Bridgeline Software Reports Financial Results for the Third Quarter of Fiscal 2009

Q309 Year Over Year Net Income Grows 166%, Customer Base Grows 29%, and Recurring Revenue Grows 19%

• Press Release
• Source: Bridgeline Software
• On 4:00 pm EDT, Tuesday August 11, 2009

WOBURN, Mass., Aug. 11, 2009 (GLOBE NEWSWIRE) -- Bridgeline Software, Inc. (Nasdaq:BLSW - News), a developer of SaaS-based web application management software and award-winning interactive business technology solutions, today announced results for its third fiscal quarter and record results for the nine months ended June 30, 2009.

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Highlights from the third quarter of fiscal 2009 include:

 *   Revenue of $6,004,000 for the quarter ended June 30, 2009,
     representing a 5% increase over revenue of $5,700,000 for the
     same quarter one year ago. Recurring revenue grew by 19% in Q309
     when compared to Q308.

 *   Customer base increased to 693 customers, a 29% increase from 539
     customers a year ago. Approximately 456 of the Company's
     customers, or 66%, pay Bridgeline Software a monthly subscription
     fee or a monthly managed service fee.

 *   Net income for the quarter ended June 30, 2009 was $178,000,
     representing a 166% increase over net income of $67,000 for the
     same quarter one year ago. This represents net income of $0.02
     per diluted share versus net income of $0.01 per diluted share a
     year ago.

 *   EBITDA (earnings before interest, taxes, depreciation, and
     amortization) before stock compensation was $768,000 for the
     quarter ended June 30, 2009 compared with EBITDA of $584,000 for
     the same three month period one year earlier, representing a 32%
     increase. This represents $0.07 per diluted share of EBITDA,
     consistent with $0.06 per diluted share of EBITDA a year ago.

 *   Balance sheet remains strong with a current ratio of 1.6 to 1. At
     June 30, 2009 Bridgeline Software had over $24.5 million in total
     assets and $5 million in total liabilities.

Highlights from the first nine months of fiscal 2009 include:

 *   Revenue for the nine months ended June 30, 2009 was $18,576,000,
     representing a 21% increase over revenue of $15,301,000 for the
     same period in 2008.

 *   Net income for the nine months ended June 30, 2009 increased 160%
     to $561,000, as compared to $216,000 of net income from the same
     period one year earlier. This represents net income of $0.05 per
     diluted share compared with net income of $0.02 per diluted share
     a year ago.

 *   Cash generated from operations was $2,018,000 for the nine months
     ended June 30, 2009 compared to cash used in operations of
     ($497,000) for the same period a year ago.

 *   EBITDA before stock compensation for the nine month period ending
     June 30, 2009 was $2,232,000, as compared with EBITDA of
     $1,417,000 for the same period one year ago, representing a 58%
     increase. This represents $0.20 per diluted share of EBITDA,
     compared to $0.15 per diluted share of EBITDA a year ago.

"Despite the severe economic challenges that have faced our nation over the past 18 months, we are very pleased with our continued growth and progress," stated Thomas Massie, Chairman and Chief Executive Officer of Bridgeline Software.

Results of Operations for the three-months ended June 30, 2009

Bridgeline Software recorded revenue of $6 million for the quarter ended June 30, 2009, an increase of $300 thousand or 5% compared to the same period of the prior year. Bridgeline Software posted operating income for the quarter ended June 30, 2009 of $189,000 compared to operating income of $40,000 for the same quarter of the prior year. Bridgeline Software posted net income for the quarter ended June 30, 2009 of $178,000 or $0.02 per diluted share versus net income of $67,000 or $0.01 per diluted share for the same quarter in fiscal 2008.

Results of Operations for the nine-months ended June 30, 2009

Bridgeline Software recorded revenue of $18.6 million for the nine months ended June 30, 2009, an increase of $3.3 million, or 21% compared to the same period of the prior year. The Company posted operating income for the nine months ended June 30, 2009 of $627,000 compared to $165,000 for the same period of the prior year. The Company posted net income for the nine months ended June 30, 2009 of $561,000 or $0.05 per diluted share versus $216,000 or $0.02 per diluted share in the same period of the previous year.

Recurring Revenue Trends

On an annualized basis, recurring revenue for the quarter ended June 30, 2009 was $3.3 million compared to annualized recurring revenue for the same period of the prior year of $2.7 million, representing an increase of 19%. Annualized figures are derived by multiplying the actual results for the quarter by four.

Recurring revenue is revenue from customers who pay Bridgeline Software a monthly subscription fee or a monthly managed service fee. Of Bridgeline Software's 693 customers as of June 30, 2009, 456 or 66% pay a monthly subscription fee or a monthly managed service fee. Bridgeline Software's retention rate of such clients during the quarter ended June 30, 2009 was 91%.

