Bridgeline (BLIN) Q2 2026 Earnings Transcript

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Date

May 14, 2026

Call participants

• President and Chief Executive Officer — Ari Kahn
• Chief Financial Officer — Thomas Windhausen

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Takeaways

• Record new logo sales -- Nineteen deals closed, the highest number for any quarter in company history, totaling $2.8 million in total contract value and $1.2 million in annual recurring revenue.
• Sales pipeline growth -- "Our pipe grew by 82% compared to Q2 of fiscal 2025, with over 500 qualified leads and more than $5 million in ARR to drive ongoing revenue growth."
• Average sale price increase -- Average ARR per new SaaS customer reached $44,000, up from $30,000 sequentially and $21,000 the prior year.
• Professional services agreements -- Over $1 million in new professional services contracts signed.
• Customer net revenue retention -- Core products achieved a net revenue retention rate of 107% during the period.
• Subscription revenue mix -- Subscription revenue made up 80% of total revenue, with $3.1 million recognized, flat compared to the prior year.
• HawkSearch contribution -- HawkSearch's AI products accounted for 65% of subscription revenue versus 61% in Q2 last year.
• Gross margin -- Overall gross margin was 64%, consisting of 69% on subscription revenue and 47% on services revenue.
• Operating expenses -- Operating expenses declined to $2.9 million, down from $3.4 million in the year-ago period.
• Net loss reduction -- Net loss narrowed to $0.4 million from $0.7 million in the prior year period.
• Adjusted EBITDA improvement -- Adjusted EBITDA for the period was -$43,000 versus -$239,000 in Q2 2025.
• Cash and receivables -- The balance sheet reflected $1.4 million in cash and $1.4 million in receivables as of March 31, 2026.
• Total debt -- Total debt fell to EUR 182,000 (about $209,000) with a 3.2% interest rate and principal payments due through 2028.
• Warrants and options -- Eight hundred twenty-nine thousand warrants were outstanding (including 167,000 at $2.85 expiring in May 2026 and 592,000 at $2.51 expiring in November 2026), as well as 2.2 million options.
• Launch of Hawk AI Shopping Assistant -- The company introduced an AI-powered shopping assistant specifically focused on B2B complexity and personalized recommendations based on each customer's contracts and merchandising rules.
• Partnership with Znode -- Announced a partnership to offer AI-powered search and merchandising features for Znode's B2B e-commerce platform customers.
• Awards and recognition -- HawkSearch earned multiple 2026 honors from Info-Tech Research Group, including Leader in Enterprise Search and top ranking in product catalog, UX, and features based on verified user feedback.
• Expansion of executive team -- Appointment of Kelly Maltman as SVP of Marketing, tasked with driving pipeline and sales growth.
• Marketing investment impact -- Ari Kahn stated, "This quarter is directly the result of that [prior year’s] raise. We raised the money, call it, April 1. That's more or less what happened in 2025. This really bodes well for our ability from a marketing organization to generate leads that convert from our ability as a technology company to create products that there is demand for and solve real-world problems."

Summary

Bridgeline Digital (NASDAQ:BLIN) reported its most successful quarter for new logo acquisitions, with sharply rising average deal values and clear benefits from its prior capital raise materializing in pipeline and sales momentum. Management highlighted the launch of its Hawk AI Shopping Assistant, positioning the company’s product suite as differentiated for complex B2B e-commerce environments. Operating expenses improved, and net loss narrowed compared to the previous year, while the sales pipeline’s expansion and a 20% close rate on high-quality leads were emphasized as key drivers for ongoing growth.

• HawkSearch’s larger share within subscription revenue and recent industry accolades may heighten customer confidence in core offerings.
• The new partnership with Znode increases Bridgeline’s addressable market for B2B commerce platforms and enables expanded cross-sell opportunity for AI-powered merchandising tools.
• Receivables matched cash levels at quarter-end, suggesting current collections are tracking in line with recent sales volume.
• Management affirmed that the lead pipeline consists of objectively qualified, metrics-driven opportunities, with at least $1 million in ARR possible at current close rates, and highlighted a sales cycle of 120-150 days.

