Q4 2021 Bottomline Technologies Inc Earnings Call
[music].
Greetings and welcome to Bottomline technologies fourth quarter and fiscal year, 2020.1 financial results.
And 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 call over to your host Angela White, Vice President of Investor Relations. Thank you you may begin.
Good afternoon, everyone and welcome to Bottomline fourth quarter and fiscal 2021 earnings conference call on Angela White and joining me. This afternoon are Robert really Bottomline, CEO, and Bruce Bowden and CFO statements.
Statements made on today's call will include forward looking statements about bottomline 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 Bottomline and most recent periodic reports filed with the SEC for a discussion on 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 Bottomline 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 on the Investor Relations section of our website.
Or any 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 and good afternoon, and welcome to the Bottomline and fourth quarter fiscal 'twenty 1 earnings call.
As always we appreciate your interest and Bottomline.
Joining me today is Bruce Bowden and CFO.
Bush will provide a detailed review of our financial results and then our future outlook.
And after his remarks, we'll both be available for questions.
The fourth quarter was in many ways and excellent quarter for Bottomline.
We had an acceleration and subscription revenue growth.
With particularly strong subscription revenue growth and our key payment platforms.
<unk> X and P T X.
We had strong bookings I haven't seen the demand for our solutions and positioning us well for growth in FY 'twenty 2.
We made significant advancements in our product set.
With both enhancements to current offerings, and and ambitious and exciting new product pipeline.
We continued to post attractive EBITDA margins.
And buck or a weaker than expected quarter on 1 area legal spend management, we would have achieved our Q4 subscription revenue growth targets.
All in all we're very pleased with the fourth quarter and have completed the fiscal year on a strong position.
We entered the new year confident and 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 and the marketplace and confident about the coming year and 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 corner with $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.
And we achieved our committed goal of 100 million EBITDA for the year.
Looking a bit deeper and growth in the quarter.
We had really strong results and our key payment platforms payroll tax and Pete Tx.
We had slower growth and legal spend management, and we had hoped or expected as the recovery of transaction volumes from Covid is occurring.
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%.
And subscription growth for our key payment platforms, and <unk> ex and PT ex was 27%.
So lots of highlights and the quarter.
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 and the quarter evidenced our future opportunity.
Bottomline is a trusted brand and leading player and BTB payments well positioned to continue to drive growth.
Across our major product categories.
Cloud based payment platforms digital banking and legal spend with delivering market leading products back.
Backline and 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.
Highest growth product lines of Bottomline.
Our <unk> ex and <unk> solutions address a large and attractive market.
We help businesses paying get paid in a manner that is simple.
And secure.
Simple and on our platform seamlessly integrate with existing systems are intuitive and design and rich and Optionality.
Smart as our platforms allow our business to use the best payment vehicle or rail for any given payment our business partner that integrated payment capability and intelligent routing is just 1 of our competitive advantages.
Finally, and critically <unk>.
Secure.
And as our payment platforms bring enhanced cyber security and a world where and nothing's more important.
It all adds up to the optimal way for our business to pay and get paid.
And the U S.
<unk> 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 <unk> ex payers and the fourth quarter and we continue to advance the size scale and capabilities of the network.
And area of particular focus is vendor enrollment, while we've made significant progress and technology advancements.
And our enrollment is a valuable capability for our payers.
And critical and driving revenue for Bottomline.
And the U K, where the predominant provider of backs and electronic business payments.
Businesses rely on our <unk> technology, not just to make payments, but to get paid as well as we provide both payment and direct debit.
With open banking, we continued to expand the capabilities, we offer our U K business customers.
We've released <unk> secure payments pro and 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 and 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 and annual revenue run rate of $120 million and grew 27% and the fourth quarter.
The Tam for these capabilities is massive.
Some estimate 20 billion and.
And we see a super strong future ahead.
Turning now to our digital banking solutions.
