Bottomline Technologies Reports Third Quarter Results

Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the third quarter ended March 31, 2009.

Revenues for the third quarter were $33.3 million, an increase of $1.3 million from the third quarter of last year. Revenues for the third quarter were impacted by $3.6 million on a year over year basis as a result of declines in foreign exchange rates. Year over year revenue growth on a consistent currency basis was 15%.

Gross margin for the third quarter was $18.9 million, an increase of $1.4 million from the third quarter of last year. Net loss for the third quarter was $2.0 million, or net loss per share of $0.08. Excluding acquisition-related amortization of intangible assets of $3.6 million and stock-based compensation expense of $1.9 million, core net income for the third quarter was $3.5 million, or core earnings per share of $0.15.

"We had a strong quarter evidencing the value of our product set, execution of our team and strength of our business model,” said Rob Eberle, President and CEO of Bottomline Technologies. "The strategic highlight of the quarter was our selection by one of the world’s largest financial institutions representing an important endorsement of our technology and a significant contractual relationship. From an operating perspective we continue to execute, delivering a strong step up in profit with EBITDA, excluding stock compensation expense, increasing 25% from the prior quarter and core operating income up 32% from the prior quarter. We continue to generate meaningful cash and ended the quarter with cash and investments of $41 million, up over $6 million from the prior quarter. Perhaps most telling, we recorded orders of $44.2 million in the quarter despite the continuing challenges of the economic environment. With our signed backlog and continued customer focus, we expect to report increasing profit levels in Q4 and beyond.”

Revenues for the nine months ended March 31, 2009 increased $7.9 million to $103.1 million as compared with $95.2 million in the same period last year. Revenues for the nine month period were impacted by $7.7 million on a year over year basis as a result of declines in foreign exchange rates. Year over year revenue growth for the nine month period on a consistent currency basis was 16%. Net loss for the nine months ended March 31, 2009 was $8.7 million, or net loss per share of $0.36. Excluding acquisition-related amortization of intangible assets of approximately $12.0 million and stock compensation expense of $6.3 million, core net income for the nine months ended March 31, 2009 was $9.6 million, or core earnings per share of $0.40.

Third Quarter Customer Highlights

• Signed a major contract with one of the world’s largest financial services firms to provide advanced capabilities for global cash management.
• Broadened existing relationship with Bank of America through new initiatives for international payments leveraging Bottomline’s global cash management platform.
• Signed new multi-year contracts for Legal eXchange™, Bottomline’s Software as a Service solution for legal spend management, with West Bend Mutual Insurance Company and Country Mutual Insurance Company.
• Added significant new customers, including Baldor Electric, Home Service USA, Hydranautics, InterfaceFLOR, Pearson, OSCO Construction Group, The Redpath Group, Teekay Shipping and Wright Medical Technology which selected Bottomline solutions to increase the security, efficiency, visibility and control of transactional processes.
• Expanded existing deployments of Bottomline’s payments, invoice and document process automation solutions at Allen & Overy, BNP Paribas, Cano Petroleum, CIGNA, Employers Insurance Company of Nevada, Johnson & Johnson, Johnson Controls, Lindt & Sprungli, The NORDAM Group, OptumHealth Bank, PACCAR, Target Corporation and United Technologies Corporation.
• Continued to strengthen our presence within healthcare as hospitals and healthcare organizations such as Catholic Healthcare Initiatives, Sutter Health, Tuomey Healthcare System and the nation’s third largest public healthcare system either selected, or expanded existing implementations of, Bottomline’s solutions for medical forms automation.
• Increased adoption of our document process automation solutions among organizations standardized on the Microsoft Dynamics® portfolio of ERP systems with new orders from companies such as Caltex, Snack Brands Australia, Flow International and SIFCO Industries.

Third Quarter Strategic Highlights

• Awarded a patent for advanced capabilities enabling the secure, unattended transmission of payments and reporting information. Leveraging Web services, these patented capabilities help ensure the seamless communication of transactions and information such as securities confirmations and check issuance files between corporate treasury departments and their banking partners.
• Appointed Marcus Hughes to the newly created role of Director of Global Marketing. In this role, Mr. Hughes will be responsible for expanding Bottomline’s brand in North America, Europe and Asia-Pacific as well as play a major role in the company’s ongoing plans for product innovation. Recognized globally as an authority on payment technologies, trade finance, financial supply chain and treasury, Mr. Hughes previously held several senior-level positions with a number of European banks, including most recently head of global trade services at Banco Santander.

• Recognized by Law Technology News for its role in enabling Vulcan Materials to accelerate law firm invoice review cycles and optimize legal spend management processes. As part of the publication’s 2008 Technology Awards, Vulcan Materials’ Legal eXchange-powered initiative earned the award for ‘Most Innovative Use of Technology by an In-House Legal Department.’
• Received a best-in-class ranking for its global cash management capabilities by research advisory firm Aite Group as part of a recent vendor evaluation.
• Delivered executive-level presentations at NACHA’s PAYMENTS 2009 conference on best practice implementation of enterprise payment hubs and the development of vertical market payment strategies. Joining Bottomline for these sessions were customers Raymond James Financial and UMB Bank.
• Announced Peter Fortune, Bottomline’s COO and President of Bottomline Europe, plans to retire from Bottomline on May 15, 2009.

Bottomline has presented supplemental non-GAAP financial measures and statements as part of this earnings release. Core net income is a non-GAAP financial measure. The non-GAAP financial measures and statements exclude certain items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses. The presentation of this non-GAAP financial information should not be considered in isolation from, 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 they allow 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 financial measures and statements 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 ended March 31, 2009 and 2008 is as follows:

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) provides collaborative payment, invoice and document automation solutions to corporations, financial institutions and banks around the world. The company’s solutions are used to streamline, automate and manage processes involving payments, global cash management, transactional documents and invoice approval. Organizations trust these solutions to meet their needs for cost reduction, competitive differentiation and optimization of working capital. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit www.bottomline.com.

Bottomline Technologies, Legal eXchange and the BT logo are trademarks of Bottomline Technologies (de), Inc. which may be registered in certain jurisdictions. All other brand/product names are trademarks of their respective holders.

Cautionary Language

This press release may contain "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. For additional discussion of factors that could impact Bottomline Technologies' financial results, refer to the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30, 2008 and December 31, 2008 and the Company’s Annual Report on Form 10-K for the year ended June 30, 2008, on file with the SEC. 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.

Non-GAAP Financial Statements

Bottomline has presented supplemental non-GAAP statements of operations as part of this earnings release. Core income, which excludes certain items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses, is a non-GAAP financial measure. The presentation of this information should not be considered in isolation from, or as a substitute for, our financial results presented in accordance with GAAP. Bottomline believes this supplemental presentation is useful to investors because it provides an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same financial statements internally to assess the ongoing performance of the company. Since this information is not in accordance with GAAP, 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. All amounts are in thousands, except per share amounts.