TUCSON, Ariz., Aug. 13, 2020 /PRNewswire/ -- AudioEye,
Inc. (NASDAQ: AEYE), an industry-leading software
solution provider delivering website accessibility compliance to
businesses of all sizes, reported financial results for the second
quarter ended June 30, 2020.
Second Quarter 2020 Financial Results
- Total revenue increased 117% to a record $5.3M from $2.4M in
the same period a year ago. The increase in revenue was primarily
due to continued growth in the Company's vertical partner channels,
coupled with new business and renewals in Enterprise channel during
the period, and represents the Company's first-ever $5M revenue quarter.
- As of June 30, 2020, monthly
recurring revenue (MRR) was about $1.6M, this is an increase of 105% on a
year-over-year basis.
- Gross profit increased more than 180% to $3.7M (~70% of total revenue) from $1.3M (~54% of total revenue) in the same
year-ago period. The increase in gross profit and gross margin was
primarily due to increased efficiencies being realized as the
Company continues to improve and expand the level of automation in
its remediations as well as an increase in revenues.
- Operating expenses increased 36% to $4.5M from $3.3M in
the same year-ago period. The increase in total operating expenses
was primarily due to increased investments in talent across various
functions, infrastructure and product development.
- Net loss available to common stockholders was $1.4M, or $(0.16)
per share, compared to $2M, or
$(0.27) per share, in the same
year-ago period. The improved net loss was expected as the Company
continues to drive efficiencies with scale, somewhat offset by an
increase in investments and other support costs.
- At quarter-end, the Company had $2.1M in cash, compared to $1.8M at March 31,
2020.
- After the quarter-end (a subsequent event) Sero Capital
exercised warrants for cash, which will infuse additional capital
of $880,000.
- The Company has not drawn on its $2M Line of Credit facility from Sero Capital and
does not intend to draw on it before it expires on August 14, 2020.
- Deferred revenue increased 65% to $5.2M from $3.2M in
the second quarter of 2019.
- As of June 30, 2020, total
customer count had grown to more than 20,000 customers, which was
an 80% increase compared to the first quarter 2020 and more than a
1,300% increase compared to the second quarter of 2019.
- The Company is reiterating its expectation to become cash flow
positive in 2021, assuming normal economic conditions.
Second Quarter and Recent Operational Highlights
- Made organizational leadership changes and added new talent:
Building on the strategic initiatives put in place last November,
we continue to implement organizational changes in order to
accelerate our efforts to build out scalable technology and IP, and
infrastructure to succeed:
-
- Heath Thompson has moved from
CEO to strategic advisor and has a continuing role to advance the
Company's mission and to acquire customers for AudioEye;
- David Moradi, joins as Interim
CEO and as Chief Strategy Officer. He is a member of the Board of
Directors, and the Founder and Manager of Sero Capital, LLC. The
Company expects to receive the benefit of his deep understanding of
the Company and his many years of technology and business
leadership experience;
- David's compensation agreement with the Company is anticipated
to be for a base salary of $1/year
plus performance-based equity awards that are tied to very material
growth in MRR and the stock price;
- Dominic Varacalli, who was
recently appointed CTO of the Company will assume the role of
President. Dominic was previously the CEO and co-owner of his own
technology consulting firm. He has also held various technology
leadership roles at Kroger Digital; and
- Khurrum Malik will join the
Company as CMO the week of August 17.
Khurrum has held leadership positions at Microsoft, Facebook and
Spotify.
- Launched refreshed audioeye.com website and digital marketplace
reflecting enhanced messaging, streamlined product plans with
improved user experience and new brand imagery.
- Continued to position AudioEye as the digital accessibility
thought leader, with media coverage in targeted publications; see
https://www.audioeye.com/posts). Articles referencing or featuring
AudioEye included : Forbes, Fast Company, San Francisco
Chronicle, Slate, Chain Store Age, and Pix11 TV (with
syndication in 9 markets nationwide).
- Customer retention remained high with a top quartile Enterprise
customer Net Promotor Score for technology companies.
- Continued to grow Enterprise (direct) sales channel client
roster in the second quarter with prominent new customers from the
consumer goods, state government agencies, energy, and the
hospitality space, among others.
- Continued to solidify existing Vertical (indirect) channel
partner relationships through deeper penetration within active
channel partners who offer AudioEye as a preferred digital
accessibility solution to their clients.
Financial Outlook
The Company remains confident in its
long-term growth prospects as well as the opportunities in the
digital accessibility industry as a whole. The Company remains
focused on growing monthly recurring revenue (MRR) as its leading
financial indicator. Under normal economic conditions, the Company
is reiterating its expectation to become cash flow positive in
2021. This expectation remains subject to change and does not
factor in a significant, long-term macroeconomic impact to AudioEye
or its customer base as a result of COVID-19.
Management Commentary
AudioEye's Board of Director and
Interim CEO David Moradi said,
"AudioEye has proven itself a market leader with its digital
accessibility platform, and I believe it has become the gold
standard for delivering full ADA compliance. As we expand our
platform to address new audiences, ecosystems, and markets, I am
excited to support the company through this next stage of
tremendous growth."
AudioEye Executive Chairman Carr
Bettis added, "We continued our positive momentum in the
second quarter of 2020 with our eighteenth consecutive quarter of
record revenue. Additionally, the second quarter represented the
first in which our revenue topped five million. Our customer count
has nearly doubled, growing from 11,000 at the end of the first
quarter to more than 20,000 at the close of the second. Our
continued investment in talent, infrastructure and product
development is having results as seen in our MRR increase, with
$1.6M as of June 30, 2020. We also continue to reiterate our
expectation that we will be cash flow positive in 2021. Even though
the impact from the global pandemic is still unknown, we are
cautiously optimistic for the second half of this year. Customers
have continued to demonstrate their commitment to digital
inclusivity, and we are pleased to continue to elevate the
importance of digital inclusion, encouraging businesses of all
sizes to prioritize accessibility at a time when digital
connectivity is critical."
Conference Call
AudioEye management will hold a
conference call today, August 13,
2020 at 4:30 p.m. Eastern time
(1:30 p.m. Pacific time) to discuss
these results.
AudioEye management will host the conference call, followed by a
question and answer period.
U.S. dial-in number: (877) 407-9208
International number: (201) 493-6784
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at (949)
574-3860.
The conference call will also be webcast live and available for
replay, which will be accessible via the investor
relations section of the company's website. The audio
recording will remain available via the investor relations section
of the company's website for 90 days.
A telephonic replay of the conference call will also be
available after 7:30 p.m. Eastern
time on the same day through August
20, 2020.
Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13707548
About AudioEye
AudioEye is an industry-leading
software solution delivering immediate ADA and WCAG accessibility
compliance at scale. Through patented technology, subject matter
expertise and proprietary processes, AudioEye is eradicating all
barriers to digital access, helping creators get accessible and
supporting them with ongoing advisory and automated upkeep. Trusted
by the FCC, ADP, SSA, Samsung, and more, AudioEye helps everyone
identify and resolve issues of accessibility and enhance user
experiences, automating digital accessibility for the widest
audiences. AudioEye stands out among its competitors because it
delivers Machine Learning/AI-driven accessibility without
fundamental changes to site architecture. Join our movement
at www.audioeye.com.
Forward-Looking Statements
Any statements in
this press release about AudioEye's expectations, beliefs, plans,
objectives, prospects, financial condition, assumptions or future
events or performance are not historical facts and are
"forward-looking statements" as that term is defined under the
federal securities laws. Forward-looking statements are often, but
not always, made through the use of words or phrases such as
"believe", "anticipate", "should", "intend", "plan", "will",
"expects", "estimates", "projects", "positioned", "strategy",
"outlook" , "forecast" and similar words. You should read the
statements that contain these types of words carefully. Such
forward-looking statements contained herein include, but are not
limited to, statements regarding anticipated contributions from
less mature lines of business, long-term growth prospects,
opportunities in the digital accessibility industry, and our
expectation that we will be cash flow positive in 2021 and the
impact from Covid-19 related macroeconomic impact to our customers
and to AudioEye. These statements are subject to a number of risks,
uncertainties and other factors that could cause actual results to
differ materially from what is expressed or implied in such
forward-looking statements, including the variability of AudioEye's
revenue and financial performance; risks associated with product
development and technological changes; the acceptance of AudioEye's
products in the marketplace by existing and potential future
customers; competition; general economic conditions; and
uncertainties regarding the impact on our business and the overall
economy from the coronavirus (COVID-19) outbreak. These and other
risks are described more fully in AudioEye's filings with the
Securities and Exchange Commission (the "SEC"), including
AudioEye's Annual Report on Form 10-K for the year ended
December 31, 2019 filed with the SEC
on March 30, 2020, and on Form 10-Q
for quarter ended March 31, 2020
filed with the SEC on May
15th, 2020. There may be events in the future
that AudioEye is not able to predict accurately or over which
AudioEye has no control. Forward-looking statements reflect
management's view as of the date of this press release, and
AudioEye urges you not to place undue reliance on these
forward-looking statements. AudioEye does not undertake any
obligation to update such forward-looking statements to reflect
events or uncertainties after the date hereof.