                                       Q309              Q308
                                    ----------------------------
 Annualized Recurring Revenue          $3,257           $2,738
 Year over Year Growth %                  19%
 Retention Rate                           91%




                        Bridgeline Software, Inc.
            Condensed Consolidated Statements of Operations
        (Dollars in thousands except per share data-unaudited)

                          Three Months Ended      Nine Months Ended
                        ----------------------- -----------------------
                          June 30,    June 30,    June 30,    June 30,
                            2009        2008       2009         2008
                        ----------- ----------- ----------- -----------
 Revenue                $     6,004 $     5,700 $    18,576 $    15,301
 Cost of revenue              2,703       2,631       8,283       7,112
                        ----------- ----------- ----------- -----------
  Gross profit                3,301       3,069      10,293       8,189
                        ----------- ----------- ----------- -----------
  Operating expenses:
   Sales & marketing          1,478       1,658       4,736       4,397
   General &
    administrative              979         993       3,048       2,517
   Research &
    development                 336         108         971         406
   Depreciation &
    amortization                319         270         911         704
                        ----------- ----------- ----------- -----------
  Total operating
   expenses                   3,112       3,029       9,666       8,024
                        ----------- ----------- ----------- -----------

  Income from operations        189          40         627         165

  Interest and other
   income (expense)              --          27         (35)         51
                        ----------- ----------- ----------- -----------
  Income before income
   taxes                        189          67         592         216

  Income taxes                   11          --          31          --
                        ----------- ----------- ----------- -----------
  Net income            $       178 $        67 $       561 $       216
                        =========== =========== =========== ===========

  Net income per share:
  Basic                 $      0.02 $      0.01 $      0.05 $      0.02
                        =========== =========== =========== ===========
  Diluted               $      0.02 $      0.01 $      0.05 $      0.02

  Number of weighted
   average shares:

  Basic                  11,109,256   9,489,159  10,960,777   9,139,356
                        =========== =========== =========== ===========

  Basic and diluted      11,160,082   9,589,777  11,009,264   9,261,419
                        =========== =========== =========== ===========

 EBITDA results (Note 1)

   Add:
    Interest and tax
     expense            $        11 $        (1)$        66 $        37
    Depreciation and
     amortization               398         365       1,142         824
    Stock-based
     compensation               181         153         463         340
                        ----------- ----------- ----------- -----------

     EBITDA before stock
      compensation and
      other non-
      recurring charges $       768 $       584 $     2,232 $     1,417
                        =========== =========== =========== ===========

     EBITDA per diluted
      share             $      0.07 $      0.06 $      0.20 $      0.15
                        =========== =========== =========== ===========

 Note 1: EBITDA (earnings before interest, taxes, depreciation and
 amortization) before stock compensation and other non-recurring
 charges, including impairment charges ("EBITDA") is a Non-GAAP
 Financial Measure. We use EBITDA as a supplemental measure of our
 performance that is not required by, or presented in accordance with,
 accounting principles generally accepted in the United States
 ("GAAP"). We present EBITDA before stock compensation and other
 non-recurring charges because we consider it an important supplemental
 measure of our performance by adjusting net income or loss primarily
 for the non-cash charges and other non-recurring charges. Because the
 use of EBITDA before stock compensation and other non-recurring
 charges facilitates comparisons of our historical operating
 performance on a more consistent basis, we use this measure for
 business planning and analysis purposes, in assessing acquisition
 opportunities and in determining how potential external financing
 sources are likely to evaluate our business. In addition, we believe
 this measure provides the investor with an accurate measure of our
 ability to meet our future cash flow requirements.




                        Bridgeline Software, Inc.
                 Condensed Consolidated Balance Sheets
      (in thousands, except share and per share data- unaudited)


                   ASSETS
                                                   June 30,  Sept. 30,
                                                     2009      2008
                                                   --------  --------
 Current assets:
 Cash and cash equivalents                         $  2,833  $  1,911
 Accounts receivable, net                             4,073     5,662
 Prepaid expenses and other current assets              255       467
                                                   --------  --------
   Total current assets                               7,161     8,040
 Equipment and improvements, net                      1,594     1,763
 Definite-lived intangible assets, net                1,632     2,980
 Goodwill                                            13,491    10,725
 Other assets                                           653       751
                                                   --------  --------
   Total assets                                    $ 24,531  $ 24,259
                                                   ========  ========


      LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                                $    722  $  1,770
   Accrued liabilities                                1,420     1,529
   Line of credit                                     1,250     1,000
   Capital lease obligations, current                    80       105
   Deferred revenue                                     924     1,176
                                                   --------  --------
     Total current liabilities                        4,396     5,580
   Capital lease obligations, less current
    portion                                              79       139
   Other long term liabilities                          488       350
                                                   --------  --------
     Total liabilities                                4,963     6,069
                                                   --------  --------

