Q1 2022 Bridgeline Digital Inc Earnings Call

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Speaker 2: ["Pomp and Circumstance"] ["Pomp and Circumstance"]

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Speaker 1: Good day, and thank you for standing by. Welcome to the BridgeLine Digital Inc. first quarter 2022 earnings call. At this time, all participants are in a listen-only mode.

Good day and thank you for stadium by welcome to the Briggs <unk> Digital Inc. First quarter 2022 earnings call. At this time, all participants are in a listen only mode.

Speaker 1: After the speaker's presentation, there'll be a question and answer session.

After the Speakers' presentation, there'll be a question and answer session.

Speaker 1: To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that this call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host today, Thomas Wienthausen, Chief Financial Officer. Please go ahead.

Ask a question during the session you will need to press star one on your telephone. Please be advised that this call is being recorded if you require any further assistance. Please press star zero.

I would now like to hand, the conference over to your host today, Thomas <unk> Chief Financial Officer. Please go ahead.

Thank you operator, and good afternoon, everyone.

Speaker 3: Thank you for joining us today. My name is Thomas Windhausen and I'm the Chief Financial Officer for BridgeLine Digital.

Thank you for joining us today.

My name is Thomas warehousing and I'm, the Chief Financial Officer for Bridge line digital.

Speaker 3: I'm pleased to welcome you to our fiscal 2022 first quarter conference call. On the call this afternoon is Ari Khan, Bridgeline Digital's president and CEO , who will begin with a discussion of our business highlights.

I'm pleased to welcome you to our fiscal 2022 first quarter conference call.

On the call. This afternoon is Ari Kahn Bridge line Digital's, President and CEO , who will begin with a discussion of our business highlights.

Speaker 3: I'll then update you on our financial results for the quarter, and we'll conclude by taking questions.

I'll then update you on our financial results for the quarter and we'll conclude by taking questions.

Speaker 3: Before we begin, I'd like to remind listeners that during this conference call, comments that we make regarding bridge lines that are not historical facts are forward-looking statements with the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Act of 1934 and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results.

Before we begin I'd like to remind listeners that during this conference call comments that we make regarding bridge lines that are not historical facts are forward looking statements with the meaning of section 27, a Securities Act of 1933 and section 20 <unk> of the Securities Act of 1034 and are subject to risks and uncertainties that could cause such statements to differ materially.

Really from actual future events or results.

Speaker 3: These statements are made pursuant to the safe harbor provisions of the private securities litigation Reform Act of 1995. Internal projections and beliefs upon which we base our expectations today may change over time and we expressly disclaim and assume no obligation to inform you if they do.

These statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Internal projections and beliefs upon which we base our expectations today may change overtime, and we expressly disclaim assumes no obligation to inform you if they do.

Speaker 3: Results of the report today should not be considered as an indication of future performance.

Results. We report today should not be considered as an indication of future performance.

Speaker 3: Changes in economic, business, competitive, technological, regulatory, and other factors, such as the impact of public health measures, could cause Bridgeline's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today.

Changes in economic business competitive technological regulatory and other factors such as the impact of public health measures could cause <unk> actual results to differ materially from those expressed or implied by the projections or forward looking statements made today.

Speaker 3: For 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 by BridgeLine Digital with the Securities and Exchange Commission.

For 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 my bedroom in digital but just curious and exchange Commission.

Speaker 3: Also, please note that on the call this afternoon, we'll discuss some non-GAAP financial measures when commenting on the company's financial performance. We provide a reconciliation of our GAAP financials to these non-GAAP measures in our earnings release. You can obtain a copy of our earnings release by visiting our website.

Also please note that on the call. This afternoon, we will discuss some non-GAAP financial measures when commenting on the company's financial performance.

A reconciliation of our GAAP financials to these non-GAAP measures in our earnings release.

A copy of our earnings release by visiting our website.

Speaker 3: I would now like to turn the call over to Ari Kahn, our president and CEO . Ari? Thank you, Tom, and good afternoon, everyone. We had another great quarter that laid the foundation for continued growth. Subscription and license revenue increased by 71% to $3.1 million, which makes up 80% of our total revenue.

I would now like to turn the call over to Ari Kahn, our president and CEO alright.

You, Tom and good afternoon, everyone. We had another great quarter that laid the foundation for continued growth subscription and license revenue increased by 71% to $3 1 million, which makes up 80% of our total revenue.

Speaker 4: Subscription and license revenues have a 76% gross margin, and customers generally sign three-year initial engagements that automatically renew annually thereafter.

Subscription and license revenues have at 76% gross margin and customers generally think three year initial engagements that automatically renew annually thereafter.

Speaker 4: We ended the quarter with $6.4 million in cash, and that was after paying $2.5 million in deferred acquisition costs for WooRank and Hawxert.

We ended the quarter with $6 $4 million in cash and that was after paying $2 5 million in deferred acquisition cost per wound rank in Hawk search.

Speaker 4: Our cash balance and the fact that we delivered positive adjusted EBITDA positions us well to continue our investments in sales and marketing and product innovation.

