Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to AudioEye's First Quarter 2023 Earnings Conference Call.

Joining us for today's call are AudioEye's CEO, Mr. David Moradi; and CFO, Ms. Kelly Georgevich.

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

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

and words harbor statements. expect, other and not expectations Before to course provides such identify Executive the Private I are XXXX call of about The all uncertainties. that a this company safe are Chief are for AudioEye that be by of assumptions events or are remind statements Officer, estimate, forward-looking forward-looking to statements and to conference turn based made Reform statements. will over on projections risks historical like management Litigation AudioEye's considered The Act call participants These and statements statements predictions, the forward-looking believe, current facts to confident statements. subject expectation are would anticipate, during Securities that the other similar future of

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

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

measures www.audioeye.com. company's of Investor posted measures the section to our the include is financial financial of A GAAP non-GAAP measures. Relations website financial certain directly Further, today non-GAAP the in most at earnings in available will management's remarks release reconciliation these comparable

please call over Now, I'd Executive Sir, Officer, AudioEye's to Mr. to Moradi. David turn proceed. Chief like the

David Moradi

to operator. our continued we'd on everyone joining financial efficiencies. focus To you and performance strong for thank Thank like us. highlight you, Welcome and begin,

revenue quarter. first Gross from in performance increased XXX% and XX% with or $X.X additional which expenses versus approximately $X.X into near first were were in increased revenue increased the $XX.X year-over-year $XXX,XXX, in million we first We achieve We announce breakeven a of our representing of profit ARR, the quarter compared of to XXXX. loss revenue able quarter.Gross operating million XXXX. recurring the despite pleased to December $X.XX Net sequential record are $XX.X growth profit. million $X XX% annual decreased versus near investment XX, Revenue margins a ended was of We key million to year-over-year, on in versus by quarter. the flow-through XX% million indicator, gross up achieved R&D while X%. to decreased a the year-over-year non-GAAP breakeven year-over-year non-GAAP loss quarter million

versus of improved provided year-over-year net used activities net operating in quarter in by of by cash cash the operating operating the $XXX,XXX by $XXX,XXX Net was In $X.X fourth the quarter activities million. used quarter to activities cash XXXX.

like today's our positive highlight call. there financial several In to I'd addition items notable to on are results

accessibility. digital believe we in inaccessible people disabilities. the today to As we with before of innings of XX% said are we have websites early remain

past and variety several increased with a the of to factors revenue effective websites. brand Over additional increased has growing to demand due been reputation, accessibility solutions. companies has generate accessible litigation for ability Demand years including there for a the

in that has other believe industry company today. and AudioEye is the products We AudioEye of than a R&D. pioneer invented in used in into has any invested more industry many the the digital accessibility

issues understand automation source their to the product the with have JavaScript. fix us the we meet at in problem, the of comprehensive or to accessibility advanced the are companies result wherever want fix their most best a they a to journey site they As whether audit, scope and customized want

or layer offering positives letters protection demand This receive and additional a legal clients scanners. online refuting technical even from our and comprehensive false exposure. their website when work, lawsuits of analysis, claims accessibility our them by helps behind stand risk frivolous eliminate or We reduce

we precedent false Babylon had as defended in didn't ADA a XXXX, vendor Marine, Before website was which we customer including accessibility. for a In that Babylon there, ones case say: AudioEye, options confusing know accessibility successfully this March are there really right to make out promises.

AudioEye as confident only no accessibility there were that not but partner there came provided AudioEye, issues up. were could the be any that documentation our We and digital solve false. barriers The accessibility our team, issues if proved claims were determined,

their was digital and lawsuits an In accessibility property they on spend or how pay fix AudioEye the party the stand partner invaluable in later. the in letters settlement how and to solution stepped effective throughout resolving customer most website will were lawsuit money the demand and appreciate, receiving the process." fees, a legal behind AudioEye We claim. entire

of right because use and but competitors solutions address to effectively. to thing legal brand automated-only the actions, Most vulnerable point-in-time accessibility, Neither audits want risk digital or experiences. customer future do approaches. Many remain ineffective and subpar companies work

of and customers making businesses the including disabilities. become Internet stay compliant. and eliminating a industry with to coupled place experts We were laws solution is a effective, better and utilizes while with risk clear people artificial for and to our for help AudioEye technology, intelligence combination evidence pleased automation unique our provide accessibility compliance

like Community. is with I'd accessibility initiatives, AI to our on item next centered the The of members highlight Disability

developing disabilities models the We to developed, at efforts people with scale. AI our direct to digital products accessibility from are input eradicate and errors with ensure in work models

initiatives. will We on the soon further have of announcements impact specific these

for with and million of XXXX, second for approximately quarter the guiding million midpoint. guidance, growth $X.X of representing to year-over-year X% at growth $X.X the revenue sequential on revenue between Moving are of we

call, ARR earnings results impacted see Even our sequential are been revenue we previous pleased first the certain the renegotiations, and in discussed have these with As half in growth. renegotiations. by to

the R&D year. non-GAAP with we in to the operating to revenue accelerate in non-GAAP meaningfully operating ARR half, investment increased second generating breakeven expect We of continue the second quarter in With that, profit expect for profit half a full continue and will second growth operating loss year. the the

XXst $X.X current sufficient this the of cash generate expect fund as fourth quarter cash still XXXX. to by with of to positive to is March the we of million continue be flow cash operations, hand on year. and believe well We We capitalized

now the call CFO, I'll Kelly? turn over to AudioEye's Kelly Georgevich.

