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Subscription and transaction revenues grew 14% in the third quarter. While this is just outside our target of 15% to 20%, we're comparing to a particularly strong quarter a year ago. Subscription and transaction revenue was $75.5 million. We've now crossed the $300 million annual subs and trans revenue level.

That's a significant accomplishment that speaks to execution and the franchise value we're building. Subscription and transaction bookings were $18.8 million. Bookings will always fluctuate quarter to quarter, and we enter Q4 with a strong pipeline. Revenue overall was $106.4 million.

EBITDA was $24.5 million or 23% of revenue. That's up $1.4 million from the prior year. At 23% of revenue, we're producing attractive profitability, profitability well ahead of our peers and competition. EPS was $0.33, above our target and expectations.

Free cash flow in the quarter, excluding our European headquarters purchase, was $21.4 million, and we ended the quarter with $88 million in cash. The financial results we are seeing demonstrate the alignment of the market opportunity, our strategic plan, our product set and our execution. During the quarter, we continued the advancement of our products. Our goal is simple, to have the leading technology solution, the solution best equipped to drive business results for our customers.

We have the opportunity to drive sustained 15% to 20% subs and trans growth. Doing so is centered on product leadership. We're investing in and developing and productizing new capabilities such as data analytics, machine learning and personalization. As I go through some of the Q3 highlights of our major products, I'll give you some examples of the new capabilities we'll bring into market.

I'll start with Paymode-X. We have a large opportunity with Paymode-X to be the way businesses pay and get paid. Visa estimates there's $120 trillion in global B2B AP spend annually and Mastercard has recently estimated the North America market alone to be $25 trillion. So our TAM is large.

We're at the beginnings of the digital transformation of business payments, a very large market and a strategic position to be in. During the quarter, we signed 22 new payers to Paymode-X. As in the past, the contribution from Bank of America was strong. We also saw sign-ons through Fifth Third, TD Bank and Citizens.

And during the quarter, we launched the go-to-market efforts with UMB, a new channel partner that signed on for Paymode-X with Visa Payables. From a product standpoint, we've established Paymode-X as the clear leading B2B payment solution for medium and large corporate payers. Our more recent focus has been broadening the platform capabilities and simplifying implementation, vendor acceptance and automation for mid-market and smaller businesses. We've completed the integration with our banking payments and cash management offering, and we are now also integrating our market-leading invoice capability.

Paymode-X isn't the only area we're leveraging new capabilities to extend our differentiation and win new customers. We had a solid sales quarter on legal spend management as well, signing eight new deals. We continue to grow in the legal spend market by deploying a leading platform and continuing to expand its capabilities and the additional offerings which accompany it. During the quarter, we announced the launch of PartnerSelect Mobile, which allows attorneys anytime, anywhere access to the set of PartnerSelect capabilities they increasingly rely on.

We've also developed new ML-based bill review capabilities, improving the business results the platform delivers. In FY '20, we'll be launching Law Firm Analytics to further provide value and drive revenue from the almost 15,000 law firms on our platforms. We had a very successful sales quarter for our banking solution platforms with a new major bank signing on for our digital banking platform, as well as our cyber fraud secure payments capabilities. This new customer is a super-regional U.S.

bank, which is part of one of the largest global banking companies in the world. They came to us to combine their U.S. banking franchises into a single, integrated digital presence, the first part of a comprehensive digital transformation strategy. So we're excited about this relationship and the potential going forward.

The most significant enhancements we're making to our digital banking products are primarily focused on intelligent customer engagement. What we're doing is taking the market's leading payment and cash management capabilities and adding a whole layer of banker-facing information and insight. Just as every e-commerce merchant learns something from each click, we want to equip our banks with the customer data, analytics and information that will allow them to more effectively acquire, keep and then grow business banking relationships. We've branded this important extension of our digital banking platform as DB IQ to emphasize the embedded intelligence and business value it represents.

It's an exciting new step forward in transaction banking technology. Finally, we're actively deploying products to address the new payment and banking environment in the U.K. and Europe. This enables us to offer the full capabilities and promise of Open Banking to our European corporate and banking customers and further distances us from competition.

So with that overview of our key products, let me step back and talk about our business model. We have a large TAM in the markets we operate in, particularly B2B payments with Paymode-X and our digital banking solutions. We have the opportunity, product plan, market presence and sales execution to grow our subs and trans revenues at our target rate of 15% to 20% for years and years to come. We're currently operating at a very healthy EBITDA margin at 23%.

We believe we can sustain that level of profitability while driving growth. At scale, we'll see higher margins and we target a 30% to 35% EBITDA margin. With growth in front of us, we're focused on subs and trans revenue and maintaining our 23% margin. With that focus, we appropriately have less emphasis on other lines of revenue.

