Safe Harbor Non-GAAP Financial Information

Transcription

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2 Safe Harbor This document contains forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including financial projections subject to risks, uncertainties and other factors that could materially affect our actual results. Actual results may differ materially from those indicated by such forwardlooking statements as a result of various important factors including, among others, competition, market demand, technological change, strategic relationships, recent acquisitions, international operations and general economic conditions. Any forwardlooking statements or financial projections represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forwardlooking statements or financial projections. Further, our financial projections do not consider the impact of any pending or future changes to accounting pronouncements under US Generally Accepted Accounting Principles. For additional discussion of factors that could impact our operational and financial results, please refer to our Form 10K for the fiscal year ended June 30, 2017 and subsequently filed Form 10Qs and Form 8Ks or amendments thereto. NonGAAP Financial Information The financial results and projections in this document are presented on both a GAAP and a nongaap basis. NonGAAP projections include core operating income, adjusted EBITDA, adjusted EBITDA margin, core operating margin, core earnings per share and constant currency growth. Reconciliations of our nongaap results and guidance to the most directly comparable GAAP results and guidance are included at the end of this document. 2 2

3 Q4 Core Results Strategic Plan Subscription and Transaction Revenue Growth 24% Well above 1520% target Drive subscription and transaction revenue growth of 1520% per year Established Products Subscription and Transaction Revenue Total Revenue Core Operating Income 54.3M 79.8M 16.0M Attractive economic model Invest in market leading cloud payment solutions Core Operating Margin 20% Sell key product sets in subscription and transaction revenue model Transitioning Products Subscription and Transaction Revenue Growth 8% Subscription and Transaction Revenue 16.8M Total Revenue 26.7M 18 million of annual subscriptions currently in implementation and not yet live Scale our predictable and profitable business model Continue to extend our product platform capabilities Consolidated Bottomline Core Operating Income 4.8M Core Operating Margin 18% Subscription and Transaction Revenue Growth 20% Subscription and Transaction Revenue 71.1M Total Revenue 106.5M Core Operating Income 20.7M Core Operating Margin 19% Margins will expand as new subscriptions go live 26.1 million EBITDA is up 25% yearoveryear, reflecting attractive business model Adjusted EBITDA 26.1M Adjusted EBITDA Margin 24% Increased 25% year over year Core EPS 0.35 Core operating income, adjusted EBITDA, adjusted EBITDA margin, core operating margin and core EPS are nongaap measures. Definitions and reconciliations to the most directly comparable GAAP 3 measures are included at the end of this document. 3

4 Revenue Mix Evolution 67% of revenue is subscription and transaction, growing at 1520% per year (up from 63% a year ago) 84% of overall revenue is recurring Strategically, we provide services only as necessary to ensure our customers success We offer software licenses only in select market circumstances Subscription and Transaction Revenue 84% of Revenue is Recurring Maintenance 17% Maintenance and Services Revenue Fiscal Years Software Revenue Subs & Trans 67% Services 11% Software/ 5% Fiscal Years Fiscal Years 4 4

5 Q1 19 Core Guidance (in millions, except for per share amounts and margin percentages) Established Transitioning Total Bottomline Subscription & transaction revenue Total Revenue Core operating income (1) Core operating margin % (1) 18 19% 10 14% 18 19% Adjusted EBITDA (1) Adjusted EBITDA as a % of Revenue (1) 23 24% Core net income per share ) Core operating income, adjusted EBITDA, core operating margin and core EPS are non GAAP measures. Definitions and reconciliations to the most directly comparable GAAP measures are included at the end of this document. 2) Transitioning product represents our Banking Solutions Segment as defined in our SEC filings. 5

6 FY19 Core Guidance (in millions, except for per share amounts and margin percentages) Established Transitioning Total Bottomline Subscription & transaction revenue Total Revenue Core operating income (1) Core operating margin % (1) 21 22% 6 12% 18 20% Adjusted EBITDA (1) Adjusted EBITDA as a % of Revenue (1) 23 24% Core net income per share ) Core operating income, adjusted EBITDA, core operating margin and core EPS are non GAAP measures. Definitions and reconciliations to the most directly comparable GAAP measures are included at the end of this document. 2) Transitioning product represents our Banking Solutions Segment as defined in our SEC filings. 6

