AEYE - Earnings call transcript Q3 2020

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Operator

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

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

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

call from Chairman, call These and the events, statements. participants other forward-looking that Harbor be I statements of Private release to during discussed made call other that Before of the management’s statements. Executive by uncertainties. any which are any Further, materially projections factors Risk filings annual and considered the remarks not are report Factors to cautioned and Thank and that section course are in Actual similar on the expectations date a company's AudioEye undertake like financial hereof. earnings made on in posted Carr would include facts statements. reconciliation comparable AudioEye XX-Q XXXX future the available reflects with statements comments non-GAAP duty will relations estimate, these those the Executive Safe section beliefs or the release company's over Web I’d on most call press of subject differ historical Reform on Litigation company call correct a or turn does these company's today's non-GAAP this you, are management's of statements now The reports site AudioEye's Form predictions, anticipate, of undue today Dr. of and turn GAAP reliance certain the to in forward-looking during the to begin. statements. of the for XX- only The on statements, financial our as Chairman, forward-looking in update are not forward-looking statements conference measures this is sir. over to Act the Bettis. measures, Securities this K, current directly are Commission. will based financial AudioEye's management its the Form could www.audioeye.com. results to expect, to risks not quarterly report the assumptions Please investor and to at to remind Securities and measures forward-looking and confidence, words on Exchange expectation place conference provides identify believe, like such of all and Participants

Carr Bettis

AudioEye After issued operator. release and now press available you, quarter today. a based Thank I'll closed, an market section SaaS copy a business. A Web of for do our content our for results digital also Investors is us everyone is begin, of XX, press site we in Welcome, of our audioeye.com. as we with release overview ended platform the joining provider the announcing leading accessibility of third always thank you at XXXX. September solutions. and the

AudioEye, Our range them. many accessibility. we around the accessibility issues. monitor in also to issues to We of mission, all maintain We At ourselves eradicate more that and continuously impact identify pride largest globe. addressing barriers just people fix, than do digital strive the

quickly latest automated, compliance Act both capabilities with more our and accessibility Because the certify ADA we with of or Accessibility with remediation demonstrate websites laws. and gain also provide American customers the the standards, Guidelines. highly regulations compliance can We to Disabilities Content many Web are

and our make trusted we investment in more private their more certification monitoring product matter their gain remediation best offerings, platform and continuous also remediation, from them by that ROI the result individuals automated digital Furthermore, subject For content gives keep believe are and provide offer a experts. to manual we disabilities. accessible. our to an clients content for our sector processes the what them with managed an and websites testing conformity opportunity their clients, and standards. we enterprise committed provide we is through and accessible that large to these The with coupled of with We is a of with population

at With the the had quarter. QX highlights of over for in to completed, XX% execution record the We million I'll from quarter QX move was marks just overview on revenue. good are $X.X of far the straight and seeing the year-over-year quarter. XXth fourth around what we ended the which business XXXX. quarter, We our so over quarter another growth

and revenue MRR increasing about in $X.X at million profit of which increase of about about of enterprise increase third second approximately of or million, XX% revenue, partner The XXXX. gross on the to from recurring over increase were by end the The at of driven efficiency XX% in profit last year. continue for largely quarter adoption be quarter third continuous and of monthly in a our XXXX and as was end or channels. the the remediation automation a vertical results the our MRR the quarter of Gross was $X.X of grow. XX% was margin quarter growth or $X.X million gross focus and Our an XXX% revenue result third revenues

somewhat it scalable on very our excited remain to annual quarters, As gross may we AudioEye's mentioned business. while an expect SaaS improve between We overall, basis. in continue margins the about to past, do fluctuate increasingly

customers, year-over-year driven partner results XXX% our than by early in more New year since channel customer over strong tripled and some and largely we growth still our representing XX,XXX accounts in platform very customer partners. end. QX traction ended and We our QX, marketplace approximately vertical in acquisition was with

$X.XX in non-GAAP this EPS a basis, you As press quarter. on our saw was loss the release,

some that based is that We have being business previously talked positioned flow the results And XXXX. we towards goal. positive apparent at about cash on our now that point have in

a to driven by ongoing in economic committed challenging subject growing in In conditions. guidance, pandemic. XXXX, cash terms continue we of environment global on businesses, we've becoming flow Like economic and other the remained to operate MRR positive

Although, COVID-XX and to marketplace. all demand with some we in enterprise to our and channels solutions customers across strong, is continue call, as partners the for impact of vertical QX on our digital due accessibility discussed see our conference prospects

business seen more a delayed. extend we some that from pricing the also basis, to and new other them case-by-case flexible on through been continued have own the to to On customers pandemic. their front, We've deals manage on some have options businesses help the impact our

renewals near far, bankruptcy our see to are proceedings So though, to Overall, on substantially that still events business such XX% outright pleased rate. of are some we as seen control, disclosures. have due out we impact the retention levels or

or have score our installed net enterprise technology a an top NPS companies. promoter for the SaaS within base client also and in We quartile

