AEYE - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to AudioEye’s Third Quarter 2018 Preliminary Results Conference Call.

Joining us for today’s call are AudioEye’s Executive Chairman, Dr. Carr Bettis; and CEO, Todd Bankofier.

Following the remarks, we will open up the call for your questions. I would now like to remind everyone that this call will be recorded and made available for replay via link available in the Investor Relations section of the company’s website at www.audioeye.com.

will call that AudioEye’s you or some during discussion the want Chairman, will other turn statements our emphasize forward-looking events. to of today statements I about over predictions, Executive to I hear that future Before are of projections consist the information expectations based are assumptions subject to These statements and are risks on current that and uncertainties. Risk the call could discussed Form other in release and the and factors and our differ conference today's Exchange this of comments section because materially during XX-K Actual reports results with made of and Commission. Factor in the press and filing Securities not undertake does forward-looking update any statements. AudioEye duty any to

Now, Chairman, would to to Bettis. over call AudioEye's Dr. I Executive turn Sir, like the Carr please proceed.

Carr Bettis

and us available release for everyone XX, ended had of our very you, XXXX. preliminary website announcing we close, quarter copy operator. today. press Investor market a for of thank joining audioeye.com. is press issued release September in at section A results the our Welcome much Relations you third After the Thank that

uplisting, Given NASDAQ raise demographic. successful recognize we to equity broader and the now investor our a are recent exposed we

the that on today it's some think So to mind, to the story important take essentially to in with call. we reintroduce AudioEye listeners time

Some growth and AudioEye strategy. be who and may less our mission familiar with

updates finish an remainder year. our on of provide details the updates recent before some some our we of CEO here with For that, those to turning with of operational who have market I'm detail who key company it heard heard will financial the today. results for After me the about into this Todd, and over please outlook bear events, and story, our before additional going some more capital before

content us, about solutions. digital accessibility AudioEye. leading So based first AudioEye of a SaaS provider is about

Health -- over of a people of to much in challenge most may living world which organization digital restricted realized. the is are some have for the XX% According people with as X websites a the billion global of way the Organization by population accessible access making currently with business to World who in and world. is form individuals larger as equates the That We disability. mobility than disabilities,

are do those to are like how hand to disability other use it, prohibits with we AudioEye building. analogy. stairs people perhaps that’s other and or of the exclusive, more who can the need from the a digital interrupting is them building, who ramp. users. It staircase our platform than staircase much to able but without from that difficult previously a inclusive, front So far help the allows experience the website in access both we'd climb have it's a the access is building. been cannot anyone Imagine, they We'd helps an A to for enable to Stairs on those perfect. ramp. cannot again to stairs access to impossible who like entering use climb ramp say most individuals of

Actually where solutions. require more properties the web a enhancement advanced addressing to and While we requires and with a relatively and out the accessible people software for is extensive complex traditional other from to can Spotting is do the that by is solutions stands online metaphor identify Other accessibility in really efficiency. one. believe words is problem simple, important widely is AudioEye problem easy. correcting more solution and this Most become exist a test execution code disability.

maintain it we property, and call platform platform, AudioEye than more the Ally monitor to With do we them. strive we identify web issues the fix, where with

regulations standard AA, the are Act, which latest Web for or the to accepted compliance access. Content Guidelines with digital website the and provide while usable Americans ADA accessibility standards, more demonstrate customers X.X many accessible provide compliance accessibility with both content we international of all. other and and cause. make gain Accessibility the the We capabilities websites we the digital their again remediation quickly our also with for can more best solutions certify and automated, WCAG people, clients more symptoms, more Disabilities treat our also is the Because address an We solutions with to the the

