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.