AudioEye Reports Record Fourth Quarter and Full Year 2021 Results
Twenty-Fourth Consecutive Period of Record Revenue
TUCSON, Ariz., March 10, 2022 /PRNewswire/ -- AudioEye, Inc. (NASDAQ: AEYE), the industry-leading digital accessibility platform delivering website accessibility compliance to businesses of all sizes, reported financial results for the fourth quarter and full year ended December 31, 2021.
"As noted in our preliminary outlook for fourth-quarter results, we are pleased to confirm that we achieved revenue at the high end of our guidance range of $6.5 million, representing accelerated growth from prior quarters," said David Moradi, CEO of AudioEye. "Our strong results show that AudioEye's hybrid approach, which pairs industry-leading automation and human-assisted technology, resonates with both new and existing customers, filling the market gap for an affordable and scalable accessibility solution."
"We are excited to announce the acquisition of the Bureau of Internet Accessibility ("BoIA"). The acquisition of BoIA adds a key dimension to our product suite for those customers who prefer to fix accessibility issues at the source, giving us an end-to-end solution for all customers in their accessibility journey."
Fourth Quarter 2021 Financial Results
- Total revenue increased 16% to a record $6.5M from $5.6M in the same prior year period.
- Monthly Recurring Revenue (MRR) as of December 31, 2021 increased 16% to a record $2.2M from $1.9M as of December 31, 2020.
- Gross profit increased to a record $4.8M (74% of total revenue) from $4.1M (73% of total revenue) in the same prior year period. As in previous periods, the increase in gross profit was primarily due to continued recurring revenue growth and continued improvement in automation in product offerings.
- Total operating expenses increased to $9.8M from $7.1M in the same prior year period. The increase in operating expenses was due primarily to increases in research and development and sales and marketing expenses as the Company continues investment to build a best-in-class product and support scalable and profitable long-term growth.
- Net loss available to common stockholders was $5.0M or $(0.44) per share, compared to $3.0M or $(0.30) per share in the same prior year period. The greater net loss was primarily due to the increase in operating expenses discussed above.
- Non-GAAP net loss increased to $1.8M or $(0.16) per share, compared to the same prior year period of $0.9M or $(0.09) per share. The non-GAAP net loss and EPS performance reflects adjustments primarily for stock-based compensation expense and patent litigation expense.
- At quarter end, the Company had $19.0M in cash, compared to $9.1M on December 31, 2020.
Full Year 2021 Financial Results
- Full year 2021 revenue increased 20% to a record $24.5M from $20.5M in 2020.
- Gross profit increased to $18.4M (75% of total revenue) from $14.5M (71% of total revenue) in 2020.
- Total operating expenses increased 57% to $33.9M from $21.6M in 2020. The increase in total operating expense was primarily driven by investments in research and development ($4.1M increase, or 331%) and sales and marketing ($6.1M increase, or 73%). General & administrative expenses also increased by $2.0M, or 17% from the prior year period.
- Net loss available to common stockholders was $14.2M or $(1.29) per share, compared to $7.2M or $(0.77) per share in 2020 primarily due to the items noted above.
- Non-GAAP net loss increased to $5.8M or $(0.53) per share in 2021 compared to $2.6M or $(0.28) per share in 2020. The non-GAAP earnings and EPS reflects adjustments for stock-based compensation, patent litigation expense and gain on loan forgiveness.
Other Updates
- In January 2022, AudioEye appointed David Moradi as Chief Executive Officer. Mr. Moradi has served as Interim CEO of AudioEye for the past 18 months.
- Continued to grow the client roster to approximately 82,000 customers as of December 31, 2021, representing an increase of approximately 156% over December 31, 2020.
- In December 2021, AudioEye acquired Square ADA, bringing web accessibility technology to Squarespace users.
- In Q4 2021, AudioEye renewed a significant contract with a global HR and payroll software and service company and signed a major agency and a large financial institution.
- WP Engine has selected AudioEye as a digital accessibility technology and services partner, which will help owners of more than 1.5 million WordPress sites provide accessible digital experiences to all their users.
- On March 9, 2022, the Company acquired the Bureau of Internet Accessibility, a leading automated testing platform combined with a seamless guide for website owners and developers to fix accessibility issues at the source.
