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Bridgeline Digital, Inc. (BLIN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 revenue was $3.8M (flat YoY) with gross margin at 67% (-100 bps YoY); diluted EPS was -$0.06, and Adjusted EBITDA was -$0.193M, reflecting a modest sequential pullback versus Q4 .
  • Sales momentum accelerated: 28 new subscription contracts, $2.7M total contract value (TCV), and ~$0.8M ARR added; Core product Net Revenue Retention was 107%, with a 105-day sales cycle and an 18% win rate .
  • Management is reallocating spend from R&D to sales and marketing to capitalize on demand and partnerships (Salesforce AppExchange, OroCommerce, Optimizely, BigCommerce), while holding overall OpEx roughly flat .
  • Subscription revenue declined 1% YoY to $3.0M; services revenue grew 11% YoY to $0.7M; margins compressed YoY (overall -100 bps; subscription -200 bps), partially offset by stronger services margins (+700 bps YoY) .
  • Consensus estimates were unavailable at the time of query; near-term stock narrative catalysts are the aggressive go-to-market push, robust core NRR, and new connectors/partnerships that may drive MRR expansion, but formal guidance remains withheld due to size/volatility .

What Went Well and What Went Wrong

What Went Well

  • Strong sales execution: “In Q1 of FY ’25, Bridgeline signed 28 licensed sales, adding $2.7M in new contracts and $800,000 in annual contract value… sales cycle is now only 105 days with an 18% win rate” .
  • Core health: Core product NRR was 107%, with core revenue cited at ~$2.1M and double-digit growth; emphasis on expanding upsell/cross-sell within HawkSearch suite .
  • Partnerships as growth lever: Salesforce AppExchange connector launched; BigCommerce Catalyst connector; continued positioning in Optimizely app store; OroCommerce integration—all aimed at lowering CAC and accelerating deployments .

What Went Wrong

  • Mixed profitability: Adjusted EBITDA deteriorated YoY (-$0.193M vs -$0.117M prior year) and margins compressed (overall GM 67% vs 68% YoY; subscription GM 71% vs 73% YoY) despite services margin improvement .
  • Subscription softness: Subscription and licenses revenue fell 1% YoY to $3.0M while total revenue was flat, indicating limited topline expansion QoQ and YoY .
  • No formal guidance: Management reiterated it will not provide revenue guidance given volatility at current scale; this reduces visibility for investors tracking near-term inflection .

Financial Results

Income Statement Summary

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$3.936 $3.863 $3.791
Gross Profit ($USD Millions)$2.706 $2.652 $2.535
Gross Margin %69% 69% 67%
Operating Expenses ($USD Millions)$3.089 $3.134 $3.046
Operating Loss ($USD Millions)$(0.383) $(0.482) $(0.511)
Net Loss ($USD Millions)$(0.305) $(0.432) $(0.634)
Diluted EPS ($USD)$(0.03) $(0.04) $(0.06)
Adjusted EBITDA ($USD Millions)$0.003 $0.005 $(0.193)

Revenue Breakdown

MetricQ3 2024Q4 2024Q1 2025
Subscription & Licenses ($USD Millions)$3.013 $3.025 $3.048
Services ($USD Millions)$0.923 $0.838 $0.743
Subscription & Licenses Mix (%)77% 78% 80%
Services Mix (%)23% 22% 20%

Margin Breakdown

MetricQ3 2024Q4 2024Q1 2025
Gross Margin % (Total)69% 69% 67%
Subscription & Licenses GM %72% 72% 71%
Services GM %58% 58% 51%

Balance Sheet Snapshot

MetricQ3 2024Q4 2024Q1 2025
Cash & Equivalents ($USD Millions)$1.200 $1.390 $1.483
Total Debt ($USD Millions)~$0.524 ~$0.526 ~$0.409
Total Assets ($USD Millions)$15.965 $15.602 $15.545
Total Liabilities ($USD Millions)$5.627 $5.596 $5.995

Actual vs Consensus – Q1 2025

MetricActualConsensusBeat/Miss
Revenue ($USD Millions)$3.791 N/A (S&P Global consensus unavailable)N/A
Diluted EPS ($USD)$(0.06) N/A (S&P Global consensus unavailable)N/A

Consensus estimates were unavailable at the time of query due to SPGI daily limit constraints.