7 Reconciliations to the Most Directly Comparable GAAP Results and Guidance and Definitions of NonGAAP Financial Measures 7 5

8 Q1 19 GAAP Reconciliation (in millions, except for per share amounts and margin percentages) Established Transitioning Total Bottomline Subscription & transaction revenue Total Revenue GAAP Operating income 0 1 GAAP Operating income % 0 1% GAAP Net Income (loss) (1) 0 GAAP Net Income (loss) per share (0.01) ) Transitioning product represents our Banking Solutions Segment as defined in our SEC filings. 8

9 Q1 19 Guidance Reconciliation (in millions, except for per share amounts) Operating Income Operating Margin Total Bottomline Q1 19 Q1 19 GAAP Operating Income / GAAP Operating Margin % Adjustments: Amortization of Intangible Assets 5.2 5% Equity Based Compensation % Global ERP system implementation and other costs 1.5 2% Core Operating Income / Core Operating Margin % GAAP Net Income (loss) per share (0.01) 0.00 Adjustments: Amortization of Intangible Assets 0.13 Equity Based Compensation 0.26 Global ERP system implementation costs 0.04 Amortization of debt issuance and debt discount costs 0.00 Tax effect on non GAAP income (0.09) Core net income per share ) Core operating income, adjusted EBITDA, adjusted EBITDA margin, core operating margin and core EPS are non GAAP measures. Definitions are included at the end of this document. 2) The table above presents a reconciliation of our Core guidance to our GAAP guidance. It is impracticable to separately reconcile GAAP guidance to Core guidance for the Established Products and Transitioning Product components of our business, because the non GAAP adjustments affecting such a reconciliation are excluded from our operating segment measures of profit or loss and therefore these amounts are not tracked in or allocated to any individual operating component of our business and are not available without unreasonable efforts. 3) We have assumed a Core tax rate of 25%. For Income (expense) we have assumed consistent draw on our revolver and consistent interest rates. 9

10 Q1 19 Guidance Reconciliation (continued) Reconciliation of Reconciliation of Adjusted EBITDA Adjusted EBITDA Margin Q1 19 Q1 19 GAAP Net income (loss) / GAAP Net income (loss) margin (1) 0 (1) 0% Adjustments: expense, net 1.3 1% Provision for income taxes 0.7 1% Depreciation and amortization 5.0 5% Amortization of acquired intangible assets 5.2 5% Stock based compensation expense % Global ERP system implementation and other costs 1.5 2% Adjusted EBITDA / Adjusted EBITDA margin % 1) The table above presents a reconciliation of our Core guidance to our GAAP guidance. Adjusted EBITDA and Adjusted EBITDA margin are non GAAP measures. Definitions are included at the end of this document. 2) We have assumed a Core tax rate of 25%. For Income (expense) we have assumed consistent draw on our revolver and consistent interest rates. 10

11 FY19 GAAP Reconciliation (in millions, except for per share amounts and margin percentages) Established Transitioning Total Bottomline Subscription & transaction revenue Total Revenue GAAP Operating income GAAP Operating margin % 3 5% GAAP Net income 7 9 GAAP Net income per share ) Transitioning product represents our Banking Solutions Segment as defined in our SEC filings. 11

12 FY19 Guidance Reconciliation (in millions, except for per share amounts) Operating Income Operating Margin Total Bottomline FY19 FY19 GAAP Operating Income / GAAP Operating Margin % Adjustments: Amortization of Intangible Assets % Equity Based Compensation % Global ERP system implementation and other costs 3.2 1% Core Operating Income / Core Operating Margin % GAAP net income per share Adjustments: Amortization of Intangible Assets 0.51 Equity Based Compensation 1.06 Global ERP system implementation and other costs 0.08 Amortization of debt issuance and debt discount costs 0.01 Tax effect on non GAAP income (0.44) Core net income per share ) Core operating income, adjusted EBITDA, adjusted EBITDA margin, core operating margin and core EPS are non GAAP measures. Definitions are included at the end of this document. 2) The table above presents a reconciliation of our Core guidance to our GAAP guidance. It is impracticable to separately reconcile GAAP guidance to Core guidance for the Established Products and Transitioning Product components of our business, because the non GAAP adjustments affecting such a reconciliation are excluded from our operating segment measures of profit or loss and therefore these amounts are not tracked in or allocated to any individual operating component of our business and are not available without unreasonable efforts. 3) We have assumed a Core tax rate of 25%. For Income (expense) we have assumed consistent draw on our revolver and consistent interest rates. 12

