AEYE - Earnings call transcript Q4 2018

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Operator

Good afternoon, and welcome to AudioEye’s Fourth Quarter and Full Year 2018 Earnings Conference Call.

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

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

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

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

Carr Bettis

faster, hopefully today. fast. operator. you, too I’ll I’ll be Thank not warn little everyone a a talk lot speaking Got to about that

the and full XX, copy is After press the press announcing we of a available December everyone at and release quarter XXXX. section the joining our thank the for market results the audioeye.com. welcome of you Web close, ended Investors A release us. site So for in year our issued fourth

today solutions. AudioEye in of digital provider SaaS-based aware, a many content are dialing accessibility is leading you of As

pride disabilities. those business sites for the ourselves We’re and of especially with content disabilities. individuals, digital range very a in individuals large in all We of accessible Web addressing making other

issues with AudioEye monitor With the platform, to strive We them. we maintain continuously properties. fix, Web than identify more do and

our demonstrate We regulations or also remediation people. in Americans more Web Coupled ADA many we to digital of clients by make their get customers and laws. provide Furthermore, best manual ROI more individuals provide be their from Guidelines the of the enormous are and with sites Accessibility or both solution opportunity standards, certify Web the subject with our usable sites and for commercial accessibility X.X. for matter an and to Web WCAG testing with can compliance commitment automated, capabilities more latest Disabilities disabilities. with the with and to investment Because accessible in and compliance Content more experts, the to them we clients Act remediation we with the population content our give quickly

on business update. the move me Let to

– an we’ve and discussed the the of current for year but the the past As revenues to mix be expected results XXX% quarters the record we��ve three years revenues last from especially the to accessibility of our XX for in the great finish translates improvement. a of the With and consecutive I’ll greater a first QX, now picture items a growth for into In was landscape. bigger around I’ll preliminary year increase AudioEye. going quarter released results fourth financial provide month, for in detail, on minute in update great current generated quarter consistent which some we

Title climate, digital to also forefront coded accessibility legal devices III potential ROI a regulatory according regulatory ensuring those find are use enterprises count to being a that benefit XXXX conversation provides that XXX% the considerations. More sites we such are standpoint estimates Shaw, benefits still ADA from of they alleging not plaintiffs these ever more that they’re XXXX only firm generally make a properly we and – law digital the or were solution, to work specifically, to or when compared and assisted are committed they properly to usable. We more site resolute utilizing cases are The the From demographic ROI could to initiatives about but not being accessible capital So this screen sales, the sites than technologies. court accessibility on of in more to Seyfarth with not With our at in commitment switch Web for in back X,XXX technology to promise not X.XX this XXXX. access about building from to forefront in coded of innovative as U.S. readers accessibility at a believing our to with of accessible. lawsuits. federal goal did recognition them. technologies August. in front believe our brand and the and continuing With saw I fully talk than are accessible opportunity into by that untapped in because that marketing we in wave of galvanized awareness understanding in massive We increase perpetuity, increasing but information the raised or was us, those we Web otherwise and to efforts, not lawsuits million and invest in use this devices AudioEye assisted the preliminary

be clear reiterate it. our business and me strategy Let about

the think still advantages quality growing continuing can gain this we to end, that possible and improve as customers. to team emerging continued we very challenge managed markets, fast team. provide our significant To sales our to the we’re greatest we’ve high our market add share the to in fast service about while how delivering Given as

divided we the partner the and have sales market market. Additionally, the by team channel direct indirect

digital last We improve we To be We the should the to recognition and additional of year to generation, as our at lead the partners we that accessibility a two out more assist leader. know efforts, the to are the added end of also in new build quality marketing, support service industry efforts. and of and our AudioEye can ramping our selling of marketing for director doing our our marketing better volume bolster name professionals hired even brand. these brand to

over little not also is end, marketing believe I but us take is accessibility. ended To third a the AudioEye public that but December in third the year will strategic revenues will XXXX AudioEye. increase these party and X.XX of say of the with to fourth hired a gain relations and it XXXX, XXXX XX. increase we’ve minute digital a steps quarter the we for the period full million mindshare synonymous financial modest evaluate a through the quarter and go together prior I’ll assist solving make of In year. goal of more to our we same over for our both will now effort an quarter XXX% help take share name for and market fourth and Our generated us choices. time time, reflecting XX% Put to results and

