8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 8, 2019

Bottomline Technologies (de), Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	000-25259	02-0433294
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
325 Corporate Drive, Portsmouth, New Hampshire		03801
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (603) 436-0700

Not Applicable.

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Common Stock, $.001 par value per share	EPAY	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operations and Financial Condition

On August 8, 2019, Bottomline Technologies (de), Inc. announced its financial results for the quarter and fiscal year ended June 30, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release issued by the company on August 8, 2019.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BOTTOMLINE TECHNOLOGIES (de), INC.
August 8, 2019	By:	/s/ Eric K. Morgan
		Eric K. Morgan
		Executive Vice President, Global Controller

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by the company on August 8, 2019

EX-99.1

Exhibit 99.1

    

Bottomline Technologies Reports Fourth Quarter Results

Strong Subscription and Transaction Bookings Highlights Fourth Quarter

PORTSMOUTH, N.H. – August 8, 2019 – Bottomline Technologies (Nasdaq:EPAY), a leading provider of financial technology that helps make complex business payments simple, smart and secure, today reported financial results for the fourth quarter ended June 30, 2019.

Subscription and transaction revenues were $79.1 million for the fourth quarter, up 11%, or 13% on a constant currency basis, as compared to the fourth quarter of last year. Revenues overall for the fourth quarter were $108.2 million, up 2%, or 3% on a constant currency basis, as compared to the fourth quarter of last year. Constant currency growth is calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

GAAP net income for the fourth quarter was $3.6 million, which was 3% of overall revenue. GAAP net income per share was $0.09 in the fourth quarter.

Adjusted EBITDA for the fourth quarter was $25.0 million, which was 23% of overall revenue. Core earnings per share was $0.34 for the fourth quarter. Adjusted EBITDA and core earnings per share are calculated as discussed in the “Non-GAAP Financial Measures” section that follows.

“Bottomline delivered a solid fourth quarter performance,” said Rob Eberle, President and CEO. “We had notable customer wins across our banking and business payments platforms as customers continued to choose Bottomline for innovative and highly secure business payments solutions. Our product strategy and execution are targeted to drive sustained growth for years to come.”

Fiscal 2019 Financial Highlights:

• Subscription and transaction revenues for the year were $295.6 million, up 13%, or 14% on a constant currency basis from prior year.

• Revenues overall for the year were $422.0 million, up 7%, or 8% on a constant currency basis from prior year.

• GAAP net income for the year was $9.4 million compared to a GAAP net income of $9.3 million the prior year. GAAP net income per share was $0.23 in the year compared to a GAAP net income per share of $0.24 in the prior year.

• Adjusted EBITDA for the year was $100.2 million, up from $93.7 million last year

• Core earnings per share for the year was $1.35 compared to $1.27 in the prior year.

Fourth Quarter Customer Highlights

• 22 organizations, including one of the largest auto manufacturers, a major athletic shoe and apparel brand, a leading grocer, several hospitals and healthcare providers and two well-known universities, selected Paymode-X to provide AP automation, increase cyber security and earn cash rebates.

• 6 banks selected Bottomline’s banking solutions platforms to help them compete and grow their corporate and business banking franchises by deploying innovative digital capabilities.

• 5 organizations, including SunPoint Holdings and Aspen Insurance (UK), chose Bottomline’s legal spend management solutions to automate, manage and control their legal spend.

• Companies such as Helvetische Bank and Crown Agents Bank selected Bottomline’s Financial Messaging solution to improve operating efficiencies and optimize the effectiveness of their financial transactions.

Fourth Quarter Strategic Corporate Highlights

• Visa announced its B2B Visa Connect solution in partnership with Bottomline, giving financial institutions the ability to quickly and securely process high-value corporate cross-border payments globally.

• Announced a new offering to the Bottomline Legal Solutions platform, PartnerSelect – Law Firm Analytics. The new capabilities are designed to help law firms manage carrier relationships and gain insight into case assignments, performance and billing compliance.

• Released the 2019 B2B Payments and Working Capital Management Strategies Survey. Results show that across the B2B payments landscape, partnering with fintechs will be the strategy of choice for a majority of banks and a growing number of corporates.

• Announced partnership with Starling Bank to launch the Real Time Payments Express Service to the market, enabling banks and corporates to send and receive payments in real time to any UK bank account.

• Launched PTX Account Visibility in the UK, a value-add offering that enables corporates to access multiple bank account balances, transactions and statement information in one place.

• Launched Bottomline’s fourth annual Business Payments Barometer research report, which gauges the pulse of corporate payments across businesses in Great Britain.

