Revenue Performance - Total revenue for Q2 FY2025 was $3.9 million, an increase from $3.8 million in the prior year period[6] - Subscription and licenses revenue for Q2 FY2025 was $3.1 million, up from $3.0 million in the prior year period, representing 79% of total revenue[11] - Total revenue for the first six months of FY2025 was $7.7 million, slightly up from $7.6 million in the same period last year[15] - Subscription and licenses revenue for the first six months of FY2025 was $6.1 million, consistent with the prior year period[15] - Total net revenue for the three months ended March 31, 2025, was $3,875 million, a slight increase from $3,804 million in the same period of 2024, reflecting a growth of 1.87%[31] Profitability Metrics - Gross profit for Q2 FY2025 was $2.6 million, with a gross profit margin of 68%, compared to 66% in the prior year period[11] - Gross profit for the six months ended March 31, 2025, was $5,151 million, compared to $5,076 million for the same period in 2024, indicating a growth of 1.48%[31] - The net loss applicable to common shareholders for the three months ended March 31, 2025, was $1,061 million, compared to a net loss of $602 million in the same period of 2024, representing an increase in loss of 76.17%[31] - Adjusted EBITDA for the three months ended March 31, 2025, was $(239) million, compared to $(83) million for the same period in 2024, indicating a worsening of 187.65%[33] Operating Expenses - Operating loss for Q2 FY2025 was $0.7 million, compared to a loss of $0.5 million in the prior year period[12] - Operating expenses for Q2 FY2025 were $3.4 million, compared to $3.0 million in the prior year period[11] - Research and development expenses for the three months ended March 31, 2025, were $1,110 million, compared to $1,037 million in the same period of 2024, an increase of 7.03%[31] Asset and Equity Changes - Total assets increased to $17,019 million as of March 31, 2025, up from $15,602 million on September 30, 2024, representing an increase of 9.05%[27] - Total current liabilities rose to $5,475 million as of March 31, 2025, compared to $4,728 million on September 30, 2024, marking an increase of 15.77%[28] - Total stockholders' equity increased to $10,590 million as of March 31, 2025, from $10,006 million on September 30, 2024, representing a growth of 5.83%[29] Business Development - Bridgeline sold 20 new subscription contracts in Q2 FY2025, adding over $700,000 in Annual Recurring Revenue[6] - Bridgeline plans to deepen its presence in B2B industries through targeted AI campaigns and events in 2025[6] Shareholder Information - The number of weighted average shares outstanding for basic shares was 10,507,720 as of March 31, 2025, compared to 10,417,609 for the same period in 2024, an increase of 0.86%[31]

Company Performance - Bridgeline Digital, Inc. reported a quarterly loss of $0.10 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.04, and compared to a loss of $0.02 per share a year ago, indicating an earnings surprise of -150% [1] - The company posted revenues of $3.88 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.90%, and this is a slight increase from year-ago revenues of $3.8 million [2] - Over the last four quarters, Bridgeline Digital has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Bridgeline Digital shares have increased approximately 20.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 0.2% [3] - The current consensus EPS estimate for the coming quarter is -$0.04 on revenues of $3.96 million, and for the current fiscal year, it is -$0.17 on revenues of $15.7 million [7] Industry Outlook - The Internet - Services industry, to which Bridgeline Digital belongs, is currently ranked in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% of industries [8]

Bridgeline Digital (BLIN) Q2 2025 Earnings Call May 15, 2025 04:30 PM ET Company Participants Thomas Windhausen - CFO & TreasurerAri Kahn - President & CEOCasey Ryan - Director - Institutional Research Operator Please note this conference is being recorded. I will now turn the conference over to your host, Tom CFO. The floor is yours. Thomas Windhausen Excellent. Thank you. Good afternoon, everyone. Thanks for joining us today. My name is Tom Windhauser, and I'm the chief financial officer of Bridgeline Dig ...

