Audioeye, Inc. (NASDAQ: AEYE) reported Q1 EPS of ($0.19), $0.04 better than the analyst estimate of ($0.23). Revenue for the quarter came in at $4.26 million versus the consensus estimate of $3.69 million.

First Quarter 2020 Financial Results and April Update

• Total revenue increased 115% to a record $4.3M from $2M in the same period a year ago. The increase in revenue was primarily due to continued growth in the Company's enterprise and vertical partner channels during the period.
• As of March 31, 2020, monthly recurring revenue (MRR) was approximately $1.4M, which was an increase of 17% compared to approximately $1.2M at December 31, 2019.
• Gross profit increased over 170% to $2.9M (~69% of total revenue) from $1.1M (~54% of total revenue) in the same year-ago period. The increase in gross profit and gross margin was primarily due to increased efficiencies being realized as the Company continues to improve and expand the level of automation in its remediations as well as an increase in revenues.
• Operating expenses increased 45% to $4.6M from $3.2M in the same year-ago period. The increase in total operating expenses was primarily due to increases in sales and marketing expenses as well as research and development and general and administrative expenses.
• Net loss available to common stockholders was $1.7M, or $(0.19) per share, compared to $2.1M, or $(0.28) per share, in the same year-ago period. The improved net loss was primarily due to increased efficiencies being realized as the Company continues to improve and expand the level of automation in its remediations as well as an increase in revenues, which was offset by an increase in total operating expenses.
• At quarter-end, the Company had $1.8M in cash, compared to $2M at December 31, 2019, and no debt.
• Bookings increased 14% to $3.9M from $3.4M in the same year-ago period. The increase in bookings was primarily due to consistent performance in the Company's enterprise channel and execution against the current sales pipeline as well as improved performance within the Company's vertical partner channel through deeper penetration within existing partners.
• Deferred revenue increased 83% to $5.3M from $2.9M in the first quarter of 2019.
• Contracts in excess of revenue and deferred revenue increased 88% to $17.2M from $9.2M in the same period last year.
• As of March 31, 2020, total customer count had grown to over 11,000 customers, which was an over 60% increase compared to the prior quarter and a more than 900% increase compared to the first quarter of 2019.
• As of April 30, 2020, total customer count had grown to over 16,000 customers, and MRR was approximately $1.5M.
• The Company is reiterating its expectation to achieve cash flow positivity in 2021, assuming normal economic conditions.

First Quarter and Recent Operational Highlights

• Appointed Heath Thompson as Chief Executive Officer, who brings nearly three decades of leadership and engineering experience from organizations ranging from start-ups to large global corporations and possesses a deep background in SaaS and software product businesses.
• Launched machine-learning powered AudioEye Digital Marketplace, a suite of digital accessibility solutions enabling companies of all sizes to accelerate accessibility easily and affordably.
• Launched free 90-day trial of the AudioEye Pro solution to assist companies managing through COVID-19.
• Continued to position AudioEye as the digital accessibility thought leader, with media coverage in publications targeted to key audiences, including business owners and website designers: Digital Trends; Social Selling News; Information Week and Small Biz Resources.
• Continued to grow Enterprise (direct) sales channel client roster in the first quarter with prominent new customers from the consumer goods, construction, major electronics, state government agencies, financial institutions, and the automotive space among others.
• Continued to solidify existing vertical (indirect) channel partner relationships. Currently, 20 active channel partners offer AudioEye as a preferred digital accessibility solution to their clients.

Management Commentary

AudioEye Executive Chairman Carr Bettis said, "We came into the year with significant sales momentum and increasing channel partner adoption, which continued to build in the first quarter. At March 31, we counted over 11,000 customers and, by the end of April, that number had grown to over 16,000 customers, which is an order of magnitude greater than even just a few quarters ago. We were able to drive our 17th consecutive quarter of record revenue while expanding our margins considerably to nearly 70% and incrementally reducing our cash usage. At March 31, 2020 MRR was $1.4M and at April 30, 2020 was approximately $1.5M. We are reiterating our expectation that under normal economic conditions we expect to be cash flow positive in 2021."

AudioEye Chief Executive Officer Heath Thomson added "While we are continuing to perform within our pre-COVID projections, like any business and similar to our customers, we are not entirely immune to the effects of a global pandemic or a related macroeconomic slowdown. However, with the rapid digital transformation taking place across all commercial activity, the need for accessible solutions has become greater than ever, and we're looking forward to leading that charge."

Financial Outlook

The Company remains confident in its long-term growth prospects as well as the opportunities in the digital accessibility industry as a whole. Both the Board of Directors and Company management remain focused on growing monthly recurring revenue (MRR) as its leading financial indicator. Under normal economic conditions, the Company is reiterating its expectation to achieve cash flow positivity in 2021. This forecast remains subject to change and does not factor in a significant, long-term macroeconomic impact to AudioEye or its customer base as a result of COVID-19.

For earnings history and earnings-related data on Audioeye, Inc. (AEYE) click here.