Q3 Fiscal 2011 Financials

Aug 15, 2011 Quinn Murphy Bridgeline Digital Reports Financial Results for the Third Quarter and First Nine Months of Fiscal 2011 BURLINGTON, Mass., Aug. 15, 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 the three and nine month periods ended June 30, 2011.Highlights from the third quarter of fiscal 2011 include:Revenue increased 13% to $6.5 million when compared to $5.8 million for the quarter ended June 30, 2010.New business bookings were a record $6.8 million, this is a 31% increase compared to $5.2 million of new bookings for the quarter ended June 30, 2010.Revenue from subscription, perpetual licenses and managed service hosting increased 6% to $1.05 million in the quarter ended June 30, 2011 when compared to $987 thousand for the quarter ended June 30, 2010.45 new iAPPS licenses were sold during the three months ended June 30, 2011. As of June 30, 2011 there have been a total of 360 iAPPS sold.Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) was $342 thousand for the quarter ended June 30, 2011 compared to $598 thousand for the quarter ended June 30, 2010.Cash flow generated from operations was $489 thousand for the quarter ended June 30, 2011 compared to $758 thousand for the quarter ended June 30, 2010.A balance sheet at June 30, 2011 with total assets of $30.0 million and only $8.8 million of liabilities.Highlights from the first nine months of fiscal 2011 include:Revenue increased 18% to $19.7 million when compared to $16.7 million for the nine months ended June 30, 2010.Revenue from subscription, perpetual licenses and managed service hosting increased 20% to $3.3 million in the quarter ended June 30, 2011 when compared to $2.7 million for the nine months ended June 30, 2010.Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) was $1.1 million for the nine months ended June 30, 2011 compared to $1.8 million for the nine months ended June 30, 2010.Non-GAAP net income was $137 thousand compared to non-GAAP net income of $887 thousand for the nine months ended June 30, 2010.Bridgeline Digital expects annual revenue for fiscal 2011 of approximately $26.5 million. In addition, the Company expects to generate positive non-GAAP net income and positive Adjusted EBITDA during fiscal 2011.Results of Operations for the Three Months Ended June 30, 2011 Compared to June 30, 2010For the three months ended June 30, 2011 our revenue increased 13% to $6.5 million from $5.8 million for the same period of fiscal 2010. Gross profit was $3.3 million compared with $3.1 million for the same period of fiscal 2010, an increase of 6%. Gross profit margins were 51% compared with 54% for the same period of fiscal 2010. The decrease in gross profit margin is due to the impact of lower gross profit margin from web application development services from the two acquisitions completed during the second half of fiscal 2010.The loss from operations for the three month period was ($171) thousand compared with income from operations of $72 thousand in the same period of fiscal 2010. The net loss for the three month period was ($246) thousand compared with net income of $35 thousand in the same period of fiscal 2010. The reasons for the decrease in operating and net income were due to a significant reduction in capitalized costs related to iAPPS software development compared to the prior year, increased R&D and infrastructure investments and lower gross margin contribution and increased sales expense from one of our recent acquisitions. Earnings (loss) per share was ($0.02) for the three months ended June 30, 2011 compared with $0.00 for the same period of the prior year. Non-GAAP adjusted net income was $37 thousand and non-GAAP adjusted earnings per diluted share was $0.00 for the three months ended June 30, 2011 compared with non-GAAP adjusted net income of $207 thousand and non-GAAP adjusted earnings per diluted share of $0.02 for the same period of fiscal 2010. Adjusted EBITDA was $342 thousand and Adjusted EBITDA per diluted share was $0.02 for the three months ended June 30, 2011 compared with $598 thousand and $0.05 for the same period of fiscal 2010.Results of Operations for the Nine Months Ended June 30, 2011 Compared to June 30, 2010For the nine months ended June 30, 2011 our revenue increased 18% to $19.7 million from $16.7 million for the same period of fiscal 2010. Gross profit was $9.8 million compared with $9.0 million for the same period of fiscal 2010, an increase of 10%. Gross profit margins were 50% compared with 54% for the same period of fiscal 2010. The decrease in gross profit margin is due to the impact of lower gross profit margin from web application development services from the two acquisitions completed during the second half of fiscal 2010.The loss from operations for the nine month period was ($502) thousand compared with income from operations of $344 thousand in the same period of fiscal 2010. The net loss for the nine month period was ($731) thousand compared with net income of $275 thousand