Q3 Fiscal 2009 Financials

Aug 11, 2009 Quinn Murphy Bridgeline Software Reports Financial Results for the Third Quarter of Fiscal 2009 BURLINGTON, Mass., Aug. 11, 2009 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a provider in cloud-based Web Content Management, eCommerce and Marketing Automation software, announced results for its third fiscal quarter and record results for the nine months ended June 30, 2009.Highlights from the third quarter of fiscal 2009 include:Revenue of $6,004,000 for the quarter ended June 30, 2009, representing a 5% increase over revenue of $5,700,000 for the same quarter one year ago. Recurring revenue grew by 19% in Q309 when compared to Q308.Customer base increased to 693 customers, a 29% increase from 539 customers a year ago. Approximately 456 of the Company’s customers, or 66%, pay Bridgeline Software a monthly subscription fee or a monthly managed service fee.Net income for the quarter ended June 30, 2009 was $178,000, representing a 166% increase over net income of $67,000 for the same quarter one year ago. This represents net income of $0.02 per diluted share versus net income of $0.01 per diluted share a year ago.EBITDA (earnings before interest, taxes, depreciation, and amortization) before stock compensation was $768,000 for the quarter ended June 30, 2009 compared with EBITDA of $584,000 for the same three month period one year earlier, representing a 32% increase. This represents $0.07 per diluted share of EBITDA, consistent with $0.06 per diluted share ofEBITDA a year ago. Balance sheet remains strong with a current ratio of 1.6 to 1. At June 30, 2009 Bridgeline Software had over $24.5 million in total assets and $5 million in total liabilities.Highlights from the first nine months of fiscal 2009 include:Revenue for the nine months ended June 30, 2009 was $18,576,000, representing a 21% increase over revenue of $15,301,000 for the same period in 2008.Net income for the nine months ended June 30, 2009 increased 160% to $561,000, as compared to $216,000 of net income from the same period one year earlier. This represents net income of $0.05 per diluted share compared with net income of $0.02 per diluted share a year ago.Cash generated from operations was $2,018,000 for the nine months ended June 30, 2009 compared to cash used in operations of ($497,000) for the same period a year ago.EBITDA before stock compensation for the nine month period ending June 30, 2009 was $2,232,000, as compared withEBITDA of $1,417,000 for the same period one year ago, representing a 58% increase. This represents $0.20 per diluted share of EBITDA, compared to $0.15 per diluted share of EBITDA a year ago.“Despite the severe economic challenges that have faced our nation over the past 18 months, we are very pleased with our continued growth and progress,” stated Thomas Massie, Chairman and Chief Executive Officer of Bridgeline Software.Results of Operations for the three-months ended June 30, 2009Bridgeline Software recorded revenue of $6 million for the quarter ended June 30, 2009, an increase of $300 thousand or 5% compared to the same period of the prior year. Bridgeline Software posted operating income for the quarter ended June 30, 2009 of $189,000 compared to operating income of $40,000 for the same quarter of the prior year. Bridgeline Software posted net income for the quarter ended June 30, 2009 of $178,000 or $0.02 per diluted share versus net income of $67,000 or $0.01 per diluted share for the same quarter in fiscal 2008.Results of Operations for the nine-months ended June 30, 2009Bridgeline Software recorded revenue of $18.6 million for the nine months ended June 30, 2009, an increase of $3.3 million, or 21% compared to the same period of the prior year. The Company posted operating income for the nine months ended June 30, 2009 of $627,000 compared to $165,000 for the same period of the prior year. The Company posted net income for the nine months ended June 30, 2009 of $561,000 or $0.05 per diluted share versus $216,000 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 June 30, 2009 was $3.3 million compared to annualized recurring revenue for the same period of the prior year of $2.7 million, representing an increase of 19%. 