Dec 29, 2008 Quinn Murphy Bridgeline Software Reports Record Results for Fiscal Year 2008 BURLINGTON, Mass., Dec. 29, 2008 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a provider in cloud-based Web Content Management, eCommerce and Marketing Automation software, announced results for its fiscal year ended September 30, 2008.Highlights from the fiscal year end results of 2008 include:Bridgeline Software achieved record revenues of $21,295,000 for the fiscal year ended September 30, 2008 representing a 91% increase over Bridgeline Software’s revenues of $11,151,000 in fiscal 2007.Bridgeline Software achieved record EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) before stock compensation and non-recurring charges for fiscal 2008 of $1,255,000, versus an EBITDA loss of -$239,000 in fiscal 2007.This represents a $1,494,000 year-over-year improvement.Bridgeline Software’s customer base as of September 30, 2008 increased to 651 customers, which is an 82% increase from 357 customers a year ago. Of Bridgeline Software’s 651 customers, 408 or 63% pay Bridgeline Software a monthly subscription fee or a monthly managed service fee.Bridgeline Software’s balance sheet remains strong. As of September 30, 2008, the Company had over $24 million in total assets, and $6 million in total liabilities. In addition, as of September 30, 2008, Bridgeline Software had over $5.9 million of cash on hand and accounts receivable.“Despite the economic recession the United States has faced for the past year, we are very pleased with our strong revenue growth and positive EBITDA results in fiscal 2008. Each quarter of fiscal 2008 we continued to increase our customer base, our software licenses, and our recurring revenue,” commented Thomas L. Massie, Bridgeline Software’s President and CEO.Massie concluded, “As Bridgeline approaches the completion of the first quarter of fiscal 2009, we are very pleased to see that our new bookings remain strong and steady. In addition, over the past 60 days, management has executed initiatives to enhance operational efficiencies, reducing our work force by 12% without hindering our revenue growth objectives or our software development plans.”Recurring Revenue TrendsOf Bridgeline Software’s 651 customers as of September 30, 2008, 408 or 63% pay Bridgeline Software a monthly subscription fee or a monthly managed service fee. Recurring revenue is revenue from customers who pay Bridgeline Software a monthly subscription fee or a monthly managed service fee. Bridgeline Software’s retention rate of such clients during the fiscal year ended September 30, 2008 was 88%.FY 08 FY 07Annual Recurring Revenues $ 2,582,000 $ 893,100Sequential Growth from Q308 to Q408 26%Year over Year Growth % 189%Retention Rate 88%Results of Operations for the fiscal year ended September 30, 2008Bridgeline Software recorded revenue of $21.3 million for the fiscal year ended September 30, 2008, an increase of $10 million, or 91% compared to the prior fiscal year. Bridgeline Software posted positive EBITDA of $1.2 million in fiscal 2008; a $1.4 million improvement when compared to the prior year. Bridgeline Software reported gross profit of $11 million in fiscal year ended September 30, 2008; a $4.9 million improvement from the prior year.As a percentage of total sales, operating expense declined to 54% in the fiscal year ended September 30, 2008, exclusive of impairment. In the fiscal year ended September 30, 2007, operating expense was 64% of total sales.Principally as a result of the recent rapid decline in the NASDAQ market and the recent rapid decline of Bridgeline Software’s own market-cap over the past six months, Bridgeline Software determined that it had identified an impairment triggering event that would require an impairment evaluation of the Company’s goodwill. During the fourth quarter of fiscal 2008, Bridgeline Software completed a review of the carrying value of goodwill and other intangible asset balances for possible impairment in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” and SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” Based upon the results of the impairment review, Bridgeline Software recognized one time, non cash related impairment charges of $9.8 million for the fiscal year ended September 30, 2008.For further information concerning the impairment charge, please refer to our annual report on Form 10-KSB for the period ended September 30, 2008 as filed with the Securities and Exchange Commission.Including the one-time non cash related impairment charges of $9.8 million, Bridgeline Software posted an operating loss for the fiscal year ended September 30, 2008, of $10.3 million compared to an operating loss of $1 million in fiscal year 2007. Including the one-time non cash related impairment charges of $9.8 million, Bridgeline Software posted a net loss for the fiscal year ended September 30, 2008 of $10.3 million or ($1.09) per diluted share versus a net loss of $1.9 million or ($0.36) per diluted share in the previous fiscal year. The increase in net loss was attributable to the one-time non cash related impairment charges.Non-GAAP Financial MeasuresThis 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.Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995All 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. Bridgeline Software, Inc.Condensed Consolidated Statements of Operations (Dollars in thousands except per share data) Year Ended September 30 20082007Revenue:Application development services$16,527$8,659Managed services 3,683 2,050Perpetual licenses and subscriptions 1,085 442Total revenue 21,295 11,151Cost of revenue: Application development services 9,683 4,558Managed services 471 436Perpetual licenses and subscriptions 151 26Total cost of revenue 10,305 5,020Gross profit 10,990 6,131Operating expenses: Sales and marketing 6,294 3,488General and administrative 3,531 2,489Research and development 619 791Depreciation and amortization 1,051 369Impairment of definite-lived intangible assets 76 --Impairment of goodwill 9,752 --Total operating expenses 21,323 7,137Loss from operations (10,333) (1,006)Interest and other expense (61 ) (924)Other income 85 33Loss before income taxes (10,309) (1,897)Income taxes -- --Net loss$(10,309)$(1,897) Net loss per share:Basic and diluted$(1.09)$(0.36)Number of weighted average shares: Basic and diluted 9,473,408 5,285,787EBITDA before stock compensation and other non-recurring charges (Note 1)$1,255$(239)EBITDA per Share$0.13$(0.05)Note 1:EBITDA before stock compensation and other non-recurring charges is a Non-GAAP Financial Measurement. We use earnings before interest, taxes, depreciation and amortization (“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”). We define EBITDA before stock compensation and other non-recurring charges, including impairment charges, as net income before interest, taxes, depreciation, amortization and stock-based compensation. We present EBITDA before stock compensation and other non-recurring charges because we consider it an important supplemental measure of our performance by adjusting net income or loss primarily for the non-cash charges and other non-recurring charges. Because the use of EBITDA before stock compensation and other non-recurring charges facilitates comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning and analysis purposes, in assessing acquisition opportunities and in determining how potential external financing sources are likely to evaluate our business. In addition, we believe this measure provides the investor with an accurate measure of our ability to meet our future cash flow requirements.Bridgeline Software, Inc.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except per share data)ASSETSSeptember30 20082007Current assets:Cash and cash equivalents$1,911$5,219Accounts receivable (less allowance for doubtful accounts of $303 and $101, respectively) 4,024 2,892Unbilled receivables 1,576 355Prepaid expenses and other current assets 529 192Total current assets 8,040 8,658 Equipment and improvements, net 1,763 961Definite-lived intangible assets, net 2,980 1,441Goodwill, net of preliminary impairment charge of $9,752 10,725 14,426Other assets 751 273Total assets$24,259$25,759 LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:Line of Credit$1,000$--Capital lease obligations, current 105 76Accounts payable 1,770 652Deferred revenue 1,176 725Accrued liabilities 1,860 1,266Total current liabilities 5,911 2,719Capital lease obligations, less current portion 139 146Other long term liabilities 19 19Total liabilities 6,069 2,884 Commitments and contingencies Shareholders’ 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: 10,665,532 and 8,648,950 shares issued and outstanding, respectively 11 9Additional paid-in capital 34,647 28,908Accumulated deficit (16,369) (6,060 )Accumulated other comprehensive income (99 ) 18Total shareholders’ equity 18,190 22,875Accumulated other comprehensive income$24,259$25,759About Bridgeline DigitalBridgeline Digital, The Digital Engagement Company™, helps customers maximize the performance of their full digital experience - from websites and intranets to online stores and campaigns. Bridgeline's Unbound (formerly iAPPS®) platform deeply integrates Web Content Management, eCommerce, eMarketing, Social Media management, and Web Analytics to help marketers deliver digital experiences that attract, engage, nurture and convert their customers across all channels. Headquartered in Burlington, Mass., 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.