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Bridgeline Digital, Inc. (BLIN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 revenue was $3.86M (+1.7% YoY) with gross margin 69%; GAAP diluted EPS was $(0.04), a dramatic improvement vs $(0.77) in Q4 FY2023, largely due to the absence of last year’s $7.5M goodwill impairment; adjusted EBITDA turned slightly positive at $5K .
  • HawkSearch momentum continued: 17 new licenses added in Q4, +$0.36M ARR; FY2024 totaled 83 licenses, +$2.1M ARR and $6.2M TCV; management cited “better than 103%” net revenue retention and the largest pipeline in company history entering 2025 .
  • Services gross margin expanded materially YoY to 58% in Q4 (from 46%); subscription gross margin remained strong at 72% as mix shifts to higher-value AI features and pricing .
  • No formal quantitative guidance was issued; qualitative outlook emphasized a doubled pipeline (186 SQLs, $3.6M ARR opportunities), a 20% close rate, and CAC payback <20 months, with partners (Optimizely, BigCommerce) accelerating lead-gen .
  • Wall Street consensus estimates from S&P Global were unavailable due to API request limits; estimate comparisons are therefore not shown (S&P Global unavailable).

What Went Well and What Went Wrong

What Went Well

  • Record AI product cadence (Conversational Search, Smart Facets, PDF Data Capture, Unified Search) and partner recognition (Optimizely app store, Moblico Partner of the Year) underpin demand for HawkSearch and upsell opportunities .
  • Sales execution: 17 Q4 licenses (+$0.36M ARR) and 83 FY licenses (+$2.1M ARR; $6.2M TCV); HawkSearch NRR >103% indicates strong expansion within existing customers .
  • Margin quality: services gross margin 58% in Q4 vs 46% YoY; subscription gross margin 72% remained robust; adjusted EBITDA positive at $5K, showing operating efficiency gains .

What Went Wrong

  • Sequential revenue dipped slightly vs Q3 ($3.86M vs $3.94M), while subscription revenue fell modestly ($3.03M vs $3.01M–$3.01M Q3/Q4), reflecting ongoing mix and timing headwinds .
  • GAAP net loss persisted at $(0.43)M despite operational improvements; operating loss of $(0.48)M continues to highlight the need for scale and sales & marketing investment .
  • Lack of formal numerical guidance and limited balance sheet flexibility (cash $1.4M; total debt ~$0.53M; WAIR ~4.4%) constrains the pace of top-of-funnel acceleration management desires .

Financial Results

Income Statement and Profitability (Quarterly)

MetricQ2 FY2024Q3 FY2024Q4 FY2024
Total Revenue ($USD Millions)$3.804 $3.936 $3.863
Subscription & Licenses Revenue ($USD Millions)$3.010 $3.013 $3.025
Services Revenue ($USD Millions)$0.794 $0.923 $0.838
Cost of Revenue ($USD Millions)$1.280 $1.230 $1.211
Gross Profit ($USD Millions)$2.524 $2.706 $2.652
Gross Margin (%)66% 69% 69%
Operating Expenses ($USD Millions)$3.043 $3.089 $3.134
Operating Income (Loss) ($USD Millions)$(0.519) $(0.383) $(0.482)
Net Income (Loss) ($USD Millions)$(0.602) $(0.305) $(0.432)
Diluted EPS ($USD)$(0.06) $(0.03) $(0.04)
Adjusted EBITDA ($USD Thousands)$(83) $3 $5

YoY Comparison (Q4 FY2023 vs Q4 FY2024)

MetricQ4 FY2023Q4 FY2024
Total Revenue ($USD Millions)$3.798 $3.863
Subscription & Licenses Revenue ($USD Millions)$3.072 $3.025
Services Revenue ($USD Millions)$0.726 $0.838
Gross Margin (%)68% 69%
Operating Expenses ($USD Millions)$10.818 (incl. $7.517 goodwill impairment) $3.134
Net Income (Loss) ($USD Millions)$(8.063) $(0.432)
Diluted EPS ($USD)$(0.77) $(0.04)
Adjusted EBITDA ($USD Thousands)$(117) $5

Segment Revenue Mix

MetricQ2 FY2024Q3 FY2024Q4 FY2024
Subscription & Licenses (% of Revenue)79% 77% 78%
Services (% of Revenue)21% 23% 22%
Subscription Gross Margin (%)71% 72% 72%
Services Gross Margin (%)47% 58% 58%

KPIs (Q4 FY2024)

KPIQ4 FY2024
New License Sales (#)17
ARR Added ($USD Millions)$0.36
FY2024 License Sales (#)83
FY2024 ARR Added ($USD Millions)$2.10
FY2024 TCV ($USD Millions)$6.20
HawkSearch Net Revenue Retention (%)>103%
Sales Pipeline (SQLs / ARR)186 SQLs / $3.6M ARR
Close Rate (%)20%
CAC Payback (months)<20
Cash ($USD Millions)$1.40
Total Debt ($USD Millions)~$0.53
Weighted Avg Interest Rate (%)~4.4%

Versus Estimates

MetricQ4 FY2024 ActualConsensus (S&P Global)
Revenue ($USD Millions)$3.863 Unavailable (S&P Global API limit)
Diluted EPS ($USD)$(0.04) Unavailable (S&P Global API limit)

Note: Wall Street consensus via S&P Global was unavailable at the time of analysis due to API daily request limits (S&P Global unavailability).