Our cash balance and the fact that we delivered positive adjusted EBITDA positions us well to continue our investments in sales and marketing and product innovation.

Speaker 4: HawkSearch and Celebroth are leading our organic growth with several new customers, cross sales into our existing customer base and outstanding partner-led deals.

Hock search and celebrate our leading our organic growth with several new customers cross sales into our existing customer base and outstanding partner led deals.

Speaker 4: Wurank is winning new customers and cross-selling across our customer base as well.

Who rank us winning new customers and cross selling across our customer base as well.

Speaker 4: We expect our sales momentum to grow. And in the first half of our second quarter, we've already exceeded the new customer sales made in our first quarter.

We expect our sales momentum to grow and then the first half of our second quarter, we've already exceeded the new customer sales made in our first quarter.

Speaker 4: We made substantial investments in our partner network last year that are delivering new customers every month.

We made substantial investments in our partner network last year that are delivering new customers every month.

Speaker 4: Salesforce, BigCommerce, and Optimizely are generating great sales as well as leads for future sales.

Sales force.

Commerce and optimized we are generating great sales as well as leads for future sales.

Speaker 4: Our presence in their marketplace exposes us to thousands of prospective customers at a much more efficient marketing cost than we could otherwise achieve.

Our preference in their marketplace exposes us to thousands of prospective customers at a much more efficient marketing cost than we could otherwise the cheap.

Speaker 4: We've built a dedicated partner team with three full-time channel managers who are responsible for strengthening our relationships and expanding output with partners.

We've built a dedicated partner team with three full time channel managers, who are responsible for strengthening our relationships and expanding output with partners.

Speaker 4: ISV partnerships, in addition to agency partnerships like AmericanEagle.com, are bringing us into opportunities with faster sales cycles and stronger close rates than ever before.

<unk> partnerships. In addition to agency partnerships like American Eagle Dot Com.

Bringing us into opportunities with faster sales cycles, and stronger close rates than ever before.

Speaker 4: In the quarter, this quarter, we won sales with multiple major hospitals, technology companies, pharmaceuticals, gaming businesses, distributors, and associations. All our sales have additional up-sale opportunities to generate even greater revenue as we move forward.

In the quarter. This quarter, we won sales with multiple major hospital technology companies pharmaceutical gaming businesses distributors and associations.

All our sales have additional upsell opportunities to generate even greater revenue as we move forward.

Speaker 4: Our new Data Bravo product has been a hit. And we signed a long-term license with the sales intelligence company to help them provide web intelligence to their customers.

Our new data Bravo product has been a hit and we signed a long term license with the sales intelligence company to help them provide web intelligence to their customers.

Speaker 4: Data Bravo mines SEO content accumulated by WoohRank to identify trends and competitive differentiators related to websites.

Data Bravo minds, SCO content accumulated by will rank to identify trends and competitive differentiators related to website.

And online marketing promotional products company with over 40000 customers chose hawk surge to power their commerce site, we're quickly becoming the preferred search solution and the promotional product sector with a string of recent wins, including another market, leading select leader selecting our natural language processing search natural.

Speaker 4: An online marketing promotional product company with over 40,000 customers chose HawkSearch to power their commerce site. We're quickly becoming the preferred search solution in the promotional product sector with a string of recent wins including another market leader selecting our natural language processing search. Natural language is a crucial solution for customizable products as it allows users to search for specific and unique product features.

Language is a crucial solution for customizable products is it allows users to search for a specific and unique product features.

We're also gaining traction with multiple customers in the beta be distributor vertical.

Speaker 4: We're also gaining traction with multiple customers in the B2B distributor vertical.

Especially electrical and plumbing.

Speaker 4: Our customers organize their large online product offerings and help drive sales and increase order size.

Our customers organize their large online product offerings and help drive sales and increased order size.

Speaker 4: We have several differentiating capabilities in this area, and we have excellent references from leading B2B distributors to continue to bring us new deals.

We have several differentiating capabilities in this area and we have excellent references for leading beta be distributors to continue to bring us new debt new deals.

Speaker 4: BridgeLine is expanding our presence in the multi-location sector, including franchises and other multi-location businesses.

Rich line is expanding our presence in the multi location sector, including franchises and other multi location businesses.

Speaker 4: Our reputation and experience in this sector are significant and continue to drive new business.

Our reputation and experience in this sector are significant and continue to drive new business.

Speaker 4: We will present at the International Franchise Association Conference later this month, and there we'll release our newest product line, True Presence.

We will present at the International franchise Association Conference later, this month and there we will release, our newest product line and true presence.

Speaker 4: True Presence is a suite of e-commerce apps specifically tuned for multi-location companies. We are committed to innovation for franchises and expect to continue winning new customers in the sector.

<unk> presence is a suite of e-commerce apps, specifically tuned for multi location company. We are committed to innovation for franchises and expect to continue winning new customers in the sector.

Speaker 4: Last year, we made two acquisitions and will continue to evaluate strategic opportunities. We only consider acquisitions that are accretive, offer a customer base to whom we can cross-sell our existing products and which have products that can be sold into our customer base.

