Exhibit 99.1
Bottomline Technologies Reports Second Quarter Results
Revenue Growth and Operating Performance Highlight Quarter
PORTSMOUTH, N.H.—January 28, 2004—Bottomline Technologies (NASDAQ: EPAY), a leading global technology provider of Financial Resource Management (FRM) software and services, today reported financial results for the second quarter ended December 31, 2003.
Revenues for the second quarter were $21.3 million compared with $17.7 million in the second quarter of last year and $16.9 million in the first quarter of this year, an increase of 20% year over year and 26% sequentially. The increase in revenue is attributable to the revenue contribution from the Create!form acquisition, higher sales of the company’s other software products and services and foreign exchange rates. The net loss for the second quarter was $449,000, or a net loss per share of $0.03, compared with a net loss of $4.2 million and a net loss per share of $0.27 in the second quarter of last year.
During the second quarter, operating expenses of $12.3 million included net acquisition-related charges of $900,000, which represented amortization of intangible assets of approximately $891,000 and a stock compensation expense of $9,000 associated with stock options assumed in a prior acquisition. Excluding these acquisition-related items, pro forma net income for the second quarter was $451,000, or pro forma net income per share of $0.03, compared with a pro forma net loss per share of $0.12 in the second quarter of last year.
“Positive results were recorded in the quarter across all key metrics while backlog increased by over $7.5 million sequentially,” said Joe Mullen, President and CEO of Bottomline. “Higher software revenues drove increased gross margins which resulted in improved operating results. We see the opportunity for continued growth in our market.”
Revenues for the six months ended December 31, 2003 were $38.1 million compared with $34.0 million in the same period of last year. The net loss for the six months ended December 31, 2003 was $2.6 million, or a net loss per share of $0.16, compared with a net loss of $23.8 million and a net loss per share of $1.53 in the six months ended December 31, 2002.
The results for the six months ended December 31, 2002 included the cumulative effect of an accounting change in the amount of $13.8 million, which related to a goodwill impairment charge recorded by the company in connection with the transition to FASB Statement 142. The net loss before the cumulative effect of this accounting change was $10.1 million, or a net loss per share of $0.65.
During the six months ended December 31, 2003, operating expenses of $23.6 million included net acquisition-related charges of $3.3 million, which represented a charge for in-process research and development of $789,000 associated with the acquisition of Create!form International, Inc., amortization of intangible assets of approximately $2.5 million and a stock compensation expense of $22,000 associated with stock options assumed in a prior acquisition. Excluding these acquisition-related items, pro forma net income for the six months ended December 31, 2003 was $719,000, or pro forma net income per share of $0.04, compared with a pro forma net loss per share of $0.36 in the same period of last year.
Bottomline has presented non GAAP financial measures in the form of pro forma results as part of this earnings release since such information excludes certain non-cash items and management believes it is a more accurate measurement of Bottomline’s overall operating performance. Management believes that presenting financial measures exclusive of certain non-cash items helps identify trends in the company’s business and the company uses these measures to establish budgets and operational goals, to manage its business and to evaluate the performance of the company. The presentation of this information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of the GAAP net loss to the pro forma results for the periods ending December 31 is as follows:
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| | | Three Months
Ended December 31,
| | | Six Months Ended December 31,
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| | | (in thousands) | |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
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GAAP Net Loss | | $ | (449 | ) | | $ | (4,205 | ) | | $ | (2,594 | ) | | $ | (23,831 | ) |
Cumulative Effect of Accounting Change | | | — | | | | — | | | | — | | | | 13,764 | |
In-process Research and Development | | | — | | | | — | | | | 789 | | | | — | |
Amortization of Intangible Assets | | | 891 | | | | 2,243 | | | | 2,502 | | | | 4,425 | |
Stock Compensation Expense | | | 9 | | | | 26 | | | | 22 | | | | 63 | |
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Pro forma Net Income (Loss) | | $ | 451 | | | $ | (1,936 | ) | | $ | 719 | | | $ | (5,579 | ) |
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Customer Highlights:
| | • | Leading companies such as Heinz, Metropolitan Life, Sungard Securities, Prudential Assurance and Caterpillar chose Bottomline to deliver financial resource management solutions. |
| | • | Western Asset Management, a subsidiary of Legg Mason, selected Bottomline’s WebSeries software for their shared service center to facilitate global electronic payments. |
| | • | Bottomline’s new Legal eXchange platform was well received with several new customer contracts during the quarter. |
| | • | Bottomline added several new customers for output management solutions including Worldwide Wresting Entertainment (WWE), Metaldyne, Michael Kors, and the University of Washington. |
| | • | Bottomline’s customer, RBC Global Services, a division of Royal Bank of Canada, captured two prestigious industry awards for its Viewfinder® web portal built using Bottomline’s WebSeries eBanking platform. |
| | • | Bottomline signed several new distributors, expanding the distribution channel for the company’s products in France, the Netherlands, Italy, Asia, and the Americas. |
Corporate and Product Highlights:
| | • | Announced the availability of the latest version of our payments software solution, PayBase 7.0. In addition to US check and NACHA-compliant electronic payment types, the system now supports over 35 foreign draft types as well as BACSTEL-IP. |
| | • | Released Create!form® Version 3.0 for use with PeopleSoft EnterpriseOne. Certified by PeopleSoft, the release includes many significant new features and enhancements, and is an important addition to the company’s complementary output management products for PeopleSoft EnterpriseOne users. |
Bottomline will host a conference call to discuss its financial results beginning at 5:00 p.m. today. Please see the corresponding advisory issued January 20, 2004 for information on the call. The call will also be broadcast live at www.bottomline.com and a replay will be available on the website following the call.
