Bridgeline Digital, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Bridge Line Digital, Inc. First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touch-tone telephone. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mark Downey, Chief Financial Officer of BridgeLine Digital, Inc. Please go ahead, sir.

Thank you and good afternoon, everyone. My name is Mark Downey and I am the Chief Financial Officer for BridgeLine Digital. I am pleased to welcome you to our fiscal 2020 first quarter conference call. Before we begin, I would like to remind listeners that during this conference call, comments that we make regarding Bridgeline Digital that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. These statements are made persuading through the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The internal projections and beliefs upon which we base our expectations today may change over time, and we undertake no obligation to inform you if they do. Results that we report today should not be considered as an indication of future performance. Changes in economic, business, competitive, technological, regulatory, and other factors could cause Bridgeline's action results to differ materially from those expressed or implied by the projections or forward-looking statements made today. for more detailed information about these factors and other risks that may impact our business. Please review the reports and documents filed from time to time by BridgeLine Digital with the Securities and Exchange Commission. Also note that on the call today, we will discuss some non-GAAP financial measures when discussing the company's financial performance. We provide a reconciliation of these non-GAAP measures to our GAAP financials in our earnings release. You can obtain a copy of our earnings release by visiting our website. I would now like to turn the call over to Eric Hahn, our president and CEO. Thank you, Mark, and good afternoon, everyone.

In 2019, Bridgeline acquired two new product lines, Cellbro Search and Orchestra CMS. These brought a partnership with Salesforce.com and also Artificial Intelligence Enterprise Search Technology to our software suite. These have proven to be great differentiators that accelerate our sales cycle. Thanks to these acquisitions, our sales cycle has improved by a factor of three, from over 175 days down to approximately 60 days on average. New sales also have a much stronger license to professional services ratio, with nearly 72% of new sales consisting of license and only 28% professional services. Today, over 60% of our revenue is subscription and license, and this ratio is expected to continue to grow as new customers are acquired. Two important measurements of success of these acquisitions are customer retention and sales volume. I'm happy to report that our newly acquired customers are renewing at even stronger rates than Bridgeline has seen in the past. Customers are also signing multi-year renewals now. Prior to last year, we generally only had single-year renewals. We are winning more new customers than ever before, with more than three times the new customer acquisitions in 2019 than we had in 2018. In this fiscal year alone, we have already closed six license sales, five of which were new customers. This is a rate of nearly one and a half per month. Recently acquired customers include B2B manufacturers, global e-commerce retailers, and health and biopharmaceuticals. Technology Instruments Manufacturers, Lifestyle and Sporting Good Retailers, Clothing and Footwear Retailers, and Regional Grocery Superstores. Thanks to our partner network, which includes Salesforce.com, UPS, Magento, Shopify, Magico, and Optiflow, we are adding new customers across the globe. We have recently won new customers in the United States, Ireland, Germany, Indonesia, and Australia. Our multilingual capabilities just this month have allowed us to recently launch an e-commerce site for a Fortune 500 company that serves Austria, Belgium, Germany, Italy, the Netherlands, Spain, the United Kingdom, and Ireland. Much of our recent success has been due to the shorter sales cycle in the Celebros product line. Over the year in which we have owned Celebros, it has proven to have, on average, a 44-day sales cycle with customer acquisition costs of less than $15,000. Compare this with the more expensive 175-day sales cycle that we had with Unbound and Orchestra CMS. We intend to further improve Celebros sales by including lightweight features from Unbound and Orchestra products to reduce our customers' reliance on third-party products such as marketing automation, recommendation engines, and landing pages. These commonly needed capabilities will be provided with limited functionality in Celebros Search with an upgrade path to full unbounded orchestra CMS license. Celebros helps e-commerce websites generate revenue by allowing online shoppers to more easily find the products they need through intelligent search results. This is called improving the conversion rate. Seller growth beats the competition in conversion rate improvement because its artificial intelligence capabilities provide better search results for shoppers. There are two other aspects to increasing revenue for e-commerce sites, however, and no enterprise search products address these. This is increasing site traffic and increasing the number of products each visitor places in their shopping cart. Unbound and Orchestra CMS do address these needs of increasing traffic and increasing cart size. By offering these Unbound and Orchestra features in a limited way with Celebros, we provide a more complete solution to the revenue generation goal for online marketers than any other enterprise search product. We'll also provide save online marketers money by providing traffic and cart size capabilities without them having to license and integrate other products. As an example, thanks to Unbound and Orchestra CMS, we'll be able to send coupons to online shoppers who search for a product but then become distracted and do not finish the shopping cart checkout process. We'll also have the ability to create one-click landing pages that are indexed by Google with the terms searched on the site by shoppers to further increase traffic. And all of this can be more tightly integrated with Salesforce.com using Orchestra CMS's native integration for more seamless e-commerce site management. Unlike other enterprise search competitors, we'll solve the broader revenue goals of online marketers rather than just the conversion partial goal that competitive enterprise search products approach today. And because we're not offering a full We expect to create a strong pipeline of sales for these enterprise products from our newly acquired Cellebroth customers in addition to our standard sales channels such as Salesforce.com partnerships. By increasing the competitiveness with Cellebroth, leading with its fast sales cycle and providing an upgrade path to Unbound and Orchestra CMS, We expect to further reduce customer acquisition costs and to further increase our license-to-revenue mix and produce a financially stronger company. At this time, I'd like to turn the call over to our Chief Financial Officer, Mark Downey, who will provide more details on the financial results for our first quarter.