Bridgeline Digital Announces Fourth Quarter and Fiscal 2013 Financial Results

Burlington, MA | December 10, 2013

Bridgeline Digital, Inc. (Nasdaq:BLIN), The Digital Engagement Company™, today announced financial results for its fourth quarter and fiscal year ended September 30, 2013.

"We continue to ardently focus on building a highly scalable iAPPS business as thousands of quality customers rely on iAPPS for their mission-critical website, intranets, and web stores," said Thomas Massie, Bridgeline Digital's President and Chief Executive Officer. "Fiscal 2014 will be an inflection year as our legacy revenue becomes an insignificant part of our total revenue and our core business continues to grow rapidly."

Fourth Quarter Highlights:

  • Revenue from our core business, iAPPS and the ElementsLocal platform, increased 30% to $5.8 million in the fourth quarter of 2013, compared to $4.5 million in the fourth quarter of 2012.
  • Revenue for the fourth quarter of 2013 was $6.7 million, compared to $6.7 million in the fourth quarter of 2012.
  • Subscription and perpetual license revenue increased 117% to $1.3 million in the fourth quarter of 2013, compared to $0.6 million in the fourth quarter of 2012.
  • Recurring revenue increased 36% in the fourth quarter to $1.5 million, compared to $1.1 million the fourth quarter of 2012.
  • 76 iAPPS enterprise licenses and 63 iAPPS ds licenses were sold in the fourth quarter of 2013.
  • Cash generated from operations in the fourth quarter of 2013 was $300,000.

Fiscal 2013 Highlights:

  • Revenue from our core business, iAPPS and ElementsLocal related revenue, increased 16%, to $19.2 million in fiscal 2013 compared to $16.6 million in fiscal 2012.
  • Subscription and perpetual license revenue increased 60% to $4 million in fiscal 2013, compared to $2.5 million in fiscal 2012.
  • Recurring revenue increased 21% in fiscal 2013 to $5.1 million, compared to $4.2 million in fiscal 2012.
  • Achieved record new bookings of iAPPS related bookings of $21.4 million in fiscal 2013.
  • 250 iAPPS enterprise licenses and 2,223 iAPPS ds licenses were sold in fiscal 2013. A total of 945 iAPPS enterprise licenses have been sold and a total of 2,223 iAPPS ds licenses have been sold since iAPPS was launched in 2008. iAPPS has an 84% retention rate.
  • In fiscal 2013 the Company made significant capital investments and improvements into the iAPPS co-managed Network Operations Center to support the planned scale of potentially driving tens of thousands of iAPPS driven websites, micro-sites or web stores.
  • In August, Bridgeline Digital acquired franchise web platform developer ElementsLocal, who has over 3,200 franchises on their web platform.
  • Bridgeline Digital was honored with 26 various industry related awards for iAPPS driven websites or web stores.

Fiscal 2014 Outlook

"For fiscal 2014, revenue is expected to be approximately $28 million, an increase from $24.5 million in 2013. I expect we will generate positive Adjusted EBITDA for the fiscal year. Further, in fiscal 2014 our revenue projection includes a projected increase of the Company's core business of approximately 32% from fiscal 2013 and a reduction of non-iAPPS related legacy revenue of approximately $2.5 million. Fiscal 2014 will validate the type of growth company we are," said Thomas Massie, President and CEO of the Company.

Conference Call Information

Bridgeline Digital will host a conference call to discuss fourth quarter and fiscal 2013 results at 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, 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 stock-based compensation charges. Bridgeline uses non-GAAP adjusted net income and Adjusted EBITDA as supplemental measures of our performance that are 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 financial performance.

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 measures. As a result 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.

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," or 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, or our ability to maintain an effective system of internal controls 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.

About Bridgeline Digital

Bridgeline Digital, The Digital Engagement Company™, enables its customers to maximize the performance of their mission critical websites, intranets, and online stores. Bridgeline's iAPPS® web engagement platform deeply integrates Content Management, eCommerce, eMarketing, Social Media management, and Web Analytics to help marketers deliver online experiences that attract, engage and convert their customers across all digital channels. Bridgeline provides end-to-end Digital Engagement solutions and boasts an award-winning team of interactive services professionals. Headquartered in Burlington, Mass, with nine additional locations throughout the United States and a .NET development center in Bangalore, India. Bridgeline has thousands of quality customers that range from small and medium-sized organizations to Fortune 1000 companies. To learn more, please visit www.bridgeline.com or call (800) 603-9936.

