Bridgeline Digital Reports Financial Results for the Third Quarter of Fiscal 2012

Burlington, MA | August 14, 2012

Bridgeline Digital, Inc. (NASDAQ: BLIN), developer of the award-winning iAPPS web engagement platform and related interactive solutions, today announced financial results for its third quarter and nine month period ended June 30, 2012.

Third Quarter Highlights:
  • Revenue in the third quarter of 2012 was $6.4 million, compared to revenue of $6.5 million in the third quarter of 2011.
  • iAPPS related revenue increased 35% to $4.2 million, compared to $3.1 million in the third quarter of 2011.
  • Recurring revenue increased 18% to $1.0 million, compared to $880 thousand in the third quarter of 2011.
  • A record 158 iAPPS licenses were sold during the third quarter, a 250% increase compared to the prior year. As of June 30, 2012 there have been a total of 659 iAPPS licenses sold.
  • Subscription and perpetual license revenue increased 27% to $686 thousand compared to $540 thousand in the third quarter of 2011.
  • Total gross profit margin increased to 56% compared to 51% in the third quarter of 2011.
  • Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) increased 25% to $429 thousand compared to $342 thousand in the third quarter of 2011.
  • Non-GAAP net income was $8 thousand compared to net income of $37 thousand in the third quarter of 2011.
First Nine Months Highlights:
  • Revenue in the first nine months of 2012 was $19.6 million, compared to revenue of $19.7 million in the first nine months of 2011.
  • iAPPS related revenue increased 40% to $12.0 million, compared to $8.7 million in the first nine months of 2011.
  • Recurring revenue increased 24% to $3.1 million, compared to $2.5 million in the first nine months of 2011.
  • A record 231 iAPPS licenses were sold during the first nine months of 2012.
  • Adjusted EBITDA increased 27% to $1.4 million compared to $1.1 million in the first nine months of 2011.
  • Non-GAAP net income was $202 thousand compared to $137 thousand in the first nine months of 2011.
Recent Developments:

On June 5, 2012 we announced our strategic alliance with UPS Logistics to offer B2B and B2C eCommerce web stores with an end-to-end offering comprised of our iAPPS eCommerce solution and UPS logistics and fulfillment services.
We also completed the acquisition of MarketNet, Inc., an award-winning interactive technology company based in Texas, expanding our North American presence into the South Central U.S. market.

Earlier today we announced iAPPS ds (distributed subscription). iAPPS ds has been specifically developed for large franchise networks and multiple dealer organizations to improve the website tools they extend to franchisees and local dealers to effectively attract, communicate with and retain local customers while enabling superior oversight of corporate branding and content messaging. Franchisees and local dealers would be required to pay a monthly subscription fee for the service.

Bridgeline Digital is pleased to announce that it recently signed a multi-year iAPPS ds agreement with a nationally recognized franchise, which plans to have up to 4,000 of its franchises directly license iAPPS ds. Bridgeline Digital expects to announce more details about this specific customer in fiscal 2013.

Fiscal 2012 Outlook

Bridgeline Digital expects Fiscal 2012 revenue to be approximately $26.5 million. The Company’s revenue strategy will continue to focus on higher gross margin iAPPS driven opportunities, while discontinuing relationships with lower margin, non-iAPPS based customers. This strategy reflects a reduction of approximately $3.5 million of revenue generated in fiscal 2011 from lower margin, non-iAPPS related customer relationships.

In addition, the Company expects to continue to generate positive non-GAAP income and positive Adjusted EBITDA for fiscal 2012.

Conference Call Today at 4:30pm EST

Bridgeline Digital will host a discussion of its third quarter results at approximately 4:30 p.m. ET today. To listen to the conference call, please dial (877) 837-3910 within the U.S. or (973) 796-5077 for international callers.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP adjusted net income, non-GAAP adjusted earnings per diluted share, Adjusted EBITDA and Adjusted EBITDA per diluted share.

Non-GAAP adjusted net income and non-GAAP adjusted earnings per diluted share are calculated as net income or net income per share on a diluted basis, excluding, where applicable, impairment charges, amortization of intangible assets, stock based compensation and the related tax effects.

Adjusted EBITDA and Adjusted EBITDA per diluted share are defined as earnings before interest, taxes, depreciation and amortization and before stock compensation and impairment charges. Bridgeline uses Adjusted EBITDA as a supplemental measure of our performance that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). Bridgeline’s management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, Bridgeline management presents non-GAAP financial measures in connection with GAAP results. Bridgeline urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which is included in this press release, and not to rely on any single financial measure to evaluate Bridgeline's business.

