Bridgeline Digital (BLIN) 11 Aug 232023 Q3 Earnings call transcript

Thank you for standing by and welcome to Bridgeline Digital's Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the call over to CFO and Treasurer, Thomas Windhausen. ahead. go Please

to good today. and Chief Thank for welcome you officer conference third Thank call. name afternoon, is us you to pleased My Bridgeline. the fiscal Thomas joining XXXX of quarter you, I'm everyone. our Windhausen. Financial I'm

with and afternoon you highlights. business quarter, the for will CEO, then Kahn, update and our taking is I Bridgeline's financial questions. the our call On begin discussion the of Ari conclude by President on results will we call us this with a will

results. Securities uncertainties XXXX risks Before we forward-looking to from the that remind subject to make during meaning that are could are that comments actual Act of to XXXX Securities listeners XXA within future Bridgeline statements of Act call, of differ and that and begin, I'd Section regarding to beliefs These we such are and cause like and this of conference statements the results Section facts, or the not materially historic of of events projections considered the to we internal may XXE and harbor statements expectations time, base XXXX. The today Reform safe pursuant of Securities our Litigation Private as change no if are inform which not obligation disclaim Act we The made upon and they indication do. over we you should assume performance. today future report expressly provisions be of the an

statements could Bridgeline's materially those by from in or the implied economic, technological, differ made to Changes actual expressed results other today. competitive, and forward-looking cause business, regulatory or factors, projections

our documents please have factors Digital time and time filed review the by Exchange an about the information impact risks other detailed Commission. and and these that Securities more with to Bridgeline from reports may business, on For

call non-GAAP in GAAP the reconciliation release. the to our will We these financial when non-GAAP measures financial on discuss that measures Company's financials a of commenting we this our on afternoon, some note performance. please Also, provide earnings

obtain can a earnings copy release our our by of visiting You website.

over I to and would Ari? CEO. call now President Bridgeline's Kahn, the Ari like to turn

everybody. terms of annual you, three typically successive by Thank sales, years Tom. licenses one-year HawkSearch and totaling which $XXX,XXX core subscription now two third customers our including the and including signed revenue. and licenses subscription years new made to our the terms, Most will subscriptions. $X.X for with over for renew revenue. In in and for XX% recurring Good products, XX% add quarter, grew new account $XXX,XXX recommendations, CAGR five Bridgeline's afternoon, initial million in we

renewal. have core XX% revenue products Our over

which are fund we competed We but not on also reducing, and a sales had not legacy have margins who Salesforce have cycle focus with competitor. we and sales great our prefer year to expensive they eliminating like gross strategy EXXX products than make platform our to innovation, partner a license. company's products, rather companies the a large teams but customers pivoted in too their this from of declined These with as

the expect XX% revenue and our in as subscriptions, decline growth in already soon Although core especially this future core causatively overall line our legacy decline outstrip to license products products, where the of XX% the product core. we will of of dominate near the our nearly revenue, hit our CAGR is

button. click over sales upcoming native launch expected with core revenue by for important growth products, events. of will will Bridgeline October. touchless HawkSearch in customers where integration Optimizely but Commerce growing our thousand allows to is be to some to increase they This dominated integration Optimizely Configured with with can a only Not that a soon the upgrade rate

in these the this need prospective will of customers. than more X,XXX large premier the Commerce eight customers only We pre-signed search of Optimizely businesses Configured for and already our make Many have us customers products. product are

