Revenues for the first quarter were $24.7 million compared with $21.7 million in the first quarter of last year. Net income for the first quarter was $147,000, or net income per share of $0.01, compared with net income of $679,000 and net income per share of $0.04 in the first quarter of last year. The quarterly results for the three months ended September 30, 2005 include approximately $1.7 million of expense associated with stock-based compensation as a result of Bottomline's adoption on July 1, 2005 of accounting rules that require the expense recognition of all stock-based awards.

During the first quarter, operating expenses of $14.0 million included net acquisition-related amortization of intangible assets of $887,000 and stock-based compensation expense of $1.7 million. Excluding these acquisition-related and stock compensation items, non-GAAP net income for the first quarter was $2.7 million, equating to non-GAAP net income per share of $0.12, compared with non-GAAP net income of $1.6 million and non-GAAP net income per share of $0.09 for the first quarter of last year. The first quarter operating results represent an improvement of approximately $1.1 million in non-GAAP net income over the same period of last year.

"We are pleased with another strong quarter of customer acceptance resulting in year-over-year growth of orders, revenue and non-GAAP operating profit," said Joe Mullen, CEO of Bottomline Technologies. "We believe that these operating results, combined with a strong cash position, provide the business with the foundation to capture future opportunities."

Customer Highlights:

• Major North American organizations such as Investors Bank & Trust, DI Foodservice, Konica Minolta Business, Lennox International Inc., New York University and the Air Force Services Agency selected Bottomline's solutions to automate financial processes.
  
• Sprint/Nextel, the recently combined cellular provider, selected the company's hosted Legal eXchange solution to automate the receipt of legal invoices.
  
• Received new orders during the quarter for Bottomline's BACSTEL-IP software solutions from leading UK-based organizations such as O2, TK Maxx and First Title. Over 3,400 customers have now signed on to Bottomline's BACSTEL-IP subscription offering.
  
• Added new customers including Alticor, DR Horton, Pharmavite, Cincinnati Public Library, O'Charleys, Pearson Education and Pittsburgh Airport Authority to the list of organizations utilizing Bottomline's document output management solutions.

Corporate and Product Highlights:

• Announced expanded functionality and new capabilities for Legal eXchange. Legal eXchange version 6.0 is a next-generation, Web-based legal spend management solution that enables corporate legal and insurance claims departments to streamline invoice management processes, reduce costs and gain better insight into outside counsel performance.
  
• Announced the expansion of the Electronic Banking Platform with the release of WebSeries Remote Hub to facilitate the secure, unattended transfer of payments-related information between corporate clients and banks. Other enhancements to the platform include new Pan-European payments and reporting capabilities, enabling European customers to consolidate multiple banking connections in anticipation of the new Single European Payments Area (SEPA) industry standard.
  
• Bottomline's Create!form product suite was named to the list of KMWorld Magazine's "Trend-Setting Products of 2005".
  
• Announced the appointment of Jeffrey Leathe to the company's Board of Directors. Mr. Leathe is the former executive vice president and chief financial officer of Apogent Technologies.
  
• Announced the appointment of Michael Kosek as Vice President and General Manager, Financial Process Solutions North America. Mr. Kosek is the former General Manager of New England operations for Microsoft.

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