AEYE - Earnings call 4 2023

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Operator

Good afternoon, and welcome to AudioEye's Fourth Quarter and Full Year 2023 Earnings Conference Call.

Joining us today on today's call are AudioEye's CEO, Mr. David Moradi and CFO, Ms. Kelly Georgevich. [Operator Instructions] I would now like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at www.audioeye.com.

the call like AudioEye's that historical to by management the the Executive statements facts turn conference AudioEye's would this be company remind during are I considered over are forward-looking Chief to Officer, made call to Before that of statements. not course all participants such Securities Litigation XXXX The statements. Act Private provides a forward-looking of Reform safe harbor for anticipate, statements except, believe, estimate, of identify words and similar confident, The other statements. expectation forward-looking will future uncertainties. predictions, events expectations are and projections on are statements about are statements current and These and subject other based to that assumptions risks and its Actual of as the and during on its quarterly not press the today's are materially call the Risk Securities forward-looking results made statements, and management's Form and release on XX-K, call filings of could which reliance report these reports the cautioned in Commission. Participants differ factors Exchange discussed annual on other on conference comments of reports with Factors because reflect and and date the only XX-Q section hereof. in company's the this to undue place Form beliefs will does certain undertake AudioEye not or today correct financial -- undertake non-GAAP any not forward-looking does remarks management's to duty measures. statements. Further, any any update include of the directly website earnings of section available in the at GAAP release in to financial the www.audioeye.com. or measures its non-GAAP reconciliation A most Relations Investor company's financial comparable these measures is otherwise posted

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

David Moradi

strongest our But will of to hard and get we accomplishments joining our want work XXXX since for operator. in thank here. why Today, the history. their I the on employees AudioEye Thank a discuss us I all of few you, to first, are in trajectory

and the shareholder, As efficiency I the of to in investor the the and XXXX Committee address of Board as operating Directors strategy. Chair initially Strategic of Board largest joined

the Adjusted Gross revenue the today. much is margins a was AudioEye The improve. per the mid-negative operating to low needed in mid-XXs. growing EBITDA were in While base, margins XXs company revenue efficiency $XXX,XXX position in off were was range. stronger and a small in employee

revenue operating improved have high XX% points top quarter. SaaS EBITDA improved have efficiency. margins by We in Gross is improved dramatically XX approximately Revenue have to adjusted the and the approaching of to now tripled are margins employee XXs per in efficiency $XXX,XXX. These fourth companies. tier the metrics and

We are on to ready entering XXXX this capitalize hard all work.

pay an increases allow flow. us growth year cash gross XX% margins operating Our achieved of future the customers, we industry. The invested to building new in most has customers. the that to Enterprise ARR with report I'm migrating development best growth team to we over into Enterprise $XXX,XXX ended approximately inflection point. $XXX,XXX $X.X anyone over, platform bet moderate adjusted only accomplished product and record accessibility one expenditures. the sequentially XXX,XXX paying a time. seeing pleased with with off will lot all approximately operating After quarter of and fourth a solid ARR free leverage digital in we our of are growth of while for revenue of We customers was the drive this date. of delivered The quarters products generating million, further and this We EBITDA of

Our strong. balance is sheet

of Board November, million a Board with not The dilution. As the or other loan include Partners shareholders. last did received The one term from million. $X management remain any a Kelly loan buyback SG discuss, of announced $X November In stock term will highly year. we and in aligned equity

price average we shares As repurchased of of March XXX,XXX X, have an at $X.XX.

over approximately of benefit shareholders. XXX,XXX X% of $X.XX. the we price previous outstanding announced years Combining programs, in long-term last stock shares XXXX, at X buyback repurchased a the June for shares valuation both our revenue below Xx average we In an of have bought addition, of at the under

purchased on of shares Board Lastly, members the and years. have the approximately the open management XXX,XXX last market X.X over

our R&D, the industry. of in the also most knowledge, have to substantially anyone We invested in

the Our wherever identify they the journey testing to and for AudioEye's consistency source allows automated a announced changes policy us customers empowering adherence. by employs environments are logic recently implement Recognizing Enterprise of in customer stringent AudioEye's level at enterprise proactively. address automated features. addressed site experts SSO, a we security new from in preproduction to audits to quickly of monitoring. With detection, accessibility developers allows same in security R&D meet requirements them the the the SDK accessibility in need providing few utilized and deeper the investment products customers. We issue large businesses their issues SDK accessibility smallest to test accessibility and during clients, and

