Good day and thank you for standing by. Welcome to the Bridgeline Digital, Inc. 3rd Quarter 2021 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.
I would now like to hand the conference over to your first Speaking for today, Mr. Mark Downey, CFO of Bridgeline Digital. Thank you. Please go ahead, sir.
Thank Thank you,
and good afternoon, everyone. My name is Mark Downey, and I am the Chief Financial Officer for Bridgeline Digital. I am pleased to welcome you to our fiscal 2021 Q3 conference call. On the call this afternoon is Eric Conn, We're John Viszio, President and CEO, who will begin with a discussion of our business highlights. I'll then update you on our financial results for the quarter, and we'll conclude by taking questions.
Before we begin, I would like to remind listeners During this conference call, comments that we make regarding Bridgeline that are not historical facts are forward looking statements Within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The internal projections and beliefs upon which we base our expectations today may change over time, and we of future performance. Occasions in economic, business, competitive, technological, Regulatory and other factors, such as the impact of related public health measures, could cause Bridgeline's actual results to differ materially from notes expressed or implied by the projections or forward looking statements made today. For more detailed information about these factors and other risks that may impact our business.
Please review the reports and documents filed from time to time at Bridgeline Digital with the Securities and Exchange Commission. Also, please note that on the call this afternoon, we will discuss some non GAAP financial measures when discussing the company's financial performance. We provide a reconciliation of these non GAAP measures to our GAAP financials in our earnings release. You can obtain a copy of our earnings release by visiting our website. I would now like to turn the call over to Ari Kahn, our President and CEO.
Thank you, Mark, and good afternoon, everybody. I'm happy to report that we delivered more than 30% top line growth and expect to deliver double digit growth the next quarter as well. Subscription revenue grew by 37% will be invested in sales and marketing to win even more customers. In our Q3, we closed more sales than any time in the company's history. Most of these sales were multi year subscriptions, which will drive additional recurring revenue in future quarters.
Our subscription and license revenue is now more 75% of our total revenue and as subscriptions continue to grow, our gross margin will increase even further. This year, we made 2 acquisitions, BlueRanc and HawkSearch. Both companies are fully integrated with Bridgeline at this time and the bulk of the restructuring With the combination of Celebros and Hawk Search, we are especially strong in the site search market with more than 400 customers Multi year commitments and 2 of them being larger than the company had ever signed before. Our strategy to merge Celebros and Hawk's search product is underway. This will result in a single product with the strongest feature set in the market, including natural language processing, personalization and recommendations.
We released the WooRank Assistant in our Q3 also. The WooRank Assistant incorporates an artificial intelligence agent that monitors your global core web vitals and makes recommendations that drive more site traffic and increase your Google ranking. Bridgeline released E Commerce 360 dashboards for both the Hawk Search and WooRank product lines. The E Commerce 360 dashboard measures Ecommerce strengthened makes recommendations with Bridgeline Software that can help drive your site traffic, boost your site's conversion and increase your online average order value. The E Commerce 360 dashboard is an important part of our organic growth strategy and facilitates cross sales across the customer bases of our product lines.
Our dashboard delivered Sales leads the very first day of its release and is impacting our sales pipeline above and beyond the new leads generated by marketing and our partner network. Our partner network, by the way, is making a strong impact on our revenue. Both agency and ISV partners are creating sales In our Q3, partners produced nearly half of our customer wins. On the marketing front, We released a new website for both Bridgeline and our Unbound product suite. These sites better articulate our e commerce 360 strategy and we'll convert more site leads to traffic more site traffic to leads.
We will continue to grow our investments in lead generation to drive even more revenue. To sum it up, we've delivered record growth. We expect to deliver strong growth next quarter. We have a strong cash position that will enable further investments in sales and marketing, and we made great strides in product development with the E Commerce 3 60 Strategy.
At this time, I'd like
to turn the call over to our Chief Financial Officer, Mark Downey. Thanks, Barry.
I'm very excited to share the positive financial results for the Q3 of fiscal 2021 ended June 30, 2021, with you this afternoon. Total revenue, which is comprised of licenses and services, increased 31% to 3,400,000 for the quarter ended June 30, 2021, as compared to $2,600,000 for the same period in 2020. The following are the various components of revenue: Subscription and licenses revenue, which is comprised of SaaS licenses, maintenance and hosting revenue and perpetual license revenue, increased 37 percent to $2,600,000 for the quarter ended June 30, 2021 from 1,900,000 the same period in 2020. As a percentage of total revenue, subscription and licenses revenue increased 3% 76% of total revenue for the quarter ended June 30, 2021 compared to 73% for the same period in 2020. Services revenue increased 15% or $108,000 to $821,000 for the quarter ended June 30, 2021, as compared to $713,000 for the same period in 2020.
