Core Insights - AudioEye, Inc. reported record revenue of over $10.2 million for Q3 2025, marking a 15% increase from $8.9 million in the same period last year [2][6] - The company anticipates continued growth in ARR, revenue, and adjusted EBITDA in Q4 2025, driven by regulatory demand and advancements in AI technology [2][4] - AudioEye updated its full-year 2025 revenue guidance to between $40.3 million and $40.4 million, reflecting approximately 15% year-over-year growth [5] Financial Performance - Total revenue for Q3 2025 was $10.2 million, with gross profit increasing to $7.9 million, representing 77% of total revenue [6] - Adjusted EBITDA for Q3 2025 was $2.5 million, with adjusted EPS of $0.19 per share, compared to $2.0 million and $0.16 per share in Q3 2024 [6][24] - The net loss for Q3 2025 was $0.6 million, or $(0.04) per share, an improvement from a net loss of $1.2 million, or $(0.10) per share, in the prior year [6][21] Market and Strategic Developments - The European Accessibility Act is increasing demand for digital accessibility solutions in Europe, and AudioEye is expanding its market presence through a partnership with Creode [2][6] - As of September 30, 2025, AudioEye had approximately 123,000 customers, an increase of 3,000 from the previous quarter, driven by growth in the Partner and Marketplace channel [6][8] - The company aims for a 30-40% annual growth in adjusted EPS and EPS over the next three years [2]

Core Insights - AudioEye's stock closed at $14.27, reflecting a daily increase of 1.13%, which is lower than the S&P 500's gain of 1.23% [1] - Over the past month, AudioEye's shares have decreased by 0.74%, underperforming the Computer and Technology sector's increase of 3.49% and the S&P 500's increase of 2.45% [1] Earnings Expectations - The upcoming earnings report for AudioEye is scheduled for November 4, 2025, with projected earnings of $0.18 per share, indicating a year-over-year growth of 12.5% [2] - Revenue is expected to reach $10.25 million, representing a growth of 14.78% compared to the same quarter last year [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $0.70 per share and revenue at $40.47 million, reflecting increases of 27.27% and 14.96% respectively from the previous year [3] Analyst Estimates - Changes in analyst estimates for AudioEye are crucial as they often reflect short-term business dynamics, with upward revisions indicating positive sentiment towards the company's operations [4] - The Zacks Rank system, which incorporates these estimate changes, provides a functional rating system for stocks [5] Zacks Rank and Performance - AudioEye currently holds a Zacks Rank of 3 (Hold), with the consensus EPS estimate remaining steady over the past month [6] - The Zacks Rank system has a strong track record, with 1 stocks averaging an annual return of 25% since 1988 [6] Valuation Metrics - AudioEye is trading at a Forward P/E ratio of 20.15, which is a discount compared to the industry average Forward P/E of 30.18 [7] - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 79, placing it in the top 32% of over 250 industries [7] Industry Performance - The Zacks Industry Rank evaluates the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Core Points - AudioEye, Inc. will hold a conference call on November 4, 2025, at 4:30 p.m. Eastern Time to discuss its financial results for Q3 2025 [1][2] - The conference call will include a question and answer session and will be available for live webcast and replay on the company's investor relations website [2][3] - AudioEye is recognized as a leader in digital accessibility, providing solutions that combine AI automation with expert fixes, serving over 120,000 customers including notable brands like Samsung and Calvin Klein [3] Financial Results Announcement - The financial results for the third quarter ended September 30, 2025, will be released in a press release prior to the conference call [1] - A telephonic replay of the conference call will be available after 7:30 p.m. Eastern Time on the same day through November 18, 2025 [3] Company Overview - AudioEye aims to ensure digital accessibility, offering a comprehensive solution that includes 24/7 monitoring, automated WCAG issue testing, and legal protection [3] - The company holds 24 US patents related to its accessibility solutions [3]

