SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 14, 2019

 

                    BRIDGELINE DIGITAL, INC.                   

(Exact name of registrant as specified in its charter)

 

 

 

Delaware     001-33567 52-2263942
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)    

 

100 Summit Drive

Burlington, MA 01803

(Address of principal executive offices, including zip code)

 

          (781) 376-5555          

(Registrant’s telephone number, including area code)

 

  

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ] Written communications pursuant to Rule 425 under the Securities Act

 

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Exchange Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                             [  ]

 

 

Securities registered pursuant to Section (12)b of the Act:

 

Title of each class

Trading Symbols(s)

Name of each exchange on which registered

Common Stock, par value $0.001

BLIN

NASDAQ

 

 

 

 

Item 2.02.  Results of Operations and Financial Condition 

 

On August 14, 2019, Bridgeline Digital, Inc. issued a press release announcing its financial results for the third quarter of fiscal 2019 ended June 30, 2019. The press release is furnished as Exhibit 99.1 hereto.

 

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01      Financial Statements and Exhibits.

 

 

Exhibit No. Exhibit Description
   
99.1  Press release, dated August 14, 2019, by Bridgeline Digital, Inc.

 

 

 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

BRIDGELINE DIGITAL, INC.

(Registrant)

 

 

 

By:   /s/Mark G. Downey                 

Mark G. Downey

Chief Financial Officer

 

 

Date: August 14, 2019

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.

Exhibit Description

   

99.1

Press release issued by Bridgeline Digital, Inc., dated August 14, 2019.

 

 

ex_155442.htm

Exhibit 99.1

 

 

Bridgeline Announces Earnings for Third Quarter of Fiscal 2019

 

 

Bridgeline Integration of Celebros and OrchestraCMS

 

 

Burlington, Mass., August 14, 2019 - Bridgeline Digital, Inc. (NASDAQ: BLIN), The Digital Engagement Company™, today announced financial results for its fiscal third quarter ended June 30, 2019.

 

 

“This was a transformative quarter for Bridgeline’s product and financial capabilities. With $4M in synergies found in the combined Bridgeline, SeeVolution (Celebros) and Stantive (OrchestraCMS), businesses, we have paved a way for a profitable and growing business in 2020. Just as importantly, we have seen strong customer sentiment with multi-year renewals from our combined customers, new sales opportunities from our Salesforce partnership, and exciting technical enhancements from the Artificial Intelligence capabilities in the Celebros product line,” said Ari Kahn, Bridgeline’s President and Chief Executive Officer. “With integration of the businesses completed and all restructuring costs contained to our third quarter, we expect license revenue and operating income to increase sequentially over the next three quarters. We anticipate customer acquisition costs to improve from our Salesforce partnership, cross-sale opportunities of Celebros and OrchestraCMS, and the speed in which the Celebros native language search product attracts new customers.”

 

 

Third Quarter Summary:

 

Total revenue for the quarter ended June 30, 2019 was $2.7 million, compared to $3.1 million for the same period last year.

 

Recurring revenue increased 5% to $1.6 million for the quarter ended June 30, 2019, from $1.5 million for the same period in 2018.

 

SaaS revenue increased 8% to $1.2 million for the quarter ended June 30, 2019, from $1.1 million for the same period last year.

 

Hosting revenue increased 4% to $0.3 million or 9% of total revenue for the quarter ended June 30, 2019, from $0.2 million or 8% of total revenue for the same quarter last year.

 

Services revenue was $1.1 million or 42% of total revenue for the quarter ended June 30, 2019, compared to $1.6 million or 51% of total revenue for the same period last year.

 

Operating expenses decreased 40% to $4.0 million from $6.7 million for the same quarter last year. Included within these amounts are restructuring and acquisition-related costs of $0.9 million for the period ended 2019 and a goodwill impairment charge of $4.6 million for the same period ended 2018.

 

Net income for the quarter ended June 30, 2019 was $7.3 million, compared to a net loss of $5.2 million for the same quarter last year. Included within the $7.3 million of net income for the three months ended June 30, 2019 was a non-cash gain of $10.1 million attributable to the change in fair value of certain derivative warrant liabilities.

 

 

 

 

Year to Date Summary:

 

Total revenue was $7.3 million for the nine months ended June 30, 2019, compared to $10.8 million for the nine months ended June 30, 2018.

 

Recurring revenue was $4.0 million for the nine months ended June 30, 2019, compared to $5.1 million for the same period last year.