Last year, we made two acquisitions and we will continue to evaluate strategic opportunities. We only consider acquisitions that are accretive offer our customer base to whom we can cross sell our existing products and what you have products that can be sold into our customer base. In addition to new customers.

Speaker 4: We look at companies globally with an emphasis on North America and Europe .

We look at companies globally with an emphasis on North America and Europe .

Speaker 4: The marketing technology sector has many acquisition opportunities, which allows us to be selective and find great matches, just as we did in 2021 with WooRank and HawkSearch.

The marketing technology sector has many acquisition opportunities, which allows us to be selective and find great matches, just as we did in 2021 with wound rank in Hawk search.

Speaker 4: Ridgeline is a healthy company with organic growth, positive adjusted EBITDA, and cash. We'll continue to invest in sales and marketing, as well as product innovation, to further increase shareholder value. At this time, I'd like to turn the call over to our Chief Financial Officer, Thomas Winhausen. Tom?

Rich line that a healthy company with organic growth positive adjusted EBITDA and cash will continue to invest in sales and marketing as well as product innovation to further increase shareholder value at this time I'd like to turn the call over to our Chief Financial Officer, Thomas warehouses Tom.

Speaker 3: Thanks Ari, I'm excited to further share with you our positive financial results for the first quarter of fiscal 2022, which ended December 31st, 2021 with you this afternoon. Our total revenue for the quarter ended December 31st, 2021, which is comprised of both subscription license revenue and services revenue with 4.3 million versus 2.8 million in the prior year period.

I'm, sorry, I'm excited to further share with you our positive financial results for the first quarter of fiscal 2022, which ended December 31, 2021 with you. This afternoon.

Our total revenue for the quarter ended December 31, 2021, which is comprised of both subscription and license revenue and services revenue was $4 3 million versus $2 8 million in the prior year period.

Speaker 3: Now going into each component of revenue, our subscription license revenue, which is comprised of fast licenses, maintenance and hosting revenue, and perpetual license revenue increased 71% for the quarter ended December 31, 2021 to $3.4 million from $2 million in the prior year period.

Now going into each component of revenue our subscription and license revenue, which is comprised of SaaS licenses maintenance and hosting revenue and perpetual license revenue increased 71% for the quarter ended December 31, 2021 to $3 4 million.

2 million in the prior year period.

Speaker 3: As a percentage of total revenue, that subscription license revenue increased by 10 percentage points to be 80% of total revenue for the quarter ended December 31, 2021, compared to 70% in the prior year period.

As a percentage of total revenue that subscription and license revenue increased by 10 percentage points to be 80% of the total revenue for the quarter ended December 31, 2021 compared to 70% in the prior year period.

Speaker 3: This increase in subscription license revenue as a percentage of total revenue was driven by the prior acquisitions of Wurak and HawkSearch, which have a high percentage of subscription revenue.

This increase in subscription and license revenue as a percent of total revenue was driven by the prior acquisitions that will break and Hawk search, which have a high percentage of subscription revenue.

Speaker 3: Services revenue increased also to 0.9 million for the quarter end of December 31st, 2021, as compared to 0.8 million in the prior year period. As a percentage of total revenue, services revenue accounted for 20% of total revenue for the quarter.

Services revenue increased also because they go to <unk> 9 million for the quarter ended December 31, 2021, as compared to zero point $8 million in the prior year period.

As a percentage of total revenue services revenue accounted for 20% of total revenue for the quarter.

Speaker 3: Cost of revenue increased 34% or 0.3 million to be 1.3 million for the quarter end of December 31st, 2021 compared to 1 million in the prior year.

Cost of revenue increased 34% or 0.3 million to be $1 3 million for the quarter ended December 31, 2021 compared to $1 million in the prior year period.

Speaker 3: As a result, gross profit increased 60% or $1.1 million, should be $3 million for the quarter ended December 31, 2021, as compared to $1.9 million in the prior year period.

As a result gross profit increased 60% or $1 1 million should be $3 million for the quarter ended December 31, 2021, as compared to $1 9 million in the prior year period.

Speaker 3: Our gross profit margin increased to 70% for the quarter and the December 31st, 2021 compared to 66% in the prior year period.

Our gross profit margin increased to 70% for the quarter ended December 31, 2021 compared to 66% in the prior year period.

Speaker 3: That was a 76% margin for subscription licenses in for the three months in December , versus 71% in the prior year, and 48% margins for services revenue for the three months in December 31, 2021, as compared to 55% in the prior year.

That was a 76% margin for subscription licenses in the third for the three months ended December versus 71% in the prior year and 48% margins for services revenue for the three months ended December 31, 2021, as compared to 55% in the prior year.

Speaker 3: Moving on to operating expenses, they increased to three and a half million for the quarter end of December 31 2021 from 1.7 million in the prior year period. The increase in operating expenses include the operating costs from last year's acquisition.

Moving on to operating expenses, they increased to $3 5 million for the quarter ended December 31, 2021 from $1 7 million in the prior year period.

Increase in operating expenses includes the operating costs from last year's acquisitions.