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, core earnings per share, constant currency information, adjusted EBITDA and adjusted EBITDA as a percent of revenue are all non-GAAP financial measures.

Core net income and core earnings per share exclude certain items, specifically amortization of acquisition related intangible assets, stock-based compensation, acquisition and integration-related expenses, restructuring related costs, minimum pension liability adjustments, non-core charges associated with certain debt instruments, global enterprise resource planning (ERP) system implementation and other costs and other non-core or non-recurring benefits or expenses that may arise from time to time.

Non-core charges associated with our debt instruments consist of amortization of debt issuance and debt discount costs. Acquisition and integration-related expenses include legal and professional fees and other direct transaction costs associated with business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services and integration related professional services costs and other incremental charges we incur as a direct result of acquisition and integration efforts. Global ERP system implementation and other costs relate to direct and incremental costs incurred in connection with our multi-phase implementation of a new, global ERP solution and the related technology infrastructure and costs related to our implementation of the new revenue recognition standard under US GAAP.

Periodically, such as in periods that include significant foreign currency volatility, we present certain metrics on a “constant currency” basis, to show the impact of period to period results normalized for the impact of foreign currency rate changes. We calculate constant currency information by translating prior period financial results using current period foreign exchange rates.

Adjusted EBITDA and adjusted EBITDA as a percent of revenue represent our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization and other charges, as noted in the reconciliation that follows.

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.

Non-GAAP Financial Measures (Continued)

Reconciliation of Core Net Income

A reconciliation of core net income to GAAP net income for the three and twelve months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended June 30,						Twelve Months Ended June 30,
	2019			2018			2019			2018
	(in thousands)
GAAP net income	$	3,557		$	11,483		$	9,432		$	9,328
Amortization of acquisition-related intangible assets		5,527			5,368			21,336			22,076
Stock-based compensation plan expense		9,789			9,068			41,695			34,200
Acquisition and integration-related expenses		1,682			968			4,648			2,564
Restructuring expense (benefit)		(82	)		19			1,881			1,495
Minimum pension liability adjustments		512			(11	)		264			24
Amortization of debt issuance and debt discount costs		103			109			414			6,502
Legal settlement		—			1,269			—			1,269
Global ERP system implementation and other costs		285			1,457			3,395			6,430
Other non-core expense (benefit) (1)		550			(3,850	)		550			(3,850	)
Gain on sale of investment		(7,362	)		(2,419	)		(7,599	)		(2,419	)
Non-recurring tax benefit (2)		—			(3,637	)		—			(8,039	)
Tax effects on non-GAAP income		(187	)		(5,659	)		(19,848	)		(19,694	)
Core net income	$	14,374		$	14,165		$	56,168		$	49,886

⁽¹⁾  Consists of non-core expenses and benefits that arise from time to time. The non-core benefit for the three and twelve months ending June 30, 2018 relates primarily to non-recurring other income of $3.7 million recorded in connection with an investment sale.

⁽²⁾  The non-recurring tax benefit in the three and twelve months ended June 30, 2018 reflects the net tax benefit recorded as a result of the U.S. Tax Cuts and Jobs Act, principally from the revaluation of U.S.-based deferred tax liabilities.

Reconciliation of Diluted Core Earnings per Share

A reconciliation of our diluted core earnings per share to our GAAP diluted net income per share for the three and twelve months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended June 30,						Twelve Months Ended June 30,
	2019			2018			2019			2018
GAAP diluted net income per share	$	0.09		$	0.28		$	0.23		$	0.24
Plus:
Amortization of acquisition-related intangible assets		0.13			0.13			0.51			0.56
Stock-based compensation plan expense		0.23			0.23			1.00			0.87
Acquisition and integration-related expenses		0.04			0.03			0.11			0.06
Restructuring expense		—			—			0.05			0.04
Global ERP system implementation and other costs		0.01			0.04			0.08			0.16
Other non-core expense (benefit)		0.01			(0.10	)		0.01			(0.10	)
Minimum pension liability adjustments		0.01			—			0.01			—
Gain on sale of investment		(0.17	)		(0.06	)		(0.18	)		(0.06	)
Amortization of debt issuance and debt discount costs		—			—			0.01			0.17
Legal settlement		—			0.03			—			0.03
Non-recurring tax benefit		—			(0.09	)		—			(0.20	)
Tax effects on non-GAAP income		(0.01	)		(0.14	)		(0.48	)		(0.50	)
Diluted core earnings per share	$	0.34		$	0.35		$	1.35		$	1.27

Non-GAAP Financial Measures (Continued)

