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): May 14, 2020

 

           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 Sylvan Road, Suite G-700

Woburn, MA 01801

(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 Symbol(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 May 14, 2020, Bridgeline Digital, Inc. issued a press release announcing its financial results for the second fiscal quarter ended March 31, 2020. 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 May 14, 2020, 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: May 20, 2020

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.

Exhibit Description

 

99.1

 

Press release issued by Bridgeline Digital, Inc., dated May 14, 2020.

 

 
ex_187387.htm

Exhibit 99.1

 

The Digital Engagement Company

 

Bridgeline Announces Financial Results for the Second Quarter of Fiscal 2020

 

Recurring Revenue Increases by 42%

 

Woburn, Mass., May 14, 2020 - Bridgeline Digital, Inc. (NASDAQ: BLIN), The Digital Engagement Company™, today announced financial results for its fiscal second quarter ended March 31, 2020.

 

“Bridgeline continues to win new customers and provide even greater strategic value to our existing customer base during the COVID-19 crisis,” said Ari Kahn, Bridgeline’s President and Chief Executive Officer. “Today our customers increasingly rely on their online stores and portals powered by Bridgeline for business continuity in providing products, services and critical communication to their customers, prospects and employees. Bridgeline is well- positioned to continue to provide premium services and strategic value to our customers during these challenging times.”

 

“This year, Bridgeline has focused on making its products even more turn-key and out-of-the-box to enable a fast telephonic sales cycle and reduce costs of implementations,” continued Mr. Kahn. “This strategy is well aligned with the challenges created by the pandemic. We have seen, and expect to continue to see, strong license subscription renewal rates within our customer base. Professional services have slowed as customers are adjusting to remote work. With our business plan driven by lower cost implementations, increased customer satisfaction and high subscription renewal rates, we expect to achieve our business goals this year.”

 

 

Second Quarter Summary:

 

 

Total revenue increased 20% to $2.7 million for the quarter ended March 31, 2020, as compared to $2.2 million for the same period last year.

 

 

Recurring revenue, which is comprised of SaaS licenses, maintenance and hosting revenue, increased 42% to $1.8 million for the quarter ended March 31, 2020, from $1.3 million for the same period last year.

 

 

Subscription and perpetual licenses revenue, which is comprised of recurring revenue and perpetual license revenue increased 63% to $1.5 million for the quarter ended March 31, 2020, from $1.0 million for the same period last year.

 

 

Services revenue was consistent at $900,000 for the quarters ended March 31, 2020, and 2019, respectively. As a percentage of total revenue, Services revenue decreased 9% to 33% of total revenue for the quarter ended March 31, 2020, compared to 42% for the same period last year.

 

 

Operating expenses remained consistent at $2.6 million, which include a restructuring charge of $365,000 and acquisition charges of $304,000 for the quarters ended March 31, 2020 and 2019, respectively.

 

 

Net income for the quarter ended March 31, 2020 was $822,000, compared to a net loss of $12.5 million for the same quarter last year. Included within the net income for the three months ended March 31, 2020 and net loss for the same period last year was a non-cash gain of $1.8 million and net loss of $10.2 million attributable to the change in fair value of certain derivative warrant liabilities, respectively.

 

 

 

Year to Date Summary:

 

 

Total revenue increased 22% to $5.6 million for the six months ended March 31, 2020, as compared to $4.6 million for the same period last year.

 

 

Recurring revenue, which is comprised of SaaS licenses, maintenance and hosting revenue, increased 46% to $3.6 million for the six months ended March 31, 2020, from $2.4 million for the same period last year.

 

 

Subscription and perpetual licenses revenue, which is comprised of recurring revenue and perpetual license revenue increased 58% to $2.9 million for the six months ended March 31, 2020, from $1.8 million for the same period last year.

 

 

Services revenue was consistent at $2 million for the six months ended March 31, 2020, and 2019, respectively. As a percentage of total revenue, Services revenue decreased 7% to 36% of total revenue for the six months ended March 31, 2020, compared to 43% for the same period last year.