         
         
BRIDGELINE DIGITAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Dollars in thousands, except per share data)
         
  Three Months Ended
September 30,
Twelve Months Ended
September 30,
  2013 2012 2013 2012
Reconciliation of GAAP net loss to non-GAAP adjusted net income:        
GAAP net loss  $ (705)  $ (40)  $(3,598)  $ (946)
Amortization of intangible assets  120  179  511  750
Impairment of intangible asset  --  --  --  281
Stock-based compensation  103  129  438  386
Non-GAAP adjusted net income(loss)  $ (482)  $ 268  $(2,649)  $ 471
         
         
Reconciliation of GAAP loss per diluted share to non-GAAP adjusted earnings per diluted share:  
GAAP net loss per share  $ (0.04)  $ (0.00)  $ (0.23)  $ (0.07)
Amortization of intangible assets  0.01  0.01  0.03  0.06
Impairment of intangible asset  --   --   --   0.02
Stock-based compensation  0.01  0.01  0.03  0.03
Non-GAAP adjusted net income(loss)  $ (0.02)  $ 0.02  $ (0.17)  $ 0.04
         
         
Reconciliation of GAAP net loss to Adjusted EBITDA:        
GAAP net loss  $ (705)  $ (40)  $(3,598)  $ (946)
Provision for income tax  61  (21)  171  68
Interest expense (income), net  79  42  273  276
Amortization of intangible assets  120  179  511  750
Impairment of intangible asset  --  --  --  281
Depreciation  344  254  1,179  979
EBITDA  (101)  414  (1,464)  1,408
Other amortization  113  40  314  170
Stock-based compensation  103  129  438  386
Adjusted EBITDA  $ 115  $ 583  $ (712)  $ 1,964
         
         
Reconciliation of GAAP net loss per diluted share to Adjusted EBITDA per diluted share:    
GAAP net loss per share  $ (0.04)  $ (0.00)  $ (0.23)  $ (0.07)
Provision for income tax  --   --   0.01  0.01
Interest expense (income), net  --   --   0.02  0.02
Amortization of intangible assets  0.01  0.01  0.03  0.06
Impairment of intangible asset  --   --   --   0.02
Depreciation  0.02  0.02  0.07  0.07
Other amortization  0.01  --   0.02  0.01
Stock-based compensation  --   0.01  0.03  0.03
Adjusted EBITDA  $ 0.00  $ 0.04  $ (0.05)  $ 0.15
         
         
BRIDGELINE DIGITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(Unaudited)
         
  Three Months Ended
September 30,
Twelve Months Ended
September 30,
  2013 2012 2013 2012
Revenue:        
Digital engagement services  $ 4,971  $ 5,464  $ 18,585  $ 21,268
Managed service hosting  466  659  1,921  2,517
Subscription and perpetual licenses  1,274  613  4,000  2,511
Total revenue  6,711  6,736  24,506  26,296
         
Cost of revenue:        
Digital engagement services  2,548  2,712  10,114  10,949
Managed service hosting  93  83  317  372
Subscription and perpetual licenses  338  114  1,107  450
Total cost of revenue  2,979  2,909  11,538  11,771
Gross profit  3,732  3,827  12,968  14,525
         
Operating expenses:        
Sales and marketing  2,326  2,203  8,593  7,730
General and administrative  1,034  1,007  4,474  3,931
Research and development  473  203  1,365  1,456
Depreciation and amortization  464  433  1,690  1,729
Impairment of intangible asset  --  --  --  281
Total operating expenses  4,297  3,846  16,122  15,127
Loss from operations  (565)  (19)  (3,154)  (602)
Interest income (expense), net  (79)  (42)  (273)  (276)
Loss before income taxes  (644)  (61)  (3,427)  (878)
Provision for income taxes  61  (21)  171  68
Net loss  $ (705)  $ (40)  $ (3,598)  $ (946)
         
Net loss per share:        
Basic and diluted  $ (0.04)  $ (0.00)  $ (0.23)  $ (0.07)
Number of weighted average shares:        
Basic and diluted  17,525,722  14,706,869  15,558,244  13,084,095
     
     
BRIDGELINE DIGITAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)
     
ASSETS    
  September 30,
2013
September 30,
2012
Current Assets:    
Cash and cash equivalents  $ 2,830  $ 2,126
Accounts receivable and unbilled revenues, net  3,194  3,977
Prepaid expenses and other current assets  963  648
Total current assets  6,987  6,751
Equipment and improvements, net  3,065  2,735
Intangible assets, net  1,517  1,527
Goodwill  23,777  21,545
Other assets  1,631  1,132
Total assets  $ 36,977  $ 33,690
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 1,746  $ 1,132
Accrued liabilities  1,093  1,306
Accrued earnouts, current  561  375
Debt, current  1,165  1,424
Capital lease obligations, current  397  230
Deferred revenue  1,960  1,042
Total current liabilities  6,922  5,509
Accrued earnouts, net of current portion  950  990
Debt, net of current portion  4,725  2,988
Capital lease obligations, net of current portion  544  127
Other long term liabilities  1,088  1,106
Total liabilities  $ 14,229  $ 10,720
     
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; 30,000,000 shares authorized; 18,294,761 and 15,203,538 shares issued and outstanding, respectively  18  15
Additional paid-in-capital  44,206  40,847
Accumulated deficit  (21,314)  (17,716)
Accumulated other comprehensive loss  (162)  (176)
Total stockholders' equity  22,748  22,970
Total liabilities and stockholders' equity  $ 36,977  $ 33,690

CONTACT:
Bridgeline Digital, Inc.
Michael Prinn
Executive Vice President
& Chief Financial Officer
781.497.3016
mprinn@blinedigital.com