Bridgeline Digital Announces Fourth Quarter and Fiscal 2015 Financial Results

Company Achieves Positive Adjusted EBITDA in the Fourth Quarter of Fiscal 2015

Burlington, MA | December 23, 2015

Bridgeline Digital, Inc., The Digital Engagement Company™, today announced financial results for its fourth quarter and fiscal year ended September 30, 2015.

We are pleased to report positive Adjusted EBITDA in the fourth quarter of 2015.  We have managed through a number of significant changes in fiscal 2015, most importantly, changes in leadership, the implementation of significant expense reductions and the launch of new express solution offerings.  All of these changes will help us improve our bottom line,” said Joni Kahn, Bridgeline Digital’s Chairperson. “I am excited about executing our operating plan for fiscal 2016, which continues to drive the transformation to a true SaaS business with higher license revenue and recurring revenue.” 

Fourth Quarter Summary:

  • Adjusted EBITDA was $21 thousand for the fourth quarter of fiscal 2015, compared to ($602) thousand in the fourth quarter of fiscal 2014, an improvement of $623 thousand.
  • Subscription and perpetual license revenue increased 13% to $1.5 million in the fourth quarter of 2015, compared to $1.4 million in the fourth quarter of 2014.
  • Revenue for the fourth quarter of fiscal 2015 was $4.6 million, compared to $5.8 million in the fourth quarter of fiscal 2014.
  • Gross margin improved to 50% in the fourth quarter of fiscal 2015, from 48% in the fourth quarter of fiscal 2014.
  • Operating expenses (excluding a goodwill impairment and restructuring charge) in the fourth quarter of fiscal 2015 were $2.8 million, compared to $4.2 million in the fourth quarter of fiscal 2014, a decrease of 32%.
  • iAPPSds was named a Strong Performer in “The Forrester Wave™: Through-Channel Marketing Automation Platforms, Q3 2015” report and earned the highest score possible for industry strategy and number of customers.
  • The iAPPS Digital Engagement Platform was named to EContent Magazine's 2015 Trendsetting Products List.

Fiscal 2015 Summary:

  • Subscription and perpetual license revenue was $5.8 million for both fiscal 2015 and fiscal 2014.
  • Recurring revenue remained constant in fiscal 2015 compared to fiscal 2014 at $6.9 million.
  • Recurring revenue for fiscal 2015 as a percentage of total revenue was 35%, an increase from 29% in fiscal 2014.
  • Revenue from our non-iAPPS, or legacy business, decreased by approximately 48% in fiscal 2015, when compared to fiscal 2014.
  • iAPPS Content Manager was awarded the 2015 CODiE Award for Best Content Management Platform globally and iAPPS Commerce was named a 2015 CODiE Award finalist for Best eCommerce System globally.
  • Throughout fiscal 2015, we implemented expense reduction initiatives aimed at aligning the cost structure with our revenue forecast and driving positive Adjusted EBITDA.  The combined annualized impact of these expense reductions since January 2015 is over $6.0 million.

Conference Call Information

Bridgeline Digital will host a conference call to discuss fourth quarter and fiscal 2015 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, goodwill impairment charges, restructuring charges, preferred stock dividends and any related tax effects.  

Adjusted EBITDA and Adjusted EBITDA per diluted share are defined as earnings before interest, taxes, depreciation and amortization, stock-based compensation charges, goodwill impairment charges, restructuring charges, preferred stock dividends and any related tax effects.  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   Twelve Months Ended
      September 30,   September 30,
        2015       2014       2015       2014  
Reconciliation of GAAP net loss to                 
non-GAAP adjusted net loss:                
  GAAP net loss applicable to common shareholders   $ (11,507 )   $ (1,818 )   $ (16,882 )   $ (6,215 )
  Amortization of intangible assets     107       157       554       655  
  Stock-based compensation     70       205       314       506  
  Goodwill impairment charge     10,500       -       10,500       -  
  Restructuring charges     437       -       496       -  
  Preferred stock dividends     32       -       114       -  
  Non-GAAP adjusted net loss   $ (361 )   $ (1,456 )   $ (4,904 )   $ (5,054 )
                   
                   
Reconciliation of GAAP loss per diluted share to                
non-GAAP adjusted loss per diluted share:                
  GAAP net loss per share applicable to common shareholders   $ (2.59 )   $ (0.42 )   $ (3.88 )   $ (1.58 )
  Amortization of intangible assets     0.02       0.03       0.13       0.17  
  Stock-based compensation     0.02       0.05       0.07       0.13  
  Goodwill impairment charge     2.36       -       2.41       -  
  Restructuring charges     0.10       -       0.11       -  
  Preferred stock dividends     0.01       -       0.03       -  
  Non-GAAP adjusted net loss   $ (0.08 )   $ (0.34 )   $ (1.13 )   $ (1.28 )
                   
Reconciliation of GAAP net loss to Adjusted EBITDA:                
  GAAP net loss applicable to common shareholders   $ (11,507 )   $ (1,818 )   $ (16,882 )   $ (6,215 )
  (Benefit)Provision for income tax     (314 )     163       (226 )     243  
  Interest expense, net     307       215       892       739  
  Amortization of intangible assets     107       157       554       655  
  Depreciation     251       302       1,065       1,282  
  Goodwill impairment charge     10,500       -       10,500       -  
  Restructuring charges     437       -       496       -  
  Other amortization     138       174       549       549  
  Stock-based compensation     70       205       314       506  
  Preferred stock dividends     32       -       114       -  
  Adjusted EBITDA   $ 21     $ (602 )   $ (2,624 )   $ (2,241 )
                   
