GlobeNewswire Inc | Aug 16, 2021 04:27PM EDT

August 16, 2021

Revenue Increases by 31% with Strong Revenue Expected Next QuarterStrong Cash Position Enables Additional Investment in Sales & Marketing

WOBURN, Mass., Aug. 16, 2021 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ: BLIN), a provider of cloud-based Marketing Technology software, today announced financial results for its fiscal third quarter ended June 30, 2021.

Bridgeline posted 31% topline growth this quarter and expects license and subscription revenue to grow by double digits next quarter, said Ari Kahn, Bridgelines President, and Chief Executive Officer. Mr. Kahn continued, We won more license sales in our third quarter than ever before in the companys history, plus Bridgeline has approximately $10M in cash, which will accelerate sales and marketing investments for even stronger quarters to come.

Third quarter Summary:

-- Total revenue, which is comprised of Licenses and Services revenue, was $3.4 million for the quarter ended June 30, 2021 as compared to $2.6 million for the same period in 2020. Subscription and licenses revenue grew by 37% and Services revenue by 15%. -- Subscription and licenses revenue, which is comprised of SaaS licenses, maintenance and hosting revenue and perpetual license revenue increased 37% to $2.6 million for the quarter ended June 30, 2021, from $1.9 million for the same period in 2020. As a percentage of total revenue, Subscription and licenses revenue increased 3% to 76% of total revenue for the quarter ended June 30, 2021, compared to 73% for the same period in 2020. -- Services revenue increased 15% or $108,000 to $821,000 for the quarter ended June 30, 2021 as compared to $713,000 for the same period in 2020. As a percentage of total revenue, Services revenue accounted for 24% of total revenue for the quarter ended June 30, 2021, compared to 27% for the same period in 2020. -- Gross profit increased 45% or $699,000 to $2.3 million for the quarter ended June 30, 2021 as compared to $1.6 million for the same period in 2020. Cost of revenue increased 11% or $114,000 to $1.2 million for the quarter ended June 30, 2021 compared to $1.1 million for the same period in 2020. Gross margin percentage increased to 65% for the quarter ended June 30, 2021, compared to 59% for the same period in 2020. Subscription and licenses gross margin percentage were 72% for three months ended June 30, 2021 as compared to 64% for the same period in 2020. Services gross margin percentage were consistent at 45% for the three months ended June 30, 2021 and 2020. -- Operating expenses increased $1.5 million to $2.9 million for the quarter ended June 30, 2021 from $1.4 million for the same period in 2020. Included within the quarterly totals as of June 30, 2021 are additional investment in sales and marketing, and acquisition related costs associated with the integration of both Woorank and Hawksearch. -- Operating loss for the quarter ended June 30, 2021 is $615,000 as compared to $150,000 profit for the same period in 2020. -- Net loss applicable to common shareholders for the quarter ended June 30, 2021 is $3.6 million, compared to $1.7 million for the same period in 2020. For the quarter ended June 30, 2021, the warrant liability revaluation which considers the overall fluctuation in our closing market share price as of June 30, 2021 of $4.30 from the previous quarters closing market share price of $2.89, resulted in a $4.1 million non-cash derivative loss attributable to the change in the fair value of the warrant liabilities. For the three months ended June 30, 2020, the net loss attributable to the change in fair value of certain derivative warrant liabilities was $1.8 million, respectively.

Year to Date Summary:

