AEYE - Earnings call transcript Q1 2024

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Operator

Good afternoon, and welcome to AudioEye's First Quarter 2024 Earnings Conference Call.

Joining us today 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 website and replay section would everyone call that be in www.audioeye.com. I company's the via a

Act made or estimate, materially of future risks The factors not Before course for Executive the statements statements. I call of Private all and subject because statements. are are that this company quarterly Reform are forward-looking Chief and AudioEye events comments annual assumptions safe XX-K, with expectations could statements reportings to by discussed Securities call are Form filings Risk remind the Commission. Officer, current today's statements XX-Q to conference The Securities turn forward-looking on made predictions, release These other identify provides about be report harbor XXXX the in Litigation its section results and and differ and over historical Actual and of on such projections in Factors and its words to like a company's management Form believe, confidence, similar statements. on based AudioEye's considered forward-looking expectation the call and participants the statements facts expect, other the press that to in are of and this would Exchange of anticipate, reports, during that the uncertainties. during other conference will

date or use www.audioeye.com. Reconciliation release will include today direct the to statements. posted correct undertake beliefs only forward-looking to Relations these comparable website Further, section or measures the to of hereof. GAAP undue at the on in non-GAAP its management's statements, are of non-GAAP any company's management's forward-looking which Investor not financial is earnings cautioned on of not update reflect remarks measures any AudioEye in does call otherwise place the financial financial available these most certain this Participants measures. duty as reliance

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

David Moradi

Thank you, operator.

X since several developments that to call, While discuss have our weeks last today. been excited are it's approximately we occurred earnings

earnings generated last inflection adjusted positive was free EBITDA mentioned, quarter flow a solid our significant the point. As ARR fourth record call cash while generating We growth. and

momentum mandate of first, to are phase. applications final rule discuss this and regulations $X But the Web the with after following initial the years accessible X with over and is the the their documents to expect in beyond. by first the state disabilities the we business Justice continuing Justice Americans later in are II These year $XX which that published ensure estimates X, significantly impact billion driving mobile X.X in costs Disabilities call. and in which We Department our increase websites implementation to the Accessibility report April I entities I'll will Content signed changing landscape, annually pleased billion Guidelines, and Title XXXX Department government guidance, full local The of a and Act. people cover that the regulatory the under . On AA.

like services, provide courts, insurance, public public food libraries, local applies and election clinics, universities, and employment to agencies regulation colleges, police or local and other transit of entities. benefits hospitals social that offices and community a government health range state The schools, assistance, and departments, government-related state offices services,

accessible sites market not opportunity with significant today. being most new public under is Title The II

demand We to meet are uniquely positioned with direct reseller sales our increase team our channel. the and

next all and that these [ cities, estimate education X partners over must websites, with years. leading municipalities the to side, serve compliant platforms the X that XX,XXX we serve the over website. which reseller partnered On ] are K-XX already SaaS We become

We only the today single digits resellers. are currently these penetrated in in

best-in-class to including approach continues billions required [indiscernible] demand meet artificial of millions increase. its potential improve sessions to scalable AudioEye to scaled and of is end investments significant platform, user intelligence in customers. serve and technology the infrastructure A the latest

the Justice Department, are to opportunity Europe. the about in addition In we excited

As discussed June and accessibility last date. takes XXXX app websites required European quarter, the Act digital effect Accessibility for that mobile and in by

including in have expand in seeing websites We are proposal. and regulatory and accessible that it mobile would current solidify also operate passed If XXXX the developments form, California jurisdictions, additional must California's its in requirement devices. AB businesses

are and demand any year, meaningful but from benefit upcoming this in our for we including noted, not As XXXX beyond. increases guidance expect we these requirements in

XXXX, from increased the tripled. and joining than XXX,XXX to have has in Since company X,XXX the revenues customer more count

significant increase demand are this the to support public sector. from We prepared

final weeks in we announced our the progresses. as early ago, we more role just are the With phase, planning and will X outlook XXXX year the still about beyond share

milestone service rolled In the security a channel was the year SOCX highest X priority privacy standards. controls, this our and [indiscernible] X large expand first to quarter, Type commitment out we and to for Type past This and compliance. X further support will organizations. growth important us underscores Type compliance our achieved enterprise enterprise Achieving attainment continue channel's the we enterprise system our organizational as initiatives. and products upholding data SOCX

management highly aligned and shareholders. The Board remain with

and buyback, an levels number while $X.XX. at similar the to are average of April shares of shares the In of at years, have X.X as we last invest XX, has continuing current repurchased remained the XXX,XXX price grow. Over we outstanding stock

