AEYE - Earnings call transcript Q2 2024

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Operator

Good afternoon, and welcome to AudioEye Second Quarter 2024 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 website and replay section would everyone call that be in www.audioeye.com. I company's the via a

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

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

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

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

David Moradi

operator. you, Thank

to is ARR of momentum from our to to $X.X representing rate by expenses We in $X.X We million, compared million sequentially operating are without revenues million, that costs XX% additional flat with strong. $X.X grow XX%. were an approximately grew adding increased sequentially. and increase Sequential growth pleased growth first of roughly the business ARR report of revenues annualized an able quarter. ARR to $XXX,XXX

As a result approximately and of expense margin record $X.X of EBITDA prudent of XX%. million, a revenue we management, growth adjusted generated

the to Looking from at in cash record of Rule in flow, free cash third the free quarter. of quarter Rule and second expect a achieving were in minus terms million operations. CapEx, flow generated of of EBITDA XX We to the XX we close the $X hit

rate enterprise fastest to both effective equally implementation notable of saw the our revenue channel both channels, is years in with in enterprise go-to-market and to due and our growing several growth We our investment at channels growth and marketplace approach. in The sequentially. R&D contributing partner the

the further shortly. report excited are quarter. We cover will a in notable other I'll this a guidance, to few year now I is which continuing in driving increase our and discuss developments momentum full that

The protections wide accessible, Section entities rule, Title public the of local April Act. disabilities which the Shortly Act, discussed II with range universities, after a a clinics, Rehabilitation including individuals schools, for and published Justice's that we with accessibility, XXX digital our are role applies and and Human civil On mandates rights final the with transit Department government the that hospitals departments, entities, state applications of Services regulatory people and earnings state under and announcement, Title libraries to police Americans colleges, Disabilities of regulation Health including and final Office Department call, local agencies. for bolsters of the to community developments their for II significant under government websites mobile disabilities. of ensure

is II requirements, The rule Like doctors at and requires nursing the from the hospitals, social The organizations digital by care HHS, depending stipulates including health of currently homes sales demand the II HHS received represent in average over services, funding provided to States. and web the reseller and page HHS XX,XXX positioned issues, including Title we impact size. meet our people specific XXXX XX% scanned expansion had applications uniquely accessible offices, the United accessibility WCAG internet of facilities. pages To the inaccessible for to May is the Title HHS that and disabilities. mobile role which direct X.X, over to and team role, alarming. content that others people accessibility website the outlined with adherence Approximately May are increase or XX with significant on opportunities organization and channel. rule, compliance DOJ we XXXX, understand by are

deliver human websites. Our to and at a AI and the way of assisted to is problem millions technology scale only address solution the approach

the as and significant Title includes municipalities education state in There in will months, and strategic to been resources we installed dominant II hard X is initiatives other next to a cities, their goal a last higher the well leader including comprehensive the platform and existing develop have care Both The care schools. to We market opportunity under penetrate base partnerships the over the to have plan. government, is happen. and contribute partnership local our with of with K-XX all plans make share and industry. as already growth significant Over Finalsite, working go-to-market of health HHS, a for X partners, with us key industry. towns this health which industries years penetrate a

create soon. new go-to-market further our and industries partnerships these we execute plan to expect in announcement expect as We

legislation. also monitoring California's are in We Act Accessibility from the demand European AB XXXX

over We further the expect on items next months. to few these see developments

Moving on to guidance.

expect quarterly without increased to cash to additional significant resulting in and operating continue increase generation. expense, We revenues leverage flow

million rate to million, $X.XX an between quarter, annualized growth revenue $X.XX the approximately third we for For XX%. are representing guiding of

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

rates We XX adjusted and expect in company Rule XXXX to margins beyond. increase a in with to EBITDA third become quarter growth the of the and potential

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

are EBITDA million million We from increasing $X.X to $X.X guidance million. to $X $X.X to also our adjusted million

be previous over and now Adjusted to share, $X.XX increase expected between an now CFO, per of $X.XX I'll This EPS to an Kelly. $X.XX midpoint. from represents is increase the the turn around of XX% at AudioEye's call guidance.