 

SaaS revenue was $2.9 million for the nine months ended June 30, 2019, compared to $3.9 million for the same period last year.

 

Hosting revenue was consistent at $0.8 million or 10% of total revenue for the nine months ended June 30, 2019, compared to 8% of total revenue for the same period last year.

 

Services revenue was $3.1 million or 43% of total revenue for the nine months ended June 30, 2019, compared to $5.6 million or 52% of total revenue for the same period last year.

 

Operating expenses are $12.6 million as compared to $11.5 million for the same period last year. Included within these amounts are restructuring and acquisition-related costs of $1.2 million and $0.2 million and goodwill impairment charges of $3.7 million and $4.6 million for the periods ended June 30, 2019 and 2018, respectively.

 

Net loss was $10.2 million for the nine months ended June 30, 2019, compared to $6.3 million for the nine months ended June 30, 2018. Reflected in net results for the nine months ended June 30, 2019 is a non-cash net adjustment to other income (expense) of $0.1 million attributable to the change in fair value of certain derivative warrant liabilities and warrant expense and a non-cash charge to amortization of debt discount of $0.2 million.

 

 

 

Financial Results

 

 

Third Quarter

 

Revenue for the period ended June 30, 2019 was $2.7 million, compared to $3.1 million for the same period last year. Recurring revenue generated increased 5% to $1.6 million for the period ended June 30, 2019 from $1.5 million for the same period last year. SaaS revenue increased 8% to $1.2 million for the quarter ended June 30, 2019, compared to $1.1 million for the same period last year. Hosting revenue increased 4% to $0.3 million or 9% of total revenue for the quarter ended June 30, 2019, from $0.2 million or 8% of total revenue for the same period last year. Services revenue was $1.1 million or 42% of total revenue for the three months ended June 30, 2019, compared to $1.6 million or 51% of total revenue for the same period last year.

 

Operating expenses decreased 40% to $4.0 million from $6.7 million for the quarter ended June 30, 2019 and 2018. Included within these amounts are restructuring and acquisition-related costs of $0.9 million and goodwill impairment charges of $4.6 million for the applicable quarters ended June 30, 2019 and 2018. Loss from operations after excluding restructuring and acquisition-related costs and goodwill impairment charges for the periods ended June 30, 2019 and 2018 were $1.9 million and $0.6 million.

 

 

 

 

Net income for the quarter ended June 30, 2019 is $7.3 million, inclusive of a non-cash gain to other income attributable to the change in fair value of certain derivative warrant liabilities of $10.1 million, compared to a net loss of $5.2 million for the quarter ended June 30, 2018.

 

Adjusted EBITDA loss for the period ended June 30, 2019 is $1.6 million, compared to $0.3 million for the same period in 2018.

 

 

Year to Date

 

Revenue for the nine months ended June 30, 2019 was $7.3 million, compared to $10.8 million for the same period last year. Recurring revenue was $4.0 million for the nine months ended June 30, 2019, compared to $5.1 million for the same period last year. SaaS revenue was $2.9 million for the nine months ended June 30, 2019, compared to $3.9 million for the same period last year. Hosting revenue was consistent at $0.8 million or 10% of total revenue for the nine months ended June 30, 2019, compared to 8% of total revenue for the same period last year. Services revenue was $3.1 million or 43% of total revenue for the nine months ended June 30, 2019, compared to $5.6 million or 52% of total revenue in 2018.

 

Operating expenses, excluding restructuring and acquisition-related costs of $1.2 million and a goodwill impairment charge of $3.7 million, were $7.6 million for the nine months ended June 30, 2019. For the same period in 2018, operating expenses, excluding restructuring and acquisition-related costs of $0.2 million and a goodwill impairment charge of $4.6 million, were $6.7 million. Loss from operations, after excluding restructuring and acquisition-related costs and goodwill impairment charges, was $4.6 million and $1.3 million for the nine months ended June 30, 2019 and 2018, respectively.

 

Net loss, inclusive of a non-cash adjustment to other income (expense) attributable to the net change in fair value of certain derivative warrant liabilities is $10.2 million for the nine months ended June 30, 2019, compared to $6.3 million for the same period in 2018.

 

Adjusted EBITDA loss for the nine months ended June 30, 2019 is $4.0 million, compared to $0.6 million for the same period in 2018.

 

 

 

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”).

