Bottomline Technologies, Inc. reports 110% EBITDA growth in 2018 and 5.6 pp EBITDA Margin growth from 6.5% to 12.1%
08/09/2018 • About Bottomline Technologies, Inc. (
$EPAY) • By InTwits
Bottomline Technologies, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bottomline Technologies, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 8.5%. Average EBITDA Margin for the same period was 10.6%. In FY2018 SBC/Revenue was even higher: 8.7%
- Bottomline Technologies, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $15m in 2018, $7m in 2017, $6m in 2016, $16m in 2015, $11m in 2014
- In the last 5 years the company invested considerably less than D&A: $113m vs. $205m. In FY2018 this situation was still the same: CAPEX was 21 while D&A was 42
- The company has potentially unprofitable business model: ROIC is 1.3%
- It operates with high leverage: Net Debt/EBITDA is 0.5x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Bottomline Technologies, Inc.'s Revenue jumped on 12.8%. Revenue growth showed acceleration in FY18Q4 - it increased 13.9% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2017 at 1.8%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.6 pp from 6.5% to 12.1% in FY2018.
Gross Margin increased on 2.4 pp from 53.7% to 56.1% in FY2018. SG&A as a % of Revenue decreased slightly on 1.0 pp from 35.5% to 34.4% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2017 at 9.1%.
Net Income margin jumped on 11.9 pp from -9.5% to 2.4% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 5.4% in FY2018. The company's CAPEX/Revenue decreased slightly on 1.6 pp from 7.0% in FY2015 to 5.4% in FY2018. For the last three years the average CAPEX/Revenue was 7.2%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2016 at 8.1% and was declining since that time.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Bottomline Technologies, Inc. has spent
$14m on M&A in FY2018 which accounts for 3.5% of revenue.
Return on investment
The company operates at low ROIC (1.3%) and ROE (3.3%). ROIC increased on 5.9 pp from -4.6% to 1.3% in FY2018. ROE jumped on 15.2 pp from -11.9% to 3.3% in FY2018.
Leverage (Debt)
Debt level is 0.5x Net Debt / EBITDA and 3.1x Debt / EBITDA. Net Debt / EBITDA dropped on 2.1x from 2.6x to 0.5x in FY2018. Debt dropped on 18.3% while cash showed almost no change in FY2018. During the last 5 years Net Debt/EBITDA topped in FY2017 at 2.6x.
Bottomline Technologies, Inc. has questionable short term financial stability: Interest coverage ratio (ICR) is only 0.5x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence charged on company's debt was 7.4% in FY2018.
Valuation and dividends
Bottomline Technologies, Inc.'s trades at EV/EBITDA 50.8x and P/E 257.9x.
Management team
Robert A Eberle "Rob" is a Bottomline Technologies, Inc.'s CEO. Robert A Eberle "Rob" is a founder and has spent 12 years with the company. CEO total compensation was
$6,703,447 in FY2018 which included
$384,167 salary and
$239,000 annual bonus. Bottomline Technologies, Inc.'s CFO Richard D Booth "Rick" has spent 4 years with the company.
2.1% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 1,700 employees. The number of employees increased on 6.3%. Average revenue per employee in FY2018 was
$231,821 and it increased on 6.2%.
