Digital engagement company Bridgeline Digital, Inc. (BLIN) is known for its award-winning Bridgeline Unbound experience management platform, which was formerly known as iAPPS. The stock of the Burlington, Mass. company has rallied 246.3% over the past month to close Friday’s trading session at its 52-week high of $8.97. This 56% rally in the last trading session can be attributed primarily to investors’ optimism surrounding the company’s increase in cash balance from its warrants. BLIN announced on July 2 that it had received more than $2.5 million in cash on its exercise of warrants, which brought its cash balance to roughly $6 million.

The company’s acquisition of WooRank and HawkSearch in 2021 also contributed to its growth, with WooRank driving traffic to websites by helping improve search engine optimization, and HawkSearch growing online revenues for ecommerce websites by increasing conversion and optimizing the search experience for visitors. 

However, BLIN incurred losses in its last-reported quarter (ended March 31, 2021). Moreover, it priced a registered direct offering for gross proceeds of $5.1 million, which is expected to lead to share dilution. So, BLIN’s near-term prospects seem uncertain.

Click here to check out our Software Industry Report for 2021

Here’s what we think could influence BLIN’s performance in the upcoming months:

Increasing Demand for Celebros Worldwide

BLIN announced on May 18 that a popular Indonesian supermarket chain has chosen Celebros to reinvent their online shopping experience. Also, a popular Irish bookseller chose Celebros in April 2021 to help tackle intelligent search on its  website. The company’s search solution was also chosen by the largest toy store chain in Indonesia to elevate their new ecommerce site on Magento 2.

A top manufacturer and retailer of decorative lighting in India selected Celebros Search as its  site search solution for its  online store in December last year. And a  European home and hardware company chose Celebros Search in December 2020 as its  site search and merchandising solution for their online store.

Mixed Financials

For its  fiscal year 2021 second quarter, ended March 31, BLIN’s subscription and perpetual licenses revenue increased 8.2% year-over-year to $1.99 million, but its revenue from digital engagement services decreased 1.6% year-over-year to $885,000. Its gross profit for the quarter increased 16.3% year-over-year to $1.81 million. However, BLIN’s net loss came in at $556,000 in the quarter compared to $822,000 in net income  in the prior-year quarter. Its loss per share came in at $0.11 compared to EPS of $0.17 in the year-ago period.

Unfavorable Analysts Estimates

Analysts expect BLIN’s revenue to increase 23.5% for the quarter ended June 30, 2021, and 18% in its fiscal year 2021. However, the company’s EPS is expected to decline 116.7% for the quarter, ending September 30, 2021, and remain negative in  2021 and 2022. Also, Wall Street analysts expect the stock to hit $5.25 in the near term, which indicates a potential 41.5% decline.

POWR Ratings Don’t Indicate Enough Upside

BLIN has an overall C rating, which equates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. Among  these categories, BLIN has a C grade for Stability, which is justified given its beta of 2.92.

The stock has a C grade for Quality, which is consistent with its negative values for trailing-12-month ROCE and ROTA compared to 6.86% and 3.22%  respective industry averages. BLIN has a D grade for Sentiment, in sync with unfavorable analyst sentiment.

BLIN is ranked #28 of 60 stocks in the Software – Business industry. Click here to see the additional POWR Ratings for BLIN (Momentum, Growth, and Value).

Better than BLIN: Click here to access 14 top-rated stocks in the same industry.

Bottom Line

While BLIN’s top line is expected to increase, it is incurring losses and is expected to continue doing so for some time. So, we think it’s wise to wait for a better entry point in the stock. 

Click here to check out our Software Industry Report for 2021

BLIN shares were trading at $12.45 per share on Tuesday morning, up $3.48 (+38.80%). Year-to-date, BLIN has gained 382.56%, versus a 16.65% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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