                   
Reconciliation of GAAP net loss per diluted share to                 
Adjusted EBITDA per diluted share:                
  GAAP net loss per share   $ (2.59 )   $ (0.42 )   $ (3.88 )   $ (1.58 )
  (Benefit) Provision for income tax     (0.06 )     0.04       (0.05 )     0.06  
  Interest expense, net     0.08       0.05       0.21       0.19  
  Amortization of intangible assets     0.02       0.03       0.13       0.17  
  Depreciation     0.07       0.07       0.24       0.33  
  Goodwill impairment charge     2.36       -       2.41       -  
  Restructuring     0.10       -       0.11       -  
  Other amortization     0.04       0.04       0.13       0.14  
  Stock-based compensation     0.02       0.05       0.07       0.13  
  Preferred stock dividends     0.01       -       0.03       -  
  Adjusted EBITDA   $ 0.05     $ (0.14 )   $ (0.60 )   $ (0.56 )
                   

 

                   
BRIDGELINE DIGITAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(Unaudited)
                   
        Three Months Ended   Twelve Months Ended
        September 30,   September 30,
          2015       2014       2015     2014  
Revenue:              
  Digital engagement services   $ 2,676     $ 3,977     $ 11,903   $ 16,369  
  Subscription and perpetual licenses     1,532       1,355       5,792     5,749  
  Managed service hosting     341       438       1,529     1,619  
    Total revenue     4,549       5,770       19,224     23,737  
                   
Cost of revenue:              
  Digital engagement services     1,548       2,528       8,738     10,231  
  Subscription and perpetual licenses     628       423       1,994     1,694  
  Managed service hosting     83       62       307     280  
    Total cost of revenue     2,259       3,013       11,039     12,205  
    Gross profit     2,290       2,757       8,185     11,532  
                   
Operating expenses:              
  Sales and marketing     1,171       1,958       5,760     7,988  
  General and administrative     826       1,084       3,935     4,392  
  Research and development     458       671       1,901     2,386  
  Depreciation and amortization     380       484       1,695     1,999  
  Goodwill impairment charge     10,500       -       10,500     -  
  Restructuring expenses     437       -       496     -  
    Total operating expenses     13,772       4,197       24,287     16,765  
Loss from operations     (11,482 )     (1,440 )     (16,102 )   (5,233 )
  Interest expense, net     (307 )     (215 )     (892 )   (739 )
Loss before income taxes     (11,789 )     (1,655 )     (16,994 )   (5,972 )
  (Benefit)Provision for income tax     (314 )     163       (226 )   243  
Net loss     $ (11,475 )   $ (1,818 )   $ (16,768 ) $ (6,215 )
Dividends on convertible preferred stock     (32 )     -       (114 )   -  
Net loss applicable to common shareholders   $ (11,507 )   $ (1,818 )   $ (16,882 ) $ (6,215 )
Net loss per share attributable to common shareholders:            
  Basic and diluted   $ (2.59 )   $ (0.42 )   $ (3.88 ) $ (1.58 )
Number of weighted average shares outstanding:              
  Basic and diluted     4,434,195       4,328,761       4,350,627     3,937,986  
                   

 

             
BRIDGELINE DIGITAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)
             
    ASSETS        
        September 30,   September 30,
          2015       2014  
Current Assets:        
  Cash and cash equivalents   $   337     $   1,256  
  Accounts receivable and unbilled revenues, net       2,463         3,342  
  Prepaid expenses and other current assets       680         747  
    Total current assets       3,480         5,345  
Equipment and improvements, net       1,315         2,175  
Intangible assets, net       1,028         1,582  
Goodwill       12,641         23,141  
Other assets       723         1,317  
    Total assets   $   19,187     $   33,560  
             
             
    LIABILITIES AND STOCKHOLDERS' EQUITY        
             
Current liabilities:        
  Accounts payable   $   1,626     $   1,126  
  Accrued liabilities       1,046         957  
  Accrued earnouts, current       468         487  
  Debt, current       92         985  
  Capital lease obligations, current       320         364  
  Deferred revenue       1,542         1,990  
    Total current liabilities       5,094         5,909  
Accrued earnouts, net of current portion       -         381  
Debt, net of current portion       7,695         5,935  
Capital lease obligations, net of current portion       -         247  
Other long term liabilities       726         1,155  
    Total liabilities       13,515         13,627  
             
Commitments and contingencies        
             
Stockholders' equity:        
  Preferred stock - $0.001 par value; 1,000,000 shares authorized;        
  208,222 and 0, issued and outstanding, respectively (liquidation preference $2,114)     -         -  
  Common stock - $0.001 par value; 50,000,000 shares authorized;        
  4,637,684 and 4,388,583 shares issued and outstanding, respectively       5         5  
  Additional paid-in-capital       50,434         47,790  
  Accumulated deficit       (44,411 )       (27,529 )
  Accumulated other comprehensive loss       (356 )       (333 )
    Total stockholders' equity       5,672         19,933  
    Total liabilities and stockholders' equity   $   19,187     $   33,560  
             

Contact:  

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