to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement. On March 23, 2022, that purported stockholder filed a complaint pursuant to Section 220 of the DGCL in the Court of Chancery of the State of Delaware against us, captioned Teamsters Local 237 Additional Security Benefit Fund v. Bottomline Technologies, Inc., Case No. 2022-0275. The complaint seeks (i) to inspect certain books and records of ours relating to the transactions contemplated by the Merger Agreement in order to investigate the process leading to the Merger Agreement and the independence of our directors and officers and to value our shares and (ii) an award of plaintiff’s expenses, including attorneys’ fees. The parties are in the process of
attempting to negotiate a resolution to these claims and must provide a status update to the Court on or before June 3, 2022.
Additional lawsuits may be filed against us, our Board of Directors, Parent and/or Merger Sub in connection with the transactions contemplated by the Merger Agreement.
Capitalized terms used but not otherwise defined herein have the meaning set forth in Note 2 to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for defined terms.
We are, from time to time, a party to other 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, 2021 before making an investment decision involving our common stock. These risk factors and the risk factors below related to the pending Merger, 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. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties may also impact our business operations.

If the Merger does not occur, it could have a material adverse effect on our business, results of operations, financial condition and stock price.
Item 2.    Unregistered Sales
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Table of Equity SecuritiesContents
On December 16, 2021, we entered into the Merger Agreement. Upon completion of the Merger, we will become a wholly owned subsidiary of Parent and Usewill cease to be publicly owned and traded. There are, however, many contingencies which may cause the Merger not to occur.
Completion of Proceedsthe Merger is subject to the satisfaction of various conditions, including but not limited to, the absence of certain legal impediments. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all.
The following table provides information about purchases by usMerger gives rise to inherent risks that include:
the price of our common stock duringwill change if the quarter ended September 30, 2021:
PeriodTotal Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2021 - July 31, 2021— $— — $50,000,000 
August 1, 2021 - August 31, 2021162,524 42.06 162,524 43,161,000 
September 1, 2021 - September 30, 2021354,440 41.36 354,440 28,501,000 
Total516,964 $41.59 516,964 
——————Merger is not completed to the extent that the current market price of our stock reflects an assumption that the Merger will be completed;
(1)On August 16, 2021,the amount of cash to be paid under the Merger Agreement is fixed and will not be adjusted for changes in our boardbusiness, assets, liabilities, prospects, outlook, financial condition or results of directors authorizedoperations or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;
legal or regulatory proceedings, including regulatory approvals from domestic and foreign governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that such governmental entities may delay or deny approval, or other matters that affect the timing or ability to complete the transaction as contemplated;
pending stockholder litigation that could prevent or delay the Merger or otherwise negatively impact our business and operations;
the possibility of disruption to our business, including increased costs and diversion of management time and resources;
difficulties maintaining business and operational relationships, including relationships with customers, suppliers, and other business partners;
the inability to attract and retain key personnel pending consummation of the Merger;
the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Merger;
the requirement that we pay a repurchase programtermination fee of $78 million to Parent if the Merger Agreement is terminated under certain circumstances;
developments beyond our control including, but not limited to, changes in domestic or global economic conditions that may affect the timing or success of the Merger; and
the risk that if the Merger is not completed, the market price of our common stock for an aggregate repurchase price notcould decline, investor confidence could decline, shareholder litigation could be brought against us or our directors, relationships with customers, suppliers and other business partners may be adversely impacted, we may be unable to exceed $50 million. This program expires on August 16, 2022. Notwithstandingretain key personnel, and profitability may be adversely impacted due to costs incurred in connection with the expiration date of the repurchase authority, as we disclosed on a Form 8-K filed on August 17, 2021 we intend to complete the program by December 31, 2021. However, we retain the ability to adjust the program at any time.proposed Merger.


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Item 6. Exhibits
Incorporated by Reference
Exhibit NumberDescriptionFormFile No.ExhibitFiling DateFiled Herewith
10.18-K000-2525910.107/23/2021
10.28-K000-2525910.110/20/2021
10.3X
  31.1X
  31.2X
  32.1X
  32.2X
101.INSInline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**Inline XBRL Taxonomy Extension Schema DocumentX
101.CAL**Inline XBRL Taxonomy Calculation Linkbase DocumentX
101.DEF**Inline XBRL Taxonomy Definition Linkbase DocumentX
101.LAB**Inline XBRL Taxonomy Label Linkbase DocumentX
101.PRE**Inline XBRL Taxonomy Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
Incorporated by Reference
Exhibit NumberDescriptionFormFile No.ExhibitFiling DateFiled Herewith
31.1X
31.2X
32.1X
32.2X
101.INSInline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH**Inline XBRL Taxonomy Extension Schema DocumentX
101.CAL**Inline XBRL Taxonomy Calculation Linkbase DocumentX
101.DEF**Inline XBRL Taxonomy Definition Linkbase DocumentX
101.LAB**Inline XBRL Taxonomy Label Linkbase DocumentX
101.PRE**Inline XBRL Taxonomy Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
**    submitted electronically herewith
Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets as of September 30, 2021March 31, 2022 and June 30, 2021, (ii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30,March 31, 2022 and 2021, and 2020, (iii) Unaudited Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30,March 31, 2022 and 2021, and 2020, (iv) Unaudited Condensed Consolidated Statements of Cash Flows for the threenine months ended September 30,March 31, 2022 and 2021 and 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, 2021May 10, 2022By:          /s/ A. BRUCE BOWDEN
                    A. Bruce Bowden
            Chief Financial Officer and Treasurer
       (Principal Financial and Accounting Officer)

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