Core Insights - AudioEye's stock price decreased by 1.62% to $13.93, underperforming compared to the S&P 500's loss of 0.55% [1] - The stock has increased by 18.3% over the past month, outperforming the Computer and Technology sector's gain of 9.88% and the S&P 500's gain of 3.64% [1] Earnings Expectations - The upcoming earnings report is anticipated to show an EPS of $0.18, representing a 12.5% increase from the same quarter last year [2] - Revenue is projected to be $10.25 million, reflecting a 14.78% rise year-over-year [2] Annual Forecast - For the full year, earnings are expected to be $0.70 per share and revenue at $40.47 million, indicating increases of 27.27% and 14.96% respectively compared to the previous year [3] - Recent analyst estimate revisions suggest a positive outlook on the company's business health and profitability [3] Valuation Metrics - AudioEye's Forward P/E ratio is 20.23, which is a discount compared to the industry average Forward P/E of 32.31 [6] - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 70, placing it in the top 29% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), indicates that AudioEye is currently rated 3 (Hold) [5] - The Zacks Rank has a historical track record of outperforming expectations, with 1 rated stocks delivering an average annual return of +25% since 1988 [5]

Core Insights - AudioEye, Inc. has announced a partnership with Creode to enhance digital accessibility solutions for financial services and enterprise organizations, addressing the growing demand for compliance with the European Accessibility Act (EAA) and other global regulations [1][2][3] Group 1: Partnership Details - The partnership will integrate AudioEye's accessibility platform into Creode's digital services, allowing for comprehensive solutions to accessibility issues at scale [1][2] - This collaboration aims to expand AudioEye's international presence in highly regulated industries, particularly in Europe [1][3] Group 2: Regulatory Context - The EAA, effective from June 28, 2025, builds on the EU's Web Accessibility Directive, increasing digital accessibility requirements across Europe [2] - As regulations strengthen, the partnership will help clients ensure ongoing compliance with accessibility standards [2][3] Group 3: Strategic Importance - Digital accessibility is emphasized as a business imperative, especially for industries like financial services that are heavily regulated [3] - The partnership allows Creode to embed accessibility into its core digital services, ensuring compliance from the outset of web design and development [3][4] Group 4: Company Backgrounds - Creode is a UK-based digital agency specializing in marketing solutions for the financial services sector, focusing on building customer relationships and driving growth [5][6] - AudioEye is recognized as a leader in digital accessibility, providing a comprehensive solution that combines AI automation with expert fixes, serving over 120,000 customers [7]

Core Insights - AudioEye, Inc. focuses on digital accessibility solutions for individuals with disabilities, operating in a competitive landscape with peers like Brightcove Inc., ClearPoint Neuro, Inc., Rekor Systems, Inc., DarioHealth Corp., and Apyx Medical Corporation [1] Financial Performance - AudioEye has a Return on Invested Capital (ROIC) of -14.04%, significantly lower than its Weighted Average Cost of Capital (WACC) of 6.98%, indicating inefficiency in generating returns to cover its cost of capital [2][5] - ClearPoint Neuro, Inc. has a ROIC of -40.55% against a WACC of 7.76%, suggesting severe inefficiencies in generating returns on invested capital [3][5] - Rekor Systems, Inc. and DarioHealth Corp. report negative ROICs of -107.12% and -18.93%, respectively, with WACCs of 12.18% and 8.50%, indicating similar capital utilization challenges [4] - Apyx Medical Corporation shows a ROIC of -26.00% and a WACC of 11.51%, further emphasizing the difficulties faced by these companies in generating sufficient returns [4]

