Bridgeline Digital Announces Financial Results for the Third Quarter and First Nine Months of Fiscal 2013

Bridgeline Digital Announces Financial Results for the Third Quarter and First
Nine Months of Fiscal 2013

   Subscription and Perpetual License Revenue Increased 33% Year over Year

                Recurring Revenue Increased 10% Year over Year

BURLINGTON, Mass., Aug. 14, 2013 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc.
(Nasdaq:BLIN), developer of the award-winning iAPPS Web Engagement Management
platform and related interactive technology solutions, today announced
financial results for its third quarter ended June 30, 2013.

Third Quarter 2013 Highlights:

  oRevenue in the third quarter of 2013 was $5.6 million, compared to revenue
    of $6.4 million in the third quarter of 2012. Revenue from legacy
    non-iAPPS related customers declined 44% or $1M. Revenue from iAPPS
    related customers increased 4%.
  oSubscription and perpetual license revenue increased 33% to $915 thousand
    in the third quarter, compared to $686 thousand in the third quarter of
    2012.
  oRecurring revenue increased 10% in the third quarter to $1.2 million,
    compared to $1.1 million in the third quarter of 2012.
  oiAPPS revenue as a percentage of total revenue increased to 78% in the
    third quarter compared to 66% in the third quarter of 2012.
  oIn May, iAPPS 5.0 was released. The latest version of iAPPS boasts a new
    cross-channel interface; cutting edge mobile-friendly editing and
    on-the-go authoring; technology integration from industry leading
    partners; and an overall enhanced user experience.
  oIn the third quarter of 2013 Bridgeline reduced its operating expenses by
    approximately $250,000 per quarter or $1,000,000 annualized, while
    increasing the size of its national sales force by 40%.

First Nine Months Highlights:

  oRevenue in the first nine months of 2013 was $17.8 million, compared to
    revenue of $19.6 million in the first nine months of 2012.
  oSubscription and perpetual license revenue increased 42% to $2.7 million
    in the first nine months of 2013, compared to $1.9 million in the first
    nine months of 2013.
  oRecurring revenue increased 16% in the first nine months to $3.6 million,
    compared to $3.1 million in the first nine months of 2012.
  o174 iAPPS enterprise licenses and 2,160 iAPPS ds licenses were sold in the
    first nine months of 2013
  oDeferred revenue increased 123% in the first nine months of 2013 to $2.5
    million, compared to $1.1 million at September 30, 2012.

Subsequent Event

On August 1, 2013 Bridgeline Digital acquired franchise web platform developer
Elements Local, who has over 35 Franchisor customers and over 3,200 Franchises
on their web platform. Over the past twelve months Elements Local has
experienced a 95% retention rate. Most of Elements Local customers are
national franchise brands such as Sports Clips, MAACO, Glass Doctor, Pearle
Vision, Molly Maids, and Mr. Handyman.In 2013 Elements Local is projecting a
record revenue year of over $2 million, of which the majority of this revenue
is recurring.

Fiscal 2013 Outlook

In the fourth quarter of Fiscal 2013 revenue is expected to be approximately
$6.5 million and the Company expects to generate positive EBITDA. For Fiscal
2013 iAPPS related revenue is expected to be approximately $19 million, up
from $16.5 million in fiscal 2012.Bridgeline Digital expects its total fiscal
2013 revenue to be approximately $24.5 million.This revenue projection
includes a projected reduction of non-iAPPS related legacy revenue of
approximately $4 million.

Conference Call Today at 4:30pm EST

Bridgeline 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 Measures

This 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, 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 stock-based
compensation charges.Bridgeline uses non-GAAP adjusted net income and
Adjusted EBITDA as supplemental measures of our performance that are 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 financial
performance.

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 measures.
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
1995

All 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, or our ability to maintain an effective system of internal
controls 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.

About Bridgeline Digital

Bridgeline Digital, The Digital Engagement Company™, enables its customers to
maximize the performance of their mission critical websites, intranets, and
online stores. Bridgeline's iAPPS^® platform deeply integrates Web Content
Management, eCommerce, eMarketing, and Web Analytics to help marketers deliver
online experiences that attract, engage and convert their customers across all
digital channels. Bridgeline provides end-to-end Digital Engagement solutions
and boasts an award-winning team of interactive services professionals.
Headquartered in Burlington, Mass., with nine additional locations throughout
the U.S. and an Asia Pacific headquarters in Bangalore, India, Bridgeline has
thousands of customers that range from middle market organizations to Fortune
1000 companies. To learn more, please visit www.bridgelinedigital.com or call
(800) 603-9936.

