Bottomline acquires analytics firm

$8 million deal lands N.Y. 'pre-revenue company'

Bottomline Technologies is paying $8 million for a company with no financial track record, the company announced Jan. 30, the same day that it released earnings showing that it lost $7.3 million.

The Portsmouth-based cloud payroll and payment services firm announced the acquisition of Rationalwave Analytics, a “pre-revenue company,” meaning that the company hasn’t earned any revenue yet.

Bottomline will pay $1.2 million in cash and approximately 206,000 shares of stock for the company. Some 45 percent of that stock – under a four-year vesting schedule – will be issued to unidentified key employees who will be joining Bottomline.

Bottomline described Rationalwave as an early-stage predictive analytics company. The New York area startup explains on its website that it uses “the hidden treasure of business knowledge that lies buried deep in the mounds of big data.”

Bottomline won’t sell the analytics, instead they will be embedded in its major products, said CEO Robert Eberle, according to a transcript of the company's earnings call on SeekingAlpha.com.

The announcement came the same day that Bottomline reported that it lost $7.3 million, or 20 cents a share, in the second quarter of the fiscal year, which ended Dec. 31. That’s slightly more than the $7 million lost the year earlier and brings the loss to $13.3 million, or 37 cents a share, for the half of the fiscal year.

Those are the results the company is required to report according to Generally Recognized Accounting Principals. Bottomline would rather concentrate on its quarterly “core” net income. If you exclude such items as equity-based compensation ($5.5 million), non-cash interest payments ($2.8 million) and amortization of intangible assets ($8.2 million), the company said it would have made $10.3 million, though still less than the $11.8 million in core net income made during the second quarter of fiscal 2012.

Bottomline’s top line, however, shows a definite improvement. Revenues for the second quarter increased 15 percent, to $73 million. Nearly half of that was subscription and transaction revenue, which the company says represents growth in the future.

It now predicts $298.5 million in revenue and a core earnings per share of $1.25.