Industry glossary

• Total contract value (TCV): The cumulative value of a contract, including all recurring and one-time fees across the contract’s term.
• Annual recurring revenue (ARR): A measure representing annualized revenue from subscription agreements active at the end of the period.
• Net revenue retention: The percentage of recurring revenue retained from existing customers, after accounting for expansion, contraction, and churn.
• HawkSearch: Bridgeline’s AI-powered site search and merchandising platform, tailored for both B2B and B2C e-commerce clients.
• Znode: A B2B e-commerce platform for manufacturers and distributors, now a partner for Bridgeline’s HawkSearch technology.

Full Conference Call Transcript

Ari Kahn, Bridgeline's President and CEO, who will begin the call with a discussion of our business highlights. I'll update you on the financial results, and we'll conclude with some questions.

Before we begin, I'd like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that may be based upon the current expectations of management that involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including without limitation, those identified in the Risk Factors section of our most recent annual report on Form 10-K and our most recent 10-Q filing in the company's other filings with the Securities and Exchange Commission. Such factors may be updated from time to time in our filings with the SEC, which are available on our website.

We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events, or otherwise. Be advised that today's results should not be viewed as an indication of future performance.

The call will also include references to certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We jointly refer to these as non-GAAP financial measures and reconciliations of the non-GAAP financial measures, the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release. I'd now like to turn the call over to Ari Kahn, Bridgeline's President and CEO. Ari.

Ari Kahn: Thank you, Thomas. Good afternoon, everyone. I'm happy to say that we tripled last quarter's sales and delivered the most new logo sales of any quarter in the company's history. We won 19 sales this quarter, nearly $2 million a week, closing $2.8 million in TCV with $1.2 million in annual recurring revenue. We also signed over $1 million in professional services agreements. The average sales price took a massive leap this quarter to $44,000 in ARR compared to $30K last quarter and $21,000 a year ago in Q2 of FY 2025.

Above and beyond the increase in our new SaaS customer average license price, our existing customers bought an average of $28,000 in ARR for add-on products like our AI Visual Search.

The increase in sales price of is largely due to the new AI add-ons that our customers are choosing, as well as the fact that we're selling to larger companies with massive catalogs and web traffic requirements. In addition to new sales, we continue to have outstanding customer satisfaction proven by our renewal rates and license expansions. This quarter, our core products had a net revenue retention of 107%. Bridgeline's core products, led by HawkSearch's suite of AI products, now represent 65% of the company's subscription revenue, compared to 61% in Q2 last year. This was the best quarter ever for customer acquisition.

The majority of our wins came from B2B manufacturers and distributors, a large total addressable market where Gartner ranked HawkSearch number one in their Critical Capabilities Report.

Some recent customer wins included a leading global gas provider selecting HawkSearch to power search across three e-commerce sites in one of the most technically complex implementation in HawkSearch's history. The site required multilingual search, customer-specific pricing, entitlement-based access, dimension-based search, and multi-site management. A wholesale distributor selected HawkSearch to power five sites on its Oracle Commerce platform with a clear path for HawkSearch to power eight of their sites as the relationship expands. HawkSearch was chosen on the strength of its B2B capabilities, including keyword management, entitlements, personalization, product recommendations, unit of measure, and analytics.

A national industrial supplier selected HawkSearch to power search across its large specification-driven catalog of metal and specialty materials with unified search and concept search, driving their online revenue by improving conversion rates and reducing friction for specification-driven customer searches. Another important part of our growth strategy is partnerships.

HawkSearch lends itself naturally to both agency and software platform partners that generate sales. HawkSearch received multiple 2026 honors from the Info-Tech Research Group, including Leader in Enterprise Search, Top Product Catalog, Top UX, Top Features across eight additional categories based on verified user feedback. In terms of partnerships, HawkSearch and Znode announced a partnership bringing AI-powered search, merchandising, and personalization to manufacturers and distributors on the Znode B2B e-commerce platform, helping buyers find their right products faster, navigate larger catalogs more easily, and improve conversion across multiple store and multi-portal experiences. Partners are a big part of our go-to-market strategy, traditional marketing also drives leads for us.

We're presenting at in-person conferences more and more like B2B Online Chicago and hosting customer conferences to drive sales. I'm really happy to announce that we recently added a new SVP of Marketing to our team, Kelly Maltman.