expect current lawsuit from quality ADA. Further, following In We continue driver are improve test engine the with regulatory attorneys have that under the accessibility the digital rules to improvements of plaintiff of environment. has record of II the ADA. and to XXXX, Department and regulations legal the grown improving industry-leading future made further Title comprehensive significant we Justice a test demand of lawsuits proposed protection. under digital guidelines, private advanced of levels our accessibility the rules accessibility will come our compliance that ongoing more accurately incorporating Awareness suite,

bills and at updates Also, XXXX. regulations development level. and over being State the the We several course currently of are further considered expect

not Internet XXXX become and in apps of old EU fine. the will and the It issues fix have Lastly, all mobile way to the accessible requires of that businesses does XX% XX% not inaccessible. the scale to solve the Approximately on trying Accessibility at June problem. to European clear of source by Act or has face websites the remain the websites

problem the way approach scale. human-assisted combining Our this with AI at of technology is to solve only

new the pioneer the of working digital accessibility Mike is most recently in Officer. of is of vision a deep that is Paciello understanding AudioEye to way accessibility, Chief role, faced with a drive joined and Accessibility expertise founding meet of believes to accessibility digital pioneering One He the old problem. Mike challenges a as respected a world. leaders needed Paciello of by also this and disabilities XX the not in policies the The in Group, accessibility, advancements over solution accessibility years the co-chairing book committees industry brings legislation. co-founding critical including to web the first provider individuals offering on with and digital scale Mike and

practices. and and Bill As Web Committee shaping for by States a pivotal played Technology former Advisory Electronics recognized a the for Access and United role WXC's co-chair President his Clinton Accessibility in Mike contribution Federal accessibility of to Initiative, has the Telecommunications and Information standards

Moving on to guidance.

$X to With social we quarter, $X.X to guiding other $X.XX expenses, million. on factors EPS of beginning adjusted and share. to revenue year between million For expect and EBITDA for $X.XX are per adjusted $XXX,XXX $XXX,XXX we first between generate security the of

We are entering XXXX with strong business momentum.

improvement, revenue year. In growth throughout addition expect continued accelerate to margin we to the operating

guiding the are growth $XX fourth XXXX, million of quarter. million, $XX.X we For revenue with high teens to for between by rates approaching

expect to We $X.X turn million $X.XX adjusted $X.XX $X.X EBITDA AudioEye's the Kelly. call and and between and EPS over CFO, per between million adjusted share. I'll now

Kelly Georgevich

David. you, Thank

sequentially from million. grew in $X.XX XXXX record levels and again million, minor from On to discussed, revenue basis, increase XXXX $XX.X QX X% XXXX, year with at revenue QX full QX revenue XXXX. a David from our hit $XX.X X% a a increase in As million

several renegotiations. contract previous discussed have calls, on by was XXXX impacted we earnings As

to all from from products deploy partners products and SMB-focused The a and SMB customers. of for channel Turning revenue these includes variety Marketplace our to channels. same marketplace Partner their revenue

this of grew XX% year-over-year revenue and of in the quarter ARR. Marketplace and revenue represented channel's of from fourth and revenue approximately in full XX% $XX channel million XXXX. For XXXX, Partner $XX XX% XXXX of to On grew a XXXX, in basis our XX% million year

who with which Enterprise existing a continues channel larger channel by see to Last AudioEye's customer impacted partners sales personnel additional including enterprise off. of engage with for generally and those directly engaging customers large with to and year, customers AudioEye, consists the AudioEye's fuel We and rolling custom pricing continue non-platform organizations, Enterprise was solutions. our expansion of growth. websites,

revenue into XX, XXXX, of QX The of XX% going recurring to profit of expect customer Enterprise QX year-over-year the XXXX. On seeing Marketplace additions for the revenue or the Enterprise quarter $XXX,XXX at $X customers channel sequentially count XXX,XXX, and of increase this the increase XXXX. In quarter and in driven fourth of the was approximately XX, grew in we momentum with accelerate of XXXX David or Annual an revenue, year. $X.X as XX% the increase ARR of to QX December end and the a customers million approximately was Partner approximately XXXX. the and over we growth million, end in $XX.X ARR XXXX, of XXXX. contributed from compared are X% expect an ARR. was However, September revenue about growth, resume at and channel. Gross growth million count XX% XX,XXX we our to from customer of last fourth fourth increase approximately XX% ARR, XX, quarter of in on in was December XXX,XXX XXXX, by mentioned,

to web while additional hosting, and able support were the In that also revenue, drive with year down several and in go full of margins profit cost XXXX, including revenue product. the directly customer million earning these were value delivering other For $XX.X related factors to in costs to we into increasing customers. million are our gross XXXX. There gross XX% costs approximately to XXXX, adding our from XXXX $XX.X

we to believe margin future implement continue has As efficiencies, to gross in room we quarters. expand

