Q4 2020 Bridgeline Digital Inc Earnings Call

20, <unk> earnings conference call.

Based on all participants in a listen only mode. Later, we will conduct a question and answer session and instructions will follow what that time, if anyone should require assistance. During the conference. Please press Star then zero on your Touchtone telephone as a reminder, this conference call is being recorded.

On a like to turn the conference over to your host Mr., Mark County, Chief Financial Officer of Bridgeline.

You still have.

Thank you good morning, everyone I hope, everyone is safe and healthy and getting ready for a great holiday week.

My name is mortality and I on the Chief Financial Officer for bridge on digital.

I am pleased to walk into our fiscal 2024th quarter Conference call.

On the call. This morning is every cod bridge on digital President and CEO will begin with a discussion of our business highlights.

Well update you on our financial results for the quarter and we'll conclude by taking questions.

Oh, I'm talking 2020, rejoice issue and if your corporate update press release outlining our business highlights and financial results for the fourth quarter 2020.

And potential for continued growth in fiscal 2021.

If you like a copy of this press release, you can access it on our website at Www Dot Bridgeline Dot com.

Before we begin I would like to remind listeners that during this conference call comments that we make regarding bridge loans that are not historical facts are forward looking statements within the meaning of section 27 day of the Securities Act of 933 and section 21 of the other Securities Act on banking 34 and are subject to risks and certain.

He said that could cause such statements to differ materially from actual future events or results.

These statements are made pursuant to the safe Harbor provisions on the private Securities Litigation Reform Act on 1995.

The internal projections beliefs upon which we based on expectations today may change over time, and we expressly disclaim assumes no obligation to inform you if they do.

Results that we report today should not be considered as an indication of future performance.

Changes in economic business sense out of a psychological regulatory and all the factors such as the impact of the Golden eye to pick on there and related public health measures could cause <unk> actual results to differ materially from those expressed or implied by the projections or forward looking statements made today.

For more detailed information about these factors and other risks that may impact our business. Please review the reports and documents filed from time to time, our bridge like digital with the Securities and Exchange Commission.

Also please note that on the call. This morning, we will discuss on non-GAAP financial measures when discussing the company's financial performance.

We provided a reconciliation of these non-GAAP measures to work out financials.

Our earnings release, you can pay a copy of our earnings release by visiting our website.

I would now like to turn the call on what you every time, our president and CEO.

Thank you Mark and good morning, everyone.

This quarter, we delivered 20% growth in subscription and license revenue at a 75% gross margin.

This is the companys eighth consecutive quarter of subscription and license growth.

We grew while delivering another quarter of strong profit net income operating income and adjusted EBITDA increased.

We ended the quarter with strong cash in less than 100 King debt.

The company is positioned for continued profitability and growth.

Bridgeline acquired more customers on its fourth quarter than in the previous three quarters combined.

One more enterprise customers, including a franchisee who signed a multiyear agreement valued at more than $650000.

Our stellar growth search App led sales with new customer wins in North America, Europe and Asia.

Our partnership with sales force produced new customers for orchestra product line not.

Not only do we have strong new customer wins existing customer renewals grew with some of our largest customers renewing their license subscription.

December and January are particularly strong renewal and collection months for Bridgeline. In fact, this very much we received a million dollar deposit from a single customer renewing.

With us.

Further growth our cash position going forward.

The company does not intend to raise capital for operating purposes, but could do so for an acquisition.

In our August earnings call. We discussed on revenue Threesixty strategy were Bridgeline will expand its out of the box product line with software to help our customers grow their E commerce revenue.

Revenue 360 brings us a touch on the sales process that has allowed us to win new customers more quickly gross subscription revenue and deliver stronger profit.

Revenue 360 is not only a sales strategy. It also guides R&D efforts partnerships and mergers and acquisitions.

In Q4, we announced on bound pages to help the franchisees increased online and in store traffic with out on the box store locator pages on bound pages makes it easy to share locator maps store hours and contact information with your customers on balance pages is unique in that it includes email marketing and online commerce.

Out on the box.

[noise] Bridgeline will continue evaluating strategic growth opportunities through acquisitions with revenue Threesixty guiding our focus towards SaaS companies, whose products help their customers growth online revenues with efficient sales cycles.

The company's we evaluate have two to 4 million on an annual recurring revenue with compatible plug and play apps in the marketing technology software sector.

We have a strong pipeline of targeted call needs and are carefully evaluating them to find the right strategic fit to preserve our profitability boost revenue and provide us with new software that delivers even more value to our customers.

