Bridgeline Digital (BLIN) Q1 2026 earnings summary

Executive summary

• Core products, especially HawkSearch and AI suite, drove a 17% year-over-year increase, now representing 60% of total revenue and over 63% of subscription revenue, offsetting declines in legacy products.

• Net revenue retention for core products was 107%, reflecting strong customer satisfaction and product adoption.

• New customer acquisition remains robust, with average ARR per customer up 12% to $28,000, and average subscription per customer rising to $33,000 from $25,000 a year ago.

• Over 2,000 customers globally, with more than 200 HawkSearch customers and several new B2B and B2C wins leveraging AI-driven features.

• AI-powered marketing technology and SaaS solutions are driving demand and recurring revenue growth.

Financial highlights

• Total revenue for Q1 FY2026 was $3.9M, up 3% year-over-year from $3.8M.

• Subscription revenue was $3.2M (81% of total), up 4% year-over-year; services revenue was $0.8M (19% of total), up 2%.

• Gross profit increased to $2.6M, with overall gross margin at 66%.

• Operating expenses decreased to $2.8M from $3.0M; net loss narrowed to $0.1M from $0.6M.

• Adjusted EBITDA turned positive at $122K, compared to negative $193K prior year.

Outlook and guidance

• Expectation for HawkSearch and core products to exceed 70% of overall revenue in FY2026, with anticipated HawkSearch growth rate of 20% this year.

• Gross margin expected to remain in the 65%-67% range, with subscription margin around 70% and services margin in the low 50s.

• Management expects future revenues and cash flows to supplement working capital and support revenue growth, with tight control over discretionary spending.

• Focus remains on expanding AI-driven solutions and deepening industry partnerships.