Bottomline Technologies Reports First Quarter Results

Financial Performance and Strategic Initiatives Highlight Quarter
PORTSMOUTH, N.H.--(Business Wire)--
Bottomline Technologies (NASDAQ: EPAY), a leading provider of
collaborative payment, invoice and document automation solutions,
today reported financial results for the first quarter ended September
30, 2008.

Revenues for the first quarter were $35.5 million, an increase of
13%, or $4.1 million, from the first quarter of last year. The growth
in revenues included a 20% increase in subscription and transaction
revenues over the first quarter of last year to $8.2 million in the
quarter.

Gross margin for the first quarter was $19.5 million, an increase
of $2.6 million from the first quarter of last year. Net loss for the
first quarter was $3.8 million, or net loss per share of $0.16. During
the first quarter, operating expenses of $23.7 million included
amortization of intangible assets of $4.4 million and stock-based
compensation expense of $2.2 million. Excluding acquisition-related
and stock compensation items, non-GAAP net income for the first
quarter was $2.8 million, or non-GAAP net income per share of $0.12.

"Bottomline executed well in the first quarter, achieving our
financial targets and at the same time advancing new initiatives and
key strategic relationships which will drive future growth. A prime
example is the partnership with SWIFT, which serves as a recognition
of our leading technology and global payments capabilities. While the
SWIFT relationship did not generate Q1 revenues, with a subscription
and revenue share model it will be a source of future predictable
revenues," said Rob Eberle, President and CEO of Bottomline
Technologies. "The quarter's financial results were highlighted by
subscription and transaction revenues of $8.2 million for the quarter,
which were up 20% year over year. With our current pipeline,
significant backlog and predictable model, we are confident in our
continued ability to achieve financial targets and execute against our
strategic plan."

First Quarter Customer Highlights

-- Announced an agreement with SWIFT to serve as the principal
technology partner on the development of Alliance Lite, a
Web-based connectivity option offering SWIFT members direct,
secure and low-cost access to its financial messaging network
worldwide. SWIFT is a member-owned cooperative that provides
the communications platform, products and services to connect
over 8,300 banking organizations, securities institutions and
corporate customers in more than 208 countries.

-- Added significant new customers, including AmeriServ Trust and
Financial Services, Avery Dennison Corporation, Bombardier
Aeronautique, Constellation Brands, Lafarge North America,
Western Refining Company L.P., and Kayaba, a division of
Japan's KYB Group, which selected Bottomline solutions to
increase the security, efficiency, visibility and control of
transactional processes.

-- Expanded existing deployments of Bottomline's award-winning
payments and document process automation solutions at Coty
USA, Firestone Tube Company, Ghirardelli Chocolate, John Lewis
Partnership, The NORDAM Group, Publicis, TD Ameritrade, Trust
Industrial Bank and UK-based Norwich Union, an Aviva company.

-- Increased adoption of Bottomline's global payments and cash
management platform through new relationships and expanded
implementations at large banks and financial institutions in
North America, Europe and Asia-Pacific.

-- Continued momentum in the healthcare vertical with new orders
for Bottomline's medical forms automation solutions from
Community Hospital Anderson, Emergency Consultants, MedStar
Health, MetroSouth Medical Center, San Juan Health Services
District, Our Lady of Lourdes Regional Medical Center and
Wellmont Health System.

First Quarter Strategic Highlights

-- Introduced Legal eXchange(TM) Explorer, a sophisticated new
tool that builds on the strengths of Legal eXchange,
Bottomline's Software as a Service solution, to enable users
to conduct comparative, multi-level invoice review and law
firm and matter trend analysis.

-- Expanded Bottomline's global banking presence with the
appointment of industry veteran and company executive, Chris
Peck, to Managing Director of Banking for Europe, the Middle
East and Africa.

-- Received a patent from the United States Patent and Trademark
Office for technology related to automated, rules-based
validation of inbound invoices, further strengthening
Bottomline's competitive differentiators for electronic
invoice management.

-- Delivered MedEx(R) 2.0, a next-generation medical forms
automation solution that allows healthcare providers of all
sizes to accelerate the creation and delivery of documents and
form sets, including those associated with admissions, patient
consent, clinical compliance, payments and billing.

-- Hosted third annual Legal Spend Management Customer Advisory
Board Conference in Boston, bringing together industry
executives from some of the nation's largest property &
casualty insurers and Fortune 500 organizations.

-- Announced expanded support for the Microsoft(R) Dynamics
portfolio of ERP systems with new capabilities for automating
business-critical transactional processes within Microsoft
Dynamics NAV.

Bottomline has presented supplemental non-GAAP financial measures
and statements as part of this earnings release. 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 month periods ended September 30,
2008 and 2007 is as follows:

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*T
Three Months Ended
September 30,
(in thousands)
------------------------------------
2008 2007
------------------------------------
GAAP net loss $ (3,849) $ (801)
Amortization of intangible assets 4,436 2,647
Acquisition-related expenses 35 -
Stock compensation expense 2,210 1,927
------------------------------------
Non-GAAP net income $ 2,832 $ 3,773
------------------------------------
*T

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 and
transactions involving global payments, invoice approval,
purchase-to-pay, collections, cash management and document process
automation. 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, MedEx 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 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 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.