Our DB IQ product, which we sell to banks for them and interface with and service their business customers.
Continues to be the leader and the banking platforms 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 3 banks chose our digital banking product and we expanded our relationship with a large global bank with over 600 billion and assets.
While the face of the banks, we work with to the thousands of business customers.
And I almost 200000 businesses are active on our banking platform and when all of our current platform implementations are completed that number could be 400000 businesses.
Deploying our platform as 1 of the bias 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.
And against other banks and their geography or region and increasingly against non bank Phanteks and challenger banks.
And they count on us to be first with new innovation, new capabilities and expanded opportunities for customer adoption and revenue.
B and a mission critical platform gives a significant add on sales and growth opportunities.
Had very good success with add on fraud solutions, and we're bringing on analytics and insight platforms as well.
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 our strategic position, we hold and the market banking.
Banking solutions at a slightly lower growth this past year.
As there was a lot of uncertainty around the economy due to COVID-19, which naturally made banks hesitant to embark on new significant projects.
A year ago, 1 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 were off from where we expect it to be and Q4.
That's really a function of the level of legal claims recovering after COVID-19.
It's pretty simple.
On people and on on the roads are 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 disclaims continue and returned 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 our leading product set.
Customer tenure is extremely long and churn is very low.
The revenue model is a fabulous 1 we.
And we grow as our customers grow as they acquire and add more volume.
We have and grow as lawyers raise their rates.
We continue to effectively sign on new customers.
We added 5 new insurers to the platform and 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 would've 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 and the year ahead.
Everything we do and 1 way or another is focused on business payments although related processes.
Business payments are complex with slight variations and nuances and different geographies. So we have different core offerings to address the various market needs.
But what we are doing this the same and critical way.
We help businesses pay and get paid.
Directly and through the banks that serve them.
We're competitively advantaged and a large and growing market.
The accelerating shift to digital payments and processes provides a favorable landscape across the board.
Every product we offer addresses this shift.
From where we said.
There is no business, we see more focused on business payments.
And no business, we compete with that as a better product set while market position.
The fourth quarter was and very good quarter and in many ways and excellent quarter.
We had an acceleration and subscription revenue growth driven by particularly strong revenue growth and <unk> ex and <unk>.
We had strong bookings and we posted solid EBITDA.
Our plan for the new year is focused on driving subscription revenue growth and our 15% to 20% target range.
We're confident we'll execute against that plan and.
And that shareholders will be rewarded.
Now I'll turn the call over to Bruce to review, our financial results and and both of US will be available for questions. Following his remarks.
Thanks, Rob.
I'll start this afternoon by reviewing our Q4 and fiscal year performance and then I'll cover guidance for Q1, and the full year for our fiscal 2022.
I want to leave you all with 3 basic messages today.
First our business performed very well and Q4 and almost all respects and but for temporary challenges to legal spend management, we would have hit all of our targets.
Second and Relatedly, our primary payment platform products, <unk> ex and Pts and have been shining stars on our portfolio.
And they are now on a $120 million run rate and growing well over 20%.
And third we remain confident that we will achieve our FY 'twenty 2 guidance as we projected last quarter.
Let's start with Q4 of 2021 and the results for the full fiscal year.
We are pleased with our performance across the business we.
We are investing with discipline as we seek to grow our leadership position and this large and growing market.
Our investments and products and go to market are positioning us to push our subscription revenue growth to a sustainable 15% to 20% level. This is our primary goal.
We've also committed to maintaining a healthy profit margin, which we did during fiscal 'twenty 1.
We achieved our guidance levels for Q4 total revenue EBITDA and earnings per share.
Our ability to hit these primary performance metrics very consistently across the past several years.
As a testament to the durability of our business.
The proficiency of our teams and our conscientiousness and managing our cost structure.
Here are some of our key financial results for Q4.
Subscription revenue was $101 million, reflecting 15% year over year growth.
