Bottomline Technologies Inc (EPAY) Q4 2021 Earnings Call Transcript

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Bottomline Technologies Inc (EPAY)
Q4 2021 Earnings Call
Aug 10, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Bottomline Technologies Fourth Quarter and Fiscal Year 2021 Financial Results. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the call over to your host, Angela White, Vice President of Investor Relations. Thank you. You may begin.

Angela White -- Vice President of Investor Relations

Good afternoon, everyone. Welcome to Bottomline's fourth quarter and fiscal 2021 earnings conference call. I'm Angela White and joining me this afternoon are Rob Eberle, Bottomline's CEO; and Bruce Bowden, CFO.

Statements made on today's call will include forward-looking statements about Bottomline's future expectations, plans and prospects. These statements are subject to risks, uncertainties and assumptions, including those related to the impact of COVID-19 on our business and global economic conditions. Our forward-looking guidance is based on assumptions as to the macroeconomic environment today. Many of these assumptions relate to matters beyond our control. Please refer to the cautionary language in today's earnings release and Bottomline's most recent periodic reports filed with the SEC for a discussion of the risks and uncertainties that could cause the Company's actual results to be materially different from those contemplated in these forward-looking statements.

We do not assume any obligation to update forward-looking statements. During the call, Bottomline's financial results are presented on a non-GAAP basis. These non-GAAP results include among others, gross margins, operating income, EBITDA, net income and earnings per share. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is available in the Investor Relations section of our website. A summary of the guidance provided during the call is available from the Company upon request.

Now let me turn the call over to Rob for his remarks.

Rob Eberle -- Chief Executive Officer

Thank you, Angela.

Good afternoon and welcome to the Bottomline's fourth quarter fiscal '21 earnings call. As always, we appreciate your interest in Bottomline. Joining me today is Bruce Bowden, our CFO. Bruce will provide a detailed review of our financial results and then our future outlook. And then, after his remarks, we will both be available for questions.

The fourth quarter was in many ways an excellent quarter for Bottomline. With an acceleration in subscription revenue growth, with particularly strong subscription revenue growth in our key payment platforms, Paymode-X and PTX, we had strong bookings and seen the demand for our solutions and position us well for growth in FY22. We made significant advancements in our product set, with both enhancements to current offerings and an ambitious and exciting new product pipeline.

We continue to post attractive EBITDA margins and apart for a weaker than expected quarter on one area, legal spend management, we would have achieved our Q4 subscription revenue growth target. All in all, we're very pleased with the fourth quarter and have completed the fiscal year in a strong position. We entered the new year, confident in our ability to execute against our highest priority, driving our overall subscription and transaction revenue growth.

I'll provide an update on our key product lines and why we're so excited about our position in the marketplace and confident about the coming year in just a moment. But first, I'll briefly cover the key financial results for the quarter. Subscription revenue was $101 million, reflecting year-over-year growth of 15%. Subscription bookings in the quarter were 25.7 million, a significant step up from last quarter's bookings. Total revenue in Q4 was $122 million, while year-over-year growth of 10%. EBITDA in Q4 was $24.2 million and we achieved our committed goal of $100 million EBITDA for the year.

Looking a bit deeper at growth in the quarter, we had really strong results in our key payment platforms, Paymode-X and PTX. We had slower growth in legal spend management than we had hoped to expected as the recovery of transaction volumes from COVID is occurring but slower than anticipated. Our digital banking product set had a tough year-over-year compare as expected, based on the acquisition of a customer, a year ago. Subscription revenue growth excluding legal spend management was 18%. Subscription revenue growth excluding Banking Solutions was 21%. The subscription growth for our key payment platforms, Paymode-X and PTX was 27%.

So lots of highlights in the quarter. You can understand why we're pleased with our results for Q4 and excited about our position as we enter the new fiscal year. Our results in the quarter evidence our future opportunity. Bottomline is a trusted brand and leading player in B2B payments, well positioned to continue to drive growth. Across our major product categories, cloud-based payment platforms, digital banking and legal spend, we're delivering market-leading products, backlining aggressive innovation agenda.

I'd like to now take a moment to cover those major product lines. Let's start with our cloud-based payment platforms, our highest growth product lines of Bottomline. Our Paymode-X and PTX solutions address a large and attractive market. We help businesses pay and get paid in a manner that is simple, smart and secure. Simple and then our platform seamlessly integrate with existing systems, our intuitive design and rich in optionality. Smart, as our platforms allow our business to use the best payment vehicle or rail for any given payment or business partner that integrated payment capability and intelligent routing is just one of our competitive advantages.