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Bottomline Technologies
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)

Three Months
Ended
September 30,
2008 2007
-----------------
Revenues:
Software licenses $ 3,606 $ 3,365
Subscriptions and transactions 8,229 6,842
Service and maintenance 21,149 17,685
Equipment and supplies 2,522 3,470
-----------------

Total revenues 35,506 31,362

Cost of revenues:
Software licenses 200 188
Subscriptions and transactions 4,117 3,971
Service and maintenance (1) 9,873 7,831
Equipment and supplies 1,854 2,524
-----------------

Total cost of revenues 16,044 14,514
-----------------

Gross profit 19,462 16,848

Operating expenses:
Sales and marketing (1) 8,638 7,519
Product development and engineering (1) 5,423 4,226
General and administrative (1) 5,172 4,459
Amortization of intangible assets 4,436 2,647
-----------------

Total operating expenses 23,669 18,851
-----------------

Loss from operations (4,207) (2,003)

Other income, net 148 897
-----------------

Loss before benefit for income taxes (4,059) (1,106)
Benefit for income taxes (210) (305)
-----------------

Net loss $(3,849) $ (801)

Basic and diluted net loss per share $ (0.16) $ (0.03)
-----------------

Shares used in computing basic and diluted net loss
per share: 23,883 23,602
-----------------

Non-GAAP (excludes amortization of intangible
assets, acquisition-related expenses and stock
compensation expense):(2)
Net income $ 2,832 $ 3,773
-----------------
Diluted net income per share (3) $ 0.12 $ 0.16
-----------------

(1) Stock-based compensation is allocated as
follows:
Cost of revenues: service and maintenance $ 260 $ 232
Sales and marketing 696 612
Product development and engineering 202 183
General and administrative 1,052 900
-------- --------
$ 2,210 $ 1,927
======== ========
(2) Non-GAAP presentation excludes charges for amortization of
intangible assets of $4,436 and $2,647, acquisition-related expenses
of $35 and zero, and stock compensation expense of $2,210 and $1,927,
for the three months ended September 30, 2008 and 2007, respectively.

(3) Shares used in computing non-GAAP diluted net income per share
were 24,300 and 24,150 for the three months ended September 30, 2008
and 2007, respectively.
*T

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Bottomline Technologies
Unaudited Condensed Consolidated Balance Sheets
(in thousands)

September 30, June 30,
2008 2008
------------------------

Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 30,375 $ 35,373
Accounts receivable 30,026 28,747
Other current assets 5,276 6,157
------------------------

Total current assets 65,677 70,277

Property and equipment, net 11,396 11,840
Intangible assets, net 105,290 115,414
Other assets 2,284 1,235
------------------------

Total assets $ 184,647 $ 198,766
========================

Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,628 $ 8,856
Accrued expenses 10,268 10,997
Deferred revenue 28,954 30,621
------------------------

Total current liabilities 45,850 50,474

Deferred revenue, non-current 5,917 3,856
Deferred income taxes 3,109 4,179
Other liabilities 1,775 1,992
------------------------

Total liabilities 56,651 60,501

Stockholders' equity
Common stock 26 26
Additional paid-in-capital 280,233 277,660
Accumulated other comprehensive (loss)
income (259) 7,766
Treasury stock (23,163) (22,195)
Accumulated deficit (128,841) (124,992)
------------------------

Total stockholders' equity 127,996 138,265
------------------------

Total liabilities and stockholders' equity $ 184,647 $ 198,766
========================
*T

Non-GAAP Financial Statements

Bottomline has presented supplemental non-GAAP statements of
operations as part of this earnings release. The non-GAAP statements
of operations exclude certain items, specifically amortization of
intangible assets, stock-based compensation and acquisition-related
expenses. The presentation of this 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 statements of operations 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
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.

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Non-GAAP
Three Months
Ended
September 30,
2008 2007
-----------------
Revenues:
Software licenses $ 3,606 $ 3,365
Subscriptions and transactions 8,229 6,842
Service and maintenance 21,149 17,685
Equipment and supplies 2,522 3,470
-----------------

Total revenues 35,506 31,362

Cost of revenues:
Software licenses 200 188
Subscriptions and transactions 4,117 3,971
Service and maintenance 9,612 7,599
Equipment and supplies 1,854 2,524
-----------------

Total cost of revenues 15,783 14,282
-----------------

Gross profit 19,723 17,080

Operating expenses:
Sales and marketing 7,942 6,907
Product development and engineering 5,221 4,043
General and administrative 4,086 3,559
-----------------

Total operating expenses 17,249 14,509
-----------------

Non-GAAP income from operations 2,474 2,571

Other income, net 148 897
-----------------

Non-GAAP income before benefit for income taxes 2,622 3,468
Benefit for income taxes (210) (305)
-----------------

Non-GAAP net income $ 2,832 $ 3,773

Diluted non-GAAP net income per share $ 0.12 $ 0.16
*T

Bottomline Technologies
Kevin Donovan, 603-501-5240
kdonovan@bottomline.com

Copyright Business Wire 2008