Q2 Fiscal 2014 Financials

May 15, 2014 Quinn Murphy Bridgeline Digital Announces Financial Results for Second Quarter and First Six Months of Fiscal 2014 BURLINGTON, Mass., May 15, 2014 (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 second quarter ended March 31, 2014."While we are disappointed in our short-term results, Bridgeline continues to execute against its long-term strategic plan to strengthen and grow a high traction, scalable iAPPS business model," said Thomas Massie, Bridgeline Digital's President and Chief Executive Officer. "With our growing backlog now exceeding $20M, we look forward to significant iAPPS SaaS revenue growth in Fiscal 2015 and beyond."Second Quarter Highlights:Subscription and perpetual license revenue increased 30% to $1.3 million in the second quarter of 2014, compared to $1.0 million in the second quarter of fiscal 2013.In March, we entered into a three year iAPPSds agreement with a leading healthcare communications technology company. The total value of the three year agreement is over $7 million, and over 94% of the revenue related to the agreement will be recognized as SaaS license fees, beginning in fiscal 2015.Achieved record new bookings of $12.2 million in the second quarter of 2014, compared to $7.1 million in the second quarter of fiscal 2013.Recurring revenue increased 23% to $1.6 million in the second quarter of 2014, compared to $1.3 million in the second quarter of fiscal 2013.First Six Months Highlights:Subscription and perpetual license revenue increased 61% to $2.9 million for the first six months of 2014, compared to $1.8 million for the comparable period of fiscal 2013.Recurring revenue increased 32% to $3.3 million in the first six months of 2014, compared to $2.5 million in the first six months of fiscal 2013.Achieved new bookings of $18.5 million in the first six months of 2014, compared to $15 million in the first six months of 2013.Consistent with our long term strategy, revenue from our legacy business decreased 45% in the first six months of fiscal 2014, compared to the first six months of fiscal 2013.Fiscal 2014 OutlookFor fiscal 2014, revenue is expected to be approximately $24 to $24.5 million, and our iAPPS related revenue is expected to be approximately $20 million, an increase from $18.7 million in fiscal 2013.Conference Call InformationBridgeline Digital will host a conference call to discuss first quarter and fiscal 2014 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 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.CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except share and per share data)(Unaudited)Three Months EndedSix Months EndedMarch 31,March 31,2014201320142013Revenue:Digital engagement services$3,610$4,489$8,159$9,339Subscription and perpetual licenses1,3071,0242,8841,811Managed service hosting3854917721,047Total revenue5,3026,00411,81512,197Cost of revenue:Digital engagement services2,6692,4945,1725,248Subscription and perpetual licenses452247849415Managed service hosting6876152148Total cost of revenue3,1892,8176,1735,811Gross profit2,1133,1875,6426,386Operating expenses:Sales and marketing1,9282,1644,0383,998General and administrative1,1679462,1982,300Research and development5792471,102379Depreciation and amortization5513901,005814Total operating expenses4,2253,7478,3437,491Loss from operations(2,112)(560)(2,701)(1,105)Interest expense, net(167)(59)(334)(135)Loss before income taxes(2,279)(619)(3,035)(1,240)Provision for income taxes35685689Net loss$(2,314)$(687)$(3,091)$(1,329)Net loss per share:Basic and diluted$(0.13)$(0.05)$(0.17)$(0.09)Number of weighted average shares outstanding:Basic and diluted17,794,60914,878,36117,894,42514,830,488BRIDGELINE DIGITAL, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share and per share data)(Unaudited)ASSETSMarch 31,September 30,20142013Current Assets:Cash and cash equivalents$3,455$2,830Accounts receivable and unbilled revenues, net3,4383,194Prepaid expenses and other current assets846963Total current assets7,7396,987Equipment and improvements, net2,7523,065Intangible assets, net1,8871,517Goodwill23,14123,777Other assets1,5261,631Total assets$37,045$36,977LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable$1,500$1,746Accrued liabilities1,0861,093Accrued earnouts, current668561Debt, current121,165Capital lease obligations, current376397Deferred revenue2,3861,960Total current liabilities6,0286,922Accrued earnouts, net of current portion554950Debt, net of current portion6,1944,725Capital lease obligations, net of current portion436544Other long term liabilities1,0921,088Total liabilities14,30414,229Commitments and contingenciesStockholders' equity:Preferred stock -- $0.001 par value; 1,000,000 shares authorized;none issued and outstanding----Common stock -- $0.001 par value; 30,000,000 shares authorized;21,825,510 and 18,313,765 shares issued and outstanding, respectively2218Additional paid-in-capital47,41144,206Accumulated deficit(24,405)(21,314)Accumulated other comprehensive loss(287)(162)Total stockholders' equity22,74122,748Total liabilities and stockholders' equity$37,045$36,977BRIDGELINE DIGITAL, INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS(Dollars in thousands, except per share data)Three Months EndedSix Months EndedMarch 31,March 31,2014201320142013Reconciliation of GAAP net loss to non-GAAP adjusted net loss:GAAP net loss$(2,314)$(687)$(3,091)$(1,329)Amortization of intangible assets216118341274Stock-based compensation125152167279Non-GAAP adjusted net loss$(1,973)$(417)$(2,583)$(776)Reconciliation of GAAP net loss per diluted share to non-GAAP adjusted net loss per diluted share:GAAP net loss per share$(0.13)$(0.05)$(0.17)$(0.09)Amortization of intangible assets0.010.010.020.02Stock-based compensation0.010.010.010.02Non-GAAP adjusted net loss$(0.11)$(0.03)$(0.14)$(0.05)Reconciliation of GAAP net loss to Adjusted EBITDA:GAAP net loss$(2,314)$(687)$(3,091)$(1,329)Provision for income tax35685689Interest expense, net16759334135Amortization of intangible assets216118341274Depreciation325272647540EBITDA(1,571)(170)(1,713)(291)Other amortization1523527279Stock-based compensation125152167279Adjusted EBITDA$(1,294)$17$(1,274)$67Reconciliation of GAAP net loss per diluted share to Adjusted EBITDA per diluted share:GAAP net loss per share$(0.13)$(0.05)$(0.17)$(0.09)Provision for income tax0.00------Interest expense, net0.01--0.020.01Amortization of intangible assets0.010.010.020.02Depreciation0.020.020.040.04Other amortization0.01--0.01--Stock-based compensation0.010.020.010.02Adjusted EBITDA$(0.07)$0.00$(0.07)$0.00About 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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