• Revenue: $8.93 million in Q3 2024, 14% year-over-year growth.
• Sequential Revenue Growth: Increased from $8.47 million in Q2 to $8.93 million in Q3, representing a 21% annualized growth rate.
• Adjusted EBITDA Margin: Improved from 17% in Q2 to 23% in Q3.
• Adjusted Free Cash Flow: $1.6 million in Q3 2024, compared to $1 million in Q2 and negative $200,000 in Q3 2023.
• Annual Recurring Revenue (ARR): $36.2 million at the end of Q3 2024, a $2.9 million sequential increase.
• Gross Margin: Increased by 1% sequentially and 3% year-over-year to 80% of revenue.
• Net Loss: $1.2 million or $0.10 per share in Q3 2024, compared to $1.4 million or $0.11 per share in Q3 2023.
• Adjusted EBITDA: Record $2 million or $0.16 per share in Q3 2024, a $1.7 million improvement year-over-year.
• Cash Position: $5.5 million as of September 30, 2024.
• Customer Count: Approximately 126,000 as of September 30, 2024, an 18% increase from the previous year.
• R&D Spend: $1.6 million in Q3 2024, down from $2.4 million in Q3 2023.
• Fourth Quarter Revenue Guidance: Between $9.7 million and $9.8 million, representing 24% year-over-year growth.
• Full Year 2024 Revenue Guidance: Between $35.2 million and $35.3 million.
• Fourth Quarter Adjusted EBITDA Guidance: Between $2.2 million and $2.3 million, representing a 23% margin.
• Full Year 2024 Adjusted EBITDA Guidance: Between $6.62 million and $6.72 million, with adjusted EPS between $0.54 to $0.55.

• Warning! GuruFocus has detected 5 Warning Sign with AEYE.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AudioEye Inc (NASDAQ:AEYE) achieved the high end of its revenue guidance and exceeded Adjusted EBITDA guidance for the third quarter.
• The company reported a 21% annualized growth rate in sequential revenues, with third-quarter revenue growing 14% year over year.
• AudioEye Inc (NASDAQ:AEYE) generated a record $1.6 million in adjusted free cash flow, a significant improvement from the previous year.
• The company expanded partnerships with Finalsite and CivicPlus, aiming to penetrate their entire customer bases over the next three years.
• AudioEye Inc (NASDAQ:AEYE) completed the acquisition of ADA Site Compliance, which is expected to be immediately accretive and offers a strong financial profile with 70% recurring revenue.

Negative Points

• Despite improvements, AudioEye Inc (NASDAQ:AEYE) reported a net loss of $1.2 million for the third quarter.
• Operating expenses increased by approximately 9% due to higher nonrecurring and business combination expenses.
• The company faces challenges in converting leads into deals, particularly with upcoming accessibility mandates in Europe.
• There are concerns about the scalability of operations if customer adoption from partnerships accelerates rapidly.
• AudioEye Inc (NASDAQ:AEYE) is still integrating ADA Site Compliance, which may present short-term operational challenges.

Q & A Highlights

Q: Can you clarify the potential impact of fully penetrating the customer bases of Finalsite and CivicPlus over the next three years? A: We believe full penetration would mean all their customers purchasing our product, which could significantly transform the company, potentially adding tens of millions of dollars in additional revenue. - David Moradi, CEO

Q: With a new administration coming in, do you expect any changes in the regulatory environment affecting your business? A: We don't anticipate any changes. The rules for Title II or HHS are unlikely to be rolled back, so we are not concerned about regulatory changes. - David Moradi, CEO

Q: How are you integrating ADA Site Compliance's audit business with your software offerings? A: We see a good match with our customer base and plan to migrate and upsell their customers to our products and services. The integration is progressing quickly, with employees already moved to our departments. - David Moradi, CEO

Q: Regarding the acquisition, do you see more synergies from overlapping OpEx or from leveraging domain expertise? A: We expect to grow the revenue base similar to our past acquisitions, with a potential 50% growth over the next 2-3 years. The acquisition is accretive from day one. - David Moradi, CEO

Q: How scalable is your business model if customer adoption from partnerships takes off? A: Our model is highly scalable, with no foreseeable issues in implementation due to our use of AI and automation. We can handle the implementation while partners manage sales and account management. - David Moradi, CEO

Q: Are you seeing any inbound demand related to upcoming European accessibility mandates? A: We are receiving leads, although they haven't converted to deals yet. Awareness is increasing as the mandate approaches. - David Moradi, CEO

Q: How should we view the progression of your gross margin, which hit 80% this quarter? A: We are pleased with the improvement and expect to maintain this level going forward, driven by product mix and efficiencies. - Kelly Georgevich, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.