AudioEye Reports Third Quarter 2019 Results

TUCSON, Ariz., Nov. 13, 2019 /PRNewswire/ -- AudioEye, Inc. (NASDAQ: AEYE), a leading developer of digital accessibility solutions that provide barrier-free website access for individuals with disabilities, reported financial results for the third quarter ended September 30, 2019.

Third Quarter and Recent Operational Highlights

    --  Launched AudioEye Digital Marketplace, a machine learning
        powered-platform enabling companies of all sizes to accelerate
        accessibility easily and affordably.
    --  Within AudioEye Digital Marketplace, the Company introduced AudioEye
        Free and AudioEye Pro as well as rebranded its Ally solution to AudioEye
        Managed, the trio collectively having been designed to encompass 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, please click here to learn more.
    --  Launched Team AudioEye, a new advocacy and certification program for
        digital professionals to accelerate digital accessibility by helping
        developers and web designers create accessible experiences for the web.
    --  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.
    --  Continued to grow direct sales channel client roster in the third
        quarter with prominent new customers from the technology, fashion,
        retail, and hospitality space among others.
    --  Continued to fortify new indirect channel partner relationships.
        Currently, 20 established channel partners offer AudioEye as their
        exclusive digital accessibility solution to their clients.
    --  Through its premier partnership with Dealer.com, a Cox Automotive brand,
        the Company successfully implemented its solution across hundreds of
        Hyundai, Subaru of America and Volvo automotive dealer websites, rapidly
        accelerating adoption of its solution

Third Quarter 2019 Financial Results

    --  Bookings increased 102% to $5.7M from $2.8M in the same year-ago period.
        The increase in bookings was primarily due to strength in the Company's
        direct channel and execution against the current sales pipeline as well
        as improved performance within the Company's indirect channel through
        deeper penetration in existing customers.
    --  Total revenue increased 86% to a record $2.8M from $1.5M in the same
        period a year ago. The increase in revenue was primarily due to
        continued growth in the Company's indirect channel and strength in
        renewals and bookings in its direct sales business.
    --  Gross profit increased 101% to $1.7M (~60% of total revenue) from $822K
        (~55% 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 80% to $3.8M 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 general and
        administrative expenses.
    --  Net loss available to common stockholders was $2.2M, or $(0.27) per
        share, compared to $1.3M, or $(0.19) per share, in the same year-ago
        period. The greater net loss was primarily due to continued investments
        to support scalable, long-term growth.
    --  At quarter-end, the Company had $3.5M in cash, compared to $5.7M at
        December 31, 2018, and no debt.
    --  Deferred revenue increased 73% to $4.3M from $2.5M in the third quarter
        of 2018.
    --  Contracts in excess of revenue and deferred revenue increased 140% to
        $15.5M from $6.5M in the same period last year.
    --  As of September 30, 2019, total customer count had grown to over 3,500
        customers, which was a 150% increase compared to the prior quarter and a
        322% increase compared to the third quarter of 2018. Current customer
        account is ~4,300.
    --  As of September 30, 2019, monthly recurring revenue (MRR) totaled $997K
        which was an increase of 29% compared to $774K at June 30, 2019.

Full Year 2019 Financial Outlook
The Company is reiterating its full year bookings guidance of $22M to $24M and revenue guidance of $10M and $11M.

Management Commentary
AudioEye Executive Chairman Carr Bettis said, "In the third quarter we built on our success from the first half of the year and generated improved results in a number of our key operating areas. More specifically, we recorded $2.8M in revenues in Q3, an 86% increase over the prior year and also a record for the fifteenth consecutive quarter. Our strong topline led to our MRR increasing nearly 30% sequentially to almost $1 million at quarter-end, also helping to provide incrementally improved visibility into our financial projections as we look to scale our business over the long-term. Additionally, quarterly bookings came in strong at $5.7M and bookings in excess of excess of revenue and deferred revenue increased again to $15.5M . Operationally, we effectively doubled our customer count during the quarter, a feat which validates our ability to support large-scale rollouts, both technically and financially, and also justifies our decision to continue allocating resources to provide the necessary infrastructure in support of not only indirect vertical CMS providers but the AudioEye Digital Marketplace.

"After the quarter end, we also announced the launch of AudioEye Digital Marketplace, our new machine learning powered-platform designed to enable companies of all sizes to accelerate accessibility both easily and affordably. With this transformative new offering, AudioEye now provides its managed service solutions designed specifically to accelerate the path to compliance for website publishers relying on some of the world's largest and most ubiquitous CMS platforms such as Wix, Weebly, Shopify, Squarespace and WordPress. Our expectation is that this channel will translate into impactful growth, in addition to our existing business, beginning in the new year. In the near term, we are increasingly confident in the performance and prospects for our business and are reiterating both our revenue and bookings guidance for 2019."

Conference Call
AudioEye management will hold a conference call today, November 13, 2019 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 November 20, 2019.

Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 13695766

About AudioEye, Inc.
AudioEye
is an industry-leading software solution 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, Samsung, 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.

To learn more about AudioEye, please view the About AudioEye video.

Forward-Looking Statements
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 full-year bookings and revenue guidance, scaling AudioEye's business over the long term and an expectation of impactful growth beginning in 2020. 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; and general economic conditions. 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. 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 represents 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 is 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.