Financial Data and Key Metrics Changes - Total revenue for Q2 FY 2025 was $3.9 million, an increase from $3.8 million in the prior year period [20] - Subscription license revenue was $3.1 million, up from $3.0 million, accounting for 79% of total revenue [20] - Services revenue remained flat at $800,000, representing 21% of total revenue [21] - Gross profit increased to $2.6 million, with a gross profit margin of 68%, up from 66% in the prior year [21] - Net loss for the quarter was $700,000, compared to a net loss of $600,000 in the prior year [22] Business Line Data and Key Metrics Changes - Core revenue, primarily from ecommerce products like Hawk Search, showed double-digit growth with a net revenue retention rate of 113% [11][12] - Noncore revenue has declined at a rate nearly equal to core revenue growth, resulting in relatively flat total revenue [12] - The company signed 20 license sales in Q2 FY 2025, adding $1.7 million in new contracts and $700,000 in annual recurring revenue [6] Market Data and Key Metrics Changes - The company is experiencing strong demand for its Hawk AI products, with a sales cycle of 120 days and a 19% win rate on qualified leads [6] - Year-to-date, the company booked $4.2 million in contracts, with $1.6 million in annual recurring revenue [7] Company Strategy and Development Direction - The company plans to increase investments in sales and marketing, funded by a $2.2 million capital raise, to expand lead generation efforts [8][10] - The focus is on enhancing core products and leveraging AI capabilities to drive growth in the ecommerce sector [10][17] - The company aims to maintain its leadership position in AI-powered ecommerce search and expects to see growth in 2026 [10][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong market conditions and product competitiveness as reasons to increase sales efforts [27] - The expectation is for increased deal flow starting at the end of Q4 FY 2025, leading to revenue impacts in Q1 FY 2026 [28][30] - Management highlighted the importance of organic growth, with M&A being opportunistic rather than a primary focus [32] Other Important Information - The company has a cash balance of over $2.7 million and total assets of $17 million as of March 31, 2025 [23] - The average initial contract length is approximately 30 months, with customers typically purchasing additional software over their lifespan [45] Q&A Session Summary Question: Are you at an inflection point to increase your sales efforts to bring in new customers? - Management confirmed that both product competitiveness and market conditions justify increased sales investments, supported by a recent capital raise [27] Question: Does Bridgeline have a handle on the return for every extra dollar spent on acquiring a new customer? - Management indicated a strong LTV to CAC ratio of around 3:1, expecting significant increases in new customer acquisitions in Q1 FY 2026 [29][30] Question: Is most of the product development internal or are there acquisition opportunities? - Management stated that AI-based product development is primarily internal, with a focus on organic sales rather than acquisitions at this time [32] Question: When do you expect to see growth in top line revenue? - Management expects to see growth in core revenue starting in Q1 FY 2026, with a continued focus on core products [35] Question: Will sales and marketing expenses rise as a percentage of sales? - Management confirmed that sales and marketing expenses are expected to increase by $250,000 to $500,000 per quarter in the coming months [39] Question: How many languages can your products support? - Management stated that their default language model supports 50 languages, allowing for customization based on customer needs [49] Question: What is the standard contract length currently? - The average initial contract length is approximately 30 months, with customers typically purchasing additional software over time [45]

Financial Performance - Total net revenue for the three months ended March 31, 2025, was $3.9 million, consistent with the same period in 2024, while the net loss increased to $(0.7) million from $(0.6) million[112]. - For the six months ended March 31, 2025, total net revenue was $7.7 million, a slight increase from $7.6 million in 2024, with a net loss of $(1.4) million compared to $(1.2) million in 2024[113]. - Subscription and perpetual licenses revenue for the three months ended March 31, 2025, was $3.1 million, up from $3.0 million in 2024, representing 79% of total revenue[116][117]. - Digital engagement services revenue for the three months ended March 31, 2025, remained at $0.8 million, accounting for 21% of total revenue[118][119]. - Gross profit for the three months ended March 31, 2025, was $2.6 million, representing a gross margin of 68%, compared to 66% in 2024[114]. - Adjusted EBITDA for the three months ended March 31, 2025, was $(0.2) million, a deterioration from $(0.1) million in 2024, reflecting a 188% increase in losses[114]. - The loss from operations was $(0.7) million for the three months ended March 31, 2025, compared to $(0.5) million for the same period in 2024[145]. Revenue and Cost Breakdown - Total cost of revenue for the three months ended March 31, 2025, was $1.3 million, unchanged from the same period in 2024[121]. - The cost of subscription and perpetual licenses was 28% of the revenue for the three months ended March 31, 2025, consistent with the same period in 2024[122]. - Subscription and perpetual licenses cost increased to $1.8 million for the six months ended March 31, 2025, from $1.7 million for the same period in 2024, representing a 5.88% increase[123]. - The cost of subscription and perpetual licenses as a percentage of revenue was 29% for the six months ended March 31, 2025, compared to 28% for the same period in 2024[123]. - Digital engagement services cost remained consistent at $0.4 million for the three months ended March 31, 2025, and 