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01/11 03:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: stable total revenue, slight increase in subscription revenue, and consistent gross profit margins suggest a steady performance. However, the unchanged net loss and decline in adjusted EBITDA reflect financial challenges. The positive outlook for HawkSearch, including reduced sales cycles and increased ARR, balances concerns about reliance on partnerships and unclear management responses. The Q&A section highlights cautious optimism but lacks significant catalysts for strong stock movement. Overall, the sentiment is neutral, with potential for slight positive movement if HawkSearch growth materializes as expected.
Total Revenue $3.9 million for the quarter ended September 30, 2025, compared to $3.9 million in the prior year period (no change).
Subscription Revenue $3.1 million for the quarter ended September 2025, compared to $3 million in the prior year period, an increase of $0.1 million. This increase is attributed to SaaS licenses, maintenance, and hosting revenue.
Services Revenue $700,000 for the quarter ended September 2025, compared to $800,000 in the prior year period, a decrease of $100,000. This decline reflects a reduction in services demand.
Cost of Revenue $1.3 million for the quarter ended September 30, 2025, compared to $1.2 million in the prior year period, an increase of $100,000. This increase is likely due to higher operational costs.
Gross Profit $2.5 million for the quarter ended September 30, 2025, with an overall gross profit margin of 66%. Subscription gross margin was 69%, and services gross margin was 50%. This is consistent with the prior year.
Operating Expenses $3 million for the quarter ended September 30, 2025, a decrease from $3.1 million in the prior year period, reflecting cost management efforts.
Net Loss $400,000 for the fiscal quarter ended September 2025, unchanged from the prior year period.
Adjusted EBITDA Minus $169,000 for the quarter ended September 2025, compared to $5,000 positive in the prior year comparable 3-month period. This decline reflects increased investments or operational challenges.
Cash $1.6 million as of September 30, 2025.
Accounts Receivable $1.5 million as of September 30, 2025.
Total Debt Outstanding EUR 278,000 (approximately USD 326,000) as of September 30, 2025, with a weighted average interest rate of 3.4% and principal payments due evenly through 2028.
Total Assets $15 million as of September 30, 2025.
Total Liabilities $5.8 million as of September 30, 2025.
HawkSearch Suite and AI products: Reached 58% of total revenue ($8.9 million) and 60% of subscription revenue ($7.4 million) with a 75% gross margin. Six new AI-powered products were launched, including Smart Search, Smart Response, Smart Agents, multisite management, Rapid UI, and advanced analytics.
Customer satisfaction and retention: Achieved 117% net revenue retention with less than 4% churn. Customers expanded their investments in AI-powered products like Smart Search and Smart Response.
New customer wins: Added 28 new customers, contributing $2 million in total contract value and $700,000 in annual recurring revenue. Examples include Culligan and ADENTRA.
Market expansion through partnerships: Established partnerships with Unilog and Salesforce, expanding the total addressable market and accelerating sales cycles.
Increased marketing efforts: Doubled ad spend to $500,000 per quarter, resulting in a 65% larger sales pipeline and a 35% increase in average sales size.
Sales efficiency: Reduced sales cycle from 160 days to 92 days and increased average ARR per sale by 35% from $18,500 to $25,000.
Revenue growth: Core product revenue grew by 16% CAGR, with an 18% increase in sales over fiscal 2024.
Focus on AI and product innovation: Launched six new AI-powered products and positioned HawkSearch as a leader in AI product discovery, validated by Gartner ranking it #1 in the B2B search space.
Shift from legacy to core products: Anticipated decline in legacy products to end in 2026, with core products driving over 60% of total revenue.
Marketing Budget Constraints: The company identified its marketing budget as a primary challenge. Despite doubling ad spend to $500,000 per quarter, the company acknowledges the need to assess its marketing budget, cash reserves, and profitability in 2026 to sustain growth.
Decline of Legacy Products: The decline in revenue from legacy products has dampened the growth of core products. Although this decline is expected to reduce in 2026, it remains a challenge impacting cumulative financial performance.
Net Loss and Adjusted EBITDA: The company reported a net loss of $400,000 for the fiscal quarter ended September 2025, consistent with the prior year. Additionally, adjusted EBITDA was negative at $169,000, reflecting financial challenges.
Debt and Cash Reserves: The company has $1.6 million in cash and $326,000 in debt as of September 30, 2025. While the debt level is manageable, limited cash reserves could constrain operational flexibility and growth investments.
Dependence on Partnerships: The company’s growth strategy heavily relies on partnerships, such as those with Unilog and Salesforce. Any disruption or underperformance in these partnerships could adversely impact sales and market expansion.
Revenue Growth: The company expects continued and accelerated growth for HawkSearch, driving growth to significantly more than 60% of the total revenue in fiscal 2026.
Sales Pipeline: The company starts fiscal 2026 with a 65% larger sales pipeline compared to the beginning of fiscal 2025.
Marketing Budget: The company has doubled its ad spend to $500,000 per quarter and will continue this level of marketing throughout 2026, with plans to reassess the budget and cash reserves at the end of the year.
Partnership Expansion: The company has established partnerships with Unilog and Salesforce, which are expected to expand the total addressable market and accelerate the sales cycle.
Product Innovation: The company plans to focus on Agentic AI and analytics in 2026 to support automated sales cycles and maintain leadership in AI product discovery.
Legacy Product Decline: The decline of legacy products is expected to reduce in 2026, allowing cumulative financials to reflect the strength of core products.
The selected topic was not discussed during the call.
The earnings call reveals mixed signals: strong comprehensive income growth and asset increase are positive, but negative EPS and unclear guidance on key projects like the Christina Lake transition and data center expansions temper optimism. The Q&A highlights slow progress in strategic initiatives and management's vague responses, adding uncertainty. Given the lack of market cap data, the prediction is neutral, as positive financial metrics are offset by guidance issues and uncertainties in strategic execution.
The earnings call presents a mixed picture: stable total revenue, slight increase in subscription revenue, and consistent gross profit margins suggest a steady performance. However, the unchanged net loss and decline in adjusted EBITDA reflect financial challenges. The positive outlook for HawkSearch, including reduced sales cycles and increased ARR, balances concerns about reliance on partnerships and unclear management responses. The Q&A section highlights cautious optimism but lacks significant catalysts for strong stock movement. Overall, the sentiment is neutral, with potential for slight positive movement if HawkSearch growth materializes as expected.
Despite some positive aspects like increased subscription license revenue and strategic marketing adjustments, the overall sentiment is negative due to declining total revenue, increased net loss, and decreased gross profit margin. The Q&A section did not provide sufficient positive insights to counterbalance these financial challenges. The increased operating expenses, significant decline in adjusted EBITDA, and continued decline in services revenue further contribute to a negative outlook, suggesting a potential stock price decrease in the near term.
The earnings call revealed an EPS miss, lack of guidance, and concerns about sales conversion despite increased marketing spend. Analysts expressed skepticism about the timeline for revenue growth, and the absence of a share buyback program or dividend hikes suggests limited shareholder returns. These factors overshadowed the positive aspects such as new contracts and efficient ad spend, leading to a negative sentiment prediction.
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