Q1 2024 Bridgeline Digital Inc Earnings Call
Yeah.
Operator: Thank you for standing by, and welcome to Bridgeline Digital's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Thank you for standing by and welcome to Bridge line Digital's first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star one one again. I would now like to hand the call over to CFO Tom Winhausen. Please go ahead.
Remove yourself from the queue. Please press star one one again.
Now I'd like to hand, the call over to CFO, Tom Whitehouse. Please go ahead.
Tom Winhausen: Thank you, and good afternoon, everyone. Thank you for joining us today. My name is Tom Windhausen, and I'm the Chief Financial Officer at Bridgeline. I'm pleased to welcome you to our fiscal 2024 first quarter conference call. On the call with us this afternoon is Ari Khan, Bridgeline's president and CEO, who will begin the call with a discussion of our business highlights. Before we begin, I'd like to remind listeners that during this conference call, comments that we make regarding Bridgeline that are not historical facts are forward-looking statements within 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.
Thank you and good afternoon, everyone. Thank you for joining US today, my name's come with housing and I'm, The Chief Financial Officer, a frictionless digital.
I'm pleased to welcome you to our fiscal 2024 first quarter conference call.
A call with US this afternoon as Ari Kahn, President and CEO, who will begin the call with a discussion of our business highlights.
I'll then update you on our financial results for the quarter will conclude by taking questions.
Before we begin I'd like to remind listeners that during this conference call comments that we make regarding <unk> that are not historical facts are forward looking statements within the meaning of section 27 a.
Securities Act of 1933 and section 21 E of the Securities Act of 1934.
The risks and uncertainties that could cause such statements to differ materially from actual future events or results.
Tom Winhausen: 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 may change over time, and we expressly disclaim and assume no obligation to inform you if they do. The results of the report today should not be considered as an indication of future performance.
These statements are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
The internal projections and beliefs upon which we base our expectations today may change overtime, and we expressly disclaim and assume no obligation to inform you if they do.
Note that we report today should not be considered as an indication of future performance.
Tom Winhausen: Changes in economic, business, competitive, technological, regulatory, and other factors could cause Bridgeline's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today. For more detailed information about these factors and other risks that may have an impact on our business, please review the reports and documents filed from time to time by Bridgeline Digital with the Security and Exchange Commission. 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. We provide a reconciliation of our GAAP financials to these non-GAAP measures in our earnings. You can obtain a copy of our earnings release by visiting our website. I would now like to turn the call over to Ari Kahn, Bridgeline's president and CEO. Ari? Thank you, Tom. Good afternoon, everyone.
Changes in economic business competitive technological regulatory and other factors could cause <unk> actual results to differ materially from those expressed or implied by the projections or forward looking statements made today.
For more detailed information about these factors and other risks that may have an impact on our business. Please review the reports and documents filed from time to time, but Richland 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 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.
I would now like to turn the call over to Ari Kahn Bridge lines, President and CEO art. Thank you Tom Good afternoon, everyone.
Ari Kahn: Our first quarter of fiscal 2024 had the strongest subscription sales since I joined Bridgeline. We signed over $2.5 million in new customer contracts with 28 license sales, adding $750,000 in ARR. You are a recurring rabbit. Sales were driven by Hawk search with the release of smart search and rapid UI, creating demand that will continue to drive new sales in the future. Search is now well over 50% of subscription revenue for the company, and that percentage is expected to increase. Subscription revenue overall is 82% of our total revenue. Professional services revenue was down this quarter to $670,000, in part because we invested in making our products out of the box with the rapid UI release last quarter that allows new customers to install Hawk Search with no implementation costs.
Our first quarter of fiscal 2024 had the strongest subscription sales since I joined bridge lines, we signed over $2 5 million of new customer contracts with 28 license sale, adding 750000.
Annual recurring revenue.
Sales were driven by hot search with the release of Smart search and rapid UI, creating demand that will continue to drive new sales in the future.
Search is now well over 50% of subscription revenue for the company and that percentage is expected to increase subscription revenue overall is 82% of our total revenue.
Professional services revenue was down this quarter to $670000 in part because we invested in making our products out of the box with the rapid UI release last quarter that allows new customers to install hawk search with no implementation costs.
Ari Kahn: This is a competitive advantage that shortens our sales cycle and increases our total addressable market. Rapid UI expands the total addressable market to include companies who seek to invest more of their budget in the subscription and to go to market more quickly than a custom implementation would allow. These customers can use the saved budget to purchase additional subscriptions from Bridgeline, such as our Smart Surge product, or invest in custom enhancements in the future after they launch and go live.
This is a competitive advantage that shortens our sales cycle increases our total addressable market.
Rapid UI expands the total addressable market to include companies, who seek to attract more of their budgets instead of subscription.
And the go to market more quickly than a custom implementation would allow.
These customers can use the same budget to purchase additional subscriptions from bridge lines, such as our smart search product or invest in custom enhancements in the future after the launch and go live.
Ari Kahn: Smart Search is the most important product release we have ever made. It delivers a clear value proposition to our customers and increases their online revenue by allowing their customers to find products to buy that they may not have realized that they need or would not have found with traditional keyword-based search. 100% of Bridgeline's over 500 search customers can increase their online revenue with Smart Search. Customers can add Smart Search to their existing HawkSearch license for an additional subscription fee, which gives Bridgeline an opportunity to significantly grow our HawkSearch revenue from our current customer base, above and beyond the fact that SmartSearch helps us win more new customers because, along with RapidUI, it allows a new customer to make an immediate improvement to their own revenue.
Smart search is the most important product release, we've ever made.
It delivers a clear value proposition to our customers it increases their online revenue by allowing their customers to find products to buy that they may not have realized that they need or would not hit filed with traditional keyword based search.
100% of bridge slides over 500 search customers can increase their online revenue with smart search.
Customers can add smart search to their existing hot search license for an additional subscription fee, which gives great slide an opportunity to significantly grow our hawk search revenue from our current customer base above and beyond the fact that smart search helps us win more new customers.
Because along with rapid UI. It allows a new customer to make an immediate improvement to their own revenue.
Ari Kahn: Smart Search is an AI-based enhancement to Hawk Search that allows a shopper to find products with more intelligent, natural search. First, while shopping, you can take a photograph with your smartphone and find products on a smart search powered website. Secondly, on a smart search-powered website, you can describe your goal to create a shopping list rather than have to specify the individual items that you want to buy. And thirdly, you can do all of this in more than 50 languages. Here's an example.