as accessibility affects at the continue over all accessibility demographic in of believe United all and to industries almost we we we we number XXXX, far Lawsuits climate booked focusing one $X.X nine solutions, under regulatory galvanized following forefront but contracts. an demand in did litigation more XXXX our in the year began effects we Now, this year. efforts and we booked of We XXXX, in are increasing the that That online booked $X our just for accessibility how and $X,XXX in incorporated has sizes. million trend. considerations. States. on which service believe this than of That we first first our time. all offering managed so restructuring way grow this The the for months booked get is following platform lack demand and the companies in million. both digital here, a our of year with in We SaaS $.X.X selling the of In letters related the the initiative, cash million to followed and AudioEye

frequently placement a discussions, enterprises disability. individuals the we large That million of ROI of growth to few For this clients also by market AudioEye. receive us $X.XX we marketing our where brings officers benefit In stage client to next past fuel of emphasize we private of with August, under-addressed addressing completed potential have the the the months. in

what capital believe are on We’re opportunities. deploying focused ROI high we on the

our both NASDAQ Market split manner. uplisting the a split to Board the the and our accelerating more affected our of sales OTC we timely XX from in of financing aided financing and customers resources recent an with for teams the and additional Exchange. our new efficient Both Capital allocating for goal Bulletin stock. to and service X reverse Specifically, common the implementation After deploying to growth even

We Our made range milestone and another investors attracted other institutional it listing our increased liquidity. represents our of and broader and believe more has shareholders. common AudioEye a to increased stock on visibility, NASDAQ important for

We the in high of company as stronger our position in are now opportunity. to SaaS establishing rapidly a accelerate Greenfield objectives business growth a a expanding

on to a turn company I does from will the while experienced time currently in the we full the finance a team Before numbers, CFO, recognize this benefit have capacity. that we pretty professional not

We position. for are actively the recruiting

the the to we investors search We more the am evaluate business. use more details the we and personally expect the I operations and spending on the metrics process to report in that to not complete In future. of too meantime, distant the of time

are reflected changes already we being Some investor update them. materials as in

financial preliminary third XXXX. the September Now results for turning quarter XX, to ended our

based For affected. the particularly quarter being SaaS many is third typically businesses, August with of slow month the

growth. is results third over from still increase with reflecting prior in quarter our Year-to-date, pleased same we’re the same we which period generated the months of revenue, XX performance. straight of year. revenue million With XXXX, XXX% $X.XX of have quarters XXXX. achieved business exception, we in nine $X.XX have but the $X.XX also of we million, QX very In in is the for Our quarter third million XXX% period up an no generated revenue

between XX% same XX% prior for to million the bookings million in $X.XX $XX our Our $XX XXXX. the expectations million year, to XXXX period between nine and contract million in cash increase We’ve somewhere previously bookings. was that $X months the with the year an cash of in cash an continue contract million about we talked in the than secured In the for $X.X year. more bookings XX% total year, I to mentioned represent over prior of reflecting the expect for compared compared before quarter the contract same period and of first totaled as increase we and

to increased range experience XXXX. we our customers. to the earn existing revenue is compared contract total increase under to at $X our expect we’ve representing between of our total our length. With the forecasted The and XX of This unchanged. of million collect million, changed. expect majority XX% and to $X.X the with revenue has expect from XXXX, it’s range down signed And new we million an revenue revenue of XXX% This timing to cash remains when expected recognition we’ve $X contracts due for year guidance we on as assumed months Based of used length $X.X to cash time to previous million. contracts an we

XX more about being contract XX However, to this associated in revenue period the with resulting year we less revenue expected. on future months. months average, than have period current associated That’s cash lengths with and increased from being

comprised million cash future and contracts play, of either the So clear, of if of lengths contract deferred because in you at the in quarter-end are contract million revenue value longer, be deferred now and $X.XX backlog on excess is is $X.XX a revenue that to target will. revenue under of $X.X million contract in revenue bookings are

revenue believe we solution company long-term lead contracts in one like and in longer that overall, it trade-off. we contract providing So a XXXX and longer year solutions reflect In we the marketplace, ability our XXXX, could our deliver clients’ the our at the and growth. to this confidence all to were We was term expect. stabilizing

