• Total Revenue: $3.8 million for the quarter ended December 31, 2024, unchanged from the prior year period.
• Subscription License Revenue: $3 million, down 1% from $3.1 million in the prior year period, accounting for 80% of total revenue.
• Services Revenue: $700,000, up 11% from the prior year period, accounting for 20% of total revenue.
• Cost of Revenue: $1.3 million, up from $1.2 million in the prior year period.
• Gross Profit: $2.5 million, down 1% from $2.6 million in the prior year period.
• Gross Profit Margin: 67%, compared to 68% in the prior year period.
• Services Gross Margin: 51%, up from 44% in the prior year period.
• Subscription License Gross Margin: 71%, compared to 73% in the prior year period.
• Operating Expenses: $3.0 million, down 4% from $3.2 million in the prior year period.
• Net Loss: $0.6 million, unchanged from the prior year period.
• Adjusted EBITDA: Negative $193,000, compared to negative $117,000 in the prior year period.
• Cash: $1.5 million as of December 31, 2024.
• Accounts Receivable: $1.2 million as of December 31, 2024.
• Total Debt: Approximately $409,000 USD as of December 31, 2024.
• Total Assets: $15.5 million as of December 31, 2024.
• Total Liabilities: $6 million as of December 31, 2024.
• Outstanding Shares: 10.4 million as of December 31, 2024.

• Warning! GuruFocus has detected 4 Warning Signs with BLIN.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bridgeline Digital Inc (NASDAQ:BLIN) signed 28 license sales in Q1 FY'25, adding $2.7 million in new contracts and $800,000 in annual contract value.
• The company has a sales cycle of only 105 days with an 18% win rate on qualified leads, indicating strong market performance.
• Bridgeline Digital Inc (NASDAQ:BLIN) released 8 AI-based products last year, establishing a leading position in AI e-commerce search.
• The company has a net revenue retention rate of 107% and a customer acquisition cost payback period better than 20 months.
• Bridgeline Digital Inc (NASDAQ:BLIN) is expanding its marketing budget and reallocating resources from R&D to sales and marketing to capitalize on market demand.

Negative Points

• Total revenue for Q1 FY'25 was flat at $3.8 million compared to the prior year period.
• Subscription license revenue decreased by 1% from the prior year period, indicating potential challenges in maintaining growth.
• Gross profit margin decreased slightly from 68% to 67% compared to the prior year period.
• The company reported a net loss of $0.6 million for the quarter, consistent with the prior year period.
• Adjusted EBITDA was negative $193,000, worsening from negative $117,000 in the prior year comparable period.

Q & A Highlights

Q: Can you clarify the revenue breakdown between core products and services? A: Ari Kahn, CEO, explained that core product revenue, which includes both services and subscription, was $2.1 million, with over 80% being subscription. The remaining revenue is from non-core products. The company is seeing double-digit growth in core revenue, while non-core revenue has been declining.

Q: How is the sales pipeline performing, and what is the win rate for qualified leads? A: Ari Kahn, CEO, highlighted that the company is experiencing a higher rate of leads than ever before, with an 18% win rate on qualified leads. This indicates strong product-market fit and suggests the need to invest more in sales and marketing to capitalize on current opportunities.

Q: Is there potential for customers to self-service and enable Hawk Search independently? A: Ari Kahn, CEO, noted that while connectors like Salesforce AppExchange and BigCommerce Catalyst allow for self-service, typically a digital agency or systems integrator is involved. The sales cycle averages 105 days, with a dedicated sales team managing the process.

Q: Will operating expenses increase with the shift from R&D to sales and marketing? A: Ari Kahn, CEO, stated that overall operating expenses will remain stable, with a reallocation of resources from R&D to sales and marketing. The focus is on leveraging last year's R&D successes to drive sales growth.

Q: What are the plans for expanding partnerships and entering new verticals? A: Ari Kahn, CEO, explained that partnerships with platforms like BigCommerce and Salesforce are crucial, as they facilitate seamless integration and access to new customers. The company is also focusing on digital agencies and systems integrators to recommend Hawk Search. Expansion into new verticals will be gradual, building on success in existing markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.