Bridgeline Digital, Inc.

What they do

Bridgeline provides a suite of AI-powered products under its HawkSearch and Celebros brands, with nine AI products in its Hawk AI suite including Smart Search, Concept Search, Image Search, Visual Search, Smart Response, Smart Answer, Smart Summary, Smart Facets, and Smart Agents. Revenue is generated through cloud-based SaaS subscriptions and perpetual licenses, with related services. The company targets B2B eCommerce, particularly customers with complex product catalogs, and integrates with platforms such as Adobe, BigCommerce, Optimizely, Sitefinity, and Shopify. It operates globally with offices in the U.S., Canada, Belgium, and India.

Revenue drivers

• Subscription revenue — SaaS and perpetual license revenue, reported as Subscription. For Q2 FY2026, subscription revenue was $3.1 million, approximately 79% of total revenue, and grew from $3.1 million in the prior year quarter.
• HawkSearch and Celebros — Enterprise site search and product discovery products, which management says drive higher-value subscription bookings. Core subscription ARR per new customer was $44,000 in Q2 FY2026, up from $21,000 a year earlier.
• Hawk AI suite — Includes AI assistants (Shopping, Analytics, Merchandising) and AI-search capabilities. The company reports strong customer response and immediate contracts upon release of these products, contributing to new logo growth and expansion.
• Services revenue — Implementation, professional services, and other non-subscription revenue. In Q2 FY2026, services revenue was the remainder of total revenue, approximately $0.8 million.

Recent performance

For Q2 FY2026 (ended March 31, 2026), total revenue was $3.9 million, flat versus the prior year quarter, with subscription revenue of $3.1 million, also flat. For the first six months of FY2026, total revenue was $7.8 million, up from $7.7 million, and subscription revenue was $6.3 million, up from $6.1 million. The company reported 19 new subscription contracts in Q2 with total contract value of $2.8 million and $875K in annual recurring revenue (ARR). Net Revenue Retention (NRR) for Core products was 107%. Cash and equivalents were $1.5 million as of June 30, 2026.

Strategy

Management is focused on increasing the share of 'Core' revenue, which grew to 61% of total revenue and 65% of subscription revenue in Q2 FY2026. They are investing in AI product enhancements, including Agentic AI, Generative AI, RAG, and LLMs, and allowing customers to choose and fine-tune AI foundation models. The company is expanding sales to existing HawkSearch customers, citing 'another excellent quarter' of expansions, and forming partnerships such as with Znode to integrate AI search into B2B eCommerce platforms. They are also targeting high-value B2B verticals with complex catalogs.

Risks

• History of losses — The company has incurred significant net losses since inception, including a net loss of approximately $2.5 million in fiscal 2025, with an accumulated deficit of approximately $94 million as of September 30, 2025.
• Potential need for financing — The company says it may require additional funding to expand operations, and such funding may not be available on acceptable terms or at all, with access limited by Nasdaq rules.
• Operating cash flow negative — Operating cash flow was negative $1.1 million in fiscal 2025 and negative $765,000 in fiscal 2024, indicating ongoing cash burn.
• Nasdaq listing-rule risk — A delisting notice or listing-rule failure was reported in February 2026, which could lead to loss of public market liquidity.

Outlook

Management expects the Hawk AI Shopping Assistant to be a meaningful driver of new logo growth, given over 100 signups for the first webinar showcase and immediate excitement in demos. They emphasize the demand for AI-powered products and continue to strengthen leadership in AI Product Discovery. The company's focus on Core revenue and higher-value subscription bookings suggest an emphasis on recurring revenue growth. However, given the flat revenue trend and cash constraints, management does not provide explicit forward guidance in the provided excerpts.