Every time we sell perpetual software license, it represents sales executive time and focus, sales and marketing investment and most important market opportunity with the customer that could have been directed at long-term subscription revenues. As Rick's guidance will show, next year, we'll sell almost 10 million less in software licenses. That's a good thing. It's the right thing for the business.

Our focus is on growing our subscription and transaction revenue. With our continued execution, subscription and transaction revenue will be $500 million in three to four years' time. We have every confidence in achieving that critical $500 million milestone, and we're equally confident shareholders will be rewarded as we do. So in summary, we have a big market.

We have leading products. We monetize our technology through an attractive SaaS model with $300 million in SaaS today with a 23% EBITDA margin. With our committed growth, we'll be $500 million in subs and trans revenue in three to four years. That's a valuable business and a strategy that will reward shareholders.

We're confident in the path we're on and confident it's the right path to drive shareholder value. I'll now turn it over to Rick, and then after his remarks, we'll both be available for questions.

Rick Booth -- Chief Financial Officer

Thank you, Rob. I'm pleased to report on another solid quarter. We delivered subs and trans revenue of $75.5 million or $302 million on a run-rate basis. Total revenue of $106.4 million and EBITDA of $24.5 million both exceeded guidance.

Operating income of $18.9 million and core earnings per share of $0.33 also exceeded guidance. I'll focus my remarks today on three major areas. First, I'll review our Q3 financial results in detail. Then I'll provide guidance for the fourth quarter of fiscal '19 and the full-year fiscal '20; and finally, I'll review our long-term target operating model.

First, to review our financial results in detail, I'll speak briefly to each line in our P&L. And in addition, we posted supplementary materials to our website for your reference. Beginning with revenue, subscription and transaction revenue is our priority. 71% of revenue came from subs and trans offerings, up 4 percentage points from a year ago.

Overall subs and trans revenue grew 14% after normalizing for currency, and this growth was led by products fully converted to subscription, which grew at 15% after normalizing for currency and the impact of the new revenue standard. With this growth, we recorded $75.5 million of subs and trans revenue, equivalent to $302 million on an annualized basis. Maintenance revenue is the other component of recurring revenue, and the combination of maintenance and subs and trans revenue provides us with 87% recurring revenue, an excellent visibility to upcoming results. License revenue by design is only a small part of our overall business, and in Q3, we reported license revenue of $3.8 million, and services, which we offer only as needed to help our customers succeed, drove $9.2 million in the quarter.

Total revenue of $106.4 million was at 8% on a constant-currency basis and above our guidance. In addition to our revenue results, we had solid sales execution in the quarter. We signed $18.8 million of new subs and trans bookings, led by Paymode-X and digital banking. This brings us to $83 million in new subs and trans bookings for the last four quarters, equivalent to 29% of subs and trans revenue in the same period.

While bookings figures or estimates and customers take time to implement and ramp to full revenue production, this provides us with visibility to future subs and trans growth in FY '20 and beyond. Looking at new customer signings. Our Paymode-X network added 22 new payers across multiple channel partners. And in addition, UMB signed on as a new Paymode-X with Visa Payables channel partner.

Both further validate the attractiveness of our full payment automation value proposition and our channel partnership approach. We signed three new customers to our digital banking product set, including the strategic platform deal that Rob discussed. And with those signings and after go-lives in the quarter, we have approximately $14 million of annual digital banking subscriptions, which are not yet being recognized in our P&L. Our digital banking implementations continue to go well, and we brought two major customers live in the quarter.

We signed eight new insurers to our legal spend management network. We continue to see strong uptake at PartnerSelect, and we have a robust pipeline of additional, new offerings to drive continued growth. Continuing down the P&L, we delivered on our financial commitments while investing to advance our solutions and drive long-term growth. EBITDA margin was 23%, consistent with our plan and expectations.

And adjusted EBITDA of $24.5 million was above our guidance, driven by the strong revenue. Core operating income of $18.9 million and core earnings per share of $0.33, likewise, also exceeded guidance and expectations. Our overall gross margin of $62.7 million or 59% of revenue is up two full percentage points year over year. Sales and marketing expense for the quarter was $20.3 million or 19% of revenue, and development expense was $15.4 million in the quarter or 14.5% of revenue.

This is an increase of 21% year over year in dollar terms as we ramp planned investment in our products. Moving from profitability to cash flow, operating cash flow was very strong at $29.8 million. We completed the purchase of our U.K. headquarters for $20.3 million during the quarter, and free cash flow was $21.4 million excluding the U.K.

headquarters. This allowed us to end the quarter with $88 million of cash and investments. Turning from results to guidance as the second major topic. Our solid results and momentum positions us well for Q4 in the short term and for FY '20 and beyond in the longer term.

