AudioEye Reports Record Fourth Quarter and Full Year 2019 Results, Nearly Doubles Customer Count Sequentially
Sixteenth Consecutive Period of Record Revenue Underpins Transformative Year in Which Company Brought Accessibility Solutions from Enterprise to Small Business and the Mass Market
TUCSON, Ariz. — March 23, 2020 — AudioEye, Inc. (NASDAQ: AEYE), an industry-leading software solution provider delivering website accessibility compliance to businesses of all sizes, reported financial results for the fourth quarter and full-year ended December 31, 2019.
Fourth Quarter and Recent Operational Highlights
- Appointed Heath Thompson as Chief Executive Officer, who brings nearly three decades of leadership and engineering experience from organizations ranging from start-ups to large global corporations and also possesses a deep background in SaaS and software product businesses.
- Launched its machine-learning powered AudioEye Digital Marketplace, a suite of digital accessibility solutions enabling companies of all sizes to accelerate accessibility easily and affordably.
- Within AudioEye Digital Marketplace, the Company introduced the AudioEye Free and AudioEye Pro product tiers, as well as rebranded its Ally Managed Service solution to AudioEye Managed. The trio collectively encompasses a full suite of digital accessibility commerce and machine-learning solutions for all price points. For additional information on how all three product offerings are differentiated, click here.
- Launched Team AudioEye, a new advocacy, certification and affiliate program for digital professionals to accelerate digital accessibility by helping developers and web designers create accessible experiences for the web.
- Announced first-ever natively integrated platform partnership with Duda, the leading web design platform for companies that offer web design services to small businesses, enabling more than 500,000 website customers to easily and affordably achieve legal compliance for digital accessibility.
- Strengthened the Company’s leadership and improved shareholder representation on its Board of Directors through the appointments of investors David Moradi and Jamil Tahir to the AudioEye board.
- High-profile, mainstream media outlets continued to look to AudioEye as a thought leader in the digital accessibility space, with featured articles in both Forbes (AudioEye Looks Out for the Disabled in the Digital World) and Fast Company (Your website needs to be accessible – anything else is just bad business).
- Recognized as the 83rd fastest-growing company in North America on Deloitte’s 2019 Technology Fast 500.
- Continued to grow enterprise (direct) sales channel client roster in the fourth quarter with prominent new customers from the government, hospitality, media, retail, and auto space among others.
- Continued to solidify existing vertical (indirect) channel partner relationships. Currently, 20 established channel partners offer AudioEye as a preferred digital accessibility solution to their clients.
Fourth Quarter 2019 Financial Results
- Bookings increased 90% to $6.6M from $3.5M in the same year-ago period. The increase in bookings was primarily due to strength in the Company’s enterprise channel and execution against the current sales pipeline as well as improved performance within the Company’s vertical partner channel through deeper penetration in existing customers.
- Total revenue increased 100% to a record $3.6M from $1.8M in the same period a year ago. The increase in revenue was primarily due to continued growth in the Company’s vertical partner channel and strength in renewals, upsells and bookings in its enterprise sales business.
- Gross profit increased 127% to $2.4M (~66% of total revenue) from $1M (~58% of total revenue) in the same year-ago period. The increase in gross profit and gross margin was primarily due to increased efficiencies being realized as the Company continues to improve and expand the level of automation in its remediations as well as an increase in revenues.
- Total operating expenses increased 92% to $3.9M from $2.1M in the same year-ago period. The increase in total operating expenses was primarily due to increases in sales and marketing expenses as well as research and development and general and administrative expenses.
- Net loss available to common stockholders was $1.4M, or $(0.16) per share, compared to $1.4M, or $(0.19) per share, in the same year-ago period. The improvement in net loss was primarily due to continued investments to support scalable and profitable long-term growth.
- At quarter-end, the Company had $2M in cash, compared to $5.7M on December 31, 2018, and no debt.
- Deferred revenue increased 82% to $5.5M from $3M in the fourth quarter of 2018.
- Contracts in excess of revenue and deferred revenue increased 128% to $17.3M from $7.6M in the same period last year.
- As of December 31, 2019, total customer count had grown to over 6,800 customers, which was a 95% increase compared to the prior quarter and a more than 600% increase compared to the fourth quarter of 2018.
- As of December 31, 2019, monthly recurring revenue (MRR) was approximately $1.2M, which was an increase of 20% compared to approximately $997K on September 30, 2019.
Full Year 2019 Financial Results
- Bookings increased 99% to $23M from $11.5M in the same year-ago period. The increase in bookings was primarily due to strength in the Company’s enterprise channel and execution against the current sales pipeline as well as improved performance within the Company’s vertical partner channel through deeper penetration in existing customers.
- Total revenue increased 90% to a record $10.8M from $5.7M in the same period a year ago. The increase in revenue was primarily due to continued new business execution in the Company’s enterprise and vertical partner channels, both of which also generated strong renewals from existing customers during the period.
- Gross profit increased 110% to $6.4M (~59% of total revenue) from $3M (~54% of total revenue) in the same year-ago period. The increase in gross profit and gross margin was primarily due to overall improvement in revenue from new and renewal sales along with the recognition of deferred revenue from prior periods. Advancements in the Company’s technology also led to certain efficiencies in the delivery of service.
- Total operating expenses increased 87% to $14.2M from $7.6M in the same year-ago period. The increase in total operating expenses was primarily due to increases in sales and marketing expenses as well as research and development and general and administrative expenses.
- Net loss available to common stockholders was $7.8M, or $(0.97) per share, compared to $5.1M, or $(0.74) per share, in the same year-ago period. The greater net loss was primarily due to continued investments to support scalable, long-term growth.
