Q3 Fiscal 2012 Financials

Aug 15, 2012 Quinn MurphyBridgeline Digital Reports Financial Results for the Third Quarter of Fiscal 2012BURLINGTON, Mass., Aug. 14, 2012 (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, 2012.Third Quarter Highlights:Revenue in the third quarter of 2012 was $6.4 million, compared to revenue of $6.5 million in the third quarter of 2011.iAPPS related revenue increased 35% to $4.2 million, compared to $3.1 million in the third quarter of 2011.Recurring revenue increased 18% to $1.0 million, compared to $880 thousand in the third quarter of 2011.A record 158 iAPPS licenses were sold during the third quarter, a 250% increase compared to the prior year. As of June 30, 2012 there have been a total of 659 iAPPS licenses sold.Subscription and perpetual license revenue increased 27% to $686 thousand compared to $540 thousand in the third quarter of 2011.Total gross profit margin increased to 56% compared to 51% in the third quarter of 2011.Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and stock-based compensation) increased 25% to $429 thousand compared to $342 thousand in the third quarter of 2011.Non-GAAP net income was $8 thousand compared to net income of $37 thousand in the third quarter of 2011.First Nine Months Highlights:Revenue in the first nine months of 2012 was $19.6 million, compared to revenue of $19.7 million in the first nine months of 2011.iAPPS related revenue increased 40% to $12.0 million, compared to $8.7 million in the first nine months of 2011.Recurring revenue increased 24% to $3.1 million, compared to $2.5 million in the first nine months of 2011.A record 231 iAPPS licenses were sold during the first nine months of 2012.Adjusted EBITDA increased 27% to $1.4 million compared to $1.1 million in the first nine months of 2011.Non-GAAP net income was $202 thousand compared to $137 thousand in the first nine months of 2011.Recent Developments:On June 5, 2012 we announced our strategic alliance with UPS Logistics to offer B2B and B2C eCommerce web stores with an end-to-end offering comprised of our iAPPS eCommerce solution and UPS logistics and fulfillment services.We also completed the acquisition of MarketNet, Inc., an award-winning interactive technology company based in Texas, expanding our North American presence into the South Central U.S. market.Earlier today we announced iAPPS ds (distributed subscription). iAPPS ds has been specifically developed for large franchise networks and multiple dealer organizations to improve the website tools they extend to franchisees and local dealers to effectively attract, communicate with and retain local customers while enabling superior oversight of corporate branding and content messaging. Franchisees and local dealers would be required to pay a monthly subscription fee for the service.Bridgeline Digital is pleased to announce that it recently signed a multi-year iAPPS ds agreement with a nationally recognized franchise, which plans to have up to 4,000 of its franchises directly license iAPPS ds. Bridgeline Digital expects to announce more details about this specific customer in fiscal 2013.Fiscal 2012 OutlookBridgeline Digital expects Fiscal 2012 revenue to be approximately $26.5 million. The Company’s revenue strategy will continue to focus on higher gross margin iAPPS driven opportunities, while discontinuing relationships with lower margin, non-iAPPS based customers. This strategy reflects a reduction of approximately $3.5 million of revenue generated in fiscal 2011 from lower margin, non-iAPPS related customer relationships.In addition, the Company expects to continue to generate positive non-GAAP income and positive Adjusted EBITDA for fiscal 2012.Conference Call Today at 4:30pm ESTBridgeline Digital will host a discussion of its third quarter results at approximately 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.RECONCILIATION OF GAAP TO NON-GAAP RESULTS (Dollars in thousands, except per share data) Three Months Ended Nine Months Ended June 30, June 30, 2012 2011 2012 2011Reconciliation of GAAP net loss to non-GAAP adjusted net income: GAAP net loss $(277) $(246) $(906) $(731) Amortization of intangible assets 184 184 571 582 