We have sales momentum happy customers positive bottom line strong cash flow drawn balance sheet and a clean cap table. This is the foundation for an exciting software company and revenue Threesixty strategy is proving to win new customers, while delivering delivering even greater value to our existing customer base.

At this time I'd like to turn the call over to our Chief Financial Officer, Mark Downey [laughter]. Thanks, Harry.

We're excited to share the pause on financial results for the fourth quarter of fiscal 2020 ended September Thirtyth 2020 with you. This morning.

Total revenue for the quarter ended September 32020, which is comprised on license and services revenue was consistent at 2.7 million for the quarters ended September 30 day, 2020 and 2019.

Following all the various components of revenue subscription and license revenue, which is comprised of south licenses maintenance and hosting revenue and perpetual license revenue increased 20 per cent for the quarter ended September 32000, 22 million on 1.7 million for the same period in 2019.

As a percentage of total revenue subscription and perpetual license revenue increased 12% to 74% of total revenue for the quarter ended September 32020, compared to 62% for the same period in 2019.

This increase is attributed to multiple renewals across the diverse portfolio of customers, including retail healthcare financial services franchisee education manufacturing.

On multi year license renewals from pharmaceutical and industrial manufacturing and global energy companies.

Services revenue decreased 314000 to seven on a 1000 per quarter ended September Thirtyth 2020, as compared to $1 million on the same period in 2019.

As a percentage on total revenue services revenue accounts for 26% of total revenue on the quarter ended September 32020, compared to 38% on total revenue for the same period in 2019.

Right is the largest overall focus is on increasing license revenue with out of the box EPS that require little or no service to implement.

Its focus and continued growth in subscription revenue is expected to further increase our license services ratio.

Gross profit increased 60% or 253000 1.8 million per quarter ended September 32020, as compared to 1.6 points on the same period of 2019.

Cost of revenue decreased 21% or 236000 to 885000 on the quarter ended September Thirtyth 2020.

It's 1.1 million for the same period in 2019.

Gross profit margin increased to 67 per cent for the quarter ended September 32020, compared to 58% from the same period in 2019.

Subscription on a perpetual licenses gross margin for 76% for the three months ended September Thirtyth 2020, as compared to 59% for the same period in 2019.

Services gross margin were 43% for the three months ended on September 32020, as compared to 57 per cent for the same period in 2019.

Operating expenses decreased 46% or 1.4 million to 1.79 per quarter ended September 32023.

$3.1 billion for the same period in 2019.

Included within the quarterly totals as of September 30, 2020 on the net benefits and overall efficiencies on the previously announced reduction of our new Western <unk> and Canada operations.

By eliminating redundancies and combining certain responsibilities and functions.

Let me look on a quarter on December 2019 results or acquisition charges of 35000 related to the acquisitions sentiments on those respectively.

Interest fair value on the river accounting rules, the warrant liability on our balance sheet, our independent revalued on a quarterly basis on a.

Quarter ended September 32020, this revaluation, which considers the overall change in on market share price from the previous quarter resulted in a 50000 dollar non cash loss to change in fair value of warrant liabilities as compared to 2.2 million non cash gain for the same period in 2019.

Offsetting the warrant liability loss for the quarter ended September 32020, 960000 on government grant income related to the forgiveness of the PPP loans respectively.

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Operating income for the quarter ended September Thirtyth 2020 is 164000 as compared to an operating loss on 1.5 million for the same period in 2019.

Net income allocable to common shareholders on the first quarter for the fiscal quarter ended September 32020 is 1.1 billion compared to net income of 619000 for the same period in 2019.

Adjusted EBITDA for the quarter ended September Thirtyth 2020 is a gain of 455000 or 10 cents per diluted share.

Since we loss of $1.2 million or 41 cents per diluted share for the same period in 2019.

Our non-GAAP adjusted net income for the quarter ended September 32020, as 1.3 million or 29 cents per diluted share compared to 1 million or 34 cents per diluted share for the same period in 2019.

At September 32020, the company had cash of 861000 on accounts receivable net of six on 65000.

As compared to September Thirtyth 2019 on the company had cash of 296000 and accounts receivable net of 979000.

Total days sales outstanding for the quarter ended September 32020 is 44.6 states.

Total day sales outstanding for the quarter ended on September 32019 was 48 days.

The primary reason for these improvements can be attributed to our exceptional strong customer relationships and consistent conversion accounts receivable into cash.

On April 17 point 20, the company entered into a long with Dnb bank as a lender in an aggregate principal amount of a million or 47, 500, plus weighted to the paycheck protection program on the carriers on.

The PTC loans is evidenced by promissory note.

Subject to the terms on the no the PPP loan bears interest at a fixed rate of one per cent per annum.

