Bottomline Technologies, Inc.

Greetings. Welcome to Bottom Line Technology's fourth quarter and fiscal year 2021 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the call over to your host, Angela White, Vice President of Investor Relations. Thank you. You may begin.

Good afternoon, everyone. Welcome to Bottom Line's fourth quarter and fiscal 2021 earnings conference call. I'm Angela White, and joining me this afternoon are Rob Eberle, Bottom Line's CEO, and Bruce Bowden, CFO. Statements made on today's call will include forward-looking statements about Bottom Line's future expectations, plans, and prospects. These statements are subject to risks, uncertainties, and assumptions, including those related to the impact of COVID-19 on our business and global economic conditions. Our forward-looking guidance is based on assumptions as to the macroeconomic environment today. Many of these assumptions relate to matters beyond our control. Please refer to the cautionary language in today's earnings release and Bottom Line's most recent periodic reports filed with the SEC for discussion of the risks and uncertainties that could cause the company's actual results to be materially different from those contemplated in these forward-looking statements. We do not assume any obligation to update forward-looking statements. During the call, Bottom Line's financial results are presented on a non-GAAP basis, These non-GAAP results include, among others, gross margin, operating income, EBITDA, net income, and earnings per share. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is available in the investor relations section of our website. A summary of the guidance provided during the call is available from the company upon request. Now let me turn the call over to Rob for his remarks.

