Twenty-Ninth Consecutive Period of Record
Revenue
TUCSON,
Ariz., May 10, 2023 /PRNewswire/ -- AudioEye,
Inc. (NASDAQ: AEYE) ("AudioEye" or the "Company"), the
industry-leading digital accessibility platform for websites and
apps, reported financial results for the first quarter ended
March 31, 2023.
"We are pleased to have generated record revenue, ARR, and gross
margins while driving a meaningful reduction in year-over-year
expenses," said AudioEye CEO David
Moradi. "We continue to focus on efficiencies, enabling us
to generate 78% gross margins, representing a nearly 100%
conversion of incremental revenue to gross profit on a
year-over-year basis. With our ongoing, strategic investments in
R&D, our rate of innovation is increasing, and we expect to
have further announcements regarding additional AI capabilities and
new products soon."
First Quarter 2023 Financial Results
- Total revenue increased 13% to a record $7.77M from $6.9M
in the same prior year period.
- Gross profit increased to a record $6.1M (78% of total revenue) from $5.2M (75% of total revenue) in the same prior
year period. The increase in gross profit was primarily due to
continued recurring revenue growth and improved automation in
product offerings.
- Total operating expenses decreased 8% to $8.1M from $8.8M in
the same prior year period. The decrease in operating expenses was
due primarily to increased efficiency in sales and marketing and
G&A expenses, partially offset by additional investments in
R&D.
- Net loss available to common stockholders was $2.0M, or $(0.17)
per share, compared to a net loss of $3.6M, or $(0.32)
per share, in the same prior year period. The improvement in net
loss was primarily due to increases in revenue and gross profit as
well as increased efficiencies in sales and marketing and
G&A.
- Non-GAAP net loss in Q1 2023 was $0.1M, or $(0.00)
per share, compared to a non-GAAP net loss of $1.0M, or $(0.09)
per share, in the same prior year period. The non-GAAP net loss and
EPS performance reflect adjustments primarily for stock-based
compensation expense, non-recurring litigation expense, and
depreciation and amortization.
- Annual Recurring Revenue ("ARR") as of March 31, 2023 increased sequentially to
$29.6M from $29.2M as of December 31,
2022.
- As of March 31, 2023, the Company
had $5.5M in cash, compared to
$6.9M as of December 31, 2022. The decrease in cash was
primarily driven by a $1 million
earn-out payment for the Company's acquisition of the Bureau of
Internet Accessibility ("BOIA") and non-recurring items.
Other Updates
- In April, AudioEye launched an AI technology initiative
centered on accessibility, with and for members of the disability
community. The Company is developing AI models with direct input
from people with disabilities to ensure the products and models
developed work in its efforts to eradicate accessibility barriers
at scale.
- In March, the Company appointed J. Paul
Getty President and CEO Katherine E.
Fleming to the Board of Directors. Ms. Fleming's extensive
leadership experience will enrich the depth and breadth of
expertise on AudioEye's board. As Getty
President and CEO, Ms. Fleming oversees the 1,500-employee
Trust's global operations, programs, and strategic priorities with
the mission to preserve, advance, and share the world's visual art
and cultural heritage.
- In March 2023, the Company
successfully defended an AudioEye customer in a precedent ADA case
for website accessibility. AudioEye's unique combination of
automation technology, including artificial intelligence, coupled
with industry experts in accessibility compliance, facilitated the
dismissal of the lawsuit for no monetary settlement or other
relief.
- Customer count was approximately 95,000 as of March 31, 2023, compared to about 74,000 as of
March 31, 2022. Both the Enterprise
and the Partner and Marketplace revenue channels contributed to
customer growth in the quarter.
Financial Outlook
The Company expects to generate
revenue of between $7.8 million and
$7.9 million in the second quarter of
2023.
Conference Call Information
AudioEye management will hold a conference call today, May 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: Wednesday, May 10, 2023
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
U.S. dial-in number: 844-826-3033
International number: 412-317-5185
Access code: 7218769
Webcast: Q123 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 Investor Relations 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 May 24,
2023 via the following numbers:
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay passcode: 10177620
About AudioEye
AudioEye is an industry-leading digital
accessibility platform delivering ADA and WCAG compliance at scale.
By combining cutting-edge technology and subject matter expertise,
AudioEye helps companies solve every aspect of digital
accessibility—from finding and removing barriers to navigating
legal compliance, to ongoing training, monitoring and upkeep.
Trusted by the FCC, Calvin Klein,
Samsung, Tommy Hilfiger, and others,
AudioEye delivers remediations and continuous monitoring for
accessibility issues without making fundamental changes to website
architecture, source code, or browser-based tools. Join us at
AudioEye on our 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, 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 by existing and potential future customers;
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, 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@gatewayir.com
949-574-3860
AUDIOEYE, INC.
