Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- HawkSearch's tailored AI approach has doubled the average sale size and secured new customers weekly.
- Bridgeline Digital Inc (BLIN, Financial) has launched multiple AI-driven features such as concept search, image search, visual search, and Smart Response.
- The company sold 23 licenses this quarter, contributing $420,000 in ARR and $1.4 million in TCV.
- HawkSearch has been recognized by leading analysts like Gartner and Info-Tech Research Group, driving demand and increasing average sales price.
- Strategic partnerships with Optimizely and BigCommerce are accelerating sales and providing significant market exposure.
Negative Points
- Total revenue for the quarter remained flat at $3.9 million compared to the prior year period.
- Subscription license revenue decreased slightly from $3.2 million to $3 million year-over-year.
- Despite improvements, the company still reported a net loss of $300,000 for the quarter.
- Gross profit margins for subscription licenses slightly decreased from 73% to 72% year-over-year.
- The company has a relatively small cash reserve of $1.2 million, which may limit its ability to make significant investments.
Q & A Highlights
Q: What are our opportunities to expand within our existing customer base?
A: HawkSearch is the primary expansion opportunity. We have over 600 HawkSearch customers, and every website owner needs to upgrade their site search to include AI capabilities. We've already upgraded several customers and see opportunities for hundreds more. Our pricing increases by about 35% when customers upgrade, and nearly 60% of our subscription revenue is search revenue.
Q: How are our relationships with companies such as BigCommerce, Salesforce, and Optimizely helping expand our customer base?
A: We are making HawkSearch available out-of-the-box on these platforms, allowing quick and painless launches. This approach differs from competitors who view AI as an omnipotent capability. Our partnerships have resulted in a pipeline nearly triple the size of last year, with a conversion rate 1.5x higher and an average sales price nearly double.
Q: What types of doors have opened up after HawkSearch was named a top-performing enterprise search software provider?
A: We are receiving leads directly from analysts and related to these awards. For example, one of the largest hardware suppliers came directly from this report, and we are currently in a sales cycle with them. These recognitions reduce customer acquisition costs and accelerate our sales cycle.
Q: When will HawkSearch's momentum outpace that of other products for Bridgeline and dominate the business?
A: HawkSearch is growing faster than other products and now represents 60% of our subscription revenue. We expect its growth to outpace any decline in other revenue within a couple of quarters. Our advances in AI position us for significant growth in the site search market.
Q: What are the incremental margins when a customer expands their use of HawkSearch?
A: Our cost of goods sold remains constant with increased revenue, leading to gross margins approaching 80%. With AI, margins will be in the mid-70% range. We expect to stabilize in the high-70s for subscription revenue. Additionally, some customers are paying a premium for isolated environments, further boosting margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
