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2016-08-25

Bottomline Technologies, Inc.: Bottomline Technologies Reports Fourth Quarter and Fiscal Year 2016 Results

Strong Growth in Subscription and Transaction Revenue Highlights Fourth
Quarter

PORTSMOUTH, N.H., Aug. 25, 2016 (GLOBE NEWSWIRE) -- Bottomline Technologies
(NASDAQ:EPAY), a leading provider of cloud-based business payment, invoice
and digital banking solutions, today reported financial results for the
fourth quarter and fiscal year ended June 30, 2016.

Subscription and transaction revenues, which are primarily related to the
company's cloud platforms, increased 14% from the fourth quarter of last year
to $50.9 million, or 15% on a constant currency basis. Revenues overall for
the fourth quarter were $88.1 million, an increase of $2.7 million, or 3%
from the fourth quarter of last year, and 5% on a constant currency basis.

Gross margin for the fourth quarter was $49.7 million, an increase of $0.4
million from the fourth quarter of last year. Net loss for the fourth
quarter was $5.9 million compared to a net loss of $21.6 million for the
fourth quarter of last year. Net loss per share was $0.16 in the fourth
quarter compared to $0.57 in the fourth quarter of last year.

Core net income for the fourth quarter was $14.2 million. Core net income
excludes certain items as discussed in the "Non-GAAP Financial Measures"
section that follows. Core earnings per share was $0.37 for the three months
ended June 30, 2016 as compared to $0.35 for the three months ended June 30,
2015.

"We have innovative products to make the complex process of business payments
efficient and secure, and the market is responding as evidenced by our
Subscription and Transaction Bookings results which are up year over year 93%
for the fourth quarter and 79% for the year," said Rob Eberle, President and
CEO of Bottomline Technologies. "With strong results and a predictable
business model we view our stock at its current price to be an attractive use
of capital and are announcing a $60 million share repurchase program. We are
committed to driving shareholder value and confident the sales results
achieved in FY16 and our execution in FY17 will achieve this goal."

Revenues for the year ended June 30, 2016 were $343.3 million compared to
$330.9 million for the year ended June 30, 2015. Subscription and
transaction revenues increased by 14%, or 15% on a constant currency basis,
to $195.2 million for the year ended June 30, 2016 from $171.4 million for
the year ended June 30, 2015. Net loss for the year ended June 30, 2016 was
$19.6 million as compared to $34.7 million for the year ended June 30, 2015.
Net loss per share was $0.52 for the year ended June 30, 2016 compared to
$0.92 for the year ended June 30, 2015.

Core net income for the year ended June 30, 2016 was $58.4 million as compared
to $55.2 million for the year ended June 30, 2015. Core net income excludes
certain items as discussed in the "Non-GAAP Financial Measures" section that
follows. Core earnings per share was $1.52 for the year ended June 30, 2016
as compared to $1.44 for the year ended June 30, 2015.

In the information above, we have presented certain non-GAAP financial
measures. As more fully discussed in the "Non-GAAP Financial Measures"
section of this earnings release, we are changing the methodology for the
income tax effects of our non-GAAP adjustments and, going forward, only the
new methodology will be used. A comparison of the new methodology versus the
old methodology is also presented below.

Fourth Quarter Customer Highlights

* Seventeen leading institutions selected Paymode-X, Bottomline's leading
cloud-based payments automation platform.
* Signed four new Digital Banking deals, including one customer for our
Digital Banking 3.0 solution, helping banks to compete and win business in
their corporate and SMB segments by deploying innovative digital
capabilities.
* Seven leading organizations, including American National Insurance and
American Reliable Insurance, chose Bottomline's cloud-based legal spend
management solutions to automate, manage and control their legal spend.
* Companies such as Share Registrars Ltd, DCC Management Services Limited and
Shawbrook Bank selected Bottomline's Financial Messaging solution to
improve operating efficiencies and optimize the effectiveness of their
financial transactions by utilizing the SWIFT global network.
* Organizations such as SEI Global Services and MediaOcean chose Bottomline's
payment automation solutions to extend their payments capabilities and
improve efficiencies.

Fourth Quarter Strategic Corporate Highlights

* Announced that Bottomline won four out of eight awards in Aite Group's 2016
Cash Management Vendor Evaluation. The study, which profiles and compares
the offerings and strategies of leading cash management vendors in the
U.S., awards those vendors who stand out among their peers. Bottomline was
a recipient of: Best User Experience, Best Small Business Capabilities,
Best Partner and Most Open Architecture.
* Announced the appointment of Mr. Peter Gibson and Mr. Benjamin E. Robinson
III to the Board of Directors. Mr. Gibson is Co-CEO of Knowledgent Group, a
data analytics and technology firm headquartered in Warren, NJ. Mr.
Robinson previously held a number of executive roles at Prudential
Corporation, most recently including Senior Vice President and Chief
Administration Officer for Prudential Annuities.
* Announced the release of a mobile payment solution for the UK in
cooperation with Barclays. The solution allows organizations to send
payments in minutes to recipients using only a phone number, without the
recipient surrendering bank account details or sensitive payment
information. The innovative new solution is being marketed as a faster,
more convenient and lower cost alternative to issuing checks.

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 and constant currency information are non-GAAP financial
measures.

Core net income and core earnings per share exclude certain items,
specifically amortization of acquired intangible assets, stock-based
compensation, acquisition and integration-related expenses, restructuring
related costs, minimum pension liability adjustments, non-core charges
associated with our convertible notes, global ERP system implementation costs
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 the
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, integration related professional services
costs and other incremental charges we incur as a direct result of
acquisition and integration efforts. Global enterprise resource planning
(ERP) system implementation costs relate to direct and incremental costs
incurred in connection with our implementation of a new, global ERP solution
and the related technology infrastructure.

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.

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.

In May 2016, the SEC issued new guidance regarding non-GAAP financial
measures, including guidance on how income tax effects should be presented in
respect of non-GAAP adjustments. This guidance clarified that the income tax
effects of non-GAAP adjustments should be shown as a single line and,
further, that the calculation should be based on the tax rate that would
apply based on the level of non-GAAP profitability. The reconciliations that
follow include reconciliations reflecting this new methodology, which shows
its impact on the non-GAAP financial measures for the fourth quarter and
fiscal year periods ending June 30, 2016 and 2015. Going forward, we will
only be presenting non-GAAP information using the new methodology.

The new non-GAAP tax presentation has no impact on cash taxes actually paid,
on EBITDA, or on Core Operating Income. The new presentation does not take
into account GAAP expenses which have and will continue to generate
deductions. In addition, we have accumulated net operating losses of $83
million in the US and $96 million overall which can be used to offset future
tax payments.

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.

We also disclose Subscription and Transaction Bookings. This amount reflects
a comparable metric of sales activity despite variations in contract lengths
and terms. This amount is defined as the one-year value of new order
invoicing, excluding installation and other one-time fees, which are
contractually obligated or anticipated to recur on an annual basis once the
customer is fully implemented and is fully utilizing the system. It is not a
non-GAAP measure.

Non-GAAP Financial Measures (Continued)

Old Methodology
A reconciliation of our GAAP results to our non-GAAP results using the old
methodology for the three and twelve months ended June 30, 2016 and 2015 is
as follows:

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