In the fourth quarter, we expect to deliver $78 million to $81 million of subs and trans revenue, $24 million to $25 million adjusted EBITDA, $105 million to $107 million of overall revenue, $19 million to $20 million core operating income, and core earnings per share of $0.32 to $0.34. Our strong focus on subs and trans revenue is evident in our guidance for full-year fiscal '20 as well. We're confident in our ability to deliver $340 million to $345 million of subs and trans revenue, consistent with our 15% to 20% target, $450 million to $460 million overall revenue, sustained 23% EBITDA margins translating to roughly $106 million of EBITDA, $82 million to $86 million core operating income, and core earnings per share of $1.38 to $1.45. We will continue to present detailed guidance prior to each quarter while evaluating and updating the full year as needed.

Finally, turning to our target operating model as my third major topic. We address a large and growing market for business payments. Our product platforms are clearly differentiated in the market and our sales teams have strong momentum. All of this makes us confident in our 15% to 20% subs and trans growth for years to come.

Furthermore, because we're a trusted innovation partner to our customers with long term, valuable customer relationships, we retain our customers for a decade or more. And as we sell them additional solutions, we have the room to expand our gross margins from the current 59% to 65% to 70% as we achieve scale. With our disciplined approach to operating expenses, we can then translate this into EBITDA margins which can rise from our current 23% to 30% to 35% when we achieve sufficient scale. And to be clear, this is not short-term guidance.

It's a long-term target model. Given the size and growth of our market, we expect to maintain our 23% EBITDA margin for the immediate future. So in conclusion, I'm pleased to report a solid quarter, $106.4 million in total revenue, $24.5 million in EBITDA and 14% overall constant-currency subs and trans growth led by 15% normalized growth from our products already in the subs and trans model. Equally importantly, we're well-positioned in a large and growing market.

Our current financial performance is strong and we are confident in our ability to drive value for customers and shareholders for years to come. And with that, we can open the call to questions

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Andrew Schmidt with Citi.

Andrew Schmidt -- Citi -- Analyst

I appreciate the disclosure, very helpful, in terms of constant-currency growth and the long-term target operating model, very helpful. Starting off with a question on the current quarter, you established subs and trans growth still within your targeted growth range but it looks like it dipped a little bit from the second quarter to third quarter. So I wondered if you could just help us break down the growth there in terms of what driving the growth currently in subs and trans, whether by product or broad category. Any information in terms of just growth in the quarter and dynamics from the second and third quarter will be helpful.

Rick Booth -- Chief Financial Officer

Andrew, this is Rick. First, a general comment. Subs and trans revenue can and does move up and down in any given quarter based on transaction volume, price limits, bands and contractual terms. If you're looking at the growth rate, remember you're comparing an exceptionally strong Q3 and Q4.

So it's really more about Q3 and Q4 of the prior year as opposed to here.

Andrew Schmidt -- Citi -- Analyst

Got it. Understood. And then I think the outlook for FY '20 calls for flat EBITDA margins but obviously, your target operating model calls for significantly higher margins. Could you walk us through what's going on in FY '20? You have some unrealized revenues that should be coming into play in digital banking, which should help margins, but clearly, there's an investment profile here that will be coming into play.

So if you could walk us through just the dynamics from a margin perspective in FY '20, that would be helpful.

Rick Booth -- Chief Financial Officer

Certainly, Andrew. The key thing in FY '20 is as we focus on subs and trans revenue and subs and trans bookings, we expect to realize about $10 million less software than we did in fiscal '19, $5 million in banking alone. So that is literally the difference between raising consensus versus where we are. Now of course, as we continue to grow in the subs and trans model, margins will naturally expand.

Rob Eberle -- Chief Executive Officer

And as you -- I'd add one thing to that. It's Rob. Rick is spot on, on the software piece and that's been the right thing for the business to do. The second piece around it is as you reference the word investment, we're certainly investing in technology innovation and market leadership, but the opportunity we see in front of us in each of our markets' leadership and the opportunity to extend that leadership for us, the drive to $500 million in subs and trans, that's the No.

1 imperative. And $5 million of EBITDA next year is not insignificant but it's far less important than driving the $500 million in subs and trans.

Andrew Schmidt -- Citi -- Analyst

Understood. That's helpful. And then just so we can get a sense over just the next few years, I understand it's a long-term model. There can be some variability.

But as we think about time frame in terms of moving toward that -- those margins, what's the right way to think about sort of, I guess, just progress toward that -- the longer-term profile that you outlined?

Rob Eberle -- Chief Executive Officer

The first thing I'd say on that is we've got to remember 23% EBITDA is an attractive margin. So we're not a when will you make money type of business. We actually produce attractive profitability today at that margin level. I would say that we're marching to $500 million and we'll hit that in three to three year time frame.

