Core Insights - Bridgeline Digital, Inc. has launched HawkSearch on Sailrite's eCommerce sites to enhance product discovery for both B2C and B2B customers [1][2] - The integration of HawkSearch is part of Sailrite's growth strategy, utilizing AI-powered search capabilities to improve user experience [2][3] - The partnership highlights Bridgeline's expertise in supporting retailers on the BigCommerce Multi-Storefront platform [3] Company Overview - Bridgeline Digital specializes in AI-powered marketing technology aimed at increasing online revenue through improved traffic, conversion rates, and average order value [3] - The company provides quick and easy implementation of HawkSearch on the BigCommerce platform, facilitating efficient upgrades for retailers [3]

Core Insights - Bridgeline Digital, Inc. has partnered with Colonial Electric Supply to implement HawkSearch for enhancing product discovery on its eCommerce platform [1][5] - The inventory of Colonial Electric Supply is valued at over $40 million, indicating a significant market presence [2] - HawkSearch is designed to address common B2B queries, improving the efficiency of product searches for customers [3] Group 1 - The implementation of HawkSearch will elevate Colonial Electric Supply's eCommerce strategy through AI-powered search capabilities [2][5] - HawkSearch Recommendations will enable personalized shopping experiences, potentially increasing the average order size for Colonial Electric Supply [4][5] - Bridgeline's growing presence in the electrical distribution sector is highlighted by partnerships with other major distributors using HawkSearch [5][6] Group 2 - The CEO of Bridgeline emphasized the importance of HawkSearch's AI capabilities in meeting the complex needs of electrical distributor customers [6] - Bridgeline aims to help companies grow online revenue by increasing traffic, conversion rates, and average order value [6]

WOBURN, Mass., May 23, 2024 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a provider of marketing software, today announced Colonial Electric Supply, a large, independent, family-owned- and-operated electrical distributor, has chosen Bridgeline's HawkSearch to power product discovery for its eCommerce website using HawkSearch's Optimizely connector. HawkSearch will elevate Colonial Electric Supply's eCommerce strategy through AI-powered search for the distributor's inventory, valued at over $4 ...

Core Insights - Bridgeline Digital, Inc. and Moblico are collaborating to present a session on AI mobile search at the Applied AI Conference in Chicago, focusing on enhancing product access for contractors [1][2][3] - The partnership aims to leverage AI technology to improve efficiency and convenience in product sourcing for contractors, allowing them to access product availability seamlessly from mobile devices [3] Company Overview - Moblico specializes in mobile engagement solutions for wholesale distributors, with a significant impact across six countries over the past 13 years [4] - Bridgeline Digital focuses on helping companies grow online revenue by increasing traffic, conversion rates, and average order value [5] Industry Implications - The session will provide insights on how AI can be utilized to increase sales, streamline productivity, and drive revenue growth in the wholesale distribution industry [2][3]

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $3.8 million, a decrease from $4.1 million in the prior year period [22] - Subscription license revenue was $3 million, down from $3.3 million year-over-year, accounting for 79% of total revenue [22][23] - Services revenue decreased to $794,000 from $821,000, representing 21% of total revenue [23] - Gross profit was $2.5 million, down from $2.8 million, with a gross profit margin of 66% compared to 69% in the prior year [24] - Net loss for the quarter was $602,000, compared to a net loss of $511,000 in the prior year [26] Business Line Data and Key Metrics Changes - HawkSearch is approaching 60% of subscription revenue, with expectations for further growth [33][38] - The company sold nearly 50 licenses this fiscal year, generating over $4 million in total contract value [38] - HawkSearch's Smart Search technology is a primary focus, driving growth and innovation [5][21] Market Data and Key Metrics Changes - The partnership with BigCommerce has significantly improved lead generation and credibility within its ecosystem [1][41] - The pipeline has seen a 35% increase in traffic and a 66% increase in conversion to lead generation compared to last year [16] Company Strategy and Development Direction - The company is focusing on expanding HawkSearch with AI capabilities and partnerships with key platforms like BigCommerce and Optimizely [6][40] - Bridgeline's e-commerce 360 strategy allows for growth through acquisitions while maintaining a strong focus on HawkSearch [5] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about ongoing growth prospects and the strong sales trajectory of HawkSearch [14][35] - The company anticipates that subscription revenue will be dominated by HawkSearch in FY 2024, which begins in October [33] Other Important Information - The company has a cash position of $1.3 million and total assets of $16.3 million as of March 31, 2024 [27][28] - The total debt outstanding is approximately $600,000, with no other debt or earnouts remaining from previous acquisitions [27][28] Q&A Session Summary Question: When will revenue from HawkSearch begin to show real growth? - HawkSearch is approaching 60% of subscription revenue, with expectations for significant growth in FY 2024 [33] Question: Can you provide insight into cash burn and projected cash position? - The company can manage financials to generate cash and can reduce non-personal marketing spending by $150,000 to $250,000 per quarter if needed [8][10] Question: What is the company's view on maintaining a diverse product base while scaling HawkSearch? - The company aims for HawkSearch to be as out-of-the-box as possible, with services revenue primarily driven by Unbound [34]

"Fresh off our record sales in the first quarter, our Zeus product launch featuring Smart Search has been a remarkable success in Q2 and will continue to be a major sales focus in 2024 and beyond," said Ari Kahn, Bridgeline's President and Chief Executive Officer. "Smart Search is an AI-powered product discovery technology that increases sales conversion on eCommerce sites through text and image-based search. Bridgeline's partnerships further boost Smart Search sales with platforms such as Optimizely and Bi ...

