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The call emphasized strong commercial momentum: record new-logo wins, a substantial increase in average contract size driven by AI add-ons, 82% pipeline growth, improved operating discipline and markedly better adjusted EBITDA. However, reported GAAP revenue was flat year-over-year, gross profit declined slightly, services revenue slipped, and cash on hand is modest. The positives (accelerating sales, higher ASP, solid retention and pipeline growth) materially outweigh the negatives, which are largely timing and mix-related, suggesting the business is scaling but has not yet fully converted recent wins into recognized revenue.
Management guided to continued acceleration in the HawkSearch Suite—driven by new AI products like the Hawk AI Shopping Assistant—and framed that outlook with a host of metrics: pipeline is up 82% YoY to over 500 qualified leads and roughly $5.0–5.5M in ARR (AQLs that historically close ~20% with a 120–150 day sales cycle, implying ~ $1M of convertible ARR), this quarter delivered 19 new-logo wins and $2.8M in TCV (including $1.2M in ARR and >$1M in professional services), average new SaaS license price rose to $44K ARR (vs. $30K last quarter and $21K a year ago), existing-customer add-ons averaged $28K ARR, core products drove 65% of subscription revenue (up from 61% a year ago) with net revenue retention of 107%, and company financials show $3.9M total revenue ($3.1M subscription, 80%), 64% gross margin (subscription 69%, services 47%), operating expenses $2.9M, net loss $0.4M, adjusted EBITDA -$43K (improved from -$239K), cash $1.4M and total debt ≈€182K (~$209K).
19 new logo wins in the quarter (the most in company history); $2.8M in total contract value (TCV) with $1.2M in annual recurring revenue (ARR); signed over $1M in professional services agreements; reported that sales this quarter tripled compared to the prior quarter.
Average sales price jumped to $44,000 ARR this quarter vs $30,000 last quarter (+46.7% QoQ) and $21,000 in Q2 FY2025 (+109.5% YoY); existing customers bought an average of $28,000 in ARR for add-on products (AI Visual Search), indicating strong upsell potential.
Qualified pipeline grew 82% year-over-year versus Q2 FY2025, with over 500 qualified leads and nearly $5.5M in ARR in the pipeline; company-reported AQLs have ~20% historical close rate (implying meaningful near-term conversion potential).
HawkSearch received multiple 2026 honors from Info-Tech Research Group (Leader in Enterprise Search, Top Product Catalog, Top UX, etc.); launched Hawk AI Shopping Assistant built for complex B2B workflows, positioned to drive further sales and differentiation vs incumbents.
Net revenue retention for core products was 107%, and HawkSearch suite now represents 65% of subscription revenue (up from 61% a year ago), demonstrating strong retention and expansion within the installed base.
Operating expenses declined to $2.9M from $3.4M in the prior-year period (down ~14.7%); net loss narrowed to $0.4M from $0.7M (improvement of $0.3M, ~42.9%); adjusted EBITDA improved to -$43K from -$239K (improvement of $196K, ~82.1%).
Cash of $1.4M and receivables of $1.4M; total debt was modest at EUR 182K (~$209K) with a weighted average interest rate of 3.2% and principal payments through 2028; no other acquisition earn-outs or additional debt disclosed.
Good day, everyone. Welcome to the Bridgeline Digital second quarter 2026 earnings call. At this time, participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Thomas Windhausen. The floor is yours.
Thank you, good afternoon, everyone. Thank you for joining us today. My name is Thomas Windhausen. I'm the Chief Financial Officer of Bridgeline Digital. I'm pleased to welcome you to the fiscal 2026 2nd quarter conference call. On the call with us today is 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 per...