We'll be at the 23% EBITDA over that time frame, so over the next three, four years. Today, our expectation would be to stay at that 23%. Then from there, we can see where we are and when we'd scale. There's no question we can achieve that higher EBITDA margin, but again, referencing my earlier remark, I think the most important thing is driving growth.

And frankly, that's what I hear regularly from shareholders and that's -- I know when talking to Rick, what he hears, driving the subs and trans growth and our next big milestone here, being $500 million in subs and trans in the three to four-year time frame.

Andrew Schmidt -- Citi -- Analyst

Understood. That's helpful. And then I guess just last question. You guys obviously operate at various points in terms of just the B2B payments or the peer to -- procure to pay or cash cycle.

I appreciate the comments in terms of the small -- SMB to mid-market automation, but do you feel like there's assets that you need today, whether it's in procure to pay or cash or capabilities, any assets that you don't have today you think will be helpful for growth? Or any comments in terms of maybe some pieces of the puzzle they might be missing or what's the incremental would be helpful.

Rob Eberle -- Chief Executive Officer

No. Actually, to be honest, it's the opposite of that. And I love the way you used the phrase, pieces of the puzzle. Are what we're really doing is putting together those pieces.

It's often monetized -- mostly, it's monetized in terms of our traditional software license model but we have leading invoice capability. And what we're doing is bringing that leading invoice capability to become part of the core Paymode-X platform. That gives us a real invoice to pay capability and gives us all the capabilities we need to really be the ideal mid-market or small business solution, complementing what we do today in mid- and large corporate. So it's actually a case of putting together the pieces of the puzzle that we already have here today at Bottomline.

Operator

Our next question comes from John Davis with Raymond James.

John Davis -- Raymond James -- Analyst

I just want to follow up a little bit on Andrew's margin questions. So Rob, if we think about -- we're calling three to four years of kind of flat margins, I guess I'm sure I'd like to understand where that investment is. And we have Paymode-X. You have vendor pay model being significantly more profitable than the classic pay model.

Seemingly, that would drop primarily to the bottom line. So just help us think about what, over the next couple of years, are going to be the areas of key investment? I understand $500 million in a few years is an impressive target, but at that point, you'll be growing revenues well into double digits. And just where that operating leverage is going?

Rob Eberle -- Chief Executive Officer

Development, if you look at where we sit today in terms of development -- level of investment and development and where that opportunity is, that would be the biggest piece. We're about 14% of revenue today. And holding that at 14%, you couldn't even see that move up a point or two as we start to gain some synergy. That's the biggest piece that would drive -- holding our EBITDA margins, again, at a very attractive 23%.

A lot of businesses most in our space or size aren't at that level today. So we're trying to find that midpoint balance of driving the subs and trans growth while we're maintaining attractive profitability and -- like everybody gets this, but the 23% EBITDA margins -- our EBITDA will be going up on a dollars basis, certainly. But to answer your question specifically, the investment would be around product innovation.

John Davis -- Raymond James -- Analyst

OK. That's helpful. And then Rick, I just want to touch on bookings a little bit. I appreciate that it's in the range, kind of that 25% to 30% trailing 12 months, but it is down relatively materially here to date from last year.

How should we think about that? I know you'll try to take out the lumpiness, but is this something that's kind of a -- do you feel comfortable it can stay in that range on a go-forward basis as far as trailing 12 months?

Rick Booth -- Chief Financial Officer

Yes, I do. We've got a robust pipeline. In fact, we closed a significant bank just after the quarter end. And as you recall and as we saw going from Q1 to Q2, that single booking can be multi-million dollars and change the optics considerably.

So there's nothing fundamental that concerns me.

John Davis -- Raymond James -- Analyst

OK. And then maybe, Rob, high level, any thoughts on -- obviously, there's not a lot of M&A in the space, most recently FIS with Worldpay. Also, I think FIS announced a partnership with Visa for some B2B stuff. So maybe first question is just your thoughts on the consolidating space with some of your peers, as well as what that FIS partnership with Visa means for you and your partnership if anything at all.

Rob Eberle -- Chief Executive Officer

So the FIS with -- there's a lot in your questions. I think there were eight. But the first part, FIS with Visa, that's natural. That's part of extending out B2B Connect.

That isn't anything that's competitive with us. Actually, it just shows the commitment to that platform. We're delighted to be one of the first announced on that, but that isn't an alternative to Bottomline. So hopefully, that answers that component.

In terms of the consolidation, when competitors are acquired, it's always wonderful for us in terms of the distraction. I won't embarrass anybody on the call, but there's been a couple in the space that we've been able to win significant margin share as a result of the inevitable reorganizations and other things that happen with those. In terms of Bottomline, where we're looking more at on our M&A on the buy side, we're looking more at technologies that we can leverage with our customer base with our distribution, with our brand, where we can have a lower price point but acquire capabilities rather than something that's larger in scale and it's got a higher price point and more dilutive. The other place we're looking from an M&A standpoint is with the quickly advancing payment standards, whether that's PSD2 in Europe or faster payments, real-time payments, other things that are moving.