13 FY19 Guidance Reconciliation (continued) Reconciliation of Adjusted EBITDA FY19 Reconciliation of Adjusted EBITDA Margin FY19 GAAP Net income / GAAP Net income margin % Adjustments: expense, net 5.2 1% Provision for income taxes 1.5 0% Depreciation and amortization % Amortization of acquired intangible assets % Stock based compensation expense % Global ERP system implementation and other costs 3.2 1% Adjusted EBITDA / Adjusted EBITDA margin % 1) The table above presents a reconciliation of our Core guidance to our GAAP guidance. Adjusted EBITDA and Adjusted EBITDA margin are non GAAP measures. Definitions are included at the end of this document. 2) We have assumed a Core tax rate of 25%. For Income (expense) we have assumed consistent draw on our revolver and consistent interest rates. 13

14 Bottomline Technologies Reconciliation of NonGAAP Measures Three Months Ended June 30, 2018 Amortization of AcquisitionRelated Intangible Assets GAAP Revenues: Subscriptions and transactions Software licenses Service and maintenance Total revenues 71,084 2,158 29,675 3, ,469 StockBased Compensation Plan Expense Acquisition and IntegrationRelated Expenses Cost of revenues: Subscriptions and transactions Software licenses Service and maintenance 31, , (771) (665) (502) Total cost of revenues 45,835 (1,436) (502) Gross profit 60,634 1, Restructuring Expenses (Benefit) Legal Settlement (3) Gain on Sale of Investment 10 (10) 13 Operating expenses: Sales and marketing Product development and engineering General and administrative Amortization of acquisitionrelated intangible assets 22,793 15,472 14,272 5,368 (5,368) (3,671) (1,392) (2,569) (11) (166) (289) (20) 4 (13) (1,269) Total operating expenses 57,905 (5,368) (7,632) (466) (29) (1,269) Income (loss) from operations 2,729 5,368 9, income (expense), net 4,582 Income (loss) before income taxes Provision for (benefit from) income taxes 7,311 (4,172) 5,368 9, Net Income (loss) (1) 11,483 5, % 9, % % Basic net income per share Diluted net income per share (1) Shares used in computing net income per share: Basic Diluted Minimum Pension Liability Adjustments Amortization of Debt Issuance and Debt Discount Costs 1 Tax Effects on NonGAAP Income NonGAAP 71,084 2,158 29,675 3,552 % of Revenue 67% 2% 28% 3% 106, % Margins 57% 92% 58% 79% 30, , ,913 (6) 62,556 59% 150 (1,457) 19,094 13,921 8,824 % of Revenue 18% 13% 8% 0% 150 (1,457) 41,839 39% (150) 1,457 20,717 19% (3,700) (1,428) 1% 109 (3,850) 1,457 3,637 5,659 19,289 5,124 18% 5% % (3,850) 3.6% 1, % (3,637) 3.4% (5,659) 5.3% 14,165 13% 5 1,269 (11) (2,419) ,269 (2,419) (11) % 1, % (2,419) 2.3% (11) 0.0% 38,743 40,316 Nonrecurring Tax Benefit (3) 5 Global ERP System Implementation and Costs 3 3 (1) NonCore Benefit (2) ,316 (1) Core net income and core earnings per share are nongaap measures and exclude certain items, specifically amortization of acquisitionrelated intangible assets, goodwill impairment and fixed asset charges, stockbased compensation plan expense, acquisition and integrationrelated expenses, restructuring related costs, minimum pension liability adjustments, noncore charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other noncore or nonrecurring gains or losses that arise from time to time. (2) Consists primarily of nonrecurring other income of 3.7 million recorded in connection with an investment sale. (3) The nonrecurring tax benefit in the three months ended June 30, 2018 primarily represents a benefit arising from the revaluation of certain deferred tax liabilities as a result of the U.S. Tax Cuts and Jobs Act. 14