Finally and critically, secure, as our payment platforms bring enhanced cyber security in a world where nothing is more important. It all adds up to the optimal way for our business to pay and get paid. In the US, our Paymode-X is the leading business payment platform for major business banks. Leading businesses across a wide range of industries utilize our platform. We signed 32 new Paymode-X payers in the fourth quarter and we continue to advance the size, scale and capabilities of the network. An area of particular focus is vendor enrollment where we've made significant progress in technology advancements.

Vendor enrollment is a valuable capability for our payers and critical in driving revenue for Bottomline. In the UK we are the predominant provider of wax and electronic business payments. Businesses rely on our PTX technology, not just to make payments but to get paid as well as we provide both payment and direct debit. With Open Banking, we continue to expand the capabilities we offer our UK business customers. We've released PTX Secure Payments Pro, a machine learning-based solution that provides additional fraud protection to all platform customers to help them know who they pay, the prime example of leveraging our leading business payment position in the UK to bring forward new innovation.

We see and are executing against the opportunity to build the world's leading and largest business payment franchise. Our cloud payment platforms have an annual revenue run rate of $120 million and grew 27% in the fourth quarter. The TAM for these capabilities is massive, some estimate $20 billion, and we see a super strong future ahead.

Turning now to our Digital banking solutions. Our DBIQ product, which we sell to the banks for them to interface with and service their business customers continues to be the leader in the banking platforms market. This is the result of our market experience, product and technology, vision, investment and execution. It's an incredibly valuable position. During the quarter, three banks chose our Digital Banking product and we expanded our relationship with a large global bank with over $600 billion in assets.

We are the face of the banks we work with to their thousands of business customers. There are almost 200,000 businesses that are active on our banking platform and when all of our current platform implementations are completed that number could be 400,000 businesses. Deploying our platform is one that banks more effectively compete for new customers, retain and grow wallet share from existing customers, and grow their business banking franchise. They rely on us to compete, compete against other banks in their geography or region, and increasingly against non-bank fintechs and challenger banks, and they count on us to be first with new innovation, new capabilities and expanded opportunities for customer adoption and revenue.

Being a mission critical platform, this is a significant add-on sales and growth opportunities. We've had very good success with add-on fraud solutions and we're bringing on analytics and insight platforms as well. With the millions of data points to run through our technology, we can help banks to better gather insights into what their customers are doing and need. While we're very pleased with our solution and the strategic position we hold in the market, Banking Solutions had a slightly lower growth year this past year. As there was a lot of uncertainty around the economy due to COVID which naturally made banks hesitant to embark on new significant projects.

A year ago, one of our customers, LegacyTexas Bank was acquired, which led to a termination fee and a tougher compare in Q4 in the current quarter. We'll see more normalized growth in Q2 of this year and beyond. Turning to Legal Spend Management. As I noted above, we are off from where we expected to be in Q4. That's really a function of the level of legal claims recovering after COVID, it's pretty simple. When people out on the roads are having accidents there are fewer claims being litigated and that volume naturally lags behind the recovery of activity. Still very confident we'll see normalized growth as claims continue to return to pre-pandemic levels.

This is a great business, it's very profitable market leading business. We have a fabulous team with deep domain knowledge and a leading product set. Customer tenure is extremely long, the churn is very low. The revenue model is a fabulous one. We grow as our customers grow, as they acquire and add more volume. We then grow as lawyers raise their rates. We continue to effectively sign on new customers. We added five new insurers to the platform in Q4 and we continue to see existing customers add new capabilities we offer. We are actively working on implementations and ramping new UK insurers as part of our geographic expansion.

So while the result this quarter held us aback a bit from what have been a truly outstanding quarter, we understand why and we're confident the impact is temporary. So in summary, I'm pleased with the quarter and excited about our market position in the year ahead. Everything we do in one way or another is focused on business payments or the related processes. Business payments are complex with slight variations and nuances in different geographies. So we have different core offerings to address the varying market needs, but what we are doing is the same and critical. We help businesses pay and get paid, directly and through the banks that serve them. We are competitively advantaged in a large and growing market, accelerating shift to digital payments and processes provides a favorable landscape across the board.

