Bridgeline Digital Inc

Previous wording

Bridgeline Digital is a marketing technology company that offers a suite of products that help companies grow online revenue and share information with customers, partners, and employees.

Current wording

We are a marketing technology company that offers a suite of products that help companies grow online revenue and share information with customers, partners, and employees.

Previous wording

All of Bridgeline's software is available through a cloud-based Software as a Service (“SaaS”) model, whose flexible architecture provides customers hosting and support. Additionally, Unbound and HawkSearch have the option to be available via a traditional perpetual licensing business model, in which the software can reside on a dedicated infrastructure either on premise at the customer’s facility, or manage-hosted by Bridgeline via a cloud-based, dedicated hosted services model.

Current wording

All of our software is available through a cloud-based Software as a Service (“SaaS”) model, whose flexible architecture provides customers hosting and support. Additionally, Unbound and HawkSearch have the option to be available via a traditional perpetual licensing business model, in which the software can reside on a dedicated infrastructure either on premise at the customer’s facility, or manage-hosted by us via a cloud-based, dedicated hosted services model.

Previous wording

Bridgeline Digital was incorporated under the laws of the State of Delaware on August 28, 2000.

Current wording

We were incorporated under the laws of the State of Delaware on August 28, 2000.

Previous wording

The Company’s corporate office is located in Woburn, Massachusetts. The Company maintains regional field offices serving the following geographical locations: Woodbury, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium.

Current wording

Our corporate office is located in Woburn, Massachusetts. We maintain regional field offices serving the following geographical locations: Woodbury, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium.

Previous wording

The Company has four wholly-owned subsidiaries: Bridgeline Digital Pvt. Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium.

Current wording

We have four wholly-owned subsidiaries: Bridgeline Digital Pvt. Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium.

Previous wording

We currently have over 2,000 active customers. For the three months ended December 31, 2023 and 2022, no customer exceeded 10% of the Company’s revenue.

Current wording

We currently have over 2,000 active customers. For the three and six months ended March 31, 2024 and 2023, no customer exceeded 10% of our revenue.

Previous wording

Results of Operations for the Three Months Ended December 31, 2023 compared to the Three Months Ended December 31, 2022

Current wording

Results of Operations for the Three and Six Months Ended March 31, 2024 compared to the Three and Six Months Ended March 31, 2023

Previous wording

Total net revenue for each of the three months ended December 31, 2023 and 2022, was $3.8 million and $4.1 million, respectively. We had net loss of ($0.6) million and ($0.08) million for the three months ended December 31, 2023 and 2022, respectively. Included in the net loss for the three months ended December 31, 2023 and 2022, was a gain of $18 thousand and $0.3 million, respectively, as a result of the change in the fair value of certain warrant liabilities. Basic and diluted loss per share attributable to common shareholders was $0.06 for the three months ended December 31, 2023. Basic and diluted net loss per share attributable to common shareholders was $0.01 for the three months ended December 31, 2022.

Current wording

Total net revenue for each of the six months ended March 31, 2024 and 2023, was $7.6 million and $8.2 million, respectively. We had net loss of $(1.2) million and $(0.6) million for the six months ended March 31, 2024 and 2023, respectively. Included in the net loss for the six months ended March 31, 2023, was a gain of $0.5 million as a result of the change in the fair value of certain warrant liabilities. Basic and diluted loss per share attributable to common shareholders was $ (0.12) for the six months ended March 31, 2024. Basic and diluted net loss per share attributable to common shareholders was $ (0.06) for the six months ended March 31, 2023.

Previous wording

Revenue from subscription (SaaS) and perpetual licenses for the three months ended December 31, 2023 of $3.1 million decreased $0.1 million from $3.2 million for the three months ended December 31, 2022. The decrease for the three months ended December 31, 2023 compared to the prior period partially resulted from a reduction in revenue from a particular customer. Subscription and perpetual licenses revenue as a percentage of total revenue increased to 82% from 79% for the three months ended December 31, 2023 compared to the three months ended December 31, 2022.

Current wording

Revenue from subscription (SaaS) and perpetual licenses for the three months ended March 31, 2024 of $3.0 million decreased $(0.3) million from $3.3 million for the three months ended March 31, 2023.

