Q3 2021 Bridgeline Digital Inc Earnings Call
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Good day, and thank you for standing by and welcome to the Beach Lionbridge adult.
Inc.
2000, and so I don't want earnings call at this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question.
I didn't answer session to ask a question during the session you will need to press star one on your telephone keypad.
I would now like to hand, the conference over to your first speaker for today, Mr. Nye County, CFO of which lines. It yourself. Thank you. Please go ahead Sir.
Thank you and good afternoon, everyone. My name is Mark Downey, and I am the Chief Financial Officer for Bridge line digital.
I am pleased to welcome you to our fiscal 2021.
Third quarter conference call.
On the call. This afternoon is every time originally digital president and CEO.
We will begin with a discussion of our business highlights.
I'll then update you on our financial results for the quarter.
I will conclude by taking questions.
Before we begin I will.
Like to remind listeners that during this conference call comments that we make regarding bridge line.
Not historical facts are forward looking statements within the meaning of section 27 day of the Securities Act of 1933.
Section 21 E of the Securities Act of $19.34, and are subject to risks and uncertainties that could cause such statements to differ materially.
The 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.
Overtime, and we expressly disclaim and assume no obligation to inform you if they do.
Results that we report today should not be considered as an indication of future performance.
Changes in economic business competitive technological regulatory and other factors such as the impact of related public health measures could cause bridge lines actual results to differ materially from those expressed or implied by the projections or forward looking statements made today.
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 I Bridge line 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 discussing the company's financial performance.
We provide a reconciliation of these non-GAAP measures to our GAAP financials in our earnings release.
You can obtain a copy of our earnings release.
Our website.
I would now like to turn the call over to Erik <unk>, our president and CEO.
Thank you Mark and good afternoon everybody.
I'm happy to report that we delivered more than 30% topline growth and expect to deliver double digit growth for next quarter as well as subscription revenue grew by 37% and is now 76% of our overall revenue.
Also accumulated a cash position of nearly $10 million will be invested in sales and marketing to win even more customers.
And our third quarter, we close more sales than any time in the company's history. Most of these sales were multiyear subscriptions, which will drive additional recurring revenue in future quarters.
Our subscription and license revenue is now more than 75% of our total revenue and subscriptions continue to grow our gross margin will increase even further.
This year, we made two acquisitions will rank in hot search.
Both companies are fully integrated with bridge lines at this time and the bulk of the restructuring expenses is that our third quarter.
With the combination of Celebrex and Hawk search, we are especially strong in the site search market with more than 400 customers in the feature set that is second to none.
Search leads.
Sales led sales for the company and our third quarter with nearly all contracts being multiyear commitments and two of them being larger than the company ever signed before.
Our strategy to merge Celebrex and hot search product is underway. This will result in a single product with the strongest feature set in the market, including natural language processing personalization and recommendation.
We released the World ranked assistant in our third quarter also will rank assistant incorporate artificial intelligent agents.
Monitors your global core.
Vital and makes recommendations that drive more site traffic and increase your Google ranking.
Richard on released E Commerce 360, dashboards for both the hot search and will rank product line. The ecommerce $3.60 dashboard measure as your ecommerce strength that makes recommendations with bridge line software that can help drive your site traffic boost your site's conversions and increase your online average order.
Value.
E Commerce 360 dashboard is an important part of our organic growth strategy and facilitates cross sales across the customer bases of our product lines.
Our dashboard delivered sales leads the very first day of its release them as impacting our sales pipeline above and beyond the new leads generated by marketing and our partner network.
Our partner network by the way is making a strong impact on our revenue both agency and <unk> partners are creating sales in our third quarter partners produced nearly half of our customer wins.
On the marketing front, we released a new website for both bridge line and our unbound product suite. These sites better articulate our E. Commerce 360 strategy and will convert more site lead to trap more site traffic to leads.
We will continue to grow our investment in lead generation to drive even more revenue to sum it up we've delivered record growth we had.
Expect to deliver strong growth next quarter, we have a strong cash position that will enable further investment in sales and marketing and we've made great strides in product development with the ecommerce three six and strategy.
At this time I'd like to turn the call over to our Chief Financial Officer, Mark Downey.
Thanks Terry.
Very excited to share the positive financial results for the third quarter of fiscal 2021 and June 30 of 2021 with you this afternoon.
Total revenue, which is comprised of licenses and services increased 31% to $3.4 million for the quarter ended June 32021, as compared to $2.6 million for the same period in 2020.
We're following all the various components of revenue.
Subscription and licensing revenue, which is comprised of SaaS licenses maintenance and hosting revenue and perpetual license revenue increased 37% to $2.6 million for the quarter ended June 32021 from $1.9 million for the same period in 2020.
As a percentage of total revenue.
Scripture and licenses revenue increased 3% to 76% of total revenue for the quarter ended June 32021, compared to 73% for the same periods in 2020.
Services revenue increased 16% or 108000 to 821000 for the quarter ended June 30th 2021 as compared to 713000 for the same period of 2020.
As a percentage of total revenue services revenue accounted for 24% of total revenue for the quarter ended June 32021, compared to 27% for the same periods in 2020.