see by, approached we goes contract time to average to continue years. not our surprised be length As would three

with our of indirect important note it’s also channel our partners think We terms vary. that do agreements the

our of only indirect end signs with use monthly one channel their an partner As clients. example, contracts

their one mirror the contrast, partners Moreover, partners we deals signing up So, clients predictability XXXX. continue the with revenues as our We guidance contracts contract cash increase. set these AudioEye some faster indirect ramp these to are revenue indirect we add their our of our also these assumptions track the those when to contracts some we our than to we're customers items three spending with see adjust indirect of contract. will partners channel adoption to we some and some to In are in contract lumpiness for course expect more this with month obviously terms appropriate and got others, years. now of of customers but we of to in expect means channel year short-term, closely for for respect going partners, bookings as could of on

just potential So our potential business of here long-term confident in of we summarize, the and strength of business. our the very to the growth remain

continue a growth to maturing SaaS rapidly revenue high path We well-rounded we and with are clear a expect business to recurring sales. into

that, to to I'm He's of some with details CEO, Todd turn operational updates. additional key provide on our going some to the Bankofier. going call So

Todd Bankofier

you, Thank Cart.

partnership financial that our customer to refer we retention. what Now I'm sales turning to as Cart going operational And a questions. over of direct sources the to to customer from channel our the call completed and as overview, our of get on do highlights focus minute sales, into some take quarter to I'll before indirect success: three

First the direct sales.

We than opportunity much verticals continue per retail across education, to government, with The financial targeted greater our major direct consumer the on and deal provides revenue basis sales brands channel all a win channel. indirect services. us

For country. sales our sales the that to continue pursue aggressively to reason direct alone, we major people and in additional across hire market expect

agreement per fashion began decision penetrated as announced to push obtained years. channel indirect we channel we of helps understand and are a inclusion. why all new with the continuing the rollout channel via we this to sales industry driving These of CMS believe with of on their the major their underscores our behind are accessibility for country is under are That basic own agree examples a In sales increased this customarily accessibility have from It once or me and of online uses was the so To a channel driver provider our setup from the will these business initiative The management and sales to perspective service indirect prime AudioEye experience increasing the is issue the is recognition partners customers agreement how in markets our they thousands websites recently believe innovative future our their out. we this LI that as business. to this go growth sales lay the coming hundreds for XXXX sales managed let in sign capital social and that enhance with functions, to platform business. and in a area all of believe being their business content be market Our factor as AudioEye master this with decided in the direct or websites This customers. These of partnership an to an vastly win-win why across scaling a the quarters to of nutshell even NYDJ understanding significant to the system indirect we well and brand a work our an We typically offering CMS parties is also just the one now involved. of partners, platform. view. channel We channel. the sales. said,

And which their ERP, partnerships Group available incremental addressable stickiness and that Oracle and that a existing associated with a we which customers addressing solution of focused with compliance, to potential wins their content we And or market gaining given upon of of majority at and retention, is a customer audience. channel are account for large broadly on given In and avoid now a the pace, model, our once the direct channel have What’s Subsequent in we with other revenue end. we're maintaining an than channels, these with over who CMS quarter-end, service agreements sites means the customer, the and well CRM for on we And helps comes looking these and change. for we template. rollout legal on partners believe total their in the place, potential partners growing industry the a AudioEye To-date, do XXX issues very additional receive websites market website short customers already are process remain current with are many on an platform breadth translates CRM of This go At industry. thousands Anexinet. announced our the undeniable. to a on we to customer our AudioEye value on them within customers in additional addressable this our owned country. proud also with the direct cases broader seeing negotiations the implementation platform providers time new course rapidly NetSuite, provide channels who And a time, incremental can market software platform we direct customers much third across with for XX the ongoing on websites. we're world. company our of sales one costly thousands customer selling in that a also request. partners' platform makes tourism on or growing join CMS in able implementations this are only XX,XXX the cost to solution. subsequent estimate we partnerships. acquisition to but and to of targets. more there also large still and the demand. an like by without garners CMS we to potential hundreds CMS partnerships believe healthy potential to investment scale We provider return CMS that secured full today. Simpleview, Our customer CU platform, quarter, the new that and for provides we Even expense to that aligned to channel rapidly disabilities solution follow though so the existing the Solutions standardized The opportunity are minimum with at of an our AudioEye starting for across through travel able services is we us that or leading to great customers a favors lastly, we're the of revenue accessibility In arrangement mix sell for tend of companies