Smart search is an AI based enhancement to Hawk search that allows the shopper to find products with more intelligent and natural search.
First while shopping you can take a photograph with your smartphone and find products smart search powered website.
Secondly on a smart search powered website you can describe your goal to create.
To create a shopping less rather than have to specify the individual items that you want to buy.
And thirdly, you can do all of this and more than 50 languages.
Here's an example.
Ari Kahn: Let's say that you have a camper planning a trip; that camper can simply ask the website, "What should I bring on a two-week camping trip for cooking?" Smart Search Response will include all the expected products, such as a cooking stove and propane tank, and will also include products such as a meal-ready-to-eat food pouch that the camper may not have thought about in the first place. The camper may then see a person on the street with cool hiking boots that they like, and they can quickly snap a picture with their camera, and the Smart Search powered website can take that picture and immediately find those booths and allow that person to buy those certificates from the website. These experiences are not possible without support.
Let's say you have a camper planning a trip.
That canfor conceptually ask the website, what should I bring on a two week camping trip for cooking.
Smart search response will include all of the expected products, such as our cooking stove and propane tank and will also include products such as our meal ready to eat food pouch with Canfor may not have thought about in the first place.
The Canfor made then see a person on the street with core hiking boots that they like and they can quickly snap a picture with their camera.
And the smart search powered website.
Take that picture it immediately find those booths.
And allow that person to buy those search from the website.
These experience are not possible without smart search.
Ari Kahn: Smart Search leverages the latest advancements in AI, including large language models, transformers, and vector databases, to deeply understand your online catalog, including what products look like, how products can be used, and how products are related to each other. The future of online shopping is for websites to become intelligent sales advisors who can understand your needs and recommend solutions. Smart Search empowers your site to see and converse with customers today to help them find products that they may not even realize that they need. From a competitive point of view, smart search offers natural intelligent capabilities that do not exist elsewhere in the market. And along with the rapid UI, it offers these abilities without the need to invest thousands of dollars and weeks of time in site redesigns or data integration because Smart Search is out of the box for existing Hawk Search customers. They can upgrade without a complicated technical investment or the politics that accompany changes to their customer experience and branding.
Smart search Leverages, the latest advancements in AI, including large language models Transformers and factor databases to deeply understand youre online catalog.
Excluding what products look like how products can be used.
And how products are related to each other.
Okay.
The future of online shopping.
As for websites to become intelligent sales advisors, who can understand their needs and recommend solutions.
Smart search empowers your site to see and converse with customers today to help them find products that they may not even realize that they need it.
From a competitive point of view Smart search offers natural intelligence capabilities that do not exist elsewhere in the market.
Long with rapid UI. It offers these abilities without the need to invest thousands of dollars of weeks of time and site redesigns or data integrations.
Because smart search is out of the box for existing hot search customers.
They can upgrade without a complicated technical investment or the politics that accompany.
Changes to their customer experience and branding.
Yes.
Ari Kahn: Hawk Search sales are largely driven through our platform partnerships with BigCommerce, Salesforce, and Optimize. We also have agency partners, including ExEngage and AmericanEagle.com, that help drive hot search sales. Sales in the first quarter include Shadler Yasco, an electrical distributor with 29 locations and 1000 brands. Yes, so chose hot search for its unique part number search functionality that allows shoppers to make full and partial part number searches while automatically performing unit of measurement conversion.
Hock search sales are largely driven through our platform partnerships with big Commerce, Salesforce and optimize late.
We also have agency partners, including AXT engaged and American Eagle comps, but helped drive Hawk search sales.
Sales in the first quarter include Schadler, Yes go on electrical distributor with 29 locations with 1000 brands.
Yes, so chose <unk> search for its unique part numbers search functionality that allows shoppers to make full and partial part number of searches while automatically performing units.
Measurement conversions.
Ari Kahn: Smart Search will go further for Yasko and allow an electrician to take a picture of a part while on the job and immediately find that part in their catalog. Another electrical distributor selected SmartSearch to enhance their e-commerce business and bring over 700 products to allow contractors to search for products with images or describe more complex needs to the site to find electrical components. The total contract value for this enhancement is more than $875,000. A leading national insurance provider selected HawkSearch for its custom research portal and smartphone app.
Smart search will go further for Gasco and allow an electrician would take a picture of a part while on the job and immediately final part in our catalog.
Another electrical distributor selected smart search to enhance their ecommerce bring over 700.
To allow contractors to search for products with images are described more complex needs to the site to find electrical components.
Total contract value for different handsets has more than $875000.
A leading national insurance provider selected hot search for its customer research portal and smartphone app.
Ari Kahn: Insurance company used RapidUI to immediately solve their client's needs to find facts, policy information, and documents from their resource library. Savvy, a leader in cloud identity and access governance, collected started smart search to help its customer support team and its customer support team to find information across several third-party knowledge bases. And this is an example of what is called federated search, where Hawk Search indexes information from multiple repositories.
Insurance company use rapid UI immediately solve their clients' needs to find facts policy information and documents and the resource library.
Savi yacht a leader in cloud identity and access governance collected start smart search to help its customers support team.
Customer support team defined information across several third party knowledge basis and this is an example of what is called Federated search where hot search index with information from multiple repositories.
A retailer specializing in agriculture and farming products chose hot search and smart search to boost sales across their 25000 product catalog.
Ari Kahn: A retailer specializing in agriculture and farming products chose Hawk Search and smart search to boost sales across their 25,000 product catalog. Smart Search will analyze your brochures and images to allow shoppers to find products using photographs or natural light. The customer tested smart search with hundreds of images taken in the field from a smartphone to ensure that their customers could find parts in the real world scenario. A leading building materials retailer selected Hawk Search to enhance their e-commerce site, improving product discovery in their catalog of over 5,000 products. Rainbow Resource Center, a top educational retailer, selected Hawk Search to power their e-commerce site. Hawke Search's capability for keyword-triggered promotional campaigns will allow the retailer to highlight special offers and featured products.
Smart search will analyze their brochures that images to allow shoppers to find products using photographs or natural language.
The customer tested smart search with hundreds of images taken in the field from smartphones to ensure that their customers can find parts in the real world scenarios.
Yes.
A leading building materials retailer selected Hawks search to enhance their ecommerce site improving product discovery and their catalog of over 5000 products.
Rainbow Resource Center top educational retailer selected Hawks search to power their ecommerce site. The hawk searches capability for keyword triggered promotional campaigns will allow the retailer.
Highlight special offers and future products.