As a percentage of total revenue, services revenue accounted for 24% of total revenue for the quarter ended June 30, 2021 compared to 27% for the same period in 2020. Bridgeline's overall strategy, as Ari has mentioned, called Ecommerce 360 has been on increasing recurring subscription and licenses revenue with out of the box apps that require little or no service to implement. This focus and continued growth are expected to further increase our subscription and licensing to services revenue ratio. Gross profit increased 45 percent or $699,002,300,000 for the quarter ended June 30, 2021, as compared to $1,600,000 for the same period in 2020. Cost of revenue increased 11% or $114,000 to $1,200,000 for the quarter ended June 30, 2021, compared to $1,100,000 for the same period in 2020 as a result of the increased fixed cost to operate our cloud based hosting model associated with the WooRank and Hawkshurst acquisitions.
Gross margin percentage increased to 65 Services gross margin percentage were consistent at 45% for the 3 months ended June 30, 2021, 2020. Operating expenses increased $1,500,000 to $2,900,000 for the quarter ended June 30, 2021, about $1,400,000 for the same period in 2020. Included within the quarterly totals as of June 30, 2021, Our additional investment in sales and marketing and acquisition related costs associated with the integration of both Hulink and HawkServe. In May, we concluded a registered direct and pipe capital raise for gross proceeds of 5,100,000 The net proceeds for this transaction were allocated according to derivative accounting rules to each of the freestanding financial instruments based on their fair value, which were comprised of common stock, preferred stock and warrants. For the quarter ended June 30, 2021, The total warrant liabilities were revalued, which considers the overall change in our closing market share price as of June 30, 2021, of $4.30 From the previous quarter's closing market share price of $2.89 resulting in a gross $4,600,000 non cash distributable loss to the change in the fair value of the warrant liabilities, offset by a gain through the exercise of Series A warrants of $506,000 For the quarter ended June 30, 2020, The net loss to the change in fair value of warrant liabilities was $1,800,000 Operating loss for the quarter ended June 3, 2021 is $615,000 as compared to $150,000 profits for the same period in 2020.
Net loss applicable to common shareholders for the quarter ended June 30, 2021, is 3,600,000 compared to $1,700,000 for the same period in 2020. Adjusted EBITDA for the quarter ended June 30, 2021 is a gain of $302,000 or $0.05 per diluted share compared to $428,000 or $0.11 per diluted share for the same period in 2020. Our non GAAP adjusted net loss for the quarter ended June 30, 2021 was $2,700,000 or $0.46 per diluted share compared to $1,400,000 or $0.37 per diluted share for the same period in 2020. On May 11, 2021, the company pursuant to a share purchase agreement Acquired all of the issued and outstanding shares of HawkSearch, a company based in Illinois. The company accounted for the HawkSearch transaction as a business combination.
We determined that the fair value of the gross assets acquired is not concentrated in a single identifiable asset of a group of similar assets. Assets acquired and liabilities assumed have been recognized as estimated fair values as of the acquisition date. The purchase price consisted of cash and preferred stock paid at closing and deferred cash payable in installments. The purchase agreement also provides for additional consideration in the event of achievement of certain revenue targets and operational goals to the selling shareholders. Additionally, Bridgeline closed on May 14, A registered direct offering priced at the market of 1,060,000 shares of its common stock at a price of $2.28 per share for gross proceeds of $2,400,000 and a securities purchase agreement with certain institutional investors in connection with the private placement of 2,700 shares of its Series B convertible preferred stock at a price of $1,000 per share.
The company received gross proceeds from its private placement of $2,700,000 As of June 30, 2021, The company had cash of $4,800,000 and accounts receivable net of $1,300,000 as compared to September 30, 2020, where the company of cash of $861,000 and accounts receivable net of $665,000 Total base sales outstanding for the quarter ended June 30, 2021 is 47.3 days. We received notification from the SBA of 100 percent forgiveness of our PPP loan. As of June 30, 2021, we have 6,801,243 shares of common stock, 350 shares of the Series C convertible preferred stock and 4,200 shares of the Series C convertible preferred stock. Our total assets are $32,100,000 and total liabilities of 23,700,000 I wanted to wrap up with some financial outlook. We expect our subscription and license revenue to grow by approximately $0.26 for the Q4 fiscal 2021.
Green Giant looks forward to continued success in 2021 and in the future by delivering shareholder value and expanding our customer success with exciting technology innovations. Thank you all for listening. And at this time, we would like to open the call up to Q and A.
Your first question comes from the line of Oren Hirschman. Your line is now open.