 Commitments and contingencies

 Shareholders' equity:
   Preferred stock -- $0.001 par value;
    1,000,000 shares Authorized; none issued
    and outstanding                                      --        --
   Common stock -- $0.001 par value; 20,000,000
    shares authorized: 11,132,827 and 10,665,533
    shares issued and outstanding, respectively          11        11
   Additional paid-in capital                        35,478    34,647
   Accumulated deficit                              (15,808)  (16,369)
   Accumulated other comprehensive income              (113)      (99)
                                                   --------  --------
     Total shareholders' equity                      19,568    18,190
                                                   --------  --------
     Total liabilities and shareholders' equity    $ 24,531  $ 24,259
                                                   ========  ========




                       Bridgeline Software, Inc.
                 Consolidated Statements of Cash Flows
                       (in thousands- unaudited)

                                                    Nine months ended
                                                         June 30,
                                                     2009       2008
                                                    -------   -------
 Cash flows from operating activities:
 Net income                                         $   561   $   216
 Adjustments to reconcile net income to net
  cash provided by operating activities:
 Depreciation                                           604       395
 Amortization of intangible assets                      538       429
 Stock-based compensation                               463       340
 Changes in operating assets and liabilities,
  net of acquired assets and liabilities:
   Accounts receivable and unbilled receivables       1,167      (525)
   Other assets                                         148      (724)
   Accounts payable and accrued liabilities          (1,349)       (6)
   Deferred revenue                                    (252)     (630)
   Other liabilities                                    138         8
                                                    -------   -------
     Total adjustments                                1,457      (713)
                                                    -------   -------
     Net cash provided by (used in) operating
      activities                                      2,018      (497)
                                                    -------   -------
 Cash flows from investing activities:
 Equipment and other asset expenditures                (405)     (618)
 Acquisitions, net of cash acquired                      --      (924)
 Contingent acquisition payments                       (846)     (731)
                                                    -------   -------
   Net cash used in investing activities             (1,251)   (2,273)
                                                    -------   -------
 Cash flows from financing activities:
 Proceeds from bank line of credit                    3,250        --
 Principal payments on bank line of credit           (3,000)       --
 Principal payments on capital leases                   (85)     (172)
                                                    -------   -------
   Net cash used in financing activities                165      (172)
                                                    -------   -------
 Net increase (decrease) in cash and cash
  equivalents                                           932    (2,942)
 Effect of exchange rate on cash                        (10)       (3)
                                                    -------   -------
 Cash and cash equivalents at beginning of
  the period                                          1,911     5,219
                                                    -------   -------
 Cash and cash equivalents at end of the period     $ 2,833   $ 2,274
                                                    =======   =======

 Supplemental cash flow information:
   Cash paid for:
     Interest                                       $    42   $    47
                                                    =======   =======
     Income taxes                                   $    13   $    --
                                                    =======   =======

   Non-cash activities:
     Issuance of common stock for acquisitions      $    --   $ 1,772
                                                    =======   =======
     Issuance of common stock for contingent
      acquisition payments                          $   368   $   133
                                                    =======   =======
     Purchase of equipment through capital leases   $    --   $    70
                                                    =======   =======
     Equipment and other assets included in
      accounts payable                              $    34   $    88
                                                    =======   =======
     Accrued contingent consideration               $   470   $   350
                                                    =======   =======

About Bridgeline Software, Inc.

Bridgeline Software is a developer of web application management software and award-winning interactive business technology solutions that help organizations optimize business processes. The iAPPS Product Suite is an innovative SaaS solution that unifies Content Management, Analytics, eCommerce, and eMarketing capabilities -- enabling business users to swiftly enhance and optimize the value of their web properties.

Combined with award-winning interactive technology services by Microsoft Gold Certified development teams, Bridgeline Software helps customers to cost-effectively maximize the value of their rapidly changing web applications. Bridgeline Software's teams of developers specialize in web application development, usability engineering, SharePoint development, rich media development, and search engine optimization.

Bridgeline Software is headquartered near Boston with additional locations in Atlanta, Chicago, Cleveland, Denver, New York, Washington, D.C., and Bangalore, India. Bridgeline Software currently has over 600 customers ranging from middle market organizations to divisions within Fortune 1,000 companies that include: Healthcore, The Bank of New York Mellon, Marriott International, Berkshire Life, PODS, Honeywell, Budget Rental Car, Washington Redskins, Sun Chemical, AARP, National Financial Partners, The Packard Foundation, DTCC, Cadaret, Grant & Co., National Insurance Crime Bureau, the American Academy of Pediatrics, and the Georgia Lottery. To learn more about Bridgeline Software, please visit www.bridgelinesw.com.

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," "aims," "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 the risks described in our Annual Report on Form 10-KSB as well as our other filings with the Securities and Exchange Commission, that 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.

Bridgeline Software, Inc.
Ronald M. Levenson, Executive Vice President &
Chief Financial Officer
781-497-3015
rlevenson@bridgelinesw.com