Q2 Fiscal 2009 Financials

May 12, 2009 Quinn Murphy Bridgeline Software Reports Record Profit for the Second Quarter of Fiscal 2009 BURLINGTON, Mass., May 12, 2009 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a provider in cloud-based Web Content Management, eCommerce and Marketing Automation software, announced record results for its second fiscal quarter and six months ended March 31, 2009.Highlights from the second quarter of fiscal 2009 include:Revenue of $6,099,000 for the quarter ended on March 31, 2009, representing a 13% increase over revenue of $5,398,000 for the same quarter one year earlier. Recurring revenue grew 46% from Q208 to Q209.Customer base increased to 679 customers, a 29% increase from 528 customers a year ago. Of the Company’s 679 customers, 414 or 61% pay Bridgeline Software a monthly subscription fee or a monthly managed service fee.Record net income for the quarter ended March 31, 2009 of $218,000, representing a 95% increase over net income of $112,000 for the same quarter one year earlier. This represents $0.02 per diluted share versus $0.01 per diluted share a year ago.Cash generated from operations of $749,000 for the quarter ended March 31, 2009 compared to cash generated from operations of $103,000 for the same three month period a year ago.EBITDA (earnings before interest, taxes, depreciation, and amortization) before stock compensation was $697,000 for the quarter ended March 31, 2009 compared with EBITDA of $547,000 for the same three month period one year earlier, representing a 27% increase. This represents $0.06 per diluted share of EBITDA, consistent with $0.06 per diluted share of EBITDA a year ago.Balance sheet remains strong with a current ratio of 1.4 to 1. As of March 31, 2009 Bridgeline Software had over $24.5 million in total assets and $5.4 million in total liabilities.Highlights from the first six months of fiscal 2009 include:Revenue for the six months ended March 31, 2009 was $12,572,000, representing a 31% increase over revenue of $9,601,000 for the same six month period in fiscal 2008.Net income for the six months ended March 31, 2009 increased 157% to $383,000, as compared to $149,000 of net income from the same six month period one year earlier. This represents $0.04 per diluted share versus $0.02 per diluted share a year ago.Cash generated from operations was $1,851,000 for the first six months ended March 31, 2009 compared to cash generated from operations of $78,000 for the same six month period a year ago.EBITDA before stock compensation for the six month period ending March 31, 2009 was $1,462,000, as compared withEBITDA of $861,000 from the same six month period one year earlier, representing a 70% increase. This represents $0.13 per diluted share of EBITDA, compared to $0.09 per diluted share of EBITDA a year ago.“New bookings and new iAPPS software licenses in Q209 were robust,” stated Thomas Massie, Chairman and Chief Executive Officer of Bridgeline Software. “In today's challenging economic environment, we believe the cost efficiencies and productivity gains offered by Bridgeline Software become even more relevant for both current and future customers.”Results of Operations for the three-months ended March 31, 2009Bridgeline Software recorded revenue of $6.1 million in the quarter ended March 31, 2009, an increase of $700 thousand or 13% compared to the same period of the prior year. Bridgeline Software posted operating income for the quarter ended March 31, 2009 of $251,000 compared to operating income of $116,000 for the same quarter of the prior year. Bridgeline Software posted net income for the quarter ended March 31, 2009 of $218,000 or $0.02 per diluted share versus net income of $112,000 or $0.01 per diluted share for the same quarter in fiscal 2008.Results of Operations for the six-months ended March 31, 2009Bridgeline Software recorded revenue of $12.6 million for the six months ended March 31, 2009, an increase of $3.0 million, or 31% compared to the same period of the prior year. The Company posted operating income for the six months ended March 31, 2009 of $438,000 compared to $125,000 for the same period of the prior year. The Company posted net income for the six months ended March 31, 2009 of $383,000 or $0.04 per diluted share versus $149,000 or $0.02 per diluted share in the same period of the previous year.Recurring Revenue TrendsOn an annualized basis, recurring revenue for the quarter ended March 31, 2009 was $3.4 million compared to annualized recurring revenue for the same period of the prior year of $2.3 million, representing an increase of 46%. Annualized figures are derived by multiplying the actual results for the quarter by four.Recurring revenue is revenue from customers who pay Bridgeline Software a monthly subscription fee or a monthly managed service fee. Of Bridgeline Software’s 679 customers as of March 31, 2009, 414 or 61% pay a monthly subscription fee or a monthly managed service fee. Bridgeline’s retention rate of such clients during the quarter ended March 31, 2009 was 87%.