Bridge lines overall strategy as Arie has mentioned called E. Commerce 360 has been on increasing recurring subscription and licensing revenue.
With out of the box apps that require little or no services to implement.
This focus and continued growth are expected to further increase our subscription and licensing to services revenue ratio.
Gross profit increased 45%.
Or $699002.3 million for the quarter ended June 32021.
As compared to $1.6 million for the same period in 2020.
Cost of revenue increased 11% or 114000 to $1.2 million for the quarter ended June 32021.
Compared to $1.1 million for the same period in 2020.
As a result of the increased fixed cost to operate our cloud based hosting model associated with the blue ranked and <unk> acquisitions.
Gross margin percentage increased to 65% for the quarter ended June 32021, compared to 59% for the same period in 2020.
Subscription and license is gross margin percentage was 72%.
For the three months ended June 32021, as compared to 64% for the same period in 2020.
Services gross margin percentage were consistent at 45%.
For the three months ended June 30 of 2021 and 'twenty one.
Operating expenses increased $1.5 million to $2.9 million for the quarter ended June 32021 from $1.4 million for the same period in 2020.
Included within the quarter, we pulse as of June 32021, our additional investment in sales and marketing and acquisition related costs associated with the integration of both <unk> and Hawkes search.
In May we concluded a registered direct pipe capital raised for gross proceeds of $5.1 million.
The net proceeds for this transaction were allocated according to derivative accounting rules.
Each of the freestanding financial instruments based on their fair values, which were comprised of common stock.
<unk> stock and warrants.
For the quarter ended June 32021, the total warrant liabilities were revalued, which considers the overall change in our clothing market share price as of June 32021 of $4.34.
The previous quarters, causing market share price of $2.89.
Resulting in a gross $4.6 million noncash derivative loss to the change in the fair value of the warrant liabilities.
All set by our game to the exercise of series C warrants 506000.
For the quarter ended June 30 of 2020, the net loss to the change in fair value of warrant liabilities was a $1.8 million.
Operating loss for the quarter ended June 32021 to 615000 as compared to 150000 profit for the same period in 2020.
Net loss applicable to common shareholders for the quarter ended June 32021, the $3.6 million compared to $1.7 million from same period in 2020.
Adjusted EBITDA for the quarter ended June 32021, with a gain of 302000 or <unk> <unk> per diluted share compared to 428000 or 11 cents per diluted share for the same period in 2020.
Our non-GAAP adjusted net loss for the quarter ended June 32021 was $2.7 million or <unk> 46 per diluted share compared to $1.4 million or <unk>.
37 cents per diluted share for the same period in 2020.
On May 11.2021.
Company persuade to a share purchase agreement acquired all of the issued and outstanding shares Hawks search.
A company based in Illinois.
The company accounts for the Hawk search transaction as a business combination.
We determined that the fair value of the gross assets acquired does not concentrated in a single identifiable asset or the group of similar assets.
Assets acquired and liabilities assumed have been recognized as their estimated fair values as of the acquisition date.
The purchase price consisted of cash and preferred stock paid at closing and the FERC cash payable in installments.
The purchase agreement also provides for additional consideration.
Most of achievement of certain revenue targets and operational goals to the selling shareholders.
Additionally, bridgeville and close on May 14th a registered direct offering priced at the market of $1 million.
60000 shares of its common stock at a price of $2 <unk> per share.
For gross proceeds of $2.4 million.
And a securities purchase agreements with certain institutional investors in connection with the private placement 2700 shares of our series D convertible preferred stock at a price of $1000 per share.
The company received gross proceeds from this private placement of $2.7 million.
As of June 32021, comprehend cash of $4.8 million and accounts receivable net of $1.3 million.
As compared to September 32020, So the company had cash of 861000 and accounts receivable net of 665000.
Total days sales outstanding for the quarter ended June 32021 is 47.3 days.
We received notification from the SBA.
100% forgiveness of our PPP loans.
As of June 30 of 2021, we have 6 million 800, or 1243 shares of common stock.
350 shares of the series C convertible preferred stock.
4200 shares of the series B convertible preferred stock.
Our total assets are $32.1 million.
Total liabilities of $23.7 million.
I wanted to wrap up with some financial outlook.
We expect.
Our subscription and license revenue to grow by approximately 20% for the fourth quarter of fiscal 2021.
We've been trying it looks forward to continued success in 2021 and in the future by delivering shareholder value and expanding our customer success with exciting technology innovations.
Thank you all for listening and at this time.
We'd like to open the call up to Q&A.
Ladies and gentlemen to ask a question. Please press star one on your phone's keypad again Thats star one on your phone's keypad.
So I just a moment to compile the Q&A roster.
Yes.
Again, Thats star one on your phone's Keith.
Ed.
Yeah.
Okay.
Your first question comes from the line of Orin Hirschman. Your line is now open.
Hi, how are you resolutions on the progress.
Kmart will continue.
Hi.
So as you're continuing to just go through some of the offerings existing offerings that are showing the most growth in.
Without saying anything you can tell us about some of the integration and some of the new offerings or I should say integrated offerings that you think are.
