Bridgeline Digital (NASDAQ:BLIN) reported a record quarter for new customer acquisition in its fiscal second quarter of 2026, with management highlighting stronger sales momentum tied to artificial intelligence products and a larger pipeline, while overall revenue remained roughly in line with the prior-year period.
President and CEO Ari Kahn said the company “tripled last quarter’s sales” and delivered “the most new logo sales of any quarter in the company’s history.” Bridgeline won 19 sales in the quarter, closed $2.8 million in total contract value and added $1.2 million in annual recurring revenue, according to Kahn. The company also signed more than $1 million in professional services agreements.
HawkSearch Drives Customer Wins
Management attributed much of the sales momentum to HawkSearch, Bridgeline’s AI-powered search and merchandising suite. Kahn said Bridgeline’s core products, led by HawkSearch’s AI products, represented 65% of subscription revenue in the quarter, up from 61% in the year-earlier period. Core products had net revenue retention of 107%.
The company said most wins came from B2B manufacturers and distributors. Kahn cited several new customer examples, including a global gas provider that selected HawkSearch to power search across three e-commerce sites, a wholesale distributor using HawkSearch on five Oracle Commerce sites, and a national industrial supplier using HawkSearch for a large catalog of metal and specialty materials.
Kahn said those implementations reflected demand for B2B capabilities such as multilingual search, customer-specific pricing, entitlement-based access, product recommendations, unit-of-measure support, analytics and multi-site management.
AI Shopping Assistant Added to Product Suite
Bridgeline also discussed the launch of the Hawk AI Shopping Assistant, which Kahn said is built on HawkSearch’s AI merchandising infrastructure and is designed to support both B2C and more complex B2B commerce use cases.
Kahn said the assistant is intended to align with a merchant’s revenue goals, including rules for product promotion, personalization and recommendations. He emphasized that B2B commerce involves negotiated pricing, customer-specific catalogs, shipping arrangements, credit lines and team-based purchasing, which the company says HawkSearch is built to support.
“HawkSearch is unique, and this is gonna drive a ton of sales for our business,” Kahn said, referring to the AI Shopping Assistant and its ability to make product recommendations based on customer-specific contracts and merchandising rules.
Revenue Steady, Loss Narrows
Chief Financial Officer Thomas Windhausen said total revenue for the quarter ended March 31, 2026, was $3.9 million, compared with $3.9 million in the prior-year period. Subscription revenue was $3.1 million and represented 80% of total revenue. Services revenue was $799,000, compared with $823,000 a year earlier, and accounted for 20% of total revenue.
Cost of revenue was $1.4 million, compared with $1.3 million in the prior-year period. Gross profit was $2.5 million, compared with $2.6 million a year earlier. Overall gross margin was 64%, with subscription gross margin at 69% and services gross margin at 47%.
Operating expenses declined to $2.9 million from $3.4 million in the prior-year period. Net loss narrowed to $0.4 million from $0.7 million. Adjusted EBITDA was negative $43,000, compared with negative $239,000 in March 2025.
Balance Sheet and Pipeline
At March 31, 2026, Bridgeline had $1.4 million in cash and $1.4 million in receivables. Total debt was EUR 182,000, or about $209,000, with a weighted average interest rate of 3.2% and principal payments due through 2028. Windhausen said the company had no other debt or earn-outs from prior acquisitions.
Total assets were $15.3 million, and liabilities were $6.1 million. The company had 12.6 million shares outstanding, just over 800,000 warrants and 2.2 million options at quarter-end.
During the question-and-answer portion, Kahn said last year’s capital raise helped fund marketing initiatives that contributed to the quarter’s new-logo performance. He said the company used the capital to increase visibility through conferences and other marketing programs, with the resulting sales cycle contributing to the recently closed quarter.
Kahn also said Bridgeline’s pipeline increased 82% from the second quarter of fiscal 2025. He described the company’s pipeline as more than 500 qualified leads representing nearly $5.5 million in annual recurring revenue. He said those leads are measured using objective criteria such as webinar attendance, demos and engagement with the sales process.
“We’re generating leads. We’re going to the right places. We know how to deploy marketing capital, and our customers are super happy,” Kahn said.
About Bridgeline Digital (NASDAQ:BLIN)
Bridgeline Digital, Inc is a software-as-a-service company that delivers digital experience management solutions to mid-market and enterprise organizations. The company’s core offering, the LX Platform, integrates content management, e-commerce, customer portals and digital marketing tools into a unified cloud-based environment. Bridgeline’s platform is designed to help businesses streamline the delivery of personalized content and commerce capabilities across web, mobile and other channels.
The LX Platform features modules for web content creation, online storefront management, customer self-service portals and marketing automation.