Subscription revenue was 83% of total revenue for points higher than and the same period a year ago.
Total revenue was $122.1 million up 10% from Q4 of fiscal 'twenty.
Adjusted EBITDA was $24.2 million or 20% of revenue.
And core operating income was $15.4 million, which translates to <unk> 27 of earnings per share.
For the 2021 fiscal year subscription revenue was $385 million total revenue was $471 million gross.
Gross margin was up 90 basis points.
EBITDA was $100 million or 21% of revenue.
And EPS was $1.16 per share.
As you know a key strategic focus for US has been on driving subscription revenue higher both in terms of year over year growth and also as a percentage of our overall revenue.
Our Q4 subscription revenue growth of 15% came and consistent with our overall, 15% to 20% objective slightly below our guidance.
And subscription revenues are now 83% of total revenues.
Drivers of our subscription revenue performance as we exited the fiscal year were a mix of very strong growth and most of our product lines and a few temporary headwinds from others.
In Q4 as expected, we saw subscription revenue growth strongest and our payment platforms.
We have noted strong interest from the investor community to understand more about <unk>, and <unk>, which are market, leading payment platforms for the U S and European markets respectively.
As Rob mentioned, the combined year over year growth rate of <unk> ex and <unk> in Q4 was 27%.
These products are now on an annual run rate of $120 million and subscription revenue.
The growth we are seeing is a strong indicator of the continued competitiveness and attractiveness of our offerings.
And they are on a very promising trend.
Over the 4 quarters of fiscal 'twenty, 1 growth continued to accelerate across these payment platforms.
We will continue to keep investors updated on our progress with these important products in response to the interest many of you have expressed.
Digital banking subscription revenue growth for the year was solid at 12% despite declining slightly in Q4 and connection with last year's termination fee, resulting from the acquisition of legacy Texas.
Legal spend management grew 3% for the year, but picked up to 6% in Q4.
This suite of products saw the continued impact from Covid early in the year and we continue to see some lag and the recovery of transaction revenue as Rob mentioned.
But the growth of <unk> did accelerate throughout the year and we expect to see this dynamic continue.
Excluding legal spend management and Q4 'twenty 1 our subscription revenue streams grew 18% over Q4 of 'twenty.
And if we exclude banking subscription revenue growth was 21%.
So again, the 15% number for the quarter reflects a contrast of really good growth from our payment platforms, a tough lap for banking.
And slower than expected reacceleration of legal spend management.
Let's turn to bookings.
Subscription bookings for the quarter were $25.7 million a substantial increase over last quarter's bookings of $20.3 million.
This pickup in bookings is 1 of many reasons that we believe we are on track to achieve our 15% plus subscription revenue growth target for fiscal 'twenty 2.
As Rob mentioned and as we noted in our release during the quarter. We added 32 clients to our <unk> ex customer base.
In digital banking 3 banks chose us as their banking solutions provider.
And 5 new customers chose our legal spend management product.
Now, let's talk about profitability.
And the fourth quarter, our total gross margin increased by 80 basis points from the same period a year ago.
For the full year total gross margin was 90 basis points higher than last year.
And subscription gross margin increased again to 61, 1% of revenue.
The combination of revenue growth and margin expansion demonstrates the scale, we are achieving and our business and is providing us with the means to continue investing to expand our product set and accelerate that growth.
We expect a continuation of this positive trend in the future.
During the year, we continued to focus on organic investment and our technology and products, including machine learning and data analytics to enhance our core products.
Expanded UI and UX capabilities our.
Our hosted platforms.
And expanding our go to market teams.
Sales and marketing, which was 22, 9% of revenue in Q4, and 21, 5% of revenue for the year, which is 160 basis points higher than last year increased as we expanded the teams that are driving bookings and revenue.
Product and development was 15, 2% of revenue in Q4 and for the full year consistent with the last Q4 and last year.
This combination of improved gross margins and increased growth investments drove adjusted EBITDA in Q4 of $24.2 million.
Which is 19, 8% of revenue.
For the full year, adjusted EBITDA was $100 million or 21, and 2% of revenue.
Versus 95 million 21, 5% of revenue last fiscal year.
Turning to the balance sheet and cash flows we ended the year with $144 million and cash and cash equivalents.
And with $130 million drawn on our revolving line of credit of $300 million.
For the quarter operating cash flow was $15 million capital expenditures were $8 million and free cash flow was $7 million.
We had no other noteworthy uses of cash during the fourth quarter and we did not repurchase shares.
I'd like to turn now to our outlook for Q1.2022.
We expect subscription revenue of $102 million to $104 million, reflecting 13% to 15% year over year growth.
We expect total revenue of 121% to $123 million or 8% to 9% year over year growth.
We expect adjusted EBITDA of $23 million to $25 million, which is 19% to 21% of revenue.
Core operating income of $14 million to $16 million.
And core EPS of <unk> 24 to 2006.
Our Q1.2022 guidance factors in some continuation of the slower than expected recovery of legal spend management and a bit more impact from that singular termination on the year over year compare for our digital banking solutions.
For those reasons Q1, 'twenty 2 growth will be as we expected it and.
And does not compromise our confidence and our full year guidance.
Our projected EBITDA for the quarter remains at our target level, even with this slightly lower revenue.
The first quarter will also reflect increased compensation expenses as we implement salary increases which had been postponed during COVID-19.
Today, we are reaffirming our full year fiscal 'twenty 2 guidance and its entirety.
We continue to expect subscription revenue of at least $445 million, reflecting 15% to 16% year over year growth driven by the continued strength of our payment platforms.
Total revenue of $520 million or 10% year over year growth.
And adjusted EBITDA of $106 million, 20% of revenue.
Today, we're also providing full year fiscal 'twenty 2 guidance for operating income and EPS.
Core operating income is expected to be $68 million to $71 million.
And core EPS is expected to be $1.11 to $1.15.
I'd like to take 1 more moment to focus on our 2022 growth expectations.
As you know we have a set of product lines with different growth profiles.
We expect our <unk> ex and PT ex products together to grow between 20% and 30% and 2022 <unk>.
Consistent with the potential of the payments market as well as our plans and execution to sell into that market.
Some of our other products are likely to perform below that level in fiscal 'twenty 2.
But both banking and legal spend management are expected to overcome the temporary impacts on Q4, 'twenty, 1 and Q1 'twenty 2 and over the longer term, we expect them to perform within our overall, 15% to 20% subscription revenue growth range.
As a result overall, we remain confident that we are driving our business to sustained 15% to 20% subscription revenue growth, while maintaining attractive margins.
We're happy with the continued progress that our outlook implies.
And very excited to start a new year of growth and value creation for our customers teams and shareholders.
So again 3 basic messages today.
1 our business performed very well and Q4.
<unk> <unk> and <unk> now comprised of $120 million of recurring revenue growing well over 20%.
And 3 we remain confident that we will achieve our FY 'twenty 2 guidance.
Now we will open the call for questions.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.
If you'd like to ask a question you May press star 1 on your telephone keypad, a confirmation tone will indicate your line is and the question queue.
You May press Star 2 if you would like to remove your question from the Q4 participants using speaker equipment and may be necessary to pick up your handset before pressing and Starkey. Our first question comes from the line of Andrew Smith with Citigroup. Please proceed with your question.
Okay.
Hey, Rob Bruce Angela is taking my questions I appreciate the additional disclosure and commentary.
I wanted to start off with a question on legal spend could you just talk us through how volumes progressed throughout the quarter.
Just to get a flavor for share vitrectomy, there and maybe a little bit on how sort of you're seeing volume strength coronary day.
And then if I could just 1 more on there.
Yes.
And your and your FY 'twenty 2 outlook, you've kind of indicated.
