Bridgeline Digital(BLIN) - 2025 Q3 - Quarterly Results

Financial and Operational Highlights Q3 FY2025 Financial Highlights Q3 FY2025 total revenue slightly decreased to $3.8 million, while subscription and licenses revenue grew 4% to $3.1 million, with core products showing 114% NRR and over 10% CAGR Q3 FY2025 Revenue Performance (vs. Q3 FY2024) | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3.8M | $3.9M | -2.6% | | Subscription & Licenses Revenue | $3.1M | $3.0M | +4.0% | | Services Revenue | $0.7M | $0.9M | -22.2% | - Revenue from Core products, including both subscription and services, grew by over 10% CAGR[7] - Core product Net Revenue Retention (NRR) was 114% for the quarter, indicating strong customer expansion and retention[7] First 9 Months FY2025 Financial Highlights For the first nine months of FY2025, total revenue remained stable at $11.5 million, with subscription and licenses revenue increasing to $9.2 million First 9 Months FY2025 Revenue Performance (vs. First 9 Months FY2024) | Metric | 9M FY2025 | 9M FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $11.5M | $11.5M | 0% | | Subscription & Licenses Revenue | $9.2M | $9.1M | +1.1% | | Services Revenue | $2.3M | $2.4M | -4.2% | Business Highlights Bridgeline accelerates customer acquisition through sales and marketing investments, securing new contracts, expanding customer relationships, enhancing AI products, and strengthening partner engagement Sales Highlights - The company is focusing resources from a recent capital raise on sales and marketing to accelerate new customer acquisitions[7] - In Q3, Bridgeline sold 16 new subscription contracts with a total contract value of $1.7 million, adding over $600,000 in Annual Recurring Revenue (ARR)[7] - New contracts were signed with notable clients such as Venue Marketplace, Adentra, and Crest Fasteners[7] Product Highlights - HawkSearch was ranked 1 in the 2025 Gartner® Critical Capabilities Report for the B2B Search Use Case, now accounting for over 60% of Bridgeline's revenue[2][7] - Introduced HawkSearch MCP (Model Context Protocol), enabling AI Agents to manage search through natural language prompts[7] - Launched AI Workbench and Advanced Analytics, allowing merchandisers to customize AI prompts without developer support and gain deeper visibility into search performance[7] Partner Highlights - Hosted the inaugural HawkSearch Virtual Summit, 'Insight25', which attracted 400 registrants and featured guest speakers from BigCommerce, HP, and others[6][8] - Co-hosted an exclusive partner event at B2B Online in Chicago with key ecosystem partners like Pimberly, BigCommerce, and Xngage[10] Customer Highlights - A Fortune 100 tech company signed a strategic retainer agreement to optimize global ecommerce search[9] - One of the nation's largest electrical distributors selected HawkSearch to power AI search across more than seventy storefronts[13] - A top five U.S. electrical distributor expanded its HawkSearch license to power hundreds of ecommerce portals[13] Detailed Financial Results Financial Results – Third Quarter of Fiscal Year 2025 Q3 FY2025 total revenue slightly decreased to $3.8 million, gross margin contracted to 66%, and increased operating expenses resulted in a wider operating loss of $0.7 million and a net loss of $0.8 million Q3 FY2025 Income Statement Summary (vs. Q3 FY2024) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Total Revenue | $3.8M | $3.9M | | Gross Profit | $2.5M | $2.7M | | Gross Margin | 66% | 69% | | Operating Expenses | $3.2M | $3.1M | | Operating Loss | ($0.7M) | ($0.4M) | | Net Loss | ($0.8M) | ($0.3M) | - Subscription and licenses revenue constituted 81% of total revenue for the quarter, up from 77% in the prior year period, indicating a continuing shift towards a subscription-based model[13] Financial Results – First 9 Months of Fiscal Year 2025 For the first nine months of FY2025, total revenue was flat at $11.5 million, gross margin declined to 67%, and increased operating expenses led to a wider operating loss of $1.9 million and a net loss of $2.2 million First 9 Months FY2025 Income Statement Summary (vs. First 9 Months FY2024) | Metric | 9M FY2025 | 9M FY2024 | | :--- | :--- | :--- | | Total Revenue | $11.5M | $11.5M | | Gross Profit | $7.7M | $7.8M | | Gross Margin | 67% | 68% | | Operating Expenses | $9.6M | $9.3M | | Operating Loss | ($1.9M) | ($1.5M) | | Net Loss | ($2.2M) | ($1.5M) | - Subscription and licenses revenue represented 80% of total revenue for the nine-month period, compared to 79% in the same period last year[13] Financial Statements and Reconciliations Consolidated Balance Sheets As of June 30, 2025, total assets were $16.1 million, total liabilities $6.2 million, cash improved to $2.1 million, and total stockholders' equity was $9.9 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,103 | $1,390 | | Total current assets | $4,085 | $2,947 | | Total assets | $16,148 | $15,602 | | Total current liabilities | $5,285 | $4,728 | | Total liabilities | $6,199 | $5,596 | | Total stockholders' equity | $9,949 | $10,006 | Consolidated Statements of Operations Consolidated statements show a net loss of $789,000 for Q3 2025 and $2,153,000 for the first nine months, resulting in basic and diluted EPS losses of $0.07 and $0.23 respectively Net Loss and EPS | Period | Net Loss | Basic & Diluted EPS | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | ($789k) | ($0.07) | | Three Months Ended June 30, 2024 | ($305k) | ($0.03) | | Nine Months Ended June 30, 2025 | ($2,153k) | ($0.23) | | Nine Months Ended June 30, 2024 | ($1,529k) | ($0.15) | Reconciliation of GAAP to Non-GAAP Results Non-GAAP Adjusted EBITDA was a loss of $330,000 for Q3 2025 and $762,000 for the nine-month period, with reconciliation adjusting for stock-based compensation, amortization, and restructuring charges Adjusted EBITDA Reconciliation Summary (in thousands) | Period | GAAP Net Loss | Adjusted EBITDA | | :--- | :--- | :--- | | Three Months Ended June 30, 2025 | ($789) | ($330) | | Three Months Ended June 30, 2024 | ($305) | $3 | | Nine Months Ended June 30, 2025 | ($2,153) | ($762) | | Nine Months Ended June 30, 2024 | ($1,529) | ($197) | Other Information Conference Call Bridgeline Digital will host a conference call on August 14, 2025, at 4:30 p.m. ET to discuss Q3 FY2025 results, led by the CEO and CFO - A conference call to discuss Q3 2025 results is scheduled for August 14, 2025, at 4:30 p.m. ET[14] Non-GAAP Financial Measures and Other Terms This section defines Non-GAAP Adjusted EBITDA as a supplemental performance metric and clarifies key terms like 'Core Product revenue' and 'Net Revenue Retention (NRR)' for investor context - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, and other specified non-cash or non-recurring items[17] - Core Product revenue includes all subscription license and services revenue from HawkSearch, specific WooRank licenses, and AccessiBe[20] - Net Revenue Retention (NRR) is defined as the current period's trailing twelve months Monthly Recurring Revenue (MRR), including cross-sales and net renewals, divided by the previous period's trailing twelve months MRR[20] Safe Harbor for Forward-Looking Statements The report contains forward-looking statements based on current expectations, subject to risks and uncertainties as detailed under the Private Securities Litigation Reform Act of 1995 - The report contains forward-looking statements that are based on current expectations and are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially[21]