<unk> got depot, a leading home improvement retailer chose Hawk search autocomplete and granular relevancy accounting that will grow its revenue significantly and streamline product discovery process with our large complex product catalog.
Ari Kahn: Nail Gun Depot, a leading home improvement retailer, chose Hawk Search to autocomplete and perform granular relevancy tuning that will grow its revenue significantly and streamline the product discovery process for their large, complex product catalog. Overall, our marketing and lead generation is focused on narrow industries, which is building supplies where we can become the industry leader to make future sales even more efficient. We're also efficiently selling to our existing customers with products like Smart Search to further drive revenue without incurring large marketing expenses. Although cumulative subscription revenue is flat due to legacy product burn, Hawk Search has outstanding customer retention, is winning new customers rapidly, and upsell opportunities within our customer base, and it continues to have double-digit growth. www.globalonenessproject.org. Our partnership with Optimizing XENGAGE is an important part of our go-to-market strategy.
Overall, our marketing and lead generation was focused on narrow industries, such as building suppliers, where we can become the industry leader to make future sales even more efficient.
We're also efficiently selling to our existing customers with products like smart search to further drive revenue without incurring large marketing expenses.
Although cumulative subscription revenue was flat due to legacy product burn Hawk surge has outstanding customer retention is winning new customers rapidly and upsell opportunities within our customer base and it continues to have double digit growth.
Our partnership with optimizing exit gains as an important part of our go to market strategy.
In October we joined optimized Lee at their annual user conference, where we announced Hawk searches integration with optimized fully configured commerce using the X engage connector.
This announcement was followed with online Webinars to further promote sales <unk> search is now in a unique position to improve site search for more than 1000 optimize the configure customers and several have already purchased the license.
We recently announced a reseller partnership with its access to be.
Ari Kahn: In October, we joined Optimizely at their annual user conference where we announced Hawk Search's integration with Optimizely Configured Commerce using Xengage Connect. This announcement was followed with online webinars to further promote sales. ParkSearch is now in a unique position to improve site search for more than 1,000 Optimizely configured customers, and several have already purchased the license. We recently announced a reseller partnership with Accessi, the market leader in web accessibility. AccessiBe helps over 180,000 companies, including PlayStation, Johnson & Johnson, and NBC, to improve compliance with the American Disability Act and similar legislation in Canada and Europe. Bridgeline will sell accessibility to our 600 plus customers, many of whom have an active interest in accessibility, which not only increases their online sales but also reduces litigation risk with compliance litigation legislation. Hawk Search has the only big commerce connector for search that supports multi-storefront.
The market leader in web accessibility.
Definitely helps over 180000 companies, including Playstation Johnson, <unk>, Johnson, and NBC to improve compliance with American Disability Act and similar legislation in Canada and Europe.
British line will sell it's got to be to our 600, plus customers many of whom have an active interest and accessibility, which not only increases their online sales, but also reduces litigation risk with compliance litigation legislation.
Hock search has the only big Commerce connector for search that supports multi storefront.
This is a big differentiator for our Big Commerce partnership multi storefront is hawks search and advantaged for the franchise and chain store market.
Recently led to a furniture store in Europe to select <unk> search restore will use <unk> rapid UI to quickly go to market across multiple countries in Europe and multiple languages with a unique user experience where users can see different furniture colors and the auto complete dropdown from Hawk searches search bar.
Regina showcase the latest versions of this connector in May at the Big comp with Big Commerce is the BTB online Chicago Conference.
Ari Kahn: This is a big differentiator for our big commerce. Multi-storefront gives Hawk Search an advantage in the franchise and chain store market and recently led a furniture store in Europe to select Hawk Search. The store will use Hawk Search's rapid UI to quickly go to market across multiple countries in Europe and multiple languages with a unique user experience where users can see different furniture colors in the auto-complete drop-down from Hawk Search's search. Bridgeline will showcase the latest versions of this connector in May with Big Commerce at the B2B Online Chicago conference.
Okay.
Okay.
Going forward, we expect hog search to drive much of the growth for bridge line with.
With investments in AI to lead the new sales and upgrades in our existing customer base.
Smart search has been especially strong with seven sales and just the last two months and a pipeline of more than 700000 annual recurring revenue.
Our go to market strategy relies on partnerships and targeting a narrow markets to maximize sales per marketing dollar.
So at this time.
To hand off to.
Our Chief Financial Officer, Tom Warehousing Tom.
Thanks, sorry, I'll provide an update on our financial results for the first quarter of fiscal 2024, which ended December 31 2023.
Tom Winhausen: Going forward, we expect Hawk Search to drive much of the growth for Bridgeline, with investments in AI to lead to new sales and upgrades in our existing customers. Smart search has been especially strong, with seven sales in just the last two months in a pipeline of more than $700,000 in annual recurring revenue. Our go-to-market strategy relies on partnerships and targeting in narrow markets to maximize sales per market in dollars. So at this time, I'd like to hand off to our Chief Financial Officer, Tom Winhausen. Tom?
Total revenue for the quarter ended December 31, 2023 was $3 8 million compared to $4 1 million in the prior year period subscription.
Subscription license revenue, which is comprised of SaaS licenses maintenance and hosting revenue for the quarter ended December 31, 2023 was $3 1 million compared to $3 2 million in the prior year period.
As a percentage of total revenue subscription and license revenue was 82% of total revenue for the quarter.
Services revenue was 669000 for the quarter ended December 31, 2023, a decrease from 854000 in the prior year first quarter as a percentage of total revenue services revenue accounted for 18% of total revenue in the quarter.
Tom Winhausen: Thanks, Ari. I'll provide an update on our financial results for the first quarter of fiscal 2024, which ended December 31st, 2023. Total revenue for the quarter and the December 31st, 2023 was 3.8 million compared to 4.1 million in the prior year period. Subscription and license revenue, which is comprised of SAS licenses, maintenance, and hosting revenue for the quarter ended December 31st, 2023 was 3.1 million compared to 3.2 million in the prior year period. That's a percentage of total revenue, subscription and license revenue accounting for 82% of total revenue for the quarter. Services revenue was $669,000 for the quarter ended December 31, 2023, a decrease from $854,000 in the prior year's first quarter. As a percentage of total revenue, services revenue accounts for 18% of total revenue.
Cost of revenue was $1 2 million for this quarter, a slight decrease from $1 3 million in the prior year period and as a result, our gross profit was $2 6 million for the quarter as compared to $2 8 million in the prior year period.