Previous wording

Revenue from digital engagement services of $0.7 million for the three months ended December 31, 2023 decreased from $0.9 million for the three months ended December 31, 2022. Digital engagement services revenue as a percentage of total revenue decreased to 18% in December 31, 2023 from 21% in December 31, 2022

Current wording

Digital engagement services revenue as a percentage of total revenue decreased to 19% for the six months ended March 31, 2024 from 20% for the six months ended March 31, 2023.

Previous wording

Total cost of revenue of $1.2 million for the three months ended December 31, 2023 decreased from $1.3 million for the three months ended December 31, 2022.

Current wording

Total cost of revenue of $1.3 million for the three months ended March 31, 2024 remained consistent with the three months ended March 31, 2023.

Previous wording

Cost of subscription and perpetual licenses decreased 4% to $0.8 million for the three months ended December 31, 2023 from $0.9 million for the three months ended December 31, 2022. The cost of subscription and perpetual licenses as a percentage of subscription and perpetual licenses revenue was 27% for each of the three months ended December 31, 2023 and 2022, respectively.

Current wording

The cost of subscription and perpetual licenses as a percentage of subscription and perpetual licenses revenue was 29% and 26% for the three months ended March 31, 2024 and 2023, respectively.

Previous wording

Cost of digital engagement services decreased 10% to $0.4 million for the three months ended December 31, 2023 from $0.4 million for the three months ended December 31, 2022. The cost of total digital engagement services as a percentage of total digital engagement services revenue was 56% and 49% for the three months ended December 31, 2023 and 2022, respectively.

Current wording

The cost of total digital engagement services as a percentage of total digital engagement services revenue was 53% and 51% for the three months ended March 31, 2024 and 2023, respectively.

Previous wording

Gross profit of $2.6 million for the three months ended December 31, 2023 decreased $0.3 million as compared to $2.8 million for the three months ended December 31, 2022. The gross profit margin was 68% and 69% for the three months ended December 31, 2023 and 2022, respectively.

Current wording

Gross profit of $2.5 million for the three months ended March 31, 2024 decreased $(0.3) million from $2.8 million for the three months ended March 31, 2023.

Previous wording

Sales and marketing expenses of $0.9 million for the three months ended December 31, 2023 decreased from $1.2 million for the three months ended December 31, 2022. Sales and marketing expense as a percentage of total revenue was 24% and 30% for the three months ended December 31, 2023 and 2022, respectively.

Current wording

Sales and marketing expenses of $0.9 million for the three months ended March 31, 2024 decreased from $1.4 million for the three months ended March 31, 2023.

Previous wording

The changes for the comparable periods is primarily attributable to lower personnel costs.

Current wording

The decrease in expenses compared to the prior periods is primarily attributable to lower personnel costs and lower marketing spend on leads and conferences.

Previous wording

Research and development expenses of $1.1 million for the three months ended December 31, 2023 increased $0.3 million, from $0.7 million for the three months ended December 31, 2022. Research and development expenses as a percentage of total revenue was 29% for the three months ended December 31, 2023 and 18% for the three months ended December 31, 2022.

Current wording

Research and development expenses as a percentage of total revenue was 27% for the three months ended March 31, 2024 and 23% for the three months ended March 31, 2023.

Previous wording

The changes for each of the comparable periods is primarily attributable to additional personnel costs.

Current wording

The increases for each of the comparable periods is primarily attributable to additional personnel costs.

Previous wording

The loss from operations was ($0.6) million and ($0.4) million for the three months ended December 31, 2023 and 2022.

Current wording

Depreciation and amortization expense was $0.3 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.

Previous wording

Depreciation and amortization expense was $0.4 million for the three months ended December 31, 2023 and 2022. Depreciation and amortization as a percentage of total revenue increased to 10% for the three months ended December 31, 2023 compared to 9% for the three months ended December 31, 2022.

Current wording

Depreciation and amortization as a percentage of total revenue was 8% and 9% for the three months ended March 31, 2024 and 2023, respectively.

Previous wording

During the three months ended December 31, 2023, the change in fair value of contingent consideration, interest expense and other, net, was $0 and ($9) thousand, respectively.

Current wording

During the three months ended March 31, 2024 and 2023, interest expense and other, net, was $(53) and $(10) thousand, respectively.

Previous wording

The Company recognized a gain related to the change in fair value of warrant liabilities of $18 thousand and $0.3 million, for the three months ended December 31, 2023 and 2022, respectively.