Kelly is a marketing exec with over a decade of experience leading B2B software sales, and is working closely with our EVP of sales, Carl Prizzi, to grow our sales pipeline. Our pipe grew by 82% compared to Q2 of FY 2025, with over 500 qualified leads and more than $5 million in ARR to drive ongoing revenue growth. HawkSearch has been an AI-based product suite since long before the new wave of large language models and neural networks in AI that are making headlines today. This has allowed us to quickly adopt the latest AI technology faster than our competitors are able to. This quarter, we released the Hawk AI Shopping Assistant.

B2C shopping assistants are starting to appear, with Amazon Rufus and Walmart Sparky leading the way.

Most B2C sites are building their shopping assistants off their support chatbot, which is designed to answer questions about products, but not designed to drive online sales. HawkSearch's entire product suite has always focused on driving online sales for our customers, and it empowers companies to define merchandising rules to promote products that grow, with full personalization, recommendation, and promotions at its core. The Hawk AI Shopping Assistant is built upon HawkSearch's AI merchandising infrastructure to truly align it with an online store's revenue goals. If you promote a product in Hawk, the AI will automatically promote it in Hawk's Assistant and vice versa.

Because HawkSearch has full B2B support, the Hawk AI Shopping Assistant is empowered to handle the complexity of B2B online sales.

Everyday B2C concepts like pricing, catalog, and shipping are more complex in the B2B world, as they're negotiated per customer and shopping is performed by teams. Each customer has pre-negotiated contracts that define which products they can access, custom pricing, freight schedules, credit lines, et cetera. The HawkSearch AI Shopping Assistant understands our customers' B2B contracts and merchandising rules, so it can make commercially intelligent recommendations tailored to each individual customer. Here's an example of what the Shopping Assistant looks like in practice. One of our customers is a master B2B distributor for electronics. It has a massive inventory, and its customers are also B2B companies. Its customers are local distributors covering a smaller territory to supply individual electricians.

With HawkSearch Shopping Assistant, a local distributor can log into the master distributor's Shopping Assistant and make a query like, "I have 50 electricians as customers. My electricians build two to three houses a year, each one $750,000, approximately 5,000 sq ft. Give me a plan for stocking circuit breakers and panels in my warehouse."

Our Shopping Assistant can then advise, "Given that you're covering Southern Ohio where AC is required, you need 500 70-volt breakers, 600 100-amp breakers, et cetera," It then suggests a 20% overage for backstop and surplus orders, surprise orders. It will say that since the distributor has a $10,000 credit line, it recommends quarterly replenishment and to add 5,000 foot cable and bundle it with the breakers to increase its sales. The Shopping Assistant then asks if it should place the order.

That entire experience, the same type of experience you might have with an intelligent salesperson in an office, can now happen online at scale, automated, and it happens in the complex B2B world where pricing, catalog, everything is custom negotiated on a per-customer basis. We support that. HawkSearch supports that. HawkSearch is unique, and this is gonna drive a ton of sales for our business. The dialogue that can continue from this can configure the total warehouse for our master distributor as a customer for its customers, local distributors, and drive their revenue. With new products like the Hawk AI Shopping Assistant, we expect to see continued acceleration in HawkSearch Suite.

Frankly, it's a great time to be in marketing technology because AI has empowered smaller businesses like HawkSearch and Bridgeline to leapfrog larger incumbents and reset the landscape with innovations in AI, like the AI Shopping Assistant.

With that, I'll turn it over to our Chief Financial Officer, Thomas Windhausen, to share additional details. Thomas?

Thomas Windhausen: Thanks, Ari. I'll provide an update on our financial results for the second quarter of fiscal 2026, which ended on March 31st, 2026. Total revenue for the quarter ending March 31st, 2026 was $3.9 million, an increase compared to $3.9 million in the prior year period. When we look at our components of revenue, we'll start with subscription revenue, which is comprised of SaaS licenses, maintenance, and hosting. For the quarter ending March 31st, 2026, its revenue was $3.1 million, also increased from $3.1 million in the prior year period.

As a percentage of total revenue, subscription revenue was 80% for the quarter ending March 31st, 2026. Our services revenue was $799,000 for the quarter ended March 2026, compared to $823,000 in the prior year period, and that's the 20%. That covers 20% of total revenue. Our cost of revenue was $1.4 million in the quarter ended March 2026, compared to $1.3 million in the prior year period, and our gross profit was $2.5 million for the quarter ended March 2026, compared to $2.6 million in the prior year period. Our overall gross margin was 64% for the quarter ended March 2026, broken down into subscription revenue of 69% and services gross margin of 47%.