We Conference. announcement make joint at will User Optimizely Optimizely with October their a

reduced has total simple is that addressable another now cycle revenue include core companies sales market need UI our to our weeks its than without our release self-service Bronco who for Bronco products driver portal. important Bridgeline's from implementation sacrificing sales a weeks increases out-of-the-box less features. XX and XX its with already and to accelerates

about important Hewlett Another analytics of is customers the November released will to Packard their online HawkSearch that detailed growth our revenue. core who our and upsell area be needs advanced to like is an which in opportunity more announced system, information contribution

also franchise product search to search offer this solution Bridgeline being making provider with with deep we for our first search already accelerate in release its the experience franchise first in will its provider and has expect our this Bridgeline by customer the only market. growth market. specifically site site franchise a segment, year, to it pre-signed the this solution

with largely Optimizely. are sales through HawkSearch and Salesforce BigCommerce, driven platform our partnerships

also We sales. have Xngage Americaneagle.com, agency Hawk to including and drive partners, new

who oBundle, customers BigCommerce now to specialist with to BigCommerce with a quarter over This partnership upgrade announced in we are HawkSearch. candidates a XXX

in included product for Equipment of of HawkSearch industry. their its that allows and indexing third customers one index Aaron being created or Sales changed. Equipment, selected world's the e-commerce dealers it's BXB leading our packaging Aaron data real-time as in to quarter because search the site

signed with chose on a also partnership for who HawkSearch BXB Seattle recommendations Salesforce commerce sites. its and worldwide Aviation, We personalized supplier aviation

business with sites, and HawkSearch partnership Designerie, in multiple paintball, oBundle. drive a furniture multi-store and its BigCommerce with selected also Valken European designer-focused purchased over distributor be Sports, sites front. BXB to multi-store sports online delivered importer an powered to e-commerce. power and e-commerce retailer e-commerce HawkSearch’s five will of HawkSearch using front Valken

WooRank Repli Paul analyze big Web to that keyword business their to on its this AB company power improve Magico. online property technology a to Commerce competitors platform SEO tracking, in our partnership for included the AI-driven power for selected on report chose to quarter websites Byron Core XXX who's search Shoes A with and sale Vitals.

focused natural processing intelligence capabilities search as Adidas Converse, an online customers power with well. products, and Reebok, to including XX,XXX several other over electrical quarter wins distributors, BXB were its artificial for this Now Bridgeline we've online language got and catalog there selected several multilingual shoe

the result these new include that of plumbing service everywhere verticals verticals electrical and these of under customers with Many distribution. market B supply, go-to BXB targets strategy BXB footwear, campaigns, our and are franchise,

increases Europe. associated with but accessiBe Bridgeline the identify similar announced also including accessible, market legislation reduces active online sales customers, of in a XXX helps & and reseller only compliance and web recently whom legislation. Johnson Act interest sell into our issues compliance companies, not with fix American many We will in accessibility, their and Johnson ability, leader partnership which PlayStation, to website risk XXX,XXX the accessibility. and with litigation accessiBe NBC have Disability over and Canada

subscription who Bridgeline the revenue reduction of a product, year for earlier, website, ninth large and quarter, revenue In reduced mentioned in revenue. legacy third subscription services. $X.X Subscription their their million license which including million revenue, influenced we in in and full their was restructured customer this quarter is $XXX,XXX delivered Bridgeline consecutive by quarter $X.X a the renewing on

totaling over our eligible quarter was This million renewed XXX of customers X subscription for licenses. in whose renewal

earlier start a renewed over XX%. XX-month renewed rate as and two product mentioned a renewed Most their with subscription customers terms. with customers for successive core at increase. subscription customers Many Our

revenue for total license three quarter signing XX% new was with revenue the years. contract of Our subscription

over Chief At turn this Financial time, Tom? I'd Tom to Windhausen. call our like Officer, the to

fiscal which our in on update of an provide XXXX for I'll XXXX, revenue third quarter was June Total period. ended XX, financial results Ari. the to prior the June year for $X.X the million million ended quarter compared Thanks, XX, XXXX. $X.X

revenue. of component each into going Now

for revenue, is license and license XX, revenue licenses, subscription Our XXXX, revenue which hosting of June comprised maintenance quarter million. was $X.X the and ended and perpetual SaaS