Gartner Disclaimer: WOBURN, Mass., May 16, 2024 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ: BLIN), a global leader in AI-powered marketing technology, announces that its HawkSearch solution has been recognized for B2B Search in the first ever Gartner® Magic Quadrant™ for Search and Product Discovery. We believe this highlights HawkSearch's position as an innovator with its advanced AI-powered Smart Search capabilities. Gartner does not endorse any vendor, product, or service depicted in its resear ...

What's Next for Bridgeline Digital? While Bridgeline Digital has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? Bridgeline Digital, Inc. (BLIN) came out with a quarterly loss of $0.02 per share versus the Zacks Consensus Estimate of a loss of $0.06. This compares to loss of $0.05 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 66.67%. A quarter ago, it was ...

Report Overview [Filer Status and Forward-Looking Statements](index=1&type=section&id=Filer%20Status%20and%20Forward-Looking%20Statements) Bridgeline Digital, Inc. is a non-accelerated filer and smaller reporting company, with forward-looking statements based on current expectations subject to various risks and uncertainties, and no obligation to update unless legally required - Bridgeline Digital, Inc. is a non-accelerated filer and a smaller reporting company[2](index=2&type=chunk)[14](index=14&type=chunk) - Forward-looking statements are based on current expectations, estimates, and projections, but are subject to various risks and uncertainties including business operations, customer retention, revenue growth, profitability, market competition, technological changes, acquisition integration, and stock price fluctuations[17](index=17&type=chunk) - The company assumes no obligation to update any forward-looking statements unless required by applicable law[17](index=17&type=chunk) PART I—FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Bridgeline Digital, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with related notes, for the periods ended March 31, 2024, and September 30, 2023 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets decreased to **$16,282 thousand** from **$17,631 thousand** as of September 30, 2023, with total liabilities at **$5,777 thousand** and stockholders' equity at **$10,505 thousand** Condensed Consolidated Balance Sheets (As of March 31, 2024, and September 30, 2023) | Indicator (in thousands) | March 31, 2024 | September 30, 2023 | | :-------------------------------- | :------------- | :------------- | | **Assets** | | | | Cash and cash equivalents | 1,302 | 2,377 | | Accounts receivable, net | 1,462 | 1,004 | | Prepaid expenses and other current assets | 388 | 278 | | **Total current assets** | **3,152** | **3,659** | | Property and equipment, net | 84 | 151 | | Operating lease right-of-use assets | 246 | 390 | | Intangible assets, net | 4,278 | 4,890 | | Goodwill | 8,468 | 8,468 | | Other assets | 54 | 73 | | **Total assets** | **16,282** | **17,631** | | **Liabilities and Stockholders' Equity** | | | | Current liabilities: | | | | Current portion of long-term debt | 273 | 267 | | Current portion of operating lease liabilities | 165 | 148 | | Accounts payable | 1,204 | 1,255 | | Accrued liabilities | 796 | 995 | | Deferred revenue | 2,161 | 2,084 | | **Total current liabilities** | **4,599** | **4,749** | | Long-term debt, net | 339 | 435 | | Operating lease liabilities, net | 81 | 241 | | Warrant liability | 181 | 174 | | Other long-term liabilities | 577 | 572 | | **Total liabilities** | **5,777** | **6,171** | | **Total stockholders' equity** | **10,505** | **11,460** | | **Total liabilities and stockholders' equity** | **16,282** | **17,631** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2024, net revenue was **$3,804 thousand** with a net loss of **$602 thousand** and basic and diluted net loss per share of **$0.06**, while for the six months, net revenue was **$7,559 thousand** with a net loss of **$1,224 thousand** and basic and diluted net loss per share of **$0.12** Condensed Consolidated Statements of Operations (For the Three and Six Months Ended March 31, 2024) | Indicator (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Subscription and perpetual license revenue | 3,010 | 3,273 | 6,096 | 6,502 | | Digital engagement services revenue | 794 | 821 | 1,463 | 1,675 | | **Total net revenue** | **3,804** | **4,094** | **7,559** | **8,177** | | Sales and marketing expenses | 941 | 1,386 | 1,854 | 2,595 | | Research and development expenses | 1,037 | 926 | 2,130 | 1,673 | | **Operating loss** | **(519)** | **(662)** | **(1,154)** | **(1,024)** | | Change in fair value of warrant liability | (25) | 171 | (7) | 468 | | **Loss before income taxes** | **(597)** | **(501)** | **(1,214)** | **(575)** | | **Net loss** | **(602)** | **(511)** | **(1,224)** | **(591)** | | Basic net loss per share | (0.06) | (0.05) | (0.12) | (0.06) | | Diluted net loss per share | (0.06) | (0.05) | (0.12) | (0.06) | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) For the three months ended March 31, 2024, comprehensive loss was **$608 thousand**, compared to **$516 thousand** in the prior year, and for the six months, it was **$1,249 thousand** versus **$657 thousand** in the prior year Condensed Consolidated Statements of Comprehensive Loss (For the Three and Six Months Ended March 31, 2024) | Indicator (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Net