AEYE - Earnings call transcript Q1 2020

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Operator

Good afternoon and welcome to AudioEye's First Quarter 2020 Earnings Conference Call.

Joining us today for today's call are AudioEye's Executive Chairman, Dr. Carr Bettis; CEO, Mr. Heath Thompson; and CFO, Mr. Sach Barot.

will publishing the analysts. we from for remarks, company's the the open call up questions Following

replay available I this of recorded for call like the will a would to www.audioeye.com. be and remind company's website made Relations the Investor in everyone at that via section link available

not to call the the Reform facts made the by Private historical management Executive during company that participants would be Before I The for provides AudioEye's all forward-looking statements turn like such of Act a that conference this course are call over to statements. statements. considered Chairman, to remind XXXX are harbor of AudioEye safe forward-looking Litigation Securities

statements will other assumptions other anticipate, words or and of and are statements expect, about The future These subject based are similar uncertainties. and predictions, and expectations believe, on current events projections expectation estimate, risks statements to are that statements. identify forward-looking

materially and XX-K, section our and in company's filings differ report Risk and discussed Factors report because of factors made Actual XX-Q Form Commission. on Securities call quarterly the with reports conference Form on comments Exchange results this annual the the could and of release its the press and today's during

duty reliance any are to not call does the update of this management's correct on Participants beliefs as undertake forward-looking to or on forward-looking place cautioned statements, undue the only reflect AudioEye statements. which date not any hereof.

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

Carr Bettis

our the quarter XXXX. of available operator. today. Investors release release joining the we in XX, a us After for A of And the website you first announcing closed, you, press welcome, our issued at for March section copy is Thank audioeye.com. market press the ended Thank everyone. results

a we pandemic. way ongoing indirectly been been support to the by the It's to those as say as environment. that condolences I'd by all in well begin has the take global nearly to impacted current to have some directly send just or our call, our everyone minute express of sincere like Before who fair affected

for thankful during this service and essential who to are time. We workers are the help continuing frontline us challenging providers

many like businesses, working time. AudioEye, other remotely we've some for At been

workforce, a say I to looking when to in company transition make to normal In to possible. with place with infrastructure and working an little business. we're We're back As our as able sure support the do we already operating hard efficiently. have distributed as a getting great same we've forward the all disruption. been meantime, soon technology this I share sentiments I'm and team we growing

began us with far our he's so introduction I Heath and smooth to our CEO, formal and the to for be Heath direction and has we a over truly now was It last with Thompson, excellent his are Heath. happy not call work an on then done with headed. what welcome month, the day. first new and has a handoff an we been could transition been

coupled plan. focused AudioEye. mean has board with off with had the pleasure to – technical enormous a background, really his us. I approached him with do is It's our which true have on Heath skills, at focused. executing start and job onboard business the energy, a on Heath great experience leadership his And to really him here

key the and provide state Heath, the will business, the to discuss his view then the results first highlight Heath quarter. you our want detail over about give I of call operations. turning Before current to of quarter first metrics from a more couple from on

XXth vertical year. great straight by in our in had We're, and QX respectively. revenue, consistent our We start to record obviously, execution the of with growth sure, pleased To the enterprise quarter. quarter in driven adoption a be the first partner was channels

end XX% the deferred to million at sequentially million. revenue MRR, XX% contracts to and excess grew year-over-year March and $XX.X of increased Monthly $X.X recurring revenue in of revenue,

report also very customers And we At new we channels. that a had accounts as magnitude our of We're over orders various across to few just ago. customers. quarter, April April over strong a of was quarters pleased These had month. XX,XXX of the the first larger than XX, are end XX,XXX customer

and Further, customer approximately million benefit economies first from end we Across is million of scale. implementation from greater we've optimize This MRR and XX%. to which reflected nearly to the grew in again expanded considerably to benefit $X.X continued period, the margins the quarter. $X.X at board, the from of automation our during increasingly

last discussed as free business. conditions cash XXXX, are being assuming positive in flow believe call, on economic we we our for Finally, on the we track to normal

completed, overview truly our turn pleasure that Thompson, to over the great call with to So, it's Heath? CEO. a Heath