2024, with a decrease in cost as a percentage of revenue from 53% to 48%[126]. Operating Expenses - Operating expenses for the three months ended March 31, 2025, increased by 10% to $3.4 million from $3.0 million in 2024[114]. - Sales and marketing expenses rose to $1.1 million for the three months ended March 31, 2025, from $0.9 million in 2024, with the expense as a percentage of total revenue increasing from 25% to 28%[132]. - Research and development expenses increased to $1.1 million for the three months ended March 31, 2025, from $1.0 million in 2024, with the percentage of total revenue rising from 27% to 29%[136]. Customer and Market Information - The company currently has over 2,000 active customers, with no single customer exceeding 10% of total revenue[111]. Cash Flow and Financing Activities - Cash used in operating activities decreased to $(0.2) million for the six months ended March 31, 2025, from $(1.0) million in 2024[156]. - Cash provided by financing activities was $1.6 million for the six months ended March 31, 2025, primarily from common stock issuance[158]. - The Company issued 1,000,000 shares of common stock at an offering price of $1.50 per share, generating approximately $1.5 million in gross proceeds before expenses, with net proceeds of $1.3 million after deducting offering expenses[161]. - A separate private placement transaction sold 473,979 unregistered shares at $1.52 per share, resulting in gross proceeds of approximately $720,000 and net proceeds of $700,000 after expenses[162]. - The company plans to offer up to $50 million of debt or equity securities under its effective registration statement[160]. Accounting and Valuation Policies - Revenue is derived from Software Licenses and Digital Engagement Services, with revenue recognized when control of services is transferred to customers[167][168]. - The Company uses a five-step model for revenue recognition, which includes identifying customer contracts and performance obligations[171]. - Goodwill is tested for impairment annually, with potential impairment factors including operational and economic uncertainties[172][173]. - The Company allocates acquisition costs to assets and liabilities based on fair values, with excess purchase price allocated to goodwill[174]. - Stock-based compensation is recognized based on fair values, with expenses expected to vest over a service period, generally three years[178]. - The fair value of stock options is estimated using the Black-Scholes-Merton model, with subjective inputs affecting the valuation[179][180]. Lease and Debt Obligations - Total gross obligations for operating leases amount to $0.2 million, with obligations extending through January 2028, and debt payments total $0.4 million, of which $0.2 million is expected to be paid in the next twelve months[164]. - The Company has no off-balance sheet arrangements or relationships with unconsolidated entities[163].

Revenue Performance - Total revenue for the first quarter of fiscal 2025 was $3.8 million, unchanged from the same period in 2024[15] - Subscription and licenses revenue was $3.0 million, down 1% year-over-year, accounting for 80% of total revenue[15] - Services revenue increased by 11% to $0.7 million, representing 20% of total revenue[15] - Total net revenue for the three months ended December 31, 2024, was $3,791 million, a 1.0% increase from $3,755 million in the same period of 2023[26] - Gross profit for the same period was $2,535 million, slightly down from $2,552 million year-over-year[26] Operating Expenses and Profitability - Operating expenses decreased to $3.0 million from $3.2 million year-over-year[15] - Total operating expenses decreased to $3,046 million from $3,187 million, representing a 4.4% reduction[26] - The company reported a net loss of $0.6 million, consistent with the same period in 2023[15] - The net loss for the quarter was $634 million, compared to a net loss of $622 million in the prior year[26] - Adjusted EBITDA for the three months ended December 31, 2024, was $(193) million, worsening from $(117) million in the same period of 2023[32] Financial Position - Cash and cash equivalents increased to $1,483 million from $1,390 million quarter-over-quarter[28] - Total current assets rose to $3,127 million, up from $2,947 million in the previous quarter[28] - Total liabilities increased to $5,995 million from $5,596 million, reflecting a 7.1% rise[29] - The accumulated deficit grew to $(92,172) million from $(91,538) million, indicating a continued loss trend[30] - The number of weighted average shares outstanding remained constant at 10,417,609 for both basic and diluted shares[26] Business Development and Strategy - Net Revenue Retention (NRR) for core products was 107% for the quarter[7] - Bridgeline signed 28 new subscription contracts totaling $2.7 million, adding over $800,000 in Annual Recurring Revenue[7] - Bridgeline plans to deepen its presence in B2B industries through targeted partnerships and events in 2025[7] - HawkSearch will expand its product line with Agentic-AI innovations aimed at increasing online revenue for customers[7] Gross Margin - Gross margin for the quarter was 67%, slightly down from 68% in the prior year[15]