We'll see some competitors or components of competitors' business that isn't keeping up. So we can see an opportunity to either make a customer acquisition or carve-out that brings us where we can leverage that with our advanced technology. And then the last piece, I think we're building a strategic asset here that certainly has a potential to drive significant value from an acquirer, but that's not something we'll ever going to comment on specifically on an earnings call or otherwise.

John Davis -- Raymond James -- Analyst

OK. And last one from me. Just obviously almost 25% of revenue coming from the U.K., some of your peers in other businesses, I guess, have called out some softness there. Are you guys seeing anything there? Does that have an impact on your kind of 2020 guidance at all taking a more conservative approach there? So any commentary there would be helpful.

Rob Eberle -- Chief Executive Officer

Outside of currency, which Rick's gone through and we've gone through obviously in prior quarters, no. One of the beautiful things about being the way businesses pay and get paid is that still has to occur. I think back down to 2008 -- I know that's a while ago but look at where the economy was, Bottomline grew in 2008 while still providing its capabilities to major banks and all the organizations that were most challenged at that time. So no, we've not seen anything today that's suggesting a change in our outlook, changing guidance or impact on the business as a result of Brexit.

Rick Booth -- Chief Financial Officer

Yes. And 80% of the U.K. revenue is recurring. So with the tailwind of Open Banking, if anything, it's been one of our stronger contributor.

Rob Eberle -- Chief Executive Officer

Yes. That's a great point, Rick. There's so much change going on in our market. I think it's more opportunity.

If it was just Brexit, it would be neutral. But when you add in the Open Banking and what that means for different ways for people to make business payments that it continues to evolve, it's a bigger opportunity rather than smaller.

Operator

Our next question is from George Sutton from Craig-Hallum.

George Sutton -- Craig-Hallum Capital Group -- Analyst

With respect to your $500 million three to four-year outlook, could you give us a sense of whether or not there's any M&A assumed in that number?

Rob Eberle -- Chief Executive Officer

No, we wouldn't assume. I mean we will do M&A along the way, but of the M&A like I just talked about it, it would be M&A of a technology, could be M&A in customer set that's not in subscription, but that's an organic number.

George Sutton -- Craig-Hallum Capital Group -- Analyst

OK. And just one other question relative to Paymode. It was nice to hear that you had some opportunities with some of the other banks that are non-Bank of America. Can just give us a sense of the sales capacity out there in the market offering Paymode and how that has changed over the past year? Why are we not seeing an increase in the number of Paymode customer adds? And have we seen any structural change in the size of the bank -- the customers that you're adding?

Rob Eberle -- Chief Executive Officer

No. In terms of size of customers, we'll continue to have customers of all sizes that we'll add. We continue to do well in verticals like healthcare, for example. We've seen more interest around public universities -- public government and university.

In terms of the distribution, I think a key for us is adding new banks and getting those new banks running. And we do a lot at Bottomline to support channels. We've just been through a major initiative to kick off with UMB, their go to market. We're supporting Citizens, supporting Fifth Third, supporting Bank of America certainly and all of our other channels.

So I don't see anything that's different there. I think we're getting -- we're continuing to grow the channel distribution, continuing to support that, which is just going to drive more deals in the future.

Rick Booth -- Chief Financial Officer

The other thing to remember when you think about the number of new Paymode customers is when compared to other platforms, large customer perhaps can be driving $1 million a year of revenue, which is distinctly different from many, many others in the space.

George Sutton -- Craig-Hallum Capital Group -- Analyst

And just to be clear, these are all under a vendor pay model?

Rick Booth -- Chief Financial Officer

Correct.

Rob Eberle -- Chief Executive Officer

Yes.

George Sutton -- Craig-Hallum Capital Group -- Analyst

OK. Thanks, guys.

Rick Booth -- Chief Financial Officer

What happened? We --

Rob Eberle -- Chief Executive Officer

Hello. We still have you.

Operator

Our next question comes from Mayank Tandon from Needham & Company.

Kyle Peterson -- Needham and Company -- Analyst

It's actually Kyle Peterson.

Rob Eberle -- Chief Executive Officer

That should be a good -- it should be a good question, Kyle. You had a lot of time to think of it.

Kyle Peterson -- Needham and Company -- Analyst

Well, hope so. So I just had a question on the bookings momentum and just kind of how it can parlay into this $500 million in subs and trans revenue in the next kind of three to four years. Just on a rolling 12-month basis, which I think is kind of how we've been trying to look at some of the S&T bookings, it did decelerate a little bit this quarter. So I just wanted to see kind of how we're going to get to that 15% to 20% CAGR over the next several years.