Every product we offer addresses this shift. From where we sit, there is no business we see more focused on business payments and no business we compete with that is a better product set or market position. The fourth quarter was a very good quarter and in many ways, an excellent quarter. With an acceleration in subscription revenue growth, driven by particularly strong revenue growth in Paymode-X and PTX, with strong bookings and we posted solid EBITDA. Our plan for the new year is focused on driving subscription revenue growth in our 15% to 20% target range. We're confident we'll execute against that plan and that shareholders will be rewarded.

Now I'll turn the call over to Bruce to review our financial results. And then both of us will be available for questions following his remarks.

Bruce Bowden -- Chief Financial Officer

Thanks, Rob. I'll start this afternoon by reviewing our Q4 and fiscal year performance, and then I'll cover guidance for Q1 and the full year for our fiscal 2022. I want to leave you all with three basic messages today. First, our business performed very well in Q4 in almost all respects, and but for temporary challenges to Legal Spend Management, we would have hit all of our targets.

Second and relatedly, our primary payment platform products, Paymode-X and PTX have been shining stars in our portfolio, and they are now on a $120 million run rate and growing well over 20%. And third, we remain confident that we will achieve our FY22 guidance as we projected last quarter. Let's start with Q4 of 2021 and the results for the full fiscal year. We are pleased with our performance across the business. We are investing with discipline as we seek to grow our leadership position in this large and growing market.

Our investments in products and go to market are positioning us to push our subscription revenue growth to a sustainable 15% to 20% level. This is our primary goal. We've also committed to maintaining a healthy profit margin, which we did during fiscal '21. We achieved our guidance levels for Q4 total revenue, EBITDA and earnings per share. Our ability to hit these primary performance metrics very consistently across the past several years is a testament to the durability of our business, the proficiency of our teams and our conscientiousness in managing our cost structure.

Here are some of our key financial results for Q4. Subscription revenue was $101 million, reflecting 15% year-over-year growth. Subscription revenue was 83% of total revenue, 4 points higher than in the same period a year ago. Total revenue was $122.1 million, up 10% from Q4 of fiscal '20. Adjusted EBITDA was $24.2 million or 20% of revenue and core operating income was $15.4 million, which translates to $0.27 of earnings per share. For the 2021 fiscal year, subscription revenue was $385 million, total revenue was $471 million, gross margin was up 90 basis points, EBITDA was $100 million or 21% of revenue, and EPS was $1.16 per share.

As you know, a key strategic focus for us has been on driving subscription revenue higher, both in terms of year-over-year growth and also as a percentage of our overall revenue. Our Q4 subscription revenue growth of 15% came in consistent with our overall 15% to 20% objective, slightly below our guidance. And subscription revenues are now 83% of total revenues. Drivers of our subscription revenue performance as we exited the fiscal year were a mix of very strong growth in most of our product lines and a few temporary headwinds from others.

In Q4, as expected, we saw subscription revenue growth strongest in our payment platforms. We have noted strong interest from the investor community to understand more about Paymode-X and PTX, which are our market leading payment platforms for the US and European markets, respectively. As Rob mentioned, the combined year-over-year growth rate of Paymode-X and PTX in Q4 was 27%. These products are now on an annual run rate of $120 million in subscription revenue. The growth we are seeing is a strong indicator of the continued competitiveness and attractiveness of our offerings and they are on a very promising trend. Over the four quarters of fiscal '21, growth continued to accelerate across these payment platforms.

We will continue to keep investors updated on our progress with these important products in response to the interest many of you have expressed. Digital Banking subscription revenue growth for the year was solid at 12% despite declining slightly in Q4 in connection with last year's termination fee resulting from the acquisition of LegacyTexas.

Legal Spend Management grew 3% for the year but picked up to 6% in Q4. This suite of products saw the continued impact from COVID early in the year and we continue to see some lag in the recovery of transaction revenue as Rob mentioned. But the growth of LSM did accelerate throughout the year and we expect to see this dynamic continue. Excluding Legal Spend Management in Q4 '21, our subscription revenue streams grew 18% over Q4 of '20. And if we exclude Banking, subscription revenue growth was 21%. So again the 15% number for the quarter reflects a contrast of really good growth from our payment platforms, a tough lap for banking and slower than expected reacceleration of Legal Spend Management.

Let's turn to bookings. Subscription bookings for the quarter were 25.7 million, a substantial increase over last quarter's bookings of 20.3 million. This pickup in bookings is one of many reasons that we believe we are on track to achieve our 15% plus subscription revenue growth target for fiscal '22. As Rob mentioned, and as we noted in our release, during the quarter we added 32 clients to our Paymode-X customer base. In digital banking, three banks chose us as their banking solutions provider, and five new customers chose our Legal Spend Management product.