I think gradual improvement and the spin, but it can be a little.
And in terms of what's baked in there that'd be great. Thanks.
Yeah, Hey, Andrew it's Bruce Thanks for the question, Yes, we did see LSA and volumes recover steadily over the course of the 4 quarters of the year as.
And as I mentioned in my comments.
LSI and grew 3% for the year, but 6% and Q4. So that gives you an idea of the.
The kind of inflection Nevertheless, as you know, we expect <unk> to get toward or or.
And.
Or into the 15% to 20% subscription revenue growth range that we target for all of our products. So it's still not where we want it to be but we do see good trends and we.
We've been watching week by week and month by month and.
So far we're on a good track going into Q1.
Okay.
Okay, that's great to hear and I think.
No.
And what investors kind of look for in terms of the FY 'twenty outlook is 8.2 day.
Sort of confidence and consistency in terms of hitting the numbers and.
I know you mentioned confidence throughout sort of the script and the prepared remarks, but.
If you could just give us a little bit more detail in terms of.
What's driving.
And the confidence, particularly in the 50% to 60% share for subsequent part of it is presumably backlog part of it is the assumption that volumes are going to recover and.
Any more detail.
It didn't help us, that's giving you confidence and achieving or exceeding the Alex and provided would be helpful. Thanks.
I'll make some comments on that first can comment as well.
And on 1 of the reasons, we gave the growth excluding a particular area.
And is really if that area returns to what we would expect that as when we could see so for example, our subscription growth this quarter, excluding the LSA and was 18%.
You can see what happens as Ela Sam returns to normalized performance.
Similarly weighted a tough compare if you take out banking and by the way believing in.
Sam, but just removing our banking solutions.
21%, so you've really got a situation and in this quarter, where we're firing very very well on most cylinders exceptionally well as we would expect a payload acts and Pts and we were held back a bit by a slower recovery and <unk>.
And some year over year compare on banking, we know the year over year compare on banking goes away after the first quarter and.
We're confident we're continuing to see the volumes move up on.
Hello, Sam.
<unk> management, so I don't know if thats helpful, but thats, how I would think about it on a high level, there's all sorts of initiatives programs and everything else at the detail.
Big picture just looking at it.
And why we gave those numbers and Thats why we a big part of why we've got so much confidence next year.
That's helpful. Thanks, Thanks for that context, Rob.
If I could sneak 1 more and from previous before I hop back in the queue.
And you've been there price for some time now just curious if you can.
And it should.
Share, perhaps and <unk>.
Longer term kind of revenue and margin profile for business and you see it.
And thank you sorry.
And that business just anything I know you guys, Bob you said, 5% subs growth.
But just thinking kind of longer term top and bottom right algorithms and anything around that would be helpful. Thanks.
Yes, Thanks, Andrew I mean for me, it's really simple I think if we can drive the business towards 20% subscription revenue growth and 20% EBITDA margins that place on the rule of 40 spectrum will be will be a very attractive valuation point.
And we will see how we progress across the course of fiscal 'twenty, 2 and getting that 15% up towards the 20 I will say, we've had very very favorable dynamics around <unk> ex <unk> ex and also our financial messaging products over the past couple of quarters, just have really good reacceleration there.
And and.
And as we as we said a couple of times on the call if not for the hiccup and <unk> and the lapping and banking I think.
And this would have been a tremendous quarter.
Alright, thanks for that Chris and I'll hop back on the Q I appreciate the comments, Rob Chris Thanks, a lot and Kendra Yep.
Our next question comes from the line of George Sutton with Craig Hallum. Please proceed with your question.
Hey, guys. This is James on for George just wanted to ask about the partnership with Bill Trust.
Can you provide any color on sort of how thats progressed in terms of suppliers, you've on boarded volume or just sort of any incremental detail on how that broadens your scope of opportunity.