Heath Thompson

much warm thank Carr, that you very for introduction.

all CEO As Carr earlier, to in mission eradicate second thrilled now I'm and mentioned my barriers accessibility. month digital AudioEye to of I'm this to team as and the part be

AudioEye to accessibility. the I've defining digital shaping new greater In perhaps But so do my opportunity here part had than be career, at with markets. to of no there's and opportunity

The reinforcing all businesses digital businesses an which accessibility pandemic individuals time interfaces digital has of but also unprecedent of organizations the global and of means reinforcing it. the for worldwide, with criticality and backdrop consequence criticality COVID-XX to has this the been one along made clear everywhere,

but to a access usable committed accessibility with solving digital to been to truly timely not and user only disabled always standards, and meeting content. problem compliance the have has enabling AudioEye

disabled engagement Meeting now this before. investments with experience, is continue this to community. believe ever our I in challenge partnerships, user than requires technology, integration, the important more ecosystem and

about excited execute Going mission strategy. forward, our on and to I'm our

legal businesses do to our we'll access their operating risks, have resilient, and help greater more lower more and customers market we make legal, potential share. so, more As

a content we now our provider overview always solutions. as of SaaS-based is I'll an digital leading begin do of business. accessibility AudioEye with

the globe. all the around accessibility. people pride largest We digital – range in impact mission eradicate that Our issues barriers many ourselves of to addressing

We just monitor also we and more do strive issues. continuously AudioEye, fix, At them. identify maintain accessibility than to

with X.X. to compliance Americans and Guidelines websites latest certify or demonstrate Web ADA, Disabilities with or Accessibility the both Content the the also We Act, WCAG

quickly we standards, regulations capabilities our automated, gain are customers accessibility more Because the provide with many remediation and laws. compliance of

our automated coupled experts. managed by product, these are and testing remediation processes matter subject with For manual

The to result accessible and monitoring continuous provide certification conformity offer make their we is with accessible. best through more clients with the remediation, content websites we keep and that of content standards. solution more digital a trusted our We their and

the Furthermore, a for our with an that from opportunity we gain gives also disabilities. investment to private population with of their an provide clients, them individuals commitment to product and enormous a them ROI sector

strategy to already mentioned excellent the some We're results. like Carr's the starting traction. of AudioEye's With see long-term results to our business from our business overview the I'd of of move QX. the completed, really getting growth benefits to now

Our standout of uptick. vertical example a was partner this channel

Our focus the quantity over results past been over on what's quality us has year. strong consistently allowed achieve to

When accessibility customers. as they choose us. for they're work thousands commitment prioritizing their much partners collective program our AudioEye, choose as signaling of We our they to to with digital and

to a While business, not any the AudioEye operate slowdown. global global effects like related to generally plan, macroeconomic of or according continues we're pandemic to immune

our whom by the that many for impacted been goes economic of businesses same current environment. are disproportionately small The customers, have

may more pricing providing in including help the options seeing we've been withstand concessions to basis, other response, that be and a proactive to from financial them customers flexible COVID-XX. In they temporary on our impacts

is Despite enterprise a uptick we're still to near perspective, slight we've attrition temporary. in we also attractive logo that seen this, a our able XX% retention From historically rates. hope maintain

our and to impacts continue knows Based to our a performance. that more on the on some some right reasonable do for one now, COVID-XX-related need that financial it current impact negative at to least no we persist, and In of we While expect collections. it's how know long programs environment what would case, meaningful will business will the operating our anticipate be near-term expectation time. revenue

the $X.X risk To program we address CARES Paycheck entered loan a SBA's into the the Protection Act. near-term under April, operating million Program through in

As for a public current with that business. small believe our appropriate the in limited environment, access to capital action company this was we

of with appreciate of times. our to the government the the support federal PPP goals navigate utilizing unprecedented the all to payroll. capital as We we We're consistently through these the work maintain