Now let's talk about profitability. In the fourth quarter, our total gross margin increased by 80 basis points from the same period a year ago. For the full year, total gross margin was 90 basis points higher than last year and subscription gross margin increased again to 61.1% of revenue. The combination of revenue growth and margin expansion demonstrates the scale we are achieving in our business, and it's providing us with the means to continue investing to expand our product set and accelerate that growth. We expect a continuation of this positive trend in the future.

During the year, we continued to focus on organic investment in our technology and products, including machine learning and data analytics to enhance our core products, expanded UI and UX capabilities, our hosted platforms, and expanding our go-to-market teams. Sales and marketing, which was 22.9% of revenue in Q4 and 21.5% of revenue for the year, which is 160 basis points higher than last year increased as we expanded the teams that are driving bookings and revenue. Product and development was 15.2% of revenue in Q4 and for the full year, consistent with the last Q4 and last year.

This combination of improved gross margins and increased growth investments drove adjusted EBITDA in Q4 of $24.2 million which is 19.8% of revenue. For the full year, adjusted EBITDA was $100 million or 21.2% of revenue versus $95 million, 21.5% of revenue last fiscal year.

Turning to the balance sheet and cash flows. We ended the year with $144 million in cash and cash equivalents and with $130 million drawn on our revolving line of credit of $300 million. For the quarter, operating cash flow was $15 million, capital expenditures were $8 million and free cash flow was $7 million. We had no other noteworthy uses of cash during the fourth quarter and we did not repurchase shares.

I'd like to turn now to our outlook for Q1 2022. We expect subscription revenue of $102 million to $104 million, reflecting 13% to 15% year-over-year growth. We expect total revenue of $121 million to $123 million or 8% to 9% year-over-year growth. We expect adjusted EBITDA of $23 million to $25 million, which is 19% to 21% of revenue. Core operating income of $14 million to $16 million, and core EPS of $0.24 to $0.26. Our Q1 2022 guidance factors in some continuation of the slower than expected recovery of Legal Spend Management and a bit more impact from that singular termination on the year-over-year compare for our digital banking solutions.

For those reasons, Q1 '22 growth will be as we expected it and does not compromise our confidence in our full year guidance. Our projected EBITDA for the quarter remains at our target level even with this slightly lower revenue. The first quarter will also reflect increased compensation expenses as we implement salary increases, which had been postponed during COVID. Today, we are reaffirming our full year fiscal '22 guidance in its entirety. We continue to expect subscription revenue of at least $445 million, reflecting 15% to 16% year-over-year growth driven by the continued strength of our payment platforms. Total revenue of $520 million or 10% year-over-year growth and adjusted EBITDA of $106 million, 20% of revenue.

Today, we are also providing full year fiscal '22 guidance for operating income and EPS. Core operating income is expected to be $68 million to $71 million, and core EPS is expected to be $1.11 to $1.15. I'd like to take one more moment to focus on our 2022 growth expectations. As you know, we have a set of product lines with different growth profiles. We expect our Paymode-X and PTX products together to grow between 20% and 30% in 2022, consistent with the potential of the payments market as well as our plans and execution to sell into that market. Some of our other products are likely to perform below that level in fiscal '22 but both banking and legal spend management are expected to overcome the temporary impacts on Q4 '21 and Q1 '22 and over the longer term, we expect them to perform within our overall 15% to 20% subscription revenue growth range.

As a result, overall, we remain confident that we are driving our business to sustain 15% to 20% subscription revenue growth while maintaining attractive margins. We are happy with the continued progress that our outlook implies and very excited to start a new year of growth and value creation for our customers, teams and shareholders. So again three basic messages today. One, our business performed very well in Q4. Two, Paymode-X and PTX now comprise $120 million of recurring revenue growing well over 20%; and three, we remain confident that we will achieve our FY22 guidance.

Now we'll open the call for questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Andrew Schmidt with Citigroup. Please proceed with your question.

Andrew Schmidt -- Citigroup -- Analyst

Hey, Rob, Bruce, Angela. Thanks for taking my questions and appreciate the additional disclosure and commentary. I want to start out with the question on legal spend. Could you just talk us how volumes progressed throughout the quarter, just to get it to the flavor for should be tricky there and maybe a little bit on how sort of you're seeing volumes trend quarter to date. And then if I could just wrap one more in there. I think you've -- in your -- in your FY22 outlook you kind of indicated I think gradual improvement in legal spend, but if you could be a little more explicit in terms of what's baked in there that would be great. Thanks.

