Good day, ladies and gentlemen, and thank you for your patience. You've joined the Bridgeline Digital Fourth Quarter Earnings Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, CFO of Bridgeline Digital, Mr. Mike Prinn. Sir, you may begin.

Thank you. Good afternoon, everyone. I'm pleased to welcome you to our fourth 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 the 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. I'll now turn the call over to Ari. Ari?

Thank you Mike and good afternoon everyone. We're pleased to report that in fiscal 2017, we met our guidance of quarter-over-quarter increasing revenue and positive adjusted ea for the year. In fact, we delivered positive adjusted EBITDA each quarter of the year with the improvement totaling over $900,000 compared to fiscal 2016, demonstrating our commitment to strong financial management. The notable improvements to the company's bottom line highlight the impact of the many changes we made in 2016 that focused the business on its iAPPS software suite, which is the engine behind our high margin recurring revenue. We finished fiscal 2017 with all non-iAPPS recurring revenue removed from our revenue stream. The non-iAPPS recurring revenue was low margin, sometimes, loss making residual revenues left over from historical acquisitions that we removed by either selling the accounts or converting the customers to use our iAPPS platform. Although, shedding non-iAPPS revenue offset some of our top line growth, it made a big positive impact on our bottom line, which was the focus of 2017. And with this legacy lower margin revenue behind us, we have more transparent growth of our core iAPPS business, which is the primary value driver for the company. In fiscal 2017, revenue increased by over 13% to $4.2 million for the fourth quarter. This increase included the shedding of non-iAPPS accounts into iAPPS subscription and perpetual license revenue increased by over 17% compared to 6.4 million in the fourth quarter of fiscal 2016, which in turn grew from 4.9 million in the fourth quarter of fiscal 2017, showing the year over year over year growth of our iAPPS subscription perpetual license revenue. This revenue is the number one driver of our business with over 70% gross margins. iAPPS professional services make up the remainder of our revenue now…

Thanks, Ari. So I’ll go through the results of operations for the fourth quarter ended September 30 as well as some color around our full fiscal year. Fourth quarter revenue was 4.2 million compared to 3.7 million in the fourth quarter of last year, an increase of 13.7%. This was within the range of guidance we gave of 4.1 million to 4.3 million and this is now the fifth quarter in a row where we've had sequential revenue increase. Let me give some additional color around the various components of revenue. So, our services revenue increased 15.2% to 2.2 million in the fourth quarter of fiscal 2017 from 1.9 million in the fourth quarter of last year. Subscription and perpetual license revenue for the fourth quarter of fiscal 2017 increased 17.3% to 1.8 million compared to 1.5 million in the fourth quarter of last year. SaaS revenue increased 6.1% to 1.4 million in the fourth quarter of fiscal 2017, compared to 1.3 million in the fourth quarter of last year. Our hosting revenue decreased from 306,000 in the fourth quarter of 2016 to 263,000 in the fourth quarter of this year, however, our iAPPS hosting revenue increased 5.8% in the fourth quarter of fiscal 2017. This decrease was attributable to non-iAPPS hosting that we had in Q4 of last year that as Ari mentioned earlier is one of the legacy revenue streams that was a distraction, hurt our margins and we sold it off in the first quarter of this year. Our recurring revenue which consists of SaaS licenses, annual maintenance on perpetual licenses and hosting remained constant at 1.8 million in the fourth quarter of fiscal 2017 compared to the fourth quarter of last year. And I would like to point out that while the total recurring revenue remained…

[Operator Instructions] Our first question comes from the line of Manoj Nadkarni of ChipInvestor Group.

You talked a bit about customer base in your commentary. Can you please elaborate further where you’re seeing revenue traction, say, small companies versus large companies, what type of verticals, US based companies versus non-US?

Sure. Sure. So for us, most of our business is either in -- we're seeing the traction in 2017, the companies between say as small as 500 million in revenue and as big as 2 billion, maybe a little bigger than that, 4 billion. Now, we have some Fortune 500 and Fortune 100 wins this year. Now, those are departmental wins, not corporate, the departments would similarly be 2, maybe $4 billion group within those companies. Our business is primarily US based. We do have some European customers and those customers for us started off building their US site and then we began powering their European sites and we are seeing a lot of interests in Europe. I think a lot of it driven through the new GDPR standards where people just have to rebuild their site in order to be compliant. B2B, especially in the manufacturing space is an area that we have had a lot of the success recently and we think that in general, B2B is going to be an area for 2018 that we'll see growth and we'll make some investments in marketing in that area and we've already got a number of product enhancements, specifically for B2B. The B2B space by the way, according to Forrester, 32% of B2B sites do not even have a web commerce, content management engine behind them. They're still legacy technologies and the B2B market itself is twice the size of B2C, yet, it's a laggard. So, I think that in general, everybody is going to start seeing more and more B2B activity and we're a little bit ahead of the curve I think in terms of the feature sets that we have and we're really happy with our momentum in that space this year.

Okay. So the challenge for you in growing business, let's say, in B2B, is that mainly just making the customers aware of your offerings or is it more competitive, any color on that?

I think that our primary challenge is market awareness. We win a very large percentage of the deals that we’re in, but our pipeline is not big enough. We need to be better known, our marketing budget is limited by the size of our company and the product itself wins when it gets to compete, but there's a lot of opportunities out there that we're not participating in that we don't know about.

Okay. And Ari, you yourself had strong background in artificial intelligence. How much AI is built into your offerings so far or do you see incorporating deep learning AI features into Bridgeline products?

Well, I think that, especially on the marketing automation side that there's going to be a number of interesting AI opportunities coming into the products. It is just a very simple example when we're sending out emails to be able to have the subject line of the email through AI, customized for every individual user to increase the likelihood of them opening would be something that wouldn't be terribly difficult to implement nowadays that we have a large enough data set. We do not have a lot of AI built into our software today and we would be partnering with Watson and other technologies, incorporating that rather than building it ourselves. We do see that as an important area. We do have expertise in that space and we're going to be innovating there as well.

Very good. Very good. And the current quarter is mostly over now, so if I may ask -- is it fair to say that you expect some year-over-year improvement compared to last year's December quarter?

All right. Well, one of the big things that impacts our quarters is whether we sign perpetual licenses or not. And in the first quarter, our fiscal first quarter last year, we had some very strong perpetual licenses that spiked our revenue that quarter. I don't spend -- there's pluses and minus with perpetual license as you do get the near term hit, but you don't have the long term recurring revenue from them, although you do get recurring revenue from -- if you do that hosting. We do not have perpetual licenses lined up for this quarter itself, so we're not going to see that short term spike, but we have some great wins this quarter already, including the Fortune 100 logistics company, the European analytics business and a few other ones. So we're pretty happy with how the quarter is shaping out, although, I can't say that it's going to have one of those perpetual license spikes.

[Operator Instructions] Okay. As there appear to be no further questions in queue, I'd like to turn the call back over to Mr. Ari Kahn for any closing remarks. Sir?

Great. Well, we really appreciate the support and patience of all of our shareholders and it's our goal to continue building a scalable business model, which in turn will build shareholder value. Thank you for joining us today. We look forward to speaking again in February for our Q1 2018 conference call. And as always, please feel free to reach out to Mike or myself if you have any questions. Thanks again.

Thanks, everyone.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.