Bridgeline Digital (NASDAQ: BLIN) trims loss as revenue inches higher
Rhea-AI Filing Summary
Bridgeline Digital, Inc. reported modest revenue growth and a sharply smaller loss for the quarter ended December 31, 2025. Total net revenue was $3.9 million, up from $3.8 million a year earlier, driven mainly by subscription revenue of $3.2 million and services revenue of $0.8 million.
Gross profit was $2.6 million with a 66% margin, similar to last year. Operating expenses fell to $2.8 million from $3.0 million, primarily due to lower research and development and general and administrative costs. Net loss narrowed to $86 thousand from $634 thousand, and basic and diluted loss per share improved to $(0.01) from $(0.06).
Adjusted EBITDA turned positive at $122 thousand versus a loss of $193 thousand in the prior-year quarter. Cash and cash equivalents were $1.5 million as of December 31, 2025, with total assets of $15.7 million and total liabilities of $6.2 million. The company maintains an effective Form S-3 shelf, with approximately $47.7 million of securities capacity remaining, but no active offerings.
Positive
- None.
Negative
- None.
Insights
Quarter shows small growth, improved loss, and stable liquidity.
Bridgeline Digital delivered slightly higher revenue at
Gross margin held around the mid‑
Cash was
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
For the quarterly period ended
OR
For the transition period from ______________ to ______________
Commission File Number
Bridgeline Digital, Inc.
(Exact name of registrant as specified in its charter)
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| State or other jurisdiction of incorporation or organization | IRS Employer Identification No. |
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| (Address of Principal Executive Offices) | (Zip Code) |
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| (Registrant’s telephone number, including area code) |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section (12)b of the Act:
| Title of each class | Trading Symbols(s) | Name of each exchange on which registered |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of common stock par value $0.001 per share, outstanding as of February 12, 2026 was
Bridgeline Digital, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period ended December 31, 2025
Index
| Page |
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| Part I |
Financial Information |
|
| Item 1. |
Condensed Consolidated Financial Statements |
|
| Condensed Consolidated Balance Sheets as of December 31, 2025 (unaudited) and September 30, 2025 |
4 |
|
| Condensed Consolidated Statements of Operations (unaudited) for the three months ended December 31, 2025 and 2024 |
5 |
|
| Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the three months ended December 31, 2025 and 2024 |
6 |
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| Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended December 31, 2025 and 2024 |
7 |
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| Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended December 31, 2025 and 2024 |
8 |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
9 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
| Item 3. |
Qualitative and Quantitative Disclosures About Market Risk |
28 |
| Item 4. |
Controls and Procedures |
28 |
| Part II |
Other Information |
|
| Item 1. |
Legal Proceedings |
29 |
| Item 1A. |
Risk Factors |
29 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
29 |
| Item 3. |
Defaults Upon Senior Securities |
29 |
| Item 4. |
Mine Safety Disclosures |
29 |
| Item 5. |
Other Information |
29 |
| Item 6. |
Exhibits |
30 |
| Signatures |
31 |
|
Bridgeline Digital, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period ended December 31, 2025
Statements contained in this Report on Form 10-Q, other than statements or characterizations of historical fact, are forward-looking statements. These “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These statements appear in a number of places in this Form 10-Q and include statements regarding the intent, belief or current expectations of Bridgeline Digital, Inc. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions, including, but not limited to, business operations and the business of our customers, suppliers and partners; our ability to retain and upgrade current customers; increasing our recurring revenue; our ability to attract new customers; our revenue growth rate; our history of net loss and our ability to achieve or maintain profitability, instability in the financial markets, including the banking sector; our liability for any unauthorized access to our data or our users’ content, including through privacy and data security breaches; any decline in demand for our platform or products; changes in the interoperability of our platform across devices, operating systems, and third-party applications that we do not control; competition in our markets; our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products, particularly in light of potential disruptions to the productivity of our employees resulting from remote work; our ability to manage our growth or plan for future growth, and our acquisition of other businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; the volatility of the market price of our common stock; the ability to maintain our listing on the NASDAQ Capital Market; or our ability to maintain an effective system of internal controls as well as other risks described in our filings with the Securities and Exchange Commission. Any of such risks could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Bridgeline Digital, Inc. assumes no obligation to, and does not currently intend to, update any such forward-looking statements, except as required by applicable law. We urge readers to review carefully the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, and in the other documents that we file with the Securities and Exchange Commission. You can read these documents at www.sec.gov.
Where we say “we,” “us,” “our,” “Company” or “Bridgeline Digital” we mean Bridgeline Digital, Inc.
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
BRIDGELINE DIGITAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| (Unaudited) | ||||||||
| December 31, 2025 | September 30, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | $ | ||||||
| Current portion of operating lease liabilities | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Warrant liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - $ par value; shares authorized | ||||||||
| Common stock - $ par value; shares authorized; shares issued and outstanding at December 31, 2025 and shares issued and outstanding at September 30, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements. |
BRIDGELINE DIGITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
| Three Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue: | ||||||||
| Subscription | $ | $ | ||||||
| Services | ||||||||
| Total net revenue | ||||||||
| Cost of revenue: | ||||||||
| Subscription | ||||||||
| Services | ||||||||
| Total cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Depreciation and amortization | ||||||||
| Restructuring and acquisition related expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Interest expense and other, net | ( | ) | ||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss applicable to common shareholders | ( | ) | ( | ) | ||||
| Net loss per share attributable to common shareholders: | ||||||||
| Basic net loss per share | $ | ( | ) | $ | ( | ) | ||
| Diluted net loss per share | $ | ( | ) | $ | ( | ) | ||
| Number of weighted average shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements. |
BRIDGELINE DIGITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(Unaudited)
| Three Months Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Other comprehensive loss: |
||||||||
| Net change in foreign currency translation adjustment |
( |
) | ||||||
| Comprehensive loss |
$ | ( |
) | $ | ( |
) | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
BRIDGELINE DIGITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(Unaudited)
| For the Three Months Ended December 31, 2025 |
||||||||||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||||||||||
| Preferred Stock |
Common Stock |
Additional |
Other |
Total |
||||||||||||||||||||||||||||
| Paid-in |
Accumulated |
Comprehensive |
Stockholders’ |
|||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Income (Loss) |
Equity |
|||||||||||||||||||||||||
| Balance at October 1, 2025 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation expense |
- | - | ||||||||||||||||||||||||||||||
| Issuance of common stock - stock options exercised |
||||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Foreign currency translation |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Balance at December 31, 2025 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| For the Three Months Ended December 31, 2024 |
||||||||||||||||||||||||||||||||
| Accumulated |
||||||||||||||||||||||||||||||||
| Preferred Stock |
Common Stock |
Additional |
Other |
Total |
||||||||||||||||||||||||||||
| Paid-in |
Accumulated |
Comprehensive |
Stockholders’ |
|||||||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Loss |
Equity |
|||||||||||||||||||||||||
| Balance at October 1, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation expense |
- | - | ||||||||||||||||||||||||||||||
| Net loss |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Foreign currency translation |
- | - | ||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
BRIDGELINE DIGITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Three Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Amortization of intangible assets | ||||||||
| Depreciation and other amortization | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Deferred revenue | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Total adjustments | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows used in investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Software development capitalization costs | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows used in financing activities: | ||||||||
| Payments of long-term debt | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Right-of-use asset obtained in exchange for new operating lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1. Description of Business
Overview
Bridgeline Digital is an AI-powered marketing technology company that offers a suite of products that help companies grow online revenue by driving more visitors to their websites, converting more visitors to purchasers, and increasing average order value per purchaser.
Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model. Additionally, Bridgeline’s software is available via a perpetual licensing business model, in which the software can reside on premise at the customer’s facility, or manage-hosted by Bridgeline. Bridgeline’s product offerings include:
● HawkSearch: a site search, recommendation, and personalization software application, built for marketers to enhance, normalize, and enrich an online customer's content search and product discovery experience.
● Celebros Search: a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches.
● Woorank: a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO.
● Unbound: a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics.
● TruPresence: a web content management and eCommerce platform that supports the needs of multi-unit organizations and franchises.
● OrchestraCMS: the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees.
Bridgeline Digital was incorporated under the laws of the State of Delaware on August 28, 2000.
The Company has four wholly-owned subsidiaries: Bridgeline Digital Pvt. Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium.
The Company’s corporate headquarters is located in Woburn, Massachusetts. The Company maintains regional field offices serving the following geographical locations: Garden City, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium.
Liquidity and Management’s Plans
The Company has historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company is continuing to maintain tight control over discretionary spending for the 2026 fiscal year. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.
The Company may offer and sell, from time to time, in one or more offerings, up to $
On March 24, 2025, the Company entered into a Securities Purchase Agreement with purchasers, pursuant to which the Company agreed to issue and sell, in a registered direct offering, an aggregate of
On March 25, 2025, the Company separately entered into a form of subscription agreement with certain accredited investors relating to a private placement transaction and sale (the “Private Placement”) of
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and with the instructions to Form 10-Q and Regulation S-X, and in the opinion of the Company’s management, these condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, necessary for their fair presentation. The operating results for the three months ended December 31, 2025 are not necessarily indicative of the results to be expected for the year ending September 30, 2026. The accompanying September 30, 2025 Condensed Consolidated Balance Sheet has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2025, filed with the Securities and Exchange Commission (“SEC”) on December 19, 2025.
Recently Adopted Accounting Standards
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024. The Company expects the standard to result in enhanced disclosures in its annual reporting period ending September 30, 2026 and did not have a material impact on these interim consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Effective
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires that an entity disclose, in the notes to financial statements, specified information about certain costs and expenses. The amendment in the ASU is intended to enhance the transparency and decision usefulness to better understand the major components of an entity’s income statement. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is not expected to have a material impact.
Intangibles—Goodwill and Other—Internal-Use Software
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU eliminates the concept of development stages and introduces a “probable-to-complete” threshold for capitalization of internal-use software costs. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is not expected to have a material impact.
Interim Reporting
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270). The ASU improves the navigability of the required interim disclosures and clarifies when the guidance is applicable, as well as provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2028. The Company is currently evaluating the impact of the new standard on its consolidated financial statements which is not expected to have a material impact.
All other Accounting Standards Updates issued but not yet effective are not expected to have a material effect on the Company’s future consolidated financial statements or related disclosures.
3. Accounts Receivable
Accounts receivable consist of the following:
| As of December 31, 2025 | As of September 30, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
As of December 31, 2025 customer exceeded 10% of accounts receivable and as of September 30, 2025, different customer exceeded 10% of accounts receivable.
Allowance for Credit Losses
The following illustrates the activity in our allowance for credit losses on accounts receivable:
| Balance as of October 1, 2025 | $ | |||
| Credit loss expense | ||||
| Write-off/adjustments | ( | ) | ||
| Balance as of December 31, 2025 | $ |
4. Fair Value Measurement and Fair Value of Financial Instruments
The Company’s financial instruments consist principally of accounts receivable, accounts payable, warrant liabilities, and long-term debt arrangements. The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, under U.S. GAAP, companies are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:
Level 1—Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.
Level 3—Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.
