Thirtieth Consecutive Period of Record
Revenue
TUCSON,
Ariz., Aug. 10, 2023 /PRNewswire/
-- AudioEye, Inc. (NASDAQ: AEYE) ("AudioEye" or
the "Company"), the industry-leading enterprise SaaS accessibility
company, reported financial results for the second quarter
ended June 30, 2023.
"The second quarter's achievements have set the stage for the
acceleration of ARR in the second half and into next year. We
announced several new enterprise products, completed the
integration of the Bureau of Internet Accessibility ("BOIA"), and
have assembled a world-class revenue organization while remaining
highly efficient," said AudioEye CEO David
Moradi. "We are excited about recent developments from the
Department of Justice that will help ensure people with
disabilities have equal access to web content and mobile apps. We
believe that momentum is building to resolve digital accessibility
at scale."
Second Quarter 2023 Financial Results
- Total revenue increased 4% to a record $7.84M from $7.6M
in the same prior year period.
- Gross profit increased to $6.05M
(77% of total revenue) from $5.7M
(76% of total revenue) in the same prior year period. The increase
in gross profit was due to continued revenue growth and decreases
in the cost of revenue from improved automation in product
offerings.
- Total operating expenses decreased 3% to $8.1M from $8.3M in
the same prior year period. The decrease in operating expenses was
due primarily to increased efficiency in sales and marketing and
lower non-recurring G&A expenses, partially offset by continued
investment in R&D.
- Net loss available to common stockholders improved 24% to
$2.0M, or $(0.17) per share, from a net loss of
$2.6M, or $(0.23) per share, in the same prior year period.
The improvement in net loss was primarily due to increases in
revenue and gross profit and increased efficiencies in sales and
marketing and G&A.
- Non-GAAP net loss in Q2 2023 was $0.2M, or $(0.02)
per share, and remained consistent with the non-GAAP net loss in
the same prior year period. For Q2 2023, the non-GAAP net loss and
EPS performance reflect adjustments primarily for stock-based
compensation expense and depreciation and amortization.
- Annual Recurring Revenue ("ARR") as of June 30, 2023, increased sequentially to
$29.7M from $29.6M as of March 31,
2023, despite contract re-negotiations that negatively
impacted ARR.
- As of June 30, 2023, the Company
had $4.3M in cash, compared to
$5.5M as of March 31, 2023. The decrease in cash was
primarily driven by continued investment in R&D including
software capitalization costs, tax payments from employee
share-based grants, and non-recurring items.
Other Updates
- Last week, the Department of Justice issued a proposed rule on
website accessibility under Title II of the Americans with
Disabilities Act ("ADA") that would help ensure people with
disabilities have equal access to essential public programs and
services. The proposed rule will drive more awareness and
compliance, and we are well-positioned as we already work with over
900 government organizations and school districts.
- In July, AudioEye announced new enterprise-grade digital
accessibility offerings, including the Accessibility Maturity
Management ("AMM") program and the Accessibility Health Advisor
("AHA"). These programs and tools use our team of certified experts
to assess a company's current level of accessibility and help
define the investments required to make measurable, sustainable
progress in accessibility. Our AMM Program identifies the people,
culture, process, and system changes an organization needs to make
accessibility a first-class concern and tracks progress toward
those goals. When new regulations change accessibility guidelines,
the AHA notifies the company of any changes required to comply.
With the further development of AI automation, we believe this
first-of-its-kind program and corresponding tools will be powerful
drivers in increasing accessibility at scale.
- In July, AudioEye announced that Gabby Giffords, former
United States Congresswoman for
Arizona's 8th
congressional district, joined the Company's Advisory Board. Gabby
Giffords is a retired U.S. politician who resigned from Congress in
2012 after sustaining a severe brain injury during an assassination
attempt. Today, she helps raise awareness about aphasia, the
language impairment caused by injuries from her shooting. Gabby's
influence in the disability community and her passion for change
will help AudioEye continue to make great strides in building
solutions that close the digital accessibility gap.
- Customer count increased 37% to approximately 104,000 customers
as of June 30, 2023, compared to
about 76,000 as of June 30, 2022. The
expansion of platforms was the most material driver of the customer
count increase in the quarter.