Do you guys think it's going to be more kind of upsell on existing clients? Is it going to be some of these product development initiatives that you guys are investing in now starting to bear fruit and lead to higher bookings in future quarters? Just kind of wanting to see how we should piece that altogether.

Rob Eberle -- Chief Executive Officer

Well, the first thing I'd say is, remember, the bookings isn't the only input to growth. So with our platforms, if payment volume increases, that will never appear on bookings because we don't go back and reestimate bookings. If we sign a legal spend management customer, we'll estimate what we think they'll be at ramp, but as they grow, as they make acquisitions to other -- their lawyers raise rates, there's a whole bunch of ways that we grow outside of bookings. So I think that's an important first comment I'd make.

The second thing on the bookings number is we don't try to manage that. And what's interesting is how much the buyers and customers will see. I think there's a quarter end opportunity for our bookings number and how much more leverage that gives us to not give up pricing, to not give up contract clauses. Even just through the first two weeks of April, we had really strong bookings, almost $4 million of bookings just in the first two weeks of the quarter.

So I really see that down. I continue to encourage the team to do what's right for the business, and that's to try to drive something into a quarter's number. So well, we see some fluctuation in bookings, but we have plenty of bookings and plenty of market to drive to the $500 million level.

Kyle Peterson -- Needham and Company -- Analyst

All right. Great. That's helpful color. And then just kind of last one from me, a little bit on the product development.

I know you guys are -- seem like you're really stepping up investment in this area. Any specific product that you guys are really focusing on right now? And is that being driven kind of by client demand in terms of what they're looking to offer their customers or emerging competitors? Just kind of how we should think of the product development in that landscape?

Rob Eberle -- Chief Executive Officer

It's not driven by emerging competitors. It's driven by the technology capabilities and really customer expectation. If you think about all the ways that technology influences each of us today, we want to bring those capabilities to market before anybody else in our space. So we think if we can continue to do that and actually accelerate the level that we do that, we'll bring more -- we'll win more business, we'll win long -- these long-term relationships.

The -- in terms of market area, it isn't a particular product spec. We centralized a lot of the investment we're doing so that if we're bringing something, for example, like, natural language processing or NLP, we'll look at that as a centralized basis rather than having multiple teams try to work and sort that out, whether that's NLP, whether that's ML, all of those capabilities. So it's really across products. And then we'll say, "Well, how does this apply in that particular space? How does this apply to Paymode-X? How does this apply for the cyber fraud solution? How does this apply for digital banking or legal bill review or financial messaging?" That's really our model.

Operator

Our next question comes from Brett Huff with Stephens.

Unknown speaker

Yes. Can you guys hear me?

Rob Eberle -- Chief Executive Officer

We can.

Rick Booth -- Chief Financial Officer

We can.

Unknown speaker

Yes. Sorry, this is Joel on for Brett Huff. I just want to dive into Paymode-X profitability a little bit. What are the biggest expense items within that segment? And how do we think about that scaling over the long term?

Rob Eberle -- Chief Executive Officer

I'd mention a couple areas then I'll let Rick comment on it. One of the areas is we're very focused on supporting the channels. So as we talked about -- I referenced it in an earlier response and I have talked about it on prior calls, we don't just sign a bank channel. We want to work with them.

We want to be on site as we make those calls. We want to help them on go to market. I think if you'd seen businesses that we've done it so much ourselves in the past if you just sign a bank and you don't really walk all the way through that process on assisting in the sales process. So we've got a big sales and marketing spend around Paymode-X to get bank channels up and running effectively.

Rick Booth -- Chief Financial Officer

Yes. And the next most significant area is we continue to extend the capabilities of the platform. When you think about the leading invoice processing capabilities that we're integrating and the fact that we've integrated into our digital banking platform as well, that significant development effort to remain on the leading edge, we think that as take the strong capabilities that have been so attractive to large customers and roll them down to small to mid-market can be a game changer.

Unknown speaker

And then just in terms of sales cycle trends. Has there been any change that you guys have seen? And how do you guys go about shortened sales cycle?

Rob Eberle -- Chief Executive Officer

That's an interesting question. I used to be frustrated with the length of time that sales cycles took with banks and with payments. And now actually, I consider it a moat and I think it really speaks to the advantage we have. These relationships were established.

So it's a double-edged sword, and the sales cycles will often be long particularly with banks and larger organizations, but that actually plays to our advantage because it's so much harder for some new technology or someone new to try to establish those relationships.

Operator

Our next question comes from Gary Prestopino.

Rick Booth -- Chief Financial Officer

Gary, we can't hear you.

Gary Prestopino -- Barrington Research -- Analyst

Can you hear me now?

Rick Booth -- Chief Financial Officer

Yes. Now we can. Thank you.