XX is additional the AudioEye and the business year to members, we a in securing increase transactional of highly team generated both channels of X.XX which with the increase marketing contracted and bookings the primarily full plans new in continuing year for revenues products months. services X.XX the from execution focus industry months up amount of XX and For revenues to indirect on due Cash XXX% negotiated of million a generally sales million thereby an company’s amount commits XXXX, The time from of us included quarter to XXXX. hiring was which partnerships reselling of was contract of increasing verticals. spend over customer of the the volume ranging money agreed an

cash quarter to and from million X.X an increase X.XX an contract the in same prior last the ended quarter Our million, year. increase for of bookings XX% in million the of compared period X.X total XXX%

in bookings, to For in due the a give secured the in execution XX% the these overview channel. The channel XXXX, million minute, sales in direct for primarily comprehensive a quarter you indirect a contracts contract million was more the cash of two and X.X Todd’s business. contract our contract and in for bookings we securing year In XXXX. XX.XX going in closings to channels increase the important number of from up full year both cash

Next, in year XX% the reported X.XX was XX% increase or million total of XX% revenues quarter of of quarter XX% of fourth in prior a which and was revenues profit XXX,XXX or third in of XX% or 'XX period. the from gross from 'XX the XXX,XXX increase revenues

of were from to scale of certain X.XX For total X.XX contract million year, operating the as efficiencies renewal total The service. million the a in terms. revenues increased of increase stock-based compensation was in a profit from in realized gross volume primarily company’s decrease sales also to XXXX. which the was an due decrease XX% in decrease XX% the led same efficiencies of a technology to year-ago period. to increased primarily with gross and of was rate in which X% Total decrease being and delivery of continued profit in the million in The increase total or Advancement revenues longer and an operating expenses or its X% increasing million from company operations. X.XX the million QX in X.XX in X.XX quarter fourth expenses revenue the due was XXX% full was

or This in million and negative a the investment million shareholders share quarter X.XX enhancements, primarily and in For expenses for net was fourth loss key operating million share. capital quarter the negative negative loss increased a XX% in $X.XX marketing of X.XX technology net year. of a the loss to Net in last compares totaled for year $X.XX an due available the X.XX from per total XXXX $X.XX X.XX or prior The a full quarter year XXXX, of increased total million share to million in XXXX. increase per operating or per of expenses a fourth personnel. to X.XX common the to

from X.XX X.XX year X.XX For share and or in cash with cash the share, available December no per improvement was to loss million negative which loss we per net XX, and ended year, common stockholders negative X.XX is an of at million We million XXXX. net compared $X.XX equivalents debt. full XXXX or million in to a have $X.XX the

and succeed. provided are start be for contract solid both channel To indirect XXXX better outlook expect would to continue AudioEye a AudioEye ways the fall in platform channel the to sales me direct the In back to we used enterprises our site main platform encouraged revenue was channel engage XXXX, for channel, channel, market. partners for a by customer these to and we two one give but tools year. In these Individually, especially than end indirect expand we describe off cash the has we two with our we of The even foundation and customers. team direct directly more indirect sales direct customers our this their business indirect. we December hosting who let up and them Moving hosting the slower started engages end bookings. of first ranges sites. and in host sales used into our our This customer. personnel of thousands like, are Web AudioEye can the direct explain, results Web distinct provide to go channels; to and with

unique to because customer service. own their they the Todd directly. started And as and in and me It serve the we channel the factor less to channel the proliferation customers. potential of indirect I’ve liked, our the of don’t explain. not reseller partner AudioEye that to key as slower the solution managed the acceleration but our expected than channel be previously I partners, has a The is channel control don’t end an is we indirect have would indirect and business said be earlier, the used and technology mentioned predictable AudioEye let As to and authorized