Impairment of intangible asset - - 281 - Stock-based compensation 101 99 256 286 Non-GAAP adjusted net income(loss) $8 $37 $202 $137 Reconciliation of GAAP loss per diluted share to non-GAAP adjusted earnings per diluted share: GAAP net loss per share $(0.02) $(0.02) $(0.07) $(0.06) Amortization of intangible assets 0.01 0.01 0.05 0.05 Impairment of intangible asset - - 0.02 - Stock-based compensation 0.01 0.01 0.02 0.02 Non-GAAP adjusted net income(loss) $0.00 $0.00 $0.02 $0.01 Reconciliation of GAAP net loss to Adjusted EBITDA: GAAP net loss $(277) $(246) $(906) $(731) Provision for income tax 21 21 90 63 Interest expense (income),net 98 54 234 166 Amortization of intangible assets 184 184 571 582 Impairment of intangible asset - - 281 - Depreciation 262 142 725 454 EBITDA 288 155 995 534 Other amortization 40 88 130 263 Stock-based compensation 101 99 256 286 Adjusted EBITDA $429 $342 $1,381 $1,083 Reconciliation of GAAP net loss per diluted share to Adjusted EBITDA per diluted share: GAAP net loss per share $(0.02) $(0.02) $(0.07) $(0.06) Provision for income tax - - 0.01 0.01 Interest expense (income),net 0.01 - 0.02 0.01 Amortization of intangible assets 0.01 0.01 0.04 0.05 Impairment of intangible asset - - 0.02 - Depreciation 0.02 0.01 0.06 0.04 Other amortization - 0.01 0.01 0.02 Stock-based compensation 0.01 0.01 0.02 0.02 Adjusted EBITDA $0.03 $0.02 $0.11 $0.09 BRIDGELINE DIGITAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share data)(Unaudited) Three Months Ended Nine Months Ended June 30, June 30, 2012 2011 2012 2011Revenue: Web application development services $5,055 $5,483 $15,804 $16,408 Managed service hosting 631 509 1,858 1,476 Subscription and perpetual licenses 686 540 1,899 1,790 Total revenue 6,372 6,532 19,561 19,674 Cost of revenue: Web application development services 2,611 2,978 8,237 8,955 Managed service hosting 98 94 289 355 Subscription and perpetual licenses 117 161 337 521 Total cost of revenue 2,826 3,233 8,863 9,831 Gross profit 3,546 3,299 10,698 9,843 Operating expenses: Sales and marketing 1,965 1,631 5,526 5,054 General and administrative 923 1,066 2,924 2,985 Research and development 370 448 1,253 1,300 Depreciation and amortization 446 325 1,296 1,006 Impairment of intangible asset - - 281 - Total operating expenses 3,704 3,470 11,280 10,345Loss from operations (158) (171) (582) (502) Interest income (expense), net (98) (54) (234) (166)Loss before income taxes (256) (225) (816) (668) Provision for income taxes 21 21 90 63Net loss $(277) $(246) $(906) $(731) Net loss per share: Basic and diluted $(0.02) $(0.02) $(0.07) $(0.06)Number of weighted average shares: Basic and diluted 12,971,259 12,306,207 12,543,019 12,148,287 BRIDGELINE DIGITAL, INC.CONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share and per share data)(Unaudited) ASSETS June 30, September 30, 2012 2011Current Assets: Cash and cash equivalents $1,942 $2,528 Accounts receivable and unbilled revenues, net 4,794 4,274 Prepaid expenses and other current assets 661 494 Total current assets 7,397 7,296Equipment and improvements, net 2,936 1,779Intangible assets, net 1,706 1,527Goodwill 21,598 20,122Other assets 806 685 Total assets $34,443 $31,409 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,160 $1,291 Accrued liabilities 1,030 1,081 Accrued earnouts, current 729 295 Debt, current 1,424 1,750 Capital lease obligations, current 235 216 Deferred revenue 1,411 1,169 Total current liabilities 5,989 5,802Accrued earnouts, net of current portion 990 772Debt, net of current portion 3,203 3,017Capital lease obligations, net of current portion 142 215Other long term liabilities 1,141 395 Total liabilities $11,465 $10,201 Commitments and contingencies Stockholders' 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; 15,203,538 and 12,306,207 shares issued and outstanding, respectively 15 12 Additional paid-in-capital 40,819 38,083 Accumulated deficit (17,676) (16,770) Accumulated other comprehensive loss (180) (117) Total stockholders' equity 22,978 21,208 Total liabilities and stockholders' equity $34,443 $31,409 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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