Bridgeline Digital, Inc. Q4 FY2024 earnings call

• Hawk Search was the growth engine in fiscal 2024, with AI-powered products. Launched 5 new products to solidify its position as a leader in AI-powered product discovery. Net revenue retention for Hawk Search is 103%.
• Fiscal year 2024 sales contracts nearly doubled in annual contract value to $2.1 million in ARR. Sold 17 licenses for $360,000 in annual contract value this quarter, with new customers like NSI Industries, Rainey's Truck Parts, etc.
• Hawk Search is part of the e360 strategy, a suite of products driving visitors, conversions, and average order value. Has a CAC payback period of less than 20 months and net revenue retention over 103%.
• Launched products like Hawk Search Rapid UI framework, conversational search, multi-site management, smart facets, smart response, and unified search. Partnered with Optimizely, BigCommerce, XEngage, Moblico, Product Genius Technology, and Human Element.

For the quarter ended September 30th, 2024, total revenue was $3.9 million. Subscription license revenue was $3.0 million, comprising 78% of total revenue. Services revenue was $800,000, making up 22% of total revenue. Cost of revenue was $1.2 million, resulting in gross profit of $2.7 million and a gross margin of 69%. Subscription license gross margins were 72%, and services gross margins were 58%.

• Expect continued growth due to investments in AI, partnerships, and a strong pipeline. Nearly doubled the sales pipeline in fiscal 2024, with 186 sales qualified leads worth over $3.6 million in annual contract value. Anticipate acceleration in growth as AI leadership and partnerships drive more business.

• Changes in economic, business, competitive, technological, regulatory, and other factors could cause actual results to differ from projections. Stock price history and company size may pose challenges. Remaining warrants with specific strike prices and expiry dates could impact the company.

Q: How is Hawk Search positioned for growth over the next couple of years, considering partnerships?

A: Hawk Search is well over half of revenue, partner-driven, especially in B2B. Expect continued acceleration due to AI investments and partner recognition. Limited by sales and marketing budget for lead generation.

Q: Are customers seeing increased satisfaction from Hawk Search, and what measurable benefits are there?

A: Customers are seeing improved conversion rates and average order value. Focus is on driving customers' revenue, with Gartner recognition helping demonstrate value.

Q: What about WooRank's role and future?

A: WooRank is tightly integrated with Hawk Search, part of the license, and helps in generating landing pages. Part of the a la carte suite model to reduce sales cycle.

Q: Can you repeat the cash on hand and talk about backlog?

A: Cash on hand at September 30th, 2024, was $1.4 million, a $200,000 increase from June. Backlog includes 186 sales qualified leads with over $3.6 million in annual contract value, expecting growth in pipeline.

Q: What's the win rate on sales qualified leads and breakdown of sales from partners?

A: Close rate on sales qualified leads is 20%. About 25% of deals result from partners, 75% come through the company's website and other marketing efforts.

Q: About remaining warrants, what are the strike prices and expiry dates?

A: 800,000 remaining warrants: 180,000 with $2.85 exercise price expiring in May 2026; 592,000 with $2.51 exercise price expiring in November 2026.