best-in-class especially during we persist, how We impacts is but the to event, the strive heavily and Our current are priority it related long-term to period going believe expect has don't throughout to focus any to AudioEye's economic thing forward. reasonable product COVID-XX long This continue to and service financial potential customer in to know the and do right been this David to the operating environment, and partner but that conditions. on continue But In key for to deliver is short, going to success. economic factors channel. grow to uncertain of the us continue a growth MRR areas and in make I'm customer enterprise now we continued our sales to brief our direct believe provide Beginning with base. to will update our different to enable going investments improve channels. or discuss the COVID later, we in quarters situation be clear, do will we COVID if will in in even Furthermore, expect the business improves. when as the ahead. performance

even customers continue contracts. higher the to In and bring channel. added to focus overall renewing growth partners shifting continue new has prominent on the business been on in we mix as we quarter, We third brands our vertical that towards

in Our PDF contribute QX. also the not a remediation continues same not revenue accessibility core provide QX to pace to good enterprise web This complement growth our business surprisingly, at business to in offerings. but as

as PDF metric. in based the included and our not project Just is reminder a a is remediation service MRR businesses to

second momentum in customers partner a We to marketplace pleased more in businesses more partner organizations. seeing with even make next for to launched our more strategy the channel. AudioEye and usability identify do of our making the are in for Moving as over to and released current marketplace it them. growth growth the we our and experience very vertical clearly enables very easily accessible Customer quarter, part In this quickly the their AudioEye continued pricing much We better strong few the or most to that vertical needs, QX simplified expect appropriate that's channel. defined indirect channel. we're plan we quarters

mid-August. business Moradi Strategy I our business joined willingness well of context the for operations investors, Officer focus, to acumen of the Interim you personally CEO as and his great in remain mind call, leadership, point for to it last thankful recall and Chief daily instincts strategic bring AudioEye. us David David's While primary am from as his and as

shareholder member David Directors. a our reminder, As a of our Board and is of largest

operations. is business As our the CEO, charge in of he fully

of insights Board business and going the now he's to to AudioEye of and worth in grow confidence reflected role He's the last Committee significant year, the significantly plan. shareholders. repeating. he achieves his for Directors. and joined company's receives Strategy had Before MRR if since David are the He fourth and the business annual significant Board CEO to a quarter call things compensation turn incentivized his a structure strategy over and David the compensation stock only value His salary the helped while turn the create growth. I'm in operations call commitment in more I have Chairman His efficiencies. to I guidance equity $X. as and the company at has of of scale David. gain David, the price of the an has over and influence related couple the on served

initiatives. personal He to you with of have organizational strategic David? updates some briefly We’re happy and really discuss some our him and can here. provide

David Moradi

believing Thank you, to captured my that our and have mission, this determination with execution great opportunity, mission, achieve special today. team single a digital bold Carr. we is you and It on and employees. took which to a of all role accessibility. uncompromising that barriers requires our leaders to minded This a is one speak eradicate I is by pleasure

leadership. During CEO, added as my experience our have tenure to depth we and

now initiatives to our strategic have has call, for is we out our gone go was the The our changes put accelerate and to our earnings innovation pace has center technology to on and in As building even transition. technology accelerated technologies in scalable during this the continued base Portland. November, last to in place order This implement discussed build of transition market. well organizational very last efforts

of is President Vice world's Sales giving Head to where Accessibility platform the an over BigCommerce, at We're of platform Marketing URLs checked AudioEye's set SEO added overall recently we leading with is by he hired partnerships XX% two accessibility revenue support talent sales acquisition Tuesday, was where have firm. SEO and integrate Tile's revenue we Rodrigues, platform. Most ideas, This and score a Enterprise joined Bryan ShipStation, of Bryan numbers. and Russell Bryan in by traded average growth Ubersuggest executive tier increased key the Vice on with Over team top week, marketers our months, a Sales not given a marketing customer and President digital companies Vice year-over-year keywords announced platform investing drive the its XX% past business leading unique give to organization, the into to with President their was US Accessibility spotlight industry fully accessibility visitors disabilities. actively at websites, the power was with expansion Most to learn E-commerce Partnership and Russell leadership CRO. subscription a year-over-year. Anoto, content the of to growth will CMO. and helping top to per SEO core a provides of free the driving and and and company, Tile, recently, oversaw company's e-commerce was Neil significant e-commerce the and through Global recently, has XXX,XXX people publicly same currently time to Prior Griffin Livescribe's companies knowledge with make at tool in one of management services. Digital This priority Ubersuggest part team month only a Patel's playing platform he partnerships of strategy the accessible. partnership XXX% kind a role the Tile, marketing, strategic websites providing constant including agency record SEO. XXX,XXX million of cloud report. new accessible that, over and and Prior the daily of up insights to company's recommendations. is Russell of Swedish as Last Solution X% The of at

for structures AudioEye However, things option proper will heading in to win a SEO, improving trial. text and sign of all can for link, accessibility interested on and them site free audio, a transcripts up their the and both like consumers improve video both tags and to direct for images, click accessibility companies. a to consistent predictable which will have Anyone

through on customers, our focus now turn positioned margins strategy are over walk acquiring in additional some the we cash well financial In short, Sach? we Our I and to MRR, remains call growth. explosive results. flow and see growing to increasing will positive is to believe becoming working Sach XXXX.

