Good day, ladies and gentlemen, and welcome to the Bridgeline Digital fourth quarter earnings call. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Michael Prinn, CFO. Sir, please begin.

Thanks, Vince. So thank you. Good afternoon, everyone. I'm pleased to welcome you to our fourth quarter and fiscal year-end 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 a copy of our earnings release by visiting our website. In a minute, I'll turn it over to Ari Kahn, Bridgeline Digital's Chief Operating Officer. But before we do, let me give you -- let me give him a proper introduction. Ari is one of the founders of the digital engagement industry and built one of the first companies in digital engagement, FatWire. He founded FatWire in 1996 and grew it into a profitable company with 13 office -- with offices in 13 countries. FatWire was eventually acquired by Oracle. In addition to being a successful entrepreneur, Ari has a Ph.D. in computer science with a deep technical expertise in digital engagement. Ari's also made a personal direct investment in Bridgeline at above-market value. So Ari will spend some time talking about Bridgeline, why he's here, our strategy and our focus for fiscal 2016 as well as some recent accomplishments. Then when Ari's done, I'll come back and I'll go through a financial summary of our fourth quarter. Ari?

Thank you, Mike, and good afternoon, everyone. I'm going to spend some time talking about why I joined Bridgeline, the market and our strategy to increase profitability with Express solutions that capitalize on inbound market demand that we see. Although I've been in the web content management market since its inception, I hadn't looked closely at Bridgeline until just this year. When I did, I was immediately impressed by Bridgeline's product suite, iAPPS. iAPPS has the broadest feature set that I've seen in the digital engagement space. As I looked at Bridgeline's customers and at their websites, as a computer scientist, I appreciated the fact that Bridgeline has powered mission-critical applications like e-commerce at the enterprise level. The security and performance necessary to deliver these websites requires a level of technical maturity that does not come easy. I saw Bridgeline's challenges, too. I had the same challenges at FatWire, and I knew they could be overcome. When I created FatWire, I led the acquisition and turnaround of a company named Open Market. Open Market was a web content management company approximately the same size as Bridgeline and was losing money. Within a short period of time, we focused on operational excellence, drove the company to profitability and created a valuation of over $160 million, which was 4x its revenue. I decided to not only make a direct investment into Bridgeline but to join Bridgeline, so I could participate hands-on in its success. I'm excited to be here and confident that we can create great shareholder value. So let's start off and take a moment to talk about our market. The digital engagement market has matured significantly in recent years, and at the same time, is evolving rapidly. Just think about how social and mobile have changed in 2015 alone. Websites…

Thanks, Ari. So I'll go through our fourth quarter ended September 30. Fourth quarter revenue was $4.6 million compared to $5.8 million in the fourth quarter of last year, a decrease of 21%. Although this revenue number is lower than last year, as we mentioned in our previous calls, we're focused on aligning our cost structure to our revenue forecast. And you'll see we had a significant improvement to our bottom line, which I'll talk about in more detail in a bit. So let me give some color around the various pieces and components of revenue. Our subscription and perpetual license revenue for the fourth quarter of fiscal 2015 increased 13% to $1.5 million compared to the fourth quarter of fiscal 2014. Our licensing and our hosting revenue combined for the fourth quarter make up more than 40% of our total revenue compared to about 31% of the total revenue in the fourth quarter of last year. This continued increase in our license and hosting revenue, aligned with our improved cost structure, has enabled us to significantly improve our bottom line, which I mentioned I'll talk about in a bit. And the Express solutions that Ari spent some time talking about before will help drive a higher proportion of license revenue to service revenue. Our recurring revenue, which consists of SaaS licenses, annual maintenance on perpetual license and hosting was $1.7 million in the fourth quarter, and this is consistent with the fourth quarter of last year. Our service revenue decreased by approximately $1.3 million or 33% from the fourth quarter of last year. And as we discussed in our prior calls, we've made some changes in the last couple of quarters to align our delivery teams with our revenue projections. We'll continue to focus on our billable utilization and…

[Operator Instructions] Our first question comes from Howard Halpern from Taglich Brothers.

First question to you, Mike. Is there going to be any additional kind of restructuring charge that we might see in the first quarter of this year?

Yes. We will have one in the first quarter of '16, just in regards to some of the management changes that we talked about in the last month or so.

Okay. Now -- well, congratulations on your position here, Ari. And...

Thank you.