AudioEye's monthly recurring revenue is the Company's annualized spend of a customer divided by 12.

Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive Chairman
cbettis@audioeye.com

Investor Contact:
Matt Glover or Tom Colton
AEYE@gatewayir.com
(949) 574-3860

-Financial Tables to Follow-


                         
        
              AUDIOEYE, INC.


              
            
          CONSOLIDATED STATEMENTS OF OPERATIONS


                           
        
              (unaudited)




                                         Three months ended September 30,               Nine months ended September 30,


                                            2019                2018               2019                                  2018

                                                                                                                       ---


     Revenues                        $2,776,436          $1,494,313         $7,197,736                            $3,878,552




      Cost of revenue                  1,121,307             672,589          3,171,715                             1,882,698

                                                                                                                       ---



      Gross profit                     1,655,129             821,724          4,026,021                             1,995,854





     Operating expenses:


      Selling and
       marketing                       1,424,210             625,789          3,389,912                             1,813,345


      Research and
       development                       139,570              48,860            501,400                               147,889


      General and
       administrative                  2,249,302           1,445,539          6,452,315                             3,592,004

                                                                                                                       ---

      Total operating
       expenses                        3,813,082           2,120,188         10,343,627                             5,553,238




      Operating loss                 (2,157,953)        (1,298,464)       (6,317,606)                          (3,557,384)





     Other income (expense):


      Unrealized (loss)
       gain on marketable
       securities                            456             (1,680)               252                                  (30)


      Interest (expense)
       income, net                      (37,746)           (32,892)          (39,323)                             (32,760)

                                                                                                                       ---

      Total other (loss)
       income                           (37,290)           (34,572)          (39,071)                             (32,790)





     Net loss                       (2,195,243)        (1,333,036)       (6,356,677)                          (3,590,174)




      Dividends on Series
       A Convertible
       preferred stock                  (13,233)           (13,233)          (39,267)                             (40,507)

                                                                                                                       ---



      Net loss available
       to common
       stockholders                 $(2,208,476)       $(1,346,269)      $(6,395,944)                         $(3,630,681)





      Net loss per common
       share-basic and
       diluted                           $(0.27)            $(0.19)           $(0.81)                              $(0.54)





      Weighted average
       common shares
       outstanding-basic
       and diluted                     8,279,207           7,084,716          7,847,905                             6,676,968

                                                                                                                       ===


                                                                                        
              
                AUDIOEYE, INC.


                                                                                 
              
                CONSOLIDATED BALANCE SHEETS


                                                                                         
              
                (unaudited)


                                                                                                                                     
     September 30,        
     December 31,


                                                                                                                                                       2019                   2018



                                                                      
              
                ASSETS



     Current assets:



     Cash                                                                                                                                       $3,463,899             $5,741,549



     Accounts receivable, net                                                                                                                    1,362,400                172,384



     Marketable securities, held in related party                                                                                                      762                    510



     Deferred costs, short term                                                                                                                    197,961                176,006



     Prepaid expenses and other current assets                                                                                                     366,370                 49,901




     Total current assets                                                                                                                        5,391,392              6,140,350





     Property and equipment, net                                                                                                                   167,805                108,007





     Right of use assets                                                                                                                           877,067                      -





     Deferred costs, long term                                                                                                                     156,786                 93,790



     Intangible assets, net                                                                                                                      1,711,650              2,061,404



     Goodwill                                                                                                                                      700,528                700,528






     Total assets                                                                                                                               $9,005,228             $9,104,079

                                                                                                                                                                              ===



                                                       
              
                LIABILITIES AND STOCKHOLDERS' EQUITY



     Current liabilities:



     Accounts payable and accrued expenses                                                                                                        $670,129                $93,544



     Related party payables                                                                                                                          4,541                 14,467



     Finance lease liabilities                                                                                                                      51,735                 30,172



     Operating lease liabilities                                                                                                                   204,411                      -



     Deferred rent                                                                                                                                       -                 4,472



     Deferred revenue                                                                                                                            4,119,567              2,626,712




     Total current liabilities                                                                                                                   5,050,383              2,769,367





     Long term liabilities:



     Finance lease liabilities                                                                                                                      61,886                 51,150



     Operating lease liabilities                                                                                                                   709,268                      -



     Deferred rent                                                                                                                                       -                 6,585



     Deferred revenue                                                                                                                              192,121                402,075






     Total liabilities                                                                                                                           6,013,658              3,229,177





     Stockholders' equity:



     Preferred stock, $0.00001 par value, 10,000,000 shares authorized


      Series A Convertible Preferred stock, $0.00001 par value, 200,000 shares designated, 105,000 shares issued and outstanding as
       of September 30, 2019 and December 31, 2018                                                                                                        1                      1


      Common stock, $0.00001 par value, 50,000,000 shares authorized, 8,876,555 and 7,579,995 shares issued and outstanding as of
       September 30, 2019 and December 31, 2018, respectively                                                                                            89                     76



     Additional paid-in capital                                                                                                                 51,491,258             48,017,926



     Accumulated deficit                                                                                                                      (48,499,778)          (42,143,101)




     Total stockholders' equity                                                                                                                  2,991,570              5,874,902






     Total liabilities and stockholders' equity                                                                                                 $9,005,228             $9,104,079

                                                                                                                                                                              ===

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SOURCE AudioEye, Inc.