As XXXX. for quarter a was XX% revenue June XX, revenue, total licenses percentage and our of total ended of revenue the subscription

over quarter from for the a slight ended was prior $XXX,XXX year revenue the Services XXXX, $XXX,XXX in quarter. June decrease

for revenue percentage of of for quarter. a accounted revenue services total the As XX% revenue, total

million for June Our cost revenue consistent $X.X the period. XXXX, year quarter with the was of million ended in prior the $X.X

the As prior for to result, compared profit $X.X as period. was million XXXX ended a June for quarter million gross the year $X.X

ended XX% margin to XXXX prior period. for – the overall quarter the Our profit gross in margin year our compared overall was June gross XX%

Our period, the the compared XX% the XX% to subscription gross were compared margins were gross to quarter ended XXXX. and year quarter same services in for period in XX% our margins XX% the license prior and for June XXXX

expenses million liability Changes our $X.X $XXX,XXX income Operating these with in noncash change $XXX,XXX were the in in share consistent compared prior a $X.X XXXX, of charge million in the driver the value quarter of period. year change the year ended June resulted is prior The fair of in value period. price for warrants. primary of in classified fair our the of warrants to

in XXXX, EBITDA. year the fiscal the moving quarter loss net net Our And $XXX,XXX income $XXX,XXX ended compared XX, to was of period. to June for prior

compared was for Our to in prior a positive period. $XXX,XXX adjusted quarter $XX,XXX EBITDA the the negative a year

balance XX, June Moving XXXX, sheet. million had $X.X on At the we receivable cash accounts of and million. of to $X.X

about through extending the Our XXXX. of was outstanding total €XXX,XXX due but weighted and average payments interest X.X% US$XXX,XXX principal debt rate or

total no earn-outs previous were have remaining acquisitions, We for $X.X liabilities $XX.X total from any assets our and million of million.

beyond, revenue growth, forward shareholder we we success on continue continued fiscal to delivering look value. our XXXX – success and to product customer to will in and growth continue We and focus and innovation,

open joining this call questions-and-answers. today. to to for like the you on us At Thank we'd the Moderator? time, call

the from Halpern Howard line comes Brothers. question first Our Instructions] Taglich of of [Operator

guys. afternoon, Good

Howard. afternoon, Good

that quarter should be see for anticipate going the should at that license to this from begin low this least point we revenue you the do subscription growth and line So point, perpetual forward? sequential

There's our in quarter, customer now, subscription be or license low in on quarter. down. burn for will is that sales be will and be that So to subscription from XX,XXX our next and another right that will depending it flat probably quarter next license going be one off

then start But then for year, you next some anticipate should you to sequential… do Okay. see

Exactly.

And selling and we've recent EBITDA Hawk So and we've is, our well, for WooRank, not adding customers set are that really about selling. of but customers products and lot innovation that are declining. a over legacy is are everybody strategy really a especially generating we're we're those of treating Hawk and Howard from time, got us got And this, we some well. new all customers products talk those because that and is really acquisitions on that for

was growth which core XX% quarter more to our than we XX% that CAGR that shine going see, this will is send through. So revenue and be

there of you one licenses get one in of deals partner. out And other that XXX over chunks the, there had type guess, could Are partnership customers? selling I with Okay. the you WooRank of that through deals

there partnership Duda company with to bulk and that called has in are. And those. a XX,XXX-plus selling signed customers Yes, is we a

when to chunks of things sell four winning we are opportunities. are that are both to we sales are coming down so cycle then term So near total of for into big are our those customers, the which actually increase There's And going also, to space, franchise addressable the speak. the market, products. growth reduce those in that core pipe our and going drive

is franchise Multi-Engine to to industry, franchise them to be search chunks allow speak. and specific features One solution so going win of solution our the going Management called of that that's has to customers, us the for only search that's