Kelly Georgevich

you, Thank David.

XX% mentioned, at with performance. our first QX revenue As are million the just growth record marks we which XXXX year-over-year. pleased quarter XXth quarter ending QX of straight $X.X was XXXX

at at from XXXX. the the was XXXX of quarter $XX.X Recurring end end $X.X a or Annual Revenue ARR increase ARR the first the of of million quarter of million first

to well. are continuing Our channels perform two revenue

updates, for in revenue and marketplace deploy channel Partner from SMB Marketplace all includes of from same products our discussed the variety previous SMB-focused these customers. their to As a partners revenue products and

quarter ARR. this the channel year-over-year grew XX% revenue first of In XX% revenue of XX% and represented XXXX approximately and of

to growth ARR. well channel and continued XX% to enterprise growing for our significantly this in the and XX% larger revenue, traction partners. further expect to see year-over-year we to The contribute as We revenue XX% of of in and build approximately perform quarter channel continue expand with contributing

price-conscious channels approximately from count XXXX sales our best customers Total we to most XX, We the of with seeing XX,XXX in contributed increases. cycles the increased the towards retention of and Both March customers count and at customer see approximately to driver overall quarter longer platforms at customer customer logo XX,XXX customers December rates. XX,XXX more some XXXX, customers, in material as growth expansion but continue of XX, revenue notably are count QX XXXX.

million about $X.X of XX% and Gross million in $X.X revenue revenue compared profit to last or for the XX% first QX of quarter was of year.

to given research continue We gross the and and increase costs. platform are pleased in see our significant customer investment margins to success development including

to margin We throughout remainder gross around XX% the XXXX. the of expect to range continue XX%

efficiencies increased and period approximately the areas by slightly in This $XXX,XXX the operating expense result of investment was over R&D. to revenues of $X.X XX% comparable sales and marketing While in offset year decrease X% G&A continued or million. prior decreased continued

approximately development is and of of this protected and investing to risk. about quarter from reflected last are as in continues statement. Our the total commitment $X.X product in in XX% XX% in flow versus best investing revenue This with reflect to QX the total our our and companies approximately ensure costs XXXX R&D $XXX,XXX market spend software spend the R&D million cash the section technology to a product year was towards deliver

comparable all million, same Net as of as $X XXXX departments. loss million, in the or period share, for prior loss spending $X.X the per increase strategic from thanks in of well compared period. profit or year, and XX%, year-ago or was efficient the to $X.X $X.XX operating in decreased first the quarter gross per million share to Total $X.XX

The non-cash compared share, period. million, $XX,XXX share per adjustments in On loss adjustment less to was a costs of near loss loss year-ago than and a were net net EPS breakeven non-GAAP litigation, were and a or basis, amortization. share-based primary or compensation, Acquisition XXXX. $X.XX per earnings QX in depreciation to for our non-GAAP also at the a a QX GAAP $X.XX loss $X QX net same XXXX

in usage share-based included $XXX,XXX approximately $X.X cash million and Cash non-GAAP for The $XXX,XXX. Bureau expenses tax the payments $XXX,XXX quarter a the of payment related to from related remaining $X Accessibility. burn litigation which to employee the was acquisition was the of Internet million, of approximately earn-out grants quarter primarily of of

give instructions. questions. open we for that, With up the please call Operator,

Operator

from Our B. [Operator FBR. you. first Thank comes Riley Please Cummins go from Zach Instructions] ahead. question

Zach Cummins

Thanks David Hi. solid customers good congrats a Kelly. with results. and quarter. David in I for nice Partner on taking mean, jump just afternoon, question in this new starting QX the added channel. and my the

about new think that few and talk in partners just as progression kick start to agreements your here quarters progress with should the how in? you can So next we about especially

Operator

on mute? Hello. your Is line

Kelly Georgevich

mute, we and in that excited partnerships are and to about but increase. David's overall. But all can I'm are count see across Overall, jump yes, Yes, we customer pleased developments increase the on guessing, line's channels I here. see

partners the biggest those the increases making partnership customer great quarters. increases, to expect that are platforms. of continue increases, and in partnership future yes, with we are But from As traction noted, driver overall count

David Moradi

me Can you hear now?

