Bridgeline Digital, Inc. Q4 FY2025 earnings call

• HawkSearch Suite and its AI products reached 58% of total revenue ($8.9 million) and over 60% of subscription revenue ($7.4 million) with 75% gross margin. Gartner ranked HawkSearch #1 for the B2B search use case in 2025. - Net revenue retention was 117%, with 117% NRR due to higher renewal rates, less than 4% churn, upgrades, and customers adding new products like AI-powered Smart Search. - HawkSearch's average sales cycle reduced from 160 days in fiscal 2024 to 92 days in fiscal 2025, and average ARR per sale grew by 35% from $18,500 to $25,000. - Added 28 new logos in fiscal 2025, with new customers like Culligan and ADENTRA. - Launched 6 new products in 2025 powered by neural networks, including Smart Search, Smart Response, etc. - Partnerships with Unilog and Salesforce to expand market reach. - Injected $2 million of capital, doubling ad spend to $500,000 per quarter to market HawkSearch.

The core product, HawkSearch Suite and its AI products, contributed 58% of total revenue, amounting to $8.9 million, and over 60% of subscription revenue ($7.4 million) with a 75% gross margin. Subscription revenue for the quarter ended September 30, 2025, was $3.1 million, representing 81% of total revenue. Services revenue was $700,000, accounting for 19% of total revenue. Cost of revenue was $1.3 million, resulting in a gross profit of $2.5 million, with a gross profit margin of 66% (subscription gross margin at 69% and services gross margin at 50%).

• Expect core product growth to continue with legacy product decline ending in 2026, driving HawkSearch to significantly more than 60% of total revenue. - Plan to continue marketing spend at $500,000 per quarter level and reassess marketing budget, cash reserves, and profitability in 2026. - Sales pipeline at the end of fiscal 2025 was 65% larger than the beginning, with shorter sales cycle and higher average sales size.

• Factors such as economic, business, competitive, technological, regulatory and other factors could cause Bridgeline's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made. - The internal projections and beliefs upon which expectations are based may change over time, and there is no obligation to inform if they do.

Q: Clarify on ARR number, whether it's HawkSearch-focused and if it will be shared quarterly A: The $8.9 million ARR is for HawkSearch. Intention is to continue sharing quarterly growth as HawkSearch is the core and will dominate financials Q: Changes or trends in HawkSearch contract length A: Average contract length was between 2-3 years, consistent with prior years. Decisive prospective customers, higher initial investment with 35% growth in average ARR per sale Q: Legacy businesses and stability in FY '26 A: HawkSearch customers have less than 4% churn rate, making the customer base super stable. Legacy products' decline expected to end in 2026 Q: Impact of Salesforce AppExchange and Unilog partnerships on revenue A: Salesforce AppExchange partnership had a sale in September quarter with more to come. Unilog partnership with embedded HawkSearch for B2B manufacturing and distribution customers, a key market for HawkSearch Q: Sales and marketing spend level and comfort A: Sales and marketing spend is $1.1 million in September quarter level, with $500,000 ad spend per quarter. Includes BDRs, BDEs, customer success team, and marketing team. Reevaluation in 2026 with focus on growth potential