Thank you, Angela. Good afternoon, and welcome to the bottom line fourth quarter fiscal 21 earnings call. As always, we appreciate your interest in Bottom Line. Joining me today is Bruce Bowden, our CFO. Bruce will provide a detailed review of our financial results and then our future outlook. Then after his remarks, we'll both be available for questions. The fourth quarter was in many ways an excellent quarter for Bottom Line. We had an acceleration in subscription revenue growth. We had particularly strong subscription revenue growth in our key payment platforms, PayModeX and PTX. We had strong bookings, evidencing the demand for our solutions and positioning us well for growth in FY22. We made significant advancements in our product set, with both enhancements to current offerings and an ambitious and exciting new product pipeline. We continue to post attractive EBITDA margins And but for a weaker than expected quarter in one area, legal spend management, we would have achieved our Q4 subscription revenue growth target. All in all, we're very pleased with the fourth quarter and have completed the fiscal year in a strong position. We enter the new year confident in our ability to execute against our highest priority, driving our overall subscription and transaction revenue growth. I'll provide an update on our key product lines and why we're so excited about our position in the marketplace and confident about the coming year in just a moment. But first, I'll briefly cover the key financial results for the quarter. Subscription revenue was 101 million, reflecting year-over-year growth of 15%. Subscription bookings in the quarter were 25.7 million, a significant step up from last quarter's bookings. Total revenue in Q4 was $122 million, or year-over-year growth of 10%. EBITDA in Q4 was $24.2 million, and we achieved our committed goal of $100 million EBITDA for the year. Looking a bit deeper at growth in the quarter, we had really strong results in our key payment platforms, PayModeX, and PTX. We had slower growth in legal spend management than we'd hoped or expected as a recovery of transaction volumes from COVID is occurring, but slower than anticipated. Our digital banking product set had a tough year over year compare as expected based on the acquisition of a customer a year ago. Subscription revenue growth excluding legal spend management was 18%. Subscription revenue growth excluding banking solutions was 21 percent. And subscription growth for our key payment platforms, PayModeX and PTX, was 27 percent. So, lots of highlights in the quarter. You can understand why we're pleased with our results for Q4 and excited about our position as we enter the new fiscal year. Our results in the quarter evidence our future opportunity. Bottom line is a trusted brand and leading player in B2B payments, well positioned to continue to drive growth. Across our major product categories, cloud-based payment platforms, digital banking, and legal spend, we're delivering market-leading products backed by an aggressive innovation agenda. I'd like to now take a moment to cover those major product lines. Let's start with our cloud-based payment platforms. Our highest growth product lines are bottom line. Our PayModex and PTX solutions address a large and attractive market. We help businesses pay and get paid in a manner that is simple, smart, and secure. Simple in that our platforms seamlessly integrate with existing systems, are intuitive in design, and rich in optionality. as our platforms allow a business to use the best payment vehicle or rail for any given payment or business partner. That integrated payment capability and intelligent routing is just one of our competitive advantages. Finally, and critically, secure, as our payment platforms bring enhanced cybersecurity in a world where nothing's more important. It all adds up to the optimal way for a business to pay and get paid. In the U.S., our PayModex is the leading business payment platform for major business banks. Leading businesses across a wide range of industries utilize our platform. We signed 32 new PayModex payers in the fourth quarter, and we continue to advance the size, scale, and capabilities of the network. An area of particular focus is vendor enrollment, where we've made significant progress in technology advancements. Vendor enrollment is a valuable capability for our payers and critical in driving revenue for bottom line. In the UK, we're the predominant provider of BACs and electronic business payments. Businesses rely on our PTX technology not just to make payments, but to get paid as well as we provide both payment and direct debit. With open banking, We continue to expand the capabilities we offer our UK business customers. We've released PTX Secure Payments Pro, a machine learning-based solution that provides additional fraud protection to all platform customers to help them know who they pay. It's a prime example of our leveraging our leading business payment position in the UK to bring forth new innovation. We see and are executing against the opportunity to build the world's leading and largest business payment franchise. Our cloud payment platforms have an annual revenue run rate of 120 million and grew 27% in the fourth quarter. The TAM for these capabilities is massive. Some estimate 20 billion, and we see a super strong future ahead. Turning now to our digital banking solutions, our DBIQ product, which we sell to banks for them to interface with and service their business customers, continues to be the leader in the banking platform's market. This is the result of our market experience, product and technology, vision, investment, and execution. It's an incredibly valuable position. During the quarter, three banks chose our digital banking product, and we expanded our relationship with a large global bank with over $600 billion in assets. We're the face of the banks we work with to the thousands of business customers. Today, almost 200,000 businesses are active on our banking platform, and when all of our current platform implementations are completed, that number could be 400,000 businesses. Deploying our platform is one of the ways banks more effectively compete for new customers, retain and grow wallet share from existing customers, and grow their business banking franchise. They rely on us to compete, compete against other banks in their geography or region, and increasingly against non-bank fintechs and challenger banks. And they count on us to be first with new innovation, new capabilities, and expanded opportunities for customer adoption and revenue. Being a mission-critical platform gives us significant add-on sales and growth opportunities. We've had very good success with add-on fraud solutions, and we're bringing out analytics and insight platforms as well. With the millions of data points that run through our technology, we can help banks to better gather insights into what their customers are doing and need. While we're very pleased with our solution and the strategic position we hold in the market, banking solutions had a slightly lower growth year this past year, as there was a lot of uncertainty around the economy due to COVID, which naturally made banks hesitant to embark on new significant projects. A year ago, one of our customers, Legacy Texas Bank, was acquired, which led to a termination fee and a tougher compare in Q4 and the current quarter. We'll see more normalized growth in Q2 of this year and beyond. Turning to legal spend management, as I noted above, we're off from where we expected to be in Q4. That's really a function of the level of legal claims recovering after COVID. It's pretty simple. When people are not on the roads or having accidents, there are fewer claims being litigated, and that volume naturally lags behind the recovery of activity. So, we're confident we'll see normalized growth as claims continue to return to pre-pandemic levels. This is a great business. It's very profitable, market-leading business. We have a fabulous team with deep domain knowledge and a leading product set. Customer tenure is extremely long and churn is very low. The revenue model is a fabulous one. We grow as our customers grow, as they acquire, and add more volume. We even grow as lawyers raise their rates. We continue to effectively sign on new customers. We added five new insurers to the platform in Q4, and we continue to see existing customers add new capabilities we offer. We're actively working on implementations and ramping new UK insurers as part of our geographic expansion. So, while the result this quarter held us back a bit from what would have been a truly outstanding quarter, we understand why and we're confident the impact is temporary. So, in summary, I'm pleased with the quarter and excited about our market position in the year ahead. Everything we do in one way or another is focused on business payments or the related processes. Business payments are complex. with slight variations and nuances in different geographies. So we have different core offerings to address the varying market needs. But what we are doing is the same and critical. We help businesses pay and get paid directly and through the banks that serve them. We're competitively advantaged in a large and growing market. Accelerating shift to digital payments and processes provides a favorable landscape across the board Every product we offer addresses this shift. From where we sit, there's no business we see more focused on business payments and no business we compete with that has a better product set or market position. The fourth quarter was a very good quarter and in many ways an excellent quarter. We had an acceleration in subscription revenue growth driven by particularly strong revenue growth in PayModeX and PTX. We had strong bookings and we posted solid EBITDA. Our plan for the new year is focused on driving subscription revenue growth in our 15 to 20% target range. We're confident we'll execute against that plan and that shareholders will be rewarded. Now I'll turn the call over to Bruce to review our financial results and then both of us will be available for questions following his remarks.

