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Bottomline Technologies (EPAY) Q1 Earnings: What's in Store?

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Bottomline Technologies (EPAY - Free Report) is slated to release first-quarter fiscal 2019 results on Nov 8.

Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average positive surprise being 19.9%.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate and recorded year-over-year improvement on both counts.

The company’s earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 29 cents and were way higher than the year-ago quarter’s figure of 28 cents.

Revenues of $106 million topped the Zacks Consensus Estimate of $101 million and grew 12.8% from the year-ago quarter.

Let’s see how things are shaping up prior to the upcoming announcement.

What to Expect?

For the fiscal first quarter, the company expects $99 million to $100 million of total revenues. The Zacks Consensus Estimate for revenues is pegged at $100.2 million, indicating year-over-year improvement of 9.8%.

Further, the Zacks Consensus Estimate for earnings stands at 33 cents, which is 10% higher than the figure reported in the year-ago quarter.

Factors to Consider

Bottomline is well positioned to capitalize on the growing business-to-business payments market. Significant investments in several solutions such as Digital Banking, the Partner Select platform, and the cyber fraud and risk management suite are helping the company to record large deal wins.

Broad-based demand for the company’s cloud-based business payment offerings is a tailwind. This is evident from strong growth in subscription and transactions revenues, which remains the major contributor.

The Zacks Consensus Estimate for subscription and transactions revenues is pegged at $70 million, which is 14.8% higher than the figure reported in the year-ago quarter.

We note that Bottomline’s partnership with Visa (V - Free Report) and MasterCard (MA - Free Report) for integrating its Paymode-X payment network for B2B payments is a key driver. Channel remains an important part for the business. On the last earnings call, management noted that the company is witnessing more success with channel partners for Paymode-X in the United States.

However, increasing investment in product development coupled with several large ongoing conversions in Banking Solutions is likely to weigh on margins.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Bottomline currently carries a Zacks Rank #3 and has an Earnings ESP of 0.00%.

A Key Pick

Here is a stock that you may consider as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:

Adobe (ADBE - Free Report) with an Earnings ESP of +0.19%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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