- In July, we completed the successful integration of BOIA, which
was acquired in March of 2022. The integration will help enable
retention and upsells as well as result in cost savings in the near
term. BOIA's non-recurring audit revenue will now primarily
generate ARR under our subscription model. The impact of the
integration of BOIA will reduce third quarter revenue by
approximately $200,000 as we
transition one-time audits into recurring revenue.
Financial Outlook
The Company expects to generate revenue of between $7.8 million and $7.9
million in the third quarter of 2023. The impact of the
integration of BOIA will reduce third quarter revenue by
approximately $200,000 as the Company
transitions one-time audits into recurring revenue. Management
forecasts that ARR will increase by approximately $1 million sequentially, representing the fastest
growth rate in several quarters. The Company also expects to
generate a non-GAAP profit of approximately $100,000 in the third quarter and expects cash
flow to inflect positively by the fourth quarter of this year,
depending on items such as working capital.
Conference Call Information
AudioEye management will hold a conference call today,
August 10, 2023 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these results,
followed by a question-and-answer period.
Date: Thursday, August 10,
2023
Time: 4:30 p.m. Eastern Time
(1:30 p.m. Pacific Time)
U.S. dial-in number: 800-830-9649
International number: 213-992-4624
Webcast: Q223 Webcast Link
Please call the conference telephone number 5-10 minutes prior
to the start time. If you have any difficulty connecting with the
conference call, please contact Gateway Group at 949-574-3860.
The conference call will also be webcast live and available
for replay 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
24, 2023 via the following numbers:
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay passcode: 152982
About AudioEye
AudioEye exists to ensure the digital
future we build is inclusive. By combining the latest AI automation
technology with guidance from certified experts and direct input
from the disability community, AudioEye helps ensure businesses of
all sizes — including over 104,000 customers like
Samsung, Calvin Klein, and Samsonite — are accessible.
Holding 23 US patents, AudioEye helps companies solve every aspect
of digital accessibility with flexible approaches that best meet
their needs — from finding and removing barriers to navigating
legal compliance, to ongoing training, monitoring and
upkeep. Join AudioEye on its mission to eradicate
barriers to digital access.
Forward-Looking Statements
Any statements in
this press 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", "confident", "intend", "plan",
"will", "expects", "estimates", "projects", "positioned",
"strategy", "outlook" 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 future cash flows of the Company,
anticipated contributions from new sales channels, expectations
regarding the integration of BOIA and its products, long-term
growth prospects, opportunities in the digital accessibility
industry, our revenue and ARR guidance, and our expectation of
investments in marketing and sales. 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 our new platform, sales channels and offerings;
product development and technological changes; the acceptance of
AudioEye's products in the marketplace; the effectiveness of our
integration efforts; competition; inherent uncertainties and
costs associated with litigation; and general economic conditions.
These and other risks are described more fully in AudioEye's
filings with the Securities and Exchange Commission. 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. Due to rounding,
numbers presented throughout this document may not add up precisely
to the totals provided and percentages may not precisely reflect
the absolute figures.
About Key Operating Metrics
We consider
annual recurring revenue ("ARR") as a key operating metric and a
key indicator of our overall business. We also use ARR as 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.
We manage customers through two primary channels, Enterprise
and Partner and Marketplace. Enterprise channel consists of our
larger customers and organizations, including those with
non-platform custom websites, who generally engage directly with
AudioEye sales personnel for custom pricing and solutions. This
channel also includes federal, state and local government agencies.
The Partner and Marketplace channel consists of our CMS partners,
platform & agency partners, authorized resellers and our
marketplace. This channel serves small and medium sized businesses
who are on a partner or reseller's web-hosting platform or who
purchase an AudioEye solution from our marketplace.
We define ARR as the sum of (i) for our Enterprise channel,
the total of the annual recurring fee under each active contract at
the date of determination, plus (ii) for our Partner and
Marketplace channel, the monthly fee for all active customers at
the date of determination, in each case, assuming no changes to the
subscription, multiplied by 12. This determination includes both
annual and monthly contracts for recurring products. Some of our
contracts are cancelable, which may impact future ARR. ARR excludes
revenue from our PDF remediation services business, one-time
Website and Mobile App report services business and other
miscellaneous non-recurring services.