The carrying value of the Company’s accounts receivable and accounts payable approximates fair value due to their short-term nature. As of December 31, 2025 and September 30, 2025, the aggregate fair values of long-term debts were $
The Company’s warrant liabilities are measured at fair value at each reporting period with changes in fair value recognized in earnings during the period. The fair value of the Company’s warrant liabilities are valued utilizing Level 3 inputs. Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of the Company’s common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility. The range and weighted average volatilities of comparable public companies utilized was
| As of December 31, 2025 | As of September 30, 2025 | |||||||||||
| Series D Preferred | Montage Capital | Series D Preferred | ||||||||||
| Volatility | % | % | % | |||||||||
| Risk-free rate | % | % | % | |||||||||
| Stock price | $ | $ | $ | |||||||||
The Company recognized a gain of $
Assets and Liabilities of the Company measured at fair value on a recurring basis as of December 31, 2025 and September 30, 2025, are as follows:
| As of December 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities: | ||||||||||||||||
| Series D | $ | $ | $ | $ | ||||||||||||
| As of September 30, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities: | ||||||||||||||||
| Montage | $ | $ | $ | $ | ||||||||||||
| Series D | ||||||||||||||||
| Total warrant liabilities | $ | $ | $ | $ | ||||||||||||
The following table provides a roll forward of the fair value, as determined by Level 3 inputs, as follows:
| Warrant Liabilities | ||||
| Balance at beginning of period, September 30, 2025 | $ | |||
| Additions | ||||
| Payments, exercises or expirations | ||||
| Adjustment to fair value | ( | ) | ||
| Balance at end of period, December 31, 2025 | $ | |||
5. Intangible Assets
The components of intangible assets, net of accumulated amortization, are as follows:
| As of December 31, 2025 | As of September 30, 2025 | |||||||
| Domain and trade names | $ | $ | ||||||
| Customer related | ||||||||
| Technology | ||||||||
| Balance at end of period | $ | $ | ||||||
Total amortization expense was $
6. Accrued Liabilities
Accrued liabilities consist of the following:
| As of December 31, 2025 | As of September 30, 2025 | |||||||
| Compensation and benefits |
$ | $ | ||||||
| Professional fees |
||||||||
| Insurance |
||||||||
| Other |
||||||||
| Balance at end of period |
$ | $ | ||||||
7. Long-term Debt
On March 1, 2021, the Company assumed the outstanding long-term debt obligations of an acquired business and issued a seller note to one of the selling shareholders. The assumed debt obligations and seller note are denominated in Euros. Long-term debt consisted of the following:
| As of December 31, 2025 | As of September 30, 2025 | |||||||
| Term loan payable, accruing interest at 3-Month EURIBOR plus % per annum, payable in quarterly installments starting in April 2023 and matures in . | $ | $ | ||||||
| Seller’s note payable (“Seller’s note”), due to one of the selling shareholders, accruing interest at a fixed rate of % per annum. The Seller’s note is payable over 5 installments and matured in . | ||||||||
| Total debt | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt, net of current portion | $ | $ | ||||||
At December 31, 2025, future maturities of long-term debt are as follows:
| Fiscal year: | ||||
| 2026 (remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total long-term debt | $ |
8. Stockholders’ Equity
Under our Certificate of Incorporation, we are authorized, subject to limitations prescribed by Delaware law and our Charter, to issue up to
Equity Issuances
On March 24, 2025, the Company entered into a Securities Purchase Agreement with purchasers, pursuant to which the Company agreed to issue and sell, in a registered direct offering, an aggregate of
On March 25, 2025, the Company separately entered into a form of subscription agreement with certain accredited investors relating to a private placement transaction and sale (the “Private Placement”) of
Series C Convertible Preferred Stock
The Company had designated
On March 5, 2025, the Company entered into a Securities Redemption Agreement (the “Redemption Agreement”) with Michael Taglich and Claudia Taglich (the “Sellers”), pursuant to which the Company agreed to purchase and redeem from the Sellers: (i) all
The Company accounted for the redemption of the Series C Preferred Stock as a return to the preferred stockholder measured as the difference between the (1) purchase price allocated to the Series C Preferred Stock of $
Amended and Restated Stock Incentive Plan
The Company has granted common stock, common stock warrants, and common stock option awards (the “Equity Awards”) to employees, consultants, advisors and former debt holders of the Company and to former owners and employees of acquired companies that have become employees of the Company.
On September 16, 2025, the stockholders approved a new stock incentive plan, the 2025 Stock Incentive Plan (the “2025 Plan”). The 2025 Plan authorizes the award of incentive stock options, non-statutory stock options, restricted stock, unrestricted stock, performance shares, stock appreciation rights and any combination thereof to employees, officers, directors, consultants, independent contractors and advisors of the Company. The 2025 Plan provides for the issuance in the aggregate of up to
Historically, the Company’s Amended and Restated Stock Incentive Plan (the “Plan”) provided for the issuance of up to
Compensation Expense
Compensation expense is generally recognized on a graded accelerated basis over the vesting period of grants. Compensation expense is recorded in the condensed consolidated statements of operations with a portion charged to Cost of revenue and a portion to Operating expenses, depending on the employee’s department.
During the three months ended December 31, 2025 and 2024, compensation expense related to share-based payments was as follows:
| Three Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating expenses | $ | |||||||
As of December 31, 2025, the Company had approximately $
Common Stock Warrants
The Company typically issues warrants to individual investors and placement agents to purchase shares of the Company’s common stock in connection with public and private placement fund raising activities. Warrants may also be issued to individuals or companies in exchange for services provided to the Company. The warrants are typically exercisable months after the issue date, expire in years, and contain a cashless exercise provision and piggyback registration rights.
March 2025 Placement Agent Warrants - In March 2025, in connection with the Registered Direct offering, the Company issued
Series A and B and C Preferred Warrants - In March 2019, in connection with the issuance of the Company’s Series C Preferred Stock, the Company issued warrants to purchase the Company’s common stock. These warrants were designated as (i) Series A Warrants with an initial term of years and an exercise price of (ii) Series B Warrants, which expired unexercised during the Company’s 2021 fiscal year, with an initial term of
The Series A and Series C Preferred Warrants, the Placement Agent Warrants issued in connection with the Series C Preferred Stock, and the Series D Warrants were all determined to be derivative liabilities and are subject to remeasurement each reporting period (see Note 4).
During the three months ended December 31, 2025 and 2024, there were
During the three months ended December 31, 2025,
Total warrants outstanding as December 31, 2025, were as follows:
| Type | Issue Date | Shares | Price | Expiration | |||||||
| Placement Agent |
| $ |
| ||||||||
| Investors |
| $ |
| ||||||||
| Placement Agent |
| $ |
| ||||||||
| Placement Agent |
| $ |
| ||||||||
Summary of Option and Warrant Activity and Outstanding Shares
During the three months ended December 31, 2025 and 2024, the Company issued no equity awards.
During the three months ended December 31, 2025,
On January 30, 2026, the Company issued
A summary of combined stock option and warrant activity for the three months ended December 31, 2025, is as follows:
| Stock Options | Stock Warrants | |||||||||||||||
| Awards | Weighted Average Exercise Price | Warrants | Weighted Average Exercise Price | |||||||||||||
| Outstanding, September 30, 2025 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised or redeemed | ( | ) | ||||||||||||||
| Forfeited | - | - | ||||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding, December 31, 2025 | $ | $ | ||||||||||||||
| Options vested and exercisable, December 31, 2025 | $ | |||||||||||||||
As of December 31, 2025, the aggregate intrinsic value of options outstanding and exercisable was $
A summary of the status of restricted stock is as follows:
| Weighted Average | ||||||||
| Grant-Date | ||||||||
| Shares | Fair Value | |||||||
| Unvested at October 1, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Cancelled/Forfeited | ||||||||
| Unvested at December 31, 2025 | $ | |||||||
The aggregate fair value of restricted stock that vested during the three months ended December 31, 2025 was $
9. Net Loss Per Share Attributable to Common Shareholders
Basic net loss per share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding. Diluted net loss per share attributable to common shareholders is computed using the weighted average number of common shares outstanding during the period plus the dilutive effect of outstanding stock options and warrants using the “treasury stock” method and convertible preferred stock using the “as-if-converted” method. The computation of diluted earnings per share does not include the effect of outstanding stock options, warrants and convertible preferred stock that are considered anti-dilutive.
