Bridgeline Digital, Inc.

Good day and thank you for standing by. Welcome to the Bridgeline Digital third quarter 2024 earnings conference 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 this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tom Winnhausen, Chief Financial Officer. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us today. My name is Thomas Winnhausen. I'm the Chief Financial Officer of Bridgeline Digital. I'm pleased to welcome you to our fiscal 2024 third quarter conference call. On the call with us this afternoon is Ari Kahn, Bridgeline's President and CEO. We'll begin the call with a discussion of our business highlights. I will then update you on our financial results for the quarter, and 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 could cause Bridgeline's actual results to differ materially from those expressed or implied by the projections or form-making statements made today. For more detailed information about these factors and other risks that may have impact on our business, please review the reports and documents filed from time to time by BridgeLine Digital with the Securities and Exchange Commission. Also, please note 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, and you can obtain a copy of that on our website. I'd now like to turn the call over to Ari Cohen, Bridgeland's President and CEO. Ari? Thank you, Tom.

Good afternoon, everyone. Recent advances in AI, especially large language models and Gen AI, are revolutionizing e-commerce and reshaping online shopper expectations. As a result, nearly every e-commerce site will upgrade their site search to be both intelligent and conversational. This shift is disrupting the billion-dollar site search market, forcing everyone to reconsider their search provider. Hawk Search is uniquely positioned displaced competitors. Our team has a deep history in AI and is approaching the site search market in a more meaningful way than anyone else. This gives us an opportunity to take a disproportionate share of the market during this turbulent time. We're the only AI company offering merchandising AI agents that work directly with our customers' marketing team to continuously tune their site searches results. This capability, known as tailored AI, is already positioning us as a leader in the market. Tailored AI has helped double the average Hawk Search sale size, win new customers every week, secure top-tier partnerships, and gain recognition from leading analysts like Gartner. We have truly taken a different approach to AI by providing collaborative agents rather than a black box, one size fits all solution. Our competition only allows customers to enable AI and assumes they should then be hands-off as AI powers their site regardless of their corporate goals. With tailored AI, We deliver AI agents that collaborate with our customers' marketing teams to optimize their sites. Our customers are empowered to continually tune and train the AI agents based on their ever-changing goals, inventory, and market demands. We're moving fast in AI innovation. This year, we launched Concept Search. We launched Image Search, Visual Search, Conversation Search, and now Smart Response. No other platform has moved this quickly to seize the tailored AI opportunity in site search. As we continue to innovate, we expect these advancements to accelerate our growth, solidify our leadership in a market where search now drives 60% of our subscription revenue. This quarter, we sold 23 licenses with $420,000 in ARR, $1.4 million in TCV. That brings us to 70 licenses totaling $1.7 million in ARR and $5.1 million in total contract value this fiscal year. HawkSearch was the lion's share of these sales. Importantly, our investments in partner connectors accelerate sales by allowing customers to launch HawkSearch with the click of a button. We're launching multiple customers every single week. Our tailored AI approach also accelerates sales because our customers know that they can continually refine search results based on their merchandising goals. And this is different than competitors who simply have an AI button that puts the site on autopilot with no ability for ongoing tuning and therefore significant Q&A review before the launch. With each launch, we have more references and further recognition as leaders in the site search sector. Analysts continue to recognize HawkSearch for its advancements in AI, and this is driving demand and average sales price. Gartner recognized HawkSearch in its magic quadrant for search and product discovery, highlighting HawkSearch's strengths in both artificial intelligence and the B2B market. InfoTech Research Group awarded HawkSearch as a champion in enterprise search and recognized HawkSearch as a top-rated software within the category. Featured customers listed HawkSearch as a top performer in the Summer 2024 Customer Success Report for Enterprise Search Software. This quarter, HawkSearch launched the Gen A Powered Athena release, updating features with smart response and conversational dialogue based on search queries. where prompts for follow-up questions and suggestions to imitate a personalized in-person conversation with the sales assistant are available. Two important platform partners that we expect to continue to generate new sales for HawkSearch are Optimizely and BigCommerce. BigCommerce is promoting HawkSearch ahead of all other search providers on the first page of its app store, providing tens of thousands of BigCommerce customers the ability to upgrade to Hawk Search's AI technology. Hawk Search offers a one-click install for Optimizely and is recognized by Optimizely as a top paid app in their app store on the very first page. Hawk Search is now uniquely positioned to improve site search for more than 1,000 Optimizely configured commerce customers with several already purchasing licenses. We partner with the system integrator and Optimizely expert, xEngage, for our Optimizely connector, which leads to even more sales. HawkSearch AI will be showcased at Opticon 2024 in San Antonio, Texas this November with Optimizely. At the Applied AI Conference in Chicago this past June, Moblico presented HawkSearch as a key AI-powered site search platform for mobile devices. This is a new market in which HawkSearch's concept search is particularly well suited for success. And here are a few of the wins that we've had this quarter. Colonial Electric Supply, large electrical distributor, chose Bridgeline's HawkSearch to power product discovery for its optimizely platform e-commerce site. Colonial selected HawkSearch for its AI search capabilities and reputation in the electrical distributor sector. Grizzly Industrial, a leading industrial supplier, selected HawkSearch to power search on its e-commerce site. HawkSearch will enhance Grizzly's industry's e-commerce product discovery by offering precise search tailored to the needs of the machinery industry, including advanced part number search for both full and partial numbers, unit of measurement conversion for dimensional products, and merchandising tools to run product-specific campaigns. SalesRite, a large craft retailer, selected HawkSearch to improve its product discovery for both B2C and B2B sites. HawkSearch launched on two of SalesRite's e-commerce sites on the BigCommerce multi-storefront platform. Our partnership with SalesRite reflects our expertise in supporting retail and BigCommerce multi-storefront. Shadler Yesco, an electrical distributor with over 29 locations and 1,000 brands, implemented Hawk Search on its optimizely powered e-commerce site using the X-Engage connector for Hawk Search. And Voltus GmbH, a leading German electrical distributor, selected Bridgeline to power site search for its e-commerce site. Voltus aims to increase online revenue by using Bridgeline's AI-powered site search for its online catalog with more than 80,000 products. All in all, we had 23 license sales this quarter, 70 this year to date, and our average license sale is nearly double the MRR of last year. This increase in volume and size is largely due to our advances in AI. So at this time, I'll turn the call back over to our Chief Financial Officer, Tom Winhausen. Go ahead, Tom.