15 Bottomline Technologies Reconciliation of NonGAAP Measures Three Months Ended June 30, 2017 GAAP Revenues: Subscriptions and transactions Software licenses Service and maintenance Total revenues 59,370 3,337 29,696 1,098 93,501 Amortization of AcquisitionRelated Intangible Assets Goodwill Impairment and Fixed Asset Charges (2) StockBased Compensation Plan Expense Acquisition and IntegrationRelated Expenses Restructuring Expenses (Benefit) 29, , (2,399) (551) (557) (6) (66) Total cost of revenues 44,503 (2,399) (1,108) (72) 18 Gross profit 48,998 2,399 1, (18) Operating expenses: Sales and marketing Product development and engineering General and administrative Amortization of intangible assets 20,294 13,928 11,188 5,865 (5,865) (3,142) (1,328) (2,126) (89) (163) Total operating expenses 51,275 (5,865) (6,596) (252) Cost of revenues: Subscriptions and transactions Software licenses Service and maintenance 9 Minimum Pension Liability Adjustments 9 (15) (103) Amortization of Debt Issuance and Debt Discount Costs NonCore Benefit Global ERP System Implementation and Costs (118) 118 Nonrecurring Tax Benefit Tax Effects on NonGAAP Income NonGAAP % of Revenue 63% 4% 32% 1% 59,370 3,337 29,696 1,098 93, % Margins 56% 93% 55% 23% 26, , ,824 52,677 56% (74) (75) (7) 223 (2,131) 17,070 12,436 6,988 % of Revenue 18% 13% 7% 0% (4) (156) 223 (2,131) 36,494 39% 324 (14) 274 (223) 2,131 16,183 17% 3,649 (841) 1% (8) 4 Income (loss) from operations (2,277) 5,865 2,399 7,704 expense, net (4,490) Income (loss) before income taxes Provision for (benefit from) income taxes (6,767) (1,108) 5,865 2,399 7, (14) 274 3,649 (223) 2, ,674 15,342 4,719 16% 5% Net Income (loss) (1) (5,659) 5, % 2, % 7, % % (14) 0.0% % 3, % (223) 0.2% 2, % (153) 0.2% (5,674) 6.1% 10,623 11% Basic net loss per share (0.15) Diluted net income (loss) per share (1) (0.15) Shares used in computing net income (loss) per share: Basic Diluted 37,693 37, ,030 (1) Core net income and core earnings per share are nongaap measures and exclude certain items, specifically amortization of acquisitionrelated intangible assets, goodwill impairment and fixed asset charges, stockbased compensation plan expense, acquisition and integrationrelated expenses, restructuring related costs, minimum pension liability adjustments, noncore charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other noncore or nonrecurring gains or losses that arise from time to time. In computing diluted core earnings per share, we exclude the weighted average dilutive effect of shares issuable under our convertible senior notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an antidilutive security under GAAP. (2) Consists of a nonrecurring fixed asset charge of 2.4 million and a goodwill impairment charge of 7.5 million in the three months ended June 30, 2017 and December 31, 2016, respectively. 15