On a positive do favor. we our some note, tailwinds in working have

accentuated social has accessibility. in shelter place digital further for need the First, and the distancing environment

that rapid seen has companies of Nadella, years charge. just strategies all few a remarked a two they've In in the impact forward like than in become we're sizes. CEO, months. Microsoft to over Satya recently ever transformation environment that accessible an seeing Anecdotally, We're solutions this, digital leading in for of and shift looking digital transformation need greater

through Second, we improvements and to improvements. process realize our automation margin continue efforts

past few now same new as channels. our with updates our our customers we level continue into with to like the channel, I'd for enterprise some Beginning have we the quick consistent or to bring on move direct at quarters. respective

the goods, customers many automotive state verticals, others. our consumer major construction, space, QX, the of from targeted and these of In agencies, new government makeup electronics, among including financial institutions comes

PDF was Our well in also the QX, revenue. booking as as remediation side well on business both tracking

predictable contracts, annualized to an the of ROI basis. we than expect significant less segments and our some to While work due the the of on nature generate

Moving indirect opportunity off, starting feel this to channel really From and remains our to customer take substantial. we partner is base our channel. for vertical current within the partner our expansion or a standpoint, growth

channel opportunities and only vertical our evaluate increasing XX. are we're user our and current During who their on remained base. the active penetration with quarter, to we when We're to base, find to widen partners focused with customer expect adoption count new driving this also at partner partners' committed strong continuing

we're which our within to lot to starting positive of expect Lastly, we new digital coming see a materialize over quarters. activity, marketplace,

over rest I'll for Sach? walk call quarter. completed, overview the now that the results financial us that Sach turn With he the through to CFO, so the can our of Barot,

Sach Barot

Thank you, Heath.

Starting right with QX jump Let into me results. our bookings.

define customer be spend reminder, years. commits a which to the a us, As contracted amount we with over could bookings multiple as

to the year. well execution quarter, increase $X.X was vertical existing $X.X increase by channel the was bookings enterprise due the period sales an as our partners. our in in XX% penetration pipeline, of totaled deeper in improved as same channels, which last million within million, through consistent For performance against performance driven partner primarily The bookings from within

mainly revenue PDF contribution about in channel, $X.X was same QX the million, our $X increase vertical growth deferred business, revenue in million continued partner was our a over year. during renewables the about from reflecting by same driven period. from XXX% from last in, coming and increase benefit The in Revenue period

which a were was first Gross about The or they according and increase XXX% increase due particularly increase to profit $X.X able about been the past from to last year. as have revenue of plan. of million increased the generate or well XX% improve million, efficiency and profit XX% quarters gross for mediation as margins, $X.X the quarter our have been gross revenue, was level few in improvements encouraging over as revenues. we automation, we in sequential to the expand and of realized margins The in

Going forward, on continue expectations, margins based long to in basis. on the expect an annual expansion and we current market over term our

during prior to we fluctuations with may in the in calls, As we're lead drive profitability. midst of shared in areas margins you and long-term trend to growth key of several This the investing quarter-over-quarter. improving

strongly the long-term However, that we and business investments will shareholders. provide for best these believe return our

these of investments our set initial with new other of include Examples rollouts vertical business with costs and channels PDF areas. among remediation associated partner

our automation our In on of investment of eventually additional both programs as come delivery to resources these lower will and cost substantial place. platform. a there to This in examples, time more is of customers put and marginal

functions, XX% million, was product increased of which in Moving investments development. last board, of driven and by $X.X In XX% in the was across million from $X.X in an QX in million to infrastructure operating $X.X talent from OpEx increase expenses. various Increase year. increase was QX and OpEx across an QX,

total offset a share well $X.XX an with Turning totaled improved revenues, efficiency $X.XX in towards net available loss the last This common of Net $X.X the share. $X.X bottom net million of increased a which year. due per line. loss or as quarter expenses. operating per loss million increase compares of stockholders by loss XXXX was as was to for or to an loss primarily The first in of increase

some to non-GAAP on Now additional metrics.