Overall gross profit margin was 68% for the quarter ended December 31, 2023 compared to 69% in the prior year comparable period.
Subscription and license gross margins were 73% for the quarter consistent with the prior year period and services gross margins were 44% compared to 51% in the prior year period.
Operating expenses were $3 2 million for the quarter ended December 31, 2023, consistent with $3 2 million in the prior year period.
Moving below operating expenses the change in fair value of liability classified warrants in the quarter resulted in noncash income of 18000 compared to income of 300000 in the prior year period.
Net loss was 600 million zero point $6 million or 600000 for the quarter ended December 31, 2023, compared to a net loss of $100 1 million in the prior year period.
And finally adjusted EBITDA for the quarter was negative 117000 compared to a positive 115000 in the prior year period.
Moving onto the balance sheet at December 31, 2023, we had cash of $1 4 million in accounts receivable of nearly $1 3 million or.
Our total debt outstanding as of December 31, 2023.
585000 barrels a 646000 U S dollars.
That debt has a weighted average interest rate of 468% principal payments due through 2028.
Tom Winhausen: Cost of revenue was $1.2 million for this quarter, a slight decrease from $1.3 million in the prior year period, and as a result, our gross profit was $2.6 million for the quarter as compared to $2.8 million in the prior year. Overall, our gross profit margin was 68% for the quarter ended December 31, 2023, compared to 69% in the prior year comparable period. Subscription and license gross margins were at 73% for the quarter, consistent with the prior year period, and services gross margins were 44% compared to 51% in the prior year. Operating expenses were $3.2 million for the quarter ended December 31st, 2023, consistent with $3.2 million in the prior year. Moving below operating expenses, the change in fair value of our liability-classified warrants in the quarter resulted in non-cash income of $18,000 compared to income of $300,000 in the prior year. Net loss was $0.6 million, or $600,000, for the quarter ended December 31, 2023, compared to a net loss of $100,000.1 million in the prior year. Finally, adjusted EBITDA for the quarter was negative $117,000 compared to a positive $115,000 in the prior year.
We have no other debt remaining earn outs from any business a previous acquisition and at December 31, our total assets were $16 6 million and our total liabilities were $5 7 million.
We did have a decrease in cash in the quarter and that was the result of timing of collections of receivables as well as timing of vendor payments.
Typically the quarter included over 200000 of payments to a certain partner vendor, which will not recur.
Finally, I'll give an update on our cap table at the end of the period December 31, 2023, our cap table included $10 4 million outstanding shares 30.
39000 shares through series C preferred stock on an as converted basis.
$1 7 million in warrants and $1 8 million option.
In October 2023 during the quarter 54000 warrants expired.
Another nearly 900000 warrants with exercise prices $4 will expire and approximately seven months in September 2024.
After that we will have 800000 warrants outstanding primarily including a 180000 warrants with a $2 85 exercise price expiring in May 2026, and.
In just under 600000 warrants with a $2 51 exercise price, which expire in November of 2026.
We look forward to continued growth and success in fiscal 2024 and beyond as we continue our focus on revenue growth product innovation customer success and delivering shareholder value.
Thank you all for joining us on the call today at this time I'd like to open the call for questions and answers moderator.
As a reminder to ask a question you will need to press star one one on your telephone again Thats star one one to remove yourself from the queue. You May press Star one one again, please standby, while we compile the Q&A roster.
Tom Winhausen: Moving on to the balance sheet, on December 31, 2023, we had cash of $1.4 million and accounts receivable of nearly $1.3 million. Our total debt outstanding as of December 31, 2023, which is approximately 585,000 euros or 646,000 US dollars, that debt has a weighted average interest rate of 4.68% with principal payments due through 2028.
Our first question.
Comes from the line of Howard Halpern of tackling brothers. Your question. Please Howard.
Good afternoon guys.
Anthony.
With all that.
Recent innovation.
You have announced what are we looking at now in terms of.
Sales cycle and potential.
Deal size, and how that might translate into future growth.
Great Great. So this has been a big focus of ours, we've made a lot of investments and specifically, making our software easier to buy.
Tom Winhausen: We have no other debt or remaining earnouts from any previous business acquisition. As of December 31st, our total assets were 16.6 million, and our total liabilities were 5.7 million. We did have a decrease in cash in the quarter, and that was the result of timely collections of receivables, as well as timing of vendor payments. Specifically, the quarter included over $200,000 in payments to a certain partner vendor, which will not. Finally, I'll give an update on our cap table. As of the end of the period, December 31, 2023, our cap table included 10.4 million outstanding shares, 39,000 shares of Series C preferred stock on an as-converted basis, 1.7 million warrants, and 1.8 million options. In October 2023, during the quarter, 54,000 warrants expired. Another nearly 900,000 warrants, whose exercise price is $4, will expire in approximately seven months in September 2024. After that, we'll have 800,000 warrants outstanding, primarily including 180,000 warrants with a $2.85 exercise price expiring in May 2026 and just under 600,000 warrants with a $2 and 51 cent exercise price which expired in November.
By allowing our customers to have immediate value towards their own businesses.
And the two big releases that happened last quarter to this Ed.
<unk> rapid UI and smart search.
But rapid UI does is it allows our customers to launch their site immediately without having to purchase any.
Professional services for a customer implementation.
This allows us to take all of the expressive power and Hawk surge that powers massive sites like HP Dot com.
And make that available for small medium businesses that cancer, that's a huge amount of money as.
Our customer implementation it increases our total addressable market.
It also changes the structure of initial deal so that our initial deals now are primarily license and many of them had zero.
Services whatsoever.
This allows us to increase our license fee is now the budget can be allocated that way for a recurring high margin revenue.
It allows us to win customers, we couldn't win otherwise because they either don't have the time or they don't have the money to.
To do a customer implementation and it decreases our sales cycle.
Allowing us to avoid having to stack out a custom implementation, which takes a lot of time and also allowing us to just immediately take the customer's website and give them a customized demo with their own product catalog rather than a generic demo with.
Operator: We look forward to continued growth and success in fiscal 2024 and beyond as we keep our focus on revenue growth, product innovation, customer success, and delivering shareholder value. Thank you all for joining us on the call today. At this time, I'd like to open the call for questions and answers. Moderator. As a reminder, to ask a question, you will need to press star 11 on your telephone. Again, to remove yourself from the queue, you may press star 11 again. Please stand by while we compile the q&A roster.
Around catalog. So that's huge now in addition to that so there is.
So there's rapid.
