Bridgeline Digital, Inc.

Thank you for standing by, and welcome to Bridgeline Digital's fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Tom Winhausen. CFO and Treasurer. Please go ahead.

Thank you so much. Thank you and good afternoon, everyone. Thank you for joining us today. My name is Thomas Windhouse and I'm the Chief Financial Officer of Bridgeline Digital. I'm pleased to welcome you to our fiscal 2024 fourth quarter conference call. On the call with us this afternoon is Ari Khan, Bridgeline's President and CEO, who will begin the call with a discussion of our business highlights. I will then update you on our financial results for the quarter, and we'll conclude by taking questions. Before we begin, I'd like to remind listeners that during this conference call, comments that are made 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 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 forward-looking statements made today. For our 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, 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 our earnings release by visiting our website. I'd now like to turn the call over to Ari Kahn, Bridgeline's president and CEO. Ari?

Thank you, Tom. Good afternoon, everyone. In fiscal 24, Hawk Search took center stage for Bridgeline, and our AI-powered products became our growth engine. We delivered innovations in AI for several years with AI multiplier, natural language processing, and personalization. But this year, Bridgeline released further advances by adding five new products, to the HawkSearch AI suite, solidifying HawkSearch as the undisputed leader in AI-powered product discovery. Today, HawkSearch is the majority of Bridgeline's business, and it powers over 1,000 websites ranging from B2C enterprises like hewlettpackard.com that has more than $1 million per hour in sales online, to top B2B distributors like Consolidated Electric Distributors that have more than 750 websites, and top brands like Black Diamond and Oriental Trading Company are also powered by HawkSearch. In 2024, we launched a new HawkSearch site every week, and Gartner recognized HawkSearch as a leading B2B product discovery platform, highlighting our AI-driven solutions tailored for distributors and manufacturers. Net revenue retention for HawkSearch is 103%, which demonstrates that we're not only retain HawkSearch customers, but also expand customer licensing with AI features like Smart Search and Smart Response. Fiscal year 24 sales contracts nearly doubled in annual contract value compared to the FY23 results, totaling $2.1 million in ARR with initial contracts typically 24 to 36 months. And this quarter, we sold 17 licenses for 360,000 in annual contract value, bringing us to 83 new licenses for the year, with 6.2 million in total contract value. Some new license sales in the year include NSI Industries, a prominent supplier in the construction materials testing equipment industry, who selected HawkSearch to enhance product discovery and customer experience. The supplier will leverage instant engage and autocomplete to display relevant content as soon as users interact with their search bar. Advanced B2B features will help customers quickly find the products that they need for NSI industries. Similarly, Rainy's truck parts and aftermarket autocomplete Automotive truck parts reseller chose Hawk Search's AI-powered Smart Search for its e-commerce site. Tacoma Screws, leading wholesale distributor in hardware, selected Hawk Search to enhance product and content discovery for their optimizely configured commerce site. And also another leader in fastener distribution selected Hawk Search to improve product discovery by incorporating a tailored, industry-trained, large-language model across 15 countries. and 12 languages. Colonial Electric Supply implemented Bridgeline's Hawk Search to optimize product discovery on its Optimizel e-commerce platform. The AI-powered search solution enhances the distributor's site with advanced features like merchandising and personalized search experiences. Finally, Hewlett Packard chose Bridgeline's Hawk Search to meet its high-performance hosting needs and optimize on-site search capabilities. This partnership highlights HawkSearch's scalability, delivering fast, relevant search results through a huge product catalog with enhanced usability for large enterprise-level platforms. HawkSearch is not a single product. It's a suite that is central to our E360 strategy with separately licensed products that drive visitors to our customer sites, convert those visitors into buyers, and increase the average order value for each one of those buyers. As a suite, HawkSearch creates upselling opportunities within our customer base, enabling a highly efficient sales engine with a CAC payback period of less than 20 months and net revenue retention rate of over 103%. In 2024, we released five products for HawkSearch that use AI large language models. to discover the products people want to buy, generate content to help people