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
significant transaction and litigation-related expenses 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
financial statements 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.
Non-GAAP Earnings (Loss) and Non-GAAP Earnings (Loss) per
Diluted Share
We define: (i) Non-GAAP earnings (loss) as net income (loss),
plus (less) interest expense (income), plus depreciation and
amortization expense, plus stock-based compensation expense, plus
non-cash valuation adjustment to contingent consideration, plus
certain litigation expense, plus certain acquisition expense, and
plus loss on disposal or impairment of long-lived assets; and (ii)
Non-GAAP earnings (loss) per diluted share as net income (loss) per
diluted common share, plus (less) interest expense (income), plus
depreciation and amortization expense, plus stock-based
compensation expense, plus non-cash valuation adjustment to
contingent consideration, plus certain litigation expense, plus
certain acquisition expense, and plus loss on disposal or
impairment of long-lived assets, 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
stock-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 expected to be 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. The following table sets forth
reconciliations of Non-GAAP loss to net loss, the most directly
comparable GAAP-based measure, as well as Non-GAAP loss per diluted
share to net loss per diluted share, the most directly comparable
GAAP-based measure. We strongly urge readers to review these
reconciliations, along with the financial statements included
elsewhere in this press release.
Investor Contact:
Tom Colton or Luke Johnson
Gateway Investor Relations
AEYE@gateway-grp.com
949-574-3860
AUDIOEYE, INC.
STATEMENTS OF
OPERATIONS
(unaudited)
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended June 30,
|
|
(in thousands, except per share
data)
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Revenue
|
|
$
|
7,836
|
|
|
$
|
7,569
|
|
|
$
|
15,608
|
|
|
$
|
14,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
1,787
|
|
|
|
1,841
|
|
|
|
3,489
|
|
|
|
3,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
6,049
|
|
|
|
5,728
|
|
|
|
12,119
|
|
|
|
10,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
|
3,253
|
|
|
|
3,425
|
|
|
|
6,496
|
|
|
|
7,151
|
|
Research and
development
|
|
|
2,033
|
|
|
|
1,406
|
|
|
|
3,779
|
|
|
|
2,935
|
|
General and
administrative
|
|
|
2,791
|
|
|
|
3,505
|
|
|
|
5,926
|
|
|
|
7,061
|
|
Total operating
expenses
|
|
|
8,077
|
|
|
|
8,336
|
|
|
|
16,201
|
|
|
|
17,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(2,028)
|
|
|
|
(2,608)
|
|
|
|
(4,082)
|
|
|
|
(6,223)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
55
|
|
|
|
(2)
|
|
|
|
98
|
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,973)
|
|
|
|
(2,610)
|
|
|
|
(3,984)
|
|
|
|
(6,226)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share-basic and diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.54)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding-basic and diluted
|
|
|
11,738
|
|
|
|
11,489
|
|
|
|
11,688
|
|
|
|
11,467
|
|
AUDIOEYE, INC.
BALANCE
SHEETS
(unaudited)
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
(in thousands, except per share
data)
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
4,317
|
|
|
$
|
6,904
|
|
Accounts receivable,
net
|
|
|
4,680
|
|
|
|
5,418
|
|
Prepaid expenses and
other current assets
|
|
|
531
|
|
|
|
644
|
|
Total current
assets
|
|
|
9,528
|
|
|
|
12,966
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
216
|
|
|
|
161
|
|
Right of use
assets
|
|
|
770
|
|
|
|
1,154
|
|
Intangible assets,
net
|
|
|
5,982
|
|
|
|
6,041
|
|
Goodwill
|
|
|
4,001
|
|
|
|
4,001
|
|
Other
|
|
|
102
|
|
|
|
105
|
|
Total assets
|
|
$
|
20,599
|
|
|
$
|
24,428
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
2,480
|
|
|
$
|
2,452
|
|
Finance lease
liabilities
|
|
|
23
|
|
|
|
38
|
|
Operating lease
liabilities
|
|
|
415
|
|
|
|
468
|
|
Deferred
revenue
|
|
|
6,610
|
|
|
|
7,125
|
|
Contingent
consideration
|
|
|
2,171
|
|
|
|
979
|
|
Total current
liabilities
|
|
|
11,699
|
|
|
|
11,062
|
|
|
|
|
|
|
|
|
|
|
Long term
liabilities:
|
|
|
|
|
|
|
|
|
Finance lease
liabilities
|
|
|
—
|
|
|
|
7
|
|
Operating lease
liabilities
|
|
|
527
|
|
|
|
745
|
|
Deferred
revenue
|
|
|
29
|
|
|
|
73
|
|
Contingent
consideration, long term
|
|
|
—
|
|
|
|
1,952
|
|
Total
liabilities
|
|
|
12,255
|
|
|
|
13,839
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.00001 par value, 10,000 shares authorized
|
|
|
|
|
|
|
|
|
Common stock, $0.00001
par value, 50,000 shares authorized, 11,797 and 11,551
shares issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
|
|
|
1
|
|
|
|
1
|
|
Additional paid-in
capital
|
|
|
94,809
|
|
|
|
93,070
|
|
Accumulated
deficit
|
|
|
(86,466)
|
|
|
|
(82,482)
|
|
Total stockholders'
equity
|
|
|
8,344
|
|
|
|
10,589
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity
|
|
$
|
20,599
|
|
|
$
|
24,428
|
|
AUDIOEYE,
INC.