Gary Prestopino -- Barrington Research -- Analyst

OK. Sorry. A couple of years ago, we went through this issue where you backed off on license sales, the earnings got choppy, the stock got hit, you're selling $10 million less license sales next year, which is fine, which kind of leads me to look at maybe redoing about $5 million to $6 million next year. I mean, is the goal to entirely eliminate license sales? And also, in that question again, are we going to get a situation where there's a bigger bank that wants a license sale and you're going to sell it so we get this more volatility in the earnings numbers going forward?

Rob Eberle -- Chief Executive Officer

Now we haven't sold a license sale in a couple years now. The license revenues will come through over a period of time, over a couple years, but we'll be clearing that this year. And no, we wouldn't sell a bank a license deal to -- one. Second, in terms of choppiness, I think we saw choppiness.

Well, I know we saw choppiness because we were making a bigger investment. When I'm making a bigger investment, we're holding profitability to 23% EBITDA levels. So we'll be increasing our profitability as we go forward and as we're growing the revenues.

Operator

Our next question comes from Bob Napoli with William Blair.

Bob Napoli -- William Blair and Company -- Analyst

Just around the $500 million, looking at Paymode, digital banking, legal spend, financial messaging, which of those -- I mean, do you expect to contribute more to the growth versus the other? When do you expect them to grow at similar levels? Or are you expecting one to -- expect Paymode or digital banking to outgrow the rest?

Rob Eberle -- Chief Executive Officer

No. I think they grow in different ways. I think if you look at the TAM, the pure TAM, Paymode-X is clearly the largest TAM opportunity and that has the longest horizon for us. That could be, by far, the largest business.

But then you look at what we've done with legal spend management. We continue to bring out why we have a smaller TAM than Paymode-X, certainly continue to bring out new capabilities with a critical system of record for the bill review process. That's got a wonderful road ahead for us as well. Digital banking, what we're doing is we're putting in place the platform between banks and their corporate customers in a world where more and more technology is trying to disenfranchise that relationship.

So a great opportunity there and we're continuing to see growth in each of those. The financial messaging piece is interesting, which you've referenced. And the trick there is that we've been able to bring more of the cyber frauds capabilities that we acquired a few years back from an Israeli acquisition, and that's really worked well. They continue to drive growth, as well as competitive dynamics.

It really worked for us well in that market. So we're not seeing a place where we're not driving growth and we don't see -- so we see every one of the areas contributing in the $500 million.

Rick Booth -- Chief Financial Officer

Yes. I think of it increasingly as we've got our payment networks and we have our bank solutions, and the bank solutions, in large part, act as channels. We've had three banks recently. Take financial messaging capabilities as part of implementing our digital banking platform.

So it really -- Rob mentioned earlier why we're -- how we're centralizing our development and we're integrating capabilities, That's really the trend.

Bob Napoli -- William Blair and Company -- Analyst

OK. And then just your digital banking product, you have such a really strong corporate product. Do you look to expand that at all? Are there any plans to expand that into the consumer side of the banks to have a more broad product line for banks or not?

Rob Eberle -- Chief Executive Officer

So expand that? Absolutely. Consumer side? No. The consumer side is a different business. Consumer side -- or different capability at least.

Consumer side is personal financial management, what are your personal goals. It's alerts on bill payments or other payment to card activity. It's different. The opportunity for us to expand that around business banking is terrific.

It's an opportunity around new capabilities we can bring to banks. It's opportunities around more insights about their customers. It's opportunities for them to monetize and become the primary wallet share, be the primary banking relationship. The market size for us, we've got clearly established, dominant position in that.

And winning principally in the U.S. today although we have global banks. So we'll be expanding and adding new capabilities, but I wouldn't see us moving toward the retail side. We'll move to smaller businesses and we do that today, but we wouldn't be going head-on into retail today.

Bob Napoli -- William Blair and Company -- Analyst

And last question. You guys are building out the U.K. I think you have bought a building, if I recall.

Rob Eberle -- Chief Executive Officer

Correct, yes.

Bob Napoli -- William Blair and Company -- Analyst

And you're expanding legal spend there and looking to build out, I think take advantage of the PSD2 Open Banking. Again, any update on how the build-out of the U.K. operation and expansion of your business in Europe is going?

Rob Eberle -- Chief Executive Officer

Well, the U.K. operation has always been very strong for us. We're one of the leading providers of business payment capability in the U.K. We've long -- I wouldn't -- on the -- acquiring a headquarters is really the most cost-effective way in that market to establish a continued position.

It's actually more cost-effective than leasing would be for us. So I wouldn't look at that as a big, big bet. I'd look at that as actually financially prudent way to continue to expand the presence.

Bob Napoli -- William Blair and Company -- Analyst

Are you expanding legal -- I think you talked about expanding legal spend and you do have -- I mean, I think you have some strategies around Open Banking.