Bruce Bowden -- Chief Financial Officer

Yeah. Hey, Andrew. It's Bruce, thanks for the question. Yes, we did see LSM volumes recovered steadily over the course of the four quarters of the year. As I mentioned in my comments, we grew -- LSM grew 3% for the year, but 6% in Q4. So that gives you an idea of the kind of inflection. Nevertheless, as you know, we expect LSM to get toward or -- or into the 15% to 20% subscription revenue growth range that we target for all of our products. So, it's still not where we want it to be, but we do see good trends and we've been watching week by week and month by month. And so far we're on a good track going into Q1.

Andrew Schmidt -- Citigroup -- Analyst

Okay. That's great to hear. And I think what investors kind of look for in terms of the FY 2022 outlook is right to take sort of confidence and then consistency in terms of hitting the numbers. And I know you mentioned confidence throughout sort of the script in the prepared remarks, but if you could just give us a little bit more detail in terms of what's driving the confidence, particularly in the 15% to 16% for subsequent part of it is presumably backlog part of it is the assumption that volumes are going to recover. But any more detail that we could help us is giving you confidence in achieving or exceeding you can provide us would be helpful? Thanks.

Rob Eberle -- Chief Executive Officer

I will make some comments on that and then Bruce can comment as well. One of the reasons we gave the growth excluding a particular area is really if that area of recurrent returns to what we would expect, that's what we could see. So for example, our subscription growth this quarter for LSM excluding LSM was 18%. Well, you can see what happens as LSM returns to normalized performance, similarly way the tough compare, if you take out banking and by the way, leaving in LSM but just removing our Banking Solutions, that's 21%.

So you've really got a situation in this quarter where we're firing very, very well on most cylinders exceptionally well as we would expect on Paymode-X and PTX and were held back a bit by a slower recovery in LSM and some year-over-year compare in banking. We know the year-over-year comparing banking goes away after the first quarter and we're confident we're continuing to see the volumes move up on LSM, a legal spend management. So I don't know if that's helpful. But that's how I would think about it, then a high level, there's all sorts of initiatives programs and everything else at the detail. But as a big picture, just looking at it, that's why we gave those numbers, and that's why we -- a big part of why we've got so much confidence next year.

Andrew Schmidt -- Citigroup -- Analyst

That's helpful. Thanks for that context, Rob. If I could sneak one more in for Bruce before I hop back in the queue. You've been there Bruce for some time now. Just curious if you could share perhaps a view on longer term kind of revenue and margin for the business, as you see it if you sort of get it -- as you look to the business just anything, I know you guys probably said, 15% to 20% subs growth but, but just thinking kind of longer term just top and bottom-line algorithms, anything around that would be helpful. Thanks.

Bruce Bowden -- Chief Financial Officer

Yes. Thanks, Andrew. I mean, for me, it's really simple. I think if we can drive the business toward 20% subscription revenue growth and 20% EBITDA margins that place on the Rule of 40 spectrum will be a very attractive valuation point and we'll see how we progress across the course of fiscal 2002 in getting that 15% up toward the 20%. I will say we've had very, very favorable dynamics around Paymode-X PTX and also our financial messaging products over the past couple of quarters, just a really good reacceleration there and as we said a couple of times on the call, if not for the hiccup in LSM in the LAP in banking, I think this would have been a tremendous quarter.

Andrew Schmidt -- Citigroup -- Analyst

All right. Thanks Bruce. I'll hop back in the queue. I appreciate the comments Rob, Bruce. Thanks a lot.

Bruce Bowden -- Chief Financial Officer

Thanks Andrew. Yeah.

Operator

Our next question comes from the line of George Sutton with Craig-Hallum. Please proceed with your question.

James Rush -- Craig-Hallum Capital Group LLC -- Analyst

Hey guys, this is James on for George. Just wanted to ask about the partnership with BillTrust, can you provide any color on sort of how that's progressed in terms of suppliers you've on-boarded volume or just sort of any incremental detail on how that brands the scope of opportunity.

Bruce Bowden -- Chief Financial Officer

Sure. We're not disclosing volumes or transactions or something along those lines, but it's a really positive way and to extend our network and for BillTrust continue to leverage their network. I've talked about this in the past. I think-over time, we'll see more interoperability between platforms like a Paymode-X BillTrust business payment network. That way if a supplier/vendors enrolled once, multiple networks can leverage that process and you get to true automation across business payments. So it's going well. And I think it's a first step for us. So I think it's not over next 90 days, but I think over the course of time, you'll see more relationships like that among other networks including Paymode-X and Bottomline.

