Bridgeline Digital, Inc. (NASDAQ:BLIN) Q1 2024 Earnings Call Transcript

Howard Halpern: Okay. And one other question 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 your HawkSearch product?

Roger Kahn: Yes. We have — so our customers, our new customers can start with Smart Search or HawkSearch or both. Either way, what we expect to see is that most companies will either start with HawkSearch 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 to just saying what their goals are. And as a consequence, you won’t have as effective results from most sites, if you leave the keyword search out of it for basically cultural reasons. And that’s fine. And also for a lot of domains, people know, especially in the B2B world, exactly what product they want. You don’t want to miss out on those.

So you’re going to get, I think, most customers buying both, they’re buying HawkSearch. 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 whatever their market is. So if we can get a fast sale by just selling HawkSearch today and give them a little bit of time to reap the benefits of that and come out back in six months and do the upgrade, that works just as well.

Howard Halpern: And one last question because I know the search is for 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?

Roger Kahn: 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 whose customer support team has a huge number of databases with FAQs and other third-party information, and they use search internally, HawkSearch to find that. And an interesting use case that happened just this quarter is a customer that has thousands of — tens of thousands of PDF of 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, 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, large language model that is [Indiscernible] so understanding in general, what somebody is speaking about and asking for. And then two, what’s called a vector database, and that’s like the long-term memory for the first Smart Search that allows it to study an existing catalog, grow shares about those products and so forth and understand what is in the product. And then we bring those two together, we get more intelligent results. So we can train off of proprietary internal information that you don’t want to share to the outside world to just make our Smart Search understand your products even better and give more intelligent results for your customers.

Howard Halpern: Okay. Thanks for the input [ph] and keep up the great work guys.

Roger Kahn: Thank you Howard.

Operator: [Operator Instructions] Next question comes from the line of [indiscernible] Jacobson. Your line is open.

Unidentified Analyst: Yes hello, good afternoon guys. And Happy Valentine’s, I guess.

Roger Kahn: That’s right. Happy Valentine’s. Sorry, I’ve got to run out down the store and get some tacos for my wife. I forgot.

Unidentified Analyst: Trouble abound. I guess I got two things. The first thing is, I really want to congratulate the team on this entry into AI in intelligent in a profitable manner. That’s great to see. I really appreciate it, it’s late. So 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 this hole. But pragmatically, we talked about deterioration of $530,000 I think, in that range on the current assets over one quarter. Is there anything that you can tell us about this?

Roger Kahn: Yes. Yes. And Tom can provide a little bit additional detail, but I’ll provide some higher-level color, which is that first and foremost, the company has sufficient cash, and it has no intention of doing any capital raises to bolster that cash position. And second of all, we have the ability 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 little bit more financial…

Thomas Windhausen: Now we had a decrease there of cash. If you look on the — in 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 really not much in short-term assets, short-term liabilities that drove in the quarter to just play timing inside receivables and payables.

Unidentified Analyst: Okay. I guess yes. Thanks for that. I appreciate it. So if we have an expectation that we’ll become cash flow positive, can we sort of like quantify that? When do you think that will happen? And can we also sort of like maybe provide some color on — is that driven by an expectation of increased sales or reduced expenses? Or where that profitability you’re going to come from?