I guess I have a couple questions, I guess, about the Express solutions. What -- are all 4 of those solutions been launched yet? Or is it just 1 or 2? Or are they going to be launched?

Sure. These are all going to be launched. Now we had 2 prelaunch sales this quarter of our web store solution of -- and of our accelerated franchise system. So most of those will be -- have formal launches in next quarter. And then the marketing automation website will be launched in the quarter following that.

Okay. And are these going to be just a onetime license or an annual or a SaaS model? And what would you expect the ratio of license revenue to service revenue be for a customer?

Right, right. Yes, these are all SaaS solutions, software-as-a-service solutions. And they're going to have much higher ratio of license to services. In general, they're going to be anywhere from 2/3 to 3/4 license-driven products.

So Howard, if you think about what engagements have looked like in the past, some of our enterprise engagements were $200,000 to $250,000 in services and maybe $100,000 in software and that software was a 3-year, 36-month SaaS subscription. We really feel like we're well positioned, where some of these Express solutions, for example, an Express website might be $50,000 in services but the monthly SaaS subscription is not going to change that much. It might be a little lower in price. But for discussion purposes, it stays around that same $100,000. You're talking about $150,000 engagement with $50,000 in services. That $50,000 instead of a 4- to 6-month deployment or implementation phase, you're talking about 2 to 3 months with less risk because it's a smaller engagement.

And that's a great point because the services around Express solutions, we anticipate those to have higher margin than the services around a traditional iAPPS solution. So both the services will be more profitable, and we're going to have higher ratio of license to services.

Okay. And I guess if you could talk a little bit about how you will, I guess, manage or maybe have tweaked the sales force? How are they going to engage with customers and follow customers and maintain and grow customers? If you could discuss that a little bit?

Well, an important thing that we've done is we've increased the size of our sales force. We've added 4 more people to our direct sales team already this quarter, and we're going to continue to evaluate and expand, both our direct sales team and our inside sales team as well. One thing that will change is that the Express solutions do not require really a direct sales effort where a higher-level salesperson is flying out to meet a customer and having executive meetings and so forth. Our goal with the Express solutions is for them to, in large part, to be an easy decision for a customer that does not require a full executive review and to be sold with -- over the phone in a lot of cases with a few phone calls and a webinar, for instance. So we'll be expanding our inside sales team as well and training our current team, which is primarily focused on evaluating leads and disqualifying leads if they're not ready to buy a full iAPPS platform to be able to take those leads that were previously disqualified and convert them into Express customers.

Okay. So...

So Howard, the -- from -- like an enterprise perspective, we're going to continue to sell the larger engagements. And that sales force, the headcount decreased throughout '15, and so Ari has done a great job since he's been on board at increasing that headcount. And then for the Express solutions, like Ari mentioned, that's more of a junior salesperson that might not need to have as long an interaction, a shorter sales cycle primarily by phone and webinar.

Okay. And I mean, your ultimate goal with this Express solutions is to spread it out to customers as far and wide as you can. And then over time, develop them into potentially larger customers?

Yes. That's really an important part of this strategy. So first of all, we've got existing demand coming in today, saying, "You know what, I've got a website that is good enough. I'm not looking for a big disruptive event of changing out the whole website, but I just want some incremental advances." Express solutions will do that. Now we've got a relationship with a customer. And long term, they'll buy other Express solutions for us. And then eventually, when it's the right time in their business model, when that 1-in-4-years event happens, where it's time for them to redo the whole website, we'll be there with a relationship as a trusted partner to become the platform for their new site.

Okay. One last one is, can you talk a little bit about the iAPPS, the ds, and how that is and where it fits into the long-term strategy?

Well, ds continues to be part of our strategy and we're very unique in this space in that we've got ds, which has franchised multiunit website capabilities. This is a vertical submarket of the general website market that we can address, and we'll continue to. We, in fact, even have an Express solution for ds and we launched a public ds website just recently for a company called Camp Bow Wow, and that was a very successful implementation, campbowwow.com. This is just one vertical of the many that we see demand for. And we'll go after that one as well, but that is not the central focus of the company. It's a focus of the company.

At this time, I'm not showing any other questions in the queue. I'd like to turn it back to management for any closing remarks.

Great. Thank you, Vince. Well, everyone, we appreciate the support and patience of our shareholders, and it's our goal to continue to build a scalable business model, which in turn will build shareholder value. Thank you for joining us today, and we'll talk again on our Q1 earnings call in February.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.