About Bottomline Technologies
Bottomline Technologies® (NASDAQ: EPAY) is a leading global technology provider of Financial Resource Management (FRM) solutions and services. Bottomline’s comprehensive set of FRM offerings enables businesses and financial institutions to more effectively manage their critical financial transactions, cash decisions and trading partner relationships, leveraging the Web. FRM applications include Electronic Payments and Cash Management, Electronic Invoice Receipt and Management, Electronic Invoice Presentment and Payment (EIPP), Electronic Banking and Information Reporting. Founded in 1989, Bottomline maintains its corporate headquarters in Portsmouth, NH and international headquarters in Reading, England. For more information, visit Bottomline on the Web at www.bottomline.com, or dial (800) 243-2528 or (603) 436-0700.
Cautionary Language
This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding future revenue growth, market opportunities and expected financial performance. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are competition, market demand, technological change, strategic relationships, recent acquisitions, international operations and general economic conditions. More information about potential factors that could affect the company’s business and financial results is included in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q including (without limitation) under the captions, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Factors That May Affect Future Results”, which is on file with the Securities and Exchange Commission (http://www.sec.gov). The accompanying unaudited condensed statements of operations and balance sheets are an integral part of this announcement. The forward-looking statements contained herein represent the judgment of Bottomline as of the date of this announcement. We disclaim any obligation to update any forward-looking statement.
Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
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| | | Three Months Ended December 31,
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| | | 2003
| | | 2002
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Revenues: | | | | | | | | |
Software licenses | | $ | 4,513 | | | $ | 3,359 | |
Service and maintenance | | | 12,492 | | | | 9,969 | |
Equipment and supplies | | | 4,249 | | | | 4,396 | |
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Total revenues | | | 21,254 | | | | 17,724 | |
Cost of revenues: | | | | | | | | |
Software licenses | | | 584 | | | | 449 | |
Service and maintenance | | | 5,400 | | | | 5,627 | |
Equipment and supplies | | | 3,446 | | | | 3,329 | |
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Total cost of revenues | | | 9,430 | | | | 9,405 | |
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Gross profit | | | 11,824 | | | | 8,319 | |
Operating expenses: | | | | | | | | |
Sales and marketing | | | 5,792 | | | | 4,704 | |
Product development and engineering: | | | | | | | | |
Product development and engineering | | | 2,659 | | | | 2,739 | |
Stock compensation expense | | | 9 | | | | 26 | |
General and administrative | | | 2,932 | | | | 2,908 | |
Amortization of intangible assets | | | 891 | | | | 2,243 | |
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Total operating expenses | | | 12,283 | | | | 12,620 | |
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Loss from operations | | | (459 | ) | | | (4,301 | ) |
Other income, net | | | 42 | | | | 111 | |
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Loss before provision for income taxes | | | (417 | ) | | | (4,190 | ) |
Provision for income taxes | | | 32 | | | | 15 | |
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Net loss | | $ | (449 | ) | | $ | (4,205 | ) |
Basic and diluted net loss per share | | $ | (0.03 | ) | | $ | (0.27 | ) |
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Shares used in computing basic and diluted net loss per share: | | | 16,621 | | | | 15,567 | |
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Pro forma (excluding acquisition-related charges):(1) | | | | | | | | |
Net income (loss) | | $ | 451 | | | $ | (1,936 | ) |
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Basic and diluted net income (loss) per share(2) | | $ | 0.03 | | | $ | (0.12 | ) |
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| (1) | Pro forma presentation excludes amortization of intangible assets of $891 and $2,243 and amortization of stock compensation expense of $9 and $26, net of tax for the three months ended December 31, 2003 and 2002, respectively. |
| (2) | Shares used in computing pro forma diluted net income per share were 17,373 and 15,567 for the three months ended December 31, 2003 and 2002 respectively. |
Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
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| | | Six Months Ended December 31,
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| | | 2003
| | | 2002
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Revenues: | | | | | | | | |
Software licenses | | $ | 7,142 | | | $ | 6,099 | |