Increased our Tam or total addressable market decreased our sales cycle.
Shift revenues from services.
Subscription.
Smart search does.
And this is my background artificial intelligence I'm really passionate and excited about this is it leverages huge advancements that have happened in the last 18 months around what are called large language models in artificial intelligence and a lot of US has seen the news around chat GPT and other companies.
Operator: Our first question comes from the line of Howard Halpern of Chaglik. Your question, please, Howard. Good afternoon, guys.
Ari Kahn: Anthony and Howard, with all the, you know, recent innovation, will have announced what we are looking at now in terms of the sales cycle and deal size and how that might translate into future growth. Great, great.
Is that.
<unk>.
Enabling.
Natural language.
Agents to automatically convert and find information for Ya will those those fundamental libraries cost billions of dollars to create.
Ari Kahn: So this has been a big focus of ours. We've made a lot of investment in specifically making our software easier to buy by allowing our customers to have immediate value for their own business. And the two big releases that happened last quarter to this end include Rapid UI and Smart. What RapidUI does is it allows our customers to launch their site immediately without having to purchase any professional services for a custom implementation.
And what companies like open AI did a very good job at was to create interfaces. So that people that don't have billions of dollars to leverage those products there is infrastructure.
Because we understand artificial intelligence very well not just myself, but many of the engineers and our team.
Ari Kahn: This allows us to take all of the expressive power in hawk search that powers massive sites like hp.com and make that available for small and medium businesses that can't invest a huge amount of money in a custom implementation. It increases our total addressable market. It also changes the structure of initial deals so that our initial deals now are primarily licensed, and many of them can zero out services whatsoever. This allows us to increase our license fee because now the budget can be allocated that way for recurring high-margin revenue. It allows us to win customers we couldn't win otherwise because they either don't have the time or they don't have the money to do a custom implementation. And it decreases our sales cycle by allowing us to avoid having to spec out a custom implementation, which takes a lot of time, and also allows us to just immediately take the customer's website and give them a customized demo with their own product catalog, rather than a generic demo with a RAM catalog. So that's huge.
We're able to look at those.
Capabilities that are now available look very carefully at our customers and our prospective customers.
Use case scenario.
Connect the dots to put that together into a set of capabilities that are very different from what you can get from other companies and that directly delivered value to our customers here's how we can deliver value.
Okay. So the value for our customer is increasing their online revenue.
And one of the challenges that they have is that there are customers don't even know what they want to buy some times.
They know what they want to do.
But they don't necessarily know what they want to buy or they don't know that the online store has the products that they need I need to fix this tractor.
And I know that I need to replace a certain gear. What I don't know is that I also need to replace certain washers and other cells, while underneath the tractor I can take a picture of the gearbox.
Ari Kahn: Now, in addition to that, there's Rapid UI to increase our TAM, our total addressable market. Decrease our sales cycle, shift revenues from services to the Group. What smart search does is, and this is my background, artificial intelligence; I'm really passionate and excited about this, is it leverages huge advancements that have happened in the last 18 months around what are called large language models and artificial intelligence. A lot of us have seen the news around chat GPT and other companies that allow enabling natural language to automatically converse and find information for you. Well, those fundamental libraries cost billions of dollars to create.
And smart search automatically figure out what parts in the tractor supply catalogs are necessary for performing that task and tell me, which ones I can purchase.
Might not realize that needed that washer or other components, but now I do and instead of running down to the local tractor supply store and buying it from.
See I'm actually buying it online from the customer that on smart search.
These capabilities.
Allow our customers to avoid revenue leakage in a huge way avoid their customers for getting the buy something and making do without it or buying something from someone else because they don't realize that they have it clear revenue impact.
Now one of the great things that we've done is that we've made smart search completely backwards compatible.
Ari Kahn: And what companies like OpenAI did a very good job at was to create interfaces so that people that don't have billions of dollars can leverage those products with infrastructure. Because we understand artificial intelligence very well, not just myself, but many of the engineers in our team, we're able to look at these capabilities that are now available. Look very carefully at our customers and our prospective customers from a use case scenario, and connect the dots to put that together into a set of capabilities that are very different from what you can get from other companies and that directly deliver value to our customers. Here's how we can deliver value. Okay, so the value for our customer is increasing their online revenue. And one of the challenges that they have is that their customers don't even know what they want to buy. They know what they want to do, but they don't necessarily know what they want to buy, or they don't know that the online store has the products that they need. I need to fix this tractor.
With our standard Hawks search keyword capability.
And this is super important because that means every single one of our hot search customers.
Can push a button and turn out a smart search.
So our sales cycle into our existing customers to upgrade smart search.
Is super short every single one of them.
Can derive value from this so we've got a great.
Market right there that can increase our smart search revenue by over 30% all by itself. In addition to us being more competitive to other search products in the market. So these two features by themselves. We think are really important you can see an impact in our.
Financial statement, we do have a lot less services revenue this quarter than we traditionally have has shown.
Ari Kahn: And I know that I need to replace a certain gear. But what I didn't know is that I also need to replace certain washers and other things. While I'm underneath the tractor, I can take a picture of the gearbox, and have smart search automatically figure out what parts in the tractor supply catalog are necessary for performing that task, and tell me which ones I can purchase. I might not have realized I needed that washer or other component.
And our subscription revenue bookings don't hit the P&L on day one.
We're excited that we're going to start seeing a greater revenue.
Our revenue mix of subscription versus the total revenue.
And faster sales cycles.
Two products that we've got more in the pipe.
Okay and talking about.
Sale.
Sales growth.
Ari Kahn: But now I do, and instead of running down to the local tractor supply store and buying it from TSC, I'm actually buying it online from the customer that owns Smart. These capabilities Allow our customers to avoid revenue leakage in a huge way; avoid their customers forgetting to buy something and making do without it or buying something from someone else because they don't realize that they have it. Clear revenue impact. Now, one of the great things that we've done is that we've made smart search completely backwards compatible with our standard hawk search keyword capability.
Are we going to start to see now sequential sales growth as that legacy customer has had they completely wound down in <unk>.
Hey, Dan.
A year.
The one wind down which was good because we were able to get additional revenue along the way in December was there last month, which had.
The final decrease of specifically $25000.
MRI and we've got substantial new sales and continuing momentum that gets to fill that hole and.
We expect to start seeing growth.
Okay and one other question.