-- Total revenue, which is comprised of Licenses and Services revenue, increased to $9.2 million for the nine months ended June 30, 2021 as compared to $8.2 million for the same period in 2020. Subscription and licenses revenue grew by 20% and Services revenue decreased by 6%. -- Subscription and licenses revenue, which is comprised of SaaS licenses, maintenance and hosting revenue and perpetual license revenue increased 20% to $6.6 million for the nine months ended June 30, 2021 from $5.5 million for the same period in 2020. As a percentage of total revenue, Subscription and licenses revenue increased 5% to 72% of total revenue for the nine months ended June 30, 2021, compared to 67% for the same period in 2020. -- Services revenue decreased 6% or $165,000 to $2.5 million for the nine months ended June 30, 2021 as compared to $2.7 million for the same period in 2020. As a percentage of total revenue, Services revenue accounted for 28% of total revenue for the nine months ended June 30, 2021, compared to 33% for the same period in 2020. -- Gross profit increased 30% or $1.4 million to $5.9 million for the nine months ended June 30, 2021 as compared to $4.5 million for the same period in 2020. Cost of revenue decreased 11% or $406,000 to $3.2 million for the nine months ended June 30, 2021 compared to $3.6 million for the same period in 2020. Gross margin percentage increased to 65% for the nine months ended June 30, 2021, compared to 56% for the same period in 2020. Subscription and licenses gross margin percentage were 71% for the nine months ended June 30, 2021 as compared to 60% for the same period in 2020. Services gross margin percentage were 49% for the nine months ended June 30, 2021 as compared to 47% for the same period in 2020. -- Operating expenses increased 2% or $114,000 to $6.5 million for the nine months ended June 30, 2021 from $6.4 million for the same period in 2020. Included within the nine month totals as of June 30, 2021 are additional investment in sales and marketing, and acquisition related costs associated with the integration of both Woorank and Hawksearch. -- Operating loss for the nine months ended June 30, 2021 is $563,000 as compared to $1.8 million for the same period in 2020. -- Net loss applicable to common shareholders for the nine months ended June 30, 2021 is $5.3 million, compared to $3.2 million for the same period in 2020. For the nine months ended June 30, 2021, the warrant liability revaluation which considers the overall fluctuation in our closing market share price as of June 30, resulted in a cumulative $6 million non-cash derivative loss attributable to the change in the fair value of the warrant liabilities offset by the government grant income of $88,000 related to the forgiveness of the PPP loan. For the nine months ended June 30, 2021, the net gain attributable to the change in fair value of certain derivative warrant liabilities was $1.1 million offset by the deemed dividend on amendment of Series A convertible preferred stock of $2.4 million, respectively.

Financial Results

Third quarter

Total revenue, which is comprised of Licenses and Services revenue, was $3.4 million for the quarter ended June 30, 2021 as compared to $2.6 million for the same period in 2020. Subscription and licenses revenue grew by 37% and Services revenue by 15%. Subscription and licenses revenue, which is comprised of SaaS licenses, maintenance and hosting revenue and perpetual license revenue increased 37% to $2.6 million for the quarter ended June 30, 2021, from $1.9 million for the same period in 2020. As a percentage of total revenue, licenses revenue increased 3% to 76% of total revenue for the quarter ended June 30, 2021, compared to 73% for the same period in 2020. Services revenue increase 15% or $108,000 to $821,000 for the quarter ended June 30, 2021 as compared to $713,000 for the same period in 2020. As a percentage of total revenue, Services revenue accounted for 24% of total revenue for the quarter ended June 30, 2021, compared to 27% for the same period in 2020.

Gross profit increased 45% or $699,000 to $2.3 million for the quarter ended June 30, 2021 as compared to $1.6 million for the same period in 2020. Cost of revenue increased 11% or $114,000 to $1.2 million for the quarter ended June 30, 2021 compared to $1.1 million for the same period in 2020. Gross margin percentage increased to 65% for the quarter ended June 30, 2021, compared to 59% for the same period in 2020. Subscription and licenses gross margin percentage were 72% for three months ended June 30, 2021 as compared to 64% for the same period in 2020. Services gross margin percentage were consistent at 45% for the three months ended June 30, 2021 and 2020.

Operating expenses increased $1.5 million to $2.9 million for the quarter ended June 30, 2021 from $1.4 million for the same period in 2020. Included within the quarterly totals as of June 30, 2021 are additional investment in sales and marketing, and acquisition related costs associated with the integration of Hawksearch.

Operating loss for the quarter ended June 30, 2021 is $615,000 as compared to $150,000 profit for the same period in 2020. Net loss applicable to common shareholders for the quarter ended June 30, 2021 is $3.6 million, compared to $1.7 million for the same period in 2020. For the quarter ended June 30, 2021, the warrant liability revaluation which considers the overall fluctuation in our closing market share price as of June 30, 2021 of $4.30 from the previous quarters closing market share price of $2.89, resulted in a $4.1 million non-cash derivative loss attributable to the change in the fair value of the warrant liabilities. For the three months ended June 30, 2020, the net loss attributable to the change in fair value of certain derivative warrant liabilities was $1.8 million, respectively.

Adjusted EBITDA gain for the quarter ended June 30, 2021 is $302,000 or $0.05 per diluted share, compared to $428,000 or $0.11 per diluted share for the same period in 2020.