Thanks, Rob. I'll start this afternoon by reviewing our Q4 and fiscal year performance, and then I'll cover guidance for Q1 and the full year for our fiscal 2022. I want to leave you all with three basic messages today. First, our business performed very well in Q4 in almost all respects, and but for temporary challenges to legal spend management, we would have hit all of our targets. Second, and relatedly, our primary payment platform products, Paymodex and PTX, have been shining stars in our portfolio, and they are now on a $120 million run rate and growing well over 20%. And third, we remain confident that we will achieve our FY22 guidance as we projected last quarter. Let's start with Q4 of 2021 and the results for the full fiscal year. We are pleased with our performance across the business. We are investing with discipline as we seek to grow our leadership position in this large and growing market. Our investments in products and go-to-market are positioning us to push our subscription revenue growth to a sustainable 15 to 20 percent level. This is our primary goal. We've also committed to maintaining a healthy profit margin, which we did during fiscal 21. We achieved our guidance levels for Q4 total revenue, EBITDA, and earnings per share. Our ability to hit these primary performance metrics very consistently across the past several years is a testament to the durability of our business, the proficiency of our teams, and our conscientiousness in managing our cost structure. Here are some of our key financial results for Q4. Subscription revenue was 101 million, reflecting 15% year-over-year growth. Subscription revenue was 83% of total revenue, four points higher than in the same period a year ago. Total revenue was $122.1 million, up 10% from Q4 of fiscal 20. Adjusted EBITDA was $24.2 million, or 20% of revenue. And core operating income was $15.4 million, which translates to 27 cents of earnings per share. For the 2021 fiscal year, subscription revenue was $385 million, total revenue was $471 million, gross margin was up 90 basis points, EBITDA was $100 million, or 21% of revenue, and EPS was $1.16 per share. As you know, a key strategic focus for us has been on driving subscription revenue higher, both in terms of year-over-year growth and also as a percentage of our overall revenue. Our Q4 subscription revenue growth of 15% came in consistent with our overall 15% to 20% objective, slightly below our guidance. And subscription revenues are now 83% of total revenues. Drivers of our subscription revenue performance as we exited the fiscal year were a mix of very strong growth in most of our product lines and a few temporary headwinds from others. In Q4, as expected, we saw subscription revenue growth strongest in our payment platforms. We have noted strong interest from the investor community to understand more about PayModeX and PTX, which are our market-leading payment platforms for the US and European markets, respectively. As Rob mentioned, the combined year-over-year growth rate of PayModeX and PTX in Q4 was 27%. These products are now on an annual run rate of $120 million in subscription revenue. The growth we are seeing is a strong indicator of the continued competitiveness and attractiveness of our offerings, and they're on a very promising trend. Over the four quarters of fiscal 21, growth continued to accelerate across these payment platforms. We will continue to keep investors updated on our progress with these important products in response to the interest many of you have expressed. Digital banking subscription revenue growth for the year was solid at 12%, despite declining slightly in Q4 in connection with last year's termination fee resulting from the acquisition of Legacy Texas. Legal spend management grew 3% for the year, but picked up to 6% in Q4. This suite of products saw the continued impact from COVID early in the year, and we continue to see some lag in the recovery of transaction revenue, as Rob mentioned. But the growth of LSM did accelerate throughout the year, and we expect to see this dynamic continue. Excluding legal spend management, in Q4 21, our subscription revenue streams grew 18% over Q4 of 20. And if we exclude banking, subscription revenue growth was 21%. So again, the 15% number for the quarter reflects a contrast of really good growth from our payment platforms, a tough lap for banking, and slower than expected reacceleration of legal spend management. Let's turn to bookings. Subscription bookings for the quarter were 25.7 million, a substantial increase over last quarter's bookings of 20.3 million. This pickup in bookings is one of many reasons that we believe we are on track to achieve our 15 percent plus subscription revenue growth target for fiscal 22. As Rob mentioned, and as we noted in our release, during the quarter we added 32 clients to our Paymodex customer base. In digital banking, three banks