service. To example, business been that events, a to lost have no for our or was for have While quality three customers some and the our customer move a due customers lost the needed longer acquired we've provider our chosen yet not provide to to platform channel associated ours. past have in CMS service others to ability of new normal partner not years we reasons knowledge, single with a

the We on customer are the mid for our Based experience reasons going twofold. Based in renewal the pleased all bring currently the of remain are rates customer in on feedback platform. providing are onto value XXs to-date forward. expected business also our retaining report to we to success we are to and that high is almost our

and and most great a resources install do to our with This And of too feature time. this pride us to unsustainable. service simply alternatives we are and technology internally. building And second, ready service do too customer and in attention their call to the to to worry their we accessibility take for in-house. that, First, conformance, real information. monitor issues is about are we address impractical providing our sites and open required consuming to product when on arise, quality accessible in use customers Operator, expensive time the provide a and length appropriate extremely to At it allows are we the contract maintain questions. throughout for The AudioEye, make make our please enterprises valuable compliant. is to have our The updates always the with been up no customers. that longer them whether website to updates

Operator

conducting from question [Operator the question. session. At with Instructions] first B. you. Please we time proceed Zach question-and-answer comes will a Our Thank Cummins this Riley line from your be FBR. of

Zach Cummins

strong contract good revenue Congrats afternoon. cash bookings on Hi, growth. really and the

the off guidance just starting So for year. with your revenue

interested attributed you about became more with agreements contracts. the moving these moving in some you that to and in your downside customers these guys? talk it longer lot more Can channel a of both direct apparent to longer were So that when term term really of actually indirect to you

Carr Bettis

reality to three of But from year have terms. big at have deals mentioned, same many think I experience And the that year forecast the their Indirect, of channel we to focus, in these do, the didn't we in the with many as two to customers whole knew deals they lot with base up coming And have is the a contract change I year. Yes. use to change in the three partners direct that they into sign the length. to I these of -- range. when or indirect. we what mean, focus the time

their gave length So it's to not a almost customers uniform inevitable an example. you it’s contract a I their for that just going It's it's providers happen. them and for not CMS

one contract. even month have Some

they when month contract get the contract one and they tend to you're their as longer a longer that's So one what month large, that have the with by has and we customer, seeing well. in a do contract length year But reflected be unfolding.

this the set contracts really going you of periods, forecast for sitting contract things, paid bit long-term possible that right sort mindful three as future obviously for revenue the with we and our large We’re backlog year, year It to the were of wonderful of next when expected even would will because length that's some a some it's get well. -- for little does revenue will because longer. of a annually if get cash into

So we there well. have as a backlog

the revenue bodes it if for you will. pent-up future well So it’s revenue,

Zach Cummins

channel. slower quarter pipeline typically feeling you pipeline It this seasonally around And already It year. quarter, but curious looking that's as of a are partnerships to specifically about I'm the QX curious partnerships last really just your activity you're forming a of sounds thoughts just kind potential that at the of quarter QX is of Great, the hear like go into but helpful. sounds end, like then in kind here this and year. few the announced how overall you've to your subsequent indirect on