loss | (602) | (511) | (1,224) | (591) | | Net change in foreign currency translation adjustment | (6) | (5) | (25) | (66) | | **Comprehensive loss** | **(608)** | **(516)** | **(1,249)** | **(657)** | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) As of March 31, 2024, total stockholders' equity decreased to **$10,505 thousand** from **$11,460 thousand** as of October 1, 2023, primarily due to net loss and foreign currency translation adjustments, partially offset by stock-based compensation expense Condensed Consolidated Statements of Stockholders' Equity (For the Six Months Ended March 31, 2024) | Indicator (in thousands) | Balance October 1, 2023 | Stock-based Compensation | Net Loss | Foreign Currency Translation Adjustment | Balance March 31, 2024 | | :-------------------------------- | :---------------- | :----------- | :----- | :----------- | :---------------- | | Preferred Stock | - | - | - | - | - | | Common Stock | 10 | - | - | - | 10 | | Additional Paid-in Capital | 101,275 | 294 | - | - | 101,569 | | Accumulated Deficit | (89,577) | - | (1,224)| - | (90,801) | | Accumulated Other Comprehensive Loss | (248) | - | - | (25) | (273) | | **Total Stockholders' Equity** | **11,460** | **294** | **(1,224)** | **(25)** | **10,505** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2024, the company experienced net cash outflows of **$982 thousand** from operating activities, **$5 thousand** from investing, and **$105 thousand** from financing, leading to a net decrease in cash and cash equivalents of **$1,075 thousand** Condensed Consolidated Statements of Cash Flows (For the Six Months Ended March 31, 2024) | Indicator (in thousands) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | | Net cash used in operating activities | (982) | 531 | | Net cash used in investing activities | (5) | (16) | | Net cash used in financing activities | (105) | (579) | | Effect of exchange rate changes on cash and cash equivalents | 17 | 27 | | **Net decrease in cash and cash equivalents** | **(1,075)** | **(37)** | | Cash and cash equivalents at beginning of period | 2,377 | 2,856 | | **Cash and cash equivalents at end of period** | **1,302** | **2,819** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's financial statements, covering business description, significant accounting policies, and various financial statement line items and related disclosures [1. Description of Business](index=10&type=section&id=1.%20Description%20of%20Business) Bridgeline Digital is a marketing technology company providing SaaS-based software products to help businesses increase online revenue, with some offerings also supporting traditional perpetual licenses, and operates globally - Bridgeline Digital is a marketing technology company that provides products to help businesses increase online revenue, convert visitors, and improve average order value[12](index=12&type=chunk)[154](index=154&type=chunk) - Key products include: Celebros Search (AI-powered e-commerce site search), Unbound (digital experience platform), HawkSearch (site search, recommendations, and personalization), Woorank (SEO audit tool), TruPresence (multi-unit organization content management and e-commerce platform), and OrchestraCMS (Salesforce-native content platform)[26](index=26&type=chunk)[27](index=27&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[88](index=88&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - All software is offered via a cloud SaaS model, with Unbound and HawkSearch also offering traditional perpetual license models[82](index=82&type=chunk)[155](index=155&type=chunk) - The company is headquartered in Woburn, Massachusetts, with wholly-owned subsidiaries and regional offices in India, Canada, and Belgium[29](index=29&type=chunk)[89](index=89&type=chunk)[160](index=160&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The company's financial statements are prepared under U.S. GAAP, with ASU 2016-13 and ASU 2021-08 adopted without material impact, and ASU 2023-07 and ASU 2023-09 are currently being evaluated for future disclosure enhancements - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include all adjustments deemed necessary by management[31](index=31&type=chunk) - The company adopted ASU 2016-13 (Financial Instruments—Credit Losses) on October 1, 2023, using a modified retrospective approach, which changed the policy for estimating allowance for doubtful accounts but had no material impact on the financial statements[32](index=32&type=chunk) - The company adopted ASU 2021-08 (Business Combinations—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers) in the first quarter of fiscal year 2024, with no material impact on the consolidated financial statements[33](index=33&type=chunk) - The company is evaluating the impact of ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Improvements to Income Tax Disclosures) on future consolidated financial statements, which are expected to result in enhanced disclosures[47](index=47&type=chunk)[48](index=48&type=chunk) [3. Accounts Receivable](index=14&type=section&id=3.