Sure we're not we're not disclosing volume, so our transactions or something along those lines, but it's a really positive way and.
And extend our network and fulfill trust.
<unk> to leverage their neck work I've talked about this and the past so I think over time, we'll see more interoperability between platforms like <unk> ex build trust business payments network.
That way.
Supplier slash vendors and rolled once multiple networks can leverage that process and you get to true automation across business payments. So it's going well and I think it's a first step for us. So I think it's not over the next 90 days, but I think over the course of time, you'll see more.
Our relationships like that amongst other networks, including <unk> ex and Bottomline.
Got it and then Rob you mentioned.
200000 businesses on GBS Q could you sort of talk about how that number has grown and the last 1 or 2 years and I guess, how quickly can you perform the implementation and that would take that number up to 400000.
Well 2 different paces.
Outperform and implementation.
And that can occur as quickly as 9 months.
Ken and more complex environment could be double that.
And thats because we are integrating so many different back office systems and to provide all of the.
Visibility and data for the bank's customers in terms of the ramp that's not really a function of our technology. That's a function of the bank's process and how they will bring their customers on won't be very much part of that bringing on a subset of customers and then ramping overtime, but thats really not driven by us that ends up being driven.
By the bank and their customer migration strategy.
Got it and that's it for me thanks, guys.
Our next question comes from the line of Gary <unk> with Barrington Research. Please proceed with your question.
Good afternoon.
Everyone Hey, Ryan.
You mentioned on the call debt the legal spend management.
Business.
Was somewhat predicated on driving and accidents and crashes and stuff like that did I hear that right.
Well sure. That's 1 of the types of clients that will be debt or insurance companies will be defended and sure absolutely.
So the.
The issue with legal spend is more or less debt that you are not having the same level of accidents and driving as you had pre pandemic.
But it really doesn't have anything to do with the courts B and all clogged up either because some courts are backlogged or whatever I'm, just trying to get an idea of.
What are the drivers there.
I think theres some mix of drivers and it's also a trailing indicator because if you've got.
Some things travel while the second airports open up and everyone feels safe travel occur rather instantly, but claims is a trailing indicator because something has occurred.
And event than someone has filed a claim and then there's litigation so that process all stretches out so thats why its trailing I think all of the things you referenced our contributors and the level of activity Inc.
The claims themselves the level of activity and the speed with which those claims that are being are able to be resolved I think they are all contributing but as we indicated we're seeing that improve we were just a little aggressive or optimistic and how much we thought that would approve and Q4.
That's really the 1 difference.
Okay, and then and.
Q4, your sales and marketing expenses.
And was at the highest level of as a percentage of sales as it was throughout the whole year is that level of about $22, 923%.
Something we should apply to fiscal 'twenty, 2 as because your increase in Europe.
<unk> investment and your sales force.
Yes, Thanks, Gary.
I think the <unk>.
Way to think about it is maintaining the 20% EBITDA level overall, we might move the money back and forth a little bit over time programmatically and also through the shifting of where the people cost is between sales and marketing and product.
But but on the whole, we're really very focused on maintaining that 20% EBITDA level.
Okay. Thank you.
Thanks, Greg.
Our next question comes from the line of my intend and with Needham. Please proceed with your question.
Hey, good evening, guys, it's actually Kyle Peterson on for <unk>, Thanks for taking the questions.
It was really helpful to see some of the.
Payments.
Our disclosures and how should we think about that.
The convergence and the revenue and and how quickly new clients ramp, especially given the kind of impressive momentum and you guys have had signing on new clients during COVID-19.
Yes, the ramp cannot Barry so ramp up our bookings will vary by product.
As I have outlined already for example on our banking.
<unk> and Thats really about subscription and when we ever go live will be realizing the full revenue, even though theyre ramping customers and.
Platforms like <unk> ex and <unk>.
Legal spend manner.
This much more of a ramp we generally think of that as a 3 year ramp.
More vendors are coming on.
