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AudioEye(AEYE) - 2024 Q3 - Earnings Call Transcript
AEYEAudioEye(AEYE)2024-11-09 21:17
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Financial Data and Key Metrics Changes - The company achieved record revenue of 8.93millioninQ32024,upfrom8.93 million in Q3 2024, up from 8.47 million in Q2 2024, representing a sequential growth of 5.4% and an annualized growth rate of 21% [7] - Adjusted EBITDA margin improved from 17% in Q2 2024 to 23% in Q3 2024, with adjusted EBITDA reaching a record 2million[8][32]−Annualrecurringrevenue(ARR)increasedto2 million [8][32] - Annual recurring revenue (ARR) increased to 36.2 million, a 2.9millionsequentialincrease,drivenbygrowthinbothEnterpriseandPartnerchannels[24]BusinessLineDataandKeyMetricsChanges−ThePartnerandMarketplacechannelgrew132.9 million sequential increase, driven by growth in both Enterprise and Partner channels [24] Business Line Data and Key Metrics Changes - The Partner and Marketplace channel grew 13% year-over-year and 5% sequentially, contributing 59% of total revenue [25] - The Enterprise channel grew organically by 14% year-over-year and 5% sequentially, accounting for 41% of revenue [26] - The company reduced non-GAAP operating expenses by 10% year-over-year while increasing gross margin to 80% [8][28] Market Data and Key Metrics Changes - Customer count increased to approximately 126,000, an 18% increase from 107,000 customers a year ago [27] - The company is seeing increased inbound demand related to upcoming accessibility mandates in Europe set for June 2025 [48] Company Strategy and Development Direction - The company is focusing on expanding partnerships with Finalsite and CivicPlus to penetrate their customer bases over the next three years, which could significantly increase revenue [10][12] - The acquisition of ADA Site Compliance is expected to enhance the company's offerings and revenue base, with a goal of integrating their customers into AudioEye's platform [13][14] - The launch of the Accessibility Protection Status aims to provide customers with a clearer understanding of their risk profile, enhancing the company's competitive edge [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that regulatory changes will not negatively impact the company's operations, particularly regarding Title II and HHS regulations [37] - The company is optimistic about maintaining and potentially increasing gross margins due to product mix and operational efficiencies [49] - Full-year revenue guidance has been increased to between 35.2 million and 35.3million,withQ4revenueexpectedtobebetween35.3 million, with Q4 revenue expected to be between 9.7 million and 9.8million[21][22]OtherImportantInformation−ThecompanyachievedHIPAAcomplianceandSOC2Type2certification,reinforcingitscommitmenttodataprotectionandsecurity[20]−FreecashflowforQ32024was9.8 million [21][22] Other Important Information - The company achieved HIPAA compliance and SOC 2 Type 2 certification, reinforcing its commitment to data protection and security [20] - Free cash flow for Q3 2024 was 1.6 million, with expectations for continued growth in Q4 [34] Q&A Session Summary Question: Clarification on penetration of Finalsite and CivicPlus - Management confirmed that full penetration would mean all customers buying the product, potentially adding tens of millions in revenue [36] Question: Impact of new administration on regulatory environment - Management does not foresee any rollback of current regulations affecting the business [38] Question: Integration of ADA Site Compliance - Management sees significant revenue growth potential from the integration, similar to past acquisitions [42] Question: Scalability of partnerships and implementation challenges - Management believes the business model is highly scalable and does not anticipate issues with implementation [44] Question: Future of gross margin - Management is optimistic about maintaining and potentially expanding gross margins due to efficiencies and product mix [49]