find websites, and to learn behavioral trends that drive sales for our customers. The HawkSearch Rapid UI framework allows our customers to launch in just days, featuring a GenAI component that seamlessly integrates smart response into search interfaces. It also enables the customization of agents, AI agents, to match brand tone, empowering merchandisers to fine-tune responses to meet specific customer needs. Additionally, we launched Conversational Search, which is powered by generative AI. Conversational Search leverages natural language capabilities to transform ordinary searches into conversational interactions. Natural language processing, NLP, is used to understand the intent and phrasing to deliver accurate, meaningful search results, and then to ask clarifying questions to further refine those results so that customers can more quickly find the products that they want to buy. This year, HawkSearch unveiled multi-site management, MSM. MSM allows organizations to centrally manage multiple websites while providing local sites the flexibility to tailor content for their markets. HawkSearch is the only product discovery platform with this capability, and MSN gives us a strong competitive advantages with franchises, with chains, and with brand networks. MSN is ideal for scenarios where multiple teams oversee numerous local sites, providing streamlined and efficient management of both local and global merchandising campaigns. We also introduced smart facets, which allow users to ask detailed, content-rich questions, and then uses a large language model and generative AI to automatically set facets on the e-commerce site to filter search results. We announced a new smart response feature that analyzes PDF content and delivers specific answers to user questions. This innovation includes tools for extracting content from large PDF repositories and using generative AI to create helpful search features, such as thumbnails of PDFs, summaries of pages within each PDF, and extraction of other important metadata, including file names and categorization. Finally, We announced an enhancement of integrating keywords and concept search into a unified intelligent search bar, which will be known as the Unified Search. Unified Search is part of Bridgeline's Agentic AI project, and its collaboration with Salesforce.com's AgentForce initiative emphasizes advanced automation and seamless integration with intelligent agents. This innovation combines Hawk Search's precise keyword search with the natural language processing capabilities of concept search, delivering faster and more relevant results to improve customer experiences and drive engagement. Two important platform partners that we expect to continue to generate new customers for Hawk Search are Optimizely and BigCommerce. BigCommerce is promoting Hawk Search ahead of all of the other search providers on the first page of its app store providing tens of thousands of big commerce 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 hawk search is now uniquely positioned to improve site search for more than a thousand optimizely configured commerce customers with several already purchasing licenses HawkSearch AI was showcased at Opticon 2024 in San Antonio, Texas just last month. We also partnered with the system integrator and optimize the expert Xengage for an optimized lead connector, which leads to even more sales. In the quarter, we announced the leading distributor of fasteners and industrial supplies to the selected HawkSearch to enhance their onsite capabilities. This distributor, the first lead from our partner Xengage, will use the Xengage XConnect connector for HawkSearch to power their product discovery on the optimizing platform. Furthermore, HawkSearch was named Moblico Partner of the Year. Moblico's integration of HawkSearch's AI capabilities enhances mobile engagement for distributors, optimizing real-time shopping experiences and increasing customer retention. This collaboration allows distributors to provide a personalized customer experience leading to increased revenue and a stronger market position. We also partnered with Product Genius Technology, a leading provider of innovative solutions with decades of experience in the fastener industry, where we'll partner with Hawk Search and provide patented search technology to enhance customer engagement and drive sales by simplifying the search, sort, and display of complex product catalogs, especially those in the fastener industry. Bridgeline has partnered with Human Element, a leading commerce services agency, who will partner with Hawk Search to expand its offerings for B2B and B2C merchants to include AI-powered search technology. And the partnership gives Adobe Commerce, previously Magento, BigCommerce, and Shopify platform users easy access to Hawk Search AI-powered search. Our leadership in AI has resulted in record sales and given us a pipeline for a great 2025. This time, I'd like to turn the call over to our Chief Financial Officer, Tom Windhausen. Tom?