Our definitions of non-GAAP adjusted net income and Adjusted EBITDA may differ from and therefore may not be comparable with similarly titled measures used by other companies, thereby limiting their usefulness as comparative measure. Because of the limitations that non-GAAP adjusted net income and Adjusted EBITDA have as an analytical tool, investors should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

BRIDGELINE DIGITAL, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2012

 

2011

 

2012

 

2011

Reconciliation of GAAP net loss to

 

 

 

 

 

 

 

 

non-GAAP adjusted net income:

 

 

 

 

 

 

 

 

 

GAAP net loss

 

 $(277)

 

 $(246)

 

 $(906)

 

 $(731)

 

Amortization of intangible assets

 

 184

 

 184

 

 571

 

 582

 

Impairment of intangible asset

 

 -

 

 -

 

 281

 

 -

 

Stock-based compensation

 

 101

 

 99

 

 256

 

286

 

Non-GAAP adjusted net income(loss)

 

 $8

 

 $37

 

 $202

 

 $137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP loss per diluted share to

 

 

 

 

 

 

 

 

non-GAAP adjusted earnings per diluted share:

 

 

 

 

 

 

 

 

 

GAAP net loss per share

 

 $(0.02)

 

 $(0.02)

 

 $(0.07)

 

 $(0.06)

 

Amortization of intangible assets

 

 0.01

 

 0.01

 

 0.05

 

 0.05

 

Impairment of intangible asset

 

 -  

 

 -  

 

 0.02

 

 -  

 

Stock-based compensation

 

 0.01

 

 0.01

 

 0.02

 

 0.02

 

Non-GAAP adjusted net income(loss)

 

 $0.00

 

 $0.00

 

 $0.02

 

 $0.01

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net loss to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

GAAP net loss

 

 $(277)

 

 $(246)

 

 $(906)

 

 $(731)

 

Provision for income tax

 

 21

 

 21

 

 90

 

 63

 

Interest expense (income),net

 

 98

 

 54

 

 234

 

 166

 

Amortization of intangible assets

 

 184

 

 184

 

 571

 

 582

 

Impairment of intangible asset

 

 -

 

 -

 

 281

 

 -

 

Depreciation

 

 262

 

 142

 

 725

 

 454

 

EBITDA

 

 288

 

 155

 

 995

 

 534

 

Other amortization

 

 40

 

 88

 

 130

 

 263

 

Stock-based compensation

 

 101

 

 99

 

 256

 

 286

 

Adjusted EBITDA

 

 $429

 

 $342

 

 $1,381

 

 $1,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP net loss per diluted share to

 

 

 

 

 

 

 

 

Adjusted EBITDA per diluted share:

 

 

 

 

 

 

 

 

 

GAAP net loss per share

 

 $(0.02)

 

 $(0.02)

 

 $(0.07)

 

 $(0.06)

 

Provision for income tax

 

 -  

 

 -  

 

 0.01

 

 0.01

 

Interest expense (income),net

 

 0.01

 

 -  

 

 0.02

 

 0.01

 

Amortization of intangible assets

 

 0.01

 

 0.01

 

 0.04

 

 0.05

 

Impairment of intangible asset

 

 -  

 

 -  

 

 0.02

 

 -  

 

Depreciation

 

 0.02

 

 0.01

 

 0.06

 

 0.04

 

Other amortization

 

 -  

 

 0.01

 

 0.01

 

 0.02

 

Stock-based compensation

 

 0.01

 

 0.01

 

 0.02

 

 0.02

 

Adjusted EBITDA

 

 $0.03

 

 $0.02

 

 $0.11

 

 $0.09

 

 

 

 

 

 

 

 

 

 

 

BRIDGELINE DIGITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(Unaudited)
        Three Months Ended   Nine Months Ended
        June 30,   June 30,
        2012   2011   2012   2011
Revenue:                  
  Web application development services    $5,055    $5,483    $15,804    $16,408
  Managed service hosting    631    509    1,858    1,476
  Subscription and perpetual licenses    686    540    1,899    1,790
    Total revenue    6,372    6,532    19,561    19,674
                     
Cost of revenue:                
  Web application development services    2,611    2,978    8,237    8,955
  Managed service hosting    98    94    289    355
  Subscription and perpetual licenses    117    161    337    521
    Total cost of revenue    2,826    3,233    8,863    9,831
    Gross profit    3,546    3,299    10,698    9,843
                     
Operating expenses:                
  Sales and marketing    1,965    1,631    5,526    5,054
  General and administrative    923    1,066    2,924    2,985
  Research and development    370    448    1,253    1,300
  Depreciation and amortization    446    325    1,296    1,006
  Impairment of intangible asset    -    -    281    -
    Total operating expenses    3,704    3,470    11,280    10,345
Loss from operations    (158)    (171)    (582)    (502)
  Interest income (expense), net    (98)    (54)    (234)    (166)
Loss before income taxes    (256)    (225)    (816)    (668)
  Provision for income taxes    21    21    90    63
Net loss      $(277)    $(246)    $(906)    $(731)
                     
