Q1 Fiscal 2010 Financials

Feb 16, 2010 Quinn Murphy Bridgeline Reports Financial Results for the First Quarter of Fiscal 2010 BURLINGTON, Mass., Feb. 16, 2010 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a provider in cloud-based Web Content Management, eCommerce and Marketing Automation software, announced financial results for its first quarter of fiscal December 31, 2010.Highlights from the first quarter of fiscal 2010 include:Bridgeline has 651 customers, of which 491 or 75% of these customers paid a monthly subscription fee or a monthly managed service fee.Annualized recurring revenue, exclusive of managed service hosting, was $1.2 million for the three months ended December 31, 2009, compared with $1.1 million for the same period one year ago, an increase of 8%.Non-GAAP adjusted net income of $416 thousand and non-GAAP adjusted earnings per diluted share of $.04 for the quarter ended December 31, 2009.Income from operations of $242 thousand, net income of $220 thousand and earnings per diluted share of $.02 for the quarter ended December 31, 2009.Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) and before stock compensation of $688 thousand and Adjusted EBITDA per diluted share of $.06 for the quarter ended December 31, 2009.A balance sheet as of December 31, 2009 with total assets of $25.4 million and only $5.2 million in total liabilities."While our pipeline remains very strong, over the past months we have seen the ongoing macroeconomic uncertainties cause some of our customers to delay their planned spending," stated Thomas Massie, Chairman and Chief Executive Officer of Bridgeline. "In addition, we have been exclusively focusing our marketing and new business development efforts towards iAPPS based solutions. This has been a rapidly growing area of our business that to date has had tremendous customer traction and we believe has the potential to drive very strong profitability for Bridgeline."Recurring Revenue TrendsOf Bridgeline’s 651 customers as of December 31, 2009, 491 or 75% paid either a monthly subscription license fee or a managed service fee. Bridgeline’s retention rate of recurring revenue customers for the three months ended December 31, 2009 was 72%.On an annualized basis, recurring revenue for the quarter ended December 31, 2009, was $3.2 million, compared with annualized recurring revenue of $3.4 million for the same period of the prior year. Annualized recurring revenue is derived by multiplying the actual results for the quarter by four.Three Months Ended December 312009 2008Annual Recurring Revenue $3,115,000 $3,435,000Year over Year Change % (8%) Retention Rate 72% Annualized recurring revenue, exclusive of managed service hosting, was $1.2 million for the three months ended December 31, 2009, compared with $1.1 million for the same period one year ago, an increase of 8%.Results of Operations for the Three Months Ended December 31, 2009, Compared to the Three Months Ended December 31, 2008For the three months ended December 31, 2009, our revenue was $5.5 million compared with $6.5 million for the same period of 2008, a decrease of 15%. Gross profit was $3 million compared with $3.6 million for the same period of 2008, representing a decrease of 15%. Gross profit margins were 55.5% compared with 55.2% for the same period of 2008. Income from operations was $242 thousand compared with $187 thousand for the same period of 2008. Net income for the three month period increased to $220 thousand from $165 thousand in the same period of 2008. Earnings per diluted share was $.02 for both three month periods. Non-GAAP adjusted net income was $416 thousand and non-GAAP adjusted earnings per diluted share was $.04 in for the three months ended December 31, 2009, compared with $492 thousand and $.05 for the corresponding period of 2008For further information, please refer to our annual report on Form 10-Q for the three months ended December 31, 2009 as filed with the Securities and Exchange Commission.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.RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Dollars in thousands, except share and per share data)Three Months Ended December 31,20092008Reconciliation of GAAP net income to non-GAAP adjusted net income GAAP net income$220$165 Amortization of intangible assets141190 Stock based compensation70137 Tax effect of non-GAAP adjustments(15)-- Non-GAAP adjusted net income (loss)$416$492Reconciliation of GAAP earnings per diluted share to non-GAAP adjusted earnings per diluted share GAAP earnings per diluted share$.02$.02 Amortization of intangible assets.01.02 Stock based compensation.01.01 Tax effect of non-GAAP adjustments---- Non-GAAP adjusted earnings per diluted share$.04$.05Reconciliation of GAAP net income to Adjusted EBITDA GAAP net income$220$165 Taxes16-- Interest622 Amortization of intangible assetsaaa141190 Depreciation184197 EBITDA 567 574 Other amortization5154 Stock based compensation 70 137 Adjusted EBITDA$688$765Reconciliation of GAAP net earnings per diluted share to Adjusted EBITDA per diluted share GAAP net earnings per diluted share$.02$.02 Taxes---- Interest---- Amortization of intangible assets.01.02 Depreciation.02.02 Other amortization---- Stock based compensation.01.01 Adjusted EBITDA per diluted share$.06$.07Bridgeline Software, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)Three Months Ended December 31,20092008Revenue: Web application development services$4,613$5,548 Managed service hosting494563 Subscription and perpetual licenses372362 Total revenue5,4796,473Cost of revenue: Web application development services2,1782,641 Managed service hosting services129134 Subscription and perpetual licenses133123 Total cost of revenue2,4402,898 Gross profit3,0393,575Operating expenses: Sales and marketing1,2501,630 General and administrative1,1691,042 Research and development75351 Depreciation and amortization303365 Total operating expenses2,7973,388Income from operations242187 Interest income (expense) net(6)(22)Income before income taxes236165 Income taxes16--Net income$220$165Net income per share: Basic$.02$.02 Diluted$.02$.02Number of weighted average shares: Basic11,182,20910,767,903 Diluted11,520,86610,836,253Bridgeline Software, Inc.CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share data)ASSETSDecember 31, 2009September 30, 2009Current assets: Cash and cash equivalents$3,076$3,060 Accounts receivable and unbilled receivables, net4,0563,468 Prepaid expenses and other current assets365320 Total current assets7,4976,848Equipment and improvements, net1,3271,448Intangible assets, net1,3491,490Goodwill, net14,36913,899Other assets834570 Total assets$25,376$24,255LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities: Accounts payable$767$714 Accrued liabilities1,3541,194 Line of credit1,3501,000 Capital lease obligations, current5777 Deferred revenue1,148890 Total current liabilities4,6763,875Capital lease obligations, net of current portion5662Other long term liabilities448414 Total liabilities5,1804,351Commitments and contingenciesStockholders’ 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; 11,182,209 and 11,182,209 shares issued and outstanding, respectively1111 Additional paid-in capital35,69035,620 Accumulated deficit(15,391)(15,611) Accumulated other comprehensive income(114)(116) Total stockholders’ equity20,19619,904 Total liabilities and stockholders’ equity$25,376$24,255About 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.

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