Bridgeline Digital Earnings Call: HawkSearch Drives Growth

Bridgeline Digital ((BLIN)) has held its Q4 earnings call. Read on for the main highlights of the call.

Bridgeline Digital Balances HawkSearch Momentum With Profit Pressures

Bridgeline Digital’s latest earnings call painted a picture of a business with strong momentum in its flagship HawkSearch suite, underpinned by robust revenue growth, high customer retention and industry recognition. At the same time, management acknowledged that legacy product declines, ongoing net losses and a constrained marketing budget are weighing on overall performance, leaving investors to balance impressive product traction against near-term financial and operational challenges.

HawkSearch Revenue Growth Fuels the Core Business

HawkSearch has clearly become the engine of Bridgeline Digital. The suite generated $8.9 million, or 58% of total revenue, and more than 60% of subscription revenue at $7.4 million, supported by a strong 75% gross margin. The product line’s 117% net revenue retention shows existing customers are expanding their spend, while a 16% compound annual growth rate (CAGR) for core products underscores sustained demand. For investors, this signals that the core business is both sticky and scalable, even as other parts of the portfolio lag.

Gartner’s Top Ranking Boosts Competitive Standing

Reinforcing that strength, HawkSearch was ranked No. 1 by Gartner for the B2B search use case in its 2025 Critical Capabilities report. This independent validation should enhance Bridgeline’s credibility with enterprise buyers, supporting pricing power and win rates against larger competitors. Such recognition is often a catalyst for better sales conversations and can translate into longer-term contract value as customers gravitate toward market leaders.

Shorter Sales Cycles and Rising Contract Values

Operational improvements are also emerging in the sales funnel. HawkSearch’s average sales cycle has been cut sharply from 160 days to 92 days, meaning deals are closing faster and cash is coming in sooner. At the same time, average annual recurring revenue (ARR) per sale climbed 35%, from $18,500 to $25,000. This combination of quicker closes and higher deal sizes suggests more efficient sales execution and a stronger value proposition, both key to scaling a SaaS-driven model.

Partnerships Power Market Expansion

Strategic partnerships are broadening HawkSearch’s reach. Integrations with Unilog and Salesforce’s AppExchange are expanding the total addressable market by embedding HawkSearch where B2B customers already do business. These alliances lower adoption friction, potentially accelerate sales cycles and open indirect channels for growth. For investors, these moves position Bridgeline to leverage partners’ customer bases without bearing the full cost of direct customer acquisition.

AI Product Innovations Deepen Customer Wallet Share

Bridgeline is leaning hard into AI-driven innovation, launching six new products: Smart Search, Smart Response, Smart Agents, Multisite Management, Rapid UI and Advanced Analytics. These offerings are designed to increase adoption within existing accounts while attracting new customers seeking advanced product discovery and search capabilities. The portfolio expansion not only differentiates HawkSearch in a crowded market but also creates more opportunities for upselling and cross-selling, supporting higher recurring revenue per customer.

Legacy Products Weigh on Overall Growth

Despite these gains, management stressed that growth in the core HawkSearch business is being partly offset by declines in legacy products. While this drag is expected to fade by 2026, it is currently muting headline growth figures and complicating the path to profitability. Investors will need to watch how quickly the legacy revenue base runs off and whether HawkSearch and related AI offerings can more than fill the gap.

Profitability Still Elusive Amid Higher Investment

On the bottom line, Bridgeline remains in the red. The company reported a net loss of $400,000 for the fiscal quarter ended September 2025, unchanged from the prior year. Adjusted EBITDA slipped to a loss of $169,000, compared with a slight positive of $5,000 a year earlier, as the company stepped up investments. While gross margins remain healthy, the results underscore that Bridgeline is still prioritizing growth and product development over near-term profitability.

Marketing Constraints Limit Speed of Scaling

Management identified limited marketing spend as a key obstacle to fully capitalizing on HawkSearch’s momentum. A larger marketing budget is seen as critical to achieving broader market saturation and maximizing brand presence in a competitive search and AI landscape. The company has begun to address this with a capital injection aimed at ramping marketing efforts, but the call made clear that marketing investment remains a central lever for accelerating growth.

Guidance Points to Aggressive Growth Investment in 2026

Looking ahead, Bridgeline’s guidance emphasizes continued expansion of HawkSearch and a more aggressive go-to-market push. The company highlighted that HawkSearch already delivers 58% of total revenue and 60% of subscription revenue with a 75% gross margin, underpinned by 117% net revenue retention and a 16% CAGR in core products. In fiscal 2025, Bridgeline sold 83 licenses with total contract value of $6.9 million, generating $2.4 million in ARR—an 18% increase year over year. Partnerships with Unilog and Salesforce are expected to further enlarge the addressable market and speed up deal flow, while a $2 million capital injection has already expanded the sales pipeline by 65%. For fiscal 2026, the company is signaling confidence with plans for a $500,000 per quarter marketing budget, aiming to convert its larger pipeline and new AI products into sustained revenue growth, even as it continues to carry a modest net loss and targets a 66% gross profit margin.

In summary, Bridgeline Digital’s earnings call showcased a company with a clear growth driver in HawkSearch, validated by strong metrics and third-party recognition, yet still grappling with legacy headwinds and the costs of scaling. Investors following BLIN will be weighing the impressive traction in AI-powered search, tightening sales execution and expanding partnerships against ongoing losses and the need for heavier marketing spend. The coming year will test whether Bridgeline can convert its product and pipeline strengths into durable, profitable growth as legacy drag fades.