16 Bottomline Technologies Reconciliation of NonGAAP Measures Twelve Months Ended June 30, 2018 Amortization of AcquisitionRelated Intangible Assets GAAP Revenues: Subscriptions and transactions Software licenses Service and maintenance Total revenues 262,363 10, ,926 6, ,096 StockBased Compensation Plan Expense Acquisition and IntegrationRelated Expenses Restructuring Expenses (Benefit) Legal Settlement Gain on Sale of Investment Cost of revenues: Subscriptions and transactions Software licenses Service and maintenance 117, ,250 3,032 (2,853) (2,480) (633) (197) (125) Total cost of revenues 173,130 (5,333) (633) (322) Gross profit 220,966 5, Operating expenses: Sales and marketing Product development and engineering General and administrative Amortization of acquisitionrelated intangible assets Minimum Pension Liability Adjustments Amortization of Debt Issuance and Debt Discount Costs (1) (10) 10 (61) (435) (1,435) (495) (120) (558) (1,269) (5) (6) (3) 215,135 (22,076) (28,867) (1,931) (1,173) (1,269) (14) Income (loss) from operations 5,831 22,076 34,200 2,564 1,495 1, income (expense), net (4,706) (2,419) 6,502 Income (loss) before income taxes Provision for (benefit from) income taxes 1,125 (8,203) 22,076 34,200 2,564 1,495 1,269 (2,419) 24 6,502 9,328 22, % 34, % 2, % 1, % 1, % (2,419) 0.6% % 6, % Shares used in computing net income per share: Basic Diluted (13,884) (5,486) (9,497) Basic net income per share Diluted net income per share (1) (9) (22,076) Net Income (loss) (1) 85,912 57,310 49,837 22,076 Total operating expenses NonCore Benefit (2) Global ERP System Implementation and Costs Nonrecurring Tax Benefit (3) Tax Effects on NonGAAP Income NonGAAP 262,363 10, ,926 6,530 % of Revenue 66% 3% 29% 2% 394, % 113, ,636 3,032 Margins 57% 92% 57% 54% 166, ,264 58% % of Revenue 18% 13% 8% 0% 150 (6,430) 71,467 51,263 30, (6,430) 153,525 39% (150) 6,430 73,739 19% (3,700) (4,323) 1% (3,850) 6,430 8,039 19,694 69,416 19,530 18% 5% (3,850) 1.0% 6, % (8,039) 2.0% (19,694) 5.0% 49,886 13% ,227 39, ,326 (1) Core net income and core earnings per share are nongaap measures and exclude certain items, specifically amortization of acquisitionrelated intangible assets, goodwill impairment and fixed asset charges, stockbased compensation plan expense, acquisition and integrationrelated expenses, restructuring related costs, minimum pension liability adjustments, noncore charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other noncore or nonrecurring gains or losses that arise from time to time. (2) Consists primarily of nonrecurring other income of 3.7 million recorded in connection with an investment sale. (3) The nonrecurring tax benefit in the twelve months ended June 30, 2018 primarily represents a benefit arising from the revaluation of certain deferred tax liabilities as a result of the U.S. Tax Cuts and Jobs Act. 16

17 Bottomline Technologies Reconciliation of NonGAAP Measures Twelve Months Ended June 30, 2017 GAAP Revenues: Subscriptions and transactions Software licenses Service and maintenance Total revenues 222,997 11, ,633 5, ,412 Amortization of AcquisitionRelated Intangible Assets Goodwill Impairment and Fixed Asset Charges (2) StockBased Compensation Plan Expense Acquisition and IntegrationRelated Expenses Restructuring Expenses (Benefit) Minimum Pension Liability Adjustments Amortization of Debt Issuance and Debt Discount Costs Cost of revenues: Subscriptions and transactions Software licenses Service and maintenance 103, ,494 3,737 (2,399) (1,725) (3,366) (448) (66) (226) (66) (58) (404) Total cost of revenues 161,826 (2,399) (5,091) (514) (292) (462) Gross profit 187,586 2,399 5, Operating expenses: Sales and marketing Product development and engineering General and administrative Amortization of acquisitionrelated intangible assets Goodwill impairment charge 222,997 11, ,633 5,097 % of Revenue 65% 3% 31% 1% 349, % Margins 56% 93% 55% 27% 153, ,344 56% 223 (8,804) 64,375 47,293 26,974 % of Revenue 18% 14% 8% 0% 0% 223 (8,804) 138,642 40% (223) 8,804 57,702 17% (3,019) 1% (223) 8,804 4,614 17,530 54,683 17,007 16% 5% (223) 0.1% 8, % (4,614) 1.3% (17,530) 5.0% 37,676 11% (24,246) (7,529) (26,822) (2,082) (255) (617) (21,188) 24,246 9,928 31,913 2, ,079 expense, net (17,086) 14,067 Income (loss) before income taxes Provision for (benefit from) income taxes (38,274) (5,137) 24,246 9,928 31,913 2, ,079 14,067 (33,137) 24, % 9, % 31, % 2, % % 1, % 14, % 37,842 37,842 NonGAAP 208,774 (0.88) Income (loss) from operations Total operating expenses Diluted net income (loss) per share (1) (227) (19) (9) Shares used in computing net income (loss) per share: Basic Diluted 98, ,592 3,737 (22) (103) (1,957) (0.88) (12,558) (5,298) (8,966) Tax Effects on NonGAAP Income (7,529) Basic net loss per share Nonrecurring Tax Benefit (3) (24,246) Net Income (loss) (1) Global ERP System Implementation and Costs 77,470 53,002 46,527 24,246 7,529 (288) (289) (40) NonCore Benefit ,066 (1) Core net income and core earnings per share are nongaap measures and exclude certain items, specifically amortization of acquisitionrelated intangible assets, goodwill impairment and fixed asset charges, stockbased compensation plan expense, acquisition and integrationrelated expenses, restructuring related costs, minimum pension liability adjustments, noncore charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation costs, and other noncore or nonrecurring gains or losses that arise from time to time. In computing diluted core earnings per share, we exclude the weighted average dilutive effect of shares issuable under our convertible senior notes to the extent that any such dilution would be offset by our note hedges; the note hedges would be considered an antidilutive security under GAAP. (2) Consists of a nonrecurring fixed asset charge of 2.4 million and a goodwill impairment charge of 7.5 million in the three months ended June 30, 2017 and December 31, 2016, respectively. (3) The nonrecurring tax benefit in the twelve months ended June 30, 2017 primarily represents a tax benefit in Switzerland related to the impairment of their investment in Intellinx, Ltd. 17