Year to Date

Total revenue, which is comprised of Licenses and Services revenue, increased to $9.2 million for the nine months ended June 30, 2021 as compared to $8.2 million for the same period in 2020. Subscription and licenses revenue grew by 20% and Services revenue decreased by 6%. Subscription and licenses revenue, which is comprised of SaaS licenses, maintenance and hosting revenue and perpetual license revenue increased 20% to $6.6 million for the nine months ended June 30, 2021 from $5.5 million for the same period in 2020. As a percentage of total revenue, Subscription and licenses revenue increased 5% to 72% of total revenue for the nine months ended June 30, 2021, compared to 67% for the same period in 2020. Services revenue decreased 6% or $165,000 to $2.5 million for the nine months ended June 30, 2021 as compared to $2.7 million for the same period in 2020. As a percentage of total revenue, Services revenue accounted for 28% of total revenue for the nine months ended June 30, 2021, compared to 33% for the same period in 2020.

Gross profit increased 30% or $1.4 mill to $5.9 million for the nine months ended June 30, 2021 as compared to $4.5 million for the same period in 2020. Cost of revenue decreased 11% or $406,000 to $3.2 million for the nine months ended June 30, 2021 compared to $3.6 million for the same period in 2020. This decrease is attributable to a reduction within our fixed costs to operate our cloud-based hosting model and variable internal support costs. Gross margin percentage increased to 65% for the nine months ended June 30, 2021, compared to 56% for the same period in 2020. Subscription and licenses gross margin percentage were 71% for the nine months ended June 30, 2021 as compared to 60% for the same period in 2020. Services gross margin percentage were 49% for the nine months ended June 30, 2021 as compared to 47% for the same period in 2020.

Operating expenses increased $114,000 to $6.5 million for the nine months ended June 30, 2021 from $6.4 million for the same period in 2020. Included within the nine month totals as of June 30, 2021 are additional investment in sales and marketing, and acquisition related costs associated with the integration of both Woorank and Hawksearch.

Operating loss for the nine months ended June 30, 2021 is $563,000 as compared $1.8 million for the same period in 2020.

Net loss applicable to common shareholders for the nine months ended June 30, 2021 is $5.3 million, compared to $3.2 million for the same period in 2020. For the nine months ended June 30, 2021, the warrant liability revaluation which considers the overall fluctuation in our closing market share price as of June 30, resulted in a cumulative $6 million non-cash derivative loss attributable to the change in the fair value of the warrant liabilities offset by the government grant income of $88,000 related to the forgiveness of the PPP loan. For the nine months ended June 30, 2021, the net gain attributable to the change in fair value of certain derivative warrant liabilities was $1.1 million offset by the deemed dividend on amendment of Series A convertible preferred stock of $2.4 million, respectively.

Adjusted EBITDA gain for the nine months ended June 30, 2021 is $1.2 million or $0.24 per diluted share, compared to a loss of $571,000 or $0.17 per diluted share for the same period in 2020.

Conference Call:

Bridgeline Digital, Inc. will hold a conference call today, August 16, 2021 at 4:30 p.m. Eastern Time to discuss these results. The Company's President and Chief Executive Officer, Ari Kahn and Chief Financial Officer, Mark G. Downey will host the call, followed by a question and answer period.

The details of the conference call and replay are as follows:

What: Bridgeline Digital Third Quarter 2021 Earnings CallWhen: Monday, August 16, 2021Time: 4:30 p.m. ETLive Call: (877) 837-3910, domestic (973) 796-5077, internationalReplay: (855) 859-2056 (404) 537-3406Conference ID: 1438499

Please call the conference telephone number 5 10 minutes prior to the start time. An operator will register your name and organization.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP adjusted net income/(loss), non-GAAP adjusted earnings/(loss) per diluted share, Adjusted EBITDA and Adjusted EBITDA per diluted share.

Non-GAAP adjusted net income/(loss) and non-GAAP adjusted earnings/(loss) per diluted share are calculated as net income/(loss) or net income/(loss) per share on a diluted basis, excluding, where applicable, amortization of intangible assets, non-cash stock-based compensation, goodwill impairment charges, restructuring and acquisition-related costs, preferred stock dividends and any related tax effects.

Adjusted EBITDA and Adjusted EBITDA per diluted share are defined as earnings before interest, taxes, depreciation and amortization, non-cash stock-based compensation charges, goodwill impairment charges, restructuring and acquisition-related costs, changes in fair value of derivative liabilities and warrant expense, amortization of debt discounts, preferred stock dividends and any related tax effects. Bridgeline uses non-GAAP adjusted net income/(loss) 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).