In the coming quarters.
Sure sure. So what are the key changes that we made at the beginning of <unk>.
At the beginning of the year was a move away from platforms and towards App.
And.
Our unbound product suite is fundamentally a platform product, which has a six month sales cycle much larger price tags and we're moving towards.
<unk> sales cycles enable telephonic and touch lift sales.
That and our site search products, which is hawk and Celebrex.
<unk>.
Our strongest selling products today, and our touchless sales for STL.
Which is will rank.
Is.
Is very strong as well.
The unbound side.
With orchestra CMS as well.
What we're doing is we are.
Investing in those.
Turn them into apps as well that can be sold telephonic Lee and to that end, we released unbound pages. So this uses our unbound platform technology.
Creates an app on top of that that has a local pages solution for franchises to be able to quickly launch.
Separate page locator pages for each of their franchisees and we sold that product. This quarter. So that salt is sold as well so in general sell abroad Orchestra.
Celebral Hawk search rank those are driving a lot of our growth.
And by repositioning unbound, that's driving growth now as well and that'll be our focus and that is the heart of E Commerce 360 <unk>.
That helped drive year revenue increase your conversion.
And boost your average order value for online stores that we're able to sell.
Hi.
Telefonica <unk> or in a touchless way could that end.
We have.
Released our E Commerce, 360, dashboard, which is now inside of both the Hawk and the wound ranked products.
Now those products to cross sell our other software and that's helping to drive some of this organic growth as well.
Is there further integration that you can do or have to do with rank.
The search product.
There is further integration that we can do so wound rank has this AI system that evaluates your website from a lot of different dimensions, not just traffic it understands the technology behind your side it connects to Google analytics and is able to kit.
Value weight conversion and bat intelligence is going to go even deeper into hot search and our other product lines to make their dashboards, even smarter. So that they can give you the best recommendations that will drive revenue for a new site.
And in terms of the.
So if you have a you.
Can say release date or anything in terms of a fully integrated search between the existing search products.
Any thoughts.
And how important that is number one and number two and any thoughts on when that might be available. If you know yeah sure sure yeah, well, that's really important so when we're talking about our search products solid growth and.
And Hock search Celebral springing natural language processing and search to the table Hawk search, bringing recommendations personalization Super strong set of analytics in the dashboard to the table integrating those it's a top priority for us it's going to give the basketball world to all of our customers.
And we don't have a formal release date, yet but that is just one of the higher priorities for the company.
Okay, great. Thanks, very much I'll, let other people out.
Thank you Arne.
Again to ask a question. Please press star one on your Phone's Keypad. Your next question comes from the line of Howard Hoffman. Your line is now open.
Congratulations on the quarter I jumped in a little late so I apologize if you've provided some of the information but.
In terms of in terms of.
The balance sheet.
Where do you stand I guess post.
The quarter in terms of your cash balance and how many warrants are left in <unk> and how how strong do you consider to the balance sheet to be.
Great great well.
Right at the end of the quarter.
Our stock price surged.
Lee and several warrants were exercised so some of those.
Recognized within our quarter, a couple of million dollars worth and then another IDE.
Five or $6 million was recognized after the fact and were.
Very close to $10 million in cash today.
I think that we exceeded $10 million a few days ago with data payroll. So it's kind of operating round in that area.
So thats, where we are today and in.
In terms of the.
The overall warranty.
Today, we get.
Post the end of the quarter I'm talking about today is in.
Okay August 16th.
We have Bob.
About one 8 million shares.
8 million warrants left on our books.
Okay.
Okay.
Okay, and what does this balance sheet really provide you in terms of.
Gaining new customers and investing in your sales staff, where do you envision the sales they are being at the end of the year, but more importantly, how customers are new customers view the company.
Okay, well on the sales side, we just hired four people literally last week. So we are growing on the sales side, Matt because of our balance sheet.
Rich line.
Our focus is.
As top line growth, we're not going to neglect our bottom line, we've had a strong bottom line and we're going to continue to.
To maintain that however, topline growth is where we want to invest right now and because we've got a lot of cash.
Creates a lot of opportunities for us.
And Opportunistically, we will we will look at acquisitions and for small one.
We could do those with cash on hand, it was if the right acquisition came up because the heart of the E. Commerce 360 strategy involves extending the number of apps that we can cross sale.
And those apps often can be acquired for <unk>.
Good luck.
And I assume will rank is still providing a whole bunch of lead generation for you guys.
Yes, we are ranked as tailing out we love, we rank and it's producing tons of leads Scott kind of value it fits perfectly in our strategy.
Okay.
Keep up the great work guys. Thank.
Thank you IRA.
Again to ask a question. Please press star one on your keypad.
Again to ask a question. Please press star one on your phone's keypad.
There are no further questions I would like to turn the call over to Mr. Mike <unk> for closing remarks.
Thank you.
We appreciate the support and patience of our shareholders and it is our goal to continue building a scalable business model, which in turn will build shareholder value.
Thank you for joining us today, and we look forward to speaking again on our Q4 fiscal 2021 conference call.
Stay healthy and well.
Thank you. This concludes today's call you may now disconnect.
Okay.
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