Exhibit 99.1
Contact: | Kevin Donovan |
Bottomline Technologies |
603-501-5240 |
kdonovan@bottomline.com |
Bottomline Technologies Reports Third Quarter Results
PORTSMOUTH, N.H. – May 1, 2006 –Bottomline Technologies (NASDAQ: EPAY), a leading provider of payments and invoice automation software and services, today reported financial results for the third quarter and nine months ended March 31, 2006.
Revenues for the third quarter were $24.9 million compared with $24.5 million in the third quarter of last year. Net loss for the third quarter was $2.2 million, or a net loss per share of $0.09, compared with net income of $1.8 million, or net income per share of $0.09 in the third quarter of last year. The fiscal 2006 third quarter net loss includes the expense impact associated with stock-based compensation as a result of accounting rules that Bottomline adopted on July 1, 2005.
During the third quarter of fiscal 2006, the company incurred acquisition-related amortization of intangible assets of approximately $1.4 million, acquisition-related technology write-offs of $189,000 and stock compensation expense of $1.9 million. Excluding these acquisition-related and stock compensation items, non-GAAP net income for the third quarter was $1.3 million, or non-GAAP net income per share of $0.05.
“We have committed to a strategy of transitioning the majority of our business to a revenue model focused on subscription- and transaction-based product offerings, and that has impacted the quarter’s revenues. At the same time, we are making an increased investment in our banking platform,” said Joe Mullen, CEO of Bottomline Technologies. “We are confident that up-front investments in product and delays in revenue recognition from subscription offerings are the right steps for the business and will, in the long-term, drive higher revenues, profits and shareholder value.”
Revenues for the nine months ended March 31, 2006 were $75.7 million compared with $70.2 million in the same period last year. Net loss for the nine months ended March 31, 2006 was $1.0 million, or a net loss per share of $0.04, compared with net income of $3.7 million, or net income per share of $0.19, in the same period last year. Net loss for the nine months ended March 31, 2006 includes the expense impact associated with stock-based compensation as a result of accounting rules that Bottomline adopted on July 1, 2005.
During the nine months ended March 31, 2006, the company incurred acquisition-related amortization of intangible assets of approximately $3.0 million, acquisition-related technology write-offs of $189,000 and stock compensation expense of $5.3 million. Excluding these items, non-GAAP net income for the nine months ended March 31, 2006 was $7.5 million, or non-GAAP net income per share of $0.33, compared with non-GAAP net income of $6.0 million, or non-GAAP net income per share of $0.32, in the same period of last year.
Bottomline has presented supplemental non-GAAP financial measures as part of this earnings release. The non-GAAP financial measures exclude certain items, specifically amortization of intangible assets, acquisition-related technology write-offs and stock compensation expense. The presentation of this information should not be considered in isolation to, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes that these supplemental non-GAAP financial measures are useful to investors because it allows for an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies. A reconciliation of the GAAP results to the non-GAAP results for the three and nine month periods ending March 31 is as follows:
Three Months March 31, | Nine Months March 31, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||
GAAP Net Income (loss) | $ | (2,172 | ) | $ | 1,765 | $ | (957 | ) | $ | 3,684 | ||||
Amortization of Intangible Assets | 1,357 | 707 | 3,018 | 2,349 | ||||||||||
Acquisition-related Technology Write-offs | 189 | — | 189 | — | ||||||||||
Stock Compensation Expense | 1,881 | — | 5,282 | 14 | ||||||||||
Non-GAAP Net Income | $ | 1,255 | $ | 2,472 | $ | 7,532 | $ | 6,047 | ||||||
Customer Highlights:
• | Further extended market leadership within insurance and energy sectors, signing multi-year contracts for Legal eXchange®, Bottomline’s Web-based legal spend management solution, with Shelter Insurance, Commerce Insurance and Williams Information Technology, Inc. |
• | Signed contracts for expanded deployments of Bottomline’s leading payments platforms with existing global customers, including British Petroleum, MetLife, Prudential and the United Nations. |
• | Increased customer base with new orders for Bottomline’s financial process automation solutions from Archer Daniels Midland, Bob’s Discount Furniture, Crocs, Employers Compensation Insurance, Federal Signal Corporation, and New York City Employees Retirement System. |
Company and Product Highlights:
• | Expanded strategic relationship with HSBC, enabling the bank to integrate Bottomline’s invoice automation services into a new HSBC-branded solution designed to streamline |
the accounts payable function of more than 1,100 of its Corporate Investment Banking & Markets customers in the UK. |
• | Awarded top ranking inGlobal Finance magazine’s Best Treasury and Cash Management Banks and Providers 2006. For the second consecutive year, Bottomline received top honors in the Best Accounts Payable Services category. |
• | Announced the receipt of a patent for Bottomline’s payables automation technology. Also announced the acquisition of a patent addressing the process of online budgeting and evaluation of legal invoices. |
About Bottomline Technologies
Bottomline Technologies (NASDAQ: EPAY) provides payments and invoice automation software and services to organizations seeking more secure and efficient financial processes. The company remains at the forefront of delivering innovative solutions that complement and extend the value of existing financial processes, business relationships and back-office systems. These solutions have enabled industry-leading corporations, banks and financial institutions to automate, manage and control processes involving payments and collections, invoice approval, cash flow, risk mitigation, reporting and document archive. For more information, please visitwww.bottomline.com.