Todd Bankofier

to announced ramp of the up it Yes, partners excited addition we to. us market training beginning we some the channel Zach, of sort in but about obviously allows almost again Xst for are again XXth the as to through us. and now indirect October way like to free of seems really opened channels all big do partners, and NetSuite do the put are up in things like it's going Simpleview. that because September These them well-known sort our large where a excited all They up stages. two and obviously they're really we we're We are the

the highly quarter is districts acceleration. starting see specifically, as And through where the I standpoint well. nicely their to our fourth then really Dealer TDK, of for speak site. seeing are ramping districts, enough final the school auto where we're like we dealer can't the sites, up and and from civic in For a increasing e-commerce are sites, the school we're government These partners plus, dealer.com the the Inspire our current pipeline three Dealer forecast Inspire, the

have through the quarter, XX see So things excited we're kicked about how really really and end here in great the things off first year. of bullish we the about October nothing, fourth days but of

Carr Bettis

expecting expected add very number Hey, I be then are a third were with up we we light internally to we in to just numbers the We want to were the put because pleased very do. quarter it and what fully pleased something. with we quarter them tougher

very the we're into now. quarter stand with where happy going right So, fourth we

Zach Cummins

Understood. then last just question me. for And finally

environment, half In similar the the been terms letters pace to in year? and lawsuits of the website seen the of of here accessibility we've regarding first demand what has regulatory

Carr Bettis

stay they Yes, consistent.

letters. received each calls to continue have companies that demand from week receive numerous We

new So have if past going in we months three regulatory anticipate seen really year for and we see elections after there's not and and don't probably that we any any to into changes any. reduction sure until be the any in don't the the tide

Zach Cummins

my and Okay, thank results for XQ. strong on in these you great. again questions Well, once taking congratulations

Carr Bettis

Thanks, Zach.

Operator

of Our the Management. questions. from Please comes from your Capital line Marathon [indiscernible] next with proceed question

Unidentified Analyst

contract longer see lower annual do revenue Todd. Hey, you link was another monthly meaningfully again. Question revenue when you contract? or I with the thanks, Cart, terms, on guidance curious

Carr Bettis

with not some as I are these them discount, clients we'll well. it's direct No, give it's but not On mean, meaningfully negotiations large. multi-year very different,

Unidentified Analyst

Okay.

Carr Bettis

It's very small. material. I not mean, it's -- it's almost

Unidentified Analyst

Okay.

your see revenue did monthly you long recurring any say what length, versus your a revenue contract stripped the so length the is, normalize of annual difference the you or expected quarter sign? you recurring if deal how to you've in So in out

Carr Bettis

on revenue, you we you if normalize So normalize it, for a it, if difference, we're track. -- say there's no, if

Unidentified Analyst

Okay.

Carr Bettis

contract the very control length. been in, transitioning recently. lengths extended. the managed and targets to service have we sort future much have cash until heretofore in have business of transition businesses cash longer the or and getting been Adjust happened The truly those with complete have has contracts the really are into what's over of what right on right, it we’re experience that's revenue targets and focus run in because reflected booking bookings don't values targets, still Yes, the business That's internally But as contract because possibilities the a thing start partners. focused get really this really bookings perspective future But revenue now the visibility bookings we term are have and we right good we're to ton nor go we here on NASDAQ to because out and sure only forecasting. as as for with we lumpiness as reported channel revenue now more we we focused. making contracts locks a traditionally a

to We expect than others. accelerate some faster of them

on relationship we've EMS so where and variables. oldest the our different speed at will ramp the and older and individual longest smaller other XX% or got the I depending size ones You historical, had we of newer one be some in of can penetration in the ones look our our think relationships XX% of

in these very, occurs So the partners the in very some feel this it channel lumpiness we do can in in excited in way future periods. acceleration be to future which they what potential periods do us could for -- still for us about

Unidentified Analyst

versus more talked business was little expecting? you about but than indirect a the bit quarter Now you were there this in direct

Carr Bettis

I are the mix terms of we to pretty close direct what and we indirect. in expected think of

those We working an -- are channel, interest in acceleration the to continue hard very try expand to with the in indirect the to to continue partners. see we that

get end about saying we I be year the think of it We've balance indirect to -- should the time to shifted in quarter. by and shifting. that was XX% the be the direct XX% been

Unidentified Analyst

or in contracts? Is that XX% dollars of of terms terms in

Carr Bettis

of yes. terms In dollars, bookings, contract

Unidentified Analyst

right, Okay. Contract okay, Thank it. you. dollars, All got great.

