Q3 Fiscal 2010 Financials

Aug 13, 2010 Quinn Murphy Bridgeline Reports Financial Results for the Third Quarter and for Nine Months of Fiscal 2010 BURLINGTON, Mass., Aug. 13, 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 third quarter and nine month period ended June 30, 2010.Highlights from the third quarter of fiscal 2010 include:A record 88 iAPPS licenses were sold in the quarter ending June 30, 2010iAPPS Content Manager wins 2010 CODiE Award for Best Content Management Solution, globallyRevenue of $5.8M for the quarter ending June 30, 201076% of Bridgeline’s customer base paid a monthly subscription fee or a monthly managed service feeAfter onetime period expense of $153 thousand, non-GAAP adjusted net income was $207 thousandAfter onetime period expense of $153 thousand, income from operations was $72 thousandAfter onetime period expenses of $153 thousand adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) and before stock compensation was $598 thousandA balance sheet at June 30, 2010 with total assets of $27.3 million and only $6.9 million in total liabilitiesBridgeline acquired the selective assets of TMX Interactive in May 2010, expanding its presence into the Philadelphia marketplaceBridgeline acquired the selective assets of eMagination and acquired eMagination IG in July 2010, expanding its presence into the Baltimore marketplace and the Federal Government marketplaceHighlights from the first nine months of fiscal 2010 include:Revenue of $16.7M for the first nine months of fiscal 2010After onetime period expense of $160 thousand, non-GAAP adjusted net income was $887 thousandAfter onetime period expense of $160 thousand, income from operations was $344 thousandAfter onetime period expense of $160 thousand, adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) and before stock compensation was $1.8 millionCash generated from operations of $1.7 million“We are very excited with the market acceptance and traction iAPPS is having“ stated Thomas Massie, Chairman and Chief Executive Officer of Bridgeline. “Bridgeline just sold a record number of iAPPS licenses during the quarter, iAPPS received the esteemed 2010 CODiE award, and with the recent acquisitions of TMX and eMagination we have dramatically accelerated our time to market in the Philadelphia, Baltimore, and Federal Government markets.”Ron Levenson, Bridgeline’s Executive Vice President and Chief Financial Officer commented, “with the recent acquisitions of TMX and eMagination, Bridgeline’s quarterly revenue should approach $7.5 million, or $30 million annually. In addition, we anticipate both acquisitions to be accretive within the next 3 to 6 months, once onetime related costs are absorbed.”Recurring Revenue TrendsOf Bridgeline’s 617 customers as of June 30, 2010, 468 or 76% 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 June 30, 2010 was 70%. Bridgeline’s retention rate of iAPPS related customers is 98%.Annualized recurring revenue, exclusive of managed service hosting, was $1.2 million for the three months ended June 30, 2010, compared with $1.1 million for the same period one year ago, an increase of 9%.On an annualized basis, recurring revenue for the quarter ended June 30, 2010, was $3 million, compared with annualized recurring revenue of $3.3 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 June 302010 2009Annualized Recurring Revenue $3,028,000 $3,257,000Year over Year Change % (7%) Retention Rate 70% The decrease is attributable to Bridgeline’s focused marketing and new business development efforts in selling more iAPPS® related engagements. Additionally, there has been some customer attrition as a result of our efforts to engage with larger organizations as opposed to some of our smaller customers obtained through previous acquisitions.Results of Operations for the Three Months Ended June 30, 2010, Compared to June 30, 2009For the three months ended June 30, 2010, our revenue was $5.8 million compared with $6 million for the same period of 2009, a decrease of 3%. Gross profit was $3.1 million compared with $3.3 million for the same period of 2009, representing a decrease of 6%. Gross profit margins were 53.9% compared with 55.0% for the same period of 2009.Onetime expenses of $153 thousand were recorded in the three month period ended June 30, 2010 related to acquisition expenses and consolidation expenses from integrating Bridgeline’s Cleveland operation into its Chicago operations. After the onetime expense of $153 thousand operating income for the three month period was $72 thousand compared with $189 thousand in the same period of 2009. After the onetime expense of $153 thousand, net income for the three month period was $35 thousand compared with $178 thousand in the same period of 2009. Earnings per diluted share were $-0- compared with $.02 for the same period of the prior year. After the onetime expense of $153 thousand, non-GAAP adjusted net income was $207 thousand and non-GAAP adjusted earnings per diluted share was $.02 for the three months ended June 30, 2010, compared with $483 thousand and $.04 for the corresponding period of 2009. After the onetime expense of $153 thousand, adjusted EBITDA was $598 thousand and adjusted EBITDA per diluted share was $.05 for the three months ended June 30, 2010, compared with $768 thousand and $.07 for the corresponding period of 2009.Results of Operations for the Nine Months Ended June 30, 2010, Compared to June 30, 2009For