Zach Cummins

Understood. you Yes, David. yes, hear I can

David Moradi

XX was Does or talking Great. there. question you that? do seconds Okay. Yes, more that your need I Zach around answer for color about

Zach Cummins

No, no.

out helpful. to there the David, this at that's that I pace mean justifies Can you R&D the guess R&D? just on obviously, opportunities invest aggressively I little it see guess And bit, pretty line. into talk invest think continuing you to really continuing that of upon some I building I about a

David Moradi

think payback items going new in We're the into term. Yes, great are we're you're have AI near going investing adding in that investing see be to near the and we're going to to capabilities. our term, a in that we products

is So the going. that's money where

Zach Cummins

sort really was renewals provide of update mentioned last of you question know it. it. just there situations? that the Got Any final outstanding ongoing on were those call, in of I couple side can of either you And conversation. on enterprise a

David Moradi

Yes.

With side? the are you about the -- talking enterprise

Zach Cummins

Yes.

David Moradi

Yes, there, these those end are both by turnover still companies, still been in more of we're We're deals so in economy. both hunt. deals one the It's of the these but negotiations. function there's be of is to still hopeful, a able we'll the of year. a demand get done of The those or at large tougher

Zach Cummins

Got the it. of rest And taking thanks questions. the of Well, my for helpful. best quarter. That's luck with

David Moradi

Thank you.

Operator

from The comes next go Wainwright. Scott Buck Please from ahead. H.C. question

Scott Buck

there's at Hi. room curious on you there marketing those improvement forward? for you sales think do efforts some Good point afternoon and guys or this David, I'm guys. efficiencies, the going exhausted have still

David Moradi

Yes.

Yes. you'll pretty efficiencies see exhausted on think don't we're and in marketing. there. the think, I more efficiencies sales I

Scott Buck

that's cash Okay, able that here drive marketing a least of back to at near And in that me. bumping then to Should going cash into roughly step you're and one sales plow along forward breakeven. to revenue? take incremental If the you're the assume fair. back, moving at you're kind term, any second for we generate we right

Kelly Georgevich

Yes.

end very the non-GAAP We half the have David Kind but have it second QX overall. cash cost first prudently million. to we $X.X is, managing of plays and mentioned and we non-GAAP expect half expect to what as did into We are profitability. loss, at net

as expect, does call is kind with by of QX. on mentioned we But we that. it in -- the line So to generating be cash do work

of are factors those we kind so And the think about the keeping rest in mind as all of we year.

Scott Buck

one last great. then me. Okay, I Kelly. appreciate that, And for

keeping the should that First But defense. if front be there's on. on else eye on regulatory curious, congrats successful we the an anything

David Moradi

so we're They Yes, the right the and pretty side. DOJ works carefully. now there have on action state something Sure. government, that the on in local is watching

Scott Buck

I you. appreciate that additional time guys. Thank

David Moradi

Thank you.

Operator

from comes George question next go Craig-Hallum. ahead. from Sutton Our Please

George Sutton

point. than Thank many of that that expect through Could you. mentioned David at you meaningfully occurring? different the you revenues second accelerate companies you you in anticipating that just to this logic be are half. would the how see Obviously walk

David Moradi

have the and business look strong A platform When reseller a the growing renegotiations, great our extremely I question. at business outside of clip. good at been

uptick is with in business and close the second team his doing. that's that So in see Michael where they're uptick by half the an the we and higher really as and rate enterprise driven well with what

George Sutton

that kind litigation. kinds specifically mentioned some additional us of just an beyond as are Can accessibility you as possible which dynamic always been talk has from you of hearing what you're So the having seeing terms as revenues businesses for to those in of numbers? interesting

David Moradi

to could to X% revenue from XX% It quantify. potentially. anywhere Yeah be it's hard more

to check it invite We have I'd a quantify. hard out website on you to the case for study but us is

George Sutton

could. I if Last

of how into these of And the side On you're it is give you I'm ROI some know just of of some increasing thinking picture a the I curious if investments. R&D from can us thus any you from automation of sort on deal can are with sort But targeting reducing the costs so investments? detail your give this. of people-based you to these us sort ROI

Kelly Georgevich

why We front notable there. investment what Yeah. that are on in we that We to opportunities us definitely do and and funding of return for the that's our spend R&D want investment there we is effort. think do capitalize on is see considering we're

to we to there and plan about. sets features pretty expanding are that product existing In addition additional to products out we're the put kind excited market of

of investing And a so factor that in for we're all R&D. what in is

George Sutton

Okay. Thank you.

Operator

I'd Moradi our his back the to closing now concludes this for turn call remarks. Mr. time, this to session. over At question-and-answer like

David Moradi

you for us Thank today. joining

for updating As I forward want partners continued to thank support. next their We to our our investors always, call. and on look employees, you

Operator

now The conference today. us for has concluded. Thank you joining

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

disconnect. now You may

AudioEye (AEYE) 10 May 232023 Q1 Earnings call transcript