Bottomline Technologies Inc. CEO Discusses F1Q2011 - Earnings Call Transcript

Bottomline Technologies Inc. CEO Discusses F1Q2011 - Earnings Call Transcript
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Bottomline Technologies Inc. (



F1Q2011 Earnings Conference Call

October 21, 2010 05:00 pm EST


Robert A. Eberle – President and Chief Executive Officer

Kevin M. Donovan

– Chief Financial Officer


Jon Maietta – Needham & Company

George Sutton – Craig-Hallum

John Kraft – D.A. Davidson & Co.

Tyler Bonzynski - Stephens

Gary Prestopino – Barrington Research

Richard Davis - Cannacord

Melissa Moran - Stifel Nicolaus


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Ladies and gentlemen, thank you for standing by. And welcome to the Bottomline Technologies first quarter 2011 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded.

Statements made today may include forward-looking information subject to risks, uncertainties, and other factors that could materially affect actual results. For further information, please see Bottomline's report filed with the SEC pursuant to the Securities Exchange Act of 1934, which are available at SEC's website, During their remarks, references to Bottomline's financial results relate to non-GAAP or core financial results. These results are also referred to as core operating income, core EBITDA, core net income and core earnings per share.

A reconciliation of GAAP net income to core net income is provided in the earnings release. These results exclude amortization of intangible assets, impairment losses on equity investments, equity-based compensation, acquisition-related expenses and restructuring related costs. Throughout this call, when they refer to their financial results, it has this meaning. Bottomline will be providing forward-looking guidance on the call. A summary of the guidance provided during the call is available from the company upon request.

I would now like to turn the conference call over to our host Mr. Rob Eberle. Please go ahead.

Rob Eberle

Good afternoon. Thank you for your interest in Bottomline Technologies and welcome to the first quarter fiscal '11 earnings call. I'm delighted to report on what was another strong quarter for Bottomline.

I'm joined by Kevin Donovan, Chief Financial Officer, who will provide a detailed review of the quarter's financial results and our guidance going forward. We'll be available for questions following Kevin's remarks.

Q1 was another strong quarter for Bottomline. Revenue growth was a clear highlight of the quarter, with revenue of $42 million or 15% from the prior year. Subscription and transaction revenues of just over 11.5 million were up 39% from the prior year. Our focus on SaaS or software as a service platform is paying off as evidenced by this growth. EBIDTA was $9.5 million, up over $1 million from the prior year. Operating income was $8.2 million, also up over $1million from the prior year and operating income as a percent of revenue was 20%, a meaningful milestone from Bottomline. EPS was $0.27, a $0.03 increase from last quarter.

The first quarter was a strong quarter across our business. Two of our most strategic offerings are WebSeries and Paymode-X and I have exciting news to report on both.

We have seen particularly strong demand for our WebSeries cash management platform from leading global banks, financial institutions and corporations. This past quarter, we signed a new deal with the top five global banks for WebSeries to provide a multi-lingual, multi-currency payment solution. With our technology, the bank is better positioned to support its global customer base, attract new customers and enter new markets. In fact today, three of the top five US global banks use Bottomline Technologies to deliver leading-edge capability and service to the most important corporate customers.

Our success with global banks has attracted the attention of other industry participants. We recently formed a strategic relationship with CGI group to jointly market to leading Canadian banks and financial institutions. Headquartered in Montreal, CGI is a $4.5 billion dollar IT consulting firm with an impressive customer base. If we are successful with working with them as we hope we will be, it will mean large deals and significant revenue growth for Bottomline.

Given the demand and market opportunity we see in front of us, we are increasing our investment in our WebSeries platform to incorporate new personalization, including mobile phone banking and smart phone access and usability features that provide a flexible, sophisticated but easy and intuitive to use customer experience. We also will be incorporating links to Paymode-X providing access to our order-to-pay capability and the largest supplier network also wants solution.

The integration of Paymode-X functionality and the WebSeries will allow banks to enhance their payment applications and capture additional business by offering their clients and prospects unmatched capability in a single solution. With Paymode-X, bank customers and suppliers realize dramatic savings in processing cost by converting to electronic payments and remittance information.

For banks’ customers, the migration away from manual paper processes to electronic allows them to better control and predict their cash optimize working capital, improve performance metrics and strengthen their supplier relationships. For banks providing Bottomline’s leading platforms means market differentiation; which drives customers, revenues, profit and growth. And for Bottomline and out shareholders being the provider of choice for major banks means increased revenue growth, profit and strategic value.

The Paymode-X network has now grown over 125,000 suppliers. We have seen increased sales activity from Bank of America, increased sales proposals and increased new customers, helping to drive the growth and strategic significance of the Paymode-X network. We are also in active discussions with several new bank partners who could potentially adapt and resell the Paymode-X platform.

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