AudioEye, Inc. (AEYE) Bundle
Understanding AudioEye, Inc. (AEYE) Revenue Streams
Understanding AudioEye, Inc.’s Revenue Streams
The revenue analysis for AudioEye, Inc. reveals key insights into its financial health as of 2024. The following sections provide a breakdown of primary revenue sources, year-over-year growth rates, and contributions from various business segments.
Revenue Breakdown by Source
AudioEye generates revenue primarily through two channels: the Partner and Marketplace channel and the Enterprise channel. As of September 30, 2024, the revenue from these channels is detailed in the table below:
| Channel | Revenue (in thousands) | Year-over-Year Change (%) |
|---|---|---|
| Partner and Marketplace | $14,930 | 12% |
| Enterprise | $10,548 | 5% |
| Total Revenue | $25,478 | 9% |
The Partner and Marketplace channel accounted for approximately 58% of the Annual Recurring Revenue (ARR) at the end of September 2024, while the Enterprise channel made up about 42%.
Year-Over-Year Revenue Growth Rate
In the nine months ended September 30, 2024, total revenue increased by 9% compared to the same period in the previous year, reflecting a steady growth trend. The specific year-over-year revenue growth rates for each channel are:
- Partner and Marketplace Channel: Increased by 12%
- Enterprise Channel: Increased by 5%
The growth in the Partner and Marketplace channel was attributed to ongoing expansion with existing partners, while the Enterprise channel growth was driven by an increase in Enterprise customers.
Contribution of Different Business Segments
The contributions from the different business segments to overall revenue highlight the importance of each channel:
| Segment | Percentage of Total Revenue (%) |
|---|---|
| Partner and Marketplace | 58% |
| Enterprise | 42% |
This distribution indicates a balanced revenue model, with both segments playing crucial roles in the company's financial performance.
Significant Changes in Revenue Streams
Notably, during the nine months ended September 30, 2024, revenue from one major customer represented approximately 16% of total revenue, consistent with the previous year. This customer’s significance underscores the reliance on key accounts for revenue stability.
Additionally, the ARR as of September 30, 2024, was approximately $36.2 million, marking a 19% increase year-over-year. This growth was driven by both the Partner and Marketplace channel and the Enterprise channel.
In summary, AudioEye, Inc.'s revenue analysis for 2024 illustrates a healthy growth trajectory across its primary revenue streams, with particular strengths in its Partner and Marketplace channel. The ongoing expansion of its customer base and consistent performance from major accounts further support its financial health moving forward.
A Deep Dive into AudioEye, Inc. (AEYE) Profitability
A Deep Dive into AudioEye, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenue | $8,925,000 | $7,838,000 | $1,087,000 | 14% |
| Cost of Revenue | ($1,823,000) | ($1,788,000) | ($35,000) | 2% |
| Gross Profit | $7,102,000 | $6,050,000 | $1,052,000 | 17% |
| Operating Expenses | ($8,093,000) | ($7,440,000) | ($653,000) | 9% |
| Operating Loss | ($991,000) | ($1,390,000) | $399,000 | (29%) |
| Net Loss | ($1,202,000) | ($1,355,000) | $153,000 | (11%) |
Trends in Profitability Over Time
In the nine months ended September 30, 2024, the financial performance showed the following:
| Metric | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenue | $25,478,000 | $23,446,000 | $2,032,000 | 9% |
| Cost of Revenue | ($5,348,000) | ($5,277,000) | ($71,000) | 1% |
| Gross Profit | $20,130,000 | $18,169,000 | $1,961,000 | 11% |
| Operating Loss | ($2,119,000) | ($5,472,000) | $3,353,000 | (61%) |
| Net Loss | ($2,766,000) | ($5,339,000) | $2,573,000 | (48%) |
Comparison of Profitability Ratios with Industry Averages
The following profitability ratios were calculated for the periods under review:
| Ratio | 2024 | 2023 | Industry Average |
|---|---|---|---|
| Gross Margin | 79.6% | 77.3% | 75% |
| Operating Margin | (11.1%) | (17.7%) | (15%) |
| Net Margin | (4.8%) | (5.8%) | (10%) |
Analysis of Operational Efficiency
Operational efficiency can be analyzed through the trends in gross margin and operating expenses:
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Gross Margin | 79.6% | 77.3% | 2.3% |