Core Insights - AudioEye, Inc. has been selected by Motability Operations to enhance the accessibility and compliance of its digital experiences through the AudioEye Digital Accessibility Platform [1][2][3] - The partnership emphasizes AudioEye's expanding international presence and its role as a trusted accessibility partner for organizations focusing on compliance and usability [2][5] Company Overview - AudioEye is recognized as an industry leader in digital accessibility, combining AI automation technology with expert fixes to ensure compliance with accessibility standards [10] - The company serves over 120,000 customers, including notable brands like Samsung and Calvin Klein, and offers a comprehensive solution that includes 24/7 accessibility monitoring and legal protection [10] Partnership Details - Motability Operations chose AudioEye for its superior automation capabilities and the ability to provide custom fixes from accessibility experts, which are crucial for the launch of a refreshed website [3] - The partnership aims to reinforce a shared commitment to digital accessibility and scalable solutions that support compliance and usability [5] Impact of the Motability Scheme - The Motability Scheme is vital for thousands of disabled individuals in the UK, providing them with accessible vehicles and enhancing their mobility and economic participation [4][7] - On average, users of the Scheme can work an additional two days per week, and for every £1 of disability allowance spent, £1.50 is returned to the UK economy, supporting approximately 34,000 jobs [4][7]

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for June 30, 2025, show increased assets and liabilities, decreased equity, and improved operational performance with revenue growth and a narrowed net loss [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$33.9 million**, liabilities to **$26.6 million** due to a new term loan, while stockholders' equity decreased to **$7.3 million** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$33,900** | **$29,766** | | Cash and cash equivalents | $6,869 | $5,651 | | Intangible assets, net | $11,929 | $10,276 | | **Total Liabilities** | **$26,551** | **$20,330** | | Term loan, net | $12,765 | $6,820 | | Deferred revenue | $8,229 | $7,518 | | **Total Stockholders' Equity** | **$7,349** | **$9,436** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 revenue grew **16%** to **$9.9 million**, achieving operating income of **$242,000** and a near breakeven net loss of **($2,000)**, significantly improving from Q2 2024 Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $9,857 | $8,470 | +16.4% | | Gross Profit | $7,619 | $6,706 | +13.6% | | Operating Income (Loss) | $242 | $(497) | +148.7% | | Net Loss | $(2) | $(735) | +99.7% | | Net Loss Per Share | $0.00 | $(0.06) | +100.0% | H1 2025 vs H1 2024 Performance (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $19,590 | $16,553 | +18.3% | | Gross Profit | $15,357 | $13,028 | +17.9% | | Operating Loss | $(698) | $(1,128) | +38.1% | | Net Loss | $(1,471) | $(1,564) | +6.0% | | Net Loss Per Share | $(0.12) | $(0.13) | +7.7% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, operating cash flow increased to **$1.2 million**, investing cash use rose to **$2.7 million** due to acquisitions, and financing cash flow reversed to a **$2.7 million** inflow from new debt Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,171 | $613 | | Net cash used in investing activities | $(2,671) | $(1,035) | | Net cash provided by (used in) financing activities | $2,718 | $(3,728) | | **Net increase (decrease) in cash** | **$1,218** | **$(4,150)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue streams, Q2 2025 asset acquisition, a new **$20 million** credit facility replacing prior debt, and the initiation of a share repurchase program - Revenue is disaggregated into two sales channels: Partner and Marketplace, and Enterprise. For the six months ended June 30, 2025, Enterprise revenue grew **27%** YoY, while Partner and Marketplace revenue grew **13%** YoY[30](index=30&type=chunk)[123](index=123&type=chunk) - One customer accounted for approximately **14%** of total revenue in the first six months of 2025 and **11%** of total accounts receivable as of June 30, 2025[32](index=32&type=chunk)[35](index=35&type=chunk) - In Q2 2025, the company completed an asset acquisition, recognizing **$1.8 million** in customer relationships, which will be amortized over 8 years[76](index=76&type=chunk) - On March 31, 2025, the company entered a new credit facility with Western Alliance Bank for up to **$20.0 million** and used proceeds to repay its previous **$7.0 million** term loan with SG Credit Partners, recognizing a **$300,000** loss on extinguishment of debt[87](index=87&type=chunk)[97](index=97&type=chunk) - In January 2025, the Board authorized a share repurchase program of up to **$12.5 million**. As of June 30, 