the nine months ended June 30, 2010, our revenue was $16.7 million compared with $18.6 million for the same period of 2009, a decrease of 10%. Gross profit was $9 million compared with $10.3 million for the same period of 2009, representing a decrease of 13%. Gross profit margins were 53.7% compared with 55.4% for the same period of 2009.Onetime expenses of $160 thousand were recorded in the nine month period ended June 30, 2010 related to acquisition expenses and consolidation expenses from integrating Bridgeline’s Cleveland operation into its Chicago operations. After the onetime expense of $160 thousand, income from operations was $344 thousand compared with $627 thousand for the same period of 2009. After the onetime expense of $160 thousand, net income for the nine month period was $275 thousand compared with $561 thousand in the same period of 2009. Earnings per diluted share were $.02 compared with $.05 for the same period of the prior year. Non-GAAP adjusted net income was $887 thousand and non-GAAP adjusted earnings per diluted share was $.08 for the nine months ended June 30, 2010, compared with $1.4 million and $.12 for the corresponding period of 2009. Adjusted EBITDA was $1.8 million and non-GAAP adjusted earnings per diluted share was $.16 in for the nine months ended June 30, 2010, compared with $2.2 million and $.20 for the corresponding period of 2009.For further information, please refer to our quarterly report on Form 10-Q for the period ended June 30, 2010 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 DIGITAL, INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Dollars in thousands, except share and per share data)Three Months Ended June 30,Nine Months Ended June 30,2010200920102009Reconciliation of GAAP net income to non-GAAP adjusted net incomeGAAP net income$35$178$275$561Amortization of intangible assets148142431376Stock based compensation114181287463Tax effect of non-GAAP adjustments(90)(18)(106)(42)Non-GAAP adjusted net income2074838871,358Reconciliation of GAAP earnings per diluted share to non-GAAP adjusted earnings per diluted shareGAAP earnings per diluted share$--$.02$.02$.05Amortization of intangible assets.01.01.04.03Stock based compensation.01.01.03.04Tax effect of non-GAAP adjustments----(.01)--Non-GAAP adjusted earnings per diluted share$.02$.04$.08$.12Reconciliation of GAAP net income to Adjusted EBITDAGAAP net income$35$178275561Taxes21115231Interest16-1735Amortization of intangible assets148142431376Depreciation195202566604EBITDA4155331,3411,607Other amortization6954186162Stock based compensation114181287463Adjusted EBITDA$598$768$1,814$2,232Reconciliation of GAAP net earnings per diluted share to Adjusted EBITDA per diluted shareGAAP net earnings per diluted share$--$.02$.02$.05Taxes--------Interest--------Amortization of intangible assets.01.01.04.03Depreciation.02.02.05.06Other amortization.01--.02.02EBITA.04.05.13.16Stock based compensation.01.02.03.04Adjusted EBITDA per diluted share$.05$.07$.16$.20BRIDGELINE DIGITAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)Three Months Ended June 30,Nine Months Ended June 30,2010200920102009Revenue:Web application development services$4,813$5,172$13,951$15,846Managed service hosting4505971,4501,851Subscription and perpetual licenses5372351,265879Total revenue5,8006,00416,66618,576Cost of revenue:Web application development services2,4042,4216,8557,426Managed service hosting services94146382451Subscription and perpetual licenses178136478406Total cost of revenue2,6762,7037,7158,283Gross profit3,1243,3018,95110,293Operating expenses:Sales and marketing1,4271,4783,8474,736General and administrative1,0459793,2463,048Research and development259336584971Depreciation and amortization321319930911Total operating expenses3,0523,1128,6079,666Income from operations72189344627Interest income (expense) net(16)--(17)(35)Income before income taxes56189327592Income taxes21115231Net income$35$178$275$561Net income per share:Basic$--$.02$.02$.05Diluted$--$.02$.02$.05Number of weighted average shares:Basic11,188,20811,109,25611,185,50610,960,777Diluted11,529,01311,160,08211,606,45811,009,264BRIDGELINE DIGITAL, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share and per share data)June 30,2010September 30, 2009AssetsCurrent assets:Cash and cash equivalents$2,863$3,060Accounts receivable and unbilled receivables, net3,7733,468Prepaid expenses and other current assets330320Total current assets6,9666,848Equipment and improvements, net1,2481,448Intangible assets, net1,2461,490Goodwill, net16,89113,899Other assets972570Total assets$27,323$24,255LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payable$783$714Accrued liabilities864786Accrued earnouts544408Deferred revenue1,677890Current portion of debt1,7331,000Current portion of capital lease obligations4377Total current liabilities5,6443,875Long-term earnouts380--Long-term debt, net of current portion417--Capital lease obligations, net of current portion3562Total liabilities6,8554,351Commitments 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; 11,188,208 and 11,182,209 shares issued and outstanding,respectively1111Additional paid-in capital35,91235,620Accumulated deficit(15,336)(15,611)Accumulated other comprehensive income(119)(116)Total stockholders’ equity20,46819,904Total liabilities and stockholders’ equity$27,373$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.

   Discover How Bridgeline Can Grow Your Business

Contact us