AudioEye Reports Record Fourth Quarter and Full Year 2022 Results
AudioEye, Inc. (NASDAQ: AEYE) announced its fourth quarter and full-year 2022 financial results, achieving record revenue of $7.74M for Q4, a 19% increase year-over-year. Full-year revenue rose 22% to $29.9M, with gross profit at $22.7M (75.9% of total revenue). Despite a net loss of $10.4M, an improvement from $14.2M in 2021, the company reported non-GAAP profitability of $0.2M in Q4. Operating expenses decreased by 19% to $7.9M, driven by efficiencies in sales and marketing. Annual Recurring Revenue (ARR) grew 13% to $29.2M. AudioEye guides Q1 2023 revenue between $7.7M and $7.9M, indicating 13% year-over-year growth.
- Record Q4 revenue of $7.74M, up 19% YoY.
- Full-year revenue increased 22% to $29.9M.
- Gross profit for Q4 reached $6M, or 77.4% gross margin.
- Operating expenses decreased by 19% to $7.9M.
- Non-GAAP profit of $0.2M in Q4, a significant improvement.
- Net loss of $10.4M for the full year, despite improvements.
Twenty-Eighth Consecutive Period of Record Revenue
"We are pleased to deliver record revenue with non-GAAP profitability and an improved GAAP net loss," said
Fourth Quarter 2022 Financial Results
- Total revenue increased approximately
19% to a record$7.74M $6.5M - Gross profit increased to a record
$6.0M 77.4% of total revenue, from$4.8M 74.0% of total revenue, in the prior year period. The increase in gross margin was a function of continued efficiencies across the board in our organization, which is impressive given our continued investment in R&D and customer success. - Total operating expenses decreased
19% to$7.9M $9.8M Bureau of Internet Accessibility inMarch 2022 , as well as lower stock compensation and litigation costs in general administrative expense. - Net loss available to common stockholders was
$1.9M $(0.17) $5.0M $(0.44) AudioEye generated Non-GAAP profit in the quarter of$0.2M $0.01 $1.4M $(0.12) - On
December 31, 2022 , the Company had$6.9M $7.8M September 30, 2022 . Cash usage declined to$0.9M $0.6M - Annual Recurring Revenue (ARR) as of
December 31, 2022 , increased13% to$29.2M $25.8M December 31, 2021 .
Full Year 2022 Financial Results
- Revenue increased
22% to a record$29.9M $24.5M - Gross profit increased to
$22.7M 75.9% of total revenue) in 2022 from$18.4M 75.0% of total revenue) in 2021. - With revenue growing
22% in 2022, total operating expenses for 2022 decreased from$33.9M $33.1M Bureau of Internet Accessibility and continued investments in R&D. - Net loss available to common stockholders was
$10.4M $(0.91) $14.2M $(1.29) - Non-GAAP net loss decreased to
$900,000 $(0.08) $4.5M $(0.41)
Other Updates
- In
February 2023 ,AudioEye appointedMikel Chertudi as Chief Revenue Officer. Mikel is a proven leader in sales and marketing, and we are excited to have Mikel join us as we prepare for continued growth and expansion. - Q4 2022 saw the renegotiation, extension, and addition of partnership accounts which will contribute to the stability and growth of revenue into 2023 and beyond.
- As of
December 31, 2022 ,AudioEye had approximately 86,000 customers, up 5,000 sequentially and 4,000 year-over-year. The customer count increase was driven by both Enterprise and the Partner and Marketplace channel.
Financial Outlook
We are guiding for revenue of between
Conference Call Information
Date: Thursday, March 9, 2023
Time:
International number: 412-317-5185
Access code: 10175433
Webcast: Q422 Webcast Link
Please call the conference telephone number 5-10 minutes prior to the start time. If you have any difficulty connecting with the conference call, please contact
The conference call will also be webcast live and available for replay 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
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay passcode: 10175433
About
Forward-Looking Statements
Any statements in this press release or regarding the stock repurchase program about
About Key Operating Metrics
We consider annual recurring revenue ("ARR") as a key operating metric and a key indicator of our overall business. We also use ARR as 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.