And more payments are being made through that platform and the case of <unk> ex on legal spend management, where law firms are being brought on at the system over time or their bills to be processed through our platform.
And there is some of the product sets have a 3 year ramp others forward debt be driven more by implementation cycle to a full subscription.
Hey, Kyle it's Bruce So I just wanted to make sure I'm clear on your question because I think you were suggesting that we gave some information about payment platform.
Our bookings levels. The number that we gave on the call that we had disclosed before as the $120 million number which is the actual revenue run rate from Q4 from <unk> ex and <unk>. So what that means is we did $30 million of revenue in Q4 for <unk> ex and <unk> 30.
<unk> 4 is 120 I just want to make sure that we didn't debt we didn't miss debt that we didn't talk past each other on that 1.
Oh, yes no.
Yes, you are correct.
And I spoke there.
Thanks.
<unk>.
And then just a quick volume.
On the on the digital banking pipeline I know like given the longer implementation cycles.
And kind of a deal is to go live how would you describe right now kind of what's in the pipeline and the degree of visibility.
And 4 deals kind of signed but not yet kind of alive and contributing revenue and how should we think about that progression through the year.
Well a couple of things I would comment on there first of all I wouldn't want you to go away with the idea of a long implementation cycle is a bad thing.
It's actually really powerful retention for us all of those all that time, whether thats 3 quarters 4 quarters, 5.6 or whatever it is that's all time and worked on where that bank has made commitment technology and investment other resource investment and our platform. So thats part of the 1 of the many things that.
Drives our lifetime customer value and our retention, where we would expect to hold customers for a decade or more.
That's not just on the implementation its commitment and new technology and the like but Thats. The first part I wouldn't view that as a negative.
At all in terms of the pipeline and number 1 thing that drives that is product.
We have the top product and the market for digital banking our business DB IQ platform is that clear later by any industry analysts and so as banks are looking to increase competitiveness as banks are looking for new ways to drive revenue and retain customers grow wallet share that all plays to that product and labor.
Related.
Offerings, we have around debt. So we have right now we have a very strong pipeline.
<unk> commented on was more of the caution of a full year, where if you think back a year ago. It was much more uncertainty about the economy credit risk and banks are only going to be as strong as their customer base on their call.
Clients, so that's where more of the softness or concern was we look forward. We're excited for the year. Once we clear the compare in Q1, we expect to be posting strong results and banking solutions.
And.
Alright Thats helpful. Thanks, guys.
Okay.
Our next question comes from the line of Cris Kennedy with William Blair. Please proceed with your question.
Hey, guys. Thanks for taking the questions and I appreciate the additional disclosure.
And that the payment platforms revenue that 120 is that about evenly split between <unk> ex and Pts.
Hey, Chris This is Bruce <unk>.
<unk> is a little bit bigger, but they're not hugely different.
And size.
Okay got it and then can you give a little bit of and update on and moving the legal spend management business to the U K, how is that going and can you give an update on that thanks guys.
Yes, that's going real well, we have a spare.
A specialized team obviously, we have a presence and the U K, but we've brought on a specialized team.
And we're in the process.
Implementing and going live with a couple of significant customers. There. So that's gone very very well for us.
Alright, and then I'll sneak 1 more historically.
Given kind of the signed digital banking revenue that's in your.
Backlog, but hasnt been implemented yet do you have and update on that thanks a lot.
Yeah, Hey, Chris that that number right now is $11 million.
Okay. Thank you.
Our next question comes from the line of John Rodriguez with D. A Davidson. Please proceed with your question.
Hi, This is John on for Pete Heckman, just wanted from us.
Revenue and payment volume growth rates, specifically for payment payable next.
I am sorry, John could you repeat that we lost it.
What was the revenue and payment volume growth rate specifically for <unk> ex.
Well.
We havent payment volume.
And it doesn't correlate to revenue and <unk> access to different revenue model.