James Rush -- Craig-Hallum Capital Group LLC -- Analyst

Got it. And then Rob, you mentioned 200,000 businesses on DBIQ. Can you sort of talk about how that number has grown in the last one or two years. I guess how quickly can you perform the implementations that would take that number up to 400,000.

Rob Eberle -- Chief Executive Officer

Well, two different pieces there. We will perform and implementation and that can occur as quickly as nine months that's in a more complex environment could be double that. That's because we're integrating in so many different back office systems and to provide all the visibility and data for the bank's customers.

In terms of the ramp, that's not really a function of our technology, that's a function of the bank's process and how they will bring their customers on. We will be very much part of that bringing on a subset of customers and then ramping over-time, but that's really not driven by us that ends up being driven by the bank and their customer migration strategy.

James Rush -- Craig-Hallum Capital Group LLC -- Analyst

Got it. That's it from me. Thanks, guys.

Operator

Our next question comes from the line of Gary Prestopino with Barrington Research. Please proceed with your question.

Gary Prestopino -- Barrington Research -- Analyst

Good afternoon, everyone. Hey Rob, you mentioned on the call that the legal spend management business was somewhat predicated on driving and accidents and crashes and stuff like that. Did I hear that right?

Rob Eberle -- Chief Executive Officer

Well, sure. That's one of the types of clients that will be -- that our insurance companies will be defending. Sure, absolutely.

Gary Prestopino -- Barrington Research -- Analyst

So the issue with legal spend is more or less that you're not having the same level of accidents and driving as you had pre-pandemic, but it really doesn't have anything to do with the courts fee and all clogged up either, because some courts are backlogged or whatever. I'm just trying to get an idea of what are the drivers there.

Rob Eberle -- Chief Executive Officer

I think there's some mix of drivers and it's also a trailing indicator. Because if you've got something is traveled while the second airports open-up and everyone feels safe travel will occur rather instantly, but claims is a trailing indicator, because something has occurred, an event, then someone has filed a claim, then there is litigation, so that process all stretches out. So that's why it's trailing, I think all of the things you referenced are contributors, the level of activity in courts, the claims themselves, the level of activity and the speed with which those claims that are being are able to be resolved. I think they're all contributing. But as we indicated, we're seeing that improve, we were just a little aggressive or optimistic and how much we thought that would approve in Q4. That's really the one difference.

Gary Prestopino -- Barrington Research -- Analyst

Okay. And then in Q4, your sales and marketing expense was at the highest level as a percentage of sales as it was throughout the whole year. Is that level about 22.9%, 23% something we should apply to fiscal 2022 because you're increasing your investment in your sales force?

Bruce Bowden -- Chief Financial Officer

Yeah. Thanks, Gary. It is Bruce. I think the way to think about it is maintaining the 20% EBITDA level overall. We might move the money back and forth a little bit over time, programmatically and also through the shifting of where the people cost is between sales and marketing and product. But on the whole, we're really very focused on maintaining that 20% EBITDA level.

Gary Prestopino -- Barrington Research -- Analyst

Okay. Thank you.

Bruce Bowden -- Chief Financial Officer

Thanks, Gary.

Operator

Our next question comes from the line of Mayank Tandon with Needham. Please proceed with your question.

Kyle Peterson -- Needham and Company, LLC -- Analyst

Hey, good evening, guys. This is actually Kyle Peterson on for Mayank. Thanks for taking the questions. I just wonder, it was really helpful to see some of the payments ARR disclosures. How should we think about the ARR convergence in the revenue and how quickly new clients ramp, especially given the kind of impressive momentum you guys have had signing on new clients during COVID?

Rob Eberle -- Chief Executive Officer

Yeah. The ramp can -- will all vary, so ramp up of our bookings will vary by products. As I've outlined already, for example, in a banking transaction, that's really not a subscription along the other go live, we'll be realizing the full revenue even though they're ramping customers. In platforms like Paymode-X, and Legal Spend Management, there is much more of a ramp. We generally think of that as a three year ramp, where more vendors are coming on, more payments are being made through that platform in the case of Paymode-X or legal spend management where law firms have been brought on to the system over-time for their bills to be processed through our platform. So some of the product sets have a three year ramp, others will be driven more by an implementation cycle to a full subscription.