For more to delayed their AudioEye than one this AudioEye, reasons unrelated program quarter. loss partner

when commitments stands by the and already news upfront real past it news the the deliver That implement within that solution at Here’s technology Xx the bookings clients we hand, the the important partners their the to once commitment to direct AudioEye time same visibility months. begin direct report discusses will AudioEye who did clients an the commitment channel their last financial scale. partner good the direct quarter. to sales starts policy in we other than good ready represent channels is you a the channel minute them visibility. made of to last AudioEye pipeline the size AudioEye from developments year on and is cash I’m Revenue color pipeline reflect we have into that have our platform this have for channel channel in contract recognition in implementation. the to do control sales give more note we Todd via some is few program in the have platforms. these detail. do more includes sales our and pleased It the more partners In not two and that that the on more he that is important to our

in back the marketing big with we So lead already stepping and guidance. year to mentioned, processes range people be the in sales for the to public I in growth and prospects on investment as of the full future. excited ramp we the generation, picture, up expect Also about focused our remain and relations,

search. on the update Finally, I want an to give CFO you

time. CFO position. we aren’t the like we a what that, this turn want I decision very Todd, our and taking lightly the process some to this We high as convey hire. open this taking it Obviously, are CEO. making to call is is our to for that over bar But With relates set progress I’ll

Todd Bankofier

Thanks, every total and Operationally, More progressing on than generate organization specifically, level. activities. beginning indirect XXXX was we as our in see growing for up through their customers substantial partnerships direct sales channel XXXX number our better to through continue growth partners. more channel active ramp a with are of we our to a X,XXX Carr. year a we

which where driven conferences. been ago the frenzies, by more attendance now at more more of Our processes in time, year lead improved this double at generation it industry content current targeted sales a has pipeline areas the digital just page was is search than more and targeted purposeful

marketing we’re we resources pipeline. on public expect additional and continue relations our the Given to to focusing grow

which going really customer the retention. the additional the my direct color rest success are remarks of around and to Now customer AudioEye indirect three channel spend of sources providing the sales sales, I’m for partnership

First, the sales. direct

this organization services this site of are PDF a increase result industry their so year to the accessible. sites. contracts address are disclose direct site directly segments house services quarter. saying us continuing channel you as Managed market and where names remediation to on they space we’re addresses Two government remediation we is but a high federal tell customers, surprise the if profile large and We space. been rate. the focusing Ally efforts recently technology direct believe on the will While XXX to have needing their I Ally become can’t a is solution say just are documents for that sales can’t some We’ve organizations kiosk An our positive that the remediation Service not solution our documents have enterprises growing tools the our not the PDF far in compliant the for space. kiosk Managed our also that time additional self-service that at can Ally Service any of in what and PDF been includes that our efforts I attract the is simply Fortune Web

it’s federal confident Act the IDEA will clear, ahead, federal here law that both to and to signing the positive To Century their IDEA how to feel now by an recent for services. us We a is the direction government. their by we continue additional that in speed agencies focus that accessibility with compliance requirement leveraging to spend Congress, by the their digital are unfolds this we ensure is but in months With and government opportunity agencies of dealing and federal be the assets the are Act AudioEye XXst accessible as see we new increase well. monitor for federal there and

The focus Lastly, purchasing their self-service a been another our their suited area the by has of well kiosk us of widespread in number of for space. utilization processes streamlining is uniquely technology. clientele today kiosk for for companies

strategy the our while ADA, fuel a in clear Ally term. compliance continuing with opportunity we kiosk channel to core have With leverage additional long technologies. our We intermediate on adding an accessibility Ally growth increased this see over to this to address and as focus the strategy