RECONCILIATIONS OF
GAAP to NON-GAAP FINANCIAL MEASURES
(unaudited)
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
(in thousands, except per share
data)
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Non-GAAP Earnings (Loss)
Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
(GAAP)
|
|
$
|
(1,973)
|
|
|
$
|
(2,610)
|
|
|
$
|
(3,984)
|
|
|
$
|
(6,226)
|
|
Non-cash
valuation adjustment to contingent consideration
|
|
|
159
|
|
|
|
158
|
|
|
|
214
|
|
|
|
158
|
|
Interest
(income) expense, net
|
|
|
(55)
|
|
|
|
2
|
|
|
|
(98)
|
|
|
|
3
|
|
Stock-based
compensation expense
|
|
|
1,031
|
|
|
|
1,041
|
|
|
|
2,149
|
|
|
|
2,186
|
|
Acquisition
expense (1)
|
|
|
—
|
|
|
|
42
|
|
|
|
—
|
|
|
|
240
|
|
Litigation
expense (2)
|
|
|
39
|
|
|
|
499
|
|
|
|
194
|
|
|
|
1,361
|
|
Depreciation and
amortization
|
|
|
577
|
|
|
|
622
|
|
|
|
1,103
|
|
|
|
1,009
|
|
Loss on disposal
or impairment of long-lived assets
|
|
|
—
|
|
|
|
7
|
|
|
|
147
|
|
|
|
7
|
|
Non-GAAP
loss
|
|
$
|
(222)
|
|
|
$
|
(239)
|
|
|
$
|
(275)
|
|
|
$
|
(1,262)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Earnings (Loss) per Diluted Share
Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share (GAAP) — diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.34)
|
|
|
$
|
(0.54)
|
|
Non-cash
valuation adjustment to contingent consideration
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
0.01
|
|
Interest
(income) expense, net
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01)
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
0.09
|
|
|
|
0.09
|
|
|
|
0.18
|
|
|
|
0.19
|
|
Acquisition
expense (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
Litigation
expense (2)
|
|
|
—
|
|
|
|
0.04
|
|
|
|
0.02
|
|
|
|
0.12
|
|
Depreciation and
amortization
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.09
|
|
|
|
0.09
|
|
Loss on disposal
or impairment of long-lived assets
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Non-GAAP loss per
diluted share (3)
|
|
$
|
(0.02)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.11)
|
|
Diluted weighted
average shares (4)
|
|
|
11,738
|
|
|
|
11,489
|
|
|
|
11,688
|
|
|
|
11,467
|
|
|
|
|
|
(1)
|
Represents legal and
accounting fees associated with the BOIA acquisition.
|
|
|
|
|
(2)
|
Represents legal
expenses related primarily to non-recurring litigation pursued by
the Company.
|
|
|
|
|
(3)
|
Non-GAAP earnings per
adjusted diluted share for our common stock is computed using the
treasury stock method.
|
|
|
|
|
(4)
|
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.
|
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SOURCE AudioEye, Inc.