Bridgelines 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/(loss) 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. As a result 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 for Forward-Looking Statements 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 within the meaning of the Private Securities Litigation Reform Act of 1995, 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 statements appear in a number of places in this press release and include statements regarding the intent, belief or current expectations of Bridgeline Digital, Inc. 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 COVID 19 pandemic and related public health measures that may affect our financial results; business operations and the business of our customers, suppliers and partners; our ability to retain and upgrade current customers, increasing our recurring revenue, our ability to attract new customers, our revenue growth rate; our history of net loss and our ability to achieve or maintain profitability, our liability for any unauthorized access to our data or our users content, including through privacy and data security breaches; any decline in demand for our platform or products; changes in the interoperability of our platform across devices, operating systems, and third party applications that we do no control; competition in our markets; our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products, particularly in light of potential disruptions to the productivity of our employees resulting from remote work; our ability to manage our growth or plan for future growth, and our acquisition of other businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; the volatility of the market price of our common stock, the ability to maintain our listing on the NASDAQ Capital Market, 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. Bridgeline Digital, Inc. assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by applicable law.

About Bridgeline Digital

Bridgeline helps companies grow online revenues by increasing their traffic, conversion rate, and average order value with its Unbound platform and suite of apps. To learn more, please visit www.bridgeline.com or call (800) 603-9936.

Contact:

Company ContactBridgeline Digital, Inc.Mark G. DowneyChief Financial Officer(631) 203-6820mdowney@bridgeline.com

BRIDGELINE DIGITAL, INC.RECONCILIATION OF GAAP TO NON-GAAP RESULTS(in thousands, except per share data) Three Months Ended Nine Months Ended June 30 June 30 2021 2020 2021 2020Reconciliation of GAAP net income/(loss) tonon-GAAP adjusted net income/(loss): GAAP net loss applicable to $ (3,609 ) $ (1,701 ) $ (5,327 ) $ (3,162 ) common shareholders Amortization of 285 208 726 678 intangible assets Stock-based 43 53 133 133 compensation Restructuring and acquisition-related 568 1 862 373 charges Convertible Preferred stock - - - 2,420 dividends Non-GAAP adjusted $ (2,713 ) $ (1,439 ) $ (3,606 ) $ 442 net income/(loss) Reconciliation of GAAPnet earnings/(loss) per diluted share tonon-GAAP adjusted netearnings/(loss) per diluted share: GAAP net income/ $ (0.61 ) $ (0.44 ) $ (1.04 ) $ (0.97 ) (loss) Amortization of 0.05 0.05 0.14 0.21 intangible assets Stock-based 0.01 0.01 0.03 0.04 compensation Restructuring and acquisition-related 0.10 0.00 0.17 0.11 charges Convertible Preferred stock - - - 0.74 dividends Non-GAAP adjusted net earnings/(loss) $ (0.46 ) $ (0.37 ) $ (0.70 ) $ 0.14 per diluted share Reconciliation of GAAPnet income/(loss) to Adjusted EBITDA: GAAP net income/ $ (3,609 ) $ (1,701 ) $ (5,327 ) $ (742 ) (loss) Provision for (1,176 ) 6 (1,175 ) 9 income tax Interest and other 9 2 7 3 expense, net Government grant - - (88 ) - income Change in fair 4,161 1,843 6,020 (1,078 ) value of warrants Amortization of 285 208 726 678 intangible assets Depreciation 14 12 38 40 Restructuring and acquisition-related 568 1 862 373 charges Other amortization 7 4 13 13 Stock-based 43 53 133 133 compensation Adjusted EBITDA $ 302 $ 428 $ 1,209 $ (571 ) Reconciliation of GAAPnet earnings/(loss) per diluted share toAdjusted EBITDA per diluted share: GAAP net income/ $ (0.61 ) $ (0.44 ) $ (1.04 ) $ (0.23 ) (loss) Provision for (0.20 ) 0.00 (0.23 ) 0.00 income tax Interest and other 0.00 0.00 0.00 0.00 expense, net Government grant - - (0.02 ) - income Change in fair 0.70 0.48 1.18 (0.33 ) value of warrants Amortization of 0.05 0.05 0.14 0.21 intangible assets Depreciation 0.00 0.00 0.01 0.01 Restructuring and acquisition-related 0.10 0.00 0.17 0.11 charges Other amortization 0.00 0.00 0.00 0.00 Stock-based 0.01 0.01 0.03 0.04 compensation Adjusted EBITDA per $ 0.05 $ 0.11 $ 0.24 $ (0.17 ) diluted share