Bottomline Technologies, Legal eXchange and the BT logo are trademarks of Bottomline Technologies, Inc. which may be registered in certain jurisdictions. All other brand/product names are trademarks of their respective holders.
Cautionary Language This press release contains “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. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are competition, market demand, technological change, strategic relationships, recent acquisitions, international operations and general economic conditions and other risks described in our most recent quarterly report on Form 10-Q. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.
Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended March 31, | |||||||
2006 | 2005 | ||||||
Revenues: | |||||||
Software licenses | $ | 2,543 | $ | 4,629 | |||
Service and maintenance | 18,750 | 15,540 | |||||
Equipment and supplies | 3,599 | 4,319 | |||||
Total revenues | 24,892 | 24,488 | |||||
Cost of revenues: | |||||||
Software licenses | 371 | 492 | |||||
Service and maintenance(1) | 8,597 | 6,931 | |||||
Equipment and supplies | 2,930 | 3,265 | |||||
Total cost of revenues | 11,898 | 10,688 | |||||
Gross profit | 12,994 | 13,800 | |||||
Operating expenses: | |||||||
Sales and marketing(1) | 6,090 | 6,012 | |||||
Product development and engineering(1) | 3,639 | 2,298 | |||||
General and administrative(1) | 4,655 | 3,042 | |||||
Amortization of intangible assets | 1,357 | 707 | |||||
Total operating expenses | 15,741 | 12,059 | |||||
Income (loss) from operations | (2,747 | ) | 1,741 | ||||
Other income, net | 780 | 108 | |||||
Income (loss) before provision for income taxes | (1,967 | ) | 1,849 | ||||
Provision for income taxes | 205 | 84 | |||||
Net income (loss) | $ | (2,172 | ) | $ | 1,765 | ||
Net income (loss) per share: | |||||||
Basic | $ | (0.09 | ) | $ | 0.10 | ||
Diluted | $ | (0.09 | ) | $ | 0.09 | ||
Shares used in computing net income (loss) per share: | |||||||
Basic | 23,083 | 18,180 | |||||
Diluted | 23,083 | 19,464 | |||||
Non-GAAP (excludes acquisition-related amortization, acquisition-related technology write-offs and stock compensation expense):(2) | |||||||
Net income | $ | 1,255 | $ | 2,472 | |||
Diluted net income per share(3) | $ | 0.05 | $ | 0.13 | |||
(1) Stock-based compensation is allocated as follows: | |||||||
Cost of revenues: service and maintenance | $ | 122 | $ | — | |||
Sales and marketing | 693 | — | |||||
Product development and engineering | 215 | — | |||||
General and administrative | 851 | — | |||||
$ | 1,881 | $ | — | ||||
(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $1,357 and $707, acquisition-related technology write-offs of $189 and $0 and stock compensation expense of $1,881 and $0, for the three months ended March 31, 2006 and 2005, respectively. | |||||||
(3) Shares used in computing non-GAAP diluted net income per share were 23,246 and 19,464 for the three months ended March 31, 2006 and 2005, respectively. |
Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Nine Months Ended March 31, | |||||||
2006 | 2005 | ||||||
Revenues: | |||||||
Software licenses | $ | 9,414 | $ | 13,649 | |||
Service and maintenance | 54,883 | 44,724 | |||||
Equipment and supplies | 11,391 | 11,813 | |||||
Total revenues | 75,688 | 70,186 | |||||
Cost of revenues: | |||||||