Speaker 3: Income from operations was the loss of 0.5 million for the quarter, as compared to income from operations of 0.2 million for the prior year period.

Income from operations was a loss of <unk> 5 billion for the quarter.

As compared to income from operations of 0.2 million for the prior year period.

Speaker 3: For the quarter end of December 31st, we had a change in fair value of our liability classified warrants, which resulted in non-cash income of $2.4 million as compared to a $1.4 million non-cash loss for the prior year.

For the quarter ended December 31, we had a change in fair value of our liability classified warrants, which resulted in noncash income of $2 4 million as compared to a $1 4 million noncash loss for the prior year period.

Speaker 3: Our change in share price is the primary driver of the changes in fair value.

Our change in share price is the primary driver of the changes in fair value of the warrants.

Speaker 3: As a result, that income was 0.9 million for the first for the fiscal quarter end of December 31 2021 or 18 cents a share for basic EPS as compared to a net loss of 1.2 million or a loss of 26 cents a share for basic EPS in the prior year. The change in that income is primarily driven by the

As a result net income was 0.9 billion for the first for the fiscal quarter ended December 31, 2021, or <unk> 18, a share for basic EPS as compared to a net loss of $1 2 million or a loss of <unk> 26, a share for basic EPS in the prior year.

Change in net income was primarily driven by the fair value adjustments for the warrants.

Speaker 3: That resulted in adjusted EBITDA for the quarter of 0.1 million compared to 0.7 million in the prior year.

That resulted in adjusted EBITDA for the quarter of zero point $1 million compared to zero point $7 million in the prior year period.

Speaker 3: Moving to our balance sheet, as already mentioned, we have cash of $6.4 million and a countable of $1.3 million at December 31st, 2021, compared to September 30th, 2021, when we have cash of $8.9 million and a countable of $1.4 million.

Moving to our balance sheet as already mentioned, we have cash of $6 4 million in accounts.

One 3 million at September at December 31, 21, compared to September 32000 September 30 of 2021.

We had cash of $8 9 million and accounts receivable of $1 4 million.

Speaker 3: December 31st, 2021, our total assets were $32.2 million, and our total liabilities were $12.6 million.

31, 2021, our total assets were $32 2 million and our total liabilities were $12 6 million.

Speaker 3: We look forward to continued success in 2022 and beyond. As we continue to focus on revenue growth, expanding customer success, technical innovation, and delivering shareholders.

We look forward to continue.

Can you success in 2022 and beyond is continue to focus on revenue growth expanding customer success technical innovation and delivering shareholder value.

Speaker 3: Thank you for joining us on the call today. At this time, we'd like to open up the call to questions and answers. Operator?

Thank you for joining us on the call today and at this time, we'd like to open up the call to questions and answers operator.

Speaker 1: And thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster.

And thank you.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the balance sheet. Please standby, while we compile the Q&A roster.

Speaker 1: And our first question comes from Howard Halpern from Taglich Brothers. Your line is now open. Thanks for your question.

And our first question comes from Howard Halpern from.

<unk> tablets brothers your line is now open.

Great great quarter guys.

Thank you Howard.

Speaker 5: Uh, first question really relates to the development of, uh, your partner or partner network. How do you envision that growing and how is that helping you drive sales?

First question really relates to the development of.

Your partner a partner networks do you envision that growing and how is that helping you drive.

Sales growth.

Speaker 4: It's really great. So we've got three full time people focused on our partners. And there's two classes of partners. There are the ISVs, Independent Software Vendors, and there are the agencies. And they're very different and they both help us in great ways. The ISVs, which include Salesforce, Optimizely, BigCommerce.

It's really great. So we've got three full time people focus on.

On our partners and there are two classes of partners third the Isps independent software vendors and there are the agencies they are very different and they both helped us.

Great ways, the Isps, which include sales force optimize Lee Big Commerce.

Speaker 4: They generally are selling platform software like content management solutions that our software runs on top of, and they generally have marketplace.

They generally are selling platform software like content management solutions that our software runs on top of and they generally have marketplaces with optimized and big Commerce, we've been hosting webinars to their customer base in conjunction junction with them explaining their customers how are softer.

Speaker 4: With Optimize and BigCommerce, we've been hosting webinars to their customer base in conjunction with them, explaining to their customers how our software can help drive more revenue for them. This results in a rather quick sales cycle because the customers don't need to buy a platform, they already have one, this is just an add-on to the platform that they've already invested in.

Where it can help drive more revenue for them. This results in a rather quick sales cycle, because the customers don't need to buy a platform. They already have one. This is just an add on to the platform that they've already invested them.

Speaker 4: In addition to that, we sit in their marketplaces so that even customers who don't attend a webinar can browse the marketplace, find us, and buy our software.

In addition to that we sit in their marketplaces, so that even customers who don't attend a webinar can browse the marketplace find us and by our software.

Speaker 4: And the agencies, these are digital agencies who are reselling platforms like Optimizely, for example, doing a full implementation of it, and our trusted advisors to their customers as to all the different technologies that are needed for success. And they include us in their recommendations.

And the agencies.