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 693 customers as of June 30, 2009, 456 or 66% pay a monthly subscription fee or a monthly managed service fee. Bridgeline Software’s retention rate of such clients during the quarter ended June 30, 2009 was 91%.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 EndedNine Months EndedJune 30, 2009June 30, 2008June 30, 2009June 30, 2008Revenue$6,004$5,700$18,576$15,301Cost of revenue 2,703 $2,631 8,283 7,112Gross profit 3,301 3,069 10,293 8,189Operating expenses: Sales & marketing 1,478 1,658 4,736 4,397 General & administrative 979 993 3,048 2,517 Research & development 336 108 971 406 Depreciation & amortization 319 270 911 704Total operating expenses 3,112 3,029 9,666 8,024Income from operations 189 40 627 165Interest and other income (expense) - 27 (35) 51Income before income taxes 189 67 592 216Income taxes 11 - 31 -Net income$178$67$561$216 Net income per share:Basic$0.02$0.01$0.05$0.02Diluted$0.02$0.01$0.05$0.02 Number of weighted average shares: Basic 11,109,256 9,489,159 10,960,777 9,139,356 Basic and Diluted 11,160,082 9,589,777 11,009,264 9,261,419 EBITDA results (Note 1) Add: Interest and tax expense$11$(1)$66$37 Depreciation and amortization 398 365 1,142 824 Stock-based compensation 181 153 463 340EBITDA before stock compensation and Other non-recurring charges$768$584$2,232$1,417 EBITDA per diluted share$0.07$0.06$0.20$0.15 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) June 30, 2009September 30, 2008AssetsCurrent assets:Cash and cash equivalents$2,833$1,911Accounts receivable, net 4,073 5,662Prepaid expenses and other current assets 255 467Total current assets 7,161 8,040 Equipment and improvements, net 1,594 1,763Definite-lived intangible assets, net 1,632 2,980Goodwill 13,491 10,725Other assets 653 751Total assets$24,531$24,259 Liabilities and shareholders’ equityCurrent liabilities: Accounts payable$722$1,770Accrued liabilities 1,420 1,529Line of credit 1,250 1,000Capital lease obligations, current 80 105Deferred revenue 924 1,176Total current liabilities 4,396 5,580Capital lease obligations, less current portion 79 139Other long term liabilities 488 350 Total liabilities 4,963 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: 11,132,827 and 10,665,533 shares issued and outstanding, respectively 11 11Additional paid-in capital 35,478 34,647Accumulated deficit (15,808) (16,369)Accumulated other comprehensive income (113) (99) Total shareholders’ equity 19,568 18,190 Total liabilities and shareholders’ equity$24,531$24,259Bridgeline Software, Inc.Consolidated Statements of Cash Flows (in thousands- unaudited) Nine months ended June 30, 20092008Cash flows from operating activities:Net income$561$216Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation 604 395Amortization of intangible assets 538 429Stock-based compensation 463 340Changes in operating assets and liabilities, netof acquired assets and liabilities: Accounts receivable and unbilled receivables 1,167 (525) Other assets 148 (724) Accounts payable and accrued liabilities (1,349) (6)Deferred revenue (252) (630)Other liabilities 138 8Total adjustments 1,457 (713) Net cash provided by (used in) operating activities 2,018 (497)Cash flows from investing activities:Equipment and other asset expenditures(405)(618)Acquisitions, net of cash acquired - (924)Contingent acquisition payments (846) (731) Net cash used in investing activities (1,251) (2,273)Cash flows from financing activities:Proceeds from bank line of credit 3,250 -Principal payments on bank line of credit (3,000) -Principal payments on capital leases (85) (172) Net cash used in financing activities 165 (172)Net increase (decrease) in cash and cash equivalents 932 (2,942)Effect of exchange rate on cash (10) (3)Cash and cash equivalents at beginning of the period 1,911 5,219Cash and cash equivalents at end of the period$2,833$2,274 Supplemental cash flow information:Cash paid for:Interest$42$47Income taxes$13$-Non-cash activities:Issuance of common stock for acquisitions$-$1,772Issuance of common stock for contingent acquisition payments$368$133Purchase of capital equipment through capital leases$-$70Equipment and other assets included in accounts payable$34$88Accrued contingent consideration$470 350About 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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