A reconciliation of our non-GAAP weighted average shares used in computing diluted core earnings per share to our GAAP weighted average shares used in computing basic and diluted net income per share for the three and twelve months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended June 30,				Twelve Months Ended June 30,
	2019		2018		2019		2018
Numerator:
Core net income	$	14,374	$	14,165	$	56,168	$	49,886
Denominator:
Weighted average shares used in computing basic net income per share for GAAP		41,214		38,743		40,612		38,227
Impact of dilutive securities (shares related to conversion feature on convertible senior notes, stock options, warrants, restricted stock awards and employee stock purchase plan) (1)		599		1,573		1,079		1,099
Weighted average shares used in computing diluted core earnings per share		41,813		40,316		41,691		39,326

⁽¹⁾  These securities are dilutive on a GAAP basis in periods where we report GAAP net income. These securities are anti-dilutive on a GAAP basis in periods where we report GAAP net loss.

Constant Currency Reconciliation

The table below is a comparative summary of our total revenues and our subscription and transaction revenues shown with a constant currency growth rate:

	Three Months Ended June 30,				% Increase
	2019		2018		GAAP Growth Rate			Impact from Currency			Constant Currency Growth Rates (1)
	(in thousands)
Subscription and transaction Revenues	$	79,075	$	71,084		11	%		2	%		13	%
Total Revenues		108,241		106,469		2	%		1	%		3	%

	Twelve Months Ended June 30,				% Increase
	2019		2018		GAAP Growth Rate			Impact from Currency			Constant Currency Growth Rates (1)
	(in thousands)
Subscription and transaction Revenues	$	295,633	$	262,363		13	%		1	%		14	%
Total Revenues		421,962		394,096		7	%		1	%		8	%

⁽¹⁾  Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating prior-period results using current period GAAP foreign exchange rates.

Non-GAAP Financial Measures (Continued)

Reconciliation of Adjusted EBITDA

A reconciliation of our adjusted EBITDA to GAAP net income for the three and twelve months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended June 30,						Twelve Months Ended June 30,
	2019			2018			2019			2018
GAAP net income	$	3,557		$	11,483		$	9,432		$	9,328
Adjustments:
Other expense (income), net (1)		(6,514	)		(4,582	)		(3,417	)		4,706
Income tax provision (benefit)		3,566			(4,172	)		(2,538	)		(8,203	)
Depreciation and amortization		6,144			5,356			22,911			19,994
Amortization of acquisition-related intangible assets		5,527			5,368			21,336			22,076
Stock-based compensation plan expense		9,789			9,068			41,695			34,200
Acquisition and integration-related expenses		1,682			968			4,648			2,564
Restructuring expense (benefit)		(82	)		19			1,881			1,495
Minimum pension liability adjustments		512			(11	)		264			24
Legal settlement		—			1,269			—			1,269
Global ERP system implementation and other costs		285			1,457			3,395			6,430
Other non-core expense (benefit)		550			(150	)		550			(150	)
Adjusted EBITDA	$	25,016		$	26,073		$	100,157		$	93,733

⁽¹⁾  On July 1, 2018, we adopted an accounting standard update that changes the classification of certain pension related items. Accordingly, pension related benefits of approximately $0.2 million and $0.7 million were reclassified from income from operations to other expense, net for the three and twelve months ended June 30, 2018, respectively, in our consolidated statement of operations. For purposes of the reconciliation of adjusted EBITDA, we have presented pension related adjustments discretely, not as a component of other expense, net.

Adjusted EBITDA as a percent of Revenue

A reconciliation of GAAP net income as a percent of revenue to adjusted EBITDA as a percent of revenue for the three and twelve months ended June 30, 2019 and 2018 is as follows:

	Three Months Ended June 30,						Twelve Months Ended June 30,
	2019			2018			2019			2018
GAAP net income as a percent of revenue		3	%		11	%		2	%		2	%
Adjustments:
Other expense (income), net		(6	%)		(4	%)		(1	%)		1	%
Income tax provision (benefit)		3	%		(4	%)		(1	%)		(2	%)
Depreciation and amortization		6	%		5	%		6	%		5	%
Amortization of acquisition-related intangible assets		5	%		5	%		5	%		6	%
Stock-based compensation plan expense		9	%		8	%		10	%		8	%
Acquisition and integration-related expenses		2	%		1	%		1	%		1	%
Restructuring expense		0	%		0	%		1	%		0	%
Global ERP system implementation and other costs		0	%		1	%		1	%		2	%
Other non-core expense		1	%		0	%		0	%		0	%
Legal settlement		0	%		1	%		0	%		1	%
Adjusted EBITDA as a percent of revenue		23	%		24	%		24	%		24	%

About Bottomline Technologies

Bottomline Technologies (Nasdaq: EPAY) helps make complex business payments simple, smart, and secure. Corporations and banks rely on us for state of the art domestic and international payments, efficient cash management, payment processing, bill review, and fraud detection, behavioral analytics and regulatory compliance solutions. Thousands of corporations around the world benefit from Bottomline solutions. Headquartered in Portsmouth, NH, Bottomline delights customers through offices across the U.S., Europe, and Asia-Pacific. For more information visit www.bottomline.com.