chose us as their banking solutions provider. And five new customers chose our legal spend management product. Now let's talk about profitability. In the fourth quarter, our total gross margin increased by 80 basis points from the same period a year ago. For the full year, total gross margin was 90 basis points higher than last year, and subscription gross margin increased again to 61.1 percent of revenue. The combination of revenue growth and margin expansion demonstrates the scale we are achieving in our business and is providing us with the means to continue investing to expand our product set and accelerate that growth. We expect a continuation of this positive trend in the future. During the year, we continued to focus on organic investment in our technology and products, including machine learning and data analytics to enhance our core products, expanded UI and UX capabilities, our hosted platforms, and expanding our go-to-market teams. Sales and marketing, which was 22.9% of revenue in Q4 and 21.5% of revenue for the year, which is 160 basis points higher than last year, increased as we expanded the teams that are driving bookings and revenue. Product and development was 15.2% of revenue in Q4 and for the full year, consistent with the last Q4 and last year. This combination of improved gross margins and increased growth investments drove adjusted EBITDA in Q4 of $24.2 million. which is 19.8 percent of revenue. For the full year, adjusted EBITDA was 100 million, or 21.2 percent of revenue, versus 95 million, 21.5 percent of revenue last fiscal year. Turning to the balance sheet and cash flows, we ended the year with 144 million in cash and cash equivalents, and with 130 million drawn on our revolving line of credit of 300 million. For the quarter, operating cash flow was $15 million, capital expenditures were $8 million, and free cash flow was $7 million. We had no other noteworthy uses of cash during the fourth quarter, and we did not repurchase shares. I'd like to turn now to our outlook for Q1 2022. We expect subscription revenue of $102 to $104 million, reflecting 13% to 15% year-over-year growth. We expect total revenue of 121 to 123 million, or 8 to 9 percent year-over-year growth. We expect adjusted EBITDA of 23 to 25 million, which is 19 to 21 percent of revenue, core operating income of 14 to 16 million, and core EPS of 24 to 26 cents. Our Q1 2022 guidance factors in some continuation of the slower than expected recovery of legal spend management and a bit more impact from that singular termination on the year over year compare for our digital banking solutions. For those reasons, Q1 2022 growth will be as we expected it and does not compromise our confidence in our full year guidance. Our projected EBITDA for the quarter remains at our target level. even with this slightly lower revenue. The first quarter will also reflect increased compensation expenses as we implement salary increases which had been postponed during COVID. Today, we are reaffirming our full-year fiscal 22 guidance in its entirety. We continue to expect subscription revenue of at least $445 million, reflecting 15% to 16% year-over-year growth. driven by the continued strength of our payment platforms. Total revenue of $520 million, or 10% year-over-year growth, and adjusted EBITDA of $106 million, 20% of revenue. Today, we are also providing full-year fiscal 2022 guidance for operating income and EPS. Core operating income is expected to be 68 to 71 million, and core EPS is expected to be $1.11 to $1.15. I'd like to take one more moment to focus on our 2022 growth expectations. As you know, we have a set of product lines with different growth profiles. We expect our PayModeX and PTX products together to grow between 20 and 30% in 2022. consistent with the potential of the payments market, as well as our plans and execution to sell into that market. Some of our other products are likely to perform below that level in fiscal 22, but both banking and legal spend management are expected to overcome the temporary impacts on Q4 21 and Q1 22. And over the longer term, we expect them to perform within our overall 15 to 20% subscription revenue growth range. As a result, overall, we remain confident that we are driving our business to sustain 15 to 20% subscription revenue growth while maintaining attractive margins. We're happy with the continued progress that our outlook implies and very excited to start a new year of growth and value creation for our customers, teams, and shareholders. So again, three basic messages today. One, Our business performed very well in Q4. Two, PayModeX and PTX now comprise 120 million of recurring revenue, growing well over 20%. And three, we remain confident that we will achieve our FY22 guidance. Now we'll open the call for questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Andrew Schmidt with Citigroup. Please proceed with your question.