These are digital agencies, who are reselling platforms like optimize Lee for example, doing a full implementation of it and our trusted advisors to their customers and solve the different technologies that are needed for success and they include us in there.

And their recommendation.

Speaker 4: Both sides have opportunities for huge growth for us. We're relatively small in a more than $6 billion market. And I can see just with any one of these sales force, optimisely, big commerce, the ability for us to grow tremendously. And we've got great relationships.

Both sides have opportunities to for for huge growth for us were relatively small and our more than $6 billion market and I can see just with any one of these sales force optimizing big commerce, the ability for us to grow tremendously and we've got great relationships.

Speaker 5: Okay, and can you talk about a little bit more about the cross selling?

Okay.

And can you talk about a little bit more about the cross selling.

Speaker 5: program that you have and what kind of customers that you achieved a year or two ago yes

Program that you have and what kind of panic.

Have you gained from customers.

Customers that you can.

<unk> a year or two ago.

Yes, yeah. So today, we have four one.

Speaker 4: Five full-time people dedicated to cross-selling within our customer base.

Five five full time people dedicated to cross selling within our customer base.

Speaker 4: We sold more software to our existing customers this quarter than we did to new quarters, so that's, or to new customers, and that's great. That's exactly what we want because you don't have to spend any marketing dollars running ads or anything to get the attention of your existing customers. So your customer acquisition cost is much lower.

We sold more software to our existing customers this quarter and we did two new quarter, so that's or to new customers and that's great. That's exactly what we want because you don't have to spend any marketing dollars running ads or anything to get the attention of your existing customers. So your customer acquisition cost is much lower.

Speaker 4: Our team, we call them customer success, they're responsible for selling licenses, and they have one pipeline for that. They're responsible for also selling professional services, so that's where they further customize our software, they have another pipeline. And then finally they're responsible for renewals of existing customers.

R.

Our team we call them customer success, they're responsible for selling licenses and they have one pipeline for that.

They are responsible for also selling professional services, so that's where they further customize our software they have another pipeline and then finally, they're responsible for renewals of existing customers.

Speaker 4: So they exceeded their goals for the quarter. They've got a great pipeline going forward. And a strategic part of our inorganic growth will be to acquire companies that both have products that our customer success team can sell into our current customer base, and also have customers that our customer success team can sell our current products into. Okay.

<unk> exceeded their goals for the quarter, they've got a great pipeline going forward and a strategic part of our inorganic growth will be to acquire companies that both have products that our customer success team can sell into our current customer base and also have customers that our customer success team can sell.

Our current products into.

Okay.

And then in terms of.

You know continuing to upgrade and integrate and expand the technology that you have are you also getting customer feedback on what they want or need and.

Speaker 5: you know, continuing to upgrade and integrate and expand the technology that you have. Are you also getting customer feedback on what they want or need and

Speaker 5: seeing how that might fit into future product offerings.

I've seen me, how that might feed into future product offerings.

Speaker 4: Absolutely. So our team that's responsible for that is called product management. There are two people in product management. They have their directive is to collect information from existing customers.

Absolutely. So our team that's responsible for that is called product management that are two people and product management they have.

They are directed us to collect information from existing customers.

Speaker 4: from competitors, from analysts, and also from our own engineering team. Compile that information and present it to executive management and to customers for prioritization and then to set our roadmap and our deadline.

From competitor.

From analysts and also from our own engineering team compile that information and present it to executive management and so customers for prioritization and then to set our roadmap and our.

And our deadlines.

Speaker 4: We have briefing meetings with key customers regularly to show them where they fit on that roadmap. And sometimes our customers want a particular feature that perhaps is not a high priority from a broader market perspective. And in those instances, our customers pay us. They pay for the R&D to accelerate that feature on the roadmap. And that's been going on.

We have Bob.

Briefing meetings with key customers regularly to show them, where they sit on that roadmap and sometimes our customers want a particular feature that perhaps is not a high priority from a broader market perspective.

And in those instances our customers pay us they pay for the R&D to accelerate that feature on the roadmap and that's been going on.

Speaker 4: for years now, we pretty much always have a paid-for feature coming into our product set. Now, we're going to announce, well, we're announcing right now, True Presence. What True Presence is, and we're debuting at the International Franchise Association conference in two weeks.

FERC for years now, we pretty much always have a paid for feature coming into our product set now.

Now we're going to announce.

We're announcing right now a true PRASM.

True presences.

Date viewing at the <unk>.

International franchise Association conference in two weeks.

Speaker 4: is all of our technology that is related to franchise.

Is all of our technology that is related to franchise is now being tracked.

Speaker 4: is now being packaged.

Packaged into a consistent suite of software for our customers like 711, like Cvs Alphagraphics sport clips.

Speaker 4: into a consistent suite of software for our customers like 7-11, like CVS, Alpha Graphics.

Speaker 4: Fort Cliffs, the UPS store. We've got a very strong foothold in franchise space today. Those customers have very specific needs. They bring them to us all the time. We've responded to those. And this is a chance where we can expand in a market that has very little competition. No one's focused on that space. We've got features, we've got customers. So the barrier of entry for us is almost nothing.