2025, the company had repurchased shares for **$1.76 million**, with **$10.74 million** remaining[57](index=57&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **18%** H1 2025 revenue growth, **14%** ARR increase to **$38.2 million**, rising operating expenses due to litigation, and improved liquidity from a new credit facility [Executive Overview and Key Metrics](index=30&type=section&id=Executive%20Overview%20and%20Key%20Metrics) The company achieved **18%** H1 2025 revenue growth, with ARR increasing **14%** to **$38.2 million**, despite a **1%** customer count decrease due to contract renegotiation - Annual Recurring Revenue (ARR) was approximately **$38.2 million** as of June 30, 2025, a **14%** increase year-over-year[112](index=112&type=chunk)[142](index=142&type=chunk) - The customer count decreased by **1%** to approximately **120,000** from June 30, 2024, due to a contract renegotiation within the Partner and Marketplace channel[113](index=113&type=chunk) - For the six months ended June 30, 2025, the Partner and Marketplace channel revenue grew **13%** and the Enterprise channel revenue grew **27%** over the prior year period[114](index=114&type=chunk) [Results of Operations Analysis](index=32&type=section&id=Results%20of%20Operations%20Analysis) H1 2025 revenue grew **18%** to **$19.6 million**, with gross profit matching; operating expenses rose **13%** due to increased selling, marketing, and G&A costs, partially offset by a **$1.3 million** non-cash gain Revenue by Channel - Six Months Ended June 30 (in thousands) | Channel | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Partner and Marketplace | $10,919 | $9,704 | $1,215 | 13% | | Enterprise | $8,671 | $6,849 | $1,822 | 27% | | **Total revenue** | **$19,590** | **$16,553** | **$3,037** | **18%** | - Selling and marketing expenses for H1 2025 increased by **26%** YoY, primarily due to higher third-party marketing expenses and costs from acquisitions[129](index=129&type=chunk)[130](index=130&type=chunk) - General and administrative expenses for H1 2025 increased by **33%** YoY, mainly due to an **$830,000** increase in litigation expense, higher personnel costs, and amortization[133](index=133&type=chunk)[135](index=135&type=chunk) - A non-cash gain of **$1.31 million** was recognized in H1 2025 due to a reduction in the estimated earnout payable for the ADA Site Compliance acquisition[136](index=136&type=chunk)[137](index=137&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$6.9 million** in cash and **$1.4 million** in working capital, an improvement driven by **$13.4 million** in new term loan advances, ensuring sufficient liquidity for the next twelve months - Working capital increased from **$549,000** at Dec 31, 2024, to **$1,384,000** at June 30, 2025, mainly due to new debt financing[143](index=143&type=chunk) - The company initiated a **$12.5 million** share repurchase program in January 2025 and used **$1.76 million** of it in the first six months of the year[144](index=144&type=chunk) - Cash from financing activities increased significantly due to **$13.4 million** in proceeds from a new term loan, partially offset by the repayment of a **$7.0 million** previous loan[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is indicated as not applicable - Not applicable[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[155](index=155&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[156](index=156&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially adversely affect its financial position or operations - Management believes the resolution of any routine disputes incidental to business operations is not likely to have a material adverse effect on the company[162](index=162&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the 2024 Form 10-K - No material changes to the risk factors set forth in the 2024 Form 10-K have occurred[163](index=163&type=chunk) [Item 2. Issuer Purchases of Equity Securities](index=40&type=section&id=Item%202.%20Issuer%20Purchases%20of%20Equity%20Securities) During Q2 2025, the company repurchased **143,939** shares for approximately **$1.76 million** under its **$12.5 million** share repurchase program Share Repurchases for Q2 2025 | Period | Total Shares Purchased (Program) | Average Price Paid per Share | Approx. Value Remaining ($) | | :--- | :--- | :--- | :--- | | May 1 - May 31 | 123,939 | $12.24 | $10,983,000 | | June 1 - June 30 | 20,000 | $12.38 | $10,735,000 | | **Total Q2** | **143,939** | **$12.26** | **$10,735,000** | [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including officer certifications and documents related to loan modification and board resolutions