X% over valuation a announced shareholders. under programs, purchased addition, we average last for June benefit the shares the long-term of of at an XXX,XXX previous approximately Combining In have outstanding both our X in shares [indiscernible]. common at revenue around Xx years XXXX, buyback of bought we of

guidance. to on Moving

free We expect quarterly in flow throughout revenues additional generation. to increased significant the year cash without resulting and accelerate operating leverage expense

guiding For the $X.X annualized revenue high are $X.X and representing an of second growth million between million, quarter, we rate teens.

million and EPS adjusted $X.XX and We million $X.XX. and $X.X also to adjusted generate $X.X EBITDA expect between between

$XX.X million. million revenue XXXX increasing are between We guidance to $XX.X and

adjusted per turn Kelly? now between by million adjusted to the guidance $X.XX We with call $X approximately over our million I'll are EBITDA increasing AudioEye's $X.X share. CFO, to and $X.X and million, EPS between also $X.XX

Kelly Georgevich

you, David. Thank

As of marking an at David revenue representing million, our with levels Annual of of the rate record or XX%. increase of of the ARR XXXX end an annualized revenue. hit from the record again first quarter revenue XXrd quarter $XX QX XXXX discussed, XXXX growth the $XXX,XXX at revenue fourth quarter ARR end recurring million, $X.X and of was

accelerate progresses. expect as growth We this to notably XXXX

who strong products customers. for grew revenue our and of this of products around ARR. channel In revenue first SMB-focused are quarter these their deliver Our revenue [indiscernible] from of results. of and includes revenue channels deploy the all same The year-over-year, SMB representing XX% and marketplace a continuing variety XX% partners channel to marketplace X% partner XXXX, from

see to growth. of drive partners to continue We and existing new expansion continues contracting which partners AudioEye, with

channel with ARR. enterprise sequentially, customers first channel XXXX. including The around to directly those organizations, larger and we sales resume pricing websites, and AudioEye of and with enterprise of contributed of our channel year-over-year generally grew solutions. and we AudioEye's XX% the quarter, the In non-platform growth engage QX X% expect revenue enterprise XX% consists personnel for in

and and an the increase partner March our X,XXX additions quarter quarters. to expand from $X.X approximately was approximately revenue revenue was count XX, XXXX, in driven customers an XX% XXXX. to of in The customer of or has XX,XXX the marketplace $X.X room profit We by believe from increase last and March the was in XXXX, future first million XX, in XX, for million channels. December of XX% Gross QX margin year. On count compared gross of XXX,XXX, increase on customers customer

increased due in XXXX, or completion million and in to and decreased decrease lower increased efficiencies from revenues sales G&A operating marketing, $XXX,XXX to approximately primarily the first quarter million. $X.X significant expenses. the $X While was The of of approximately initiatives expenses R&D XX%

$X.X QX million, spend costs R&D software cash total reflected section comparable approximately flow was the with investment. approximately consistent this This versus the of was XXXX. XXXX in year with R&D down spend our of in development in from The XXXX prior and XX% the $XXX,XXX million QX about total of in Our investing the QX period is revenue statement. quarter approximately XX% $X.X

XXXX. continue appropriate that We R&D believe in for to current is investment

share quarter revenue, million from XXXX per Net Total in to year loss the in year's or ago increase of same and $X.XX efficient prior the all $X $X.X $X.XX in technological share period. driven spending compared and period, was XX% million an per or the $XXX,XXX by investment. net first comparable in departments strategic decreased loss by and

improvement per share, expense amortization, QX $X.XX share-based or $X GAAP million and The to $XXX,XXX a EPS for was earnings primary EBITDA interest items. compensation, depreciation, and noncash XXXX adjustments year-over-year. for nonrecurring adjusted other QX Our

$X.X approximately to was of share adjusted million $X primarily of March $XXX,XXX first $XXX,XXX is primarily to decreased balance $XXX,XXX of of customer million quarter, from Cash the The EBITDA, payments. cash sheet with due $X.X XX, as the was as in Our XXXX. Free development due quarter. less well timing repurchase. in million of cost flow software the decrease remaining capitalized calculated cash

positive the year open Operator, throughout flow up that, improvements free generate please to progresses. expect instructions. With cash with We the XXXX give as call we questions. for

Operator

comes question from Craig-Hallum. with Sutton The Instructions] [Operator George first

George Sutton

Congratulations. Very nice results.

early you guidance specifically, resellers sort the increasing obviously doing play. terms inspite that? aggressively EBITDA we but into in fact to of European you expect little what that. opportunities You mentioned you're relative those alternate might talk invest things DOJ we're you're a of for the about So both prep interesting more going the bit it's into Can to and would of your

So any thoughts?