Store, we've got a very strong foothold in franchise space today, those customers have very specific needs. They bring them to us all the time, we've responded to those and this is a chance where we can expand in a market that has very little competition. No. One is focused on that space. We've got features we have.

Customers so the <unk>.

Barrier of entry for Us is almost nothing.

Speaker 5: And just one last one, over the next couple of years, do you anticipate getting to maybe a 90-10 split in the revenue mix, or where you are now is where you might stand?

Okay, and just one last one over the next couple of years do you anticipate.

You know getting to maybe a 90 10 split in in.

In the revenue mix or are you or where you are now where you might stand.

Speaker 4: Yeah, I actually think that we are going to increase our license as a percentage of revenue. I don't know that it will be 90-10. I think we're close, and I think that 85-15 is a healthy number. Let me expand on that. So first of all, we believe that making our software more and more out of the box,

I actually think that we are going to increase our license as a percentage of revenue I don't know that it will be 90 10, I think we are close and I think that 80 515 is a healthy number.

Let me expand on that so first of all we believe that.

Making our software more and more out of the box.

Increases the return on investment for our customers not only is their implementation costs in terms of consulting dollars for our customers, but a lot of time on there is if they have to customize so we have a big prioritization of out of the box now that said every customer has some unique needs and we learn a true.

Speaker 4: not only is their implementation cost in terms of consulting dollars for our customers, but a lot of time on theirs if they have to customize. So we have a big prioritization of out-of-the-box. Now that said,

Speaker 4: Every customer has some unique needs, and we learn a tremendous amount from our customers when we're deeply engaged with them to implement those needs.

Amend this amount from our customers when we are deeply engaged with them to implement those needs.

Speaker 4: So although we've got products like WooRank, for example, which is completely hands-off, point and click and buy, we'll continue to have products like many of our True Presence products.

So although we've got products like Blue rank for example, which is completely hands off point and click and buy will continue to have products like many of our true presence products like true presence pages that requires some implementation and $85 15 in the marketing technology space is a ratio that we think is healthy.

Speaker 4: True Presence pages that require some implementation. And 85-15 in the marketing technology space is a ratio that we think is healthy. Okay, well guys keep up the great work.

Okay, well guys keep up the great work.

Thank you Howard we appreciate it.

Speaker 1: And thank you. And our next question comes from Oren Hirschman from iInvestment Partners. Your line is now open. Hi, thank you, Oren Hirschman.

Yeah.

And thank you and our next question comes from Orin Hirschman from <unk> investment partners. Your line is now open.

Hi, Thank you.

H H.

At present.

Present.

Speaker 1: Good, how are you? Very good. In terms of true presence, a lot of the customers that are existing customers, they're an upsell opportunity, as well, as they were to expand. And some of the existing customers, some of the bigger ones, were the site licenses years ago, and now the chance to be able to convert some of it to SaaS.

Good how are you.

Very good.

In terms of true true presence or a lot of the customers that are existing customers is there an upsell opportunity as well as if they were to expand it.

Some of the existing customers some of the bigger ones.

The site licenses.

Curious ago now the chance to be able to convert some of it to fail.

Speaker 4: That's exactly right. So the TruePresence customers, we've already begun, not under the TruePresence brand, but we've already begun cross-selling into them. And now everything is being packaged and customized specifically for franchise under TruePresence brand. One of the biggest products that have been selling into our franchise customers is WooRank.

Yeah, that's exactly right. So the true present customers, we've already begun not under the true present brands, but we've already begun cross selling into them and now everything is being packaged and customized specifically for franchise under true presence brand one of the biggest products that have been selling into are free.

<unk> customers is wound rang, we ranked allows companies to increase the traffic for the website by giving them a view of their website from google's perspective, so that they can tune it and make it more visible in the franchise space. Each individual franchisee has local competition you can imagine sport clips.

Speaker 4: WooRank allows companies to increase the traffic for the website by giving them a view of their website from Google's perspective so that they can tune it and make it more visible.

Speaker 4: In the franchise space, each individual franchisee has local competition. You can imagine Sport Clips, a barbershop customer of ours, that they're really competing with a barbershop across the street, not so much the national barbershop chain, and WooRank allows them to compare themselves to their local competition, so that's very big.

The Barber shop customer of ours that they are really competing with a barber shop across the street not so much the national barbershop chain and will rank allows them to compare themselves to their local competition. So that's very big.

Speaker 4: The second one is Data Bravo. Data Bravo collects information about groups of sites and advises competitively as to what the opportunities are to beat everybody in that group. Again, a great franchise space. So we're seeing a lot of cross-sale demand from the franchise customers. Out of the gate, we're coming really strong in franchise.

One is data Bravo data Bravo collect information about groups of sites and advises competitively as to what the opportunities are to be everybody in that group again, a great franchise space. So we're seeing a lot of cross sale demand from the franchise customers out of the gate work.

Common really strong and franchise.

Speaker 4: And some of these customers are not exactly franchised, but they operate like a franchise. We've got AstraZeneca, we've got Bristol-Myers Squibb, Allergan, Sanathy, MRC Global, Triumph Motorcycle.

