Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $3.8 million, a decrease from $3.9 million in the prior year period [17] - Subscription license revenue was $3.1 million, up from $3.0 million in the prior year, accounting for 81% of total revenue [17][18] - Services revenue decreased to $700,000 from $900,000 in the prior year, representing 19% of total revenue [18] - Gross profit was $2.5 million with a gross profit margin of 66%, down from 72% in the prior year [18] - Net loss for the quarter was $800,000 compared to a net loss of $300,000 in the prior year [19] - Adjusted EBITDA was negative $330,000 compared to positive $3,000 in the prior year [19] Business Line Data and Key Metrics Changes - Core products now account for over 60% of total revenue, with double-digit growth from Hawk Search [6][15] - Hawk Search has a net revenue retention rate of 114%, indicating strong customer satisfaction and expansion [7][15] - Average initial contract for Hawk Search customers is $25,000 ARR, with additional features bringing total to $75,000 ARR [8] Market Data and Key Metrics Changes - Hawk Search was ranked as the number one B2B search software provider by Gartner [8] - The company added over 20 new customers and sold more than 30 licenses to existing customers [6] Company Strategy and Development Direction - The company is focusing on revenue growth, product innovation, and customer success [20] - Increased marketing budget from $250,000 to $500,000 per quarter to enhance lead generation [10][11] - The strategy includes leveraging partnerships and co-hosted events to generate leads more effectively [12] Management's Comments on Operating Environment and Future Outlook - Management expects Hawk Search to continue growing and positively impacting overall company growth by 2026 [15][55] - The company is in a favorable position within the B2B market and is capitalizing on advancements in AI technology [55] Other Important Information - As of June 30, 2025, the company had cash of over $2.1 million and total assets of $16.1 million [19][20] - Total liabilities were $6.2 million, with no significant debt obligations [20] Q&A Session Summary Question: How has your customer acquisition strategy evolved? - The company has shifted to investing two-thirds of its budget in known lead sources, focusing on campaigns that generate the best leads [25] Question: Where does your pipeline stand in regards to reaching new customers or expanding within existing customers? - Approximately 60% of sales have been to existing customers, indicating strong product value and customer retention [27] Question: Are you getting any customer feedback about the new technology enhancements? - Most product releases were driven by customer feedback, leading to innovations that meet customer needs [29] Question: Should we expect sales and marketing expenses to continue at the current level? - The company plans to maintain the increased marketing spend of $500,000 per quarter, as it is producing positive results [35] Question: What are competitors doing in response to Hawk Search's success? - Competitors are offering free professional services to compete, but this approach is not sustainable long-term [38][39] Question: Is there significant customer concentration within Hawk Search? - No single customer contributes 5% of revenues, indicating a diversified customer base [49]

Financial Data and Key Metrics Changes - Total revenue for Q2 FY2025 was $3.9 million, an increase from $3.8 million in the prior year period [22] - Subscription license revenue was $3.1 million, up from $3.0 million, accounting for 79% of total revenue [22] - Services revenue remained flat at $800,000, representing 21% of total revenue [23] - Gross profit increased to $2.6 million, with a gross profit margin of 68%, up from 66% in the prior year [23][24] - Net loss for the quarter was $700,000, compared to a net loss of $600,000 in the prior year [24] Business Line Data and Key Metrics Changes - Core revenue, primarily from ecommerce products like Hawk Search and WooRank, showed double-digit growth with a net revenue retention rate of 113% [12][16] - Noncore revenue has declined at a rate nearly equal to core revenue growth, resulting in relatively flat total revenue [13] - The company signed 20 license sales in Q2 FY2025, adding $1.7 million in new contracts and $700,000 in annual recurring revenue [6] Market Data and Key Metrics Changes - The company reported a 24% year-over-year increase in first-half license sales, reaching $1.6 million in annual recurring revenue [16] - Hawk Search is positioned as a leader in AI-powered ecommerce search, with significant growth potential in the B2B ecommerce market [11][18] Company Strategy and Development Direction - The company plans to increase investments in sales and marketing, funded by a $2.2 million capital raise, to enhance lead generation and expand its customer base [7][8] - The focus remains on organic growth through internal R&D, particularly in AI, while M&A opportunities are considered opportunistically [34][35] - The launch of new features like smart conversion and smart response aims to enhance customer engagement and drive revenue growth [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong demand for Hawk AI products and a favorable market environment [11][33] - The expectation is to see an increase in deal flow starting at the end of Q4 FY2025, leading to revenue impacts in Q1 FY2026 [30][32] - The company anticipates that core revenue will continue to grow, becoming a larger percentage of total revenue [36] Other Important Information - The company had cash of over $2.7 million and total assets of $17 million as of March 31, 2025 [25] - The weighted average interest rate on total debt was 3.8%, with no other debt or earn-outs from prior acquisitions [25] Q&A Session Summary Question: Are you at an inflection point to increase your sales efforts to bring in new customers? - Management indicated that both product competitiveness and market conditions justify increased sales investments, supported by a recent capital raise [29] Question: Do you have a handle on the return for every extra dollar spent on acquiring a new customer? - The company models customer acquisition costs and generally sees a three times value of the LTV to CAC ratio [31] Question: Is most of your product development internal or are there acquisition opportunities? - The company focuses on internal R&D for AI products, with potential acquisitions aimed at companies lacking AI capabilities [34] Question: When do you expect to see growth in top-line revenue? - Growth in top-line revenue is expected in Q1 FY2026, with core revenue becoming a larger percentage of total revenue [36] Question: What is the standard contract length currently? - The average initial contract length is approximately 30 months, with customers typically purchasing additional software over their lifespan [46]

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]