Strong Financial Performance Highlights Quarter and Fiscal Year

Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment, invoice and document automation solutions, today reported financial results for the fourth quarter and fiscal year ended June 30, 2008.

Revenues for the fourth quarter were $36.0 million, an increase of 11%, or $3.7 million, from the fourth quarter of last year. The growth in revenues included a 22% increase in subscription and transaction revenues to $8.3 million in the fourth quarter from $6.8 million in the fourth quarter of last year.

Gross margin for the fourth quarter was $19.5 million, an increase of $2.0 million from the fourth quarter of last year. Net loss for the fourth quarter was $3.4 million, or net loss per share of $0.14. During the fourth quarter, operating expenses of $22.8 million included amortization of intangible assets of $3.4 million, acquisition-related expenses of $0.2 million and stock-based compensation expense of $2.4 million. Excluding these acquisition-related and stock compensation items, non-GAAP net income for the fourth quarter was $2.6 million, or non-GAAP net income per share of $0.11.

“Bottomline had a strong fourth quarter, completing a year in which EBITDA increased 72% year over year and non-GAAP operating income more than doubled with a 104% increase from the prior year,” said Rob Eberle, President and CEO of Bottomline Technologies. “During the fourth quarter, we entered into a significant strategic relationship with a large global financial institution, signed a top insurer to our Legal eXchange and booked record orders of $45 million. We continue to drive growth of our subscription and transaction revenues, which at $8.3 million was up 22% year over year. With this success, we enter the new fiscal year confident in our continued ability to execute against our strategic plan.”

Revenues for the year ended June 30, 2008 increased 11% to $131.2 million as compared with $118.3 million in the same period last year. Net loss for the fiscal year ended June 30, 2008 was $5.3 million, or net loss per share of $0.22. Excluding amortization of intangible assets of $11.4 million, acquisition-related expenses of $0.3 million and stock compensation expense of $8.8 million, non-GAAP net income for the fiscal year ended June 30, 2008 was $15.2 million, an increase of 49% from the fiscal year ended June 30, 2007. Non-GAAP net income per share for the fiscal year ended June 30, 2008 was $0.63 as compared with $0.43 per share in the same period last year.

Fourth Quarter Customer Highlights

• Entered into a new strategic relationship with a major global financial institution.
• Signed a multi-year contract with one of the nation’s 15 largest mutual insurance companies for Legal eXchange™, Bottomline’s Software as a Service (SaaS) solution for legal spend management.
• Added significant new customers, including City of Santa Fe, Educational Testing Service, Emerson Canada, Marathon Equipment Company, Metropolitan Airports Commission of Minneapolis, Motorola Networks, Pioneer Road Services, Standard Furniture, The Upper Deck Company and WireCo WorldGroup, who selected Bottomline’s solutions to increase the efficiency of accounts payable and other transactional business processes.
• The Home Depot, Oracle Corporation, Target Corporation, Alpharma, Google, Schlumberger, Harvard Business School Publishing, UniCredit Group, United Technologies Corporation, U.S. Air Force Services Agency, Loomis, Sayles & Company and DePuy International, a Johnson & Johnson company, signed new or expanded agreements for Bottomline’s payments and document process automation solutions.
• Increased adoption of Bottomline’s healthcare document and payment process automation solutions among hospitals, including Albany Medical Center, Catholic Healthcare Partners, Caritas Good Samaritan Medical Center, Excela Health, Inova Loudoun Hospital, San Joaquin General Hospital, Singing River Hospital, St. Luke’s Regional Medical Center, St. Vincent’s Hospital & Medical Center and Sutter Health.

Fourth Quarter Corporate and Product Highlights

• Completed the acquisition of Optio Software, which further extends Bottomline’s leadership position as a provider of advanced capabilities for transactional document automation and adds a significant customer base as well as a strong vertical presence in the healthcare industry.
• Introduced new functionality for automating business-critical transactional document processes within Microsoft Dynamics® AX 2009, enabling the growing number of organizations standardized on this popular ERP system to increase efficiency, reduce costs and respond with greater agility to changing regulatory demands.
• Named to the 2008 Insurer’s Choice, an annual ranking recognizing the top technology providers serving the insurance industry. Bottomline was identified by insurers as a preferred vendor in six of the survey’s nine categories, including analytics, workflow, financials and operations.
• The Board of Directors authorized the repurchase of up to $10 million of the company’s common stock for use in connection with Bottomline’s stock plans and for other corporate purposes.
• Hosted third annual European Customer Conference, bringing together senior-level executives from leading corporations, public sector organizations and financial institutions to discuss innovation in payments, invoice and document processing.

Bottomline has presented supplemental non-GAAP financial measures and statements as part of this earnings release. The non-GAAP financial measures and statements exclude certain non-cash items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses. The presentation of this non-GAAP financial information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes 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. Bottomline’s executive management team uses these same non-GAAP financial measures and statements internally to assess the ongoing performance of the company. 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. A reconciliation of the GAAP results to the non-GAAP results for the three month periods and fiscal years ended June 30 is as follows:

About Bottomline Technologies

Bottomline Technologies (NASDAQ: EPAY) provides collaborative payment, invoice and document automation solutions to corporations, financial institutions and banks around the world. The company's solutions are used to streamline, automate and manage processes and transactions involving global payments, invoice approval, purchase-to-pay, collections, cash management and document process automation. Organizations trust these solutions to meet their needs for cost reduction, competitive differentiation and optimization of working capital. Headquartered in the United States, Bottomline also maintains offices in Europe and Asia-Pacific. For more information, visit www.bottomline.com.

Bottomline Technologies, Legal eXchange and the BT logo are trademarks of Bottomline Technologies, Inc. which may be registered in certain jurisdictions. All other brand/product names are trademarks of their respective holders.

Cautionary Language

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are competition, market demand, technological change, strategic relationships, recent acquisitions, international operations and general economic conditions. For additional discussion of factors that could impact Bottomline Technologies' financial results, refer to the Company's Quarterly Reports on Form 10-Q for the quarters ended September 30, 2007, December 31, 2007 and March 31, 2008 on file with the SEC. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements.

(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $3,440 and $2,750, acquisition-related expenses of $175 and zero, and stock compensation expense of $2,400 and $2,054, for the three months ended June 30, 2008 and 2007, respectively.

(3) Shares used in computing non-GAAP diluted net income per share were 24,172 and 23,849 for the three months ended June 30, 2008 and 2007, respectively.

(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $11,399 and $9,324, acquisition-related expenses of $269 and zero, and stock compensation expense of $8,803 and $7,945, for the fiscal years ended June 30, 2008 and 2007, respectively.

(3) Shares used in computing non-GAAP diluted net income per share were 24,294 and 23,814 for the fiscal years ended June 30, 2008 and 2007, respectively.

Non-GAAP Financial Statements

Bottomline has presented supplemental non-GAAP statements of operations as part of this earnings release. The non-GAAP statements of operations exclude certain non-cash items, specifically amortization of intangible assets, stock-based compensation and acquisition-related expenses. The presentation of this information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes that these supplemental non-GAAP statements of operations are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations. Bottomline’s executive management team uses these same non-GAAP financial statements internally to assess the ongoing performance of the company. Since this information is not in accordance with GAAP, 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. All amounts are in thousands, except per share amounts.

Bottomline Technologies
Kevin Donovan, 603-501-5240
kdonovan@bottomline.com