Press Release October 25, 2007

PORTSMOUTH, NH – October 25, 2007 – Bottomline Technologies (NASDAQ: EPAY), a leading provider of collaborative payment and invoice automation solutions, today reported financial results for the first fiscal quarter ended September 30, 2007.

Revenues for the first quarter were $31.4 million, a 24% increase from revenues of $25.2 million in the first quarter of last year. The growth in revenues was highlighted by an increase in software license revenues to $3.4 million in the current quarter from $1.9 million in the first quarter of last year. Subscription and transaction revenue and service and maintenance revenue also increased on a year-over-year basis.

Net loss for the first quarter was $0.8 million, or net loss per share of $0.03. During the first quarter, operating expenses of $18.9 million included acquisition-related amortization of intangible assets of $2.6 million and stock-based compensation expense of $1.9 million.

Excluding these acquisition-related and stock compensation items, non-GAAP net income for the first quarter was $3.8 million, a $2.0 million, or 108% increase in non-GAAP net income from the first quarter of last year. Non-GAAP net income per share doubled from $0.08 a year ago to $0.16 in the current quarter.

Cash and short-term investments on hand as of September 30, 2007 were $64.9 million. During the first quarter, the company spent $3.7 million toward the repurchase of 281,000 shares of its common stock at an average repurchase price of $13.14.

“Bottomline had a good first quarter and a strong start to the new fiscal year,” said Rob Eberle, President and CEO of Bottomline Technologies. “Our results were well ahead of expectations. We are beginning to see the earnings capability of the model we have been working to create with non-GAAP net income of $3.8 million which is double the same period a year ago. This reflects a focused effort to prioritize and align our offerings towards the greatest opportunities for revenue growth and margin expansion. We expect this effort, which will be ongoing, to yield even greater earnings potential in the future.”

Bottomline Technologies Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share amounts)
	Three Months Ended
	September 30,
	2007 ---------------------	2006 ---------------------
Revenues:
Software licenses	$ 3,365	$ 1,851
Subscriptions and transactions	6,842	6,484
Service and maintenance	17,685	13,507
Equipment and supplies	3,470	3,380
	--------------------	--------------------
Total revenues	31,362	25,222

Cost of revenues:
Software licenses	188	197
Subscriptions and transactions	3,971	2,606
Service and maintenance (1)	7,831	6,362
Equipment and supplies	2,524	2,526
	--------------------	---------------------
Total cost of revenues	14,514	11,691
	--------------------	---------------------
Gross profit	16,848	13,531

Operating expenses:
Sales and marketing (1)	7,519	6,591
Product development and engineering (1)	4,226	3,708
General and administrative (1)	4,459	4,219
Amortization of intangible assets	2,647	1,461
	--------------------	--------------------
Total operating expenses	18,851	15,979
	--------------------	--------------------
Loss from operations	(2,003)	(2,448)

Other income, net	897	969
	--------------------	--------------------
Loss before provision for income taxes	(1,106)	(1,479)
Provision (benefit) for income taxes	(305)	1
	--------------------	--------------------
Net loss	$ (801)	$ (1,480)

Basic and diluted net loss per share:	$ (0.03)	$ (0.06)
	--------------------	--------------------
Shares used in computing basic and diluted net loss per share:	23,602	23,430
	--------------------	--------------------
Non-GAAP (excludes acquisition-related amortization and stock compensation expense): (2)
Net income	$ 3,773	$ 1,817
	---------------------	---------------------
Diluted net income per share (3)	$ 0.16	$ 0.08
	---------------------	---------------------

(1) Stock-based compensation is allocated as follows:
Cost of revenues: service and maintenance	$ 232	$ 118
Sales and marketing	612	695
Product development and engineering	183	198
General and administrative	900	825
	----------	----------
	$ 1,927	$ 1,836
	======	======
(2) Non-GAAP presentation excludes charges for amortization of intangible assets of $2,647 and $1,461, and stock compensation expense of $1,927 and $1,836 for the three months ended September 30, 2007 and 2006, respectively.
(3) Shares used in computing non-GAAP diluted net income per share were 24,150 and 23,649 for the three months ended September 30, 2007 and 2006, respectively.

Bottomline Technologies Unaudited Condensed Consolidated Balance Sheets (in thousands)
	September 30,	June 30,
	2007 ------------------------	2007 ----------------------

Assets
Current assets:
Cash, cash equivalents and short-term investments	$ 64,942	$ 65,873
Accounts receivable	26,277	24,359
Other current assets	5,018	5,402
	------------------------	------------------------
Total current assets	96,237	95,634

Property and equipment, net	8,159	8,270
Intangible assets, net	82,191	84,296
Other assets	1,736	1,784
	------------------------	------------------------
Total assets	$ 188,323	$ 189,984
	===============	==============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$ 6,205	$ 6,650
Accrued expenses	7,909	8,475
Deferred revenue and deposits	24,784	25,188
	------------------------	----------------------
Total current liabilities	38,898	40,313

Deferred revenue and deposits, non current	1,980	2,498
Deferred income taxes	5,676	6,258
Other liabilities	753	479
	------------------------	----------------------
Total liabilities	47,307	49,548

Stockholders' equity
Common stock	25	25
Additional paid-in-capital	266,665	263,229
Accumulated other comprehensive income	9,363	8,292
Treasury stock	(14,505)	(11,285)
Accumulated deficit	(120,532)	(119,825)
	------------------------	----------------------
Total stockholders' equity	141,016	140,436
	------------------------	----------------------
Total liabilities and stockholders' equity	$ 188,323	$ 189,984
	===============	==============

Bottomline has presented supplemental non-GAAP financial measures as part of this earnings release. The non-GAAP financial measures exclude certain non-cash items, specifically amortization of intangible assets and stock compensation expense. The presentation of this information should not be considered in isolation from, or as a substitute for, the financial results presented in accordance with GAAP. Bottomline believes that these supplemental non-GAAP 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. Bottomline’s executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies. A reconciliation of the GAAP results to the non-GAAP results for the three-month ending September 30 is as follows: