AudioEye(US:AEYE)2025-08-07 21:30Financial 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]