XXXX expenses efficiencies investment X%, from in revenues The decreased by compensation to XXXX, R&D. increased last operating million year-over-year we initiatives gain impressive $X.X were from fourth to X%, to and marketing, million and driven QX implemented with $X.X in million lead able with same million basis, in a was needed While $XX.X major in is of up sales year decreased revenue the continuing offset produce the other XXXX. full expenses generation completed, quarter partially lower $XX.X in quarter from to $X.X year. efficiencies decrease million in nonrecurring R&D. In in On operating annual were R&D and XX% XXXX lower investments while more primarily which expenses stock

same quarter in total XX% R&D million $X.X total XXXX. development from XXXX The $XXX,XXX XXXX adjusted of in basis, our earnings share or primary in was $X.X a compared investment. In as profitability per period. EBITDA was or of year per loss $XXX,XXX $X.X achieved XXXX. The loss year of to a the section adjustments ago QX the we flow million record approximately a share quarter XXXX. fourth to software approximately for EBITDA technological a million of also a feel we of with other XXXX improvement This full XXXX $X.X costs. fourth compared net of adjusted statement. to our including EBITDA loss efficiencies, program our share share-based of the R&D a related Credit to share as down or approximately revenue up XXXX, or and revenue loss approximately compared $X.XX loss reflected for EBITDA investment $X.XX basis, and R&D per balance repurchase We is and valuation or for full noncash term million of share was XXXX development QX This of depreciation $X.X net spend million, were per costs. current we in million amortization, of share software share of a dramatic inclusive was of for year XXXX. spend liquidity compensation, to the XXXX. Net $X.X $XXX,XXX plan sheet. In approximately million for $X QX share of $X.XX result GAAP investing $X.X from and year of $X.XX and compared net and XXXX $XXX,XXX QX million to Partners XXXX, repurchased $X.XX in proceeds repurchase in add loan of On ago the the per noncash and in XX% around with XXXX to R&D We in $X.XX SG additional is or shares year $X.X period. quarter $X.XX full BOIA was reflected On the million the spend per implemented share $XX.X the full year a compared Our XXXX, is costs in in XX% full year million the to as same partnered produced QX a years XX% earnout negative EPS $X a or adjusted we revenue. of appropriate of to liabilities fourth few of QX use the loan. $X.XX for increases XXXX share or the to from of adjusted million ago million in loss per miscellaneous with $X.X and both the revenue adjustments with per to year to a cash and November of net full In

the we of of discussed, David free had $XXX,XXX software as $X.XX cash of adjusted significant fourth quarter, a million In the As milestone, flow. free generated costs. in EBITDA calculated quarter $XXX,XXX of cash development XXXX, less flow positive we

pleased continue this to and we to flow achieve to are able are free in We generate milestone positive XXXX. expect cash

the addition term of the XX, well cash please Operator, is December With of call XXXX. With balance for loan, million we questions. that, of our open give with the sheet as $X.X capitalized up instructions.

Operator

from Sutton come with Instructions] the Craig-Hallum. question [Operator first George And will

George Sutton

factors defining were and easier comps. do the in on as accelerating results. acceleration walk that. to just Obviously, just some throughout make to an ahead want But wanted year appreciating growth I you what sure I was understand Congratulations what's fully the growth. behind I the we driving to have the wanted through

David Moradi

When look the revenues Yes. you implies year as ramp guidance, at unfolds. going are the to it

these talking revenue is to higher growth ask way, rate ARR to because as back as Marketplace the even not EBITDA said and what get expecting about. I the pick about EU, high I'm So up half sequential we in this. margins. growth by call, all know the to at that. channel Enterprise teens strong I should to with compounded Also, and the high expect the we second the we're you're is the teens half, and on Partner than And channel contribute numbers the in compound

George Sutton

We say are changes. But focused I Europe. some that on your investment in would CRM you've made

new driving I us of added explanation you go-to-market you've can analytics, what's if plan? the give salespeople. bigger of added wondered You've a sort

David Moradi

Yes.

suite We large you all we the product made. or R&D now investment a big, whether can with that business you you're think meet I it's you're small full just we've wherever are, have a enterprise.

of We of lot major a and said, breadth this been optimization our have that's in a think And you advantage. like I offering, competitive go-to-market. there's

So leads our and most we're some enterprise on we're robust record side history. seeing seeing the pipeline there, in the

George Sutton

Great.