Net loss per share:                
  Basic and diluted    $(0.02)    $(0.02)    $(0.07)    $(0.06)
Number of weighted average shares:                
  Basic and diluted    12,971,259    12,306,207    12,543,019    12,148,287
                     

 

 

BRIDGELINE DIGITAL, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)

    ASSETS        
        June 30,   September 30,
        2012   2011
Current Assets:        
  Cash and cash equivalents    $1,942    $2,528
  Accounts receivable and unbilled revenues, net    4,794    4,274
  Prepaid expenses and other current assets    661    494
    Total current assets    7,397    7,296
Equipment and improvements, net    2,936    1,779
Intangible assets, net    1,706    1,527
Goodwill    21,598    20,122
Other assets    806    685
    Total assets    $34,443    $31,409
             
             
    LIABILITIES AND STOCKHOLDERS' EQUITY        
             
Current liabilities:        
  Accounts payable    $1,160    $1,291
  Accrued liabilities    1,030    1,081
  Accrued earnouts, current    729    295
  Debt, current    1,424    1,750
  Capital lease obligations, current    235    216
  Deferred revenue    1,411    1,169
    Total current liabilities    5,989    5,802
Accrued earnouts, net of current portion    990    772
Debt, net of current portion    3,203    3,017
Capital lease obligations, net of current portion    142    215
Other long term liabilities    1,141    395
    Total liabilities    $11,465    $10,201
             
Commitments and contingencies        
             
Stockholders' equity:        
  Preferred stock - $0.001 par value; 1,000,000 shares authorized;        
  none issued and outstanding    -    -
  Common stock - $0.001 par value; 20,000,000 shares authorized;        
  15,203,538 and 12,306,207 shares issued and outstanding, respectively    15    12
  Additional paid-in-capital    40,819    38,083
  Accumulated deficit    (17,676)    (16,770)
  Accumulated other comprehensive loss    (180)    (117)
    Total stockholders' equity    22,978    21,208
    Total liabilities and stockholders' equity    $34,443    $31,409
             
About Bridgeline Digital, Inc

Bridgeline Digital is developer of the award-winning iAPPS® Web Engagement Platform and related interactive solutions.

The iAPPS platform deeply integrates Web Content Management, eCommerce, eMarketing, and web Analytics capabilities within the heart of mission critical websites or eCommerce web stores. iAPPS enables customers to enhance and optimize the value of their web properties. Combined with award-winning interactive development capabilities, Bridgeline helps customers cost-effectively accommodate the changing needs of today’s rapidly evolving web properties; allowing them to maximize revenue, improve customer loyalty, enhance employee knowledge, and reduce operational costs.

The iAPPS product suite is delivered through a Cloud-based SaaS business model, whose flexible architecture provides customers with state-of-the-art deployments that provide maintenance and daily technical operation and support; or via a traditional perpetual licensing business model, in which the iAPPS software resides on a dedicated server in either the customer’s facility or Bridgeline’s co-managed hosting facility.

Bridgeline Digital is headquartered near Boston with additional locations in Atlanta, Baltimore, Chicago, Denver, New York, Philadelphia, Tampa, and Bangalore, India. Bridgeline has hundreds of customers ranging from middle market organizations to divisions within Fortune 1,000 companies that include: L’Oreal, Sun Chemical, Parametric Technologies Corp, Blue Cross Blue Shield, Novartis, Shaw Flooring, Endo Pharmaceuticals, Guardian Life, Tosoh, Dover, ViaWest, PODS, AARP, Cadaret Grant & Co., CFO Magazine, and the American Academy of Pediatrics. To learn more about Bridgeline Digital, please visit www.bridgelinedigital.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions, including, but not limited to, the impact of the weakness in the U.S. and international economies on our business, our inability to manage our future growth effectively or profitably, fluctuations in our revenue and quarterly results, our license renewal rate, the impact of competition and our ability to maintain margins or market share, the limited market for our common stock, the volatility of the market price of our common stock, the performance of our products, our ability to respond to rapidly evolving technology and customer requirements, our ability to protect our proprietary technology, the security of our software, our dependence on our management team and key personnel, our ability to hire and retain future key personnel, our ability to maintain an effective system of internal controls, or risks associated with our contracts with the U.S. federal government, as well as other risks described in our filings with the Securities and Exchange Commission. Any of such risks could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. We expressly disclaim any obligation to update any forward-looking statement.