Hey, Rob, Bruce, Angela. Thanks for taking my questions. I appreciate the additional disclosure and commentary. I want to start off with a question on legal spend. Could you just talk us through how volumes progress throughout the quarter? Just to get a flavor for sort of the trajectory there and maybe a little bit on how sort of you're seeing volumes trend quarter to day. And then if we could just wrap one more in there. I think you've, you know, in your In your FY22 outlook, you've kind of indicated, I think, gradual improvement in legal spend. But if you could be a little more explicit in terms of what's baked in there, that'd be great.

Thanks. Yeah. Hey, Andrew. It's Bruce. Thanks for the question. Yes, we did see LSM volumes recover steadily over the course of the four quarters of the year. As I mentioned in my comments, LSM grew 3% for the year. but 6% in Q4. So that gives you an idea of the kind of inflection. Nevertheless, as you know, we expect LSM to get toward or into the 15% to 20% subscription revenue growth range that we target for all of our products. So it's still not where we want it to be. But we do see good trends. And we've been watching week by week and month by month. And so far, we're on a good track. going into Q1.

Okay, that's great to hear. And I think, you know, I think what investors kind of look for in terms of the FY22 outlook is, you know, two things, sort of confidence and then consistency in terms of hitting the numbers. And, you know, I know you mentioned confidence throughout sort of the script and the prepared remarks, but if you could just give us a little bit more detail in terms of what's driving the confidence, particularly in the 50% to 60% here for subscript. Part of it is presumably backlog. Part of it is the assumption that volumes are going to recover. But any more detail that, you know, you can help us that's giving you confidence in achieving or exceeding the outlook you provided would be helpful. Thanks.

You know, I'd make some comments on that, and then Bruce can comment as well. You know, one of the reasons we gave the growth excluding a particular area is really if that area returns to what we'd expect, that's what we could see. So, for example, our subscription growth this quarter for LSM, excluding LSM, was 18%. Well, you can see what happens as LSM returns to normalized performance. Similarly, the tough compare, if you take out banking, and by the way, leaving in LSM, but just removing our banking solutions, that's 21%. So you've really got a situation in this quarter where we're firing very, very well on most cylinders, exceptionally well as we would expect on PayModex and PTX, and we were held back a bit by a slower recovery in LSM and some year-over-year compare on banking. We know the year-over-year compare on banking goes away after the first quarter, and we're confident we're continuing to see the volumes move up on PTX LSM, Legal Spend Management. So I don't know if that's helpful, but that's how I would think about it at a high level. There's all sorts of initiatives, programs, and everything else at the detail. But as a big picture, just looking at it, that's why we gave those numbers, and that's a big part of why we've got so much confidence next year.

That's helpful. Thanks for that context, Rob. If I could speak one more for Bruce before I hop back in the queue. You've been there, Bruce, for some time now. Just curious if you could, you know, share perhaps a view on longer-term kind of revenue or margin profile for business as you see it, as you sort of, you know, as you've looked into business, just anything. I know you guys have obviously said 50% to 20% subs growth, but just thinking kind of longer-term, just top and bottom line algorithm, anything around that would be helpful. Thanks.