So it really wouldn't be particularly relevant and then something that way.
And disclosed in that manner.
And <unk> as you probably know.
The majority of transaction volume it is on.
On the legacy model.
It's still the case today, but worried about 250 billion.
Going through the <unk>.
And <unk> ex network annually.
And John and the growth rate on <unk> ex plus P. T X for Q4 was 27% I think I think you.
We're also asking that.
Got it thanks, so much.
Hey.
Our next question is a follow up question from the line of Andrew Schmidt with Citigroup. Please proceed with your question.
Hey, guys. Thanks for taking my follow up I just wanted to ask.
2.1 question that ill and I'll ask a follow up but first question.
Just in terms of the sales pipeline across the product across the product spectrum should talk a little bit about that and.
And I know you sort of talk to sort of bookings pipeline, but how does that how does the sales pipeline and score up relative to kind of.
And now.
Okay and its expectations for the current quarter.
Thanks.
Alright, well the first piece I'd comment on sales pipeline and this just looking net sell succession and the fourth quarter of $25.7 and bookings. It was a real strong number force US number we're very happy with.
Success across a mix of products and 1 of the things that drives our pipeline as our digital marketing team and presence and we've got a fabulous on digital marketing team we have.
We have outstanding digital content and tools. So the top of our funnel is always going to be very strong and what's going to drive selection and ultimate latest product and.
And we've made the investments and have the leading product set you are pretty familiar with where we sit across the board.
We feel very good and again Q4 numbers show us and we'd expect the same thing in Q1 throughout FY 'twenty 2 will do a good job of winning those opportunities just because where we are on the current product and the last thing I'd mention is where.
Where we are on our innovation agenda, what we can show and commit to customers, where they will see from us and a year 3 years 5 years from now is really powerful everybody knows technologies not staying where it is today. So what you want for your choosing someone as a partner or choosing a vendor you want to choose someone and I was going to be the right vendor today and the right vendor and 3.
And 5.8 and 10 years, so thats, a big and important part of our innovation agenda.
Great. Thank you for that and then just a follow up.
If you could talk about kind of how debt.
The competitive environment is evolving around <unk>.
And then depend whether youre selling payload ex or full stack Inc.
But what are you and get your sense on that and then just to tag on to that.
And is having a more sort of holistic set across AP AR and then on Treasury management.
Help you get more shots on goal on pipeline perspective.
Kind of a 2 part question and environment net net the.
And the evolving product.
And with you before.
Let me, let me first off from a competitive standpoint, there are things, we clearly do on <unk> ex better than anybody.
And we feel things, where the technologies and capabilities, we've adopt we felt for vendor enrollment a critical differentiator.
Ability, we things and we bring from our cyber fraud perspective, the enterprise.
And we're not on a platform for a sole proprietor, we're not a platform for our business and it doesn't have and accounting team of financial function at any level. Those are small businesses and there are other solutions for them, but as soon as you get to and accounting function and as soon as you get to of enterprise. If you have a P. A R.
Cyber fraud or C. So office that plays right to Bottomline and worked from a competitive standpoint, we don't see anymore and it was a better solution than we do there.
It was really intuitive the second part of your question and Youre right, we get multiple shots on goal because somebody could come via Bottomline customer for receivables and then expand and treasury expand the payments and a full PCL platform.
It could be a treasury customer and expand the payments and.
And receivables so that's definitely part of the strategy, we will get more.
It's an interesting way to phrase it but it will absolutely generate more shots on goal.
Okay.
Yeah.
Alright, Thanks, a lot Rob appreciate it.
Thank you.
We have come to the end of our question and answer session I would like to hand, it back over to Robert I believe for closing remarks.
Well. Thank you everyone and thank you for your retention and the fourth quarter was a very good quarter for Bottomline and were really excited as we head into the new year. So look forward to reporting on Q1.
As we go forward and again appreciate your time and attention.
Okay.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.