                                                               
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,
                              2013        2012        2013        2012
Revenue:                                                        
Web application development    $4,276    $5,055    $13,614   $15,804
services
Managed service hosting        409        631        1,456      1,858
Subscription and perpetual     915        686        2,726      1,899
licenses
Total revenue                  5,600      6,372      17,796     19,561
                                                               
Cost of revenue:                                                
Web application development    2,341      2,611      7,566      8,237
services
Managed service hosting        76         98         224        289
Subscription and perpetual     330        117        770        337
licenses
Total cost of revenue          2,747      2,826      8,560      8,863
Gross profit                   2,853      3,546      9,236      10,698
                                                               
Operating expenses:                                             
Sales and marketing            2,275      1,965      6,266      5,526
General and administrative     1,140      923        3,440      2,924
Research and development       515        370        893        1,253
Depreciation and amortization  412        446        1,226      1,296
Impairment of intangible asset --         --         --         281
Total operating expenses       4,342      3,704      11,825     11,280
Loss from operations           (1,489)    (158)      (2,589)    (582)
Interest income (expense), net (59)       (98)       (194)      (234)
Loss before income taxes       (1,548)    (256)      (2,783)    (816)
Provision for income taxes     21         21         110        90
Net loss                       $(1,569)  $(277)    $(2,893)  $(906)
                                                               
Net loss per share:                                             
Basic and diluted              $(0.10)   $(0.02)   $(0.19)   $(0.07)
Number of weighted average                                      
shares:
Basic and diluted              15,037,767 12,971,259 14,902,419 12,543,019
                                                               

                                                                 
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,
                                     2013       2012      2013      2012
Reconciliation of GAAP net loss                                   
tonon-GAAP adjusted net income:
GAAP net loss                         $(1,569) $(278)  $(2,893) $(906)
Amortization of intangible assets     118       184      390      571
Impairment of intangible asset        --        --       --       281
Stock-based compensation              55        101      334      256
Non-GAAP adjusted net income(loss)    $(1,396) $7      $(2,169) $202
                                                                 
Reconciliation of GAAP loss per
diluted share to non-GAAP adjusted                                
earnings per diluted share:
GAAP net loss per share               $(0.10)  $(0.02) $(0.19) $(0.07)
Amortization of intangible assets     0.01      0.01     0.02     0.05
Impairment of intangible asset        --       --      --      0.02
Stock-based compensation              --       0.01     0.02     0.02
Non-GAAP adjusted net income(loss)    $(0.09)  $0.00   $(0.15) $0.02
                                                                 
Reconciliation of GAAP net loss to Adjusted                        
EBITDA:
GAAP net loss                         $(1,569) $(278)  $(2,893) $(906)
Provision for income tax              21        21       110      90
Interest expense (income),net         59        98       194      234
Amortization of intangible assets     118       184      390      571
Impairment of intangible asset        --        --       --       281
Depreciation                          295       262      836      725
EBITDA                                (1,076)   288      (1,363)  995
Other amortization                    122       40       201      130
Stock-based compensation              55        101      334      256
Adjusted EBITDA                       $(899)   $429    $(828)  $1,381
                                                                 
Reconciliation of GAAP net loss per
diluted share toAdjusted EBITDA per                              
diluted share:
GAAP net loss per share               $(0.10)  $(0.02) $(0.19) $(0.07)
Provision for income tax              --       --      0.01     0.01
Interest expense (income),net         --       0.01     0.01     0.02
Amortization of intangible assets     0.01      0.01     0.02     0.04
Impairment of intangible asset        --       --      --      0.02
Depreciation                          0.02      0.02     0.06     0.06
Other amortization                    0.01      --      0.01     0.01
Stock-based compensation              --       0.01     0.02     0.02
Adjusted EBITDA                       $(0.06)  $0.03   $(0.06) $0.11
                                                                 

                                                               
BRIDGELINE DIGITAL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
(Unaudited)
                                                               
ASSETS                                                          
                                                      June 30,  September 30,
                                                      2013      2012
Current Assets:                                                 
Cash and cash equivalents                              $1,715  $2,126
Accounts receivable and unbilled revenues, net         3,379    3,977
Prepaid expenses and other current assets              954      648
Total current assets                                   6,048    6,751
Equipment and improvements, net                        3,341    2,735
Intangible assets, net                                 1,029    1,527
Goodwill                                               21,880   21,545
Other assets                                           1,676    1,132
Total assets                                           $33,974 $33,690
                                                               
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
                                                               
Current liabilities:                                            
Accounts payable                                       $1,265  $1,132
Accrued liabilities                                    926      1,306
Accrued earnouts, current                              322      375
Debt, current                                          1,541    1,424
Capital lease obligations, current                     431      230
Deferred revenue                                       2,548    1,144
Total current liabilities                              7,033    5,611
Accrued earnouts, net of current portion               586      990
Debt, net of current portion                           2,501    2,988
Capital lease obligations, net of current portion      604      127
Other long term liabilities                            912      1,004
Total liabilities                                      $11,636 $10,720
                                                               
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; 30,000,000 shares
authorized; 17,672,281 and 15,203,538 shares issued    18       15
and outstanding, respectively
Additional paid-in-capital                             43,066   40,847
Accumulated deficit                                    (20,609) (17,716)
Accumulated other comprehensive loss                   (137)    (176)
Total stockholders' equity                             22,338   22,970
Total liabilities and stockholders' equity             $33,974 $33,690

CONTACT: Bridgeline Digital, Inc.
         Michael D. Prinn
         Executive Vice President & Chief Financial Officer
         781.497.3016
         mprinn@blinedigital.com

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