Yeah, thanks, Andrew. I mean, for me, it's really simple. I think if we can drive the business toward 20% subscription revenue growth and 20% EBITDA margins, that place on the rule of 40 spectrum will be a very attractive valuation point. And we'll see how we progress across the course of fiscal 22 in getting that 15% up towards the 20. I will say we've had very, very favorable dynamics around PayModex, PTX, And also our financial messaging products over the past couple of quarters, just a really good re-acceleration there. And as we said a couple of times on the call, if not for the hiccup in LSM and the lap in banking, I think this would have been a tremendous quarter.

All right. Thanks, Bruce. I'll hop back in the queue. Appreciate the comments, Rob, Bruce. Thanks a lot. Thanks, Andrew. Yep.

Our next question comes from the line of George Sutton with Craig Hallam. Please proceed with your question.

Hey, guys. This is James on for George. Just wanted to ask about the partnership with Build Trust. Can you provide any color on sort of how that's progressed in terms of suppliers you've onboarded, volume, or just sort of any incremental detail on how that broadens your scope of opportunity?

Sure. We're not disclosing volumes or transactions or something along those lines, but it's a really positive way to extend our network and for BuildTrust to continue to leverage their network. I've talked about this in the past. I think over time we'll see more interoperability between platforms like a PayModex, BuildTrust Business Payment Network, That way, if a supplier slash vendor is enrolled once, multiple networks can leverage that process, and you get to true automation across business payments. So it's going well, and I think it's a first step for us. I think not over the next 90 days, but I think over the course of time, you'll see more relationships like that amongst other networks, including Paymodex and Bottomline.

Got it. And then, Rob, you mentioned... 200,000 businesses on DBIQ. Can you sort of talk about how that number has grown in the last one or two years, and I guess how quickly can you perform the implementations that would take that number up to 400,000?

Well, two different pieces there. We'll perform an implementation, and that can occur as quickly as nine months. In a more complex environment, it could be double that. That's because we're integrating so many different back office systems and provide all the visibility and data for the bank's customers. In terms of the ramp, that's not really a function of our technology. That's a function of the bank's process and how they will bring their customers on. We'll be very much part of that, bringing on a subset of customers and then ramping over time. But that's really not driven by us. That ends up being driven by the bank and their customer migration strategy.

Got it. That's it for me. Thanks, guys.

Our next question comes from the line of Gary Prespetino with Barrington Research. Please proceed with your question.

Good afternoon, everyone. Hey, Rob. You mentioned on the call that the legal spend management business was somewhat predicated on driving and accidents and crashes and stuff like that. Did I hear that right?

Well, sure. That's one of the types of claims that our insurance companies will be defending. Sure, absolutely.

So the issue with legal spend is more or less that you're not having the same level of accidents and driving as you had pre-pandemic, but it really doesn't have anything to do with the courts being all clogged up either because some courts are backlogged or whatever. I'm just trying to get an idea of

What are the drivers here? I think there's a mix of drivers, and it's also a trailing indicator because if you've got, you know, some things travel. Well, the second airports open up and everyone feels safe, travel will occur rather instantly. But claims is a trailing indicator because something has occurred that an event, then someone has filed a claim, then there's litigation, so that process all stretches out, so that's why it's trailing. I think all of the things you referenced are contributors, the level of activity in courts, the claims themselves, the level of activity and the speed with which those claims then are able to be resolved, I think they're all contributing. But as we indicated, we're seeing that improve We were just a little aggressive or optimistic in how much we thought that would approve in Q4. That's really the one difference.

Okay. And then in Q4, your sales and marketing expense, you know, was at the highest level of the percentage of sales as it was throughout the whole year. Is that level about 22.9, 23% something we should apply to fiscal 22 because you're increasing your you know, investment in your sales force?

Yeah, thanks, Gary. I think the way to think about it is maintaining the 20% EBITDA level overall. We might move the money back and forth a little bit over time programmatically and also through the shifting of where the people cost is between sales and marketing and product. But on the whole, we're really very focused on maintaining that 20% EBITDA level.

Okay, thank you.

Thanks, Kerry.

Our next question comes from the line of Mayank Tandon with Needham. Please proceed with your question.