Now AudioEye highly indirect channel. deliver with channel discussed with or way. proprietary CMS the already the management the in partners, AudioEye cost a leverages of economies solution content efficient indirect by our working effective to scale providers systems Carr providers, and

big as auto so Dealer.com clients, to we thousands services their dealerships. adding we One signed have of scope partner hundreds partners in to excited up. of and of very we’re opportunity AudioEye need reselling incredible channel provider leverages a the the that size platform be was the support existing solution to announcements about means made time for and ahead. and that decides days each clients the recently we the of At Dealer.com, takes now businesses ready having representing this same an stands marketing partner. the potential Dealer.com for new Dealer.com and seriously partner. given and a requirements quickly the able to is as AudioEye obviously By challenge. prospective we for sales ramp professionals capacity digital of Dealer.com solution premier a

We’re to we on-boarding changes we facilitate platform bringing our systems onto partner Service existing to Ally as the indirect process. as and Managed channel updates can the make and to continue clients fast

process an on lot to been can on-boarding, Web volume Web including To time. and at technical a to test augmented channel hundreds monitor remediate ability our client As considerably year our basis. be tests higher an or occur address in otherwise last the processes more ongoing from the batches, sites issue, sites, bottleneck rapidly capacity and and our of partners, we big for a much a a what example, clients of expected existing on-boarding address remediation more potentially large have to

efficiencies offer are pricing to of platform that first AudioEye space. of economies now application advancements single of more channel We supported amazing platform. allowing clients in indirect digital to scale these practical, thousands a provide it inning place, we when yield the CMS in for potentially the With accessible accessibility still platforms in realize affordable across comes

continued a lot, have our experience to training and in our gained We better each to channel have the indirect last this data effort, learned garner and improve have how on, sign support we to in more partners growth confidence and And adoption we forecast from current more our however, To better programs. year. we anticipate partner with business. new

For announce dedicated with who messaging partners this two product that forward training, marketing signed in term. partner have channel assist channel to to a sales very the three bringing very new indirect and example, team I’m on To we just to two member two subject, now partners we on added weeks and training. conclude have the additional more in last look near pleased

are retention. the solutions. of to proud Moving AudioEye customer At stickiness our we of incredibly technology

stick Customers We continue the the business that done we service offering onto do. would to service retain all platform. our after we they because with the year first said everything almost realize bring that have of of we we

accessible their compliant. We site have kept and

and Web maintenance presumably the they firms to bookings. it meaning significant work the people, do AudioEye. We monitoring idea do for particular that And expected client those based retention, in and consulting they in the remain on next revenue with are to based our job. in that competitors have to a at number Further rates content and compete on unlocked in channel, their move then remember on make businesses site that important the that revenues continue direct they additional renewal as of pay way most disabilities. is of mid-XXs once renewal compliant, digital we to-date, a the project-based did on and records are not They our we with the

in their the address revenue of changing. changes to made, additional highly a as subsequent site a and to these owner. Web site are to the on. the site As And content to consistent likely site recurring moved errors Web source aren’t once any Web sites updates Most able generate to consultants are and reliably or stream inaccessible the consultant has features ever added essence unbeknownst are result, Web dynamic clients are their a income, unable regulatory

in manner been and Our so us. advantage ability for cost sustain effective to achieve what a to clients our large has appealing and conformance is a competitive

put we’re positions. XXXX. right personnel QX, our good continue always and to to Carr Consistent have stated in business a will in right bring As the internal we the key start aim about plan people on and off with to

We the this unfold fortify as and add plan pipeline, brand scale will sales in continue partners a to to marketing more ourselves large leaders the space.