Sach Barot

Thanks, David.

term and with and you everyone challenging historic to continues on have time. long mentioned, you during shareholder hope deliver Carr and I this value. As well and drive to is be growth it board to great partner safe

As for a Carr was ways customers to strong Both the to ongoing and this AudioEye. David the and described, our find quarter crisis. navigate continue through company

starting reflecting XX% a Now increase Revenue onto over with was in a the year. little last $XXX QX over results, million, QX revenue.

continues in penetration launched Our enterprise vertical partner our improved to from by to contributions channel and revenue performance be channel. also

As mentioned came margins, at quarter. XX% in this to better our earlier, we gross for continue which

we our continue overtime. this expect may fluctuate, to While grow margins

talent further that quarters, are an million, in drive functions, year. to of versus the is had across also costs to Moving investments and infrastructure in as severance about In development sales marketing growth. expenses. and XX% OpEx QX operating of various and this mostly which last to the last drivers was year few workings product related about have QX, increase restructuring. increased $X.X same was OpEx The QX $XXX,XXX increase

EPS and the share loss bottom Turning a per of a liability $X.X year. loss improvement per third net includes was profit or scale credit of for net a of This $X.X line available This related about also in $XXX,XXX of increase the From towards includes our line. This service reversal million as of charges. XXXX common exercised loss equity reflects a also were non-GAAP in warrants in and gross Net $X.XX loss August. comp related service with was reflects warrant compares loss cost. our costs, for and with interest The EPS last million stockholders non-GAAP expense earnings net loss share. certain accounting, $X.XX issuance a debt in and loss loss expense of adjustment totaled of the we QX $X.XX. the quarter associated reflects compensation, to net mainly as for and warrant which costs severance or perspective, the

quarter. the about was end with recurring starting compared We Monthly some of $X.X as cash on in it $X.X and with the to increase million an revenue, additional second September MRR, or to $XX.X at Now metrics million XXth. million, which of quarter of the about XX% was ended year-over-year. about

balance closing, shareholders offering warrants in customers, of contribution secondary we the our like conducted all I of execute Operator, their we'll equality the continued support questions. health. And call as everyone instructions. their our family open digital against to safety wish and vision we please that for access. and and cash thank reflects to exercise August. and for Capital from employees, Sero from In I the Our With sound and partners about our give would the bring $XXX,XXX

Operator

[Operator Thank instructions]. you

B. today sir. Riley Our FBR. Zach Please coming first question Cummins ahead, is from of go

Zach Cummins

that's It on the with smooth and is would you've be Portland. just just your sounds guess resources additional transitioning relatively question perspective going seen I that helpful. be to first really development around been like to progress

David Moradi

very gone product The leadership technology and of the updating of has transition very, technology Portland are we well. stack. Yes,

Zach Cummins

should little thinking of And we script how some out Carr, recent give in you can go like as of sense know I of elevated is months. there we But attrition these mentioned a from of here your forward a here? little I bit some then of a level attrition you your be control. of in that's mean, us sounds about maybe It

Carr Bettis

the So still if some space driven economic the bankruptcies retail that, have would closures. seen about around and primary business say conditions you turn. think by XX, the I think levels I again, And overall we impacted -- and to the renewals We with strengthening to is automotive well. even expected we space strong to strengthen do some of be as economies expect strengthen as and even some continue extent really like well. economic to

Zach Cummins

and in giving us those it then delays there the really of terms to on kind you what fronts of kind seen flexible month cycle be necessary. cycle. like customers either half we on give improvement those But And update forward? what some of sales few first of and moving can renewal there you was in has pricing have of and And mean, some a in here I expecting any both of QX, when metrics? been an should sounds

Carr Bettis

quarter, quarters. our about So Zach, are the good looking fourth we beyond growth third expecting QX good again, expect we in But the the us well numbers, pretty see and know regard. we about We're you pretty liked that specifically talking momentum the coming -- to over not about do the growth very feel we over in that quarters. the coming we're quarter

Zach Cummins

opportunity But question me, momentum to your the forward of help towards going are major think growth moving Can be hires areas hear outline of final that seen to how that really And be this are drive a into curious indirect gear David. the play about recent you channel you thinking then I’ll of lot in areas just and quarters. strategy? you're that some executive new moving to going some partner forward? you the it biggest We've just for

David Moradi

digital This biggest mission digital for eradicate think potential fits the to to has business our and be our the marketplace all to barriers I accessibility. is huge. segment going

can and available we scale. is the at deliver platform and best Our technology

excited So that's what I'm most about.

Zach Cummins

Absolutely. questions. for thank taking strong Well, Congrats you on a my quarter.

Operator

session. you. remarks. Bettis his closing our back now I'd concludes Dr. This floor like for turn the over Thank question-and-answer to

Carr Bettis

you looking very for forward to everyone want I investors evening. to continued especially our are and Thanks updating much, we support. do everyone. the a our Thank for our thank us good partners you call. Have joining our employees, today. on next And

Operator

you. Thank

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

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AudioEye (AEYE) 12 Nov 202020 Q3 Earnings call transcript