you number of a this seeing now? the you together, getting law mentioned that? is record driving believe, if you're DOJ. X What I can bring could obviously, of things ADA. is the away Lastly, a from way we there months you from number under lawsuits And We're defined that right do think any quantify more record lawsuits

David Moradi

today, Most inaccessible accessible. sites are X% on the are Internet only or X% of sites

off an in lawyers money why find easy that's of It's and you're I TAM So record and innings. time is here. the and wide the the open this, mean, companies seeing humongous, we're just lawsuits. suing making ADA early

going quantify can't to So this going how really be, is big. I be to but it's big

Operator

will question B. with come FBR. Zach next The from Cummins Riley

Zach Cummins

team? could motion. XXXX you're that a big up you know Enterprise I really the building for about throughout XXXX. from on starting off, more to a was little bit you build Congrats what focus and solid results that just just momentum seeing David, into talk it

on initial just of from payback So curious the here some getting you're in investment recent that maybe months.

David Moradi

of mean terms you terms ARR of do in or... What in payback,

Zach Cummins

in just up? Yes, team and of of seeing you're towards that terms fully that from kind fully they're now ramped built productivity of out that working kind

David Moradi

is building. Yes. Like pipeline the We've lot. optimized I a said,

to going see continue. use. in It's leads. That's demo it system the we not I record going stop. just have to We can

just it's so And really clicking.

So that. see I'm to happy

Zach Cummins

in that Got kind you that what's a mean, of expenses -- to step some kind ongoing way can it sense that in give of quarters the me of we it. of really appropriate in saw here think working wind QX, the is when you've And for now? comes major down to R&D Or been on a the R&D of past? multiple just expense projects I down

David Moradi

a initiatives to Yes. last we of to to Look, have X X We're over we lead. improvements side. number made R&D a our completed continuing years. the of But product the lot invest maintain in our to

able efficiencies. were some drive we So to

of expect should forward. levels going similar you R&D So

Zach Cummins

of is landscape. the acquisition one year. And your the it. of question Obviously, at end really just Got final competitive last of competitors on another

curious amongst AudioEye if So that landscape this consolidation? and how of evolving just up any stacks nature competitive

David Moradi

face lot ago, a there's PE a Since been of Yes. X got M&A X years activity. to

seen this to about is You've more, space capital seen that all in way the revenue. $XX a Xx They Competitor company, they're money about $XX for million think to into that's recently going raises. million subscale was lot was buyouts, you've putting grow a why and this. either out taken revenue,

the consolidating. is players likely So space here. clearly end the be only at of handful There'll a

a think good it's So setup. I

Operator

H.C. come with The Wainright. Buck next question will Scott from

Scott Buck

year-over-year that guess in acceleration I revenue could half further conditions curious teens following of XXXX, First, this carry potentially acceleration they curious, because that the in see asking year. And David, up we set XXXX? back high I'm if year. but growth into the Could of I'm only to revenue I'm the over in then

David Moradi

I here this so. We've the going stop train. think and to nothing is turned corner

EU higher state And rates station. the train into the so leaving the local and is XXXX see regulation This think I with on you'll growth DOJ's government. and

Scott Buck

Great. the of guess? then the it on maturity, like is kind midpoint. like That's margin at And on this guide, somewhere I based look on business the helpful. XX% EBITDA around looks adjusted does EBITDA What the margin

Kelly Georgevich

in QX Yes. XX% to XXXX. the like see that We'd in

would put rates. accelerate half, revenue you If you expect look accelerate assume in of kind similar the does can do at so you at margins double-digit. second kind the We and at guide, it of to EBITDA

to do in the the of half and second think year further XX% XXXX. there's grow opportunity we an So fiscal in

Scott Buck

That's then one me, And last guys. for helpful, Kelly.

how price today. purchase the about was where guys bit appreciated buyback. obviously date. Stock's average to on a feeling price curious I'm are Just from you your the quite

David Moradi

I revenue checked, into attractive. can't around levels pretty get last so. or was but it still Xx I with It's you,

still pretty taken So are for when cheap times. X that's getting out companies

Scott Buck

Congrats the results. on

Operator

to At Please Moradi closing our ahead. this would time, remarks. the like call turn for to this concludes over go I back any session. question-and-answer Mr.

David Moradi

Thank you for joining us today.

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

Operator

section would us today's the Earnings like I AudioEye's via recording Call. call, Quarter available company's Fourth will we Year website. to for Before that available a conclude you the replay be everyone joining remind Investors for call link in for today XXXX a today's Thank of Full Conference and of

disconnect. now may You

AudioEye (AEYE) 6 Mar 242023 Q4 Earnings call transcript