Ari Kahn: And this is super important because that means every single one of our hot search customers pushes a button and turns on smart. So our sales cycle into our existing products to upgrade smart is super short. Every single one of them can derive value from this. So we've got a great market right there that can increase our smart search revenue by over 30% all by itself, in addition to us being more competitive with other search products in the market. So these two features, by themselves, we think are really important.
With regard to search now.
That is an independent product. So if you were to.
Sell it to a new customer.
Is that then a potential down the road to backfill and then sell them.
<unk> search product.
Yes.
So our customers are new customers can start with smart search our Hawk search are both hot dog.
Yes.
Either way, we expect to see is that most companies will either start with hot search or start with both we don't expect people to just do smart search and part of that is because humans have trained themselves.
Ari Kahn: You can see an impact in our financial statement. We do have a lot less services revenue this quarter than we traditionally have shown, and our subscription revenue bookings don't hit the P&L on day one. So we're excited that we're going to start seeing a greater revenue mix of subscription versus total revenue and faster sales cycles thanks to these two products and we've got more in the pipeline.
Over the past 20 years to search for things with keywords, rather than to just say what their goals are.
And as a consequence.
Don't have effective as effective results for most sites. If you leave the keyword search out of it for basically cultural reasons and and that's fine and also for a lot of domain people now, especially in the <unk> world exactly what product. They want so you don't want to.
Ari Kahn: Okay, and talking about sales growth, are we going to start to see sequential sales growth as that legacy customer has completely wound down? It took a year for them to wind down, which was good because we were able to get additional revenue along the way. And December was their last month, which had the final decrease of specifically $25,000. MRR.
Miss out on box, so youre going to get.
Most customers buying both are buying hot search and the decision to upgrade to smart search is I think very easy and it's really a financial one for most customers whether right now it makes sense for them and basically.
Ari Kahn: And we've got substantial new sales and continuing momentum that will fill that hole, and we expect to start seeing growth. Okay, and one other question with regard to search now that that is an independent product. So if you were to, you know, sell it to a new customer, that then has the potential down the road to backfill and then sell them your search product? Yeah, we have. So our customers, our new customers, start with smart search or hawk search or both, either way. What we expect to see is that most companies will either start with hawk search or start with both. We don't expect people to just do smart search, and part of that is because humans have trained themselves over the past 20 years to search for things with keywords rather than just say what their goals are. And as a consequence, you won't have as effective results for most sites if you leave the keyword search out of it for basically cultural reasons.
Their market and so if we can get a fast to held by just selling hawk search today and give them a little bit of timeshare reap the benefits of that come out are back in six months.
The upgrade that works just as well.
And one last question because I know the search.
Is four.
The stores.
And improve the ROI from customer inquiries.
Is it also are you seeing customers, who want to use it internally to help their efficiencies.
We have and that's not the most common use cases, but we get sales every quarter to that end and one of the examples in and even in the most recent quarter is.
Customer who.
Whose customer support team has.
He has a huge number of databases with.
Faqs and other <unk>.
Ari Kahn: And, uh, and that's fine. And also, for a lot of domains, people know, especially in the B2B world, exactly what products they want. So you don't want to, um, miss out on those.
Third party.
Information and the use search internally Hawks search to find that and then interesting use case.
Happened just this quarter is a customer that has thousands of tens of thousands of PDF.
Ari Kahn: So you're going to get, uh, I think most customers buying both are buying Hawk Search. And the decision to upgrade to Smart Search is, I think, very easy. And it's really a financial one for most customers, whether right now it makes sense for them and based on what their market is. So if we can get a fast sale by just selling Hawk Search today and give them a little bit of time to reap the benefits of that, and come back in six months and do the upgrade that works just as well. And one last question, because I know the search, uh, is for, you know, uh, the stores and cuts and, uh, improves the ROI from customer inquiries, is it also, or are you seeing customers who want to use it internally to help their efficiencies?
Product descriptions that they consider proprietary information.
And they don't want to share that online, but they want smart search to read all of that information and learn more about their products and then to be able to more intelligently help their customers find products that they need. So when you think of smart search what it can do is a couple of different components one log.
Language model that is.
Yes, so understanding.
In general what somebody is speaking about and asking for and then two what's called a vector database and thats like the long term memory.
For the.
First smart search that allows it to study an existing catalogs brochures about those products and so forth I understand what is in the product and then we bring those two together.
Ari Kahn: Um, we have, and that's not the most common use case, but we get sales every quarter to that end. And one of the examples in even the most recent quarters is a customer who's, um, whose customer support team has a huge number of databases with, you know, FAQs and other third-party information, and they use search internally, hawk search, to find that. And an interesting use case that happened just this quarter is a customer that has thousands, tens of thousands of PDFs of product descriptions that they consider proprietary information. And they don't want to share that online, but they want SmartSearch to read all of that information, learn more about their products, and then be able to more intelligently help their customers find products that they need. So, when you think of SmartSearch, what it can do is a couple of different components. One is a large language model.
Give more intelligent results. So we can train.
Offer proprietary internal information that you don't watch shared to the outside world to just make our smart search understand your products, even better and give them more intelligent results for your customers.
Okay, well, thanks for the info and keep up the great work guys.
Thank you art.
Thank you once again to ask a question. Please press star one on your telephone them again Thats Star one one to ask a question.
Our next question.
Comes from the line.
Our per Jacobson.
Sir your line is open.
Yes Hello.
Good afternoon, guys happy Valentine's I guess.
Alright, Alright, happy Belk Brooks.
Right now I've got it right now to start I guess, a chocolate for my wife I forgot.
Ari Kahn: That is, Silverman, Bridgeline Dig for the first smart search that allows it to study existing catalogs, brochures about those products, and so forth and understand what is in the product, and then we bring those two together to get more intelligent results. So we can train it to offer proprietary internal information that you don't want shared with the outside world to just make our smart search understand your products even better and get more intelligent results for your customers. Okay, well, thanks for the info, and keep up the great work, guys. Thank you, Howard. Thank you. Once again, to ask a question, please press star 11 on your telephone. Again, that's star 11 to ask a question. Our next question comes from the line of per Jacob, for your line is, Yeah, hello.
Trouble are bound.
I guess I got two things. The first thing is I really want to congratulate the team on this.
Entry into AI and intelligent profitable manner.
That's great to see a really appreciate that.
Okay.
The second piece is I guess can can you provide some color and maybe what's the thinking here.
On the balance sheet situation with respect to current assets.
I mean, pragmatically and I did hear the $200000.
Yes.
But.
But we got this whole, but but pragmatically, we're talking about deterioration of 535 partners.
<unk> thousand also I think in that.