 

 

Operating expenses decreased 39% or $3.2 million to $5 million for the six months ended March 31, 2020 as compared to $8.2 million (including a goodwill impairment charge of $3.7 million) for the same quarter last year.

 

 

Net income for the six months ended March 31, 2020 was $959,000, compared to a net loss of $17.5 million for the same period last year. Included within the net income for the six months ended March 31, 2020 and net loss for the same period last year was a non-cash gain of $2.9 million and $10.2 million net loss attributable to the change in fair value of certain derivative warrant liabilities, respectively.

 

Financial Results

Second Quarter

 

Revenue for the quarter ended March 31, 2020 was $2.7 million, compared to $2.2 million for the same period last year. Recurring revenue, which is comprised of SaaS licenses, maintenance and hosting revenue, increased 42% to $1.8 million for the quarter ended March 31, 2020 from $1.3 million for the same period last year. Subscription and perpetual licenses revenue, which is comprised of recurring revenue and perpetual license revenue increased 63% to $1.5 million for the quarter ended March 31, 2020, compared to $1 million for the same period last year.

 

Gross Margin increased to 57% for the quarter ended March 31, 2020, compared to 27% for the same period last year. Cost of revenue decreased 26% or $400,000 to $1.2 million for the quarter ended March 31, 2020 compared to $1.6 million for the same period in 2019.

 

Operating expenses remained consistent at $2.6 million, which includes a restructuring charge of

 

$365,000 and acquisition charges of $304,000 for the quarters ended March 31, 2020 and 2019, respectively.

 

Net income applicable to common shareholders was $795,000 for the quarter ended March 31, 2020, compared to a net loss of $12.6 million for the same period last year. Reflected in net results for the quarters ended March 31, 2020 and 2019 is a non-cash net adjustment to other income of $1.8 million and other expense of $10.2 million attributable to the change in fair value of certain derivative warrant liabilities, respectively.

 

Adjusted EBITDA loss for the quarter ended March 31, 2020 is $331,000 or loss of $0.08 per diluted share, compared to $1.5 million or loss of $5.09 per diluted share for the same period in 2019.

 

 

 

Year to Date

 

Revenue for the six months ended March 31, 2020 was $5.6 million, compared to $4.6 million for the same period last year. Recurring revenue, which is comprised of SaaS licenses, maintenance and hosting revenue, increased 46% to $3.6 million for the six months ended March 31, 2020 from $2.4 million for the same period last year. Subscription and perpetual licenses revenue, which is comprised of recurring revenue and perpetual license revenue increased 58% to $2.9 million for the six months ended March 31, 2020, compared to $1.8 million for the same period last year.

 

Gross Margin increased to 54% for the six months ended March 31, 2020, compared to 32% for the same period last year. Cost of revenue decreased $600 thousand or 18% to $2.5 million as compared to $3.1 million for the periods ended March 31, 2020 and 2019, respectively.

 

Operating expenses decreased 39% or $3.2 million to $5 million from $8.2 million (including a goodwill impairment charge of $3.7 million) for the six months ended March 31, 2020 and 2019, respectively.

 

Net loss applicable to common shareholders was $1.5 million for the six months ended March 31, 2020, compared to $17.6 million for the same period last year. Reflected in net results for the six months ended March 31, 2020 and 2019 is a non-cash net adjustment to other income of $2.9 million and other expense of $10.2 million attributable to the change in fair value of certain derivative warrant liabilities offset by a deemed dividend expense for the period ended March 31, 2020 on the amendment of convertible preferred stock of $2.4 million, respectively.

 

Adjusted EBITDA loss for the six months ended March 31, 2020 is $1 million or loss of $0.33 per diluted share, compared to $2.4 million or loss of $9.21 per diluted share for the same period in 2019.