Current wording

We recognized a gain/(loss) related to the change in fair value of warrant liabilities of $(25) thousand and $0.2 million, for the three months ended March 31, 2024 and 2023, respectively.

Previous wording

The provision for income taxes was $5 thousand for the three months ended December 31, 2023 and $6 thousand for the three months ended December 31, 2022. The provision for income taxes consists of estimated liability for federal and state income taxes owed by the Company. Net operating loss (“NOL”) carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company maintains a valuation allowance against its net deferred tax assets.

Current wording

The provision for income taxes was $5 thousand for the three months ended March 31, 2024 and $10 thousand for the three months ended March 31, 2023. The provision for income taxes was $10 thousand for the six months ended March 31, 2024 and $16 thousand for the six months ended March 31, 2023. The provision for income taxes consists of estimated liability for federal and state income taxes owed by us. Net operating loss (“NOL”) carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. We maintain a valuation allowance against its net deferred tax assets.

Previous wording

Cash used in operating activities was $0.9 million for the three months ended December 31, 2023, compared to $0.1 million for the three months ended December 31, 2022. The change in cash used in operating activities, compared to the prior period, was primarily due to a decrease in net earnings and changes in non-cash items, including changes in fair value of warrant liabilities, and changes in accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities and deferred revenue.

Current wording

Cash used in operating activities was $(1.0) million for the six months ended March 31, 2024, compared to $0.5 million cash provided by operating activities for the six months ended March 31, 2023. The change in cash used in operating activities, compared to the prior period, was primarily due to a decrease in net earnings and changes in non-cash items, including changes in fair value of warrant liabilities, and changes in accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities and deferred revenue.

Previous wording

There was no cash used in investing activities for the three months ended December 31, 2023. Cash used in investing activities was $6 thousand for the three months ended December 31, 2022, related primarily to purchases of property and equipment.

Current wording

There was $(5) thousand cash used in investing activities for the six months ended March 31, 2024 and $(16) thousand for the six months ended March 31, 2023, related primarily to purchases of property and equipment.

Previous wording

Cash used in financing activities was $0.1 million for the three months ended December 31, 2023, related to long-term debt payments related to acquisitions completed during fiscal 2021. Cash used in financing activities was $0.3 million for the three months ended December 31, 2022, primarily related to payments of long-term debt and deferred purchase price payable and contingent consideration payments related to acquisitions completed during fiscal 2021.

Current wording

Cash used in financing activities was $(0.1) million for the six months ended March 31, 2024, related to long-term debt payments related to acquisitions completed during fiscal 2021. Cash used in financing activities was $(0.6) million for the six months ended March 31, 2023, primarily related to payments of long-term debt and deferred purchase price payable and contingent consideration payments related to acquisitions completed during fiscal 2021.

Previous wording

The Company has historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company is continuing to maintain tight control over discretionary spending for the 2024 fiscal year. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.

Current wording

We have historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. We continue to maintain tight control over discretionary spending for the 2024 fiscal year. We believe that future revenues and cash flows will supplement our working capital and have an appropriate cost structure to support future revenue growth.

Previous wording

The Company may offer and sell, from time to time, in one or more offerings, up to $50 million of its debt or equity securities, or any combination thereof. Such securities offerings may be made pursuant to the Company’s currently effective registration statement on Form S-3 (File No. 333-262764), which was initially filed with the Securities and Exchange Commission on February 16, 2022 and declared effective on March 4, 2022 (the “Shelf Registration”). A complete description of the types of securities that the Company may sell is described in the Preliminary Prospectus contained in the Shelf Registration. As of the date of the filing of this Quarterly Report, there are no active offerings for the sale or obligations to purchase any of the Company’s securities pursuant to the Shelf Registration. There can be no assurances that the Company will offer any securities for sale or that if the Company does offer any securities that it will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us. Further, our ability to offer or sell such securities may be limited by rules of the NASDAQ Capital Market.

Current wording

We may offer and sell, from time to time, in one or more offerings, up to $50 million of its debt or equity securities, or any combination thereof. Such securities offerings may be made pursuant to our currently effective registration statement on Form S-3 (File No. 333-262764), which was initially filed with the Securities and Exchange Commission on February 16, 2022, and declared effective on March 4, 2022 (the “Shelf Registration Statement”). A complete description of the types of securities that we may sell is described in the Preliminary Prospectus contained in the Shelf Registration Statement. As of the date of the filing of this Quarterly Report, there are no active offerings for the sale or obligations to purchase any of our securities pursuant to the Shelf Registration Statement. There can be no assurances that we will offer any securities for sale or that if we do offer any securities that we will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us. Further, our ability to offer or sell such securities may be limited by rules of the NASDAQ Capital Market.