Our operating expenses were $2.9 million for the quarter ended March 26th, down from $3.4 million in the prior year period. Our net loss was $0.4 million, down from $0.7 million in the prior year period. Finally, our adjusted EBITDA for the quarter was -$43,000 compared to a -$239,000 in March of 2025. Moving to our balance sheet, at March 31st, 2026, we had cash of $1.4 million and receivables of $1.4 million. Our total debt was down to EUR 182,000, about $209,000, with a weighted average interest rate of 3.2% in principal payments due through 2028.

We have no other debt or earn-outs from our previous acquisitions. Our total assets at March 31st, 2026 were $15.3 million, with liabilities of $6.1 million. Moving to the cap table, at March 31st, 2026, we had 12.6 million shares outstanding, just over 800,000 warrants, and 2.2 million options. The 829,000 warrants consist of 167,000 warrants at $2.85, which expire in May 2026, and 592,000 warrants with a $2.51 exercise price, which expire in November 2026. Bridgeline looks forward to continued growth and success in 2026 and beyond as we continue our focus on revenue growth, product innovation, customer success, and delivering shareholder value. Thank you for joining us on the call today.

At this time, I'll share some questions that were sent in advance. Our first question was about the capital raise last year, and how is that driving current sales? Ari?

Ari Kahn: Okay, that's me. All right. This quarter that we just closed was the best quarter in the company's history for winning new logos, and that's exactly what our goal was when we raised capital at the end of March 2025, to inject $2 million, put that into marketing, get our name out there with all the great technology that we already have, let everybody know about it, and win a bunch of deals. This quarter is directly the result of that raise. We raised the money, call it, April 1st. That's more or less what happened in 2025. Three months to deploy the capital. You gotta sign up for conferences and so forth.

This gets you more or less to July 1st.

Give yourselves a 120-150 day sales cycle. All of a sudden, you're in January of this year, the first month of the quarter that we just closed. This really bodes well for our ability from a marketing organization to generate leads that convert from our ability as a technology company to create products that there is demand for and solve real-world problems. This is above and beyond what I'm super proud of, our customer retention. Remember, we also drive an excellent net revenue retention rate of 107%. That means our existing customers renew their subscriptions and buy the new stuff that we're innovating every day. We're generating leads. We're going to the right places.

We know how to deploy marketing capital, and our customers are super happy.

Thomas Windhausen: Excellent. Another question came in about pipeline. Let's form that as what does the pipeline look like, and how fast is it growing?

Ari Kahn: All right. Well, we have nearly doubled our pipeline since last year. I think it's an 82% year-over-year growth, Q2 of FY 2026 versus Q2 of FY 2025. When I talk about our pipeline, I'm talking about qualified leads. Qualified leads are not subjective qualification, where a sales guy feels good this morning about the lead, and he might not feel so good about it next day and so forth. For us, we've got a metrics-driven marketing organization that qualifies its leads based on objective behavior. Did the lead attend a webinar? Did they get a demo? Are they returning phone calls, and do they have a pulse, right? Clear, measurable things that define a lead objectively.

We've got 82% growth of that, and that rate of, or that scale at which we're measuring, the 82% growth, that's what we call an AQL. Our AQLs tend to have a 20% close rate. The AQL level today is 5 over 500 leads today with nearly $5.5 million in ARR. That lead pipeline by itself at a 20% rate has got $1 million in ARR right there in itself. With the sales cycle of 120-150 days and the fact that this pipeline is twice as big as it was last year, and we measure it the same way, I think that really puts us in a healthy position to continue with the momentum that we've got now.

Okay, is that it? All right.

Thomas Windhausen: Yeah, there are no other questions. That's it.

Ari Kahn: All right. Good. Good. Well, I want to thank everybody for joining us today. We appreciate your continued support and the support of our customers and partners as well. We are really excited about this business. It is an exciting time to be in AI, to be in marketing technology, and to be a growing company that is in a space that is expanding with lots of new technology. We look forward to speaking with you all again on our third quarter fiscal 2026 conference call that is going to be in April this summer. Until then, be well, and thank you.

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