%20Accounts%20Receivable) As of March 31, 2024, net accounts receivable increased to **$1,462 thousand** from **$1,004 thousand** as of September 30, 2023, with the allowance for credit losses rising due to increased credit loss expense Accounts Receivable Composition (in thousands) | Indicator | March 31, 2024 | September 30, 2023 | | :---------------- | :------------- | :------------- | | Accounts receivable | 1,694 | 1,184 | | Allowance for credit losses | (232) | (180) | | **Accounts receivable, net** | **1,462** | **1,004** | Allowance for Credit Losses Rollforward (in thousands) | Change | Amount | | :-------------------- | :--- | | Balance October 1, 2023 | 180 | | Credit loss expense (recovery) | 60 | | Write-offs/adjustments | (8) | | **Balance March 31, 2024** | **232** | - As of March 31, 2024, and September 30, 2023, no single customer's accounts receivable exceeded **10%** of total accounts receivable[50](index=50&type=chunk) [4. Fair Value Measurement and Fair Value of Financial Instruments](index=14&type=section&id=4.%20Fair%20Value%20Measurement%20and%20Fair%20Value%20of%20Financial%20Instruments) The company's financial instruments include accounts receivable, accounts payable, warrant liabilities, and long-term debt, with warrant liabilities measured at fair value using Level 3 inputs and changes recognized in earnings - The company's financial instruments primarily include accounts receivable, accounts payable, warrant liabilities, and long-term debt[52](index=52&type=chunk) - Warrant liabilities are measured at fair value at each reporting period, with changes in fair value recognized in current period earnings, using Level 3 inputs (Monte Carlo option pricing model) for valuation[58](index=58&type=chunk)[60](index=60&type=chunk)[230](index=230&type=chunk) Warrant Liability Fair Value (in thousands) | Type | March 31, 2024 | September 30, 2023 | | :---------------- | :------------- | :------------- | | Montage Capital | 12 | 12 | | Series A and C | 15 | 11 | | Series D | 154 | 151 | | **Total warrant liability** | **181** | **174** | - As of March 31, 2024, and September 30, 2023, the fair value and carrying value of long-term debt were **$0.6 million** and **$0.6 million** (fair value), and **$0.6 million** and **$0.7 million** (carrying value), respectively, classified as Level 2 in the fair value hierarchy[55](index=55&type=chunk) - The company recognized **$25 thousand** and **$7 thousand** in losses from changes in the fair value of warrant liabilities for the three and six months ended March 31, 2024, respectively, compared to gains of **$171 thousand** and **$468 thousand** in the prior year periods[60](index=60&type=chunk) [5. Intangible Assets](index=17&type=section&id=5.%20Intangible%20Assets) As of March 31, 2024, net intangible assets totaled **$4,278 thousand**, primarily comprising customer relationships, technology, domain names, and trademarks, with amortization expense of **$612 thousand** for the six months then ended Intangible Assets Composition (in thousands) | Type | March 31, 2024 | September 30, 2023 | | :---------------- | :------------- | :------------- | | Domain names and trademarks | 601 | 629 | | Customer related | 3,302 | 3,678 | | Technology | 375 | 583 | | **Total intangible assets, net** | **4,278** | **4,890** | - Amortization expense for intangible assets was **$266 thousand** and **$612 thousand** for the three and six months ended March 31, 2024, respectively[67](index=67&type=chunk) - Estimated amortization expense for the remainder of fiscal year 2024, and for 2025, 2026, 2027, 2028, and thereafter, is **$369 thousand**, **$734 thousand**, **$673 thousand**, **$559 thousand**, **$559 thousand**, and **$1,384 thousand**, respectively[67](index=67&type=chunk) [6. Accrued Liabilities](index=17&type=section&id=6.%20Accrued%20Liabilities) As of March 31, 2024, total accrued liabilities were **$796 thousand**, mainly consisting of compensation and benefits, professional services, insurance, and other accrued expenses Accrued Liabilities Composition (in thousands) | Type | March 31, 2024 | September 30, 2023 | | :---------------- | :------------- | :------------- | | Compensation and benefits | 365 | 517 | | Professional services | 163 | 260 | | Insurance | 91 | - | | Other | 177 | 218 | | **Ending balance** | **796** | **995** | [7. Long-term Debt](index=17&type=section&id=7.%20Long-term%20Debt) As of March 31, 2024, total long-term debt was **$612 thousand**, including a term loan due July 2028 and a seller note due September 2025, with net long-term debt (excluding current portion) of **$339 thousand** Long-term Debt Composition (in thousands) | Type | March 31, 2024 | September 30, 2023 | | :---------------- | :------------- | :------------- | | Term loan | 353 | 385 | | Seller note | 259 | 317 | | **Total debt** | **612** | **702** | | Less: Current portion | (273) | (267) | | **Long-term debt, net** | **339** | **435** | Future Long-term Debt Maturities (in thousands) | Fiscal Year | Amount | | :---------------- | :--- | | 2024 (remaining) | 169 | | 2025 | 208 | | 2026 | 79 | | 2027 | 79 | | 2028 | 77 | | **Total long-term debt** | **612** | [8. Stockholders' Equity](index=19&type=section&id=8.