Basic and diluted net (loss) per share is computed as follows:
| (in thousands, except per share data) |
Three Months Ended December 31, |
|||||||
| 2025 |
2024 |
|||||||
| Numerator: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Denominator: |
||||||||
| Weighted-average shares outstanding for basic earnings per share |
||||||||
| Effect of dilutive securities: |
||||||||
| Options |
||||||||
| Warrants |
||||||||
| Weighted-average shares outstanding for diluted earnings per share |
||||||||
| Basic net loss per share |
$ | ( |
) | $ | ( |
) | ||
| Diluted net loss per share |
$ | ( |
) | $ | ( |
) | ||
Potential common stock equivalents excluded from the computation of diluted net (loss) per share because their inclusion would have been anti-dilutive were as follows (in shares):
| Three Months Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Stock options |
||||||||
| Warrants |
||||||||
| Series C Convertible Preferred Stock |
||||||||
| Unvested restricted stock |
||||||||
10. Revenues and Other Related Items
Disaggregated Revenues
The Company disaggregates revenue from contracts with customers by geography and product grouping, as it believes this best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.
The Company’s revenue by geography (based on customer address) is as follows:
| Three Months Ended December 31, | ||||||||
| Revenues: | 2025 | 2024 | ||||||
| United States | $ | 3,548 | $ | |||||
| International | 365 | |||||||
| $ | 3,913 | $ | ||||||
The largest concentration within the Company’s international revenue geography is within Canada.
Long-lived assets located in foreign jurisdictions aggregated approximately $
The Company’s revenue by type is as follows:
| Three Months Ended December 31, | ||||||||
| Revenues: | 2025 | 2024 | ||||||
| Subscription - SaaS | $ | $ | ||||||
| Subscription - Maintenance | ||||||||
| Subscription - Hosting | ||||||||
| Services | ||||||||
| $ | $ | |||||||
For the three months ended December 31, 2025 and 2024,
Deferred Revenue
Amounts that have been invoiced are recorded in accounts receivable and deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenue that is expected to be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent deferred revenue included in Other long-term liabilities.
The following table summarizes the classification and net change in deferred revenue as of and for the three months ended December 31, 2025:
| Deferred Revenue | ||||||||
| Current | Long-Term | |||||||
| Balance as of October 1, 2025 | $ | $ | ||||||
| Increase | ||||||||
| Balance as of December 31, 2025 | $ | $ | ||||||
11. Income Taxes
Provision for income taxes consists of the estimated liability for state income taxes owed by the Company. Net operating loss carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. During each of the three months ended December 31, 2025 and 2024, the Company recognized a provision for income taxes of $
12. Leases
The Company leases facilities in the United States for its corporate and regional field offices. During the three months ended December 31, 2025 and 2024, the Company was also a lessee/sublessor for certain office locations.
Commencing December 1, 2025, the Company leases office space in Garden City, New York. The lease is for $
The Company maintains a sublease for its Rosemont, Illinois location. During the quarter ended March 31, 2025, the Company remeasured its operating lease liability for one of its sublet locations as a result of a change in the expected lease term in conjunction with the extension of the sublease. Such remeasurement resulted in an adjustment to the operating lease asset of less than $
The components of net lease costs were as follows:
| Three Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Condensed Consolidated Statement of Operations: | ||||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | ||||||||
| Less: Sublease income, net | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Cash paid for amounts included in the measurement of lease liabilities was $
At December 31, 2025, future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess of one year were as follows:
| Payments Operating Leases | Receipts Subleases | Net Leases | ||||||||||
| Fiscal year: | ||||||||||||
| 2026 (remaining) | $ | $ | $ | |||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| 2030 | ||||||||||||
| Thereafter | ||||||||||||
| Total lease commitments | ||||||||||||
| Less: Amount representing interest | ( | ) | ||||||||||
| Present value of lease liabilities | ||||||||||||
| Less: current portion | ( | ) | ||||||||||
| Operating lease liabilities, net of current portion | $ | |||||||||||
As of December 31, 2025, the Company had lease commitments that extended to fiscal 2031.
13. Commitments and Contingencies
The Company leases certain of its buildings under non-cancelable lease agreements. Refer to the Leases footnote (Note 12) of the Notes to the Condensed Consolidated Financial Statements for additional information.
The Company frequently warrants that the technology solutions it develops for its clients will operate in accordance with the project specifications without defects for a specified warranty period, subject to certain limitations that the Company believes are standard in the industry. In the event that defects are discovered during the warranty period, and none of the limitations apply, the Company is obligated to remedy the defects until the solution that the Company provided operates within the project specifications. The Company is not typically obligated by contract to provide its clients with any refunds of the fees they have paid, although a small number of its contracts provide for the payment of liquidated damages upon default. The Company has purchased and maintains insurance policies covering professional errors and omissions, property damage and general liability that reduce its monetary exposure for warranty-related claims and enable it to recover a portion of any future amounts paid.
The Company’s contracts typically provide for testing and client acceptance procedures that are designed to mitigate the likelihood of warranty-related claims, although there can be no assurance that such procedures will be effective for each project. The Company has not paid any material amounts related to warranties for its solutions. The Company sometimes commits unanticipated levels of effort to projects to remedy defects covered by its warranties. The Company’s estimate of its exposure to warranties on contracts is immaterial as of December 31, 2025 and September 30, 2025.
The Company’s agreements with customers generally require the Company to indemnify the customer against claims in which the Company’s products infringe third-party patents, copyrights, or trademarks and indemnify against product liability matters. As of December 31, 2025 and September 30, 2025, the Company has not experienced any losses related to the indemnification obligations and no significant claims with respect thereto were outstanding. The Company does not expect significant claims related to the indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
Litigation
The Company is subject to ordinary routine litigation and claims incidental to its business. As of December 31, 2025, the Company was not engaged with any material legal proceedings.
14. Segment Reporting
We operate as operating segment: Software. The Software segment provides marketing technology to customers under software-as-a-service arrangements. The service term for the software arrangements is variable, with the median term being approximately years. Bridgeline derives revenue primarily in North America and manages the business activities on a consolidated basis.
Our Chief Executive Officer, our CODM, reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, we have operating segment - Software - in the business of marketing technology.
Our CODM reviews cost of sales expense, sales and marketing expense, general and administrative expense and research and development expense to assess our significant segment expenses, and reviews income (loss) from operations and net income (loss) to assess our operating performance. Our CODM also reviews total assets, as reported on our consolidated balance sheets.
The accounting policies of the software segment are the same as those described in the summary of significant accounting policies. See our consolidated statement of operations for our significant segment expenses, loss from operations and net loss in the periods presented.