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
We define ARR as the sum of (i) for our Enterprise channel, the total of the annual recurring fee under each active contract at the date of determination, plus (ii) for our Partner and Marketplace channel, the monthly fee for all active customers at the date of determination, in each case, assuming no changes to the subscription, multiplied by 12. This determination includes both annual and monthly contracts for recurring products. Some of our contracts are cancelable, which may impact future ARR. ARR excludes revenue from our PDF remediation services business, Website and Mobile App report services business and other miscellaneous non-recurring services.
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 and litigation-related expenses and other costs that are expected to be non-recurring. 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 press release 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.
Non-GAAP Earnings (Loss) and Non-GAAP Earnings (Loss) per Diluted Share
We define: (i) Non-GAAP earnings (loss) as net income (loss), plus interest expense, plus depreciation and amortization expense, plus stock-based compensation expense, plus non-cash valuation adjustment to contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus executive team restructuring cost, plus loss on disposal or impairment of long-lived assets, and less gain on loan forgiveness; and (ii) Non-GAAP earnings (loss) per diluted share as net income (loss) per diluted common share, plus interest expense, plus depreciation and amortization expense, plus stock-based compensation expense, plus non-cash valuation adjustment to contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus executive team restructuring cost, plus loss on disposal or impairment of long-lived assets, 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.
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 press release, 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. The following table sets forth 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.
Investor Contact:
AEYE@mzgroup.us
(561) 374-0177
STATEMENTS OF OPERATIONS | ||||||||
Year ended | ||||||||
(in thousands, except per share data) | 2022 | 2021 | ||||||
Revenue | $ | 29,913 | $ | 24,503 | ||||
Cost of revenue | 7,219 | 6,121 | ||||||
Gross profit | 22,694 | 18,382 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 13,657 | 14,621 | ||||||
Research and development | 6,085 | 5,304 | ||||||
General and administrative | 13,381 | 13,970 | ||||||
Total operating expenses | 33,123 | 33,895 | ||||||
Operating loss | (10,429) | (15,513) | ||||||
Other income (expense): | ||||||||
Gain on loan forgiveness | — | 1,316 | ||||||
Interest expense, net | (4) | (12) | ||||||
Total other income (expense) | (4) | 1,304 | ||||||
Net loss | (10,433) | (14,209) | ||||||
Dividends on Series A Convertible Preferred Stock | — | (69) | ||||||
Net loss available to common stockholders | $ | (10,433) | $ | (14,278) | ||||
Net loss per common share-basic and diluted | $ | (0.91) | $ | (1.29) | ||||
Weighted average common shares outstanding-basic and diluted | 11,477 | 11,040 | ||||||
BALANCE SHEETS | ||||||||
(in thousands, except per share data) | 2022 | 2021 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 6,904 | $ | 18,966 | ||||
Accounts receivable, net | 5,418 | 5,311 | ||||||
Deferred costs, short term | 49 | 103 | ||||||
Prepaid expenses and other current assets | 595 | 451 | ||||||
Total current assets | 12,966 | 24,831 | ||||||
Property and equipment, net | 161 | 196 | ||||||
Right of use assets | 1,154 | 834 | ||||||
Deferred costs, long term | 12 | 34 | ||||||
Intangible assets, net | 6,041 | 2,622 | ||||||
