Bottomline Technologies, Inc.

Greetings. Welcome to the bottom line first quarter fiscal 2022 earnings conference call. 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 the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Amy Brownrigg. You may begin.

Good afternoon, everyone. Welcome to Bottom Line's first quarter fiscal 2022 earnings conference call. I'm Amy Brownrigg 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 impacts of COVID-19 on our business and global economic conditions. Our forward-looking guidance is based on our 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 this call, Bottom Line's financial results are presented on a non-GAAP basis. These non-GAAP results include, among others, gross margins, operating income, EBITDA, net income, and earnings per share. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures 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. Let me now turn it over to Rob for his remarks.

Thank you, Amy. Good afternoon and welcome to the Bottom Line Fiscal 22 earnings call. As always, we appreciate your interest in Bottom Line. I'm here with Bruce Bowden, our CFO, who will provide a detailed review of our financial results and our guidance. Bruce will also outline the new manner in which we'll be disclosing and reporting on our key product sets. This will help investors understand the financial profile and contributions of each and importantly, allow investors to track the growth and success of these major products. As always, we'll answer questions after Bruce's remarks. We're pleased to report on a strong Q1. Subscription revenue growth was on target at 15%, highlighted by a breakout quarter in PayModex. We made significant advancements in our product set, expanding CAM, and extending our competitive advantage. We announced that we'll be welcoming three new board members. Mike Kern will be rejoining the board. We're also adding Phil Hillel and Larry Twain as new members. We look forward to adding their experience and perspective. We've also formed a strategy committee of the board, which will make recommendations with respect to our market position and strategy, opportunities to accelerate our subscription revenue growth, and other ways to create additional shareholder value. I'll provide some color on several of our most significant product advancements in a moment, but first I'll outline the key financial results for the first quarter. Subscription revenue was $103.5 million, reflecting year-over-year growth of 15%. Our investment thesis is straightforward. Our product set, market position, and execution are well positioned to produce sustained subscription revenue growth in our target 15 to 20% range. Subscription bookings in the quarter were 19.8 million. Total revenue was 123.6 million, representing year-over-year growth of 10%. and adjusted EBITDA was 23.1 million, in line with our plan and guidance. Our targeted product investment, market opportunity, competitive position, and strong execution are all evidenced in the results we're reporting for the quarter. They're also the foundation of our confidence and our ability to drive sustained subscription revenue growth in the coming year and years beyond. There's a lot of really great progress being made across the company in new product innovation. I'd like to highlight a few for investors as they play a central part in our competitive position in the market, expansion of TAM, and long-term growth opportunity. We've spoken of the significant opportunity in front of us to build on our leading position in payments automation and expand into the full payments and cash life cycles. That's payables, receivables, and treasury management. I'm pleased to update you on the progress we're making on our new integrated receivables platform, which is one of the building blocks of our PCL strategy. Over the next few months, we'll be launching our next generation receivables offering. Some features of the platform include intelligent reconciliation of payments, remittances, and invoices, easy to navigate exception management, and the ability to predict behavior over time to increase payment visibility and forecast receipts. Our PCL strategy will play out steadily over the coming quarters and years, and the receivables release is a significant and important step in the expansion of our capabilities in this market. Turning to our banking solutions, developing the market-leading platform is a complex and difficult task. particularly in a highly competitive market. We've done just that with digital banking with our DBIQ platform. Our leadership was confirmed this past quarter as we're once again named best in class by AT in the digital commercial banking payments and cash management category, with number one in product features, client service, client strength, and vendor stability. We continue to offer new capabilities to banks, to allow them to more effectively compete and grow their business banking franchise. An example is our new MergerIQ platform, which is focused on banks' consolidations and positions Bottom Line as a key partner in monitoring the customer basis of two merged banks. The platform provides insights and predictions related to platform usage, transaction volumes, engagement, and early warnings of attrition all critical behaviors banks want to monitor on an acquired customer base. With the combination of a well-established market leading position, a strong pipeline of new product innovations, and a positive outlook, we're confident our digital banking product set will be a significant contributor to our growth in Q2, the second half of the fiscal year, and the years ahead. Finally, I'd like to comment on the quarter and some of the advancements we've made with PayModeX. We had a real breakout quarter in PayModeX. Growth in the quarter was 31 percent, but it's not just the acceleration to 31 percent growth. It's really about execution, momentum, and major product extensions. Our comprehensive payable product strategy is resonating with customers and the market. We provide a single offering for all payment types optimizing customer outcomes across automation, security, and rebates. We have an excellent foundation for continued growth based on our position in the market, the size of our network, and the strength of our go-to-market. Earlier today, we announced significant new capabilities for PayModeX via the acquisition of BOR payment systems. The combination with BOR brings us straight through processing of virtual cards, new robust vendor enrollment capabilities, added value to customers' virtual card programs, and the potential for new additional channel partners and additional revenue opportunities for our existing channel partners. Our continued product extensions align to our customer promise and strategic plan for growth. We couldn't be more excited about the results for the quarter and the road ahead for PayModeX. As you can see, we've built a portfolio of market-leading products targeted at intelligently digitizing the way businesses pay and get paid. Our products do this in a manner that is simple, smart, and secure. Across our payment platforms, we've continued to innovate around these strengths, focusing on products that exceed customers' expectations for automation, intelligence, routing across multiple payment types, fraud prevention, predictive analytics, interoperability, and innovation. In closing, we're excited about fiscal 22 and the runway we see ahead based on our product's position in the market and the size of those markets. Our product set differentiates bottom line from other players in the space and powers continued demand and growth. We're pleased with the Q1 results and the strategic advancements in the quarter. We're confident in our FY22 plan. We're also confident we'll continue to execute against that plan, and in doing so, drive shareholder value. I'll now turn the call over to Bruce, and then of course, we'll both be available for questions.