in the same period of fiscal 2010. The reasons for the decrease in operating and net income were due to a significant reduction in capitalized costs related to iAPPS software development compared to the prior year, increased R&D and infrastructure investments and lower gross margin contribution and increased sales expense from our two recent acquisitions. Earnings (loss) per share was ($0.06) for the nine months ended June 30, 2011 compared with $0.02 for the same period of the prior year. Non-GAAP adjusted net income was $137 thousand and non-GAAP adjusted earnings per diluted share was $0.01 for the nine months ended June 30, 2011 compared with non-GAAP adjusted net income of $887 thousand and non-GAAP adjusted earnings per diluted share of $0.08 for the same period of fiscal 2010. Adjusted EBITDA was $1.1 million and Adjusted EBITDA per diluted share was $0.09 for the nine months ended June 30, 2011 compared with $1.8 million and $0.16 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 June 30,Nine Months Ended June 30,2011201020112010Reconciliation of GAAP net income to non-GAAP adjusted net incomeGAAP net (loss) income$(246)$35$(731)$275Amortization of intangible assets184148582431Stock based compensation99114286287Tax effect of non-GAAP adjustments-(90)-(105)Non-GAAP adjusted net (loss) income$37$207$137$887Reconciliation of GAAP (loss)earnings per diluted share to non-GAAP adjusted earnings per diluted shareGAAP net (loss) income per share$(0.02)$-$(0.06)$0.02Amortization of intangible assets0.010.010.050.04Stock based compensation0.010.010.020.03Tax effect of non-GAAP adjustments-----(0.01)Non-GAAP adjusted net income$.00$.02$.01$0.08Reconciliation of GAAP net (loss)income to Adjusted EBITDAGAAP net(loss)income$(246)$35(731)275Provision for income tax21216352Interest expense (income), net541616617Amortization of intangible assets184148582431Depreciation142195454566EBITDA1554155341,341Other amortization8869263186Stock based compensation99114286287Adjusted EBITDA$342$598$1,083$1,814Reconciliation of GAAP net (loss)earnings per diluted share to Adjusted EBITDA per diluted shareGAAP net (loss)income per share$(0.02)$-$(0.06)$0.02Provision for income tax--0.01-Interest expense (income), net--0.01-Amortization of intangible assets0.010.010.050.04Depreciation0.010.020.040.05Other amortization0.010.010.020.02Stock based compensation0.010.010.020.03Adjusted EBITDA $0.02$0.05$0.09$0.16BRIDGELINE DIGITAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)Three Months Ended June 30,Nine Months Ended June 30,2011201020112010Revenue:Web application development services$5,483$4,813$16,408$13,951Managed service hosting5094501,4761,450Subscription and perpetual licenses5405371,7901,265Total revenue6,5325,80019,67416,666Cost of revenue:Web application development services2,9782,4048,9556,855Managed service hosting services9494355382Subscription and perpetual licenses161178521478Total cost of revenue3,2332,6769,8317,715Gross profit3,2993,1249,8438,951Operating expenses:Sales and marketing1,6311,4275,0543,847General and administrative1,0661,0452,9853,246Research and development4482591,300584Depreciation and amortization3253211,006930Total operating expenses3,4703,05210,3458,607(loss)Income from operations(171)72(502)344Interest income (expense) net(54)(16)(166)(17)(loss)Income before income taxes(225)56(668)327Provision for income taxes21216352Net (loss) income$(246)$35$(731)$275Net (loss)income per share:Basic$(0.02)$0.00$(0.06)$0.02Diluted$(0.02)$0.00$(0.06)$0.02Number of weighted average shares:Basic12,306,20711,188,20812,148,28711,185,506Diluted12,306,20711,529,01312,148,28711,606,458BRIDGELINE DIGITAL, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share and per share data)June 30,2011September 30, 2010AssetsCurrent assets:Cash and cash equivalents$1,167$3,045Accounts receivable and unbilled receivables, net4,1633,929Prepaid expenses and other current assets479351Total current assets5,8097,325Equipment and improvements, net1,6141,171Intangible assets, net1,7102,292Goodwill, net20,03920,036Other assets840900Total assets$30,012$31,724LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payable$861$1,270Accrued liabilities1,0591,024Accrued earnouts, current390900Debt, current2922,475Capital lease obligations, current22450Deferred revenue1,482899Total current liabilities4,3086,618Accrued earnouts, net of current portion1,0731,073Debt, net of current portion2,9003,025Capital lease obligations, net of current portion26411Other long term liabilities296341 Total liabilities 8,841 11,068Commitments 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; 12,306,207 and 11,182,208 shares issued and outstanding,respectively1211Additional paid-in capital38,01236,749Accumulated deficit(16,719)(15,988)Accumulated other comprehensive income(134)(116)Total stockholders’ equity21,17120,656Total liabilities and stockholders’ equity$30,012$31,724 About 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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