Kelly Georgevich

Thank you, David.

the again revenue first of rate. levels annualized of Annual was growth quarter of hit our of XXXX second the a QX XXXX growth $X.X revenue a from ARR million, increase at quarter million, As or revenue, $X.X $XX.X million improvement quarter with David XX% discussed, revenue the recurring and XXth marking XXXX. at record a XX% record and end ARR, in

our revenue their includes and revenue strong performance from channels the all both revenue teen SMB partners marketplace X both from marketplace variety are with deploy products annualized The high partner rates customers. and channel Our a same sequential products showing growth for channels. SMB-focused in who of

both larger In On with in organizations, non-platform enterprise March customers an XX, XXXX, profit of of revenue ticked of and XX% on XX% channels channel websites the was XXXX, from of and sequentially those partner AudioEye in the this enterprise count gross annualized. same customer compared of AudioEye's [ XX% in XX% X,XXX to margin quarter second additions engage revenue and revenue X% was X% period. and last increase customers of $XX,XXX year-over-year channel year. in a $X.X June to who grew our a channel. XX, channel with consist second XXX,XXX $X ] The grew around by revenue X% cost count directly XX% ARR. from pricing XX% of approximately year-over-year and and or revenue year-over-year approximately around year-over-year, over up generally The of personnel was marketplace XX% customers our of X% in enterprise QX or The approximately sequentially XX, revenue increase June a for including ARR. contributed of XXXX. growth decrease sales customer and and representing $XXX,XXX million XX% and Gross increase driven the In quarter, million result solutions. XXXX, XXX,XXX, enterprise the the of increase

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

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

continue around believe in R&D XX% appropriate current XXXX. the to We investment of for is

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

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

to continues of capitalized well million be as June with sheet $X.X cash XXXX. Our XX, balance of

development shares offering repurchased in $XXX,XXX. in $X.X quarter to proceeds the Internet cost Cash less software earn-out of Accessibility in XXXX, payment decreased approximately million due $X.X cash In final of of our calculated Free the March $XXX,XXX million quarter, we to EBITDA was the net primarily second quarter. second adjusted by of the $XXX,XXX the of $X flow, also at Bureau XXXX. approximately the approximately at-the-market million and in of from acquisition $X.X million related received

call quarter We continue we third expect in of that, for and free appropriate instructions. XXXX. cash open to give the the With Operator, fourth flow up please increase questions. to

Operator

comes with of [Operator first from ROTH. Baldry Richard Instructions] line the question Our

Richard Baldry

have need a growing again a of a really whether you get How revenue head if to as sort even sort up growth to of support do adjusted sort do the of about to that's good job areas support places the like back has, count feel hiring, when really in of to cutting you You've of or grow you in kind containment, infrastructure way base? pretty mode. continues your cost or different pick fast done it EBITDA to the in revenues sales sort existing increasing in started feel the

David Moradi

going Rich, is and of to support then drop We've the new some pretty made is R&D you lot of incremental amount good would see, and to but There investments down. business, the model scalable. generate revenue, in straight be yes, go-to-market. can generally as a I investments incremental think, a

I So invest don't sales infrastructure. we more, think not the time at mostly [ ] the marketing, to just on need and

Richard Baldry

to wanted would climb can I how COGS to it's start X flat top a pretty ask or Yes. years. because, basis be your the specifically fixed down sequential grows? on even steadily again? line line What for about to as almost last Like that that cause to been

Kelly Georgevich

but XXXX, into support our overall. happy feel gross Yes. pretty and to through about of is We XXXX. about the investments continuing good line, now about of We've matter that We see good XX%. improve to that at XX% margins holding we of run and different pretty a through good feel been the that feel margin mix line. We've gross in looking pretty It efficiencies. kind

Richard Baldry

it. sort Got in sort better Your move there? on your obviously at? in them or can business more about acquisition of about a comfortable you And feel where you Does Just periods little recent access us little lot any now. sheet? to the talk then capital the asap? plans Would change a And to with of, of you invest is from basically levels just out our think willingness help basis. the they're a that bit that accelerated a prefer do How debt wipe bit. forward balance

David Moradi

cash the into that's a get can get a I the ATM feel little news. we Kelly, We're generative. into we ATM bit. bit, Kelly will flow think though. really need pretty don't good good. little money, Yes, the

Kelly Georgevich

Yes, $X capital potentially we that and relatively pay for did amount do a be to open raising We debt have compared reduce opportunistic ATM the to expense. there small like and up cap debt with to down interest our million. about our our an market

Richard Baldry

that now just much how maybe seconds a you've do potential, of And to cap on, deal you few sort with? acquisition larger a got view market

David Moradi

We call. really around, We're don't looking going M&A. it not but discuss to always we're on discuss this

Operator

Zach Securities. the Cummins Our next question of with line B. from Riley comes

Zach Cummins

can is, of you've expecting segment just what coming the me sort are regain returning talk And in momentum seeing really see to quarters year-over-year you one there? to first the enterprise you're about to in there you David, for traction that the really progress started channel growth? with as

David Moradi

it's beat strong the there leads, we're been in investments conversions. We've of continue a really suite to to us go-to-market, gives lot also record of R&D, made Yes, Sure. grow. in made pipelines our a which seeing lot product good. a competition. The pretty investments and full We've

clicking. really it's So

I think market to we're Xx outgrowing Xx by the right generally now.