Hey, good evening, guys. This is actually Kyle Peterson on for Mayank. Thanks for taking the questions. Just wanted to, you know, it was really helpful to see some of the payments ARR disclosures. You know, how should we think about, you know, the ARR convergence in the revenue and how quickly new clients ramp, especially given the kind of impressive momentum you guys have had signing on new clients during COVID?

Yeah, the ramp will all vary. So ramp of our bookings will vary by product set. As I've outlined already, for example, in a banking transaction, that's really about a subscription. And when we have a go live, we'll be realizing the full revenue, even though they're ramping customers. In platforms like PayModeX and Legal Spend Management, there's much more of a ramp. We generally think of that as a three-year ramp where more vendors are coming on, more payments are being made through that platform in the case of PayModeX. Or in Legal Spend Management, where law firms are being brought onto the system over time for their bills to be processed through our platform. So some of the product sets have a three-year ramp. Others will be driven more by an implementation cycle to a full subscription.

Hey, Kyle, it's Bruce. I just want to make sure I'm clear on your question because I think you were suggesting that we gave some information about payment platform ARR or bookings levels. The number that we gave on the call that we hadn't disclosed before is the $120 million number, which is the actual revenue run rate from Q4 from PayModex and PTX. So what that means is we did $30 million of revenue in Q4 for PayModeX and PTX. 30 times 4 is 120. I just want to make sure that we didn't talk past each other on that one.

Oh, yeah, no. Yeah, you're correct. I misspoke there. But thanks for the clarification. And then just a quick follow-up on the digital banking pipeline. I know, like, given the longer implementation cycles and time for deals to go live, how would you describe right now kind of what's, you know, in the pipeline and the degree of visibility for deals kind of signed but not yet kind of live and contributing revenue and how should we think about that progression through the years?

Well, a couple things I'd comment on there. First off, I wouldn't want you to go away with the idea that a long implementation cycle is a bad thing. It's actually really powerful retention for us. All that time, whether that's three quarters, four quarters, five, six, or whatever it is, that's all time and work done where that bank has made commitment, technology investment, other resource investment in our platform. So that's part of one of the many things that drives us. our lifetime customer value and our retention, where we would expect it to hold customers for a decade or more. That's not just on the implementation. It's commitment to new technology and the like, but that's the first part. I wouldn't view that as a negative piece at all. In terms of the pipeline, the number one thing that drives that is product. We have the top product in the market for digital banking. Our business, DBIQ platform, is declared a leader by any industry analysts And so as banks are looking to increase competitiveness, as banks are looking for new ways to drive revenue, retain customers, grow wallet share, that all plays to that product and the related offerings we have around that. So right now we have a very strong pipeline. What we commented on was more the course of a full year, where if you think back a year ago, there was much more uncertainty about the economy, about credit risk, and banks are only going to be as strong as their customer base and their clients. So that's where more of the softness or concern was. We look forward. We're excited for the year. Once we clear the compare in Q1, we expect to be posting strong results in banking solutions.

All right. That's helpful. Thanks, guys.

Our next question comes from the line of Chris Kennedy with William Blair. Please proceed with your question.

Hey, guys. Thanks for taking the questions and appreciate the additional disclosure. On the payment platforms revenue, that 120, is that about evenly split between PayModeX and PTX?

Hey, Chris. It's Bruce. PayModeX is a little bit bigger, but they're not hugely different in size.

Okay, got it. And then can you give a little bit of an update on moving the legal management business to the UK? How is that going? And can you give an update on that? Thanks, guys.

Yeah, that's going real well. We have a specialized team. Obviously, we have a presence in the UK, but we've brought on a specialized team. And we're in the process of implementing and going live with a couple of significant customers there. So That's gone very, very well for us.

All right. Now let's sneak one more. Historically, you've given kind of the signed digital banking revenue that's in your backlog but hasn't been implemented yet. Do you have an update on that? Thanks a lot.

Yeah. Hey, Chris, that number right now is $11 million.

Okay. Thank you. Our next question comes from the line of John Rodriguez with DA Davidson. Please proceed with your question.