Operator: Good afternoon, guys. And Happy Valentine's, I guess. That's right. That's right. Happy Valentine's. Boy, now I've got to run down to the store and get some chocolate for my wife.
<unk>.
The current assets.
101 corridor.
Yes.
Is there anything that you can tell us about this.
Yep Yep.
Tom can provide a little bit additional detail, but I'll provide some higher level color, which is that first and foremost.
Operator: I forgot. Yeah. Trouble abounds. Hey, I guess I've got two things.
Company has sufficient cash.
Operator: The first thing is, I really want to congratulate the team on this entry into AI in an intelligent and profitable manner. That's great to see. I really appreciate it. It's great.
And it has no intention of doing any capital raises to bolster that cash position and second of all we have the ability.
Operator: The second piece is, I guess, can you provide some color and maybe what's the thinking here on the balance sheet situation with respect to current assets? I mean, pragmatically, and I did hear the $200,000 caveat that we got before, but pragmatically, we talk about deterioration of $530,000, I think, in that range on current assets over one quarter. Thank you. Is there anything that you can tell us about that?
This fiscal year.
To become cash positive for that closed so there isn't a recurring or structural cash during challenge at all.
Tom can speak a moment more finance you can decrease their cash if you look on the in those current assets Youll see receivables are up 200000 or so.
Cash that we can go out there and collect and bring that in.
<unk>.
Really not much in short term assets short term liabilities that drove in the quarter, principally timing inside of receivables and payables.
Tom Winhausen: Yep, yep. And Tom can provide a little bit of additional detail, but I'll provide some higher-level color, which is that first and foremost, the company has sufficient cash and has no intention of doing any capital raises to bolster that position. And second of all, we have the ability this fiscal year to become cash positive for that close. So there isn't a recurring or structural cash challenge at all.
Okay.
I guess.
Yeah, Thanks for that I appreciate it.
So if we have an expectation that we will become cash flow positive can we can we sort of like quantify that.
When do we think that will happen and can you also sort of like it.
Tom Winhausen: Johnson speak a little bit more about finances, yeah, you can notice we had a decrease there in cash. If you look at those current assets, you'll see receivables are up 200,000 or so. So that is cash that we can go out there and collect and bring that in. And you can really not see much in short-term assets and short-term liabilities that drove the quarter. It's like timing and receivables and, Okay, um, I guess, um... Yeah, yeah, thanks for that. I appreciate it.
Can you provide some color on is that bridge is that deliver into about an expectation of increased sales of reduced expenses overall is that what that was.
Profitability is going to come from.
Right right, Okay, great. So as an expectation will be towards the end of this fiscal year and it's going to be driven by increases in gross profit not decreases in expenses, it's not going to be huge positive cash flow is going to be positive.
Ari Kahn: So, if we have an expectation that we'll become cash flow positive, can we sort of like quantify that? When do we think that will happen? And can we also maybe provide some color on whether that is driven by an expectation of increased sales or reduced expenses? Or where's that profitability going to come from? Right, right. Okay, great.
Cash flow, we never expect to fall into less than $1 million in cash.
And.
But we don't see any need to reduce expenses, we think that strategically continuing to invest in R&D and improve our market position, especially in artificial intelligence generates the most long term value to the company as well as of course investing in marketing and and winning.
Ari Kahn: So, as an expectation, it'll be towards the end of the fiscal year. And it's going to be driven by increases in gross profit, not decreases in expenses. It's not going to be a huge, positive cash flow. It's going to be positive cash flow. We never expect to fall into less than a million dollars in cash, and we don't see any need to reduce expenses.
New customers. So look at gross profit increases in the gross profit is primarily driven through subscription at a 73% GM this quarter.
Versus services, and we expect that revenue mix between services and subscriptions to continue to be in the $80.
Ari Kahn: We think that strategically continuing to invest in R&D and improve our market position, especially in artificial intelligence, generates the most long-term value for the company, as well as, of course, investing in marketing and winning new customers. So look at gross profit increases, and gross profit is primarily driven through subscriptions at a 73, I think percent GM this quarter versus services, and we expect that revenue mix between services and subscriptions to continue to be in the eight. Yeah, I thought, and the gross margins are quite, quite nice. I mean, that's, that's, that's well done.
Yes.
On the gross margins up.
Quite nice I mean, that's.
Well done.
When would we when we look at.
The increase is in the in.
In license sales.
We are we've been projecting sort of a rapid increase or is aligning from this point out what are we looking at now is.
Ari Kahn: And when we, when we look at the increases in, in, in license sales, are we projecting sort of a rapid increase or is it linear from this point out? What are we looking at? No, it's more, it's more linear, and that's the nature of that.
More linear and that's the nature of.
So most of our new sales are in the.
25% to 50000 and annual recurring revenue per sale.
And again generally.
Hawk search and often they have an initial engagement of 24 to 36 months in that range and we typically see five year total.
Ari Kahn: So most of our new sales are in the $25,000 to $50,000 in annual recurring revenue per sale, and generally, in their hawk search, and often they have an initial engagement of 24 to 36 months in that range. And we typically see five-year total lifetime with hawk search customers, so they start with a two or three-year renewal, and they renew several times in a row. Now, because that initial deal is largely a subscription, it gets recognized as rabbit, pro rata over the life of that initial contract.
Lifetime with Cox search customers.
So if they start with a two or three year renewal they renewed several times in a row now because that initial deal is largely subscription.
Syed a recognized as revenue.
Rata over the life of that initial contracts. So we don't get.
Ari Kahn: So we don't get spikes, and our current quarter, which was outstanding and we were very excited about it, is not going to, you know, obviously be able to just generate a big spike in our Q2 from a revenue perspective, and it does from a booking. Now an important component to revenue growth is Net Revenue Retention, our and Bridgeline's products broadly fall into two categories. We've got our growth products, which are really hot surges, our, When I talk about search, I talk about Hawk Search, but Celebros, which is our other search product, and most of those customers are migrating over to the Hawk platform, is really kind of a one, one effort. And that group of products has a net revenue retention in the high 90 percentile.
Bikes, and our current quarter, which was.
Outstanding and very excited about it.
<unk> is not going to.
Ill be able to just generate a big spike and our Q2 from a revenue perspective no. It does from a bucket now an important component.
To revenue growth.
Is <unk>.
Net revenue retention.
In our.
And rich lines products broadly fall into.
Two categories, we've got our growth products, which is really hot search are.
When I talk about search I talked about hot search but.