%20Stockholders'%20Equity) The company is authorized to issue preferred stock, with **350 shares** of Series C convertible preferred stock outstanding as of March 31, 2024, and approximately **25 thousand shares** available for future issuance under its 2016 equity incentive plan - The company is authorized to issue up to **1,000,000 shares** of preferred stock, with terms to be set by the Board of Directors[263](index=263&type=chunk) - As of March 31, 2024, and September 30, 2023, the company had **350 shares** of Series C convertible preferred stock outstanding, convertible into **38,889 shares** of common stock[97](index=97&type=chunk) - The company has designated Series D convertible preferred stock, but no shares were outstanding as of March 31, 2024, and September 30, 2023[98](index=98&type=chunk) - The company's 2016 Equity Incentive Plan authorizes the issuance of up to **2,400,000 shares** of common stock; as of March 31, 2024, **2,121,562 options** were outstanding, with approximately **25 thousand shares** available for future issuance[100](index=100&type=chunk) [9. Net Income (Loss) Per Share Attributable to Common Shareholders](index=25&type=section&id=9.%20Net%20Income%20(Loss)%20Per%20Share%20Attributable%20to%20Common%20Shareholders) For the three and six months ended March 31, 2024, basic and diluted net loss per share were **$0.06** and **$0.12**, respectively, with anti-dilutive potential common shares excluded from diluted loss per share calculations Net Income (Loss) Per Share Attributable to Common Shareholders Calculation (in thousands, except per share data) | Indicator | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Net loss attributable to common shareholders - Basic | (602) | (511) | (1,224) | (591) | | Net loss attributable to common shareholders - Diluted | (602) | (514) | (1,224) | (596) | | Weighted-average common shares outstanding for basic EPS | 10,417,609 | 10,417,609 | 10,417,609 | 10,417,609 | | Weighted-average common shares outstanding for diluted EPS | 10,430,602 | 10,430,710 | 10,430,602 | 10,430,766 | | **Basic net loss per share** | **(0.06)** | **(0.05)** | **(0.12)** | **(0.06)** | | **Diluted net loss per share** | **(0.06)** | **(0.05)** | **(0.12)** | **(0.06)** | Potential Common Share Equivalents Excluded from Diluted Net Income (Loss) Per Share Calculation Due to Anti-Dilution (shares) | Type | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Stock options | 2,121,562 | 1,184,538 | 2,121,562 | 1,184,538 | | Warrants | 1,689,150 | 1,743,891 | 1,689,150 | 1,743,891 | | Series C convertible preferred stock | 38,899 | 38,899 | 38,899 | 38,899 | [10. Revenues and Other Related Items](index=25&type=section&id=10.%20Revenues%20and%20Other%20Related%20Items) For the three months ended March 31, 2024, total revenue was **$3,804 thousand**, with **$3,199 thousand** from the U.S. and **$605 thousand** internationally, and deferred revenue was **$2,161 thousand** as of the same date Revenue by Geographic Region (in thousands) | Region | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :---------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | United States | 3,199 | 3,331 | 6,296 | 6,626 | | International | 605 | 763 | 1,263 | 1,551 | | **Total revenue** | **3,804** | **4,094** | **7,559** | **8,177** | - The largest portion of the company's international revenue is derived from Canada[126](index=126&type=chunk) Revenue by Type (in thousands) | Type | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :---------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Subscription | 2,652 | 2,869 | 5,358 | 5,701 | | Maintenance | 110 | 146 | 234 | 282 | | Hosting | 248 | 258 | 504 | 519 | | Digital engagement services | 794 | 821 | 1,463 | 1,675 | | **Total revenue** | **3,804** | **4,094** | **7,559** | **8,177** | - For the three and six months ended March 31, 2024, no single customer accounted for more than **10%** of the company's total revenue[128](index=128&type=chunk) Deferred Revenue Rollforward (in thousands) | Change | Current Deferred Revenue | Long-term Deferred Revenue | | :-------------------- | :----------- | :----------- | | Balance October 1, 2023 | 2,084 | 345 | | Decrease | (424) | - | | Balance December 31, 2023 | 1,660 | 345 | | Increase | 501 | - | | **Balance March 31, 2024** | **2,161** | **345** | [11. Income Taxes](index=27&type=section&id=11.%20Income%20Taxes) For the three and six months ended March 31, 2024, income tax expense was **$5 thousand** and **$10 thousand**, respectively, primarily for state income taxes, with net operating loss carryforwards expected to offset potential taxable income - For the three and six months ended March 31, 2024, the company's income tax expense was **$5 thousand** and **$10 thousand**, respectively[131](index=131&type=chunk) - Income tax expense primarily consists of estimated liabilities for state income taxes[131](index=131&type=chunk) - The company expects net operating loss carryforwards to offset potential taxable income for all periods presented[131](index=131&type=chunk) [12. Leases](index=28&type=section&id=12.%20Leases) The company leases its U.S. office facilities, incurring total lease costs of **$81 thousand** for the six months ended March 31, 2024, with a weighted-average remaining lease term of **1.5 years** and a weighted-average discount rate of **7.0%** Lease Cost Components (in thousands) | Indicator | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :---------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Operating lease cost | 52 | 50 | 119 | 100 | | Variable lease cost | 15 | 10 | 50 | 20 | | Less: Net sublease income | (33) | (19) | (88) | (37) | | **Total** | **34** | **41** | **81** | **83** | - For the six months ended March 31, 2024, cash paid for lease liabilities was **$174 thousand**, all classified as operating cash flows[134](index=134&type=chunk) - As of March 31, 2024, the weighted-average remaining lease term was **1.5 years**, and the weighted-average discount rate was **7.0%**[134](index=134&type=chunk) Future Minimum Lease Commitments (in thousands) | Fiscal Year | Operating Leases | Sublease Income | Net Leases | | :---------------- | :------- | :------- | :----- | | 2024 (remaining) | 74 | 36 | 38 | | 2025 | 184 | 66 | 118 | | **Total lease commitments** | **258** | **102** | **156** | - As of March 31, 2024, the company had no lease commitments extending beyond fiscal year 2025[136](index=136&type=chunk) [13. Commitments and Contingencies](index=29&type=section&id=13.