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

In connection with this earning’s release and our associated conference call, we will be posting additional material financial information (such as financial results, non-GAAP financial projections and non-GAAP to GAAP reconciliations) within the “Investors” section of our website at www.bottomline.com/us/about/investors.

Cautionary Language

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements reflecting our expectations about our ability to execute on our strategic plans, achieve future growth and profitability and increase shareholder value. Any statements that are not statements of historical fact (including but not limited to statements containing the words “believes,” “plans,” “anticipates,” “expects,” “look forward”, “confident”, “estimates,” “targeted” and similar expressions) should be considered to be forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors including, among others, 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’ operational and financial results, refer to our Form 10-K for the fiscal year ended June 30, 2018 and the subsequently filed Form 10-Q’s and Form 8-K’s or amendments thereto. 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.

Media Contact:

Rick Booth

Bottomline Technologies

603.501.6270

rbooth@bottomline.com

Bottomline Technologies
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
	Three Months Ended June 30,					Twelve Months Ended June 30,
	2019			2018		2019		2018
Revenues:
Subscriptions and transactions	$	79,075		$	71,084	$	295,633	$	262,363
Software licenses		2,410			2,158		16,389		10,277
Service and maintenance		25,848			29,675		105,895		114,926
Other		908			3,552		4,045		6,530
Total revenues		108,241			106,469		421,962		394,096
Cost of revenues:
Subscriptions and transactions		32,823			31,672		127,467		117,076
Software licenses		256			183		923		815
Service and maintenance		13,116			13,324		51,168		52,519
Other		700			734		3,161		3,032
Total cost of revenues		46,895			45,913		182,719		173,442
Gross profit		61,346			60,556		239,243		220,654
Operating expenses:
Sales and marketing		24,493			22,840		95,265		86,095
Product development and engineering		17,097			15,519		67,364		57,500
General and administrative		13,255			14,280		52,199		49,869
Amortization of acquisition-related intangible assets		5,527			5,368		21,336		22,076
Total operating expenses		60,372			58,007		236,164		215,540
Income from operations		974			2,549		3,079		5,114
Other income (expense), net		6,149			4,762		3,815		(3,989	)
Income before income taxes		7,123			7,311		6,894		1,125
Income tax benefit (provision)		(3,566	)		4,172		2,538		8,203
Net income	$	3,557		$	11,483	$	9,432	$	9,328
Net income per share:
Basic	$	0.09		$	0.30	$	0.23	$	0.24
Diluted	$	0.09		$	0.28	$	0.23	$	0.24
Shares used in computing net income per share:
Basic		41,214			38,743		40,612		38,227
Diluted		41,813			40,316		41,691		39,326

Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
	June 30,			June 30,
	2019			2018
ASSETS
Current assets:
Cash, cash equivalents and marketable securities	$	99,705		$	131,872
Cash and cash equivalents, held for customers		5,637			2,753
Accounts receivable		77,285			74,305
Other current assets		30,434			19,781
Total current assets		213,061			228,711
Property and equipment, net		54,541			28,895
Goodwill and intangible assets, net		374,450			361,809
Other assets		27,177			16,553
Total assets	$	669,229		$	635,968
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,947		$	10,251
Accrued expenses and other current liabilities		33,945			34,994
Customer account liabilities		5,637			2,753
Deferred revenue		75,097			75,356
Total current liabilities		125,626			123,354
Borrowings under credit facility		110,000			150,000
Deferred revenue, non-current		17,062			23,371
Deferred income taxes		10,345			8,367
Other liabilities		26,819			19,944
Total liabilities		289,852			325,036
Stockholders’ equity
Common stock		47			45
Additional paid-in-capital		721,438			678,549
Accumulated other comprehensive loss		(43,593	)		(30,633	)
Treasury stock		(127,095	)		(129,914	)
Accumulated deficit		(171,420	)		(207,115	)
Total stockholders’ equity		379,377			310,932
Total liabilities and stockholders’ equity	$	669,229		$	635,968