Q1 Fiscal 2011 Financials

Feb 14, 2011 Quinn Murphy Bridgeline Digital Reports Financial Results for the First Quarter of Fiscal 2011 BURLINGTON, Mass., Feb. 14, 2011 (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 2011 (quarter ended December 31, 2010).Highlights from Q1 Fiscal Year 2011 include:In Q1;2011 revenue increased 19% to $6.5 million for the quarter ended December 31, 2010 when compared to $5.5 million for the quarter ended December 31, 2009In Q1 2011 the cumulative total number of iAPPS Licenses sold increased 132% to a total of 274 at December 31, 2010 when compared to a cumulative total of 118 iAPPS licenses sold at December 31, 2009In Q1 2011 revenue from SaaS and perpetual licenses increased 40% to $519 thousand in the quarter ended December 31, 2010 when compared to $372 thousand for the quarter ended December 31, 2009In Q1 2011 Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) was $485 thousand compared to $688 thousand for the quarter ended December 31, 2009In Q1 2011 non-GAAP Net Income was $167 thousand compared to $416 thousand for the quarter ended December 31, 2009"We had a very busy first quarter as we continued to operationally integrate the e.Magination acquisition, record new bookings including some prominent iAPPS customers, and enhance our executive management team" said Bridgeline Digital CEO, Thomas Massie. "As we move into the balance of fiscal 2011, demand for iAPPS looks very strong and we believe we will have a breakout year."Bridgeline Digital expects annual revenue for Fiscal 2011 in the range of $26.5 million to $28 million. In addition, the Company expects to generate positive non-GAAP net income and positive Adjusted EBITDA during the remainder of Fiscal 2011.Results of Operations for the Three Months Ended December 31, 2010, Compared to December 31, 2009For the three months ended December 31, 2010, our revenue increased 19% to $6.5 million from $5.5 million for the same period of fiscal 2010. Gross profit was $3.2 million compared with $3.0 million for the same period of fiscal 2010, an increase of 5%. Gross profit margins were 49% compared with 55% for the same period of fiscal 2010. The decrease in gross profit margin is primarily attributable to the impact of lower gross profit margin web application development services revenue from two acquisitions completed during the second half of fiscal 2010.The loss from operations for the three month period was ($84) thousand compared with income from operations of $242 thousand in the same period of fiscal 2010. The net loss for the three month period was ($156) thousand compared with net income of $220 thousand in the same period of fiscal 2010. The primary reason for the decrease in operating and net income is that there were no capitalized costs related to iAPPS software development in the three months ended December 31, 2010, while there was $170 thousand of capitalized costs in the three months ended December 31, 2009. In addition, the decrease is due to lower gross margin contribution and increased sales expense from our two recent acquisitions. Earnings (loss) per share were ($0.01) for the three months ended December 31, 2010, compared with $0.02 for the same period of the prior year. Non-GAAP adjusted net income was $167 thousand and non-GAAP adjusted earnings per diluted share was $0.01 for the three months ended December 31, 2010, compared with non-GAAP adjusted net income of $416 thousand and non-GAAP adjusted earnings per diluted share of $0.04 for the same period of fiscal 2010. Adjusted EBITDA was $485 thousand and Adjusted EBITDA per diluted share was $0.04 for the three months ended December 31, 2010, compared with $688 thousand and $0.06 for the same period of fiscal 2010.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 Digital, INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Dollars in thousands, except share and per share data)Three Months Ended December 31,20102009Reconciliation of GAAP net (loss) income to non-GAAP adjusted net income GAAP net income$(156)$220 Amortization of intangible assets206141 Stock based compensation11570 Tax effect of non-GAAP adjustments--(15) Non-GAAP adjusted net income$167$416Reconciliation of GAAP (loss) earnings per diluted share to non-GAAP adjusted earnings per diluted share GAAP earnings per diluted share$(.01)$.02 Amortization of intangible assets.01.01 Stock based compensation.01.01 Tax effect of non-GAAP adjustments---- Non-GAAP adjusted earnings per diluted share$.01$.04Reconciliation of GAAP net (loss) income to Adjusted EBITDA GAAP net income$(156)$220 Provision for taxes2116 Interest516 Amortization of intangible assets206141 Depreciation162184 EBITDA 286 567 Other amortization8451 Stock based compensation 115 70 Adjusted EBITDA$485$688Reconciliation of GAAP net (loss) earnings per diluted share to Adjusted EBITDA per diluted share GAAP net earnings per share$(.01)$.02 Taxes---- Interest---- Amortization of intangible assets.02.01 Depreciation.01.02 EBITDA .02 .05 Other amortization.01-- Stock based compensation.01.01 Adjusted EBITDA per diluted share$.04$.06Bridgeline Digital, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)Three Months Ended December 31,20102009Revenue: Web application development services$5,544$4,613 Managed service hosting466494 Subscription and perpetual licenses519372 Total revenue6,5295,479Cost of revenue: Web application development services3,0142,178 Managed service hosting services146129 Subscription and perpetual licenses182133 Total cost of revenue3,3422,440 Gross profit3,1873,039Operating expenses: Sales and marketing1,6441,250 General and administrative8971,169 Research and development38275 Depreciation and amortization348303 Total operating expenses3,2712,797(loss) Income from operations(84)242 Interest income (expense) net(51)(6)(Loss) Income before income taxes(135)236 Provision for income taxes2116Net (loss) income$(156)$220Net (loss) income per share: Basic$(.01)$.02 Diluted$(.01)$.02Number of weighted average shares: Basic11,883,86011,182,209 Diluted11,883,86011,520,866Bridgeline Digital, Inc.CONSOLIDATED BALANCE SHEET (Dollars in thousands, except share and per share data)ASSETSDecember 31, 2010September 30, 2010Current assets: Cash and cash equivalents$2,972$3,045 Accounts receivable and unbilled receivables, net4,1333,929 Prepaid expenses and other current assets384351 Total current assets7,4897,325Equipment and improvements, net1,5751,171Intangible assets, net2,0842,292Goodwill20,03420,036Other assets872900 Total assets$32,054$31,724LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities: Accounts payable$1,000$1,270 Accrued liabilities8111,024 Accrued Earnouts, current590900 Debt, Current2,3422,475 Capital lease obligations, current20650 Deferred revenue956899 Total current liabilities5,9056,618 Accrued Earnouts, net of current portion1,0731,073 Debt, net of current portion2,9833,025Capital lease obligations, net of current portion31311Other long term liabilities305341 Total liabilities10,57911,068Commitments 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, respectively1211 Additional paid-in capital37,72136,749 Accumulated deficit(16,144)(15,988) Accumulated other comprehensive income(114)(116) Total stockholders’ equity21,47520,656 Total liabilities and stockholders’ equity$32,054$31,724About 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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