%20Commitments%20and%20Contingencies) The company provides warranties for technology solutions and indemnifies against third-party patent infringement, with no significant warranty-related expenditures, indemnity losses, or material legal proceedings as of March 31, 2024 - The company provides warranties for its developed technology solutions, committing to remedy defects within the warranty period[139](index=139&type=chunk) - The company has purchased insurance to mitigate monetary risk associated with warranty claims[139](index=139&type=chunk) - As of March 31, 2024, and September 30, 2023, the company had not incurred significant warranty-related expenditures, and its exposure to warranty risk is not material[140](index=140&type=chunk) - The company typically agrees to indemnify customers against claims arising from its products infringing third-party patents, copyrights, or trademarks[141](index=141&type=chunk) - As of March 31, 2024, the company had not incurred any material losses related to its indemnification obligations and was not involved in any material legal proceedings[141](index=141&type=chunk)[142](index=142&type=chunk) [14. Related Party Transactions](index=29&type=section&id=14.%20Related%20Party%20Transactions) The company engages in various related party transactions with board member Michael Taglich and his affiliate Taglich Brothers, Inc., including warrants received by Taglich Brothers as placement agent and warrants and Series C preferred stock purchased by Michael Taglich - Michael Taglich is a member of the company's Board of Directors and the Chairman and President of Taglich Brothers, Inc., which has served as a placement agent for several of the company's private placements and debt offerings[143](index=143&type=chunk) - Taglich Brothers has received multiple placement agent warrants to purchase the company's common stock[144](index=144&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Michael Taglich personally received warrants for providing loans and guarantees to the company[145](index=145&type=chunk) - Michael Taglich purchased **350 units** of Series C preferred stock and associated warrants in March 2019[147](index=147&type=chunk) [15. Subsequent Events](index=30&type=section&id=15.%20Subsequent%20Events) The company evaluated subsequent events up to the report's filing date and found no material events requiring adjustment or disclosure - The company evaluated subsequent events up to the report's filing date and found no material events requiring adjustment or disclosure[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Bridgeline Digital's financial condition and operating results for the three and six months ended March 31, 2024, compared to the prior year, covering business overview, operating performance, non-GAAP adjusted EBITDA, liquidity, capital resources, and critical accounting policies [Overview](index=31&type=section&id=Overview) Bridgeline Digital is a marketing technology company providing SaaS software products to help businesses grow online revenue, serving over **2,000 active customers** with no single customer accounting for more than **10%** of revenue - The company provides SaaS software products, including HawkSearch, Celebros Search, Woorank, Unbound, TruPresence, and OrchestraCMS, designed to help businesses grow online revenue and share information[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - The company serves over **2,000 active customers**[161](index=161&type=chunk) - For the three and six months ended March 31, 2024, and March 31, 2023, no single customer accounted for more than **10%** of the company's total revenue[161](index=161&type=chunk) [Results of Operations for the Three and Six Months Ended March 31, 2024 compared to the Three and Six Months Ended March 31, 2023](index=33&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20March%2031%2C%202024%20compared%20to%20the%20Three%20and%20Six%20Months%20Ended%20March%2031%2C%202023) For the three months ended March 31, 2024, total net revenue decreased **7%** to **$3.8 million**, and net loss increased **18%** to **$0.6 million**; for the six months, total net revenue decreased **8%** to **$7.6 million**, and net loss increased **107%** to **$1.2 million**, driven by traditional product subscription declines and higher R&D personnel costs Operating Results Overview (in thousands) | Indicator | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Change (%) | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------- | :-------------------- | :-------------------- | :------- | | **Total net revenue** | **3,804** | **4,094** | **(7%)** | **7,559** | **8,177** | **(8%)** | | Subscription and perpetual license revenue | 3,010 | 3,273 | (8%) | 6,096 | 6,502 | (6%) | | Digital engagement services revenue | 794 | 821 | (3%) | 1,463 | 1,675 | (13%) | | **Gross profit** | **2,524** | **2,832** | **(11%)**| **5,076** | **5,636** | **(10%)**| | Sales and marketing