AudioEye has historically provided year-ahead annual bookings and revenue guidance. Going forward, its focus will be on growing MRR as its updated leading financial metric. The Company remains confident in its long-term growth prospects as well as the opportunities in the digital accessibility industry as a whole. Both the board and management remain focused on driving revenue and bookings growth to support the long-term health of its business. Going forward, the Company will continue to re-evaluate the growth and predictability of its operating performance with respect to providing financial forecasts.
AudioEye Executive Chairman Carr Bettis said, “Q4 was a great finish to what ended up being another year of tremendous growth for our business. Financially, we achieved our sixteenth consecutive quarter of record revenue and produced $10.8M for the year, a 90% increase over 2018 and also another record. During the fourth quarter, we also expanded our margins to 66% from 58% in Q4 last year, underscoring our ability to create leverage in our operations as more customers come online. Going forward, and absent other macroeconomic market changes, as we continue taking advantage of the automation and increased efficiencies we’ve built into our onboarding processes across our enterprise and vertical partner channels, it is our current expectation to be cash flow positive in 2021.
“Operationally, we nearly doubled our customer count sequentially for the second straight quarter to over 6,800 businesses and, as of today, have grown to more than ten times our size when compared to the end of 2018. We have a massively untapped market just within our own customer base, and with our recent launch of the AudioEye Digital Marketplace, coupled with the initial rollout of our platform partnership strategy, our accelerated customer growth should continue for the foreseeable future. Over the past year, we’ve solidified our senior leadership team, made tremendous progress within our existing business channels, dramatically expanded our total addressable market, and fulfilled our promise to make comprehensive digital accessibility solutions available for all constituencies. We remain incredibly confident in our long-term growth prospects as well as the opportunities in the digital accessibility industry as a whole.”
AudioEye management will hold a conference call today, March 23, 2020, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.
AudioEye management will host the call, followed by a question and answer period.
U.S. dial-in number: (877) 407-9208
International number: (201) 493-6784
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.
The conference call will also be webcast live and available for replay, which will be accessible via the investor relations section of the company’s website. The audio recording will remain available via the investor relations section of the company’s website for 90 days.
A telephonic replay of the conference call will also be available after 7:30 p.m. Eastern time on the same day through March 30, 2020.
Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13699208
AudioEye is an industry-leading software solution provider delivering immediate ADA and WCAG accessibility compliance at scale. Through patented technology, subject matter expertise, and proprietary processes, AudioEye is eradicating all barriers to digital accessibility, helping creators get accessible and supporting them with ongoing advisory and automated upkeep. Trusted by the FCC, ADP, SSA, Uber, and more, AudioEye helps everyone identify and resolve issues of accessibility and enhance user experiences, automating digital accessibility for the widest audiences. AudioEye stands out among its competitors because it delivers Machine Learning/AI-driven accessibility without fundamental changes to site architecture. Join our movement at www.audioeye.com.
Any statements in this press release about AudioEye’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. Forward-looking statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements contained herein include, but are not limited to, statements regarding anticipated contributions from less mature lines of business, long-term growth prospects, opportunities in the digital accessibility industry, and our expectation that we will be cash-flow positive by the middle of 2021. These statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements, including the variability of AudioEye’s revenue and financial performance; risks associated with product development and technological changes; the acceptance of AudioEye’s products in the marketplace by existing and potential future customers; competition; general economic conditions; and uncertainties regarding the impact on our business and the overall economy from the coronavirus (COVID-19) outbreak. These and other risks are described more fully in AudioEye’s filings with the Securities and Exchange Commission (the “SEC”), including AudioEye’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 27, 2019. There may be events in the future that AudioEye is not able to predict accurately or over which AudioEye has no control. Forward-looking statements reflect management’s view as of the date of this press release, and AudioEye urges you not to place undue reliance on these forward-looking statements. AudioEye does not undertake any obligation to update such forward-looking statements to reflect events or uncertainties after the date hereof.
About Key Operating Metrics
To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (GAAP), we consider certain operating measures that are not GAAP measures, including monthly recurring revenue, bookings, and contracts in excess of revenue and deferred revenue. AudioEye reviews a number of operating metrics such as these to evaluate its business, measure performance, identify trends, formulate business plans, and make strategic decisions.
We believe these metrics and measures are useful to facilitate period-to-period comparisons of our business and to facilitate comparisons of our performance to that of other similar companies. In this press release, we are reporting results and/or affirming our previously announced guidance on bookings, revenue, and monthly recurring revenue.
AudioEye’s bookings represent the contracted amount of money the customer commits to spend with the Company over an agreed amount of time, generally ranging from 12 months up to 60 months.
AudioEye’s contracts in excess of revenue and deferred revenue are the remaining bookings that have not yet been recognized as revenue or billed to the customer. This measure represents the contractually agreed amount of money that is remaining to be billed and paid under contracts and that will be recognized in subsequent periods.
Monthly recurring revenue for a paid customer account is a legal and contractual determination made by assessing the contractual terms of each paid customer account, as of the date of determination, as to the revenue we expect to generate in the next monthly period for that paid customer account, assuming no changes to the subscription and without taking into account any usage above the subscription base, if any, that may be applicable to such subscription.
Vertical Partner is a CMS provider or a company that provides a web-hosting platform for private and public entities and resells the AudioEye Managed service as a new accessibility service offering to its customers. CMS providers who are focused on a specific industry vertical are referred to as Vertical Partners by AudioEye. CMS providers who are vertical agnostic are referred to as Platform partners by AudioEye.
Dr. Carr Bettis, Executive Chairman
Matt Glover or Tom Colton
-Financial Tables to Follow-
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