Some of these customers are not exactly franchise, but they operate like a franchise. We've got Astrazeneca, We've got Bristol Myers Squibb Allergan fantasy MRC.

Mobile triumph motorcycles.

Speaker 4: Sears, big brand with big needs. They've been feeding us a lot of information and we're gonna be very strong in this space.

<unk> Big brands with big needs have been feeding us a lot of information and we're going to be very strong in this space.

Speaker 1: You mentioned a product that I'm not familiar with from before, a state of profit product that you just mentioned. Can you just refresh on that? If it's a new product, tell us more about it and have you sold any of it yet?

You mentioned, a product that I'm not familiar with them before.

Data, probably a product that you just mentioned right. So just to refresh us on that.

It's more about it and have you sold any of it yet.

Speaker 4: Yeah, we have sold and in fact this quarter we had a very strong sale of Data Bravo. So Data Bravo was a minor product within the Woorank company that wasn't really being marketed. In fact, it wasn't even launched at the time that we did the acquisition. And we finished it up with the Woorank team and launched.

Yes, we have sold and in fact this quarter, we had a very strong sale of data Bravo data Bravo.

Is a was a minor product within the wound rank company that wasn't really being marketed in fact, it wasn't even launched at the time that we did the acquisition and we finish it up with the world ranked team and launched it.

Speaker 4: DataBravo collects all these, so WooRank collects information about an individual website. DataBravo combines the information from all WooRank customers, identifies trends, and makes broader recommendations on an industry basis.

Data Bravo flex all these so we'll rank flex information about an individual website data Bravo.

Combined the information from all wound ranked customers identify trends and makes broader recommendations on an industry basis.

Speaker 4: Data Bravo can be licensed as a, um,

Data Bravo it.

It can be licensed as odd as.

Speaker 4: as a data set for companies that are selling, for instance, sales intelligent information. We've got a pharmaceutical company that is using it to collect competitive information from competitor websites. We've got a fintech company that's using it to evaluate actual acquisition opportunities from online information. So it's a very powerful and unique set of data. I don't know anyone that has data even close to data bravo, and it was a hidden gem that we got for free inside of Woorang.

As the data set for companies that are selling for instance sales intelligent information, we've got a pharmaceutical company that is using it to.

Collect competitive information from competitor websites, we've got a fintech company, that's using it to evaluate actual acquisition opportunities from online information. So it's a very powerful and unique set of data I don't know anyone that has data even close to data Bravo and it was.

A hidden gem that we got for free insider will rank.

Speaker 1: in in it sounds like it's really on though didn't by will recall on the heaven would successful evil

It sounds like it's early on though because it isn't viable ranks how long ago, one was officially launched.

Speaker 4: It was officially launched in July , and right now we have, I believe, six customers, something around there, and the customers are generally paying between $2,000 and $10,000 a month for access to the data.

It was officially launched in July and right now we have I believe six customers something around there and the customers are generally.

Between 2000, $10000 a month for access to the data.

Speaker 1: So this is a SaaS offering, a multi-year SaaS offering as well?

Okay.

They're engaged.

So this is a SaaS offering a multiyear south footprint as well.

Yeah Yeah.

Speaker 1: Is the idea to be able to sell this product, it sounds like a very useful product that people can understand and use very quickly, to just the WooRank customers or is it possible to move it into AUKsearch and other customers? I'm not sure.

Scripts.

If the idea to be able to sell this product because it sounds like a very useful product that people don't understand that use very quickly to just the rent customers or if it's possible to moving into.

Search and other customers.

It is possible to move it.

Speaker 4: into the other customers. And in fact, this quarter that we just closed, we sold it to new customers that were not in the WuRank group at all. So it's, it's got demand. And another thing that's going to be interesting with DataBravo is it's going to allow us for true presence.

We ended the other customers and in fact.

This quarter.

Quarter that we just closed we sold it to new customers that were not in but we'll rank group at all so it's.

Got demand and another thing thats going to be interesting with data Bravo is it's going to allow us to present.

Speaker 4: to have a data set that no one else has in that industry, some of that data we'll give away in order to generate a stronger brand inside of inside a franchise. And then we'll be able to license different additional information to franchises after they get a taste of the free stuff.

Do you have a data set that no one else has in that industry. Some of that data will give away in order to generate a stronger brand inside of it.

Inside of franchised and then we'll be able to license the different additional information of the franchises after they get a taste of the freestyle.

Speaker 1: Okay, and final question. What percent of the fails in Q4 were related to search?

Okay and final question.

What percent of the of the sales in Q4 were related to search.

And I invite or.

The search related license sales.

Speaker 4: we're approximately 75%. I don't have the exact number. So search is driving our organic growth. That is very strong. And on the M&A front, we see search opportunities. It's a little bit of a crowded space. We think we can accumulate businesses in that space. It's a growth area for us.

Approximately 75% I don't have the exact number so search is driving our organic growth that is very strong and on the M&A front, we see search opportunities, it's a little bit of a crowded space. We think we can accumulate businesses in that space, It's a growth area for us.