15. Related Party Transactions
Brandon Ross
On February 14, 2025, the Board appointed Brandon Ross to serve as a Class III Director of the Board, to fill the vacancy created by the resignation of Mr. Taglich. Mr. Ross will serve until his term expires at the 2026 Annual Meeting of Stockholders. Mr. Ross currently serves as Head of Placements and Senior Managing Director at WestPark Capital, Inc.
Of the
Michael Ketslakh
On February 10, 2025, the Board appointed Michael Ketslakh to serve as a Class II Director of the Board, to fill the vacancy created by the resignation of Mr. Landers. Mr. Ketslakh will serve until his term expires at the 2028 Annual Meeting of Stockholders.
Mr. Ketslakh participated in the Private Placement and purchased
16. Subsequent Events
The Company evaluated subsequent events through the date of this filing and concluded there were no material subsequent events requiring adjustment to or disclosure in these interim condensed consolidated financial statements, except as already disclosed in Note 8.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
All statements included in this section, other than statements or characterizations of historical fact, are forward-looking statements. These “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may" "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These statements appear in a number of places and include statements regarding the intent, belief or current expectations of Bridgeline Digital, Inc. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions, including, but not limited to, business operations and the business of our customers, suppliers and partners; our ability to retain and upgrade current customers; increasing our recurring revenue; our ability to attract new customers; our revenue growth rate; our history of net loss and our ability to achieve or maintain profitability; instability in the financial markets, including the banking sector; our liability for any unauthorized access to our data or our users’ content, including through privacy and data security breaches; any decline in demand for our platform or products; changes in the interoperability of our platform across devices, operating systems, and third-party applications that we do not control; competition in our markets; our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products, particularly in light of potential disruptions to the productivity of our employees resulting from remote work; our ability to manage our growth or plan for future growth, and our acquisition of other businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; the volatility of the market price of our common stock; the ability to maintain our listing on the NASDAQ Capital Market; or our ability to maintain an effective system of internal controls as well as other risks described in our filings with the Securities and Exchange Commission. Any of such risks could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. We urge readers to review carefully the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, as well as in the other documents that we file with the Securities and Exchange Commission.
This section should be read in combination with the accompanying unaudited condensed consolidated financial statements and related notes prepared in accordance with United States generally accepted accounting principles.
Overview
Bridgeline Digital is an AI-powered marketing technology company that offers a suite of products that help companies grow online revenue by driving more visitors to their websites, converting more visitors to purchasers, and increasing average order value per purchaser.
Bridgeline’s software is available through a cloud-based Software as a Service (“SaaS”) model. Additionally, Bridgeline’s software is available via a perpetual licensing business model, in which the software can reside on premise at the customer’s facility, or manage-hosted by Bridgeline. Bridgeline’s product offerings include:
● HawkSearch: a site search, recommendation, and personalization software application, built for marketers to enhance, normalize, and enrich an online customer's content search and product discovery experience.
● Celebros Search: a commerce-oriented site search product that provides Natural Language Processing with artificial intelligence to present relevant search results based on long-tail keyword searches.
● Woorank: a Search Engine Optimization (“SEO”) audit tool that generates an instant performance audit of the site’s technical, on-page, and off-page SEO.
● Unbound: a Digital Experience Platform that includes Web Content Management, eCommerce, Digital Marketing, and Web Analytics.
● TruPresence: a web content management and eCommerce platform that supports the needs of multi-unit organizations and franchises.
● OrchestraCMS: the only content and digital experience platform built 100% native on Salesforce and helps customers create websites and intranets for their customers, partners, and employees.
Locations
Our corporate office is located in Woburn, Massachusetts. We maintain regional field offices serving the following geographical locations: Garden City, New York; Rosemont, Illinois; Atascadero, California; Ontario, Canada; and Brussels, Belgium.
We have four wholly-owned subsidiaries: Bridgeline Digital Pvt. Ltd., located in Bangalore, India; Bridgeline Digital Canada, Inc., located in Ontario, Canada; Hawk Search, Inc. located in Rosemont, Illinois and Bridgeline Digital Belgium BV, located in Brussels, Belgium.
Customer Information
We currently have over 2,000 active customers. For the three months ended December 31, 2025 and 2024, no customer exceeded 10% of our revenue.
Results of Operations for the Three Months Ended December 31, 2025 compared to the Three Months Ended December 31, 2024
Total net revenue for each of the three months ended December 31, 2025 and 2024, was $3.9 million and $3.8 million, respectively. We had net loss of $(0.1) million and $(0.6) million for the three months ended December 31, 2025 and 2024, respectively. Included in the net loss for the three months ended December 31, 2025 and 2024, was a gain of $90 thousand and a loss of $(114) thousand as a result of the change in fair value of certain warrant liabilities, respectively. Basic and diluted loss per share attributable to common shareholders was $ (0.01) and $ (0.06) for the three months ended December 31, 2025 and 2024, respectively.
| (in thousands) |
Three Months Ended December 31, |
|||||||||||||||||||||||
| Revenue |
2025 |
% | 2024 |
% | Change |
% Change |
||||||||||||||||||
| Subscription |
$ | 3,155 | 81 | % | $ | 3,048 | 80 | % | $ | 107 | 4 | % | ||||||||||||
| Services |
758 | 19 | % | 743 | 20 | % | 15 | 2 | % | |||||||||||||||
| Total net revenue |
3,913 | 3,791 | 122 | 3 | % | |||||||||||||||||||
| Cost of revenue |
||||||||||||||||||||||||
| Subscription |
985 | 31 | % | 893 | 29 | % | 92 | 10 | % | |||||||||||||||
| Services |
340 | 45 | % | 363 | 49 | % | (23 | ) | (6 | )% | ||||||||||||||
| Total cost of revenue |
1,325 | 34 | % | 1,256 | 33 | % | 69 | 5 | % | |||||||||||||||
| Gross profit |
2,588 | 66 | % | 2,535 | 67 | % | 53 | 2 | % | |||||||||||||||
| Operating expenses |
||||||||||||||||||||||||
| Sales and marketing |
1,041 | 27 | % | 982 | 26 | % | 59 | 6 | % | |||||||||||||||
| General and administrative |
711 | 18 | % | 786 | 21 | % | (75 | ) | (10 | )% | ||||||||||||||
| Research and development |
792 | 20 | % | 1,073 | 28 | % | (281 | ) | (26 | )% | ||||||||||||||
| Depreciation and amortization |
190 | 5 | % | 195 | 5 | % | (5 | ) | (3 | )% | ||||||||||||||
| Restructuring and acquisition related expenses |
25 | 1 | % | 10 | 0 | % | 15 | 150 | % | |||||||||||||||
| Total operating expenses |
2,759 | 3,046 | (287 | ) | (9 | )% | ||||||||||||||||||
| Loss from operations |
(171 | ) | (511 | ) | 340 | (67 | )% | |||||||||||||||||
| Interest expense and other, net |
- | (4 | ) | 4 | 0 | % | ||||||||||||||||||
| Change in fair value of warrant liabilities |
90 | (114 | ) | 204 | (179 | )% | ||||||||||||||||||
| Loss before income taxes |
(81 | ) | (629 | ) | 548 | (87 | )% | |||||||||||||||||
| Provision for income taxes |
5 | 5 | - | 0 | % | |||||||||||||||||||
| Net loss |
$ | (86 | ) | $ | (634 | ) | $ | 548 | (86 | )% | ||||||||||||||
| Non-GAAP Measure: |
||||||||||||||||||||||||
| Adjusted EBITDA |
$ | 122 | $ | (193 | ) | $ | 315 | (163 | )% | |||||||||||||||
Revenue
Our revenue is derived from two sources: (i) subscription and (ii) services.
