Good afternoon, ladies and gentlemen, and welcome to Bridgeline Digital Second Quarter 2015 Earnings Call. At this time all participant lines on the telephones are in listen-only mode to reduce background noise. But later we will be conducting a question-and-answer session. Instructions will follow at that time. [Operator Instructions]. As a reminder this conference call is being recorded. I would now like to introduce your first speaker for today, Michael Prinn, Chief Financial Officer. Sir, you have the floor.

Thanks Andrew, and good afternoon, everyone. I’m pleased to welcome you to our second quarter conference call. Before we begin I'd like to remind listeners that during this conference call, comments that we make regarding Bridgeline Digital that are not historical facts are forward-looking statements 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 undertake no obligation to inform you if they do. Results that we report today should not be considered as an indication of future performance. Changes in economic, business, competitive, technological, regulatory and other factors could cause Bridgeline's actual results to differ materially from those 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 by Bridgeline Digital with the Securities and Exchange Commission. Also please note that on the call today, we will discuss some non-GAAP financial measures in talking about the company's financial performance. We report our GAAP results, as well as provide a reconciliation of these non-GAAP measures to GAAP financial measures in our earnings release. You can obtain the copy of our earnings release by visiting our website. At this time I'd like to turn the call over to Bridgeline Digital's President and CEO, Thomas Massie.

Thank you, Mike, and good afternoon, everybody. Our second quarter and first half of fiscal 2015 was not as strong as we anticipated. Our legacy business decreased 44% in the second quarter of fiscal 2015 when compared to the second quarter of fiscal 2014 and anticipated revenues from larger iAPPS engagements that have already been booked have pushed into future quarters. Revenue for the second quarter of fiscal 2015 was $4.8 million. However, as we deploy our backlog we believe revenue will increase in the third quarter of fiscal 2015 and beyond. Subscription and perpetual license revenue increased 4% to $1.4 million for the second quarter of 2015 and recurring revenue was $1.6 million. In the second quarter we announced and we entered into a multi-year agreement for $1.8 million for a national franchise to launch and power its eCommerce capabilities on the iAPPSds platform. This is strategically significant as we will bring iAPPS commerce capabilities to the forefront of our multi-unit growth initiatives. In Q2 we announced iAPPSdsr a customizable pre- templated mobile friendly digital platform that we developed for growing franchises and multi-unit networks. The release of iAPPSdsr was driven by the success of iAPPSds. ds stands for distributed subscription; the "r" stands for rapid and the iAPPSdsr provides a multi-unit organization with a digital engagement micro site platform that gets them to market in approximately 90 days with scale. iAPPS DSR sales cycles will be much shorter and with a pre-templated system deployment time will be significantly reduced. The easy to use digital engagement solution will help corporates maintain its brand standards with preapproved templates while enhancing regeneration by significantly improving visibility and traffic through local search engine optimization capabilities. Users will be further empowered with best-in-class features and functionality that’s built in to our standard iAPPS…

Thanks Thomas. So I'm going to review our results of operations for the second quarter ended March 31, 2015. Our second quarter revenue was $4.8 million compared to $5.3 million in Q2 of last year, a decrease of 9%. So let me give some color on various pieces that make up that change. Our subscription and perpetual license revenue increased 4% compared to the second quarter of last year. We continue to work on deploying on our iAPPS SaaS and iAPPSds SaaS backlog. We do expect to launch one of our recent iAPPSds wins late in the third quarter and that should add an incremental $40,000 per month or over $120,000 per quarter in SaaS revenue once it’s launched. Our recurring revenue which consists of our SaaS licenses, the annual maintenance on our perpetual license and our managed service hosting was $1.6 million in the second quarter and this is consistent with the second quarter of last year. Our iAPPS services revenue decreased by approximately $550,000 in the second quarter compared to the second quarter of last year. So couple of reasons for this decline, one is that we're working right now on some of our iAPPSds implementation projects that we intentionally sold at a lower than desired margin in order to secure the recurring license revenue. And secondly, as we mentioned in prior calls our billable utilization is not what we had hoped it would be in the second quarter. As a result we made some adjustments to our delivery headcount and I will discuss this in a detail in a bit. Revenue from our non-iAPPS or legacy business decreased by approximately 44% when compared to the second quarter of last year. We are now at a point where our quarterly revenue legacy business is consistently less than a…

Thank you. [Operator Instructions]. And our first question today comes from Howard Halpern from Taglich Brothers. Your line is open.

Good morning. When you talk about your anticipation for third quarter revenue growth, that’s sequentially growth, correct?

Correct.

Okay. And also in terms of what was said earlier we could think about the digital engagement service line and the managed service hosting line, staying pretty constant in that $3 million, 3.1 million for the digital, the $370,000-$385,000 for managed services?

Yeah, I think we remain pretty confident. I mean I think there will be some modest growth. I think we certainly plan on driving a higher engagement services revenue and I think from a hosting prospective we get one or two engagements that we are working on, that are scheduled to launch at some point in this quarter, that will drive a little bit higher hosting revenue. But I think what you are getting at is those two lines, of services and hosting are going to remain fairly stable with some modest growth and when you will see the growth in the upcoming quarters is really the license line as we launch our IFTS recent wins.

And in terms of expenses, I saw in this G&A was up sequentially it was at just to get every single line correctly and it is going to start decrease going forward?

No, we had a onetime non-cash accounting charge. We will give a little more detail in our Q. Those were 135K and I think when you take that out G&A is fairly flat sequentially and you will see that go down again in our third quarter.

Okay. And in terms of the $23 million backlog that you have is that well could you put a timeframe and that is that 12 month 24 month 4 month?

Sure, there is a couple of different pieces, about a third of it, $8 million is services backlog and that obviously is probably within 12 months as most of our services engagements are three to six months, we have some annual retainers and some logic projects but a third is 12 months or less remaining license and hosting piece you know it should be other 15 million or so. That’s typically over a three year, 36 month period. Most of our contracts are 36 months and then you know that 23 million-24 million dollar number is really like a 36 month outlook.

So what’s important is 65% of our backlog is high margin SaaS future revenue.

And can you talk about in your qualified pipeline that you see maybe coming at getting contracts over the next 12 months?

We have a very exciting pipeline, numerous engagements and potentially thousands of additional DS licenses that are inside the pipeline I think that from an IS engagement perspective, our qualified pipeline is in probably one of the better shapes then it has been in a long time so we are very excited about some upcoming new venture we will be able to add and help us drive future revenue growth.

Thanks guys.

Thanks Howard.

Thank you. That’s all the questions that we have today. So I would like to turn the call back over to management for closing remarks.

Thank you for joining the call today. Just want to reiterate that we are very excited about the future. We do costs well under control now and we are going to want to get the most leverage driving the growth in the SaaS revenue line item that Howard was mentioning while maintain the services revenues be flat really get that leverage in economy to get that SaaS revenue to drop to the bottom-line. If anybody has any questions please feel free to give Michael or myself call at any time. Thank you.

Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program, and you may all disconnect your telephone lines. Everyone have a great day.