Rob Eberle -- Chief Executive Officer

Yes. And one of the things that the U.K. and our presence in Open Banking gives us -- you'll see things like GDPR, for example, with more of a presence in Europe before it's coming to the U.S., coming to California, coming to some states. So our global position gives us a competitive advantage.

A lot of our U.S. banks are asking us about Open Banking, how does that play, what would happen if a version of that comes to the U.S. either formally or informally. So we leveraged our capabilities, offering to market presence across all of Bottomline.

We'll have experience in technology and financial messaging or our experience in technology and Open Banking and bring that across everywhere. B2B Connect is a good example of that, their relationship with Visa being principally started with Paymode-X but being able to expand that, leveraging our international capability.

Bob Napoli -- William Blair and Company -- Analyst

And I guess I want to sneak in one more. Paymode-X, the AP automation side of your business, versus the payment side, the integration, which piece of the business is the bigger driver for you? And are you building out more AP automation?

Rick Booth -- Chief Financial Officer

We're absolutely building out more AP automation. That's exactly what Rob was referring to in terms of extending our invoice processing capabilities so that we can be seamless, receipt of invoice all the way through payment with straight-through processing.

Rob Eberle -- Chief Executive Officer

Yes. I would add I think one of the misconceptions though is that we're on the AP side because we provide a lot of value to vendors on the AR side and you won't really run a network -- we wouldn't have 400,000 vendors in our network if we weren't providing value to them.

Rick Booth -- Chief Financial Officer

Yes. On the vendor side, they can use the capability to send invoices as well.

Operator

Our next question comes from Peter Heckmann with Davidson.

Peter Heckmann -- D.A. Davidson -- Analyst

A lot of questions have been answered. Just wanted to put a little finer point on maintenance and services. It looks like if I'm triangulating correctly on your fourth-quarter guidance, it looks like maintenance and services will be down mid-teens in the back half of fiscal '19. And I think you said that there's maybe some professional services projects in the year before.

But is there also an element of cannibalization as some of these digital banking customers go live?

Rick Booth -- Chief Financial Officer

No. No. As we talked about, I think, last quarter when I was describing the outlook for Q3, I was pointing out the -- that we're reaching the conclusion of some large services projects that helped the first half of the year with both license and service. So those are deals that were actually booked some time ago and we're completing those.

So that's the reason why we're doing less services in Q4.

Peter Heckmann -- D.A. Davidson -- Analyst

OK. Great. And so would you say it in the kind of a base of maintenance fees maybe somewhere around $18 million a quarter?

Rick Booth -- Chief Financial Officer

Yes. The changes in service is not in maintenance.

Peter Heckmann -- D.A. Davidson -- Analyst

In the service and maintenance revenue line?

Rick Booth -- Chief Financial Officer

Yes. You were asking about the service and maintenance revenue line. The change is in service. So there's no degradation in maintenance.

Peter Heckmann -- D.A. Davidson -- Analyst

OK. Got it. Got it. OK.

That's helpful. And then just trying to target in on Paymode-X one more time and I think you may have touched on this before, but I guess are you thinking that Paymode-X is maybe more of a niche vertical solution that has specific value for things like universities and healthcare or property managers and maybe less flexibility to manufacturers? Is that a fair statement?

Rob Eberle -- Chief Executive Officer

No. Actually, if we've given that impression -- I'm glad you asked the question. What's interesting is the breadth of different payers that we'll have that are really in all industries from retail to manufacturing, to brand names, to sports teams to -- we have a full range. If your business of any size, scale, and need to pay, Paymode-X represents the best alternative to do that particularly with a full integrated payables capability that says, "If I want to pay a lot card or I want to pay more on ACH or whatever that mix may be, we can accommodate all of that." So we've got payers in all types of industries.

Operator

No further questions in queue at this time. Please continue.

Rob Eberle -- Chief Executive Officer

Well, thank you, everyone. Thank you for your time and your questions. Hopefully, this was helpful to investors. I would say I couldn't be more excited about the path we're on, the opportunity to drive to $500 million in subs and trans and the market in front of us.

So I appreciate your time. I appreciate your support. I look forward to reporting to you on the fourth quarter in early August.

Operator

[Operator signoff]

Duration: 66 minutes

Call participants:

Rob Eberle -- Chief Executive Officer

Rick Booth -- Chief Financial Officer

Andrew Schmidt -- Citi -- Analyst

John Davis -- Raymond James -- Analyst

George Sutton -- Craig-Hallum Capital Group -- Analyst

Kyle Peterson -- Needham and Company -- Analyst

Unknown speaker

Gary Prestopino -- Barrington Research -- Analyst

Bob Napoli -- William Blair and Company -- Analyst

Peter Heckmann -- D.A. Davidson -- Analyst

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