Subscription
Subscription revenue of $3.2 million for the three months ended December 31, 2025 increased by $0.1 compared to $3.1 million for the three months ended December 31, 2024.
Subscription revenue as a percentage of total revenue of 81% for the three months ended December 31, 2025 increased from 80% for the three months ended December 31, 2024.
Services
Services revenue of $0.8 million for the three months ended December 31, 2025 increased slightly compared to $0.7 million for the three months ended December 31, 2024.
Services revenue as a percentage of total revenue of 19% for the three months ended December 31, 2025 decreased from 20% for the three months ended December 31, 2024.
Overall
Revenue for Bridgeline’s Core products was $2.4 million for the three months ended December 31, 2025 (representing 60% of total revenue), an increase from $2.0 million in the three months ended December 31, 2024 (representing 54% of total revenue). Bridgeline revenue for the three months ended December 31, 2025 increased compared to the three months ended December 31, 2024, with growth in Core products, led by HawkSearch, offset by lower revenue in certain legacy products. Core revenue for the 12 months ended December 31, 2025 grew by 17% compared to the 12 months ended December 31, 2024.
Cost of Revenue
Total cost of revenue of $1.3 million for the three months ended December 31, 2025 remained consistent with $1.3 million for the three months ended December 31, 2024.
Cost of Subscription Revenue
Cost of subscription revenue of $1.0 million for the three months ended December 31, 2025 increased slightly from $0.9 million for the three months ended December 31, 2024.
The cost of subscription revenue as a percentage of subscription revenue was 31% and 29% for the three months ended December 31, 2025 and 2024, respectively.
The changes in cost of subscription revenue are primarily due to higher server costs.
Cost of Services Revenue
Cost of services revenue of $0.3 million for the three months ended December 31, 2025 a slight decrease from $0.4 million for the three months ended December 31, 2024.
The cost of services revenue as a percentage of total services revenue was 45% and 49% for the three months ended December 31, 2025 and 2024, respectively.
The changes in cost of services revenue is primarily due to lower personnel costs.
Gross Profit
Gross profit of $2.6 million for the three months ended December 31, 2025 increased from $2.5 million for the three months ended December 31, 2024.
The gross profit margin was 66% and 67% for the three months ended December 31, 2025 and 2024, respectively.
Operating Expenses
Sales and Marketing Expenses
Sales and marketing expenses of $1.0 million for the three months ended December 31, 2025 increased from $1.0 million for the three months ended December 31, 2024.
Sales and marketing expense as a percentage of total revenue was 27% and 26% for the three months ended December 31, 2025 and 2024, respectively.
General and Administrative Expenses
General and administrative expenses of $0.7 million for the three months ended December 31, 2025 decreased from $0.8 million for the three months ended December 31, 2024.
General and administrative expense as a percentage of total revenue was 18% and 21% for the three months ended December 31, 2025 and 2024, respectively.
The decrease from the prior comparable periods is primarily attributable to lower personnel costs.
Research and Development
Research and development expenses of $0.8 million for the three months ended December 31, 2025 decreased from $1.1 million for the three months ended December 31, 2024.
Research and development expenses as a percentage of total revenue was 20% and 28% for the three months ended December 31, 2025 and 2024, respectively.
The decrease for the three months ended December 31, 2025 was primarily attributable to lower personnel costs.
Depreciation and Amortization
Depreciation and amortization expenses of $0.2 million for the three months ended December 31, 2025 remained consistent with $0.2 million for the three months ended December 31, 2024.
Depreciation and amortization as a percentage of total revenue was 5% for each of the three months ended December 31, 2025 and 2024.
Restructuring and Acquisition Related Expenses
Restructuring and acquisition related expenses were $25 thousand for the three months ended December 31, 2025 compared to $10 thousand for the three months ended December 31, 2024.
Interest expense and other, net
The sum of interest expense and other, net, was less than $(1) thousand of income for the three months ended December 31, 2025 and was $(4) thousand of income for the three months ended December 31, 2024.
Change in fair value of warrant liabilities
We recognized a gain on the change in fair value of warrant liabilities of $0.1 million during the three months ended December 31, 2025 and recognized a loss related to the change in fair value of warrant liabilities of $(0.1) million for the three months ended December 31, 2024.
Provision for Income Taxes
The provision for income taxes was $5 thousand for each of the three months ended December 31, 2025 and December 31, 2024. The provision for income taxes consists of estimated liability for federal and state income taxes owed by us. Net operating loss (“NOL”) carryforwards are estimated to be sufficient to offset any potential taxable income for all periods presented. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. We maintain a valuation allowance against its net deferred tax assets.
Adjusted EBITDA
We also measure our performance based on a non-GAAP (“Generally Accepted Accounting Principles”) measurement of earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, impairment of goodwill and intangible assets, non-cash warrant related expenses, other income and expenses, change in fair value of derivative instruments, change in fair value of contingent consideration, and restructuring and acquisition related charges (“Adjusted EBITDA”).
We believe this non-GAAP financial measure of Adjusted EBITDA is useful to management and investors in evaluating our operating performance for the periods presented and provides a tool for evaluating our ongoing operations.