And is it growing double digits.

Speaker 4: Yeah, it's growing at nearly 20%. Organic.

Yes, it's growing at.

Nearly 20%.

Organically.

Organic growth yes.

Speaker 1: Is there opportunity to accelerate that further? So what do you do? Because obviously, without having a big name or brand that's growing real fast, it must be off of the capability. What can you do further? Can you make it easier to install, like you said, out of the box, so to speak, as opposed to the customization aspect?

Is there opportunity to accelerate that further and if so what do you do because obviously without without having a big name a brand that is growing real fast must be off of the capability.

For <unk> can you make it easier to install like you said out of the box so to speak as opposed to the customization effect.

Speaker 4: Yes, so a couple of things there. Making it easier to install is important.

Yeah, So a couple of things there so.

Easier to install is important.

Speaker 4: The partnership is very important. BigCommerce, Salesforce, these guys can drive a ton of leads for us.

The partnership is very important big calmer.

Sales force these guys can drive a ton of leads for us.

Speaker 4: And you should take a look at Coveo, C-O-V-E-O, and their ticker is C-V-O dot T-O. They just went public in November on the Toronto Exchange.

And you should take a look at Kobe O C of the.

Oh and Theyre ticker is <unk>.

E V O that T O. They just went public in November and the.

Toronto Exchange.

Speaker 4: And they're trading really helpfully. They've been growing. They are a competitor. But there's nobody in this space owns a majority of it. So we've got an opportunity to grow as fast or faster than anybody else. And it gives you an example of what other companies can do. And they're focused purely on search.

And.

They are trading really healthily, they've been growing they are a competitor, but there is nobody in this space owned a majority of it. So we've got the opportunity to grow as fast or faster than anybody else and it gives you. An example of what other companies can.

It can do and they are focused purely on search.

Speaker 1: And my final question is just, you know, obviously a partner like a big commerce is a marquee name and also gets still small enough where maybe you don't get lost in the shuffle.

And my final question.

Good for you.

Like a big Commerce.

Marquee names and also we get still small enough, where maybe you don't get lost in the shuffle.

Speaker 1: So, I guess, a partner like that, have they come online yet with, couldn't have come online yet with meaningful sales? Have they come online yet with the first sales? When does that really begin in earnest? So, we had sales with Big Top this last quarter. We've had sales with them prior to that, but in a less organized way without a formal contract.

Alright, So I guess, it's a partner like that have been come online yet.

I Couldnt have colon, you don't want yet with meaningful sales have really come online yet with the <unk>.

Our sales when did that really begin in earnest.

So we had.

Sales with big top <unk>.

This last quarter, we've had sales with them prior to that but in a less organized way without a formal contract.

Speaker 4: and we've got a joint webinar I think next week with them and we're already jointly reaching out to their customers and they've provided a pipeline for us. So they're going right now and Optimizely is basically in the same position.

And we've got a joint webinar I think next week with them and we're already jointly reaching out to their customers and they provided a pipeline for us. So there that are going right now and optimize Lee is basically in the same position.

Speaker 4: Salesforce is huge, a little harder to keep to get their attention and less organized in terms of the relationship, but nevertheless generate Salesforce as well. So for all of these, these partners, we have several existing customers today.

Salesforce is huge a little harder to keep to get their attention and less organized in terms of the relationship.

But nevertheless generate sales force as well so for all of these these partners we have several existing customers today.

Speaker 1: Right, but what you're saying is that it's early on in these relationships. That's right. It's early on, and I am expecting the partnerships to be attached to almost every hawk sale. Last quarter, every hawk sale had a partner attached to it. The quarter before that, all but one or two, so it's a very important part of our lead gen. Okay. Great. Okay. Thanks so much.

Alright, but you were just saying is it's early on in these relationships.

That's right, it's early on and I am.

Expecting the partnership to be attached to almost every park Dale.

Last quarters every every hog sale had a partner attached to it the quarter before that all but one or two so it's a very important part of our lead gen.

Okay, great. Okay. Thanks, so much I'll, let other people out.

Speaker 6: Thank you, Art. Thank you. Next Star One if you'd like to ask a question.

Thank you arent a U nexstar, one if you'd like to ask a question.

Speaker 6: I would now like to go ahead and I'm showing no further questions. I would now like to go ahead and turn the call back over to Ari Khan for closing remarks.

I would now like to go ahead, and I am showing no further questions I would now like to go ahead and turn the call back over to Ari Kahn for closing remarks.

Thank you everybody for joining us today, we appreciate the continued support of our customers and our shareholders. We're excited about our business model and the ongoing growth opportunities and look forward to speaking with you again on our Q2 fiscal 'twenty two conference call stay healthy and well. Thank you.

Speaker 4: Thank you everybody for joining us today. We appreciate the continued support of our customers and our shareholders. We're excited about our business model and the ongoing growth opportunities and look forward to speaking with you again on our Q2 Fiscal 22 Conference Call. Stay healthy and well.

Speaker 6: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker 2: ?

Okay.

Okay.

Yes.

Hum.

Okay.

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