Bottomline (EPAY) 8-K Bottomline Technologies Reports Fourth Quarter Results

Exhibit 99.1

Contact:	Irena Mroz
	Bottomline Technologies
	781-693-1802
	imroz@bottomline.com

Bottomline Technologies Reports Fourth Quarter Results

Revenue Growth Drives Increased Financial Performance

PORTSMOUTH, N.H. – August 11, 2004 –Bottomline Technologies (NASDAQ: EPAY), a leading global technology provider of Financial Resource Management (FRM) software and services, today reported financial results for the fourth quarter and fiscal year ended June 30, 2004.

Revenues for the fourth quarter were $22.4 million compared with $18.6 million in the fourth quarter of last year. Net income for the fourth quarter was $417,000, or net income per share of $0.02, compared with a net loss of $1.8 million and a net loss per share of $0.11 in the fourth quarter of last year, representing a $2.2 million change in operating results.

During the fourth quarter, operating expenses of $12.3 million included net acquisition-related charges of $972,000, which represented amortization of intangible assets of approximately $910,000, a charge for in-process research and development of $53,000, and 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 fourth quarter was $1.4 million, or pro forma net income per share of $0.08, compared with pro forma net income per share of $0.02 in the fourth quarter of last year. The fourth quarter pro forma operating results represent over a $1 million improvement from the same period last year.

“I am pleased with the results of the fourth quarter and the acceleration of profitability,” said Joe Mullen, President and CEO of Bottomline. “The Company is executing on market opportunities such as the new UK payments standard and invoice management. Going forward we expect to see continued revenue growth and increased profits.”

Revenues for the twelve months ended June 30, 2004 were $82.1 million compared with $71.3 million in the same period of last year. The net loss for the twelve months ended June 30, 2004 was $2.4 million, or a net loss per share of $0.15, compared with a net loss of $27.9 million and a net loss per share of $1.78 in the twelve months ended June 30, 2003.

The results for the twelve months ended June 30, 2003 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 $14.1 million, or a net loss per share of $0.90. The $25.5 million reduction in the net loss was partially the result of the $13.8 million goodwill impairment charge.

- more -

During the twelve months ended June 30, 2004, operating expenses of $48.2 million included acquisition-related charges of $5.2 million, which represented charges for in-process research and development of $842,000 associated with our acquisitions of Create! form International, Inc. and Albion Business Machines Limited (ABM), amortization of intangible assets of approximately $4.3 million and stock compensation expense of $41,000 associated with stock options assumed in a prior acquisition. Excluding these acquisition-related items, pro forma net income for the twelve months ended June 30, 2004 was $2.7 million, or pro forma net income per share of $0.16, compared with a pro forma net loss per share of $0.33 in the same period of last year. The fiscal 2004 pro forma operating results represent a $7.9 million improvement from fiscal 2003.

Bottomline has presented non GAAP financial measures in the form of pro forma results as part of this earnings release since this 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 to, or as a substitute for, the results presented in accordance with GAAP. A reconciliation of the GAAP net loss to the pro forma results for the periods ending June 30 is as follows:

	Three Months Ended June 30,					Twelve Months Ended June 30,
	2004		2003			2004			2003
	(in thousands)
GAAP net income (loss)	$	417	$	(1,797	)	$	(2,418	)	$	(27,854	)
Cumulative effect of accounting change		—		—			—			13,764
In-process research and development		53		—			842			—
Amortization of intangible assets		910		2,170			4,277			8,830
Stock compensation expense (benefit)		9		(24	)		41			71
Pro forma net income (loss)	$	1,389	$	349		$	2,742		$	(5,189	)

Customer Highlights:

• During the quarter, 113 new orders for Bottomline’s BACSTEL-IP software solutions, which include the UK versions of Paybase and WebSeries^®, were received from leading UK-based organizations.

• Significant organizations such as Royal Bank of Scotland Insurance, Royal London Group, Financial Services Authority and Big Food Group purchased Bottomline’s BACSTEL-IP solution. BACSTEL-IP is the new electronic payment standard for the UK and businesses are required to upgrade to this new standard by the end of 2005.

• Leading companies such as Wells Fargo Home Mortgage, Cendant Corporation and First Health chose Bottomline to deliver financial business process management solutions.

- more -

• National City Corporation (NCC) began using Bottomline’s Information Reporting module, which provides expanded functionality and service to their customers. Bottomline’s treasury management platform is being used by NCC to facilitate consolidation of domestic and international balances, statements, current day activity, prior day transactions and ACH details into a complete, real-time browser-based reporting suite.

Corporate and Product Highlights:

��

• Announced the release of the BACS accredited WebSeries^® bureau module which extends WebSeries’ use to commercial bureau environments in the United Kingdom.

• Launched PayBase^® v8.0. This new version introduces important new features and enhancements including digital archiving and retrieval of financial documents, native e-mail delivery, extended BACSTEL capabilities and NACHA-compliant FTP data transmission support.

• Released Create!archive^® v3.0, an integrated document archive and retrieval solution. Create!archive creates electronic PDF copies of documents with instant Microsoft Windows^® Client or web-based search and retrieval options, providing cost-efficient, self-service access to transactional documents.

• Bottomline’s Create!form division was recognized byStart Magazine in its annual Hottest Companies of 2004 Awards.