expenses | 941 | 1,386 | (32%) | 1,854 | 2,595 | (29%) | | Research and development expenses | 1,037 | 926 | 12% | 2,130 | 1,673 | 27% | | **Operating loss** | **(519)** | **(662)** | **(22%)**| **(1,154)** | **(1,024)** | **13%** | | Change in fair value of warrant liability | (25) | 171 | (115%) | (7) | 468 | (101%) | | **Net loss** | **(602)** | **(511)** | **18%** | **(1,224)** | **(591)** | **107%** | | Basic net loss per share | (0.06) | (0.05) | 20% | (0.12) | (0.06) | 100% | | Diluted net loss per share | (0.06) | (0.05) | 20% | (0.12) | (0.06) | 100% | - The decrease in subscription and perpetual license revenue was primarily due to a reduction in traditional product subscriptions, partially offset by growth in HawkSearch revenue[171](index=171&type=chunk)[172](index=172&type=chunk) - The decrease in sales and marketing expenses was primarily attributable to reduced personnel costs and marketing expenditures[188](index=188&type=chunk) - The increase in research and development expenses was primarily attributable to additional personnel costs[193](index=193&type=chunk) - The increase in interest expense and other, net, was primarily due to stock-based compensation expense from options issued to a board member[203](index=203&type=chunk) [Adjusted EBITDA (Non-GAAP Measure)](index=39&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a non-GAAP financial measure, was negative **$83 thousand** for the three months ended March 31, 2024, an improvement from negative **$144 thousand** in the prior year, but worsened to negative **$200 thousand** for the six months compared to negative **$29 thousand** - Adjusted EBITDA is a non-GAAP financial measure used to assess the company's operating performance and should not be considered a substitute for GAAP profitability measures[199](index=199&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Indicator | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :-------------------- | | Net loss | (602) | (511) | (1,224) | (591) | | Income tax expense | 5 | 10 | 10 | 16 | | Interest expense and other, net | 53 | 10 | 53 | 19 | | Change in fair value of warrant liability | 25 | (171) | 7 | (468) | | Amortization of intangible assets | 266 | 344 | 612 | 686 | | Depreciation and other amortization | 41 | 45 | 86 | 87 | | Restructuring and acquisition-related expenses | - | 45 | 15 | 45 | | Stock-based compensation expense | 129 | 84 | 241 | 177 | | **Adjusted EBITDA** | **(83)** | **(144)** | **(200)** | **(29)** | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) For the six months ended March 31, 2024, the company experienced cash outflows of **$1.0 million** from operations, **$5 thousand** from investing, and **$0.1 million** from financing, historically relying on cash and financing to support operations, and plans to control discretionary spending while potentially raising funds through debt or equity - For the six months ended March 31, 2024, cash used in operating activities was **$1.0 million**, primarily due to lower net income and changes in non-cash items[208](index=208&type=chunk) - For the six months ended March 31, 2024, cash used in investing activities was **$5 thousand**, primarily for the purchase of property and equipment[209](index=209&type=chunk) - For the six months ended March 31, 2024, cash used in financing activities was **$0.1 million**, primarily for the repayment of long-term debt related to acquisitions[210](index=210&type=chunk) - The company has historically incurred operating losses and used cash on hand and financing activities to fund operations and new product development[90](index=90&type=chunk)[213](index=213&type=chunk) - The company will continue to tightly control discretionary spending in fiscal year 2024 and believes future revenue and cash flows will supplement its working capital[90](index=90&type=chunk)[213](index=213&type=chunk) - The company may, from time to time, offer and sell up to **$50 million** of debt or equity securities under its effective shelf registration statement on Form S-3[30](index=30&type=chunk)[214](index=214&type=chunk) - As of the filing date of this report, the company has no active securities offerings or purchase obligations[30](index=30&type=chunk)[214](index=214&type=chunk) - The company currently has no off-balance sheet arrangements, financing, or other relationships with unconsolidated entities or other persons, other than operating leases[215](index=215&type=chunk) - Total operating lease obligations are **$0.3 million**, with **$0.2 million** expected to be paid within the next twelve months; total debt payments are **$0.6 million**, with **$0.2 million** expected to be paid within the next twelve months[216](index=216&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) Key accounting policies, including revenue recognition, allowance for credit losses, and accounting for goodwill, intangible assets, business combinations, common stock warrants, and stock-based compensation, involve significant management estimates and assumptions where actual results may differ materially - Critical accounting policies include: revenue recognition, allowance for credit losses, goodwill and intangible assets accounting, business combinations accounting, common stock warrants accounting, and stock-based compensation accounting[222](index=222&type=chunk) - Revenue recognition follows a five-step model, recognizing revenue when control of services is transferred