 

 

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," 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. OrchestraCMS is the only content and digital experience platform built 100% native on Salesforce.com. OrchestraCMS helps Salesforce.com create digital experiences for their customers and partners; combining content with business data, processes and applications across multiply channels and device including Salesforce.com Communities, social media, portals, intranets, websites, applications and services. Celebros Search is a commerce oriented, site search product that provides for Natural Language Processing with artificial intelligence to present very relevant search results in seven languages. Headquartered in Woburn, Mass., Bridgeline customers 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.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Dollars in thousands, except per share data)

 

   

Three Months Ended

   

Six Months Ended

 
   

March 31

   

March 31

 
   

2020

   

2019

   

2020

   

2019

 

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

                               

GAAP net income/(loss)

  $ 795     $ (12,600 )   $ (1,461 )   $ (17,634 )

Amortization of intangible assets

    233       62       470       66  

Stock-based compensation

    50       38       80       135  

Goodwill impairment charge

    -       -       -       3,732  

Restructuring and acquisition-related charges

    367       304       372       304  

Convertible Preferred stock dividends

    27       78       2,420       157  

Non-GAAP adjusted net income/(loss)

  $ 1,472     $ (12,118 )   $ 1,881     $ (13,240 )
                                 
                                 

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

                               

GAAP net income/(loss)

  $ 0.18     $ (41.52 )   $ (0.48 )   $ (67.36 )

Amortization of intangible assets

    0.05       0.20       0.16       0.25  

Stock-based compensation

    0.01       0.13       0.03       0.52  

Goodwill impairment charge

    -       -       -       14.26  

Restructuring and acquisition-related charges

    0.08       1.00       0.12       1.16  

Convertible Preferred stock dividends

    0.01       0.26       0.80       0.60  

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

  $ 0.33     $ (39.94 )   $ 0.62     $ (50.57 )
                                 

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

                               

GAAP net income/(loss)

  $ 795     $ (12,600 )   $ (1,461 )   $ (17,634 )

Provision for income tax

    -       -       3       4  

Interest and other expense, net

    1       104       1       333  

Amortization of debt discount

    -       221       -       221  

Change in fair value of warrants

    (1,820 )     (1,046 )     (2,921 )     (1,058 )

Warranty liability expense

    -       11,272       -       11,272  

Amortization of intangible assets

    233       62       470       66  

Depreciation

    12       14       28       34  

Goodwill impairment charge

    -       -       -       3,732  

Restructuring and acquisition-related charges

    367       304       372       304  

Other amortization

    4       7       9       22  

Stock-based compensation

    50       38       80       135  

Convertible Preferred stock dividends

    27       78       2,420       157  

Adjusted EBITDA

  $ (331 )   $ (1,546 )   $ (999 )   $ (2,412 )
                                 
                                 

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

                               

GAAP net income/(loss)

  $ 0.18     $ (41.52 )   $ (0.48 )   $ (67.36 )

Provision for income tax

    -       -       0.00       0.02  

Interest and other expense, net

    0.00       0.34       0.00       1.27  

Amortization of debt discount

    -       0.73       -       0.84  

Change in fair value of warrants

    (0.41 )     (3.45 )     (0.96 )     (4.04 )

Warranty liability expense

    -       37.15       -       43.06  

Amortization of intangible assets

    0.05       0.20       0.16       0.25  

Depreciation

    0.00       0.05       0.01       0.13  

Goodwill impairment charge

    -       -       -       14.26  

Restructuring and acquisition-related charges

    0.08       1.00       0.12       1.16  

Other amortization

    0.00       0.02       0.00       0.08  

Stock-based compensation

    0.01       0.13       0.03       0.52  

Convertible Preferred stock dividends

    0.01       0.26       0.80       0.60  

Adjusted EBITDA per diluted share

  $ (0.08 )   $ (5.09 )   $ (0.33 )   $ (9.21 )

 

 

 

BRIDGELINE DIGITAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

 

   

Three Months Ended

   

Six Months Ended

 
   

March 31,

   

March 31,

 
   

2020

   

2019

   

2020

   

2019

 

Revenue:

                               

Digital engagement services

  $ 899     $ 911     $ 1,995     $ 1,984  

Subscription and perpetual licenses

    1,839       1,285       3,575       2,587  

Total revenue

    2,738       2,196       5,570       4,571  
                                 

Cost of revenue:

                               

Digital engagement services

    457       571       1,026       1,421  

Subscription and perpetual licenses

    727       1,036       1,517       1,675  

Total cost of revenue

    1,184       1,607       2,543       3,096  

Gross profit

    1,554       589       3,027       1,475  
                                 

Operating expenses:

                               

Sales and marketing

    786       945       1,818       1,702  

General and administrative

    723       744       1,472       1,431  

Research and development

    426       489       816       907  

Depreciation and amortization

    249       78       507       104  

Goodwill impairment charge

    -       -       -       3,732  

Restructuring and acquisition-related

    367       304       372       304  

Total operating expenses

    2,551       2,560       4,985       8,180  

Loss from operations

    (997 )     (1,971 )     (1,958 )     (6,705 )

Interest and other, net

    (1 )     (104 )     (1 )     (333 )

Amortization of debt discount

    -       (221 )     -       (221 )

Warranty liability expense

    -       (11,272 )     -       (11,272 )

Change in fair value of warrant liabilities

    1,820       1,046       2,921       1,058  

Income (loss) before income taxes

    822       (12,522 )     962       (17,473 )

Income Taxes

    -       -       3       4  

Net income (loss)

  $ 822     $ (12,522 )   $ 959     $ (17,477 )

Dividends on convertible preferred stock

    (27 )     (78 )     (106 )     (157 )

Deemed dividend on amendment of Series A convertible preferred stock

    -       -       (2,314 )     -  

Net income (loss) applicable to common shareholders

  $ 795     $ (12,600 )   $ (1,461 )   $ (17,634 )

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

                         

Basic net income/(loss) per share

  $ 0.25     $ (41.52 )   $ (0.49 )   $ (67.36 )

Diluted net income/(loss) per share

  $ 0.17     $ (41.52 )   $ (0.50 )   $ (67.36 )

Number of weighted average shares outstanding:

                               

Basic

    3,124,174       303,443       2,960,435       261,800  

Diluted

    4,412,935       303,443       3,027,147       261,800  

 

 

 

BRIDGELINE DIGITAL, INC.

CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

 

   

March 31

   

September 30

 
   

2020

   

2019

 
ASSETS                

Current Assets:

               

Cash and cash equivalents

  $ 234     $ 296  

Accounts receivable, net

    874       979  

Prepaid expenses

    299       351  

Other current assets

    30       49  

Total current assets

    1,437       1,675  

Property and equipment, net

    267       299  

Operating lease assets

    385       -  

Intangible assets, net

    3,040       3,509  

Goodwill

    5,557       5,557  

Other assets

    101       115  

Total assets

  $ 10,787     $ 11,155  
                 
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               
                 

Current Liabilities:

               

Current portion of operating lease liabilities

  $ 157     $ -  

Accounts payable

    2,236       1,740  

Accrued liabilities

    1,159       835  

Deferred revenue

    1,739       1,262  

Total current liabilities

    5,291       3,837  

Operating lease liabilities, net of current portion

    228       -  

Warrant liabilities

    593       3,514  

Other long-term liabilities

    5       8  

Total liabilities

    6,117       7,359  
                 

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 March 31, 2020 and September 30, 2019

    -       -  

Series A Convertible Preferred Stock: 264,000 shares authorized; 154,894 shares at March 31, 2020 and 262,310 shares at September 30, 2019 issued and outstanding (liquidation preference $1,734 at March 31, 2020)

    -       -  

Common stock - $0.001 par value; 50,000,000 shares authorized; 3,412,281 at March 31, 2020 and 2,798,475 at September 30, 2019, issued and outstanding

    3       3  

Additional paid-in-capital

    78,014       75,620  

Accumulated deficit

    (72,951 )     (71,489 )

Accumulated other comprehensive loss

    (396 )     (338 )

Total stockholders' equity

    4,670       3,796  

Total liabilities and stockholders' equity

  $ 10,787     $ 11,155