30% Subscription and Transaction Revenue Growth Highlights Fourth QuarterPORTSMOUTH, N.H. – August 12, 2014 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of cloud-based payment, invoice and digital banking solutions, today reported financial results for the fourth quarter and year ended June 30, 2014.
Revenues for the fourth quarter were $81.7 million, an increase of $16.6 million, or 26%, from the fourth quarter of last year. Subscription and transaction revenues, which are primarily related to the company’s digital banking, legal spend management and Paymode-X cloud-based applications, increased 30% from the fourth quarter of last year to $39.6 million.
Gross margin for the fourth quarter was $46.5 million, an increase of $11.9 million from the fourth quarter of last year. Net loss for the fourth quarter was $1.5 million, representing a net loss per share of $0.04.
Core net income for the fourth quarter was $14.9 million. Core net income excludesacquisition and integration-related expenses (including amortization of intangible assets) of $8.3 million, equity-based compensation of $6.0 million, restructuring expenses of $0.3 million, non-cash interest expense of $2.9 million associated with our convertible notes and net other non-core gains of $1.2 million. Core earnings per share was $0.39.
“We are pleased to report a very strong fourth quarter which completes an outstandingfiscal year” said Rob Eberle, President and CEO of Bottomline Technologies. “Our results for the quarter and the year confirm our strategic direction and demonstrate our ability to execute. Going forward, we are focused on driving new growth in the large markets we participate in. The course we have chosen positions the company well for continued future success as we expand our market presence and solution set”.
Revenues for the year ended June 30, 2014 increased 18% to $300.6 million as compared with $254.8 million last year. Subscription and transaction revenues increased 20% to $141.1 million in the year ended June 30, 2014. Net loss for the year ended June 30, 2014 was $19.1 million, or $0.52 per share.
Core net income for the year ended June 30, 2014 was $48.4 million. Core net income excludes acquisition and integration-related expenses (including amortization of intangible assets) of $31.6 million, equity-based compensation of $22.8 million, restructuring expenses of $1.4 million, non-cash interest expense of $11.4 million associated with our convertible notes and other non-core expenses of $0.3 million. Core earnings per share was $1.29.
Fourth Quarter Customer Highlights
Chosen by six leading organizations, including Aviva Canada and Enstar, to provide Bottomline's cloud-based legal spend management solutions to automate, manage and control their legal spend.
Signed 14 new deals to provide banks with online account origination technology, including a multi-year agreement with a major global bank, enabling the banks to improve their digital presence and increase customer acquisition through digital channels.
Leading institutions, such as Cambridge Building Society, NYC Employees’ Retirement System, Qualcomm and Plusnet Plc, chose Bottomline’s payment automation solutions to extend their payments capabilities and improve efficiencies.
Companies such as Bank Austria Creditanstalt, Cigna and INTL FCStone selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions by utilizing the SWIFT global network.
Selected by nine institutions, including Jones Lang LaSalle, to provide Paymode-X, Bottomline’s leading cloud-based payments automation platform.
Fourth Quarter Strategic Corporate Highlights
Deployed release 10.2 of Legal-X, which includes new innovative widgets that will increase productivity and improve the user experience by showing users information on their productivity, program performance and pending workload.
Received the 2014 Granite State Award, given annually in recognition of outstanding contributions to the state of New Hampshire by the University of New Hampshire. Bottomline’s selection was based on its outstanding community support and employee involvement in charitable causes.
Announced the general availability of the Healthcare 5.1 platform, including eCapture, eSignature, and On-Demand forms functionality, providing an easy to use and intuitive solution for both patients and staff.
Non-GAAP Financial Measures
We have presented supplemental non-GAAP financial measures as part of this earnings release. The presentation of this non-GAAP financial information should not be considered in isolation from, or as a substitute for, our financial results presented in accordance with GAAP. Core net income and core earnings per share are non-GAAP financial measures. Our non-GAAP financial measures exclude certain items, specifically amortization of intangible assets, impairment losses on equity investments, equity-based compensation, acquisition and integration-related expenses (including acquisition-related earn-outs), restructuring related costs, non-cash pension expenses, non-core charges associated with our convertible notes and other non-core or non-recurring gains or losses that arise from time to time. Non-core charges associated with our convertible notes consist of non-cash interest expense as well as gains or losses on derivative instruments issued in conjunction with the notes. Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with our business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services, integration related professional services costs and other charges we incur as a direct result of our acquisition and integration efforts. The non-core income tax benefit for the quarter ended June 30, 2014 relates to a change in certain tax estimates during the fourth quarter. We believe that these supplemental non-GAAP financial measures are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations, including more meaningful comparisons of financial results to historical periods and to the financial results of less acquisitive peer and competitor companies. Our executive management team uses these same non-GAAP financial measures internally to assess the ongoing performance of the company. Additionally, the same non-GAAP information is used for planning purposes, including the preparation of operating budgets and in communications with our board of directors with respect to our core financial performance. 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. In computing diluted core earnings per share, we exclude the effect of shares issuable under our convertible notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an anti-dilutive security under GAAP.
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