the XXXX, As of an last monthly earlier, end recurring or revenue, of of increase March approximately noted compared XX, million, at which to XX% was $X.X million year. approximately as was MRR, $X.X

recognized Moving in excess to revenue. and contracts of deferred revenue

is have remaining been upon booked bookings deferred not as As you to of that be that a we the periods. to mostly is yet that and measure metric represents contractually This revenue expect revenue. as this know, or remaining recognized amount recognize future in agreed amount billed

million to from In in the $X.X last QX, revenue of revenue and million same contracts period in recognized year. deferred increased excess XX% $XX.X

revenue. deferred with beginning items, sheet balance Some

As from have any are yet which first the was yet funds earned amounts provided In we in deferred XX% deferred up last quarter, for revenue million for a contracts not $X.X reminder, or received revenue. revenue invoiced non-cancelable million, services not was $X.X year. while

balance receivable million decrease of QX from and prior $X.X – to $XXX,XXX about at XXXX. was at QX to customer end the the due of accounts million Our sequential and the in during to was year signed compared at The end a about the of end enterprise year last end AR received primarily was a which customer large of QX. payment – was collected the $X

$X.X compared last the at $XXX,XXX million year. was about balance payable end to accounts of Our

$X compared We ended in million the million December quarter to cash about at XXXX. with XX, about $X.X

year. to remains date, to this through we not quarter $X drawn of have available the which line During our August existing million credit, of us and

to past of the long-term XXXX. incurring growth that, options, is in impact context of capital a of still the economic uncertainty, cost As I our achieve lowest in are flow calls, positivity of variety support we within in we expect cash goal without needs. of financing mentioned to the continuing evaluate major few the with This our

This completes our remarks. prepared

provide turn over We to now questions. the call appropriate instructions. Operator, please will the

Operator

from [Operator B. question Instructions]. our Cummins is And first your with FBR. proceed Zach Please from question. Riley

Zach Cummins

for and the on Heath. afternoon, year. taking Hi. Carr Thanks start Good questions. Sach. congrats aboard, And welcome a And Yeah. strong to my

really most sense specifically First of those some across partners? there? you of verticals can you the a partner within of where seeing talk you're give question And us average rate vertical the here, what's penetration the about can channel, all that adoption

Heath Thompson

historically Zach, Heath. there strong penetration for those performance there. seeing a of color bit this been provide we high area in the is I'll very That's strong And in little us. dealership a We're, obviously, markets. uptake vertical. automotive see

regard up actively And really a to to before working to working before, the we channel. our we're that do expanding As higher. many partners that I now vertical we're penetration of make entire our that drive with base mentioned across the in consciously start focus, partnership

Zach Cummins

And out we what's And Sach, items meaningful there really in of here? this be helpful. forward? once are to in the building in again any for Understood. then, that the margin going the one-time terms That's improvement leverage should gross quarter, call expectation

Sach Barot

there that do said, I Look, we the is the there margin and basis, margins one-time no mix. will one-time quarter. there's go. may really fluctuation just and want item as expectation here, But perspective, continue fluctuate right, item annual no we to But term, to and some to want to may to Zach. strive remind on on we in see is long material from expansion. always automation, but an the an And based I improve, this expectation be continue more as the But

Zach Cummins

sort you we've metric? impact sort cycles of from Just up at terms in a the of cash number. be XX% COVID-XX any that Understood. any contract And helpful. from just of end year-over-year. sales there of bookings, that reconciling quarter? help Can lower would then, lot that than the It's any bookings into the Was give seen typically insight us to

Carr Bettis

Hey, Carr. This Zach. is

to continue plays had see contributing revenue large We also who also But commitments. of channel. in from traditional of continue enterprise made long-term way. clients partners COVID-XX, over the bookings revenue out. contracts, past, the in comes we've longer-term and who've The revenue enterprise the to How how excess the they're by deferred vertical – to we'll of in for excess affected deferred to We continue in that long-term significant right? bookings deliver from revenue contracts bookings expect to are sort

us advantage of relationships cycles. and we to and maximizing to agreements some as concentrating have. we're that those billing taking of our more of quality the more may will said, for with the on out Heath into But be and we and have and them the it partners contracts. relationships opportunities efforts own expect their we affiliates contract enter more the building still have have we But We common are aligned fully

the that forward. that doing think us way best margin I gives it in moving

going NRR we're relationships the obviously of situation, Contracts focus be to booking, go booking to in going to will here. the is So, we if on monthly to continue metric excess slow.