About Key Operating Metrics
To supplement
our financial information presented in accordance with generally
accepted accounting principles in the
United States (GAAP), we consider certain operating measures
that are not GAAP measures, including monthly recurring revenue,
bookings and contracts in excess of revenue and deferred revenue.
AudioEye reviews a number of operating metrics such as these to
evaluate its business, measure performance, identify trends,
formulate business plans, and make strategic decisions.
We believe these metrics and measures are useful to
facilitate period-to-period comparisons of our business and to
facilitate comparisons of our performance to that of other similar
companies. Company may adjust the definitions to enable better
comparisons as business evolves.
AudioEye's bookings represent the contracted amount of money
the customer commits to spend with the Company over an agreed
amount of time, generally ranging from 12 months up to 60 months.
This may include cancellable contracts.
AudioEye's contracts in excess of revenue and deferred
revenue is the remaining bookings that have not yet been recognized
as revenue or deferred revenue. This measure represents the
contractually agreed amount of money that is remaining to be
recognized as revenue under contracts and that will be recognized
in subsequent periods, as company fulfills its service
obligations.
Monthly recurring revenue for a paid customer account is a
determination made by assessing the terms of each paid customer
account, as of the date of determination, as to the revenue we
expect to generate on an average monthly basis for that paid
customer account, assuming no changes to the subscription and
without taking into account any usage above the subscription or
recurring revenue base, if any, that may be applicable to such
subscription.
Vertical Partner is a CMS provider or a company which
provides a web-hosting platform for private and public entities and
resells the AudioEye Managed service as an accessibility service
offering to its customers. CMS providers who are focused on a
specific industry vertical are referred to as Vertical Partners by
AudioEye. CMS providers who are vertical agnostic are referred to
as Platform partners by AudioEye.
Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive
Chairman
cbettis@audioeye.com
Investor Contact:
Matt
Glover or Tom Colton
AEYE@gatewayir.com
(949) 574-3860
-Financial Tables to Follow-
AUDIOEYE,
INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited)
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(in thousands, except
per share data)
|
|
Revenue
|
|
$
|
5,283
|
|
|
$
|
2,436
|
|
|
$
|
9,544
|
|
|
$
|
4,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
1,607
|
|
|
|
1,124
|
|
|
|
2,927
|
|
|
|
2,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
3,676
|
|
|
|
1,312
|
|
|
|
6,617
|
|
|
|
2,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
|
1,705
|
|
|
|
1,345
|
|
|
|
3,523
|
|
|
|
2,658
|
|
Research and
development
|
|
|
265
|
|
|
|
152
|
|
|
|
598
|
|
|
|
293
|
|
General and
administrative
|
|
|
2,556
|
|
|
|
1,834
|
|
|
|
4,988
|
|
|
|
3,583
|
|
Total operating
expenses
|
|
|
4,526
|
|
|
|
3,331
|
|
|
|
9,109
|
|
|
|
6,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(850)
|
|
|
|
(2,019)
|
|
|
|