18 Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin Reconciliation of Adjusted EBITDA Reconciliation of Adjusted EBITDA Margin Three Months Ended Three Months Ended 6/30/18 6/30/17 6/30/18 6/30/17 GAAP Net income (loss) / GAAP Net income (loss) margin 11,483 (5,659) 11% (6%) Adjustments: expense (income), net (4,582) 4,490 (4%) 5% Income tax benefit (4,172) (1,108) (4%) (1%) Depreciation and amortization 5,356 6,603 5% 7% Amortization of acquisitionrelated intangible assets 5,368 5,865 5% 6% Stockbased compensation plan expense 9,068 7,704 8% 9% Acquisition and integrationrelated expenses % 0% Restructuring expense (benefit) 19 (14) 0% 0% Legal settlement 1,269 1% 0% Minimum pension liability adjustments (11) 274 0% 0% Global ERP system implementation and other costs 1,457 2,131 1% 2% noncore expense (benefit) (150) 189 0% 0% Adjusted EBITDA / Adjusted EBITDA margin 26,073 20,799 24% 22% (1) The table above presents reconciliations of adjusted EBITDA to GAAP Net income (loss) and Adjusted EBITDA margin to GAAP Net income (loss) margin. Adjusted EBITDA and Adjusted EBITDA margin are nongaap measures. Adjusted EBITDA represents our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization, and other charges. Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue. 18

19 Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin Reconciliation of Adjusted EBITDA Reconciliation of Adjusted EBITDA Margin Twelve Months Ended Twelve Months Ended 6/30/18 6/30/17 6/30/18 6/30/17 GAAP Net income (loss) / GAAP Net income (loss) margin 9,328 (33,137) 2% (9%) Adjustments: expense, net 4,706 17,086 1% 5% Income tax benefit (8,203) (5,137) (2%) (1%) Depreciation and amortization 19,994 19,528 5% 6% Amortization of acquisitionrelated intangible assets 22,076 24,246 6% 7% Goodwill impairment charge 7,529 0% 2% Stockbased compensation plan expense 34,200 31,913 8% 8% Acquisition and integrationrelated expenses 2,564 2,596 1% 1% Restructuring expense 1, % 0% Legal settlement 1,269 1% 0% Minimum pension liability adjustments 24 1,079 0% 0% Global ERP system implementation and other costs 6,430 8,804 2% 3% noncore expense (benefit) (150) 189 0% 0% Adjusted EBITDA / Adjusted EBITDA margin 93,733 75,243 24% 22% (1) The table above presents reconciliations of adjusted EBITDA to GAAP Net income (loss) and Adjusted EBITDA margin to GAAP Net income (loss) margin. Adjusted EBITDA and Adjusted EBITDA margin are nongaap measures. Adjusted EBITDA represents our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization, and other charges. Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue. 19