 

 

 

 

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/(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 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," or 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 ability to maintain our listing on the NASDAQ Capital market, the ability to raise capital, 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™, helps customers maximize the performance of their full digital experience from websites and intranets to online stores and campaigns. Bridgeline’s Unbound platform is a Digital Experience Platform that deeply integrates Web Content Management, eCommerce, Marketing Automation, Site Search, Authenticated Portals, Social Media Management, Translation and Web Analytics to help the goal of assisting marketers to help organizations deliver digital experiences that attract, engage, nurture and convert their customers across all channels and streamline business operations. 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.

 

 

Contact:

Company Contact

Bridgeline Digital, Inc.

Mark G. Downey

Chief Financial Officer

(631) 203-6820

mdowney@bridgeline.com

 

 

 

 

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

 
   

2019

   

2018

   

2019

   

2018

 

Revenue:

                               

Digital engagement services

  $ 1,118     $ 1,578     $ 3,102     $ 5,559  

Subscription and perpetual licenses

    1,322       1,262       3,411       4,367  

Managed service hosting

    253       243       751       839  

Total revenue

    2,693       3,083       7,264       10,765  
                                 

Cost of revenue:

                               

Digital engagement services

    573       977       2,007       3,666  

Subscription and perpetual licenses

    834       510       2,010       1,503  

Managed service hosting

    84       47       222       213  

Total cost of revenue

    1,491       1,534       4,239       5,382  

Gross profit

    1,202       1,549       3,025       5,383  

Gross margin %

    45 %     50 %     42 %     50 %
                                 

Operating expenses:

                               

Sales and marketing

    1,268       892       3,083       2,800  

Support

    201       99       436       245  

General and administrative

    785       625       2,216       2,156  

Research and development

    592       406       1,499       1,221  

Depreciation and amortization

    257       93       361       305  

Goodwill impairment charge

    -       4,615       3,732       4,615  

Restructuring and acquisition-related

    938       6       1,242       187  

Total operating expenses

    4,041       6,736       12,569       11,529  

Loss from operations

    (2,839 )     (5,187 )     (9,544 )     (6,146 )

Interest income (expense), net

    7       (70 )     (305 )     (199 )

Amortization of debt discount

    -       (28 )     (231 )     (82 )

Other income (expense), net

    10,146       133       (79 )     166  

Income/(loss) before income taxes

    7,314       (5,152 )     (10,159 )     (6,261 )

Provision for income taxes

    3       10       7       11  

Net income/(loss)

  $ 7,311     $ (5,162 )   $ (10,166 )   $ (6,272 )

Dividends on convertible preferred stock

    (78 )     (79 )     (235 )     (231 )

Net income/(loss) applicable to common shareholders

  $ 7,233     $ (5,241 )   $ (10,401 )   $ (6,503 )

Net income/(loss) per share attributable to common shareholders:

                               

Basic net income/(loss) per share

  $ 3.62     $ (61.78 )   $ (12.38 )   $ (77.00 )

Diluted net income/(loss) per share

  $ 3.56     $ (61.78 )   $ (12.38 )   $ (77.00 )

Number of weighted average shares outstanding:

                               

Basic

    1,996,326       84,825       839,975       84,457  

Diluted

    2,032,766       84,825       839,975       84,457  

 

 

 

 

BRIDGELINE DIGITAL, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

(Unaudited)

 

   

June 30

   

September 30

 
   

2019

   

2018

 
ASSETS                
                 

Current Assets:

               

Cash and cash equivalents

  $ 1,298     $ 644  

Accounts receivable and unbilled receivables, net

    1,658       1,721  

Prepaid expenses

    442       452  

Other current assets

    89       21  

Total current assets

    3,487       2,838  

Property and equipment, net

    315       80  

Intangible assets, net

    3,747       20  

Goodwill

    5,557       7,782  

Other assets

    103       280  

Total assets

  $ 13,209     $ 11,000  
                 
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               
                 

Current Liabilities:

               

Accounts payable

  $ 1,312     $ 1,577  

Accrued liabilities

    1,172       580  

Debt, current

    -       1,017  

Deferred revenue

    1,832       594  

Total current liabilities

    4,316       3,768  

Debt, net of current portion

    -       2,574  

Warrant liabilities

    5,726       180  

Other long-term liabilities

    13       54  

Total liabilities

    10,055       6,576  
                 

Commitments and contingencies

               
                 

Stockholders' equity:

               

Preferred stock - $0.001 par value; 1,000,000 shares authorized;

               

Series C Convertible Preferred Stock:

               

