Bridgeline Digital, Inc.

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, and 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 second 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 I'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 factor section of our most recent annual report on Form 10-K and our most recent 10-Q filing and 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 form-looking statement as a result of new information, future events, or otherwise. We advise that today's results should not be viewed as an indication of future performance. The call will also include references to certain financial measures that are not calculated in accordance with and generally accept the accounting principles for GAAP. We generally refer to these as non-GAAP financial measures. In reconciliations of the non-GAAP financial measures, the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release. I'd now like to turn the call over to Ari Kahn, BridgeLine's President and CEO.

Ari? Thank you, Tom. Good afternoon, everyone. Well, I'm happy to say that we tripled last quarter's sales and delivered the most new logo sales of any corner in the company's history. We won 19 sales this quarter, nearly two a week, closing $2.8 million in TCG with $1.2 million in annual recurring revenue. We also signed over a million dollars in professional services agreements. The average sales price took a massive leap this quarter to $44,000 in ARR compared to $30K last quarter and $21,000 a year ago in Q2 of FY25. Above and beyond the increase in our new customer average license price, our existing customers bought an average of $28,000 in ARR for add-on products like our AI Visual Search. The increase in sales price of is largely due to the new AI add-ons that our customers are choosing, as well as the fact that we're selling to larger companies with massive catalogs and web traffic requirements. In addition to new sales, we continue to have outstanding customer satisfaction proven by our renewal rates and license expansions. This quarter, our core product had a net revenue retention of 107%. BridgeLine's core products, led by Hawk Search's suite of AI products, now represent 65% of the company's subscription revenue compared to 61% in Q2 last year. This was the best quarter ever for customer acquisition. The majority of our wins came from B2B manufacturers and distributors, a large total addressable market where Gartner ranked Hawk Search number one in their critical capabilities report. The recent customer wins included a leading global gas provider selecting HawkSearch to power search across three e-commerce sites in one of the most technically complex implementations in HawkSearch's history. The site required multilingual search, customer-specific pricing, entitlement-based access, dimension-based search, and multi-site management. A wholesale distributor selected Hawk Search to power five sites on its oral commerce platform, with a clear path for Hawk to power eight of their sites as the relationship expands. Hawk Search was chosen on the strength of its B2B capabilities, including keyword management, entitlements, personalization, product recommendations, unit of measure, and analytics. A national industrial supplier selected HawkSearch to power search across its large specification-driven catalog of metal and specialty materials, with unified search and concept search driving their online revenue by improving conversion rates and reducing friction for specification-driven customer searches. Another important part of our growth strategy is partnerships. HawkSearch lends itself naturally to both agency and software platform partners that generate sales. HawkSearch received multiple 2026 honors from the InfoTech Research Group, including Leader in Enterprise Search, Top Product Catalog, Top UX, Top Features across eight additional categories based on verified user feedback. In terms of partnerships, Hawk Search and Znode announced the partnership bringing AI-powered search, merchandising, and personalization to manufacturers and distributors on the Znode B2B e-commerce platform, helping buyers find their right products faster, navigate larger catalogs more easily, and improve conversion across multiple store and multi-portal experiences. Partners are a big part of our go-to-market strategy, and traditional marketing also drives leads for us. We're presenting at in-person conferences more and more, like B2B Online Chicago, and hosting customer conferences to drive sales. And I'm really happy to announce that we recently added a new SVP of marketing to our team, Kelly Maltman. Kelly is a marketing exec with over a decade of experience leading B2B software sales and is working closely with our EVP of sales, Carl Prissy, to grow our sales pipeline. Our pipe grew by 82% compared to Q2 of FY25 with over 500 qualified leads and more than $5 million in ARR to drive ongoing revenue growth. Hawk Search has been an AI-based product suite. since long before the new wave of large language models and neural networks in AI that are making headlines today. This has allowed us to quickly adopt the latest AI technology faster than our competitors are able to. This quarter, we released the Hawk AI Shopping Assistant. B2C shopping assistants are starting to appear, with Amazon Rufus and Walmart Sparky leading the way. Most B2C sites are building their shopping assistance off their support chatbot, which is designed to answer questions about products, but not designed to drive online sales. TalkSearch's entire product suite is always focused on driving online sales for our customers. And it empowers companies to define merchandising rules to promote products that grow with full personalization, recommendation, and promotions at its core. The Hawk AI Shopping Assistant is built upon Hawk Search's AI merchandising infrastructure to truly align it with an online store's revenue goals. If you promote a product in Hawk, the AI will automatically promote it in Hawk's Assistant and vice versa. Furthermore, because Hawk Search has full B2B support, The Hawk AI Shopping Assistant is empowered to handle the complexity of B2B online sales. Everyday B2C concepts like pricing, catalog, and shipping are more complex in the B2B world as they're negotiated per customer and shopping is performed by teams. Each customer has pre-negotiated contracts to define which products they can access, custom pricing, freight schedules, credit lines, etc., The HawkSearch AI Shopping Assistant understands our customers' B2B contracts and merchandising rules so it can make commercially intelligent recommendations tailored to each individual customer. Here's an example of what the Shopping Assistant looks like in practice. One of our customers is a master B2B distributor for electronics. It has a massive inventory, and its customers are also B2B companies. Its customers are local distributors covering a smaller territory to supply individual electricians. With Hawker Shopping Assistance, a local distributor can log into the Master Distributor Shopping Assistance, and make a query like, I have 50 electricians as customers. My electricians build two or three houses a year, each one 750K, approximately 5,000 square feet. Give me a plan for stocking surrogate rakers and animals in my warehouse. Our stocking assistance is then advised to give Given that you're covering Southern Ohio and AC is required, you need 570 volt breakers, 600, 100 amp breakers, et cetera, and then suggest a 20% over for backstop and surplus plus orders, surprise orders. It will say that since the distributor has $10,000 credit line, it recommends quarterly replenishment and to add 5,000 foot cable and bundle it with the breakers to increase its sales. The shopping assistant then asks if it should place the order. That entire experience, the same type of experience you might have with an intelligent salesperson in an office can now happen online at scale, automated, and it happens in the complex B2B world where pricing, catalog, everything is custom negotiated on a per-customer basis. We support that. Hawk Search supports that. Hawk Search is unique, and this is going to drive a ton of sales for our business. The dialogue that can continue from this can configure the total warehouse for our master distributor as a customer, for its customers, local distributors, and drive their revenue. With new products like the AI Hawk Shopping Assistant, we expect to see continued acceleration of Hawk Search Suite. Frankly, it's a great time to be in marketing technology because AI has empowered smaller businesses like Hawk Search and BridgeLine to leapfrog larger incumbents and reset the landscape with innovations in AI like the AI Shopping Assistant. So with that, I'll turn it over to our Chief Financial Officer, Tom Windhausen, to share additional details.