Financial Data and Key Metrics Changes - Total revenue for Q1 FY2025 was $3.8 million, unchanged from the prior year period [24] - Subscription license revenue was $3 million, down 1% from $3.1 million in the prior year [24] - Services revenue was $700,000, up 11% from the prior year [25] - Gross profit was $2.5 million, down 1% from around $2.6 million in the prior year [25] - Net loss was $0.6 million, consistent with the prior year [26] - Adjusted EBITDA was negative $193,000 compared to negative $117,000 in the prior year [26] Business Line Data and Key Metrics Changes - Core revenue from Hawk Search products was $2.1 million with double-digit growth and a net revenue retention of 107% [11][24] - Non-core products, including professional services, represent the balance of revenue [11] Market Data and Key Metrics Changes - The sales cycle is now 105 days with an 18% win rate on qualified leads, indicating a strong market position [9][50] - The company signed 28 license sales, adding $2.7 million in new contracts and $800,000 in annual contract value [8][13] Company Strategy and Development Direction - The company plans to reallocate resources from R&D to sales and marketing to capitalize on market demand [10][23] - Partnerships with platforms like BigCommerce and Salesforce are crucial for expanding market reach [20][63] - The focus will be on enhancing existing verticals while gradually migrating to new sectors [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales pipeline and the efficiency of customer acquisition costs [54][56] - The company is optimistic about growth prospects in 2025, driven by strong product demand and market conditions [29][75] Other Important Information - The company had cash of $1.5 million and total assets of $15.5 million as of December 31, 2024 [27][28] - Total liabilities were $6 million, with no remaining earnouts from previous acquisitions [28][29] Q&A Session Summary Question: Insights on core product revenue and services ratio - Management clarified that core product revenue is primarily subscription-based, with services making up about 19% of that revenue [36][39] Question: Lead generation and sales pipeline - Management noted that leads are coming in at a higher rate, with an efficient customer acquisition cost [42][44] Question: Shift in operating expenses towards sales and marketing - Management confirmed that operating expenses will remain stable while increasing investment in marketing [60] Question: Partnership opportunities and vertical expansion - Management discussed the importance of partnerships with ISVs and digital agencies for sales growth [62][64]

Company Performance - Bridgeline Digital, Inc. reported a quarterly loss of $0.06 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.05, marking an earnings surprise of -20% [1] - The company posted revenues of $3.79 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.82% and showing a slight increase from $3.76 million a year ago [2] - Over the last four quarters, Bridgeline Digital has exceeded consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - Bridgeline Digital shares have increased approximately 30.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 2.9% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $3.9 million, while for the current fiscal year, it is -$0.15 on revenues of $15.64 million [7] Industry Outlook - The Internet - Services industry, to which Bridgeline Digital belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Financial Performance - Total net revenue for the three months ended December 31, 2024, was $3.8 million, a 1% increase from $3.8 million in the same period of 2023[113]. - Subscription and perpetual licenses revenue was $3.1 million, accounting for 80% of total revenue, down from 82% in the prior year[116]. - Digital engagement services revenue increased to $0.7 million, representing 20% of total revenue, up from 18% in the previous year[117]. - Gross profit for the three months ended December 31, 2024, was $2.5 million, with a gross profit margin of 67%, slightly down from 68% in 2023[124][125]. - Total operating expenses decreased to $3.0 million, down 4% from $3.2 million in the same period last year[132]. - Loss from operations improved to $(0.5) million for the three months ended December 31, 2024, compared to $(0.6) million in 2023[131]. - Adjusted EBITDA for the three months ended December 31, 2024, was $(0.2) million, a decline of 65% from $(0.1) million in the same period of 2023[134]. - Adjusted EBITDA for the three months ended December 31, 2024, was $(193) thousand, compared to $(117) thousand for the same period in 2023, indicating a decline in operating performance[139]. - The company incurred a net loss of $(634) thousand for the three months ended December 31, 2024, compared to a net loss of $(622) thousand for the same period in 2023[139]. Cash Flow and Investments - Cash provided by operating activities was $0.2 million for the three months ended December 31, 2024, a significant improvement from cash used in operating activities of $(0.9) million for the same period in 2023[140]. - Cash used in investing activities was $(5) thousand for the three months ended December 31, 2024, while there was no cash used in investing activities for the same period in 2023[141]. Customer and Revenue Recognition - The company currently has over 2,000 active customers, with no single customer exceeding 10% of total revenue[111]. - The company recognizes revenue from software licenses and digital engagement services, with revenue recognized when control of services is transferred to customers[149][150]. Cost Management and Future Planning - The cost of subscription and perpetual licenses was 29% of revenue for the three months ended December 31, 2024, compared to 27% in 2023[120]. - The company plans to maintain tight control over discretionary spending for the 2025 fiscal year to support future revenue growth[142]. - The company is evaluating future financing options, including the potential filing of a new shelf registration statement to replace the existing one set to expire on March 4, 2025[144]. - The company has historically incurred operating losses and has relied on cash on hand and financing activities to fund operations and develop new products[142]. Liabilities and Obligations - The company recognized a loss of $114 thousand related to the change in fair value of warrant liabilities for the three months ended December 31, 2024[133]. - The gross obligations for operating leases total $0.1 million, all expected to be paid in the next twelve months[146]. - Debt payments on various obligations total $0.4 million, with $0.2 million expected to be paid in the next twelve months[146].

