Audioeye ((AEYE)) has held its Q1 earnings call. Read on for the main highlights of the call.
AudioEye’s recent earnings call presented a balanced outlook, highlighting both achievements and challenges. The company reported strong revenue growth and significant pipeline developments, alongside financial flexibility through debt refinancing. However, challenges such as gross margin pressure and increased net loss due to non-GAAP items were also discussed. Despite these hurdles, the record revenue and market expansion suggest a promising future for AudioEye.
Record Revenue and Growth
AudioEye achieved its 37th consecutive quarter of record revenue, with Q1 2025 revenue reaching $9.7 million, marking a 20% year-over-year growth. The company also reached the Rule of 40, with 20% adjusted EBITDA margins, showcasing its robust financial performance.
Strong Pipeline and Market Expansion
The company reported significant pipeline growth in both the U.S. and Europe. Notably, the European sales team has expanded to capture demand related to the European Accessibility Act, and contributions from the reseller business are expected to be significant in the second half of the year.
Debt Refinancing and Financial Flexibility
AudioEye successfully refinanced its existing debt to a $20 million facility, reducing interest rates from 14% to approximately 7.5%. This move has strengthened the company’s cash position, with $8.3 million in cash as of March 31, 2025.
Enterprise Channel Growth
The enterprise channel experienced a 26% year-over-year growth, contributing 43% of revenue and 42% of annual recurring revenue (ARR), highlighting the channel’s importance to AudioEye’s overall revenue structure.
Gross Margin Pressure
Margins are expected to decrease by 3 to 4 percentage points in Q2 2025 due to customer migration to the upgraded platform. However, they are anticipated to return to the high 70s in the second half, indicating a temporary setback.
Increased Net Loss
The net loss in Q1 2025 was $1.5 million or $0.12 per share, an increase from $800,000 or $0.07 per share in the same year-ago period. This increase was largely due to non-GAAP items, including litigation and depreciation.
Customer Churn
Overall gross retention was impacted by higher churn in lower-tier customers acquired through ADA site compliance and Bureau of Internet accessibility migrations, suggesting an area for improvement in customer retention strategies.
Forward-Looking Guidance
AudioEye’s guidance for the second quarter of 2025 indicates expected revenue between $9.85 million and $10 million, with adjusted EBITDA ranging from $1.9 million to $2 million. The company reaffirmed its full-year 2025 revenue guidance of $41 million to $42 million, with adjusted EBITDA projected between $9 million and $10 million. They anticipate adjusted EBITDA margins to climb into the upper 20s by year-end, with free cash flow approaching $3 million in the fourth quarter, reflecting significant year-over-year growth.
In conclusion, AudioEye’s earnings call revealed a company navigating both growth and challenges. While gross margin pressures and increased net loss present hurdles, the record revenue and strategic market expansions paint a promising picture for the future. The forward-looking guidance further supports this optimistic outlook, suggesting continued growth and financial stability.