Thirty-First Consecutive Period of Record
Revenue
TUCSON,
Ariz., Nov. 2, 2023 /PRNewswire/ -- AudioEye,
Inc. (Nasdaq: AEYE) ("AudioEye" or the "Company"), the
industry-leading enterprise SaaS accessibility
company, reported financial results for the third quarter
ended September 30, 2023.
"We are pleased to deliver strong sequential ARR growth in the
quarter and a record reported non-GAAP profit of approximately
$300,000. In the fourth
quarter, we anticipate building on this positive momentum, enabling
us to deliver continued ARR growth, record reported non-GAAP
profitability, and positive free cash flow," said AudioEye CEO
David Moradi.
Third Quarter 2023 Financial Results
- Total revenue increased 2% to a record $7.84M from $7.7M
in the same prior year period.
- Gross profit increased to $6.1M
(77% of total revenue) from $5.8M
(75% of total revenue) in the same prior year period. The increase
in gross profit was due to continued revenue growth compared to the
same prior year period and decreases in the cost of revenue from
improved automation in product offerings.
- Total operating expenses decreased 8% to $7.4M from $8.1M 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 41% to
$1.4M, or $(0.11) per share, from a net loss of
$2.3M, or $(0.20) 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 profit in Q3 2023 was $0.3M, or $0.02 per
share, compared to $0.1M, or
$0.01 per share, in the same prior
year period. For Q3 2023, the non-GAAP net profit and EPS
performance reflect adjustments primarily for stock-based
compensation expense and depreciation and amortization.
- Annual Recurring Revenue ("ARR") as of September 30, 2023, increased sequentially to
$30.5M from $29.7M as of June 30,
2023.
- As of September 30, 2023, the
Company had $3.3M in cash, compared
to $4.3M as of June 30, 2023. The decrease in cash was primarily
driven by continued investment in R&D including software
capitalization costs and working capital adjustments.
Other Updates
- In August, AudioEye released findings from an analysis of over
900 known legal claims in the accessibility industry, revealing
that customers leveraging AudioEye's managed digital accessibility
solution are 67% less likely to receive a valid lawsuit claim
compared to other industry solutions. The study also found that
companies with no solution in place are most susceptible to
accessibility claims and that AudioEye customers had the highest
rates of protection against legal claims in the industry.
- In September, AudioEye released its first-ever Digital
Accessibility Index, a combination of automated AI findings coupled
with expert audits from members of the disability community, to
identify the most common digital accessibility issues across 40,000
websites. The findings concluded that every page tested had at
least one accessibility error, and the average page had 37 items
that failed one of the Web Content Accessibility Guidelines (WCAG)
2.1 success criteria. AudioEye's report also identified key
barriers across retail, travel, financial services, media,
insurance, and government organizations, which significantly impact
the ability of people with a disability to utilize the internet
successfully.
- In September, AudioEye was named a winner of Best
Accessibility Innovation in a SaaS Product in the international
SaaS Awards program. Judges for the SaaS Awards noted that in
addition to AudioEye's ability to identify accessibility issues,
its proactive steps to automate fixes, cutting-edge AI, and
collaboration with the disability community "[exemplify] a
transformative approach to digital accessibility."
- Customer count increased 32% to approximately 107,000 customers
as of September 30, 2023, compared to
about 81,000 as of September 30,
2022. The increase in customer count was driven by additions
in Partner and Marketplace customers.
Financial Outlook
The Company expects to generate
revenue of between $7.9 million and
$8.0 million in the fourth quarter of
2023. Management also expects that non-GAAP profitability will
increase sequentially and the Company will generate positive free
cash flow in the fourth quarter.
Conference Call Information
AudioEye management will
hold a conference call today, November 2,
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, November 2,
2023
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
U.S. dial-in number: 888-348-8931
International number: 412-317-0453
Webcast: Q323 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 November
16, 2023 via the following numbers:
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay passcode: 10182669
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 106,000 customers like
Samsung, Calvin Klein, and Samsonite — are accessible.
Holding 21 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, plus
executive team restructuring cost, 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, plus
executive team restructuring cost, 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 one
of 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 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. 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
September 30,
|
|
|
Nine months ended
September 30,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Revenue
|
|
$
|
7,838
|
|
|
$
|
7,700
|
|
|
$
|
23,446
|
|
|
$
|
22,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
1,788
|
|
|
|
1,923
|
|
|
|
5,277
|
|
|
|
5,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
6,050
|
|
|
|
5,777
|
|
|
|
18,169
|
|
|
|
16,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
|
2,891
|
|
|
|
3,351
|
|
|
|
9,387
|
|
|
|
10,502
|
|
Research and
development
|
|
|
1,955
|
|
|
|
1,542
|
|
|
|
5,734
|
|
|
|
4,477
|
|
General and
administrative
|
|
|
2,594
|
|
|
|
3,166
|
|
|
|
8,520
|
|
|
|
10,227
|
|
Total operating
expenses
|
|
|
7,440
|
|
|
|
8,059
|
|
|
|
23,641
|
|
|
|
25,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(1,390)
|
|
|
|
(2,282)
|
|
|
|
(5,472)
|
|
|
|
(8,505)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
35
|
|
|
|
(1)
|
|
|
|
133
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,355)
|
|
|
|
(2,283)
|
|
|
|
(5,339)
|
|
|
|
(8,509)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share-basic and
diluted
|
|
$
|
(0.11)
|
|
|
$
|
(0.20)
|
|
|
$
|
(0.46)
|
|
|
$
|
(0.74)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares
outstanding-basic and diluted
|
|
|
11,822
|
|
|
|
11,458
|
|
|
|
11,733
|
|
|
|
11,464
|
|
AUDIOEYE, INC.