Hi, this is John on for Pete Heckman. Just one from us. Revenue and payment volume growth rate specifically for PayModex? I'm sorry, John. Could you repeat that? We lost you there for a minute. What was the revenue and payment volume growth rate specifically for PayModex?

Well, payment volume doesn't correlate to revenue in PTX. It's a different revenue model. So it really wouldn't be particularly relevant, and that hasn't been something that we would disclose in that manner. On PayModeX, as you probably know, the majority of transaction volume is on the legacy model. That's still the case today, but we're at about $250 billion going through the PayModex network annually.

And, John, the growth rate on PayModex plus PTX for Q4 was 27%. I think you were also asking that. Got it. Thank you so much. Okay.

Our next question is a follow-up question from the line of Andrew Schmidt with Citigroup. Please proceed with your question.

Hey, guys, thanks for taking my follow-up. I just wanted to ask one question, then I'll ask a follow-up. But first question, just in terms of the sales pipeline across the product spectrum, could you talk a little bit about that? And I know you don't sort of talk to sort of Booking's pipeline, but, you know, how does the sales pipeline score up relative to kind of, you know –

Bookings expectations for the current quarter. Thanks. Right. Well, the first piece I'd comment on sales pipeline is just looking at sales success in the fourth quarter, 25.7 in bookings. It was a real strong number for us and a number we're very happy with. Success across a mix of product sets. You know, one of the things that drives our pipeline is our digital marketing team and presence. And we've got a fabulous digital marketing team. We have outstanding digital content and tools. So the top of our funnel is always going to be very strong. And what's going to drive selection ultimately is product. And we've made the investments and have the leading products that you're pretty familiar with where we sit across the board. We feel very good. And again, Q4 numbers show us and we'd expect the same thing in Q1 and throughout FY22. We'll do a good job of winning those opportunities just because where we are in the current product. And the last thing I'd mention is where we are in our innovation agenda, what we can show and commit to customers where they'll see from us in a year, three years, five years from now is really powerful. Everybody knows technology is not staying where it is today. So if you're choosing someone as a partner or choosing a vendor, you want to choose someone who's going to be the right vendor today and the right vendor in three, five, eight, and ten years. So that's a big and important part of our innovation agenda. Great.

Thank you for that. And then just to follow up, if you could talk about kind of how the competitive environment is evolving around PMODACs and And I know it can depend whether you're selling pay mode X or full stack AP, but I'm wondering to get your sense on that. And then just to tab onto that, is having a more sort of holistic set across AP, AR, and then now treasury management, you know, help you get more shots on goal from a pipeline perspective? Kind of a two-part question in terms of an environment and then the evolving product that's been alluded to before.

Let me, first off, from a competitive standpoint, there are things we clearly do in PaymentX better than anybody. We feel things with the technologies and capabilities we've built for vendor enrollment are critical differentiator. The ability we, things that we bring from a cyber fraud perspective. The enterprise, you know, we're not a platform for a sole proprietor. We're not a platform for, for a business that doesn't have an accounting team or financial function at any level. Those are small businesses, and there are other solutions for them. But as soon as you get to an accounting function, as soon as you get to an enterprise, if you have AP, AR, cyber fraud, or CISO office, that plays right to bottom line. And from a competitive standpoint, we don't see anyone who has a better solution than we do there. That was really intuitive, the second part of your question, and you're right. We get multiple shots on goal because somebody could come, be a bottom line customer for receivables, and then expand to treasury, expand to payments, and the full PCL platform. They could be a treasury customer and expand to payments and receivables. So that's definitely part of the strategy. It's an interesting way to phrase it, but it'll absolutely generate more shots on goal.

All right. Thanks a lot, Rob. Appreciate it.

Thank you.

We've come to the end of our question and answer session. I'd like to hand it back over to Rob Everly for closing remarks.

Well, thank you, everyone. Thank you for your attention. The fourth quarter was a very good quarter for Bottom Line, and we're really excited as we head into the new year. So look forward to reporting on Q1 as we go forward, and, again, appreciate your time and attention.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.