11,000 shares authorized; 441 shares issued and outstanding at June 30, 2019

    -       -  

Series A Convertible Preferred Stock:

               

264,000 and 262,310 at June 30, 2019 and 264,000 and 262,364 at September 30, 2018 issued and outstanding (liquidation preference $2,624 at June 30, 2019)

    -       -  

Common stock - $0.001 par value; 50,000,000 shares authorized; 2,794,308 at June 30, 2019 and 84,005 at September 30, 2018, issued and outstanding

    3       -  

Additional paid-in-capital

    75,585       66,553  

Accumulated deficit

    (72,101 )     (61,778 )

Accumulated other comprehensive loss

    (333 )     (351 )

Total stockholders' equity

    3,154       4,424  

Total liabilities and stockholders' equity

  $ 13,209     $ 11,000  

 

 

 

 

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

 
   

2019

   

2018

   

2019

   

2018

 

Reconciliation of GAAP net income/(loss) to non-GAAP adjusted net income/(loss):

                               

GAAP net income/(loss)

  $ 7,233     $ (5,241 )   $ (10,401 )   $ (6,503 )

Amortization of intangible assets

    240       71       306       214  

Stock-based compensation

    74       126       209       373  

Goodwill impairment charge

    -       4,615       3,732       4,615  

Restructuring and acquisition-related charges

    938       6       1,242       187  

Dividends on convertible preferred stock

    78       79       235       231  

Non-GAAP adjusted net income/(loss)

  $ 8,563     $ (344 )   $ (4,677 )   $ (883 )
                                 

Reconciliation of GAAP net earnings/(loss) per diluted share to non-GAAP adjusted net earnings/(loss) per diluted share:

                               

GAAP net earnings/(loss) per share

  $ 3.56     $ (61.78 )   $ (12.38 )   $ (77.00 )

Amortization of intangible assets

    0.12       0.84       0.36       2.53  

Stock-based compensation

    0.04       1.48       0.24       4.42  

Goodwill impairment charge

    -       54.40       4.45       54.64  

Restructuring and acquisition-related charges

    0.45       0.07       1.48       2.21  

Dividends on convertible preferred stock

    0.04       0.93       0.28       2.74  

Non-GAAP adjusted net earnings/(loss) per diluted share

  $ 4.21     $ (4.06 )   $ (5.57 )   $ (10.46 )
                                 

Reconciliation of GAAP net income/(loss) to Adjusted EBITDA:

                               

GAAP net income/(loss)

  $ 7,233     $ (5,241 )   $ (10,401 )   $ (6,503 )

Provision for income tax

    3       10       7       11  

Interest and other expense, net

    (7 )     70       316       200  

Change in fair value of warrants/warrant expense

    (10,146 )     (133 )     68       (156 )

Amortization of debt discount

    -       28       231       82  

Amortization of intangible assets

    240       71       306       214  

Depreciation

    16       20       50       85  

Goodwill impairment charge

    -       4,615       3,732       4,615  

Restructuring and acquisition-related charges

    938       6       1,242       187  

Other amortization

    9       17       31       50  

Stock-based compensation

    74       126       209       373  

Dividends on convertible preferred stock

    78       79       235       231  

Adjusted EBITDA

  $ (1,562 )   $ (332 )   $ (3,974 )   $ (611 )
                                 

Reconciliation of GAAP net earnings/(loss) per diluted share to Adjusted EBITDA per diluted share:

                               

GAAP net earnings/(loss) per share

  $ 3.56     $ (61.78 )   $ (12.38 )   $ (77.00 )

Provision for income tax

    -       0.12       0.01       0.13  

Interest and other expense, net

    -       0.83       0.37       2.37  

Change in fair value of warrants/warrant expense

    (4.99 )     (1.57 )     0.08       (1.84 )

Amortization of debt discount

    -       0.33       0.28       0.97  

Amortization of intangible assets

    0.12       0.84       0.36       2.53  

Depreciation

    0.01       0.24       0.06       1.01  

Goodwill impairment charge

    -       54.40       4.45       54.64  

Restructuring and acquisition-related charges

    0.45       0.07       1.48       2.21  

Other amortization

    -       0.20       0.04       0.59  

Stock-based compensation

    0.04       1.48       0.24       4.42  

Dividends on convertible preferred stock

    0.04       0.93       0.28       2.74  

Adjusted EBITDA per diluted share

  $ (0.77 )   $ (3.91 )   $ (4.73 )   $ (7.23 )