TUCSON, Ariz., Nov. 12, 2020 /PRNewswire/ -- AudioEye,
Inc. (NASDAQ: AEYE), an industry-leading digital
accessibility platform delivering website accessibility
compliance to businesses of all sizes, reported financial results
for the third quarter ended September 30,
2020.
Third Quarter 2020 Financial Results
- Total revenue increased 92% to a little over $5.3M from $2.8M in
the same prior year period. The year-over-year increase in revenue
was primarily due to continued growth in the Company's vertical
partner channel, coupled with new business and renewals in the
enterprise channel.
- As of September 30, 2020, monthly
recurring revenue (MRR) was about $1.7M, an increase of 67% on a year-over-year
basis.
- Gross profit increased 132% to $3.8M (~71% of total revenue) from $1.6M (~59% of total revenue) in the same prior
year period. The increases in gross profit and gross margin were
primarily due to increased revenue and improvement in efficiencies
being realized as the Company continues to improve and expand the
level of automation in its remediations, offset in part by higher
costs for investments to support the revenue growth.
- Operating expenses increased 43% to $5.4M from $3.8M in
the same prior year period. The increase in total operating
expenses was primarily due to increased investments in talent
across various functions, product development, sales, marketing,
and severance.
- Net loss available to common stockholders was $1.1M, or $(0.12)
per share, compared to $2.2M, or
$(0.27) per share, in the same prior
year period. The improvement in net loss reflects the increase in
our gross profit as we scale, and also benefit from warrant
liability accounting, and partially offset by higher equity
compensation costs and severance related charges.
- On a Non-GAAP basis, net loss available to common stockholders
was about $200K, or $(0.02) per share. The Non-GAAP earnings and EPS
reflect adjustments as described further below under "Use of
Non-GAAP Financial Measures."
- At quarter-end, the Company had $10.3M in cash, compared to $2.1M at June 30,
2020. This cash balance reflects net proceeds from a public
offering of common stock and cash received from exercise of
warrants in the third quarter.
- As of September 30, 2020, total
customer count had grown to about 22,000 customers, which was a
500% increase compared to September 30,
2019.
- The Company is reiterating its expectation to grow MRR and
become cash flow positive in 2021, subject to ongoing economic
conditions.
Third Quarter and Recent Operational Highlights
- Added key executives to help build on and execute upon on the
strategic initiatives laid out last November which are designed to
accelerate growth in customers, MRR and gross margin:
-
- Bryan Rodrigues joined the
company as Chief Marketing Officer. Bryan brings 20 years of
technology marketing leadership with strong depth in product
marketing, branding and growth marketing, having held leadership
positions and key roles at Tile, Livescribe, Houghton Mifflin
Harcourt, Nike and The McKenna Group.
- Russell Griffin joined the
Company as Chief Revenue Officer. Russell brings over 15 years of
executive sales leadership and is responsible for executing on the
Company's go to market strategy. He has held executive leadership
positions at ShipStation and BigCommerce. Russell also spent time
at Dell, Rackspace, Pier 1 Hosting, and Hostway, building and
developing strategic partnerships and leading enterprise sales
organizations.
- The Company and digital marketing agency Neil Patel Digital
announced their strategic partnership to integrate AudioEye's
digital accessibility platform with Neil
Patel's Ubersuggest SEO platform to show digital marketers
how accessibility impacts the performance of SEO.
- Selected by HubSpot as the digital accessibility provider for
its annual INBOUND event, which was held virtually for the first
time. AudioEye's Toolbar was visible to more than 42,000 attendees,
activated more than 14,000 times.
- Continued to position AudioEye as a digital accessibility
thought leader, with media coverage in targeted publications (see
https://www.audioeye.com/posts). Publications referencing or
featuring AudioEye included: Forbes, Fast
Company, Rewire, EdScoop, Diverse
Education and Thrive Global.
- Customer retention during the third quarter remained high at an
historic 90% rate.
- As many Enterprise organizations continue to balance the
still-uncertain impact of COVID-19, AudioEye continued to grow its
Enterprise (direct) sales channel client roster in the third
quarter with prominent new customers from the automotive, fashion
and retail industries, 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 focused on
growing monthly recurring revenue (MRR) as its leading financial
indicator. The Company is reiterating its expectation to grow MRR
and become cash flow positive in 2021. This expectation remains
subject to the overall economic conditions.
Management Commentary
AudioEye's Director and Interim CEO David Moradi said, "We continue to bring on top
tier talent, invest in our scalable technology and expand our
market leading position as we pursue our mission to eradicate
barriers to digital access. AudioEye remains the market's
most trusted choice when it comes to digital accessibility
compliance, as we deliver to our customers unique, truly
comprehensive and sustainable digital accessibility solutions
through our platform."
Executive Chairman Dr. Carr
Bettis added, "Our positive momentum continued in the third
quarter of 2020 with an increase in our total customer count to
about 22,000 customers representing enterprise, vertical partner
and marketplace/platform channels. We also saw an increase in total
revenue, representing our 19th straight quarter of
revenue growth, and an increase in MRR, with MRR at the end of Q3
at approximately $1.7M, an increase
of 67% on a year-over-year basis."
Conference Call
AudioEye management will hold a
conference call today, November 12,
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 November
19, 2020.
Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13712272
About AudioEye
AudioEye is an industry-leading
digital accessibility platform delivering trusted 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, our
expectation that we will grow MRR and be cash flow positive in 2021
and the 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, Form 10-Q for the
quarter ended March 31, 2020 filed
with the SEC on May 15, 2020, Form
10-Q for the quarter ended June 30,
2020 filed with the SEC on August 13,
2020 and its subsequent filings with the SEC. 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 new
information, future events or uncertainties or otherwise after the
date hereof.
About Key Operating Metrics
We consider monthly recurring revenue ("MRR") as a key
operating metric and a key indicator of our overall business. We
also use MRR as (i) one of the primary methods for planning
and forecasting overall expectations and for evaluating, on at
least a quarterly and annual basis, actual results against such
expectations; and (ii) as a performance metric for certain
executive share-based compensation awards.
We define MRR as the sum of (i) for our enterprise and
agency sales channels, the total of the average monthly fee amount
under each active paid contract at the date of determination, plus
(ii) for our vertical partners, marketplace and platform sales
channels, the recognized monthly fee amount for all paying
customers at the date of determination, in each case, 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. This determination
includes both annual and monthly contracts for recurring products.
Some of our contracts are cancelable, which may impact future MRR.
MRR excludes revenue from our PDF remediation services
business.
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.
Use of Non-GAAP Financial Measures
From time to time, we review adjusted financial measures that
assist us in comparing our operating performance consistently over
time, as such measures remove the impact of certain items, as
applicable, such as our capital structure (primarily interest
charges), items outside the control of the management team (taxes),
and expenses that do not relate to our core operations, including
transaction-related expenses (such as professional and advisory
services) and other costs that are expected to be non-recurring. In
order to provide investors with greater insight, and allow for a
more comprehensive understanding of the information used in our
financial and operational decision-making, the Company has
supplemented the information presented on a GAAP basis in this
press release with the following non-GAAP financial measures:
Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted
share.
These non-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation or as a
substitute for analysis of Company results as reported under GAAP.
The Company compensates for such limitations by relying primarily
on our GAAP results and using non-GAAP financial measures only as
supplemental data. We also provide a reconciliation of non-GAAP to
GAAP measures used. Investors are encouraged to carefully review
this reconciliation. In addition, because these non-GAAP measures
are not measures of financial performance under GAAP and are
susceptible to varying calculations, these measures, as defined by
us, may differ from and may not be comparable to similarly titled
measures used by other companies.
We define: (i) Non-GAAP earnings (loss) as net income
(loss), less non-cash valuation adjustments to liabilities, plus
interest expense, plus share-based compensation expense and plus
certain severance expense; and (ii) Non-GAAP earnings (loss)
per diluted share as net income (loss) per diluted common share,
less non-cash valuation adjustments to liabilities, plus interest
expense, plus share-based compensation expense and plus certain
severance expense, each on a per share basis. Non-GAAP earnings per
diluted share would include incremental shares in the share count
that are considered anti-dilutive in a GAAP net loss position.
However, no incremental shares apply when there is a Non-GAAP loss
per diluted share, as is the case for the periods presented in this
press release.
Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per
diluted share are used to facilitate a comparison of our operating
performance on a consistent basis from period to period and provide
for a more complete understanding of factors and trends affecting
our business than GAAP measures alone. All of the items adjusted in
the Non-GAAP earnings (loss) to net loss and the related per share
calculations are either recurring non-cash items, or items
that management does not consider in assessing our on-going
operating performance. In the case of the non-cash items, such as
share-based compensation expense and valuation adjustments to
assets and liabilities, management believes that investors may find
it useful to assess our comparative operating performance because
the measures without such items are less susceptible to variances
in actual performance resulting from expenses that do not relate to
our core operations and are more reflective of other factors that
affect operating performance. In the case of items that do not
relate to our core operations, management believes that investors
may find it useful to assess our operating performance if the
measures are presented without these items because their financial
impact does not reflect ongoing operating performance.
Non-GAAP earnings (loss) is not a measure of liquidity under
GAAP, or otherwise, and is not an alternative to cash flow from
continuing operating activities, despite the advantages regarding
the use and analysis of these measures as mentioned above. Non-GAAP
earnings (loss) and Non-GAAP earnings (loss) per diluted share, as
disclosed in this press release, have limitations as analytical
tools, and you should not consider these measures in isolation or
as a substitute for analysis of our results as reported under GAAP;
nor are these measures intended to be measures of liquidity or free
cash flow for our discretionary use.
To properly and prudently evaluate our business, we encourage
readers to review the GAAP financial statements included elsewhere
in this press release, and not rely on any single financial measure
to evaluate our business. Reconciliations of Non-GAAP
earnings (loss) to net loss, the most directly comparable
GAAP-based measure, as well as Non-GAAP earnings (loss) per diluted
share to net loss per diluted share, the most directly comparable
GAAP-based measure, are included in this press release. We strongly
urge readers to review these reconciliations, along with the
consolidated financial statements included elsewhere in this press
release.
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
|
|
Nine months
ended
|
September 30,
|
September 30,
|
(in thousands,
except per share data)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
|
$
|
5,341
|
|
$
|
2,776
|
|
$
|
14,885
|
|
$
|
7,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
1,551
|
|
|
1,147
|
|
|
4,478
|
|
|
3,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
3,790
|
|
|
1,629
|
|
|
10,407
|
|
|
4,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
|
2,028
|
|
|
1,598
|
|
|
5,551
|
|
|
4,257
|
Research and
development
|
|
|
203
|
|
|
149
|
|
|
801
|
|
|
442
|
General and
administrative
|
|
|
3,197
|
|
|
2,040
|
|
|
8,185
|
|
|
5,624
|
Total operating
expenses
|
|
|
5,428
|
|
|
3,787
|
|
|
14,537
|
|
|
10,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(1,638)
|
|
|
(2,158)
|
|
|
(4,130)
|
|
|
(6,318)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value
of warrant liability
|
|
|
593
|
|
|
-
|
|
|
120
|
|
|
-
|
Interest
expense
|
|
|
(35)
|
|
|
(37)
|
|
|
(141)
|
|
|
(39)
|
Total other income
(expense)
|
|
|
558
|
|
|
(37)
|
|
|
(21)
|
|
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,080)
|
|
|
(2,195)
|
|
|
(4,151)
|
|
|
(6,357)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on
Series A Convertible Preferred Stock
|
|
|
(13)
|
|
|
(13)
|
|
|
(39)
|
|
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to
common stockholders
|
|
$
|
(1,093)
|
|
$
|
(2,208)
|
|
$
|
(4,190)
|
|
$
|
(6,396)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share-basic and diluted
|
|
$
|
(0.12)
|
|
$
|
(0.27)
|
|
$
|
(0.46)
|
|
$
|
(0.81)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding-basic and diluted
|
|
|
9,385
|
|
|
8,279
|
|
|
9,067
|
|
|
7,848
|
AUDIOEYE,
INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
|
|
|
|
September 30,
|
|
December 31,
|
(in thousands,
except per share data)
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
10,295
|
|
$
|
1,972
|
Accounts receivable,
net of allowance for doubtful accounts of $79 and $63,
respectively
|
|
|
3,457
|
|
|
2,958
|
Unbilled
receivables
|
|
|
34
|
|
|
160
|
Deferred costs, short
term
|
|
|
179
|
|
|
183
|
Debt issuance costs,
net
|
|
|
-
|
|
|
137
|
Prepaid expenses and
other current assets
|
|
|
219
|
|
|
198
|
Total current
assets
|
|
|
14,184
|
|
|
5,608
|
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of $179 and $124,
respectively
|
|
|
121
|
|
|
156
|
Right of use
assets
|
|
|
671
|
|
|
827
|
Deferred costs, long
term
|
|
|
102
|
|
|
145
|
Intangible assets,
net of accumulated amortization of $4,294 and $3,710,
respectively
|
|
|
1,931
|
|
|
1,715
|
Goodwill
|
|
|
701
|
|
|
701
|
Total
assets
|
|
$
|
17,710
|
|
$
|
9,152
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
1,588
|
|
$
|
973
|
Finance lease
liabilities
|
|
|
57
|
|
|
52
|
Operating lease
liabilities
|
|
|
223
|
|
|
209
|
Warrant
liability
|
|
|
-
|
|
|
120
|
Deferred
revenue
|
|
|
5,587
|
|
|
5,372
|
Total current
liabilities
|
|
|
7,455
|
|
|
6,726
|
|
|
|
|
|
|
|
Long term
liabilities:
|
|
|
|
|
|
|
Finance lease
liabilities
|
|
|
23
|
|
|
52
|
Operating lease
liabilities
|
|
|
486
|
|
|
655
|
Deferred
revenue
|
|
|
110
|
|
|
153
|
Term loan
|
|
|
1,302
|
|
|
-
|
Total
liabilities
|
|
|
9,376
|
|
|
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 September 30, 2020 and
December 31, 2019, respectively
|
|
|
1
|
|
|
1
|
Common stock,
$0.00001 par value, 50,000 shares authorized, 9,921 and 8,877
shares issued and outstanding
as of September 30, 2020 and December 31, 2019,
respectively
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
62,409
|
|
|
51,490
|
Accumulated
deficit
|
|
|
(54,077)
|
|
|
(49,926)
|
Total stockholders'
equity
|
|
|
8,334
|
|
|
1,566
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
17,710
|
|
$
|
9,152
|
AUDIOEYE,
INC.
RECONCILIATIONS OF GAAP to NON-GAAP FINANCIAL MEASURES
(unaudited)
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
September 30,
|
September 30,
|
(in thousands,
except per share data)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Non-GAAP Earnings
(Loss) Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
(GAAP)
|
|
$
|
(1,080)
|
|
$
|
(2,195)
|
|
$
|
(4,151)
|
|
$
|
(6,357)
|
Non-cash valuation
adjustments to liabilities
|
|
|
(593)
|
|
|
-
|
|
|
(120)
|
|
|
-
|
Interest
expense
|
|
|
35
|
|
|
37
|
|
|
141
|
|
|
39
|
Share-based
compensation expense
|
|
|
1,089
|
|
|
273
|
|
|
2,004
|
|
|
997
|
Severance
(1)
|
|
|
360
|
|
|
-
|
|
|
360
|
|
|
-
|
Non-GAAP
earnings (loss)
|
|
$
|
(189)
|
|
$
|
(1,885)
|
|
$
|
(1,766)
|
|
$
|
(5,321)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Earnings
(Loss) per Diluted Share Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share (GAAP) — diluted
|
|
$
|
(0.12)
|
|
$
|
(0.27)
|
|
$
|
(0.46)
|
|
$
|
(0.81)
|
Non-cash valuation
adjustments to liabilities
|
|
|
(0.06)
|
|
|
-
|
|
|
(0.01)
|
|
|
-
|
Interest
expense
|
|
|
-
|
|
|
-
|
|
|
0.02
|
|
|
-
|
Share-based
compensation expense
|
|
|
0.12
|
|
|
0.04
|
|
|
0.22
|
|
|
0.13
|
Severance
(1)
|
|
|
0.04
|
|
|
-
|
|
|
0.04
|
|
|
-
|
Non-GAAP earnings
(loss) per diluted share (2)
|
|
$
|
(0.02)
|
|
$
|
(0.23)
|
|
$
|
(0.19)
|
|
$
|
(0.68)
|
Diluted weighted
average shares (3)
|
|
|
9,385
|
|
|
8,279
|
|
|
9,067
|
|
|
7,848
|
|
|
(1)
|
Represents severance
expense associated with the move of our technology center to
Portland, Oregon, and is exclusive of accrued vacation paid upon
termination of employment.
|
|
|
(2)
|
Non-GAAP earnings per
adjusted diluted share for our common stock is computed using the
more dilutive of the two-class method or the if-converted
method.
|
|
|
(3)
|
The number of diluted
weighted average shares used for this calculation is the same as
the weighted average common shares outstanding share count when the
Company reports a GAAP and non-GAAP net loss.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/audioeye-reports-third-quarter-2020-results-301172144.html
SOURCE AudioEye, Inc.