Guidance Changes

  • Management did not issue formal quantitative guidance for revenue, margins, OpEx, EPS, OI&E or tax; commentary focused on pipeline scale, partner momentum, and AI product expansion .
MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2025None providedNone providedMaintained (no formal guidance)
MarginsFY2025None providedNone providedMaintained (no formal guidance)
OpExFY2025None providedNone providedMaintained (no formal guidance)
EPSFY2025None providedNone providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicQ2 FY2024 (Prior-2)Q3 FY2024 (Prior-1)Q4 FY2024 (Current)Trend
AI/Technology InitiativesSmart Search “Zeus” launch (Concept & Image Search) driving engagement and sales; AI vector databases/LLMs, RAG; weekly launches GenAI “Athena” Smart Response; recognition by Gartner/InfoTech/FeaturedCustomers Conversational Search, Smart Facets, PDF Data Capture, Unified Search; Rapid UI GenAI updates Accelerating product velocity and breadth
PartnershipsBigCommerce first-page app store; Optimizely one-click install; Xngage connector; partner-led lead gen Opticon 2024 showcase; Moblico mobile AI; continued Optimizely/BigCommerce push Optimizely promoting HawkSearch; Moblico Partner of the Year; new SI partnerships (Human Element, Product Genius) Deeper ecosystem presence
Product Performance50+ licenses YTD; weekly customer launches 23 licenses; $0.42M ARR; ASP nearly doubled YoY 17 licenses; $0.36M ARR; FY: 83 licenses, $2.1M ARR, $6.2M TCV; NRR >103% Sustained license volume, strong retention
Regional/VerticalsFocus on B2B electrical/plumbing/manufacturing; customers with large catalogs Adds large distributors, industrials; German distributor Voltus Additional fastener, hardware, life safety gear; top-10 U.S. electrical distributor expansion Strengthening B2B distribution foothold
Margins/ProfitabilityGM 66%; subscription GM 71%; services GM 47%; adj. EBITDA $(83)K GM 69%; services GM 58% (anomaly); adj. EBITDA $3K GM 69%; sustained services GM 58%; adj. EBITDA $5K Improving services margin; breakeven-ish adj. EBITDA
Sales EfficiencyCAC payback <20 months; pipeline traffic +35% YoY; conversion +66% Higher ASP and conversion; partner ecosystem boosts 186 SQLs; 20% close rate; 25% partner-sourced leads Strong top-of-funnel; leverage partners

Management Commentary

  • “HawkSearch is the leader in AI-powered product discovery... we begin 2025 with the largest sales pipeline in the company’s history” — Ari Kahn, CEO .
  • “Net revenue retention for HawkSearch is 103%, which demonstrates that we’re not only retaining... but also expand customer licensing with AI features like Smart Search and Smart Response.” — Roger Kahn .
  • “Our cost of goods sold… are essentially constant… we should start seeing our gross margins approaching 80%… stabilize in the high 70s [subscription].” — Roger Kahn (on margin potential) .
  • “At September 30, 2024, we had cash of $1.4M… total debt… approximately USD $526K… weighted average interest rate ~4.4%.” — Thomas Windhausen, CFO .

Q&A Highlights

  • Pipeline and conversion: 186 SQLs totaling ~$3.6M ARR opportunities; close rate ~20%; top-of-funnel marketing and partner ecosystems cited as key growth drivers .
  • Lead sourcing mix: ~25% of deals sourced by partners directly; remaining 75% involve partners but are driven by Bridgeline outreach/web .
  • Capital structure: ~800K warrants outstanding with strikes $2.51–$2.85 expiring in 2026; management mindful of dilution and stock price dynamics .
  • Profitability pathway: services margin uplift seen as partially anomalous; long-run services GM target ~50%; subscription margins expected in high-70s with AI adoption .

Estimates Context

  • Wall Street consensus estimates (Revenue, EPS) via S&P Global were unavailable due to API daily request limits at the time of retrieval; as a result, beat/miss vs consensus cannot be determined here (S&P Global unavailability).
  • Given the qualitative momentum (license volume, NRR >103%, partner visibility), sell-side models may need to reflect the scaling contribution from AI feature upsell and partner-driven pipeline conversion, as well as the sustained services margin improvements .

Key Takeaways for Investors

  • HawkSearch-led growth with 83 FY licenses (+$2.1M ARR; $6.2M TCV) and NRR >103% signals durable expansion within customers; expect continued upsell from new AI modules (Conversational Search, Smart Facets, PDF Data Capture, Unified Search) .
  • Margin trajectory is constructive: services GM sustained at 58% and subscription GM at 72%; adjusted EBITDA breakeven suggests operating leverage as ARR scales and R&D investments normalize .
  • Partner ecosystems (Optimizely, BigCommerce, Moblico) are strong catalysts for pipeline and conversion; 25% partner-sourced lead share lowers CAC and compresses sales cycles .
  • Balance sheet adequate but not expansive (cash $1.4M; debt ~$0.53M, WAIR ~4.4%); management prioritizes ROI-positive marketing spend while avoiding dilutive capital raises at current valuation .
  • Near-term trading: watch for additional large distributor wins and product announcements; license ARR additions per quarter are tangible markers of momentum .
  • Medium-term thesis: a consolidating leadership position in AI product discovery for B2B commerce, with partner distribution, tailored AI agents, and improving unit economics could drive sustained ARR growth and margin expansion .
  • Lack of formal guidance and unavailable consensus today limits beat/miss framing; track quarterly ARR adds, services GM, and adjusted EBITDA to gauge progress toward scale profitability .