Company Performance - AudioEye reported quarterly earnings of $0.15 per share, missing the Zacks Consensus Estimate of $0.16 per share, but showing an increase from $0.12 per share a year ago, resulting in an earnings surprise of -6.25% [1] - The company posted revenues of $9.86 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.8%, and an increase from $8.47 million year-over-year [2] - Over the last four quarters, AudioEye has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Performance - AudioEye shares have declined approximately 21% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current Zacks Rank for AudioEye is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $10.49 million, and for the current fiscal year, it is $0.71 on revenues of $41.51 million [7] - The outlook for the Internet - Software industry, where AudioEye operates, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable environment for performance [8]

Financial Data and Key Metrics Changes - In Q2 2025, AudioEye achieved revenue of $9.9 million, representing a 16% increase year-over-year and marking the 38th consecutive quarter of growth [15][5] - Annual Recurring Revenue (ARR) increased by $1.1 million sequentially and $4.9 million year-over-year to $38.2 million [15][5] - Adjusted EBITDA for Q2 2025 was $1.9 million, a 31% increase year-over-year [21] - The company expects adjusted EBITDA margins to reach the high 20s by Q4 2025 [6] Business Line Data and Key Metrics Changes - The enterprise channel grew by 25% year-over-year, contributing approximately 45% of revenue and ARR, while the partner and marketplace channel grew around 10%, contributing about 55% [19] - The company is phasing out lower-margin legacy services from acquired companies, which has impacted ARR and revenue numbers [19][10] Market Data and Key Metrics Changes - The European Accessibility Act (EAA) went into effect in late June 2025, creating significant demand for AudioEye's services in the EU [10] - The company is seeing a growing pipeline in the EU, which has reportedly tripled from Q2 to Q3 2025 [29][34] Company Strategy and Development Direction - AudioEye aims to achieve annual adjusted EPS growth of 30% to 40% over the next three years [7] - The company is focusing on integrating recent acquisitions to standardize offerings and eliminate duplicate systems, which is expected to enhance cash flow [9] - There is a strong emphasis on expanding presence in the EU and targeting agencies that create websites for clients [46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about accelerating ARR and revenue growth in the second half of 2025, driven by strong demand in the enterprise business [5][6] - The company anticipates that the enforcement of the EAA will lead to increased legal actions for non-compliance, further driving demand for its services [10][11] - Management noted that the digital accessibility lawsuits have increased, which is expected to benefit AudioEye's growth [28] Other Important Information - The company repurchased approximately $1.8 million of shares in Q2 2025 [22] - As of June 30, 2025, AudioEye had $6.9 million in cash and $6.6 million in available debt facilities [22] Q&A Session Summary Question: Impact of phased-out customers on numbers - Management indicated that acquisition-related churn is expected to impact ARR by approximately $1 million to $1.5 million in 2025, primarily due to the migration to AudioEye products [25][26] Question: Digital accessibility lawsuits trend - Management acknowledged that digital accessibility lawsuits are likely up, estimating a 10% to 20% increase, and noted that the company is outgrowing the market [28] Question: EU pipeline visibility - Management reported that the pipeline for the EU business has tripled from the previous quarter, indicating strong growth potential [29][34] Question: Expansion strategy in the EU - Management confirmed that the company is adding salespeople and increasing marketing efforts in the EU to drive growth [36] Question: Title II of the DOJ update - Management expects significant momentum from partners in the government-adjacent space as they prepare for the implementation of Title II [49]