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-unaudited) Three Months EndedSix Months EndedMarch 31, 2009March 31, 2008March 31, 2009March 31, 2008Revenue$6,099$5,398$12,572$9,601Cost of revenue 2,682 $2,459 5,580 4,481Gross profit 3,417 2,939 6,992 5,120Operating expenses: Sales & marketing 1,628 1,672 3,258 2,739 General & administrative 1,027 779 2,069 1,524 Research & development 284 132 635 298 Depreciation & amortization 227 240 592 434Total operating expenses 3,166 2,823 6,554 4,995Income from operations 251 116 438 125Interest and other income (expense) (13) (4) (35) 24Income before income taxes 238 112 403 149Income taxes 20 - 20 -Net income$218$112$383$149 Net income per share:Basic$0.02$0.01$0.04$0.02Diluted$0.02$0.01$0.04$0.02 Number of weighted average shares: Basic 11,012,808 9,250,265 10,891,537 8,965,411 Basic and Diluted 11,058,933 9,349,102 10,938,201 9,067,113 EBITDA results (Note 1) Add: Interest and tax expense$31$14$53$32 Depreciation and amortization 303 289 744 493 Stock-based compensation 145 132 282 187EBITDA before stock compensation and Other non-recurring charges$697$547$1,462$861 EBITDA per diluted share$0.06$0.06$0.13$0.09 Note 1:EBITDA (earnings before interest, taxes, depreciation and amortization) before stock compensation and other non-recurring charges, including impairment charges (“EBITDA”) is a Non-GAAP Financial Measure. We use 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 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.Condensed Consolidated Balance Sheets(in thousands, except share and per share data- unaudited) March 31, 2009September 30, 2008AssetsCurrent assets:Cash and cash equivalents$2,740$1,911Accounts receivable (less allowance for doubtful accounts of $321 and $380, respectively) 3,445 4,086Unbilled receivables 791 1,576Prepaid expenses and other current assets 430 467Total current assets 7,406 8,040 Equipment and improvements, net 1,727 1,763Definite-lived intangible assets, net 1,773 2,980Goodwill 13,007 10,725Other assets 614 751Total assets$24,527$24,259 Liabilities and stockholders’ equityCurrent liabilities: Accounts payable$1,185$1,770Accrued liabilities 1,820 1,860Line of credit 1,000 1,000Capital lease obligations, current 76 105Deferred revenue 1,220 1,176Total current liabilities 5,301 5,911Capital lease obligations, less current portion 99 139Other long term liabilities — 19 Total liabilities 5,400 6,069 Commitments and contingenciesShareholders’ 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: 11,074,856 and 10,665,533 shares issued and outstanding, respectively 11 11Additional paid-in capital 35,228 34,647Accumulated deficit (15,986) (16,369)Accumulated other comprehensive income (126) (99) Total shareholders’ equity 19,127 18,190 Total liabilities and shareholders’ equity$24,527$24,259Bridgeline Software, Inc.Consolidated Statements of Cash Flows (in thousands- unaudited) Six months ended March 31, 20092008Cash flows from operating activities:Net income$383$149Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation 402 249Amortization of intangible assets 342 210Stock-based compensation 282 187Changes in operating assets and liabilities, netof acquired assets and liabilities: Accounts receivable and unbilled receivables 1,003 70 Other assets 37 (303) Accounts payable and accrued liabilities (642) 1Deferred revenue 44 (485)Total adjustments 1,468 (71 ) Net cash provided by operating activities 1,851 78Cash flows from investing activities:Acquisitions, net of cash acquired - (924)Contingent acquisition payments (587) (440)Equipment and improvments expenditures(376)(338) Net cash used in investing activities (963) (1,702)Cash flows from financing activities:Proceeds from bank line of credit 2,000 -Principal payments on bank line of credit (2,000) -Principal payments on capital leases (69) (104) Net cash used in financing activities (69) (104)Net increase (decrease) in cash and cash equivalents 819 (1,728)Effect of exchange rate on cash 10 —Cash and cash equivalents at beginning of the period 1,911 5,219Cash and cash equivalents at end of the period$2,740$3,491 Supplemental cash flow information:Cash paid for:Interest$35$32Income taxes$13$-Non-cash activities:Issuance of common stock for acquisitions$-$1,772Issuance of common stock for contingent acquisition payments$301$133Purchase of capital equipment through capital leases$-$70About 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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