Carr Bettis

Sure.

Operator

Please line next from Cross with comes Stanley. your the question Morgan from proceed Our of question. [ph] Christopher

Unidentified Analyst

Todd, how are you?

Todd Bankofier

Chris. Hey,

Unidentified Analyst

the congratulations Hey, on quarter.

Todd Bankofier

you. Thank

Unidentified Analyst

got I you. softball for couple of a questions

and it kind how for guys business XX over terms that? call thinking in about months, think and how of next about at looking Just making in I that I kind XXXX are what the investments of OpEx do looks you of guess the

Todd Bankofier

opening of we're As to we the competition in in land greenfield of our alluded with is comments, front take we everything. grab is our really [ph], timing going because out call limited advantage this us what operational is

size obviously the the increasing increasing and hired sales months sales we're two in -- So and QXX. in size implementation the last of our size the we're to the new team. people We've three of continuing increase

the So sites. that they there. can handle influx of customer new We've hired people five

our carry with some we're we going do to that raise and are stated money continuing to spent like we have we So out.

on capabilities some leads. our it's We're customers got sales. now We've getting our marketing enhanced more in getting much XXX% sales messaging, right about faster. So we're getting cycle We've to excited transactional. focused better

we're And we're excited landgrab. going operational about our really with so where

Unidentified Analyst

Okay.

to you're going bit investing say looking as So go you more probably into XXXX? a you'd maybe

Todd Bankofier

features and We sales out obviously the really money. to to as to spend team, where and still In new making year we've end technology keeps that's that spend at enhanced, well. the some implementation going our Yes. sure here it's going money important got being we're we're of the us our and product roll

that team of us. that and out lays of it is there in advantage majority there, money the take members before new but is this opportunity So go spent

Unidentified Analyst

right. All Thank you very much, Todd.

Todd Bankofier

Thanks, Chris.

Operator

remarks. session. like to now closing turn [Operator Bettis for the And conclude our this I’d this to Instructions] does call Dr. At question-and-answer time, back

Carr Bettis

taking I Yes, thank just to time want to today. for the come everybody

remain what business about excited model on to opportunity. continue and doing the we're the We

taking operator. appreciate questions So to as for Thanks you, listen. you well. your Thank time

Operator

facts are I could this made that statements. of Harbor management like considered call. risks like include important that of Private course other to believe, AudioEye statements to by Safe are that anticipate, identify call, similar historical Reform regarding cautions for made and forward-looking during during would today's expect provide expectation as subject all conclude forward-looking a Statement uncertainties. statement the conference Securities and such provides Harbor participants Act would we forward-looking Before of statements not remind Litigation will, AudioEye's call, to this The The estimate, XXXX, company words statements Safe be forward-looking statements. The

place to reliance the which on with Commission. are its The circumstances uncertainties are important and to as cause forward-looking the results from statements AudioEye’s hereof, to could company obligation call made management's after public or date forward-looking Participants factors be occurrence under risks, the to reflected revise are release in events. on caution only this statements. which events and These materially reflect filings that Forward-looking not or U.S. undertakes risks subject in unanticipated certain the statements, uncertainties Exchange the of forward-looking these reflect detailed and update statements, or those the actual reflect Securities to date to no hereof. of may differ

you Investors call. I AudioEye's link the will Finally, third company's preliminary would the results a joining available remind everyone be of like conference quarter available replay recording us on to for that website. XXXX section today's of for Thank a for call via today

You now disconnect. may

AudioEye (AEYE) 25 Oct 182018 Q3 Earnings call transcript