Service and maintenance | | | 22,939 | | | | 19,255 | |
Equipment and supplies | | | 8,044 | | | | 8,650 | |
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Total revenues | | | 38,125 | | | | 34,004 | |
Cost of revenues: | | | | | | | | |
Software licenses | | | 854 | | | | 854 | |
Service and maintenance | | | 9,848 | | | | 10,654 | |
Equipment and supplies | | | 6,465 | | | | 6,492 | |
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Total cost of revenues | | | 17,167 | | | | 18,000 | |
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Gross profit | | | 20,958 | | | | 16,004 | |
Operating expenses: | | | | | | | | |
Sales and marketing | | | 10,011 | | | | 10,013 | |
Product development and engineering: | | | | | | | | |
Product development and engineering | | | 4,972 | | | | 5,979 | |
In-process research and development | | | 789 | | | | — | |
Stock compensation expense | | | 22 | | | | 63 | |
General and administrative | | | 5,306 | | | | 5,844 | |
Amortization of intangible assets | | | 2,502 | | | | 4,425 | |
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Total operating expenses | | | 23,602 | | | | 26,324 | |
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Loss from operations | | | (2,644 | ) | | | (10,320 | ) |
Other income, net | | | 97 | | | | 283 | |
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Loss before provision for income taxes and cumulative effect of accounting change | | | (2,547 | ) | | | (10,037 | ) |
Provision for income taxes | | | 47 | | | | 30 | |
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Net loss before cumulative effect of accounting change | | | (2,594 | ) | | | (10,067 | ) |
Cumulative effect of accounting change | | | — | | | | (13,764 | ) |
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Net loss | | $ | (2,594 | ) | | $ | (23,831 | ) |
Basic and diluted: | | | | | | | | |
Loss per share before cumulative effect of accounting change | | $ | (0.16 | ) | | $ | (0.65 | ) |
Cumulative effect of accounting change | | | — | | | | (0.88 | ) |
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Net loss per share | | $ | (0.16 | ) | | $ | (1.53 | ) |
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Shares used in computing basic and diluted net loss per share: | | | 16,333 | | | | 15,556 | |
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Pro forma (excluding acquisition-related charges):(1) | | | | | | | | |
Net income (loss) | | $ | 719 | | | $ | (5,579 | ) |
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Basic and diluted net income (loss) per share(2) | | $ | 0.04 | | | $ | (0.36 | ) |
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| (1) | Pro forma presentation is before the cumulative effect of accounting change and excludes in-process research and development of $789 and $0, amortization of intangible assets of $2,502 and $4,425 and amortization of stock compensation expense of $22 and $63, net of tax for the six months ended December 31, 2003 and 2002, respectively. |
| (2) | Shares used in computing pro forma diluted net income per share were 17,019 and 15,556 for the six months ended December 31, 2003 and 2002, respectively. |
Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
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| | | December 31,
2003
| | | June 30,
2003
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Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 23,036 | | | $ | 25,802 | |
Accounts receivable | | | 16,300 | | | | 13,281 | |
Other current assets | | | 4,253 | | | | 4,148 | |
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Total current assets | | | 43,589 | | | | 43,231 | |
Property and equipment | | | 6,591 | | | | 6,447 | |
Intangible assets | | | 30,555 | | | | 22,660 | |
Other assets | | | 920 | | | | 1,024 | |
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Total assets | | $ | 81,655 | | | $ | 73,362 | |
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Liabilities and stockholders’ equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 5,916 | | | $ | 5,712 | |
Accrued expenses | | | 7,067 | | | | 6,005 | |
Deferred revenue and deposits | | | 16,780 | | | | 13,697 | |
Current portion of long-term debt | | | 253 | | | | 253 | |
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Total current liabilities | | | 30,016 | | | | 25,667 | |
Long-term debt | | | — | | | | — | |
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Total liabilities | | | 30,016 | | | | 25,667 | |
Stockholders’ equity | | | | | | | | |
Common stock | | | 17 | | | | 17 | |
Additional paid-in-capital | | | 169,969 | | | | 164,809 | |
Deferred compensation | | | (33 | ) | | | (78 | ) |
Accumulated other comprehensive income | | | 2,821 | | | | 1,628 | |
Treasury stock | | | (4,110 | ) | | | (4,250 | ) |
Retained deficit | | | (117,025 | ) | | | (114,431 | ) |
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Total stockholders’ equity | | | 51,639 | | | | 47,695 | |
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Total liabilities and stockholders’ equity | | $ | 81,655 | | | $ | 73,362 | |
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