to CTO variety comes just newly Co-Founder, Former Sean’s has AudioEye Strategy also years as AudioEye transition Mark to realized Technology putting with new been created the right focus our Co-Founder the a role, the more Bradley Officer but this of in day-to-day a will main for of Sean position former than out with and capable his role recently channel. Baker Officer. Sean capable In Officer AudioEye aspects. we been will areas Chief sales audience, will Technical Chief over now proud Officer. of the important we’re people spanning to overseeing number oversee strategic Chief of change leader. Regarding an President AudioEye years, the promoted of build us we the Chief our of of ongoing and places, a With Development be indirect has extremely and five benefit for going Sean is of while most business technical planning his he that expertise Mark not forward say the

AudioEye engineer a patented inventor, has timely with releases As been technology our successful revolutionized marked scalable way an solutions diverse certified delivers AWS and highly have to Mark’s AudioEye of that secure and tenure customer product series the base. growing and by

content respect the work opportunity capable, the inclusive provide space. open with has your focus So share Operator, more digital for with appropriate content to the It ready talent honor committed is a passionate, instructions. digital in building please accessible, up purpose, in more who the world. that, XX an making to to And call more an Access to for team questions. tremendous about accessibility conclusion, an in share taking our of such been we’re of increasing individuals alongside digital market on people. a usable remains common

Operator

At you. [Operator be Thank question-and-answer a session. this will time, Instructions]. conducting we

Our first Zach Cummins, Riley your with questions. question FBR. B. proceed from Please comes

Zach Cummins

Hi. and the to Todd. questions Carr my the strong for congrats Thanks and Good finish taking on year. afternoon,

But just sounds of the a of bit delaying your you’re really a are channel. to of like So the off to talk own. it do any these the some off with little starting fault you some start of Much bookings that in of customer is of AudioEye with slow reasons the bases? QX, not this year-to-date in indirect can solution partners about I their guess impending rollout to of

Carr Bettis

a Zach. is decisions It’s This and organizational from timing expect have happened own Thanks that things just have that impacted actually that question. Hi, with There the their the Carr. programs us activity few some and launch to of launch this interesting. we for your slightly. M&A been didn’t delay

They’ve we a made of channel important commitment and about insight to interested they’re that programs So to how talking us. it have they’re that and unfolding. already we’re be again, partners financial have some shown their in the going very into

is, clearly ready. do – it AudioEye that our that’s with control. what call would I it So out is Nothing to the delay say of being we it’s

Zach Cummins

to in side the to Dealer.com and And penetration a the the sector quarter? your more side that’s any seems helpful. forefront. strength on more channel, you’ve that of indirect the from so has of the the both lot one been Is know partnership business. federal of been there going of there That’s But these the direct were the that more automotive relationships? come direct or some you verticals other with like first channel I in automotive Understood. strength had of kiosk saw the terms some it in

Carr Bettis

I first make IDEA This evolving Act. is Zach. to so clear want thing we’re we opportunity for channel, the see because federal us of as the sure about Yes, an what

to far. for we lot that We invested an in us future That’s that doing see if benefit needs be a were got in channel. pursued. and bookings of just successful trying We’re opportunity so that imply it to we’re as direct

your So I important second think recognize. question, of I’m sorry, that’s to Zach. the part

Zach Cummins

in terms And this that’s the there. helpful. penetration partnership to forefront of seeing the the come establishing some That’s automotive where Dealer.com some of we some with understood. with to customers? that’s lot Should direct strength also one automotive from or been been vertical, a been increased are expect you Yes, you’ve relationships indirect of

Todd Bankofier

have come For of through we partners mostly and now. Zach, channel dealer the four them they’ve our most part,

surrounded have of the see on this. automotive do majority moving industry automotive quickly in CMS we with So the platforms ourselves We the the industry.