David Moradi

the all Yes. reseller We're here on and the clicking just with enterprise channel. cylinders

So it's is. business as

a major think I factor. been investment has R&D

suite wherever full enterprise. or small customer large product meet We are, a business have a a to the they

major think. outgrowing of I breadth a the market, We're So competitive the advantage. is offering

business -- as go a to as along and we're we're coming. demand regulations multitude significant think clicking yes, of going into uptick So see in XXXX you're with here, the you I just usual,

George Sutton

with you the are with to with that will are in positioned be market you, U.S. the to think, partners? -- multiple walk many be through structured? particularly, being help of key. they player are those reseller great. mentioned with? market, you how You key Are typically I ultimately the any would impact. in Just relationships there going And the are they Or some some that cases, taking key Can of the DOJ resellers going

David Moradi

exclusive Yes. Those are relationships.

is our in our digit. As the rate And around I only single on current websites. the serve penetration mentioned, side government XX,XXX partners

to there's current government current don't be change going you a So the dramatically our to next close X that's retailer think penetration business. full We is the with this on the penetration can massive going full see partners over to And to grow the why opportunity any we reason side years. not get X to here.

George Sutton

that partners Lastly for just partners? saw specific behind give can the strength relationships drove partner and those specificity Or new being me. partners? Kelly channel that you marketplace the with new quarter, mentioned additions as any you in this to

Kelly Georgevich

have lot a I of...

David Moradi

ahead, Go Kelly.

Kelly Georgevich

growth expansion -- seeing We're resellers. but and mentioned, we both continue we every as with there, there's in resellers, opportunity which think we're to David of new also additional contracting are we quarter, see existing

that growth happy So coming buckets, which is those to both we're of from see.

Operator

from Riley next Cummins Zach with comes Instructions] [Operator question B. Our Securities.

Zach Cummins

just adjusted just talk -- about the Congrats solid EBITDA results. in model terms of on in in that that's driving key leverage seeing you're the mean, upside have, the we of the really maybe wanted exiting the the year? the margin on really to you here. I what's this that underlying hone margin factor kind I especially can

Kelly Georgevich

essentially capital decrease been expenses, We've without efficient be in can with revenue we able prove and Yes. increasing to expenses. scale

and QX expect extra And to able As we revenue adjusted the -- we've we been QX guidance, additional continue really those if it's needing high David expenses. and have margins that in mentioned, generate look out teens. to figure at expect you QX, to formula that of the without EBITDA

Zach Cummins

Understood. side. opportunity? I sector And demand the that place of incremental really David, on additional to But direct have in the the investments relationships with into your channel major investments terms any direct know take growing you you partners, need of especially in to channel, with make advantage public full

David Moradi

to tremendous high a margin. plans. Not to pretty between teens We're We well to think right get point formulating profitability, EBITDA balanced to get this and and it's we're growth effort the been still now.

So we're that. happy with

Zach Cummins

free final business maybe cash capital allocation. And for potentially in looking just with thinking M&A? How the Understood. at I the just me business are investments mean, organic question you incremental continuing even generate positive versus is flow. about around to

David Moradi

favorably. and potentially to sustainable LTV going that in and and of Xx and on incremental acquisition look But margins we on a don't understand The you are going sure marketing of There go [ like that. way comment them. at sales financings have we really see CAC we the increase we can forward, user think at M&A. R&D, operating space. ARR. been Yes, in We're to that I'm ] number if M&A more was these latest

Operator

Our H.C. with next question Buck comes from Wainright. Scott

Scott Buck

aggressive so the to David, stock in opportunity on here you see you repurchasing Curious fairly over are the shares thoughts year. in XX guys obviously your have move been far today what shares the this given the months? XX next versus

David Moradi

seems It to Yes. still me. cheap pretty

approaching and I we I Rule as think last was And think it around Rule XX I we're now. XX can year. next Xx into checked, of go we revenue, of exceed

So tend revenue. to XXx those companies trade over

Scott Buck

actually sounds likely then it Yes. revenue 'XX pretty in we not that like up And second for It No, you from the that makes accelerating only set for commentary like already sense. are and well looking X me. looks 'XX. at 'XX,

right? legs, So this has momentum

David Moradi

growth with to and high . go for is margins. a years high few this rates EBITDA think I on going

Operator

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

David Moradi

today. Yes. for Thank joining us you

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

Operator

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

AudioEye's Thank you today First XXXX for for joining Conference Earnings Call. us Quarter

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AudioEye (AEYE) 23 Apr 242024 Q1 Earnings call transcript