KPIs

KPIQ3 2024Q4 2024Q1 2025
New Subscription Contracts (#)23 17 28
ARR Added ($USD Millions)>$0.400 >$0.360 ~$0.800
TCV from New Deals ($USD Millions)~$1.4 N/A~$2.7
Core NRR (%)N/A103% (FY) 107%
Sales Cycle (days)N/AN/A105
Win Rate on Qualified Leads (%)N/AN/A18%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025+None providedNone providedMaintained: company does not issue formal guidance
MarginsQ2 2025+None providedNone providedMaintained
OpExFY2025N/AReallocation from R&D to Sales & Marketing; overall OpEx held roughly flatReallocation/maintained total
EPS/Net LossQ2 2025+None providedNone providedMaintained
Adjusted EBITDAQ2 2025+None providedNone providedMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesLaunched GenAI Smart Response, Conversational Search, Smart Facets; Rapid UI GenAI component; Unified Search announced; HawkSearch recognized by Gartner/Info-Tech Continued push: Agentic-AI, Smart Search/Smart Response, Hybrid Search; Hermes release innovations Expanding feature set and deployments
PartnershipsOptimizely top paid app; BigCommerce promotion; Xngage connector; pipeline expanded; partner-originated leads ~25% Salesforce AppExchange connector live; OroCommerce partnership; deepening partner GTM Strengthening, broadening channels
Go-to-market investmentEmphasis on marketing/vertical conferences; ROI with CAC payback <20 months Reallocate from R&D to Sales/Marketing; hold OpEx flat; more conferences/events Aggressive sales ramp
Vertical focus (B2B)Wins in electrical, plumbing, fasteners; HP and large distributors; multi-language/global New logos in janitorial/restoration, aftermarket auto parts, plumbing; healthcare (Montefiore) Diversifying within B2B + healthcare
Financial postureAchieved breakeven-ish EBITDA in Q3/Q4; services margin spike was anomalous EBITDA negative; subscription GM compresses; services GM improves YoY Mixed near-term profitability
Guidance/visibilityNo formal guidance; growing pipeline (186 SQLs, ~$3.6M ARR potential exiting FY2024) No formal guidance; internal forecasting split core vs noncore; 105-day cycle visibility Policy maintained; internal visibility improving

Management Commentary

  • “Now is the time to reallocate resources from R&D to sales and marketing, it's time to go all in on growth.” – Ari Kahn, CEO .
  • “Our revenue can broadly be broken into 2 product groups… Core revenue is $2.1 million with double-digit growth, net revenue retention of 107%...” – Ari Kahn .
  • “Operating expenses were $3.0 million… down 4% YoY… Net loss was $0.6 million… Adjusted EBITDA… negative $193,000.” – Thomas Windhausen, CFO .
  • “Sales cycle… 105 days… 18% conversion to a win from qualified leads… We need to go all in on sales and marketing immediately.” – Ari Kahn .
  • “We’re going to hold operating expenses more or less where they're at… shifting personnel… investing more on the marketing side.” – Ari Kahn .

Q&A Highlights

  • Guidance and forecasting: Company will not offer formal guidance due to volatility at current scale; internal forecasting is split between predictable noncore renewals and core new-logo wins with ~105-day cycles .
  • Sales pipeline and conversion: Leads from vertical conferences and partners yield strong CAC payback; 18% win rate for qualified leads supports expanded sales/marketing spend .
  • Partnerships and channels: ISVs (Salesforce, Optimizely, BigCommerce, Magento) and digital agencies are in nearly every deal; partner marketplaces/connectors drive low-CAC adoption .
  • Vertical priorities: Continue deepening in existing verticals (electrical, plumbing) while slowly entering new verticals to build references and compress sales cycles .
  • OpEx mix: Shift from R&D to go-to-market while maintaining overall OpEx discipline; G&A remains lean .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q1 FY2025 revenue and EPS were unavailable at the time of query due to daily request limit constraints. As a result, we cannot assess beats/misses vs consensus for this quarter [GetEstimates errors].
  • Implication: In the absence of consensus anchors, investors should focus on sequential/YoY trajectory, core NRR durability, and conversion metrics to infer the likelihood of near-term estimate revisions.

Key Takeaways for Investors

  • Sales momentum is real: 28 licenses, $2.7M TCV, ~$0.8M ARR added, 105-day cycles, and 18% win rate indicate a robust demand environment and efficient funnel conversion .
  • Core health supports thesis: Core NRR at 107% and double-digit core growth suggest durable expansion potential from upsell/cross-sell within HawkSearch suite .
  • Go-to-market pivot: Reallocating spend from R&D to sales/marketing—while keeping OpEx roughly flat—should drive topline acceleration with manageable burn, a near-term narrative catalyst .
  • Margins mixed near term: Overall and subscription margins compressed YoY; services margins improved; monitor mix (subscription vs services) and AI deployment costs for margin normalization .
  • Profitability inflection risk: Q3/Q4 delivered near-breakeven Adjusted EBITDA; Q1 retraced to -$0.193M. Execution on partner-led pipeline and vertical references is key to re-approaching breakeven .
  • No guidance policy: Lack of formal guidance reduces visibility but 105-day sales cycles and partner marketplaces (Salesforce, BigCommerce, Optimizely) provide tangible operating signals .
  • Near-term trading setup: Watch for incremental partner announcements/connectors, conference-driven logo wins, and sequential ARR growth as potential catalysts; absence of consensus data magnifies focus on company-reported KPIs .

Other Relevant Press Releases in Q1 2025

  • None directly tied to HawkSearch product launches within Q1; note a Lateral Link “Bridgeline Solutions” personnel announcement appears unrelated to BLIN’s AI search business focus .