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Bridgeline Digital Reports Financial Results For The First Quarter Of Fiscal 2011

Stocks in this article: BLIN

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, 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.

 (Dollars in thousands, except share and per share data)
  Three Months Ended December 31,
   2010 2009
Reconciliation of GAAP net (loss) income to non-GAAP adjusted net income    
GAAP net income   $ (156)  $ 220
Amortization of intangible assets 208 141
Stock-based compensation 115 70
Tax effect of non-GAAP adjustments -- (15)
Non-GAAP adjusted net income $ 167 $ 416
Reconciliation of GAAP (loss) earnings per diluted share to non-GAAP adjusted earnings per diluted share    
GAAP earnings per diluted share  $ (0.01)  $ 0.02
Amortization of intangible assets 0.01 0.01
Stock-based compensation 0.01 0.01
Tax effect of non-GAAP adjustments -- --
Non-GAAP adjusted earnings per diluted share $ 0.01 $ 0.04
Reconciliation of GAAP net (loss) income to Adjusted EBITDA    
GAAP net income  $ (156) $ 220
Provision for taxes 21 16
Interest 51 6
Amortization of intangible assets 208 141
Depreciation 162 184
EBITDA 286 567
Other amortization 84 51
Stock-based compensation 115 70
Adjusted EBITDA $ 485 $ 688
Reconciliation of GAAP net (loss) earnings per diluted share to  adjusted EBITDA per diluted share    
GAAP net earnings per share  $ (0.01) $ 0.02
Taxes -- --
Interest --  --
Amortization of intangible assets 0.02 0.01
Depreciation 0.01 0.02
EBITDA 0.02 0.05
Other amortization 0.01 --
Stock-based compensation 0.01 0.01
Adjusted EBITDA per diluted share $ 0.04 $ 0.06
(Dollars in thousands, except share and per share data)
  Three Months Ended December 31,
  2010 2009
Web application development services  $ 5,544  $ 4,613
Managed service hosting 466 494
Subscription and perpetual licenses 519 372
Total revenue 6,529 5,479
Cost of revenue:    
Web application development services 3,014 2,178
Managed service hosting 146 129
Subscription and perpetual licenses 182 133
Total cost of revenue 3,342 2,440
Gross profit 3,187 3,039
Operating expenses:    
Sales and marketing 1,644 1,250
General and administrative 897 1,169
Research and development 382 75
Depreciation and amortization 348 303
Total operating expenses 3,271 2,797
(Loss) income from operations (84) 242
Interest income (expense) net (51) (6)
(Loss) income before income taxes (135) 236
Provision for income taxes 21 16
Net (loss) income  $ (156)  $ 220
Net (loss) income per share:    
Basic  $ (0.01) $ 0.02
Diluted  $ (0.01) $ 0.02
Number of weighted average shares:    
Basic 11,883,860 11,182,209
Diluted 11,883,860 11,520,866
(Dollars in thousands, except share and per share data)
ASSETS December 31, 2010 September 30, 2010
Current assets:    
Cash and cash equivalents  $ 2,972 $ 3,045
Accounts receivable and unbilled receivables, net 4,133 3,929
Prepaid expenses and other current assets 384 351
Total current assets 7,489 7,325
Equipment and improvements, net 1,575 1,171
Intangible assets, net 2,084 2,292
Goodwill 20,034 20,036
Other assets 872 900
Total assets  $ 32,054  $ 31,724
Current liabilities:    
Accounts payable  $ 1,000  $ 1,270
Accrued liabilities 811 1,024
Accrued earnouts, current 590 900
Debt, current 2,342 2,475
Capital lease obligations, current 206 50
Deferred revenue 956 899
Total current liabilities 5,905 6,618
Accrued earnouts, net of current portion  1,073  1,073
Debt, net of current portion 2,983 3,025
Capital lease obligations, net of current portion 313 11
Other long term liabilities 305 341
Total liabilities 10,579 11,068
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; 12,188,208 and 11,188,208 shares issued and outstanding, respectively  12  11
Additional paid-in capital 37,721 36,749
Accumulated deficit (16,144) (15,988)
Accumulated other comprehensive loss (114) (116)
Total stockholders' equity 21,475 20,656
Total liabilities and stockholders' equity  $ 32,054  $ 31,724

About Bridgeline Digital, Inc.

Bridgeline Digital is a developer of an award-winning web engagement management software suite and interactive business technology solutions that help customers leverage best in class web-based technologies to achieve their business objectives. The iAPPS Product Suite is an innovative SaaS solution that deeply unifies web Content Management, eCommerce, eMarketing, and web Analytics capabilities into the heart of websites, online stores, intranets, extranets or portals - enabling users to swiftly enhance and optimize the value of their web assets. iAPPS Content Manager is the recent winner of the 2010 CODiE Award for the Best Content Management Solution, globally.

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