Revenue Performance - Total revenue for the fourth quarter was $3.9 million, a slight increase from $3.8 million in the prior year period[22]. - Subscription and licenses revenue for the fourth quarter was $3.0 million, down from $3.1 million in the prior year period, representing 78% of total revenue[46]. - Services revenue for the twelve months ended September 30, 2024, was $3.2 million, up from $3.1 million in the prior year, accounting for 21% of total revenue[26]. - Total revenue for the twelve months ended September 30, 2024, was $15.4 million, compared to $15.9 million in the prior year[51]. - Total net revenue for the three months ended September 30, 2024, was $3,863 million, a slight increase from $3,798 million in the same period last year, representing a growth of 1.7%[72]. - Subscription and perpetual licenses revenue decreased to $3,025 million from $3,072 million year-over-year, reflecting a decline of 1.5%[72]. - Digital engagement services revenue increased to $838 million, up 15.5% from $726 million in the prior year[72]. Profitability and Loss - Gross margin for the fourth quarter improved to 69%, compared to 68% in the prior year period[12]. - Operating loss for the fourth quarter was $0.5 million, significantly reduced from $8.2 million in the same period last year[24]. - Net loss for the fourth quarter was $0.4 million, compared to a net loss of $8.1 million for the same period in 2023[50]. - GAAP net loss for the three months ended September 30, 2024, was $432 thousand, compared to a net loss of $8,063 thousand for the same period in 2023[64]. - Adjusted EBITDA for the twelve months ended September 30, 2024, was a loss of $192 thousand, improving from a loss of $309 thousand for the same period in 2023[64]. - The net loss for the three months ended September 30, 2024, was $432 million, an improvement from a net loss of $8,063 million in the same period last year[72]. - Non-GAAP adjusted net loss for the three months ended September 30, 2024, was $38 million, compared to a non-GAAP adjusted net loss of $213 million in the prior year[73]. - The company reported a basic net loss per share of $0.04 for the three months ended September 30, 2024, compared to a loss of $0.77 per share in the same period last year[72]. Assets and Liabilities - Total current assets decreased from $3,659 million in September 2023 to $2,947 million in September 2024, a decline of approximately 19.4%[61]. - Total liabilities decreased from $6,171 million in September 2023 to $5,596 million in September 2024, a reduction of approximately 9.3%[61]. - Total stockholders' equity decreased from $11,460 million in September 2023 to $10,006 million in September 2024, a decline of approximately 12.7%[61]. - Current portion of long-term debt increased slightly from $267 million in September 2023 to $282 million in September 2024[61]. Strategic Initiatives - For fiscal year 2024, Bridgeline signed 83 license sales, adding $2.1 million in annual recurring revenue, totaling $6.2 million in new customer contracts[7]. - HawkSearch launched new features including Smart Response and Conversational Search, enhancing user interaction and search accuracy[8][36]. - Bridgeline's management reported the largest sales pipeline in the company's history as they enter 2025[3]. - The company plans to focus on increasing recurring revenue and attracting new customers as part of its future growth strategy[69]. Operating Expenses - Total operating expenses for the three months ended September 30, 2024, were $3,134 million, significantly lower than $10,818 million in the same period last year, primarily due to the absence of goodwill impairment charges[72]. - Research and development expenses for the three months ended September 30, 2024, were $1,022 million, slightly down from $1,070 million year-over-year[72]. Margins - Gross margin remained stable at 68% for the twelve months ended September 30, 2024, compared to the same period in 2023[66]. - Subscription and licenses gross margin decreased from 74% in 2023 to 72% in 2024, while services gross margin improved from 48% to 52%[66].