We're anything we're in this. customers. bad fundamentally about about what there's So, way which acquiring and we're the excited not doing

Zach Cummins

areas Got know your And helpful, I outsized out particular than kind it. thinking beginning seeing churn, that still least retention risk seeing of to around impact customers, maintaining mitigating that we from in of areas that within of you're see Carr. of you're but others XX% QX churn about That rate, of commentary, then, as forward? was specific right some in of you're area. Can talk that here, pointing how more churn, plus you're you churn starting terms you're verticals the Heath's that that and any in some move at

Heath Thompson

Heath bit again. little more is This I'll comment a on that.

losses pretty entering looked this with we've and We're renewals think some customers us. at into in contracts seeing I not per long-term here. We're seeing carefully. delays just se customer

believe related. have we've of And key Frankly, been some furloughed. our so, we predominantly that seen where situations that's contacts with customers COVID-XX actually

we And But those so, been said, those very some into that's situations. organization, work those in back and that as we're monitoring closely the accounts created delays proactively connections reestablish we with having

and downturn. is relationship on that customers now client we helping through the our preserving relationship, right during focus pandemic can really Our client wherever times the the

Zach Cummins

you're help your I you're lot it time. customers this to during a And then, know tough within doing a trial good marketplace still offering. free SMB of pretty know like getting out And XX-day but relatively them some early, sounds Understood. I traction for

far we thus and can seen move about feedback your of as channel for really talk expectations you what that forward? customers So, the are you've from sort

Heath Thompson

some still promotion, really the Heath. we've from seeing is early marketplace, COVID-XX but actually you pointed seen as results. uptake It's The bit good a very good This out, we're that. on Yeah.

become nicely along business here I the traction our business. really over in will and direct beginning marketplace QX. continue But starting our part think, also to at time, with coming the indirect important our see the business, an channel to here blending we of nicely are with of

Zach Cummins

here Understood. Thoughts in in took And here of final here collections balance given some Material geared the reversal a of the Sach. the burn cash then, is on sheet. at in Paycheck that me What just potentially us you quarters? question cash that around on client rate expectations proceed rate Program April? Understood on end of improvement the some in funding cash was are give you the coming those from QX. the towards for April. the Can an where maybe we Protection as burn update for forward

Sach Barot

you cash of at we give end we share April, I what can Yeah, didn't the had this. but

You rate you here. little our is bit know management had in see capital that has connection we've that, well. about a working the QX, the as burn as of reflection well. And timing will And grown AP a

forward, improve normal But look, we'll to going be cash we'll in we burn. continue under positive. given comfortable, our XXXX, feel that very circumstances, continue cash to And

Zach Cummins

thanks Well, it. for start congrats questions. again to the And on year. strong taking Got the my

Carr Bettis

Thanks a lot, Zach.

Heath Thompson

Zach. you, Thank

Operator

this At concludes management Instructions]. remarks. over time, for to like this back the [Operator I'd to our call question-and-answer turn session. now closing

Carr Bettis

stay We you, time. Thank Thank for appreciate you, joining Zach, you. today. everybody, for Everyone, your you. Thank questions. healthy. Thank your

Sach Barot

everybody. Thanks,

Heath Thompson

you. Thank

Operator

in call, Investors via a we conclude replay the of will before for available company's I remind section today's available website. everyone that a the would be recording today's link like to call And

earnings XXXX Thank you for first call. for conference joining AudioEye's us today quarter

disconnect. now may You

AudioEye (AEYE) 14 May 202020 Q1 Earnings call transcript