STATEMENTS OF
OPERATIONS
(unaudited)
|
|
|
|
Three months
ended
March 31,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
Revenue
|
|
$
|
7,772
|
|
|
$
|
6,906
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
1,702
|
|
|
|
1,710
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
6,070
|
|
|
|
5,196
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
|
3,243
|
|
|
|
3,726
|
|
Research and
development
|
|
|
1,746
|
|
|
|
1,529
|
|
General and
administrative
|
|
|
3,135
|
|
|
|
3,556
|
|
Total operating
expenses
|
|
|
8,124
|
|
|
|
8,811
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
|
(2,054)
|
|
|
|
(3,615)
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
43
|
|
|
|
(1)
|
|
Total other income
(expense)
|
|
|
43
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,011)
|
|
|
$
|
(3,616)
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share-basic and diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding-basic and diluted
|
|
|
11,637
|
|
|
|
11,444
|
|
AUDIOEYE, INC.
BALANCE
SHEETS
(unaudited)
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
5,543
|
|
|
$
|
6,904
|
|
Accounts receivable,
net
|
|
|
4,567
|
|
|
|
5,418
|
|
Prepaid expenses and
other current assets
|
|
|
637
|
|
|
|
644
|
|
Total current
assets
|
|
|
10,747
|
|
|
|
12,966
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
147
|
|
|
|
161
|
|
Right of use
assets
|
|
|
897
|
|
|
|
1,154
|
|
Intangible assets,
net
|
|
|
6,011
|
|
|
|
6,041
|
|
Goodwill
|
|
|
4,001
|
|
|
|
4,001
|
|
Other
|
|
|
100
|
|
|
|
105
|
|
Total assets
|
|
$
|
21,903
|
|
|
$
|
24,428
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
2,564
|
|
|
$
|
2,452
|
|
Finance lease
liabilities
|
|
|
32
|
|
|
|
38
|
|
Operating lease
liabilities
|
|
|
479
|
|
|
|
468
|
|
Deferred
revenue
|
|
|
6,706
|
|
|
|
7,125
|
|
Contingent
consideration
|
|
|
—
|
|
|
|
979
|
|
Total current
liabilities
|
|
|
9,781
|
|
|
|
11,062
|
|
|
|
|
|
|
|
|
|
|
Long term
liabilities:
|
|
|
|
|
|
|
|
|
Finance lease
liabilities
|
|
|
1
|
|
|
|
7
|
|
Operating lease
liabilities
|
|
|
621
|
|
|
|
745
|
|
Deferred
revenue
|
|
|
50
|
|
|
|
73
|
|
Contingent
consideration, long term
|
|
|
2,012
|
|
|
|
1,952
|
|
Total
liabilities
|
|
|
12,465
|
|
|
|
13,839
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.00001 par value, 10,000 shares authorized
|
|
|
|
|
|
|
|
|
Common stock, $0.00001
par value, 50,000 shares authorized, 11,697 and
11,551 shares issued and outstanding as of
March 31, 2023 and
December 31, 2022, respectively
|
|
|
1
|
|
|
|
1
|
|
Additional paid-in
capital
|
|
|
93,930
|
|
|
|
93,070
|
|
Accumulated
deficit
|
|
|
(84,493)
|
|
|
|
(82,482)
|
|
Total stockholders'
equity
|
|
|
9,438
|
|
|
|
10,589
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
21,903
|
|
|
$
|
24,428
|
|
AUDIOEYE,
INC.
RECONCILIATIONS OF
GAAP to NON-GAAP FINANCIAL MEASURES
(unaudited)
|
|
|
|
|
|
Three months
ended
March 31,
|
|
(in thousands,
except per share data)
|
|
2023
|
|
|
2022
|
|
Non-GAAP Earnings
(Loss) Reconciliation
|
|
|
|
|
|
|
|
|
Net loss
(GAAP)
|
|
$
|
(2,011)
|
|
|
$
|
(3,616)
|
|
Non-cash valuation
adjustment to contingent consideration
|
|
|
55
|
|
|
|
—
|
|
Interest (income)
expense, net
|
|
|
(43)
|
|
|
|
1
|
|
Stock-based
compensation expense
|
|
|
1,118
|
|
|
|
1,145
|
|
Acquisition expense
(1)
|
|
|
—
|
|
|
|
198
|
|
Litigation expense
(2)
|
|
|
155
|
|
|
|
862
|
|
Depreciation and
amortization
|
|
|
526
|
|
|
|
387
|
|
Loss on disposal or
impairment of long-lived assets
|
|
|
147
|
|
|
|
—
|
|
Non-GAAP
loss
|
|
$
|
(53)
|
|
|
$
|
(1,023)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Earnings
(Loss) per Diluted Share Reconciliation
|
|
|
|
|
|
|
|
|
Net loss per common
share (GAAP) — diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.32)
|
|
Non-cash valuation
adjustment to contingent consideration
|
|
|
—
|
|
|
|
—
|
|
Interest (income)
expense, net
|
|
|
—
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
0.10
|
|
|
|
0.10
|
|
Acquisition expense
(1)
|
|
|
—
|
|
|
|
0.02
|
|
Litigation expense
(2)
|
|
|
0.01
|
|
|
|
0.08
|
|
Depreciation and
amortization
|
|
|
0.05
|
|
|
|
0.03
|
|
Loss on disposal or
impairment of long-lived assets
|
|
|
0.01
|
|
|
|
—
|
|
Non-GAAP loss per
diluted share (3)
|
|
$
|
—
|
|
|
$
|
(0.09)
|
|
Diluted weighted
average shares (GAAP) (4)
|
|
|
11,637
|
|
|
|
11,444
|
|
|
|
(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.