Bottomline will host a conference call to discuss its financial results beginning at 5:00 p.m. today. Please see the corresponding advisory issued August 2, 2004 for information on the call. The call will also be broadcast live atwww.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. 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 and Document Output Management. 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

Any statements in this announcement about our future expectations, plans and prospects constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: competition, market demand, technological change, strategic relationships, recent acquisitions, international operations, general economic conditions and other factors discussed in our most recent quarterly report filed with the SEC. In addition, the forward-looking statements included in this announcement represent our views as of the date of this announcement. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this announcement. The accompanying unaudited condensed statements of operations and balance sheets are an integral part of this announcement.

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

	Three Months Ended June 30,
	2004		2003
Revenues:
Software licenses	$	3,626	$	3,324
Service and maintenance		14,623		11,022
Equipment and supplies		4,190		4,271
Total revenues		22,439		18,617
Cost of revenues:
Software licenses		368		657
Service and maintenance		5,916		4,709
Equipment and supplies		3,440		3,529
Total cost of revenues		9,724		8,895
Gross profit		12,715		9,722
Operating expenses:
Sales and marketing		5,577		4,016
Product development and engineering:
Product development and engineering		2,536		2,700
Stock compensation expense		9		(24	)
In-process research and development		53		—
General and administrative		3,219		2,583
Amortization of intangible assets		910		2,170
Total operating expenses		12,304		11,445
Income (loss) from operations		411		(1,723	)
Other income (expense), net		88		(59	)
Income (loss) before provision for income taxes		499		(1,782	)
Provision for income taxes		82		15
Net income (loss)		417		(1,797	)
Basic and diluted net income (loss) per share	$	0.02	$	(0.11	)
Shares used in computing net income (loss) per share:
Basic		17,003		15,938
Diluted		18,078		15,938
Pro forma (excluding acquisition-related charges):(1)
Net income		1,389		349
Diluted net income per share(2)	$	0.08	$	0.02

(1) Pro forma presentation excludes charges for in-process research and development of $53 for the three months ended June 30, 2004, amortization of intangible assets of $910 and $2,170 and amortization of stock compensation expense (benefit) of $9 and $(24), net of tax, for the three months ended June 30, 2004 and 2003, respectively.

(2) Shares used in computing pro forma diluted net income per share were 18,078 and 16,442 for the three months ended June 30, 2004 and 2003, respectively.

Bottomline Technologies

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

	Year Ended June 30,
	2004			2003
Revenues:
Software licenses	$	14,366		$	13,021
Service and maintenance		51,364			40,865
Equipment and supplies		16,402			17,379
Total revenues		82,132			71,265
Cost of revenues:
Software licenses		1,678			1,936
Service and maintenance		21,456			20,358
Equipment and supplies		13,312			13,615
Total cost of revenues		36,446			35,909
Gross profit		45,686			35,356
Operating expenses:
Sales and marketing		21,062			18,372
Product development and engineering:
Product development and engineering		10,171			10,836
In-process research and development		842			—
Stock compensation expense		41			71
General and administrative		11,830			11,088
Amortization of intangible assets		4,277			8,830
Total operating expenses		48,223			49,197
Loss from operations		(2,537	)		(13,841	)
Other income (expense), net		288			(189	)
Loss before provision for income taxes and cumulative effect of accounting change		(2,249	)		(14,030	)
Provision for income taxes		169			60
Loss before cumulative effect of accounting change		(2,418	)		(14,090	)
Cumulative effect of accounting change		—			(13,764	)
Net loss	$	(2,418	)	$	(27,854	)
Basic and diluted:
Loss per share before cumulative effect of accounting change	$	(0.15	)	$	(0.90	)
Cumulative effect of accounting change		—			(0.88	)
Net loss per share	$	(0.15	)	$	(1.78	)
Shares used in computing basic and diluted net loss per share:		16,514			15,667
Pro forma (excluding acquisition-related charges):(1)
Net income (loss)	$	2,742		$	(5,189	)
Diluted net income (loss) per share(2)	$	0.16		$	(0.33	)

(1) Pro forma presentation is before the cumulative effect of accounting change of $13,764 for the year ended June 30, 2003 and excludes in-process research and development of $842 and $0 amortization of intangible assets of $4,277 and $8,830 amortization of stock compensation expense of $41 and $71, net of tax, for the years ended June 30, 2004 and 2003, respectively.

(2) Shares used in computing pro forma diluted net income per share were 17,353 and 15,667 for the years ended June 30, 2004 and 2003, respectively.

Bottomline Technologies

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2004			June 30, 2003
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	25,015		$	25,802
Accounts receivable		18,530			13,281
Other current assets		4,533			4,148
Total current assets		48,078			43,231
Property and equipment		6,468			6,447
Intangible assets		34,686			22,660
Other assets		835			1,024
Total assets	$	90,067		$	73,362
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,327		$	5,712
Accrued expenses		7,901			6,005
Deferred revenue and deposits		17,586			13,697
Current portion of long-term debt		—			253
Total current liabilities		30,814			25,667
Stockholders’ equity
Common stock		18			17
Additional paid-in-capital		177,205			164,809
Deferred compensation		(14	)		(78	)
Accumulated other comprehensive income		3,026			1,628
Treasury stock		(4,133	)		(4,250	)
Retained deficit		(116,849	)		(114,431	)
Total stockholders’ equity		59,253			47,695
Total liabilities and stockholders’ equity	$	90,067		$	73,362