- Management has deemed the Company to have effective disclosure controls and procedures and internal controls of financial reporting, in compliance with SOX 404, as of December 31, 2021.
Financial Outlook
The Company expects revenue to be between $6.7M and $6.9M in the first quarter, representing year over year growth of 17% at the midpoint.
Conference Call Information
AudioEye management will host the conference call, followed by a question and answer period.
Date: Thursday, March 10, 2022
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
U.S. dial-in number: 1-855-327-6837
International number: 1-631-891-4304
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 1-949-574-3860.
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 today through March 17, 2022.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10018308
About AudioEye
AudioEye is an industry-leading digital accessibility platform delivering ADA and WCAG compliance at scale. By combining easy-to-use technology and subject matter expertise, AudioEye helps companies and content creators solve every aspect of web accessibility--from finding and resolving issues to navigating legal compliance, to ongoing monitoring and upkeep. Trusted by the FCC, ADP, SSA, Samsung, and others, AudioEye delivers automated remediations and continuous monitoring for accessibility issues without making fundamental changes to website architecture, source code, or browser-based tools. Join us on our mission to eradicate barriers to digital access, visit www.audioeye.com.
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", "confident", "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 new sales channels, long-term growth prospects, opportunities in the digital accessibility industry, our revenue and MRR guidance, and our expectation of investments in marketing and sales. 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 our new platform and sales channels; product development and technological changes; the acceptance of AudioEye's products in the marketplace by existing and potential future customers; competition; inherent uncertainties and costs associated with litigation; 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, 2020 filed with the SEC on March 11, 2021 and in subsequent filings with the SEC. 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. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
About Key Operating Metrics
We consider monthly recurring revenue ("MRR") as a key operating metric and a key indicator of our overall business. We also use MRR as (i) one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations; and (ii) as a performance metric for certain executive stock-based compensation awards.
We manage customers through two primary channels, Enterprise and Partner and Marketplace. Enterprise channel consists of our larger customers and organizations, including those with non-platform custom websites, who generally engage directly with AudioEye sales personnel for custom pricing and solutions. This channel also includes federal, state and local government agencies. The Partner and Marketplace channel consists of our CMS partners, platform & agency partners, authorized resellers and our marketplace. This channel serves small and medium sized businesses who are on a partner or reseller's web-hosting platform or who purchase an AudioEye solution from our marketplace.
We define MRR as the sum of (i) for our Enterprise channel, the total of the average monthly recurring fee amount under each active paid contract at the date of determination, plus (ii) for our Partner and Marketplace channel, the recognized monthly fee amount for all paying customers at the date of determination, in each case, assuming no changes to the subscription. This determination includes both annual and monthly contracts for recurring products. Some of our contracts are cancelable, which may impact future MRR. MRR excludes revenue from our PDF remediation services business and Mobile App report business.
Use of Non-GAAP Financial Measures
From time to time, we review adjusted financial measures that assist us in comparing our operating performance consistently over time, as such measures remove the impact of certain items, as applicable, such as our capital structure (primarily interest charges), items outside the control of the management team (taxes), and expenses that do not relate to our core operations, including transaction-related expenses and other costs that are expected to be non-recurring, such as severance related to strategic shift. In order to provide investors with greater insight, and allow for a more comprehensive understanding of the information used in our financial and operational decision-making, the Company has supplemented the Financial Statements presented on a GAAP basis in this Annual Report on Form 10-K with the following non-GAAP financial measures: Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share.
These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.
We define: (i) Non-GAAP earnings (loss) as net income (loss), less non-cash valuation adjustments to liabilities, plus interest expense, plus stock-based compensation expense, plus certain litigation expense, plus certain severance expense, plus loss on impairment of long-lived assets, plus loss on disposal of property and equipment, and less gain on loan forgiveness; and (ii) Non-GAAP earnings (loss) per diluted share as net income (loss) per diluted common share, less non-cash valuation adjustments to liabilities, plus interest expense, plus stock-based compensation expense, plus certain litigation expense, plus certain severance expense, plus loss on impairment of long-lived assets, plus loss on disposal of property and equipment, and less gain on loan forgiveness, each on a per share basis. Non-GAAP earnings per diluted share would include incremental shares in the share count that are considered anti-dilutive in a GAAP net loss position. However, no incremental shares apply when there is a Non-GAAP loss per diluted share, as is the case for the periods presented in this Annual Report on Form 10-K.
Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share are used to facilitate a comparison of our operating performance on a consistent basis from period to period and provide for a more complete understanding of factors and trends affecting our business than GAAP measures alone. All of the items adjusted in the Non-GAAP earnings (loss) to net loss and the related per share calculations are either recurring non-cash items, or items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, such as stock-based compensation expense and valuation adjustments to assets and liabilities, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are expected to be less susceptible to variances in actual performance resulting from expenses that do not relate to our core operations and are more reflective of other factors that affect operating performance. In the case of items that do not relate to our core operations, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.
Non-GAAP earnings (loss) is not a measure of liquidity under GAAP, or otherwise, and is not an alternative to cash flow from continuing operating activities, despite the advantages regarding the use and analysis of these measures as mentioned above. Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share, as disclosed in this Annual Report on Form 10-K, have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are these measures intended to be measures of liquidity or free cash flow for our discretionary use.
To properly and prudently evaluate our business, we encourage readers to review the GAAP financial statements included elsewhere in this press release, and not rely on any single financial measure to evaluate our business. Reconciliations of Non-GAAP earnings (loss) to net loss, the most directly comparable GAAP-based measure, as well as Non-GAAP earnings (loss) per diluted share to net loss per diluted share, the most directly comparable GAAP-based measure, are included in this press release. We strongly urge readers to review these reconciliations, along with the consolidated financial statements included elsewhere in this press release.
Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive Chairman
[email protected]
Investor Contact:
Matt Glover or Tom Colton
[email protected]
(949) 574-3860
AUDIOEYE, INC. | ||||||||
STATEMENTS OF OPERATIONS | ||||||||
Year ended December 31, | ||||||||
(in thousands, except per share data) | 2021 | 2020 | ||||||
Revenue | $ | 24,503 | $ | 20,475 | ||||
Cost of revenue | 6,121 | 5,961 | ||||||
Gross profit | 18,382 | 14,514 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 14,621 | 8,472 | ||||||
Research and development | 5,304 | 1,230 | ||||||
General and administrative | 13,970 | 11,945 | ||||||
Total operating expenses | 33,895 | 21,647 | ||||||
Operating loss | (15,513) | (7,133) | ||||||
Other income (expense): | ||||||||
Gain on loan forgiveness | 1,316 | — | ||||||
Change in fair value of warrant liability | — | 120 | ||||||
Interest expense | (12) | (145) | ||||||
Total other income (expense) | 1,304 | (25) | ||||||
Net loss | (14,209) | (7,158) | ||||||
Dividends on Series A Convertible Preferred Stock | (69) | (51) | ||||||
Net loss available to common stockholders | $ | (14,278) | $ | (7,209) | ||||
Net loss per common share-basic and diluted | $ | (1.29) | $ | (0.77) | ||||
Weighted average common shares outstanding-basic and diluted | 11,040 | 9,313 | ||||||
AUDIOEYE, INC. | ||||||||
BALANCE SHEETS | ||||||||
DECEMBER 31, 2021 AND 2020 | ||||||||
December 31, | December 31, | |||||||
(in thousands, except per share data) | 2021 | 2020 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 18,966 | $ | 9,095 | ||||
Accounts receivable, net of allowance for doubtful accounts of $157 and $79, | 5,311 | 5,096 | ||||||
Deferred costs, short term | 103 | 152 | ||||||
Prepaid expenses and other current assets | 451 | 288 | ||||||
Total current assets | 24,831 | 14,631 | ||||||
