Bridgeline Digital (NASDAQ:BLIN) said fiscal third-quarter sales momentum remained strong as the company tied its record for new customer wins and expanded adoption of its HawkSearch AI-powered search and product-discovery offerings.
For the quarter ended June 30, 2026, the marketing technology software company recorded nine new customer wins and 10 license expansions from existing customers. The activity resulted in 19 new subscription contracts with $1.7 million in total contract value and more than $370,000 in annual recurring revenue, according to President and Chief Executive Officer Ari Kahn.
HawkSearch Wins and AI Product Activity
Bridgeline said its Core net revenue retention rate was 106%, reflecting customer retention and expansion within the Core customer base. Kahn said the company is focused on manufacturers, distributors and other businesses with complex catalogs and B2B commerce requirements.
Among the quarter’s customer activity, a U.S.-based wholesale distributor of pet, farm, garden and home products selected HawkSearch for its BigCommerce platform after what Kahn described as a 14-day sales cycle. The deployment supports approximately 25,000 products and more than 450,000 monthly sessions.
A home and garden supplier launched the first two of five contracted HawkSearch deployments across its B2B and direct-to-consumer e-commerce operations, covering about 80,000 stock-keeping units. Separately, a large enterprise wholesale distributor selected HawkSearch for search and product discovery across five OroCommerce sites, with potential expansion to eight sites.
Kahn also said HawkSearch ranked first for the B2B search use case in Gartner’s 2026 Critical Capabilities for Search and Product Discovery report, marking the second consecutive year the platform received that ranking.
The company expanded customer sales and pipeline activity for its HawkSearch AI Agent Suite, including its Shopping Assistant and Analytics Assistant products. Bridgeline also advanced its Aura AI Agent framework, which Kahn said connects product discovery with inventory, pricing, customer entitlements, order history and other commerce workflows.
Revenue, Margins and Loss Narrowing
Chief Financial Officer Tom Windhausen said total revenue was $3.9 million in the fiscal third quarter, compared with $3.8 million in the prior-year quarter. Subscription revenue, including SaaS licenses, maintenance and hosting, was unchanged at $3.1 million. Subscription revenue accounted for 79% of total revenue, compared with 81% a year earlier.
Services revenue rose to $800,000 from $700,000 in the prior-year period, representing 21% of total revenue compared with 19% a year ago.
- Cost of revenue was $1.4 million, compared with $1.3 million in the prior-year quarter.
- Gross profit was $2.5 million, unchanged from a year earlier.
- Overall gross margin was 46%, while subscription gross margin was 69%, compared with 70% a year earlier.
- Services margin was 47%, compared with 50% in the prior-year period.
- Operating expenses declined to $3.0 million from $3.2 million.
- Net loss narrowed to $500,000 from $800,000.
- Adjusted EBITDA loss improved to $102,000 from $330,000.
Balance Sheet and Marketing Investment
As of June 30, Bridgeline had $1.5 million in cash and $1.2 million in accounts receivable. Total debt outstanding was $187,000, carrying a weighted average interest rate of 3.5%, with equal principal payments due through 2028. The company reported total assets of $15.3 million and total liabilities of $6.4 million.
Kahn said Bridgeline’s March 2025 $2 million capital raise was intended to fund advertising and sales-and-marketing investment. The company is now spending about $350,000 per quarter on lead generation, down from the roughly $500,000 quarterly level initially discussed following the financing.
He said the investment contributed to the past two quarters of record new-logo sales and that operational efficiencies, including those related to artificial intelligence, should allow Bridgeline to sustain its current advertising spending level without significant cash burn.
Core Revenue Mix Outlook
Looking ahead, Kahn said management expects the company to remain roughly cash neutral in fiscal 2027, though individual quarters could be modestly positive or negative. He said the company intends to prioritize growth investment while avoiding what he described as a non-accretive capital raise.
Management expects Core products to account for more than 70% of total revenue next year and more than 75% of subscription revenue, based on current Core growth rates and Legacy-product attrition. Kahn said that as Core revenue becomes a larger share of the business, overall revenue growth could more closely reflect the growth profile of the company’s AI-focused software offerings.
About Bridgeline Digital (NASDAQ:BLIN)
Bridgeline Digital, Inc is a software-as-a-service company that delivers digital experience management solutions to mid-market and enterprise organizations. The company’s core offering, the LX Platform, integrates content management, e-commerce, customer portals and digital marketing tools into a unified cloud-based environment. Bridgeline’s platform is designed to help businesses streamline the delivery of personalized content and commerce capabilities across web, mobile and other channels.
The LX Platform features modules for web content creation, online storefront management, customer self-service portals and marketing automation.
