Bottomline Technologies Inc., whose third-quarter results fell well below analysts expectations, says it will have better news when it releases its fourth-quarter and full fiscal-year results Aug. 9.
Analysts had predicted the Portsmouth, N.H., electronic bill payment and presentment specialist to post a loss of 27 cents on revenues of $17 million for the three months that ended June 30 and revenues of about $74 million for the full year.
But its clear we are going to substantially beat those numbers, chairman and chief executive officer Dan McGurl said Thursday. We are seeing good demand for our products in an unfavorable economic environment.
In the third quarter, Bottomline reported a per-share loss of 31 cents. That was more than six times what analysts had expected, according to Thomson Financial/First Call.
Bottomline, which was launched in 1989, had lowered its projections for the third quarter. It was in posting its second-quarter results that it said revenues for the third quarter would be $23 million instead of its earlier projection of $25.4 million to $26.4 million; third-quarter revenues actually came in at $18.7 million.
Its main product, which lets users access their back-office payments systems through the Web, did especially well in the fourth quarter, Mr. McGurl said. Clients can use it to do such things as access and approve payments without having to be at the network location.
The product has been a very big new success story for us in recent months, Mr. McGurl said. He added that most of the fourth quarters revenues came from selling products to nonbank companies directly rather than selling them to banks to sell in turn to their corporate clients.
Adam Holt, a senior analyst at J.P. Morgan H&Q in San Francisco, sounded impressed about the fourth-quarter news, but not very.
Bottomlines stock had been trading like the company was in a lot of trouble, he said. Topping analysts fourth-quarter projections would show that things arent that bad.
The stock was $5.86 at midday Friday, up 23% from the previous weeks close.
But Mr. Holt added that it was hard to tell the impact billing and payment products are having on Bottomline. Though the company is starting to show strength with their Web-based electronic payments, other business lines, such as cash management which has been strong across the industry could have propped it up in the fourth quarter, he said.
It is unclear that EBPP has anything to do with the company getting back on track, Mr. Holt continued. We dont know the extent that the bill presentment business has recovered.
The more positive results do not mean that all systems are go, he said. They are still digging their way out of a hole, but this could mean that things have stopped getting worse and maybe are stabilizing.
Despite worries that budget cutbacks are hindering sales of e-business technology, there are signs that at least some vendors can make a living pitching EBPP to businesses.
Ariana-Michele Moore, an analyst at Celent Communications and co-author of Ranking the Vendors of B2B EBPP Solutions, said the service has a great deal of potential and that the economic slowdown could actually make it more attractive to corporate customers seeking ways to cut costs.
Now is the time companies will look at their internal systems, Ms. Moore said. With EBPP there is a huge cost savings possible from the time it takes for someone to track down an invoice, to get approval, to work on disputes, she added.
Despite long ramp-up and implementation times, EBPP growth will snowball, she said, as more businesses go online and enable themselves to route more invoices on the Web. She estimates that $27 million will have been spent on EBPP by businesses at yearend 2001 and said that figure will rise to $112 million by 2005.
Meanwhile, many other new electronic commerce sectors are hurting from the economic slowdown.
For example, Commerce One Inc., a provider of technology for online marketplaces, reported a second-quarter loss Thursday that was far more than expected partly because of the lingering slowdown and weak demands for its products. The Pleasanton, Calif., company lost $70.2 million, or 31 cents a share, compared with a loss of $16.2 million, or 10 cents a share, in 2000. On average, analysts had expected a loss of 21 cents a share.
Even if businesses are willing to spend on EBPP, though, only a handful of players will come out on top, Ms. Moore said. In her study, Bottomline was ranked second. The leader, BCE Emergis of Toronto, had a slight advantage because some of its features, such as dispute management and information displays, are more sophisticated, she said.
Alan Neely, chief marketing officer for BCE Emergis, said his company had an outstanding second quarter and is a quarter ahead of any internal plans in terms of revenues and customer signings for its e-invoicing product. It is scheduled to report its earnings Tuesday.
Greg Sward, director of market development at the third-ranked firm, Avolent Inc. in San Francisco, said the privately held company continues to have very strong demand for EBPP, with a steady increase of revenues and sales. He said companies will spend on EBPP because it cuts costs and makes cash-flow tracking easier and customer service better.