Property and equipment, net of accumulated depreciation of $210 and $209, | 196 | 91 | ||||||
Right of use assets | 834 | 617 | ||||||
Deferred costs, long term | 34 | 77 | ||||||
Intangible assets, net of accumulated amortization of $5,285 and $4,328, | 2,622 | 2,137 | ||||||
Goodwill | 701 | 701 | ||||||
Other | 95 | — | ||||||
Total assets | $ | 29,313 | $ | 18,254 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 3,542 | $ | 2,190 | ||||
Finance lease liabilities | 57 | 49 | ||||||
Operating lease liabilities | 415 | 229 | ||||||
Deferred revenue | 7,068 | 6,328 | ||||||
Contingent consideration | 134 | — | ||||||
Term loan, short term | — | 219 | ||||||
Total current liabilities | 11,216 | 9,015 | ||||||
Long term liabilities: | ||||||||
Finance lease liabilities | 45 | 12 | ||||||
Operating lease liabilities | 450 | 427 | ||||||
Deferred revenue | 5 | 83 | ||||||
Term loan, long term | — | 1,083 | ||||||
Total liabilities | 11,716 | 10,620 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.00001 par value, 10,000 shares authorized | ||||||||
Series A Convertible Preferred stock, $0.00001 par value, 200 shares authorized, | — | 1 | ||||||
Common stock, $0.00001 par value, 50,000 shares authorized, 11,435 and 10,130 | 1 | 1 | ||||||
Additional paid-in capital | 88,889 | 64,716 | ||||||
Accumulated deficit | (71,293) | (57,084) | ||||||
Total stockholders' equity | 17,597 | 7,634 | ||||||
Total liabilities and stockholders' equity | $ | 29,313 | $ | 18,254 | ||||
AUDIOEYE, INC. | ||||||||||||||||
RECONCILIATIONS OF GAAP to NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended | Year ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Non-GAAP Earnings (Loss) Reconciliation | ||||||||||||||||
Net loss (GAAP) | $ | (5,003) | $ | (3,007) | $ | (14,209) | $ | (7,158) | ||||||||
Non-cash valuation adjustments to liabilities | — | — | — | (120) | ||||||||||||
Interest expense | 1 | 4 | 12 | 145 | ||||||||||||
Stock-based compensation expense | 2,191 | 2,134 | 7,616 | 4,138 | ||||||||||||
Severance expense (1) | — | — | — | 360 | ||||||||||||
Litigation expense (2) | 1,035 | — | 2,099 | — | ||||||||||||
Loss on impairment of long-lived assets | — | — | 10 | — | ||||||||||||
Loss on disposal of property and equipment | — | — | 12 | — | ||||||||||||
Gain on loan forgiveness | — | — | (1,316) | — | ||||||||||||
Non-GAAP loss | $ | (1,776) | $ | (869) | $ | (5,776) | $ | (2,635) | ||||||||
Non-GAAP Earnings (Loss) per Diluted Share | ||||||||||||||||
Net loss per common share (GAAP) — diluted | $ | (0.44) | $ | (0.30) | $ | (1.29) | $ | (0.77) | ||||||||
Non-cash valuation adjustments to liabilities | — | — | — | (0.01) | ||||||||||||
Interest expense | — | — | — | 0.02 | ||||||||||||
Stock-based compensation expense | 0.19 | 0.21 | 0.69 | 0.44 | ||||||||||||
Severance expense (1) | — | — | — | 0.04 | ||||||||||||
Litigation expense (2) | 0.09 | — | 0.19 | — | ||||||||||||
Loss on impairment of long-lived assets | — | — | — | — | ||||||||||||
Loss on disposal of property and equipment | — | — | — | — | ||||||||||||
Gain on loan forgiveness | — | — | (0.12) | — | ||||||||||||
Non-GAAP loss per diluted share (3) | $ | (0.16) | $ | (0.09) | $ | (0.53) | $ | (0.28) | ||||||||
Diluted weighted average shares (4) | 11,368 | 10,045 | 11,040 | 9,313 | ||||||||||||
(1) | Represents severance expense associated with the move of our technology center to Portland, Oregon, and is exclusive of accrued vacation paid upon termination of employment. | |
(2) | Represents legal expenses towards patent litigation pursued by the Company. | |
(3) | Non-GAAP earnings per adjusted diluted share for our common stock is computed using the more dilutive of the two-class method or the if-converted method. | |
(4) | The number of diluted weighted average shares used for this calculation is the same as the weighted average common shares outstanding share count when the Company reports a GAAP and non-GAAP net loss. |
SOURCE AudioEye, Inc.
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