to customers, and estimating variable consideration[223](index=223&type=chunk)[224](index=224&type=chunk) - The allowance for credit losses is determined based on historical collection and write-off experience, along with management's assessment of customer collectability, including current conditions and future forecasts[226](index=226&type=chunk) - Goodwill is tested for impairment annually and more frequently when events and circumstances indicate that an asset may be impaired[227](index=227&type=chunk) - In business combinations, the acquisition consideration is allocated to assets acquired and liabilities assumed, including identifiable intangible assets, with any purchase price exceeding the fair value of net tangible and identifiable intangible assets allocated to goodwill[229](index=229&type=chunk) - Common stock warrants are evaluated for classification as equity instruments or liabilities, with liability-classified warrants measured at fair value and changes in fair value recognized in earnings[230](index=230&type=chunk) - Stock-based compensation expense is accounted for under ASC 718, recognized on a straight-line basis over the vesting period of the award based on its fair value, and uses estimated future forfeiture rates[232](index=232&type=chunk)[233](index=233&type=chunk) - The fair value of stock options is estimated using the Black-Scholes-Merton option valuation model, which considers assumptions such as stock price, volatility, expected life, risk-free interest rate, and dividend yield[235](index=235&type=chunk) [Item 3. Qualitative and Quantitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This report does not require qualitative and quantitative disclosures about market risk - This report does not require qualitative and quantitative disclosures about market risk[237](index=237&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2024, the company's CEO and CFO assessed and concluded that disclosure controls and procedures were effective, with no significant internal control changes during the quarter, though management acknowledges inherent limitations in any control system - As of March 31, 2024, the company's Chief Executive Officer and Chief Financial Officer assessed and concluded that disclosure controls and procedures were effective[239](index=239&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[240](index=240&type=chunk) - Management acknowledges that any control system, no matter how well designed and operated, is based on certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met[241](index=241&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company routinely faces ordinary course litigation and claims but is not involved in any material legal proceedings beyond those disclosed in its 2023 fiscal year 10-K annual report - The company is, from time to time, subject to ordinary routine litigation and claims incidental to its business[244](index=244&type=chunk) - As of the current date, the company is not involved in any material legal proceedings beyond those disclosed in its 2023 fiscal year 10-K annual report[244](index=244&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors since the company's 2023 fiscal year 10-K annual report disclosure - There have been no material changes to the risk factors since the company's 2023 fiscal year 10-K annual report disclosure[245](index=245&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) For the six months ended March 31, 2024, the company did not engage in any unregistered sales of equity securities - For the six months ended March 31, 2024, the company did not engage in any unregistered sales of equity securities[247](index=247&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company has not experienced any defaults upon senior securities - The company has not experienced any defaults upon senior securities[249](index=249&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure is not applicable - This disclosure is not applicable[251](index=251&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This report contains no other information - This report contains no other information[253](index=253&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including articles of incorporation, certification documents, and XBRL data files - Exhibits include the company's articles of incorporation, amended and restated bylaws, certificate of designation of preferred stock, Section 302 and 906 certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL data files[256](index=256&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) This report was signed by Bridgeline Digital, Inc.'s President and CEO Roger Kahn and CFO Thomas R. Windhausen on May 14, 2024 - This report was signed by Bridgeline Digital, Inc.'s President and Chief Executive Officer Roger Kahn and Chief Financial Officer Thomas R. Windhausen on May 14, 2024[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)

WOBURN, Mass., May 14, 2024 (GLOBE NEWSWIRE) -- Bridgeline Digital, Inc. (NASDAQ:BLIN), a global leader in AI-powered marketing technology, today announced financial results for its fiscal second quarter ended March 31, 2024. "Fresh off our record sales in the first quarter, our Zeus product launch featuring Smart Search has been a remarkable success in Q2 and will continue to be a major sales focus in 2024 and beyond," said Ari Kahn, Bridgeline's President and Chief Executive Officer. "Smart Search is an A ...