Adjusted EBITDA, however, is not a measure of operating performance under accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should not be considered as an alternative or substitute for U.S. GAAP profitability measures such as (i) income from operations and net income, or (ii) cash flows from operating, investing and financing activities, both as determined in accordance with U.S. GAAP. Adjusted EBITDA as an operating performance measure has material limitations because it excludes the financial statement impact of net interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation, goodwill impairment, changes in fair value of warrant liabilities, loss on disposal of assets, other amortization, changes in fair value of contingent consideration and restructuring charges, acquisition related expenses, and therefore does not represent an accurate measure of profitability. As a result, Adjusted EBITDA should be evaluated in conjunction with net income (loss) for a complete analysis of our profitability, as net income (loss) includes the financial statement impact of these items and is the most directly comparable U.S. GAAP operating performance measure to Adjusted EBITDA. Our definition of Adjusted EBITDA may also differ from and therefore may not be comparable with similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because of the limitations that Adjusted EBITDA has as an analytical tool, investors should not consider it in isolation, or as a substitute for analysis of our operating results as reported under U.S. GAAP.
The following table reconciles net loss (which is the most directly comparable U.S. GAAP operating performance measure) to Adjusted EBITDA (in thousands):
| Three Months Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Net loss |
$ | (86 | ) | $ | (634 | ) | ||
| Provision for income tax |
5 | 5 | ||||||
| Interest expense and other, net |
- | 4 | ||||||
| Change in fair value of warrants |
(90 | ) | 114 | |||||
| Amortization of intangible assets |
183 | 184 | ||||||
| Depreciation and other amortization |
7 | 17 | ||||||
| Restructuring and acquisition related charges |
25 | 10 | ||||||
| Stock-based compensation |
78 | 107 | ||||||
| Adjusted EBITDA |
$ | 122 | $ | (193 | ) | |||
Liquidity and Capital Resources
Cash Flows
Operating Activities
Cash used in operating activities was $(39) thousand for the three months ended December 31, 2025, compared to cash provided by operating activities of $0.2 million for the three months ended December 31, 2024. The change in cash used in operating activities, compared to the prior period, was primarily due to changes in non-cash items, including amortization, depreciation, stock-based compensation, and changes in fair value of warrant liabilities, and changes in accounts receivable, prepaids and other current assets, and accounts payable and accrued liabilities and deferred revenue.
Investing Activities
There was $(17) thousand and $(5) thousand cash used in investing activities for the three months ended December 31, 2025 and 2024, respectively.
Financing Activities
Cash used in financing activities was $(0.1) million for each of the three months ended December 31, 2025 and 2024, primarily related to payments of long-term debt.
Capital Resources and Liquidity Outlook
We have historically incurred operating losses and used cash on hand and from financing activities to fund operations as well as develop new products. The Company is continuing to maintain tight control over discretionary spending for the 2026 fiscal year. The Company believes that future revenues and cash flows will supplement its working capital and it has an appropriate cost structure to support future revenue growth.
We may offer and sell, from time to time, in one or more offerings, up to $50 million of its debt or equity securities, or any combination thereof. Such securities offerings may be made pursuant to the Company’s currently effective registration statement on Form S-3 (File No. 333-285176), which was initially filed with the Securities and Exchange Commission on February 24, 2025 and declared effective on February 27, 2025 (the “Shelf Registration Statement”). A complete description of the types of securities that the Company may sell is described in the Preliminary Prospectus contained in the Shelf Registration Statement. As of the date of the filing of this Quarterly Report, there are no active offerings for the sale or obligations to purchase any of the Company’s securities pursuant to the Shelf Registration Statement. There can be no assurances that the Company will offer any securities for sale or that if the Company does offer any securities that it will be successful in selling any portion of the securities offered on a timely basis if at all, or on terms acceptable to us. Further, our ability to offer or sell such securities may be limited by the rules of the NASDAQ Capital Market. As of December 31, 2025 approximately $47.7 million remains available for issuance.
Off-Balance Sheet Arrangements
At this time, we do not have any off-balance sheet arrangements, financings or other relationships with unconsolidated entities or other persons.
Contractual Obligations
We lease all of our office locations. The gross obligations for operating leases are $0.6 million, with obligations extending through fiscal 2031. Debt payments on our various debt obligations total $0.2 million, of which $0.1 million is expected to be paid in the next twelve months.
Critical Accounting Policies
These critical accounting policies and estimates by our management should be read in conjunction with Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements that were prepared in accordance with U.S. GAAP.
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. We regularly make estimates and assumptions that affect the reported amounts of assets and liabilities. The most significant estimates included in our financial statements are the valuation of accounts receivable and long-term assets, including intangibles, goodwill and deferred tax assets, stock-based compensation, amounts of revenue to be recognized on service contracts in progress, unbilled receivables, and deferred revenue. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.
We consider the following accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment:
| ● |
Revenue recognition; |
|
| ● |
Accounts receivable; |
|
| ● |
Accounting for goodwill and other intangible assets; |
|
| ● |
Accounting for business combinations; |
|
| ● |
Accounting for common stock purchase warrants; and |
|
| ● |
Accounting for stock-based compensation. |
Revenue Recognition
We derive our revenue from two sources: (i) Subscription, which are comprised of software subscription fees ("SaaS"), hosting and related services, maintenance for post-customer support (“PCS”) on perpetual licenses, and perpetual software licenses, and (ii) Services, which are professional services to implement our products such as web development, digital strategy, information architecture and usability engineering search. Customers who license the software on a subscription basis, which can be described as “Software as a Service” or “SaaS”, do not take possession of the software.
Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. If the consideration promised in a contract includes a variable amount, for example, overage fees, contingent fees or service level penalties, we include an estimate of the amount we expect to receive for the total transaction price if it is probable that a significant reversal of cumulative revenue recognized will not occur. Our subscription service arrangements are non-cancelable and do not contain refund-type provisions. Revenue is reported net of applicable sales and use tax.
We recognize revenue from contracts with customers using a five-step model, which is described below:
| 1. |
Identify the customer contract; |
|
| 2. |
Identify performance obligations that are distinct; |
|
| 3. |
Determine the transaction price; |
|
| 4. |
Allocate the transaction price to the distinct performance obligations; and |
|
| 5. |
Recognize revenue as the performance obligations are satisfied. |
Accounts Receivable
The allowance for credit losses is determined based upon a variety of judgments and factors. Factors considered in determining the allowance include historical collection, write-off experience, and management’s assessment of collectability from customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators. Management also monitors the aging analysis of receivables to determine if there are changes in the collections of accounts receivable. Receivable balances are written-off against the allowance for credit losses when such balances are deemed to be uncollectible.