Hi, how are you? Congratulations Can you continue to go through some of the offerings, existing offerings that are Showing the most growth and without saying anything you can't tell us about some of the integration and some of the new offerings or I The integrated offerings that you think are going to be appealing in the coming quarters.
Sure, sure. So one of the Key changes that we made at the beginning of the year was A move away from platforms and towards apps. And our Unbound product Suite is fundamentally a platform product, which has a 6 month sales cycle, much larger And we're moving towards shorter sales cycles that enable telephonic and touchless sales. To that end, our site search products, which is Hawk and Celebros, Our strongest selling products today and our touchless sales for SEO, which is WooRank is very strong as well. On the unbound side and with OrchestraCMS to apps as well that can be sold telephonically.
And to that end, we released Unbound Pages. So this uses our unbound platform technology, creates an app on top of it That has a local pages solution for franchises to be able to quickly launch separate page locator pages for each of their franchisees. And we sold that product this quarter. So that sold as well. So in general, Celebros, Orchestra or I mean, Celebros, HawkSurg, WooRank, those are driving a lot of our growth.
And by Unbound, that's driving growth now as well. And that will be our focus and that is the heart of E Commerce 360. Apps that help drive your revenue, increase your conversion and boost your average order value To that end, we have released our E Commerce 360 dashboard, which is now inside of both the And the Wubank products that allow those products to cross sell our other software and that's helping to drive some of this organic growth as well.
Is there further integration that you could do or have to do with WooRank and the search product?
Well, there is further integration that we can do. So WooRank has this AI system that evaluates your website From a lot of different dimensions, not just traffic, it understands the technology behind your site, it connects to Google Analytics and is able to EvaluATE conversion and that intelligence is going to go even deeper into HawkSearch and our other product lines to make their dash Even smarter so that they can give you the best recommendations that will drive revenue for your site.
And in terms of I don't know if you have a Canse release date or anything, in terms of Fully integrated search between existing search products, any thoughts on how important that is, number 1? And number 2, any thoughts on When that might be available, if you know?
Sure, sure. Yes. Well, that's really important. So when we're talking about our search products, Celebros And HawkSearch, Celebros bringing natural language processing and instant search to the table, HawkSearch bringing recommendations, Personalization, super strong set of analytics and the dashboard to the table, integrating those is a top priority for us. It's going to give the best of both worlds to all of our customers.
And we don't have a formal release date yet, but that is one of the higher priorities
Your next question comes from the line of Howard Hackler. Your line is now open.
Congratulations on the quarter. I jumped in a little late, so I apologize if you provided some of the information. But In terms of the balance sheet, where do you stand, I guess, post The quarter in terms of your cash balance and how many warrants are left and if you and How strong do you consider the balance sheet to be?
Great, great. Well, pretty much right at the end of the quarter, our stock Price surged significantly and several warrants were exercised. So some of those were recognized with In our quarter, a couple of $1,000,000 worth and then another $5,000,000 or $6,000,000 was recognized after the Exactly. And we're very close to $10,000,000 in cash today. I think that we exceeded $10,000,000 Few days ago, the data payroll, so it's kind of hovering around in that area.
So that's where we are today. And in terms of The overall warrant today is in the post the end of the quarter. I'm talking about today is in August
16. We have about 1,800,000 Shares, 1,800,000 warrants left on the books.
Okay. And what does this balance sheet really provide to you in terms of gaining new customers, investing in your Sales staff, where do you envision the sales staff being at the end of the year, but more importantly, how customers or new customers view the company?
Okay. Well, on the sales staff side, we just hired 4 people literally last week. So we are growing on the sales side, and that's because of our balance sheet. Okay. Bridgeline to our focus is top line growth.
We're not going to neglect our bottom line. We've had Strong bottom line and we're going to continue to maintain that. However, top line growth is where we want To invest right now and because you've got a lot of cash that creates a lot of opportunities for us. And opportunistically, we came up because the heart of the E Commerce 360 strategy involves extending the number of apps that we can cross sale. And those apps often, it can be acquired for a couple of $100
And I assume Wurink it's still providing a whole bunch of lead generation for you guys?
Yes. Woorank is telling it. We love Woorank and it's Producing tons of leads, it's got a ton of value, it fits perfectly in our strategy.
Okay. Well, keep up the great work guys.
Thank you,
Howard. There are no further questions. I would like to turn the call over to Mr. Mark Downey for closing remarks.
Thank you. We appreciate the support and patience of our shareholders. And it is our goal to continue building a scalable business model, which in turn will build shareholder value. Thank you for joining us today, and we look forward to speaking again on our Q4 fiscal 2021 conference call. Stay healthy and well.