Celebral switches or other search product and both of those customers are migrating over to the Hawk platform is really kind of one.
One efforts and that group.
Products have the net revenue retention in the high 90 percentile.
Ari Kahn: And when we look at some of our legacy products, they have lower revenue retention and large customers that have maybe $20,000, $30,000 in monthly recurring revenue, or $300,000 in annual recurring revenue. And one of the reasons we don't sell those anymore is because that whole marketplace is so expensive. It's dominated by larger players like SAP or Salesforce that can demand those products, and they have long sales cycles. But those types of products will bleed down, and they create little cliffs of revenue because of just the size that they have, and those cliffs will be more apparent. Now that hog search is, I think it's over 56% of our subscription revenue and growing very rapidly, those cliffs are becoming more and more muted. So this is the year.
And when we look at some of our legacy products they have lower <unk>.
Revenue retention.
And large customers that have maybe 20 $30000 in monthly recurring revenue.
300000 annual recurring revenue.
And.
One of the reasons, we don't sell those anymore, but that whole marketplace is so expensive it's dominated by larger players like us.
Our sales force that can demand those products and they have long sales cycles.
But those those types of products will bleed down and they create little clips of revenue because of just the size.
Hi.
Yes.
That they have in those close will be.
Be more apparent.
Now that Hawk search is.
I think it's over 56% of our subscription revenue and growing very rapidly those cliffs become more and more.
So this is the year.
Ari Kahn: 2024 when we really start enjoying the dominion of our search platform. Lots of smaller customers. Steady growth, predictable growth, and the ability for us to continue to make investments in marketing, and I'll have predictable revenue streams and, therefore, predictable cash flows. Okay, yeah. I appreciate that. And thanks for providing that information.
2024, when we really start to join the domination of our.
Search platforms lots.
Lots of smaller customers.
Steady growth.
<unk> growth and the ability for us to continue to make investments and marketing and.
Okay.
Predictable revenue streams, and therefore predictable cash flows.
Okay, Yeah, I appreciate that and thanks for providing that information and with respect to the change to the product mix.
Ari Kahn: And with respect to the change in the product mix, I mean, you know, that's actually really great. So with respect to the new customer, excuse me, the new contracts, whatever the term is that, you know, where we reached a new benchmark in the time at least that you have been here. What was the comparable in the last quarter on that? Do we have any idea of that?
That's how it can be really brief so.
With respect to the new customer excuse me, the new contracts, what they what determines that.
We reached a new benchmark in the time at least that you have been here.
What was the comparable in the last quarter on that do we have any idea of that.
Ari Kahn: I'm sorry, I broke up a little bit there the comparables in the last quarter on new customer wins. Yeah, so I believe that in the press release and also in the call you referred to, I believe the number was $2.5 million in new, new something. And so this most recent quarter was a little bit better than twice as big as our previous quarter, and the annual recurring revenue that was won. So we want to make about twice as much as we did in the previous quarter. And one of the most exciting things that we saw was that many of the sales that we had this quarter started in our first quarter and ended in our first quarter. So that speaks to the length of our sales cycle being less than 90 days for many of those sales. And also, Smart Search was only pre-released in late October, and a lot of those sales happened in December.
Oh, I'm sorry I.
It broke up a little bit there the comparables in the last quarter new customer wins.
Yes, so I believe that in the press release and also in the call you referred to I believe the number was $2 $5 million of Nu.
Some things.
And so.
So this most recent quarter was.
A little bit better than twice as big.
As our previous quarter.
Our annual recurring revenue that was one.
So we want about twice as much as we did in the previous quarter and one of the most exciting things that we saw.
Was that.
Many of the sales that we had this quarter.
Started in the in our first quarter and ended in our first quarter. So that speaks to the length of our sales cycle being less than 90 days for many of those sales.
And there also.
Smart search was only pre released in late October.
And a lot of those sales happened in December.
Ari Kahn: So we think that we've got something here that is going to allow us to grow at a different level. And we need to invest in sales and marketing, not just innovation. We need to, because that'll feed back and pay for our ideas. So we need to balance those investments and continue to hit those markets. And be efficient.
So we think that we've we think we've got something here that is going to allow us to grow at a different level and we need to invest in sales and marketing not just innovation, we need to because that will feed back and it'll pay for R&D.
So we need to balance those those investments and continue to hit those markets and being efficient.
Ari Kahn: And customer acquisition costs is a big focus. And that is why we specifically look for markets that are underserved that we can win and try to become a dominant player in there, like this niche market of electrical distributors that, frankly, wasn't even on my radar 18 months ago, that now we just. Today, we're at the New York Build Conference at the Javits Center talking to electrical distributors. So those narrow markets are an efficient way for us to win new customers. Okay, thank you very much. That's all I have got.
And customer acquisition cost is the big focus and that is why we specifically look for markets that are underserved that we can win and try to become the dominant player in there like this niche market of electrical distributors that frankly wasn't even on my radar 18 months ago and now we just.
Today, we're at the New York built conference at the Javits Center talking to electrical distributors. So those narrow markets are efficient way for us to win new customers.
Okay. Thank you very much that's all I got thank you.
Ari Kahn: Thank you. Thank you for, Thank you. I would now like to turn the conference back to management for closing remarks. Well, thank you everybody for joining us today. I have to say this is a very exciting time in computer science. It's an opportunity for people that understand artificial intelligence to do exciting things, for people who understand their customers and their markets, and what those specific needs are to make a real impact.
Thank you Sir.
Okay.
Thank you I would now like to turn the conference back to management for closing remarks.
Well, thank you everybody for joining us today.
I have to say this is a very exciting time in computer science it's.
It's an opportunity for people to understand artificial intelligence to do exciting things for people, who understand their customers and their markets and what those specific needs that can make a real impact.
Ari Kahn: And I think that we're there to do that. We appreciate the continued support from all of our customers and our partners, and, of course, our shareholders. We're excited about the business's ongoing growth prospects. We look forward to speaking with you again on our second quarter fiscal 24 conference call, which will be in May. Be well. This concludes today's conference call. Thank you for participating. You may now disconnect.
And I think that we're there to do that.
We appreciate the continued support from all of our customers and our partners and of course, our shareholders. We're excited about the business ongoing growth prospects. We look forward to speaking with you again on our second quarter fiscal 'twenty conference call, which will be in May.
Be well.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Okay.
Okay.
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Operator: The Billie Jean's Sweet Child O' Mine Inter specialize one, two, three of three. The Billie Jean's Sweet Child O' Mine