Accounting for Goodwill and Intangible Assets
Goodwill is tested for impairment annually during the fourth quarter of every fiscal year and more frequently if events and circumstances indicate that the asset might be impaired. The purpose of an impairment test is to identify any potential impairment by comparing the carrying value of a reporting unit including goodwill to its fair value. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
Factors that could lead to a future impairment include material uncertainties such as operational, economic and competitive factors specific to the key assumptions underlying the fair value estimate we use in our impairment testing that have a reasonable possibility of changing. This could include a significant reduction in projected revenues, a deterioration of projected financial performance, future acquisitions and/or mergers, and a decline in our market value as a result of a significant decline in our stock price.
Accounting for Business Combinations
We allocate the amount we pay for each acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets which arise from a contractual or legal right or are separable from goodwill. We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price that exceeds the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated growth rates, cash flows and discounts rates and estimated useful lives could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with these acquisitions are expensed as incurred through general and administrative expense on the consolidated statements of operations. In those circumstances where an acquisition involves a contingent consideration arrangement, we recognize a liability equal to the fair value of the contingent payments expected to be made as of the acquisition date. We re-measure this liability each reporting period and recognizes changes in the fair value through income (loss) before income taxes within the consolidated statements of operations.
Accounting for Common Stock Purchase Warrants
We evaluate common stock warrants as they are issued to determine whether they should be classified as an equity instrument or a liability. Those warrants that are classified as a liability are carried at fair value at each reporting period, with changes in their fair value recognized in change in fair value of warrant liabilities in the consolidated statements of operations. The fair value of our warrant liabilities are valued utilizing Level 3 inputs. Warrant liabilities are valued using a Monte Carlo option-pricing model, which takes into consideration the volatilities of comparable public companies, due to the relatively low trading volume of our common stock. The Monte Carlo option-pricing model uses certain assumptions, including expected life and annual volatility.
Accounting for Stock-Based Compensation
At December 31, 2025, we maintained two stock-based compensation plans, one of which has expired but still contains vested stock options. The two plans are more fully described in Note 8 of these condensed consolidated financial statements.
We account for stock-based compensation awards in accordance with ASC 718, Compensation-Stock Compensation. Share-based payments (to the extent they are compensatory) are recognized in our consolidated statements of operations based on their fair values.
We recognize stock-based compensation expense for share-based payments issued that are expected to vest on a straight-line basis over the service period of the award, which is generally three years. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rate and reduce the expense over the recognition period. Estimated forfeiture rates are updated for actual forfeitures quarterly. We also consider, each quarter, whether there have been any significant changes in facts and circumstances that would affect our forfeiture rate. Although we estimate forfeitures based on historical experience, actual forfeitures in the future may differ. In addition, to the extent our actual forfeitures are different than our estimates, we recognize a true-up for the difference in the period that the awards vest, and such true-ups could materially affect our operating results.
We estimate the fair value of stock options using the Black-Scholes-Merton option valuation model. The fair value of an award is affected by our stock price on the date of grant as well as other assumptions, including the estimated volatility of our stock price over the term of the awards and the estimated period of time that we expect employees to hold their stock options. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the awards. We use the historical volatility of our publicly traded options in order to estimate future stock price trends. In order to determine the estimated period of time that we expect employees to hold their stock options, we use historical trends of employee turnovers. Our expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The aforementioned inputs entered into the option valuation model we use to fair value our stock awards are subjective estimates and changes to these estimates will cause the fair value of our stock awards and related stock-based compensation expense we recognize to vary.
We recognize deferred tax assets for stock-based awards that result in deductions on our income tax returns, based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which we will receive a tax deduction.
| Item 3. |
Qualitative and Quantitative Disclosures About Market Risk. |
Not required.
| Item 4. |
Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) were effective as of December 31, 2025.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.
PART II – OTHER INFORMATION
| Item 1. |
Legal Proceedings. |
From time to time, we are subject to ordinary routine litigation and claims incidental to our business. We are not currently involved in any legal proceedings that we believe are material beyond those previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the Securities and Exchange Commission on December 19, 2025.
| Item 1A. |
Risk Factors. |
There have been no material changes to the risk factors described under Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the Securities and Exchange Commission on December 19, 2025.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. |
None.
| Item 3. |
Defaults Upon Senior Securities. |
None.
| Item 4. |
Mine Safety Disclosures. |
Not applicable.
| Item 5. | Other Information. |
| Item 6. |
Exhibits. |
| Exhibit No. |
Description of Document |
|
| 3.1 |
Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on May 15, 2013). |
|
| 3.2 |
Amended and Restated By-laws (incorporated by reference to Exhibit 3.1 to our current Report on Form 8-K filed on December 14, 2018). |
|
| 3.3 |
Amendment to the Amended and Restated By-laws (incorporated by reference to Exhibit 3.1 to our current Report on Form 8-K filed on September 10, 2021). |
|
| 3.4 |
Certificate of Designations of the Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on November 4, 2014). |
|
| 3.5 |
Certificate of Designations of the Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on October 19, 2018). |
|
| 31.1* |
Certification of Chief Executive Officer, pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|
| 31.2* |
Certification of Chief Financial Officer, pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|
| 32.1* |
Certification of Chief Executive Officer, pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|
| 32.2* |
Certification of Chief Financial Officer, pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|
| 101.INS** |
Inline XBRL Instance |
|
| 101.SCH** |
Inline XBRL Taxonomy Extension Schema |
|
| 101.CAL** |
Inline XBRL Taxonomy Extension Calculation |
|
| 101.DEF** |
Inline XBRL Taxonomy Extension Definition |
|
| 101.LAB** |
Inline XBRL Taxonomy Extension Labels |
|
| 101.PRE** |
Inline XBRL Taxonomy Extension Presentation |
|
| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Bridgeline Digital, Inc. |
||
| (Registrant) |
||
| February 12, 2026 |
/s/ Roger Kahn |
|
| Date |
Roger Kahn President and Chief Executive Officer (Principal Executive Officer) |
|
| February 12, 2026 |
/s/ Thomas R. Windhausen |
|
| Date |
Thomas R. Windhausen Chief Financial Officer (Principal Financial and Accounting Officer) |
FAQ
How did Bridgeline Digital (BLIN) perform financially in the quarter ended December 31, 2025?
What were Bridgeline Digital (BLIN)’s key revenue drivers this quarter?
How did Bridgeline Digital’s profitability metrics change year over year?
What is Bridgeline Digital’s cash position and balance sheet profile as of December 31, 2025?
How is Bridgeline Digital’s core product revenue trending?
Does Bridgeline Digital (BLIN) have capacity to raise additional capital through securities offerings?
What happened to Bridgeline Digital’s warrant liabilities during the quarter?