|
BALANCE
SHEETS
|
(unaudited)
|
|
|
|
September 30,
|
|
|
December 31,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
3,274
|
|
|
$
|
6,904
|
|
Accounts receivable, net
|
|
|
4,409
|
|
|
|
5,418
|
|
Prepaid expenses and other current assets
|
|
|
660
|
|
|
|
644
|
|
Total current
assets
|
|
|
8,343
|
|
|
|
12,966
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
241
|
|
|
|
161
|
|
Right of use assets
|
|
|
691
|
|
|
|
1,154
|
|
Intangible assets, net
|
|
|
5,874
|
|
|
|
6,041
|
|
Goodwill
|
|
|
4,001
|
|
|
|
4,001
|
|
Other
|
|
|
104
|
|
|
|
105
|
|
Total assets
|
|
$
|
19,254
|
|
|
$
|
24,428
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
2,113
|
|
|
$
|
2,452
|
|
Operating lease
liabilities
|
|
|
374
|
|
|
|
468
|
|
Finance lease
liabilities
|
|
|
14
|
|
|
|
38
|
|
Deferred
revenue
|
|
|
6,358
|
|
|
|
7,125
|
|
Contingent
consideration
|
|
|
2,157
|
|
|
|
979
|
|
Total current
liabilities
|
|
|
11,016
|
|
|
|
11,062
|
|
|
|
|
|
|
|
|
|
|
Long term
liabilities:
|
|
|
|
|
|
|
|
|
Operating lease liabilities
|
|
|
463
|
|
|
|
745
|
|
Finance lease liabilities
|
|
|
—
|
|
|
|
7
|
|
Deferred revenue
|
|
|
12
|
|
|
|
73
|
|
Contingent consideration, long term
|
|
|
—
|
|
|
|
1,952
|
|
Total
liabilities
|
|
|
11,491
|
|
|
|
13,839
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.00001 par value, 10,000 shares
authorized
|
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value, 50,000 shares authorized,
11,876 and
11,551 shares issued and outstanding as of
September 30, 2023 and
December 31, 2022, respectively
|
|
|
1
|
|
|
|
1
|
|
Additional paid-in capital
|
|
|
95,583
|
|
|
|
93,070
|
|
Accumulated deficit
|
|
|
(87,821)
|
|
|
|
(82,482)
|
|
Total stockholders' equity
|
|
|
7,763
|
|
|
|
10,589
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
19,254
|
|
|
$
|
24,428
|
|
AUDIOEYE,
INC.
|
RECONCILIATIONS OF
GAAP to NON-GAAP FINANCIAL MEASURES
|
(unaudited)
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Non-GAAP Earnings
(Loss)
Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
(GAAP)
|
|
$
|
(1,355)
|
|
|
$
|
(2,283)
|
|
|
$
|
(5,339)
|
|
|
$
|
(8,509)
|
|
Non-cash valuation
adjustment to
contingent consideration
|
|
|
(14)
|
|
|
|
24
|
|
|
|
200
|
|
|
|
182
|
|
Interest (income)
expense, net
|
|
|
(35)
|
|
|
|
1
|
|
|
|
(133)
|
|
|
|
4
|
|
Stock-based
compensation expense
|
|
|
886
|
|
|
|
1,308
|
|
|
|
3,035
|
|
|
|
3,494
|
|
Acquisition expense
(1)
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
|
|
247
|
|
Litigation expense
(2)
|
|
|
106
|
|
|
|
449
|
|
|
|
300
|
|
|
|
1,810
|
|
Executive team
restructuring cost (3)
|
|
|
63
|
|
|
|
—
|
|
|
|
63
|
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
567
|
|
|
|
598
|
|
|
|
1,670
|
|
|
|
1,607
|
|
Loss on disposal or
impairment of
long-lived assets
|
|
|
73
|
|
|
|
43
|
|
|
|
220
|
|
|
|
50
|
|
Non-GAAP earnings
(loss)
|
|
$
|
291
|
|
|
$
|
147
|
|
|
$
|
16
|
|
|
$
|
(1,115)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Earnings
(Loss) per
Diluted Share Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share (GAAP) —
diluted
|
|
$
|
(0.11)
|
|
|
$
|
(0.20)
|
|
|
$
|
(0.46)
|
|
|
$
|
(0.74)
|
|
Non-cash valuation
adjustment to
contingent consideration
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
0.02
|
|
Interest (income)
expense, net
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.01)
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
0.07
|
|
|
|
0.11
|
|
|
|
0.26
|
|
|
|
0.30
|
|
Acquisition expense
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
Litigation expense
(2)
|
|
|
0.01
|
|
|
|
0.04
|
|
|
|
0.03
|
|
|
|
0.16
|
|
Executive team
restructuring cost (3)
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.14
|
|
|
|
0.14
|
|
Loss on disposal or
impairment of
long-lived assets
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
—
|
|
Non-GAAP earnings
(loss) per diluted
share (4)
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
$
|
(0.10)
|
|
Diluted weighted
average shares
(GAAP)
|
|
|
11,822
|
|
|
|
11,458
|
|
|
|
11,733
|
|
|
|
11,464
|
|
Includable incremental
shares (Non-
GAAP) (4)
|
|
|
412
|
|
|
|
760
|
|
|
|
376
|
|
|
|
—
|
|
Adjusted diluted shares
(Non-
GAAP) (5)
|
|
|
12,234
|
|
|
|
12,218
|
|
|
|
12,109
|
|
|
|
11,464
|
|
|
|
(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)
|
Represents severance
expense associated with the restructuring in executive
roles.
|
|
|
(4)
|
Non-GAAP earnings per
adjusted diluted share for our common stock is computed using the
treasury stock method.
|
|
|
(5)
|
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.