Bottomline earnings cloud has a silver lining

Portsmouth-based Bottomline Technologies reported that it didn't earn much money for its shareholders when it released its quarterly earnings last week, but it did beat expectations in its "core" income, getting a boost in share price that has lasted for days.

The financial services company's net profit was $18,000, compared to $1.7 million for the same quarter in 2011.But if you ignore things like amortization of intangible assets and equity-based compensation, the company earned $10.5 million, or 30 cents a share, compared to $8.9 million a year earlier.

And that 30 cents a share not only beat last year's core EPS by 4 cents, it beat Wall Street expectations of 22 cents a share.

That, in the words of the Motley Fool website, "reinforced optimism over the cloud-based tailwinds." The firm has been moving into handling bank and payroll services itself through the cloud, as opposed to just selling software.

Its stock price, which was dipping below $22 Nov. 7, peaked at over $26 a share on Nov. 8, and it was in the $24 to $25 a share range into Nov. 12.Further fueling the optimism was some $61.7 million in quarterly revenue — an 18 percent increase from 2011. The biggest increase came from subscription and transaction revenue, which now accounts for nearly half (some $28.5 million) of its quarterly revenue. That's a 62 percent year-over-year improvement.

But increases in expenses wiped out the gain. The cost to service those subscriptions rose up over $5 million. Marketing costs rose $3 million. Product development costs rose more than $2 million and administration expenses increased by $1.5 million.

Indeed, the company ran a slight operating loss, and was only put in the black with an income tax adjustment.