' BRIDGELINE DIGITAL, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data)(Unaudited) ASSETS June 30 September 30 2021 2020 Current assets: Cash and cash equivalents $ 4,768 $ 861 Accounts receivable, net 1,325 665 Prepaid expenses 389 268 Other current assets 600 111 Total current assets 7,082 1,905 Property and equipment, net 248 238 Operating lease assets 533 294 Intangible assets, net 8,159 2,617 Goodwill 15,961 5,557 Other assets 80 49 Total assets $ 32,063 $ 10,660 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 755 $ - Current portion of operating lease 176 96 liabilities Accounts payable 2,169 1,311 Accrued liabilities 754 599 Purchase price and contingent consideration 6,187 - payable Paycheck Protection Program liability - 88 Deferred revenues 2,796 1,511 Total current liabilities 12,837 3,605 Long-term debt, net of current portion 1,288 - Operating lease liabilities, net of current 356 198 portionWarrant liabilities 8,823 2,486 Other long-term liabilities 425 15 Total liabilities 23,729 6,304 Commitments and contingencies Stockholders' equity: Preferred stock - $0.001 par value; 1,000,000 sharesauthorized; Series A Convertible Preferred stock: 264,000 shares authorized; no shares outstanding at June 30, 2021 and - - September 30, 2020 Series C Convertible Preferred stock: 11,000 shares authorized; 350 shares issued and outstanding at June 30, 2021 - - and September 30, 2020 Series D Convertible Preferred Stock: 4,200 shares authorized; 4200 shares issued andoutstanding at June 30, 2021 and no shares outstanding at - - September 30, 2020 (liquidation preference of $4,200 at June 30, 2021) Common stock - $0.001 par value; 50,000,000 sharesauthorized; 6,801,243 shares at June 30, 2021 and 4,420,170 shares at September 30, 2020, 7 4 issued and outstanding Additional paid-in-capital 87,663 78,316 Accumulated deficit (78,910 ) (73,583 ) Accumulated other comprehensive loss (426 ) (381 ) Total stockholders' equity 8,334 4,356 Total liabilities and stockholders' $ 32,063 $ 10,660 equity

BRIDGELINE DIGITAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except share and per share data)(Unaudited) Three Months Ended Nine Months Ended June 30, June 30, 2021 2020 2021 2020Revenue: Digital engagement $ 821 $ 713 $ 2,543 $ 2,708 services Subscription and 2,624 1,919 6,612 5,494 licenses Total revenue 3,445 2,632 9,155 8,202 Cost of revenue: Digital engagement 449 395 1,297 1,432 services Subscription and 744 684 1,919 2,190 licenses Total cost of 1,193 1,079 3,216 3,622 revenues Gross profit 2,252 1,553 5,939 4,580 Operating expenses: Sales and marketing 760 312 1,729 2,130 General and 608 464 1,681 1,936 administrative Research and 625 402 1,453 1,218 development Depreciation and 306 224 777 731 amortization Restructuring and acquisition-related 568 1 862 373 expenses Total operating 2,867 1,403 6,502 6,388 expensesIncome (loss) from (615 ) 150 (563 ) (1,808 )operations Interest expense (9 ) (2 ) (7 ) (3 ) and other, net Government grant - - 88 - income Change in fair value of warrant (4,161 ) (1,843 ) (6,020 ) 1,078 liabilitiesLoss before income (4,785 ) (1,695 ) (6,502 ) (733 )taxes Provision for (benefit from) (1,176 ) 6 (1,175 ) 9 income taxesNet loss $ (3,609 ) $ (1,701 ) $ (5,327 ) $ (742 )Dividends onconvertible preferred - - - (106 )stockDeemed dividend onamendment of Series A convertiblepreferred stock - - - (2,314 )Net loss applicable to $ (3,609 ) $ (1,701 ) $ (5,327 ) $ (3,162 )common shareholdersNet loss per shareattributable to common shareholders: Basic $ (0.61 ) $ (0.44 ) $ (1.04 ) $ (0.97 ) Diluted $ (0.61 ) $ (0.44 ) $ (1.04 ) $ (0.97 )Number of weightedaverage shares outstanding: Basic 5,939,021 3,876,677 5,117,586 3,264,734 Diluted 5,939,021 3,876,677 5,117,586 3,264,734