Bruce Bowden -- Chief Financial Officer

Hey Kyle, it's Bruce. So I just want to make sure I'm clear on your question, because I think you were suggesting that we gave some information about payment platform ARR bookings levels. The number that we gave on the call that we hadn't disclosed before is the $120 million number, which is the actual revenue run rate from Q4 from Paymode-X and PTX. So what that means is, we did $30 million of revenue in Q4 for Paymode-X and PTX 30 times four is 120. Just want to make sure that we didn't miss -- that we didn't talk past each other on that one.

Kyle Peterson -- Needham and Company, LLC -- Analyst

Yeah, no. Yeah, you're correct. I misspoke there. But thanks for the clarification. And then just a quick follow-up on the digital banking pipeline. I know given the longer implementation cycles in time for deals that go live, how do you describe right now kind of what's in the pipeline and the degree of visibility for deals kind of signed, but not yet kind of live and contributing revenue and how should we think about that progression through the year?

Rob Eberle -- Chief Executive Officer

Well, a couple things are common in there. First off, I wouldn't want you to go away with the idea of the long implementation cycle is a bad thing. It's actually really powerful retention for us. All that time, whether that's three quarters, four quarters, five, six, or whatever it is, that's all time and work done where that bank has made commitment, technology, investment, other resource investment in our platform. So that's part of the one of the many things that drives our lifetime customer value in our retention, where we would expect to hold customers for a decade or more. That's not just on the implementation, its commitment to new technology in the light. But that's the first part, I wouldn't view that as a negative piece at all.

In terms of the pipeline, the number one thing that drives that is product. We have the top product in the market for digital banking. Our business DBIQ platform is the clear leader by any industry analysts. And so as banks are looking to increase competitiveness, as banks are looking for new ways to drive revenue, retain customers grow wallet share, that all plays to that product, and then related offerings we have around that. So right now we have a very strong pipeline. We also commented on what is more the course of the full-year, where if you think back a year ago, there was much more uncertainty about the economy about credit risk, and banks are only going to be as strong as their customer base and their clients. So that's where more of the softness or concern was. We look forward. We're excited for the year once we clear the comparing Q1, we expect to be posting strong results in banking solutions.

Kyle Peterson -- Needham and Company, LLC -- Analyst

All right. That's helpful. Thanks guys.

Operator

Our next question comes from the line of Chris Kennedy with William Blair. Please proceed with your question.

Cristopher Kennedy -- William Blair & Company LLC -- Analyst

Hey guys, thanks for taking the questions and appreciate the additional disclosure. On the payment platforms revenue that 120, is that about evenly split between Paymode-X and PTX?

Bruce Bowden -- Chief Financial Officer

Hey Chris, it's Bruce. Paymode-X is a little bit bigger, but they're not hugely different in size.

Cristopher Kennedy -- William Blair & Company LLC -- Analyst

Okay, got it. And then can you give a little bit of an update on moving the legal spend management business to the UK? How is that going? And can you give an update on that? Thanks, guys.

Rob Eberle -- Chief Executive Officer

Yeah. That's going real well. We have a specialized team. Obviously, we have a presence in UK, but we brought on a specialized team and we're in the process of implementing and going live with a couple of significant customers there. So that's gone very, very well for us.

Cristopher Kennedy -- William Blair & Company LLC -- Analyst

All right. I will stick one more. Historically, you both given kind of the signed digital banking revenue that's in your backlog, but hasn't been implemented yet. Do you have an update on that? Thanks a lot.

Bruce Bowden -- Chief Financial Officer

Yeah. Hey Chris, that number right now is $11 million.

Cristopher Kennedy -- William Blair & Company LLC -- Analyst

Okay. Thank you.

Operator

Our next question comes from the line of John Rodriguez with D.A. Davidson. Please proceed with your question.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Hi, this is John on for Pete Heckman. Just one from [Technical Issues] revenues payment volume growth with specifically for Paymode-X?

Bruce Bowden -- Chief Financial Officer

I'm sorry, John, could you repeat that? We lost you there.

John Rodriguez -- D.A. Davidson Companies -- Analyst

What was the revenue and payment volume growth rate specifically for Paymode-X?

Rob Eberle -- Chief Executive Officer

Well, we haven't payment volume in doesn't correlate to revenue in PTX. It's a different revenue model. So it really wouldn't be particularly relevant and then something that we would disclose in that manner. On Paymode-X as you probably know, the majority of transaction volume is on the legacy model. That's still the case today, but we're at about $250 billion going through Paymode-X network annually.

