GEO Investing

We are coding Bridgeline Digital (NASDAQ:BLIN) as a GeoBargain on the Radar. BLIN develops iAPPS Web engagement management product platform and related digital solutions in the United States.  Its iAPPS platform enables companies and developers to create Websites, Web applications, and online stores.  Reasons for tracking:

  • SaaS angle with low EV/S of 1.1.
  • Turnaround play; about to achieve profitability for the first time in four years.
  • Large market opportunity (billion dollar market).
  • Big name customers such as UPS, Disney, Qualcomm and more.
  • Favorable operating leverage model. (see last quote from management below)
  • Recently surpassed over 1,000 iAPPS enterprise licenses.
  • Bullish commentary by management in recent releases and year end conference call:

“Fiscal 2014 will be an inflection year as our legacy revenue becomes an insignificant part of our total revenue and our core business continues to grow rapidly”

“As our developers continue to evolve our product, we look forward to another record-breaking year for iAPPS adoption in 2014.”

“At the $7 million quarter revenue level, we will begin to see positive leverage to our margins. With annual revenues of $28 million, our model generates approximately $1 million of EBITDA. With annual revenues of $36 million, our model generates over $3 million a year of EBITDA, and we achieve GAAP breakeven. And with annual revenues of over $40 million, our model will generate over $5 million a year of EBITDA, and we will generate meaningful GAAP income.”

BLIN reminds us of Ex-GeoSpecial Group (NASDAQ:WWWW), a leading provider of Internet services and online marketing solutions for small businesses, the stock performed well after we alerted members that we were initiating a position.  WWWW is currently trading at an EV/Sales of 4.76 and an EV/EBITDA of 24.7.  While WWWW deserves a richer multiple because it is a solidly profitable company; applying a modest EV/S and EV/EBITDA multiple to BLIN could call for nice growth in its share price.   Again, we are coding BLIN as a GeoBargain on the Radar (GBR).  We are looking to secure an interview with BLIN management.