The to upsell us allow other our substantial opportunity actually one base, to customer with an is MRR is need. Analytics, many new of existing Advanced sell product which them that into a that's going

is into rather commerce, need self-service big a button, portal where that one and one than can can of implementation. interface an a is few to the customers us and And we'll out-of-the-box X,XXX who configured Optimizely away as Bronco, Third access click Optimizely wait sell a to right recommendations. launch we a and with which in user Hawk purchase gives then have fourth a that weeks companies so the

you with customer software? into potential described also, types do and the And integrate that fold there base for of needs you like software the could out Okay. your partnerships that see you other where bring your

interesting. That's

doing in those did we is strategically into more now. into And that that's things base with with We'll to way. acquisition negotiation accessiBe do sell we're by both along a want accessiBe right a it. the reselling. with and revenue with be of customer couple that And so We're leverage partnering our we'll and able selling and also we announcing customer and our base. to that And share to by be innovation, And be partners. the one other to

What bit partnering. this landscape little a the the in acquisition see you opportunities area, point the And time? partnering easier in at in is

In cut time. is partnering smaller Well, point is, of you get at just overall but not easier, in this general, revenue. the a it

private market So right like I of as company to you careful to valuations got buyer's low cost. be M&A sales your revenue now. terms But starting in going own see as a We're industry think, the X.Xx lower. is, down

it's at long-term. we area be starting into this get market finally, where to in it think the to so ought And the

excited guys I'm you work. on and great come, Okay. up what's keep to the

Much Howard. you, appreciated. Thank

the next Thank Jacobsen]. [Operator Our [Per Instructions] you. question line comes from of

Hi doing? you are guys, how

are Good, Per, you? how

wondering well, of Hey, Doing things. couple thanks. a I was

Just net Is quarter? a customers did new small could something share? that direct thing you we How in many this first. gain

me the would so customers don't that I that say that to logos of in want new but front So XX, we have gained, be notes I were acquired. new

also upsell We I in quarter existing customers believe. addition XX but logos, that, each into to new

about the I the growth I think hidden somewhere before, – Okay. story numbers. as Thanks for there's in I the definitely mean, sharing information legacy expressed a

that. So thanks of starting dissect for sort to

incline hard materially decline? incline decline. and Howard's up it's mean I question, grasp are about the exceed you you on expecting? think that to what you're because of an will do When the a sort Following talking

that's I quarter be would would quarter QX. Absolute worst-case so coming in March. December, the our either ending our in that think case worst the QX, ending that be

do So was actually we beginning – their at customer, And have It do that size. all next once decline. we the in we a have announced and they it a at our had the quarter it quarter. that that – and left successive reduced customer year $XX,XXX moved of ramped revenue subscription this they've and who, so couldn't large there's down license we caused

guess, So in quarter. fourth quarter, current in I the our

change we'll nothing So a quarter-over-quarter decline. see were if $XX,XXX to

that on than But at terms of expect. then it we're with We course, impact. we're was of that that will less And customers well. currently be customer. that particular point, the we Now have done largest And we as winning do subscription in primary revenue, because half from say just focus. customers I revenue and do really current. We're right is spaces. not keep these in that our products, respect we them new now About winning products. focusing hate the of which those legacy to

the do core in decline in XX% things overall, So products.

quarters products Now XX% and with tend core light XX% in quarter, us little quarter, a for the summers CAGR at this growing XX% be last bit. to

to Sort you Optimizely, kind see these those focus of of on that Commerce, core growth that and reason wanted at a and do Analytics even Bronco, for the expect faster quarters. we're math, why and to like of increase doing Advanced the total sales Also, us rates. Search, and can allow some market Configured products, I in future initiatives Franchise cycle our grow larger hopeful we addressable see to faster

this, Okay. I before quarterly Thank you. report I may have the missed and didn't have access call. to the

position look does cash what So like now? the

$X.X Cash at June million $X.X XX of accounts receivable. was million.

Okay.

between usually, As release and quarterly noticed bit like true that you we little we doing lag its, didn't Can before it good guys the ask a a come call, more get little the the a the job. so. even as of call are

Okay.

that off, hasn't You do. been for know see can bringing we what thanks that radar, what and on my and we'll

guys. it. everything appreciate Appreciate it. thanks Okay. you do, for you, Thank And

you. Thank We support. appreciate your

Thanks.