Previous wording

At this time, the Company does not have any off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, other than our operating leases.

Current wording

At this time, we do not have any off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons, other than our operating leases.

Previous wording

We lease all of our office locations. The gross obligations for operating leases is $0.3 million, of which $0.2 million is expected in the next twelve months. Debt payments on the Company’s various debt obligations total $0.6 million of which $0.2 million is expected to be paid in the next twelve months.

Current wording

We lease all of our office locations. The gross obligations for operating leases is $0.3 million, of which $0.2 million is expected to be paid in the next twelve months. Debt payments on our various debt obligations total $0.6 million of which $0.2 million is expected to be paid in the next twelve months.

Previous wording

The Company derives its revenue from two sources: (i) Software Licenses, which are comprised of subscription fees, perpetual software licenses, and maintenance for post-customer support (“PCS”) on perpetual licenses, and (ii) Digital Engagement Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search. Customers who license the software on a subscription basis, which can be described as “Software as a Service” or “SaaS”, do not take possession of the software.

Current wording

We derive our revenue from two sources: (i) Software Licenses, which are comprised of subscription fees, perpetual software licenses, and maintenance for post-customer support (“PCS”) on perpetual licenses, and (ii) Digital Engagement Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search. Customers who license the software on a subscription basis, which can be described as “Software as a Service” or “SaaS”, do not take possession of the software.

Previous wording

Revenue is recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, the Company includes an estimate of the amount it expects to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. The Company’s subscription service arrangements are non-cancelable and do not contain refund-type provisions. Revenue is reported net of applicable sales and use tax.

Current wording

Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, we include an estimate of the amount we expect to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. Our subscription service arrangements are non-cancelable and do not contain refund-type provisions. Revenue is reported net of applicable sales and use tax.

Previous wording

The Company recognizes revenue from contracts with customers using a five-step model, which is described below:

Current wording

We recognize revenue from contracts with customers using a five-step model, which is described below:

Previous wording

The Company allocates the amount it pays for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill. The Company bases the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. The Company allocates any excess purchase price that exceeds the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated growth rates, cash flows and discounts rates and estimated useful lives could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through general and administrative expense on the consolidated statements of operations. In those circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the contingent payments expected to be made as of the acquisition date. The Company re-measures this liability each reporting period and recognizes changes in the fair value through income (loss) before income taxes within the consolidated statements of operations.

Current wording

We allocate the amount we pay for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill. We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price that exceeds the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated growth rates, cash flows and discounts rates and estimated useful lives could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through general and administrative expense on the consolidated statements of operations. In those circumstances where an acquisition involves a contingent consideration arrangement, we recognize a liability equal to the fair value of the contingent payments expected to be made as of the acquisition date. We re-measure this liability each reporting period and recognizes changes in the fair value through income (loss) before income taxes within the consolidated statements of operations.

Previous wording

The Company evaluates common stock warrants as they are issued to determine whether they should be classified as an equity instrument or a liability. Those warrants that are classified as a liability are carried at fair value at each reporting period, with changes in their fair value recognized in change in fair value of warrant liabilities in the consolidated statements of operations. The fair value of the Company’s warrant liabilities are valued utilizing Level 3 inputs. Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of the Company’s common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility.

Current wording

We evaluate common stock warrants as they are issued to determine whether they should be classified as an equity instrument or a liability. Those warrants that are classified as a liability are carried at fair value at each reporting period, with changes in their fair value recognized in change in fair value of warrant liabilities in the consolidated statements of operations. The fair value of our warrant liabilities are valued utilizing Level 3 inputs. Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of our common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility.

Previous wording

The Company accounts for stock-based compensation awards in accordance with ASC 718,* Compensation-Stock* Compensation. Share-based payments (to the extent they are compensatory) are recognized in our consolidated statements of operations based on their fair values.

Current wording

We account for stock-based compensation awards in accordance with ASC 718,* Compensation-Stock* Compensation. Share-based payments (to the extent they are compensatory) are recognized in our consolidated statements of operations based on their fair values.