4,001 | 701 | |||||||
Other | 93 | 95 | ||||||
Total assets | $ | 24,428 | $ | 29,313 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 2,452 | $ | 3,542 | ||||
Finance lease liabilities | 38 | 57 | ||||||
Operating lease liabilities | 468 | 415 | ||||||
Deferred revenue | 7,125 | 7,068 | ||||||
Contingent consideration | 979 | 134 | ||||||
Total current liabilities | 11,062 | 11,216 | ||||||
Long term liabilities: | ||||||||
Finance lease liabilities | 7 | 45 | ||||||
Operating lease liabilities | 745 | 450 | ||||||
Deferred revenue | 73 | 5 | ||||||
Contingent consideration, long term | 1,952 | — | ||||||
Total liabilities | 13,839 | 11,716 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, | ||||||||
Common stock, | 1 | 1 | ||||||
Additional paid-in capital | 93,070 | 88,889 | ||||||
Accumulated deficit | (82,482) | (71,293) | ||||||
Total stockholders' equity | 10,589 | 17,597 | ||||||
Total liabilities and stockholders' equity | $ | 24,428 | $ | 29,313 | ||||
RECONCILIATIONS OF GAAP to NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended | Year ended | |||||||||||||||
(in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Non-GAAP Earnings (Loss) Reconciliation | ||||||||||||||||
Net loss (GAAP) | $ | (1,924) | $ | (5,003) | $ | (10,433) | $ | (14,209) | ||||||||
Non-cash valuation adjustment to contingent consideration | 164 | — | 346 | — | ||||||||||||
Interest expense, net | — | 1 | 4 | 12 | ||||||||||||
Stock-based compensation expense | 1,072 | 2,191 | 4,566 | 7,616 | ||||||||||||
Acquisition expense (1) | — | — | 247 | — | ||||||||||||
Litigation expense (2) | 106 | 1,035 | 1,916 | 2,099 | ||||||||||||
Executive team restructuring cost (3) | 246 | — | 246 | — | ||||||||||||
Depreciation and amortization | 504 | 365 | 2,111 | 1,322 | ||||||||||||
Loss on disposal or impairment of long-lived assets | 1 | — | 51 | 22 | ||||||||||||
Gain on loan forgiveness | — | — | — | (1,316) | ||||||||||||
Non-GAAP earnings (loss) | $ | 169 | $ | (1,411) | $ | (946) | $ | (4,454) | ||||||||
Non-GAAP Earnings (Loss) per Diluted Share Reconciliation | ||||||||||||||||
Net loss per common share (GAAP) — diluted | $ | (0.17) | $ | (0.44) | $ | (0.91) | $ | (1.29) | ||||||||
Non-cash valuation adjustment to contingent consideration | 0.01 | — | 0.03 | — | ||||||||||||
Interest expense, net | — | — | — | — | ||||||||||||
Stock-based compensation expense | 0.09 | 0.19 | 0.40 | 0.69 | ||||||||||||
Acquisition expense (1) | — | — | 0.02 | — | ||||||||||||
Litigation expense (2) | 0.01 | 0.09 | 0.17 | 0.19 | ||||||||||||
Executive team restructuring cost (3) | 0.02 | — | 0.02 | — | ||||||||||||
Depreciation and amortization | 0.04 | 0.03 | 0.18 | 0.12 | ||||||||||||
Loss on disposal or impairment of long-lived assets | — | — | — | — | ||||||||||||
Gain on loan forgiveness | — | — | — | (0.12) | ||||||||||||
Non-GAAP earnings (loss) per diluted share (4) | $ | 0.01 | $ | (0.12) | $ | (0.08) | $ | (0.41) | ||||||||
Diluted weighted average shares (GAAP) | 11,517 | 11,368 | 11,477 | 11,040 | ||||||||||||
Includable incremental shares (Non-GAAP) (4) | 727 | — | — | — | ||||||||||||
Adjusted diluted shares (Non-GAAP) (5) | 12,244 | 11,368 | 11,477 | 11,040 | ||||||||||||
(1) | Represents legal and accounting fees associated with the BOIA acquisition. |
(2) | Represents legal expenses related primarily to patent litigation pursued by the Company. |
(3) | Represents severance expense associated with the restructuring in executive roles. |
(4) | Non-GAAP earnings per adjusted diluted share for our common stock is computed using the treasury stock method. |
(5) | 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. |
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