20 Reconciliation of Diluted Core Earnings Per Share Three Months Ended Twelve Months Ended 6/30/18 6/30/17 6/30/18 6/30/17 GAAP diluted net income (loss) per share 0.28 (0.15) 0.24 (0.88) Plus: Impact on GAAP diluted net loss per share of weighted average shares used in computing core earnings per share 0.01 Amortization of acquisitionrelated intangible assets Goodwill impairment and fixed asset charges Stockbased compensation plan expense Acquisition and integrationrelated expenses Restructuring expense (benefit) 0.00 (0.00) Legal settlement Global ERP system implementation and other costs noncore benefit (0.10) (0.01) (0.10) (0.01) Gain on sale of investment (0.06) (0.06) Minimum pension liability adjustments (0.00) Amortization of debt issuance and debt discount costs Nonrecurring tax benefit (0.09) (0.00) (0.20) (0.12) Tax effects on nongaap income (0.14) (0.15) (0.50) (0.46) Diluted core earnings per share Numerator: Three Months Ended Twelve Months Ended 6/30/18 6/30/17 6/30/18 6/30/17 Core net income 14,165 10,623 49,886 37,676 Denominator: Weighted average shares used in computing basic net income (loss) per share for GAAP 38,743 37,693 38,227 37,842 Impact of dilutive securities (shares related to conversion feature on convertible senior notes, stock options, restricted stock awards and employee stock purchase plan) (1) 1, , Weighted average shares used in computing diluted core earnings per share 40,316 38,030 39,326 38,066 (1) These securities are dilutive on a GAAP basis in periods where we report GAAP net income. These securities are antidilutive on a GAAP basis in periods where we report GAAP net loss. 20

21 NonGAAP Financial Measures We have presented supplemental nongaap financial measures as part of this earnings release. The presentation of this nongaap financial information should not be considered in isolation from, or as a substitute for, our financial results presented in accordance with GAAP. Core net income, core earnings per share, adjusted EBITDA and adjusted EBITDA as a percent of revenue are all nongaap financial measures. Core net income and core earnings per share exclude certain items, specifically amortization of acquisition related intangible assets, goodwill impairment and fixed asset charges, stockbased compensation, acquisition and integrationrelated expenses, restructuring related costs, minimum pension liability adjustments, noncore charges associated with our convertible notes and revolving credit facility, global enterprise resource planning (ERP) system implementation and other costs, and other noncore or nonrecurring gains or losses that arise from time to time. Noncore charges associated with our convertible notes and revolving credit facility consist of the amortization of debt issuance and debt discount costs. Acquisition and integrationrelated expenses include legal and professional fees and other direct transaction costs associated with business and asset acquisitions, costs associated with integrating acquired businesses, including costs for transitional employees or services and integration related professional services costs and other incremental charges we incur as a direct result of acquisition and integration efforts. Global ERP system implementation and other costs relate to direct and incremental costs incurred in connection with our multiphase implementation of a new, global ERP solution and the related technology infrastructure and costs related to our implementation of the new revenue recognition standard under US GAAP. Adjusted EBITDA and adjusted EBITDA as a percent of revenue represent our GAAP net income or loss, adjusted for charges related to interest expense, income taxes, depreciation and amortization and other charges, as noted in the reconciliation that follows. We believe that these supplemental nongaap financial measures are useful to investors because they allow for an evaluation of the company with a focus on the performance of its core operations, including more meaningful comparisons of financial results to historical periods and to the financial results of less acquisitive peer and competitor companies. Our executive management team uses these same nongaap financial measures internally to assess the ongoing performance of the company. Additionally, the same nongaap information is used for planning purposes, including the preparation of operating budgets and in communications with our board of directors with respect to our core financial performance. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a standalone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies. 21