Bridgeline Digital, Inc.

Good day and thank you for standing by. Welcome to the Bridge Line Digital Incorporated third quarter 2022 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tom Windhausen, Chief Financial Officer. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us today. My name is Thomas Windhausen, and I'm Bridgeline's Chief Financial Officer. I am pleased to welcome you to our fiscal 2022 third quarter conference call. On the call this afternoon is Ari Kahn, Bridgeline's President and CEO, who will begin with a discussion of our business highlights. I will then update you on our financial results for the quarter. We will conclude by taking questions. Before we begin, I'd like to remind listeners that during this conference call, comments that we make regarding Bridgeline that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 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 pursuant to 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 expressly disclaim and assume no obligation to inform you if they do. The results we report today should not be considered as an indication of future performance. Changes in economic, business, competitive, technological, regulatory, and other factors such as the impact of public health measures, could cause Bridgeline's actual 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 Securities and Exchange Commission. Also, please note that on the call this afternoon, we will discuss some non-GAAP financial measures when commenting on the company's financial performance. We provide a reconciliation of our GAAP financials to these non-GAAP measures in our earnings release. You can obtain a copy of the earnings release by visiting our website. I will now turn the call over to Ari Kahn, our president and CEO. Ari?

Thank you, Tom, and good afternoon, everyone. Richland had 22% revenue growth this quarter compared to the same quarter last year, totaling $4.2 million. Most of our growth was in subscription and license, which increased by 29% to $3.4 million. Subscription and license is now over 80% of our total revenue and drove gross profit to increase by 30% to $2.9 million with a five-point gain in gross margin percentage. We booked $690,000 in new license ARR from 23 sales this quarter. Our cross-sale strategy drove 11 license sales to existing customers on top of 12 newly won customers. And site search is our strongest growth area with 19% CAGR organic growth. Our cash and projected operations position us well to continue our investments in innovation and sales and marketing without additional capital for operations. We ended the quarter with $3.9 million in cash after paying half a million in financing activities from the WooRank and HawkSearch acquisitions. We also negotiated a $600,000 discount to the earn-out and working capital adjustment on the HawkSearch acquisition in consideration for a six-month early payment. Our e-commerce 360 strategy fuels more efficient growth, not only by winning new customers with multiple entry points to our product suite, but sales of new products to existing customers from our growing product suite. Bridgeline saw growth in the finance, automotive, retail, and manufacturing industries. Bell Metrics is an auto parts dealer who chose our Hawk Surge product to power their big commerce online store. This is the latest in a series of new automotive customers, including 1-800-RADIATORS and ZBART. Corpocon Pump, a B2B pump manufacturer, selected HawkSearch to power search, recommendations, and search information management on their online store. Our AI-powered search information management product increases B2B sales for companies with products that require unit of measurement conversion. For example, with search and information management, your customer can search for a part using metric sizes when the underlying catalog is an English measurement. This is a straightforward example, but the same technology powers searches for colors and other descriptors when more subjective conversions are needed. A new European customer is PharmaDirect, who selected Celebro to grow online revenue with superior site search on their B2C website. where Celebros' natural language processing better understands customer intent to provide more relevant search products for customers using imprecise search terms. In addition to new customer wins, we also had over 100 renewed customers this quarter, including Bristol-Myers Squibb, 7-Eleven, Shell Oil, and Triumph Motorcycles. Many of our customers renewed with price adjustments for inflation. Platform partners like Adobe, BigCommerce, Kentico, Optimizely, Sitefinity, and Shopify are an important part of our growth. This quarter, we released a new Magento connector for Hawk Search that reduces implementation time and cost for our customers while providing a more seamless look and feel to their product catalog management and Adobe Magento's administrative interface. Sitefinity and BigCommerce continue to drive new business often with sophisticated sales being powered by both platforms simultaneously, as is the case with Sage Publishing, a new customer of ours. Our digital partnership drove the win of a large financial institution selecting Hawk Search to help their 1 million customers more easily find content on their website. And Bridgeline's TruePresence product suite for the franchise industry continues to bring new opportunities including a recent win using our Data Bravo product for individual location analytics and personalized SEO recommendations. Bridgeline has added over $100,000 in ARR this fiscal year to date for the TruePresence product suite alone. It's winning customers ahead of schedule, and the location analytics solution is already receiving outstanding feedback. Last year, we made two acquisitions, and we will continue to evaluate strategic opportunities. This is a challenging environment for public stocks, and we only consider acquisitions that can be financed accretively. We believe that the valuations of our targets will continue to drop and intend to be patient as we evaluate opportunities. The companies we consider for acquisitions need to have a customer base to whom we can cross-sell our products, in addition to acquisitions bringing products that can be sold to our customer base as well as attract new customers. We look at companies globally with an emphasis in North America and Europe. Again, only consider opportunities with terms that are accretive compared to our enterprise value to revenue ratio. At this time, I'd like to turn the call back over to our Chief Financial Officer, Tom Windhausen.