Software licenses | 1,072 | 1,868 | |||||
Service and maintenance(1) | 23,927 | 19,028 | |||||
Equipment and supplies | 9,105 | 8,970 | |||||
Total cost of revenues | 34,104 | 29,866 | |||||
Gross profit | 41,584 | 40,320 | |||||
Operating expenses: | |||||||
Sales and marketing(1) | 18,629 | 17,806 | |||||
Product development and engineering(1) | 8,956 | 7,184 | |||||
General and administrative(1) | 13,364 | 9,349 | |||||
Amortization of intangible assets | 3,018 | 2,349 | |||||
Total operating expenses | 43,967 | 36,688 | |||||
Income (loss) from operations | (2,383 | ) | 3,632 | ||||
Other income, net | 2,285 | 401 | |||||
Income (loss) before provision for income taxes | (98 | ) | 4,033 | ||||
Provision for income taxes | 859 | 349 | |||||
Net income (loss) | $ | (957 | ) | $ | 3,684 | ||
Net income (loss) per share: | |||||||
Basic | $ | (0.04 | ) | $ | 0.21 | ||
Diluted | $ | (0.04 | ) | $ | 0.19 | ||
Shares used in computing net income (loss) per share: | |||||||
Basic | 22,643 | 17,878 | |||||
Diluted | 22,643 | 18,911 | |||||
Non-GAAP (excludes acquisition-related amortization, acquisition-related technology write-offs and stock compensation expense):(2) | |||||||
Net income | $ | 7,532 | $ | 6,047 | |||
Diluted net income per share(3) | $ | 0.33 | $ | 0.32 | |||
(1) Stock-based compensation is allocated as follows: | |||||||
Cost of revenues: service and maintenance | $ | 368 | $ | — | |||
Sales and marketing | 1,854 | — | |||||
Product development and engineering | 653 | 14 | |||||
General and administrative | 2,407 | — | |||||
$ | 5,282 | $ | 14 | ||||
(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $3,018 and $2,349, acquisition-related technology write-offs of $189 and $0 and stock compensation expense of $5,282 and $14, for the nine months ended March 31, 2006 and 2005, respectively. | |||||||
(3) Shares used in computing non-GAAP diluted net income per share were 23,159 and 18,911 for the nine months ended March 31, 2006 and 2005, respectively. |
Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2006 | June 30, 2005 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash, cash equivalents and short-term investments | $ | 77,250 | $ | 35,916 | ||||
Accounts receivable | 21,979 | 22,956 | ||||||
Other current assets | 5,004 | 4,893 | ||||||
Total current assets | 104,233 | 63,765 | ||||||
Property and equipment | 6,787 | 6,940 | ||||||
Intangible assets | 60,835 | 38,695 | ||||||
Other assets | 762 | 1,041 | ||||||
Total assets | $ | 172,617 | $ | 110,441 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 8,152 | $ | 6,094 | ||||
Accrued expenses | 8,328 | 9,381 | ||||||
Deferred revenue and deposits | 19,202 | 20,738 | ||||||
Total current liabilities | 35,682 | 36,213 | ||||||
Deferred revenue and deposits, non current | 1,543 | 1,435 | ||||||
Deferred income taxes | 2,587 | — | ||||||
Total liabilities | 39,812 | 37,648 | ||||||
Stockholders’ equity | ||||||||
Common stock | 23 | 19 | ||||||
Additional paid-in-capital | 244,222 | 182,534 | ||||||
Accumulated other comprehensive income | 1,164 | 2,350 | ||||||
Treasury stock | (686 | ) | (1,149 | ) | ||||
Retained deficit | (111,918 | ) | (110,961 | ) | ||||
Total stockholders’ equity | 132,805 | 72,793 | ||||||
Total liabilities and stockholders’ equity | $ | 172,617 | $ | 110,441 | ||||