Carpio Instructions] Joseph [Operator Our from next question Leo Gunnar. the line of comes of you. Thank

I two afternoon, questions. have gentlemen. actually quick Good

could the is the one, you economy you're update industry economy provide on in first terms particular what seeing an and any of sales in on Thanks. or The your cycle? impact environment trends the of terms what having us

Leo. Thanks,

personally overall market I because terms size So first the tend see of little for the We We nor to in have to a cheaper sides. two significantly neither a bit felt impact demand, under trends, One, relative to less not of last macroeconomics new in – caveat, companies hate the private the markets. large terms the America. But deals side of Bridgeline is appreciable the of sort all, sales North side, the valuation that of we in in especially of smaller. be have us change to in company those an on Europe on than on of with year. both macro becoming think, sell still

So we that haven't yet. felt

talk pipeline about pipeline and of lot the our per kind people our cycle But do hasn't cost sales see changed. lead and length our our same a we of Although has it. in

are and the that then what add-on satisfied be right appealing. or in now to your you that down mentioned Any nice near-term? that just at side, be M&A you're would seem considering valuations to And technology particular the platform? are with Or looking coming you the on you more have a

Yes.

customer not we We satisfied our that terms of Well, what customers. into think existing with existing an factors efficient and acquisition we're Okay. less to growth We costs, right sell have upsell key think now. of customers. that the in is significantly of one growth is ability

me. of deals they would I and and and it. month even my stay we can name am to making investment I was seeing every my of anything still didn't a it a in XXXX, lot focused. spent to relevant, way, if Now quickly that banker come think that XXXX want sure a time knew throw couple I triage

lot is we sell, a see products services but require so to with our professional I Ideally, increase And that want as to So do revenue. implement. meaning point-and-click all our are helping don't say. to online deals customers their purchase about we of they to focus coming, significant sales touchless that easy

customers websites. traffic companies for to see this products We visitors for can to as convert look site probably can candidates products buyers. prospective our that So customers' every acquisitions. we look their We customer site quarter increase to like that more and help to of our

competitors products, come to of HawkSearch, see we to competitors existing that example, particular, our for us in And acquisitions. some for

buy that products purchase But that recommendation recommendations checkout increased we technologies. tool Celebros we integrate that own trigger bases your price also that to average think on of the similar And the impulse could consider screen. our at and HawkSearch. purchase makes look the on then We customer solutions, any those. pulled because would haven't we we two the did and We sites search

broader three than in happen leverage those that revenue. what because think less in are ability us revenue, that we're for the that debt categories And Xx for drive at point, make this not that which looking generally but sense. of deals is customers' million are $X to buyouts challenge revenue little at for. could makes looking a are So something bit We're in synergistic a their we we're all companies market, trading with

few one the the Any Is or competitive players Okay. seen static And the quarters? environment? new same? quick you've last just it pretty much follow-up, as still in

competitive environment, there's the the aspects So to partners two the competitors. and

competitor changed. space, side, our the things in haven't On

lot money great and marketing a done on we that's Algolia from has I'm HawkSearch. of has a and did with year, directly competing of spent last perspective, of However, fair see more and technical amount year sorry, them, than them this some things a we

On is some success they're And better got the it them amount we've But their for because with Optimizely, that might also time well partnership be base. within side, certain stories us. mind BigCommerce their that realizing seen are from we've spent and that much getting leads increased have so what and the value as particular had and we're customers substantially. just customer from our that we've a that choosing in products are might and of share because be

All right. Thank you.

you, Thank Leo.

would the conference turn to you. now management remarks. to for Thank closing like I back

of will really call, to be again for which and, all well, us Well, you. on course, appreciate speaking ongoing thank to December we fiscal shareholders. in thank forward growth prospects, today. fourth continued our and Great. quarter customers, and you our business XXXX. joining our conference and about of our look you partners Be excited We We're support the

conference participating. concludes you Thank This for today's call.

now may disconnect. You