Our ahead. to what dealers partners auto have to months engaged the they’re us planning programs some do marketing their in in in

quarters. are couple really excited we next So about the of

Zach Cummins

on Understood. And then that something in color you or your are you prior QX? provide in regards you going a that revenue can update metric. that to give the Is actually gave monthly anything recurring to performance of metric in

Carr Bettis

make report to quarterly by that when We’ve we’re provide decided for us disclose also a we metrics well. CFO onboard, review going By some forward. Zach. the a Yes, additional results a practice to CFO, with so going may to we subject new way that as

Zach Cummins

taking XXXX. of for go luck my again, Thanks, and Understood. here into as you questions best

Carr Bettis

Thank you, Zach.

Operator

Grozovsky, Ilya comes Securities. your with Please question questions. National next proceed from Our

Ilya Grozovsky

Thanks.

XX% kind do we on revenues Given you essentially done visibility Thanks. in the QX, in first you about margin How XXXX? out are guys that And in quarter? what of up through trends, gross a with could have about your play does also put you little QX. the mind that just bit if obviously talk

Carr Bettis

results a different in of finalized, the you about question. about them comfortable Hi. once terms we have time feel talk we’ll QX We’ll your Thank those. for talking at

again about had We’re very excited to about that also the and pipeline that first our today, quarter. we we a we have. solid Also sit excited where start

later. more you information give first we’ll So on the quarter

you yes, that. So thank for

Ilya Grozovsky

in As 'XX? far margins as the gross

Carr Bettis

as continue far over time. margins gross we’re to to margins gross improve going expect As see go, to

when available, strong markets as process, expect to going sales we’re sales significantly some cost still well. we investments. we And We’re make But to ramp also to emerging to the these right, continue the preserve margins the process going we in in pretty to here. see invest continue up

Ilya Grozovsky

Thank Okay. you.

Operator

Instructions]. [Operator

Please Management. Capital proceed Marathon Kennedy, Jim question. from comes with question next Our your

James Kennedy

Hi, on Carr. the Congratulations progress. Hi, Todd.

Carr Bettis

you, Thank Jim.

Todd Bankofier

you. Thank

James Kennedy

related of partners. Can it you on them, the process is footprint looks two they the they color kind like? what are add the from question the gross some just rank to My us on-boarded, onboard size, already standpoint there market indirect channel? give takes they indirect either already out you that channel industry, in what where what new to just And that how to have a in

Todd Bankofier

indirect in not channel process on we obviously feel their number we through they through we’re in the give going industry going industry names yet, getting up on not our as new industry of leader coined liberty excited signed They an getting they’re an the them week platform. we’re marketing assortment set a of the them new not represent We’ve these. – CMS a They classified. number process Jim, in are the assorted do But an unveiling clients what at just of current – process. classified, industry of Well, clients. to thousands really potential one but about specific necessarily training and last and large they’re

it’s specific narrowed So sector. a to industry down not

James Kennedy

Got you.

Todd Bankofier

you -- But I will tell

James Kennedy

you of have? many was prior channel these how going do indirect to two, say partners to just I the addition

Todd Bankofier

XX We to XX today, prior have we so that. had

James Kennedy

Okay.

two XX% would maybe to are mean it of reading added top than additive I correctly? to XX. So capacity, that that to adding these adding sounds me probably like XX% Am more you QX

Todd Bankofier

Yes.

James Kennedy

know. Thank good. you. what That’s I Okay, wanted to

Carr Bettis

Well done.

Operator

back to the to his over our now concludes would call this turn closing I Dr. time, this session. Bettis remarks. question-and-answer At for like

Carr Bettis

well. for appreciate with as questions us today. I the time spending you Thank everyone

as We’re here. through next it. we being be quarter; talking Thanks Cheers. excited forward to you get looking to into further to the for

Todd Bankofier

Thank you much. very

Operator

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

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

fourth company's Thank a Finally, AudioEye's for the I recording like for the to earnings today us for remind site. call. via available that would today's of link section Investors a Web of available year in conference full quarter everyone be and joining call will replay you XXXX

now may You disconnect.

AudioEye (AEYE) 27 Mar 192018 Q4 Earnings call transcript