Financial and operational results
FY ended 06/30/2018
Bottomline Technologies, Inc. ($EPAY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 300.6 | 330.9 | 343.3 | 349.4 | 394.1 | 12.8% |
| Gross Profit | 169.9 | 191.4 | 196.2 | 187.6 | 221.0 | 17.8% |
| SG&A | 106.4 | 114.6 | 123.4 | 124.0 | 135.7 | 9.5% |
| EBITDA | 32.4 | 40.5 | 39.3 | 22.8 | 47.8 | 109.6% |
| EBIT | -2.5 | -0.8 | -3.6 | -21.2 | 5.8 | |
| Interest expence | 14.2 | 14.8 | 15.5 | 17.1 | 11.2 | -34.5% |
| Tax | 2.1 | 18.4 | 0.8 | -5.1 | -8.2 | |
| Net Income | -19.1 | -34.7 | -19.6 | -33.1 | 9.3 | |
| Stock Based Compensation | 22.3 | 26.9 | 30.0 | 31.9 | 34.2 | 7.2% |
Balance Sheet
|
|---|
| Cash | 167.7 | 121.2 | 97.2 | 124.6 | 124.6 | 0.0% |
| Accounts Receivable | 61.1 | 65.1 | 61.8 | 64.2 | 74.3 | 15.7% |
| Accounts Payable | 16.3 | 11.6 | 10.2 | 9.0 | 10.3 | 13.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 183.7 | 0.0 | -100.0% |
| Long Term Debt | 148.8 | 159.8 | 171.5 | 0.0 | 150.0 | |
Cash flow
|
|---|
| Capex | 12.7 | 23.3 | 27.7 | 28.2 | 21.4 | -24.1% |
| Acquisitions | 153.5 | 68.0 | 1.8 | | 13.7 | |
Ratios
|
|---|
| Revenue growth | 18.0% | 10.1% | 3.7% | 1.8% | 12.8% | |
| EBITDA growth | 66.3% | 25.1% | -3.1% | -41.9% | 109.6% | |
|
|---|
| Gross Margin | 56.5% | 57.9% | 57.1% | 53.7% | 56.1% | 2.4% |
| EBITDA Margin | 10.8% | 12.2% | 11.4% | 6.5% | 12.1% | 5.6% |
| EBIT Margin | -0.8% | -0.2% | -1.0% | -6.1% | 1.5% | 7.5% |
| SG&A, % of revenue | 35.4% | 34.6% | 35.9% | 35.5% | 34.4% | -1.0% |
| SBC, % of revenue | 7.4% | 8.1% | 8.7% | 9.1% | 8.7% | -0.5% |
| Net Income Margin | -6.4% | -10.5% | -5.7% | -9.5% | 2.4% | 11.9% |
| CAPEX, % of revenue | 4.2% | 7.0% | 8.1% | 8.1% | 5.4% | -2.6% |
|
|---|
| ROIC | -0.5% | -0.1% | -0.7% | -4.6% | 1.3% | 5.9% |
| ROE | -5.1% | -9.4% | -6.1% | -11.9% | 3.3% | 15.2% |
| Net Debt/EBITDA | -0.6x | 1.0x | 1.9x | 2.6x | 0.5x | -2.1x |
| Interest coverage ratio (ICR) | | | | | 0.5x |
| Interest expence / Average debt | 9.6% | 9.6% | 9.4% | 9.6% | 7.4% | -2.2% |
People
|
|---|
| Insider ownership | 2.1% | 2.1% | 2.1% | 2.1% | 2.1% | 0.0% |
| Employees | 1,300 | 1,500 | 1,600 | 1,600 | 1,700 | 6.3% |
| Revenue/Employee, th. $ | 231 | 221 | 215 | 218 | 232 | 6.2% |
Bottomline Technologies, Inc. ($EPAY) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 91 | 95 | 101 | 106 | | 9.9% | 9.8% | 17.5% | 13.9% |
| EBITDA | 10 | 13 | 11 | 13 | | 126.6% | | 35.1% | 28.4% |
| Net Income | -4 | 3 | -1 | 11 | | | | | |
Balance Sheet
|
|---|
| Cash | 128 | 68 | 95 | 125 | | 29.9% | -32.2% | -23.3% | 0.0% |
| Short Term Debt | 187 | 0 | 0 | 0 | | | -100.0% | -100.0% | -100.0% |
| Long Term Debt | 0 | 150 | 150 | 150 | | -100.0% | | | |
Ratios
|
|---|
| Gross Margin | 55.6% | 56.7% | 54.7% | 56.9% | | 1.5% | 2.4% | 0.7% | 4.5% |
| EBITDA Margin | 11.3% | 13.2% | 10.9% | 12.6% | | 5.8% | 13.5% | 1.4% | 1.4% |
| Net Income Margin | -4.6% | 3.2% | -1.0% | 10.8% | | 8.0% | 15.2% | 6.7% | 16.8% |
Peers in Application Software
Below you can find Bottomline Technologies, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Bottomline Technologies, Inc. ($EPAY) | | 10.1% | 3.7% | 1.8% | 12.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.0% |
|---|
| Bottomline Technologies, Inc. ($EPAY) | 56.5% | 57.9% | 57.1% | 53.7% | 56.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Bottomline Technologies, Inc. ($EPAY) | 10.8% | 12.2% | 11.4% | 6.5% | 12.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Bottomline Technologies, Inc. ($EPAY) | 4.2% | 7.0% | 8.1% | 8.1% | 5.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -9.8% |
|---|
| Bottomline Technologies, Inc. ($EPAY) | -0.5% | -0.1% | -0.7% | -4.6% | 1.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| Bottomline Technologies, Inc. ($EPAY) | -0.6x | 1.0x | 1.9x | 2.6x | 0.5x |