Bruce Bowden -- Chief Financial Officer

And John, the growth rate on Paymode-X plus PTX for Q4 was 27%. I think that's -- you were also asking that.

John Rodriguez -- D.A. Davidson Companies -- Analyst

Got it. Thank you so much.

Bruce Bowden -- Chief Financial Officer

Okay.

Operator

Next question is a follow up question from the line of Andrew Schmidt with Citigroup. Please proceed with your question.

Andrew Schmidt -- Citigroup -- Analyst

Hey guys, thanks for taking my follow up. I just wanted two -- ask one question, then I'll ask a follow up. But first question, just in terms of the sales pipeline across the product spectrum, can you talk a little bit about that. And I know you don't sort of talk to sort of bookings pipeline, but how does the sales pipeline score up relative to kind of bookings expectations for the current quarter? Thanks.

Rob Eberle -- Chief Executive Officer

Well, the first piece I comment on in sales pipeline is just looking at sales success in the fourth quarter of 25.7 in bookings was a real strong number for us, number we're very happy with success across a mix of products. One of the things that drives our pipeline is our digital marketing team and presence and we've got a fabulous digital marketing team. We have a way of outstanding digital content and tools. So the top of our funnel is always going to be very strong, and what's going to drive selection ultimately is product. And we've made the investments and have the leading products that you're pretty familiar with where we sit across the board. We feel very good. And again, Q4 numbers show us and we'd expect the same thing in Q1 throughout FY 2022. We will do a good job of winning those opportunities, just because where we are on the current product.

And the last thing I'd mentioned is where we are in our innovation agenda. What we can show and commit to customers will see from us in a year, three years, five years from now, is really powerful. Everybody knows technology is not same where it is today. So if you're choosing someone as a partner or choosing a vendor, you want to choose someone who's going to be the right vendor today and the right vendor in three, five, eight and 10 years. So that's a big and important part of our innovation agenda.

Andrew Schmidt -- Citigroup -- Analyst

Great. Thank you for that. And then just to follow-up. What are the topics you can talk about kind of how the competitive environment is evolving around Paymode-X and I know it depends whether you're on Paymode-X or full stack EP, but wondering to get your sense on that. And then just to have on to that, just having a more sort of holistic set across EP, AR, and then our treasury management helps you get more shots on pipeline perspective, kind of a two part question from an environment and then the evolving product as alluded to before.

Rob Eberle -- Chief Executive Officer

First off from a competitive standpoint, there are things we clearly do and Paymode-X better than anybody. We feel things where the technologies and capabilities we built for vendor enrollment or critical differentiator, the ability and things we bring from a cyber-fraud perspective. The enterprise, we were not a platform for a sole proprietor, we are not a platform for business that doesn't have an accounting team or financial function at any level, most small businesses and there are other solutions for them. But as soon as you get to an accounting function, as soon as you get to an enterprise if you have APAR cyber fraud or CECL office that plays right to Bottomline, and working from a competitive standpoint, we don't see anyone, it was a better solution than we do there.

That was really intuitive, the second part of your question, and you're right, we get multiple shots on goal because somebody could come, be a Bottomline customer for receivables, and then expand to Treasury expand the payments and the full PCL platform. They could be a treasury customer, and expand the payments and receivables. So that's definitely part of the strategy. We'll get more. It's an interesting way to phrase it, but it'll absolutely generate more shots on goal.

Andrew Schmidt -- Citigroup -- Analyst

All right. Thanks a lot, Rob. Appreciate it.

Rob Eberle -- Chief Executive Officer

Thank you.

Operator

Thank you. We've come to the end of our question-and-answer session. I'd like to hand it back over to Rob Eberle for closing remarks.

Rob Eberle -- Chief Executive Officer

Well, thank you, everyone. Thank you for your attention. The fourth quarter was a very good quarter for Bottomline and we're really excited as we head into the new year. So look forward to reporting on Q1 as we go forward, and again appreciate your time and attention.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Angela White -- Vice President of Investor Relations

Rob Eberle -- Chief Executive Officer

Bruce Bowden -- Chief Financial Officer

Andrew Schmidt -- Citigroup -- Analyst

James Rush -- Craig-Hallum Capital Group LLC -- Analyst

Gary Prestopino -- Barrington Research -- Analyst

Kyle Peterson -- Needham and Company, LLC -- Analyst

Cristopher Kennedy -- William Blair & Company LLC -- Analyst

John Rodriguez -- D.A. Davidson Companies -- Analyst

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