The first six months of interest tougher on an initial term of two years and subsequently increase to five years.

And is unsecured and guaranteed by the SPX.

The company will apply to the lender for forgiveness of the PPP low key about which may be forgiven equal to the sum of payroll costs southern rent obligations and utility payments incurred by the topic. During the 24 week period, beginning on May 1st 20 point.

Lastly, in accordance with the terms of the carriers items.

As of September 32020, based on SP, a requirements, we have calculated on a given this and recorded as government grant income on the income statement.

And I on a 60000 or 92% of the applicable BPP loans drawdown on the.

The remaining PPP loan balance of 87005 on that will be recorded as government grant income effective first quarter 20.1.

As of September 32020, we have three on a 50 shares on the series C convertible preferred stock.

What's your burn it equals 3000, any non shares of common stock.

We anticipate being able to convert all remaining series C convertible preferred stock on the first half 2021.

Our total assets, our 10.7 million and total liabilities of 6.3 million.

Got 4 million 420170 issued and outstanding shares of common stock as on September 32020.

Compared to 2 million 798, 475 issued and outstanding shares of common stock as of September Thirtyth 2019.

Bridgeline looks forward to continued success in 2021 bite.

By delivering shareholder value and expanding customer success with exciting technical innovations.

Thank you all for listening and at this time, we would like to open the call lots to QNX.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Right. Your first question comes from Howard Halpern with Backlist properties Human I'll ask your question.

Oh, congratulations on a solid quarter and a great year.

Thank you Howard.

Pick out we're not.

Net in terms of a customer base, how many customers did you end the year with and how many new customers have you gotten so far in a 121.

So we ended.

2020 was solved.

About 200 customers Orlando.

And.

Once you 21 this quarter.

Oh, we've added about Ken.

Okay.

Okay and income in terms of what you've seen so far with renewals.

Hi.

Have you have you seen on renewals.

Increase in revenue value a good day octuplets sales.

Sales are.

Yeah, it's funny to obtain.

In general we increased our.

Our license on renewals are at.

GAAP between five and 10% our customers depending on the linked their original contract typically its a three year contract settled that length of.

Impact how much we increase it by so if you're on a three year contract you're probably more on the 10% increase on the renewal range.

HM Okay.

And.

And just a little bit of a broad overview are you.

You know what what are you seeing in the industry and how it's evolving especially during.

You know the pandemic and environment debt has seemed to accelerate is online environment for consumers companies et cetera, yeah.

Yeah, Yeah, what we're seeing is that arc.

Our customer within our customer who is the author of the on the VP of marketing.

His budget has held steady so it's not been decrease but it shifted toward on line. So they are redirecting their budgets from the stores to their online presence.

And.

As we lead up to the holiday. This year, we saw several customers expand their projects to.

Create new on new features before the on.

On the holiday season.

Okay [laughter] could you I guess talk on just a little bit about the pipeline that you're seeing in terms of.

Both both enterprise and you know.

Celebrants product.

Right right well be on the stellar both gross line is where most of our pipeline is growing and you know specifically celebrates the reset in the revenue Threesixty mindset is focused on helping customers increase there on line revenue and.

We're seeing customers that are on the smaller side, probably between 100 million and a billion dollars in annual sales.

Coming to us for celebration and.

We're also seeing a lot of that business.

Almost half of it in Europe, I'm not sure exactly why.

And on.

On the platform side, both for our on balance platform and for our orchestra platform. We are seeing business as well on the orchestra generated businesses, often coming EPS referrals from Salesforce Dot com.

And on the on boarding side that is a direct business were.

People are coming to us because they know our name.

HM.

Okay.

And.

You know, what we're sort of coming to a closing on a one she can offer any kind of a perspective that is what we should see on the top line revenue.

Yeah, we expect to see a growth.

Growth on the top line Oh, we're going to I <unk> in one Q have an even stronger cash on balance sheet position than we have.

Had at the end of our previous quarters. So this this month and next month happened to be large collection lumps per for Bridgeline and.

We're we're still focusing on positive operating income as well.

Okay. Okay.

Okay, well graduations again and keep up the good work.

Thank you Howard happy holiday.

[noise] again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your touched on couple of fat.

And your if your question has been answered or you wish turn moving yourself from the queue. Please press the pound key.

All right at this time I would like to turn it back to the speakers for any closing comments.

We appreciate your support and patience.

All of our share holders guests, it's been great. It's our goal to continue building a scalable business model, which in turn will build shareholder value. Thank you for joining us today happy holidays, we look forward to speaking to you again on our Q1 fiscal 21 conference call stay healthy as well.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation topicality used to everyone keep me all disconnect.

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