Zach Cummins

it. my really And is your Got question around just follow-up partnerships.

you partner the that that side call, think under can that had channel? you just some about you Can I really -- talk the about within partners, that the momentum on would you're on work accelerate access new Finalsite, obviously, that really with regulation. websites, you've within doing be to great talk prior to of made mentioned XX,XXX more your but inroads you current targets

David Moradi

the we're dominant a about Both in the us platform a for base. release, to and super the spot both really huge, -- focus II the Title great resources and with their you we're excited [ huge in penetrating it, entire ] Yes, opportunity deploy press and are is K-XX. saw have going customer of opportunity on

to really other and we're about excited more So that one, on come the ones.

tuned. stay So

Operator

comes Sutton Group. Capital line George of with Hallum Our next Craig question from the

Unknown Analyst

on George. for This results. is James Nice

then commentary. As growth operating on these costs? years should of next opportunities? be as some you a Finalsite sort think operating you you quantify or of resources contributing, what kind about of those we follow-up are the more the leverage of to detail some over target expense any And might incremental Can couple provide how mandated

David Moradi

details into the to question? details was I into going your resources we're of campaigns, and Yes, we're second marketing What contract. the not the figure get would all awareness But really really getting the but of I that, co-marketing, confidential do. that part can't

Unknown Analyst

as think of mandate couple of sort years? about opportunities. these Just of how the leverage, next operating expense Sort operating to growth over target you

Just you're you as of because a customers. expense wouldn't indirectly, sort add lot of going kind be incremental since assume I'd your of to there

David Moradi

Yes.

I think scalable. I've Model in like said, we at. we're already the good pretty with R&D. investments, I feel is made where

increase marketing with the good scalable that's investing, a and the potential to So potentially. think said we I about bit But future little -- feel on I model sales like before, in a really margins. it's

Unknown Analyst

going have initial kind And with any just the constituents of mandate? by be then impacted on good. Sounds to also curious some of interactions you the are that maybe

David Moradi

Constituents? I'm trying to understand that.

Unknown Analyst

any that people basically agencies? impacted be Just would by the Anybody to government mandate that's...

David Moradi

of than government we're yes, lot more Yes, a leads come ever. seeing in,

at we're So all closing, conversations. we're aren't of a lot deals having having a of but lot Those conversations the moment.

aware they're of So very it.

this We tick standpoint. going all. XXXX think into our to up it's at year don't to a this have I start demand numbers for from in

Operator

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

Scott Buck

of you moving or typically, take mandate date? get seen push more a to a follow-up right that's mandates? direction. lawsuits in question. it as historically, have these whatnot proactive the in addressing DOJ really David Or Whether of a bit people curious, the customers to does I'm last be past

David Moradi

lot We don't There's with a you. of at lot moment can't happening EU, of with really this, Title so II HHS the mandates have a and I now. experience the tell

So to is we'll in going plays to that XXXX, up. have guess, to My start pick see really how it's out.

Scott Buck

Right.

Okay.

more guys your you the with build are next of piling at How point just what then cash further allocation? fair. you mean, thoughts allocation, year, free that about remainder there? growth? marketing and the into you do that's to cash And are terms capital into thinking I as in Or flow. of So through accelerate start positive

David Moradi

look would cash marketing but increases, growing on like we'd and Look We it profitable. there, to more tick at Yes. potentially But have cash off spend free sales that the really LTV being to to like up. we flow.

continue. to expect that So

Scott Buck

And And Okay. the feeling you guys repurchase favor. Stock's the repurchased some obviously in during today? on about I authorization? thing, moved then you last that your left shares quarter. are How what's know

David Moradi

Yes.

cheap, buying revenue, be on there And and to to a We don't if side. I ATM pretty I buyback think anymore. know are lot going back so, the don't know, Xx have an don't higher, I like, we stock Xx out we're so, buying so it's the

Operator

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

David Moradi

us you to on investors today. call. want support. joining to I We for Thank partners our thank look and their next continued forward you our employees, for updating

Operator

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

may now disconnect. You

AudioEye (AEYE) 25 Jul 242024 Q2 Earnings call transcript