(2,492)
|
|
|
|
(4,159)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value
of warrant liability
|
|
|
(501)
|
|
|
|
-
|
|
|
|
(473)
|
|
|
|
-
|
|
Interest expense,
net
|
|
|
(56)
|
|
|
|
(1)
|
|
|
|
(106)
|
|
|
|
(2)
|
|
Total other
expenses
|
|
|
(557)
|
|
|
|
(1)
|
|
|
|
(579)
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,407)
|
|
|
|
(2,020)
|
|
|
|
(3,071)
|
|
|
|
(4,161)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Series A
Convertible Preferred Stock
|
|
|
(12)
|
|
|
|
(13)
|
|
|
|
(26)
|
|
|
|
(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to
common stockholders
|
|
$
|
(1,419)
|
|
|
$
|
(2,033)
|
|
|
$
|
(3,097)
|
|
|
$
|
(4,187)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share-basic and diluted
|
|
$
|
(0.16)
|
|
|
$
|
(0.27)
|
|
|
$
|
(0.35)
|
|
|
$
|
(0.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding-basic
and diluted
|
|
|
8,937
|
|
|
|
7,646
|
|
|
|
8,907
|
|
|
|
7,629
|
|
AUDIOEYE,
INC. CONSOLIDATED BALANCE SHEETS
(unaudited)
|
|
|
|
June 30,
|
|
|
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(in thousands, except
per share data)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,130
|
|
|
$
|
1,972
|
|
Accounts receivable,
net
|
|
|
4,024
|
|
|
|
2,958
|
|
Unbilled
receivables
|
|
|
-
|
|
|
|
160
|
|
Deferred costs, short
term
|
|
|
184
|
|
|
|
183
|
|
Debt issuance costs,
net
|
|
|
27
|
|
|
|
137
|
|
Prepaid expenses and
other current assets
|
|
|
200
|
|
|
|
198
|
|
Total current
assets
|
|
|
6,565
|
|
|
|
5,608
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
141
|
|
|
|
156
|
|
Right of use
assets
|
|
|
724
|
|
|
|
827
|
|
|
|
|
|
|
|
|
|
|
Deferred costs, long
term
|
|
|
123
|
|
|
|
145
|
|
Intangible assets,
net
|
|
|
1,709
|
|
|
|
1,715
|
|
Goodwill
|
|
|
701
|
|
|
|
701
|
|
Total
assets
|
|
$
|
9,963
|
|
|
$
|
9,152
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
2,509
|
|
|
$
|
973
|
|
Finance lease
liabilities
|
|
|
60
|
|
|
|
52
|
|
Operating lease
liabilities
|
|
|
218
|
|
|
|
209
|
|
Warrant
liability
|
|
|
593
|
|
|
|
120
|
|
Deferred
revenue
|
|
|
5,078
|
|
|
|
5,372
|
|
Total current
liabilities
|
|
|
8,458
|
|
|
|
6,726
|
|
|
|
|
|
|
|
|
|
|
Long term
liabilities:
|
|
|
|
|
|
|
|
|
Finance lease
liabilities
|
|
|
37
|
|
|
|
52
|
|
Operating lease
liabilities
|
|
|
544
|
|
|
|
655
|
|
Deferred
revenue
|
|
|
168
|
|
|
|
153
|
|
Term loan
|
|
|
1,302
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
10,509
|
|
|
|
7,586
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.00001 par value, 10,000 shares authorized
|
|
|
|
|
|
|
|
|
Series A Convertible
Preferred Stock, $0.00001 par value, 200 shares
designated,
100 and 105 shares
issued and outstanding as of June 30, 2020 and December 31,
2
019,
respectively
|
|
|
1
|
|
|
|
1
|
|
Common stock,
$0.00001 par value, 50,000 shares authorized, 9,113 and
8,877
shares issued and
outstanding as of June 30, 2020 and December 31, 2019,
respectively
|
|
|
1
|
|
|
|
1
|
|
Additional paid-in
capital
|
|
|
52,449
|
|
|
|
51,490
|
|
Accumulated
deficit
|
|
|
(52,997)
|
|
|
|
(49,926)
|
|
Total stockholders'
(deficit) equity
|
|
|
(546)
|
|
|
|
1,566
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' (deficit) equity
|
|
$
|
9,963
|
|
|
$
|
9,152
|
|
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SOURCE AudioEye, Inc.