| Operating Expenses as % of Revenue | 86.1% | 91.3% | (5.2%) |
Debt vs. Equity: How AudioEye, Inc. (AEYE) Finances Its Growth
Debt vs. Equity: How AudioEye, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, AudioEye, Inc. reported total long-term debt of $7,000,000 from a term loan, which matures on November 30, 2026. Additionally, the company has a short-term debt obligation in the form of a note payable amounting to $2,348,000, maturing on November 26, 2024.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for AudioEye as of September 30, 2024, is calculated as follows:
- Total Debt: $9,348,000 (Long-term of $7,000,000 + Short-term of $2,348,000)
- Total Stockholders’ Equity: $7,352,000
- Debt-to-Equity Ratio: 1.27
This ratio is above the industry average of approximately 0.65, indicating that AudioEye is more leveraged compared to its peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In November 2023, AudioEye entered into a Loan and Security Agreement for a term loan of $7,000,000 with an interest rate of 6.25% plus the base rate. The company also incurred debt issuance costs totaling $71,000.
How the Company Balances Between Debt Financing and Equity Funding
AudioEye has strategically utilized both debt and equity financing to support its growth initiatives. The company recently initiated an At The Market offering (ATM offering) allowing it to raise up to $7,000,000 through equity sales. As of September 30, 2024, the company raised $3,473,000 from the ATM offering.
| Debt Type | Amount ($) | Maturity Date | Interest Rate |
|---|---|---|---|
| Term Loan | 7,000,000 | November 30, 2026 | 6.25% + Base Rate |
| Note Payable | 2,348,000 | November 26, 2024 | Non-interest bearing |
Overall, AudioEye's approach to financing demonstrates a balance between leveraging debt for immediate growth and utilizing equity to maintain liquidity and support long-term strategies. This dual approach enables the company to adapt to market conditions while pursuing its growth objectives.
Assessing AudioEye, Inc. (AEYE) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio is calculated as follows:
- Current Assets: $11,396,000
- Current Liabilities: $13,610,000
- Current Ratio: 0.84 (Current Assets / Current Liabilities)
The quick ratio, which excludes inventory from current assets, is not directly provided, but given the current assets and current liabilities, the quick ratio is likely similar due to limited inventory holdings.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is:
- Working Capital: ($2,214,000)
This reflects a decline from December 31, 2023, when working capital was $3,247,000. The decrease in working capital is attributed to the acquisition of ADA Site Compliance and higher current liabilities.
| Period | Current Assets | Current Liabilities | Working Capital |
|---|---|---|---|
| September 30, 2024 | $11,396,000 | $13,610,000 | ($2,214,000) |
| December 31, 2023 | $14,776,000 | $11,529,000 | $3,247,000 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow overview is as follows:
- Net Cash Provided by Operating Activities: $2,166,000
- Net Cash Used in Investing Activities: ($4,603,000)
- Net Cash Used in Financing Activities: ($1,321,000)
- Net Decrease in Cash: ($3,758,000)
The increase in cash provided by operating activities is primarily due to increased revenue and cost efficiencies, while cash used in investing activities increased due to the ADA Site Compliance acquisition.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Cash: $5,478,000
- Outstanding Term Loan: $7,000,000
- Note Payable: $2,348,000
While the company has sufficient liquidity to continue as a going concern through the next twelve months, the negative working capital and reliance on external financing raise potential liquidity concerns.
Is AudioEye, Inc. (AEYE) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company's financial metrics present a mixed picture of valuation. The following key ratios are essential for assessing whether the company is overvalued or undervalued:
- Price-to-Earnings (P/E) Ratio: The P/E ratio is – (negative), reflecting a net loss of $2,766,000 for the nine months ended September 30, 2024.
- Price-to-Book (P/B) Ratio: The book value per share is approximately $0.61 (calculated from total stockholders' equity of $7,352,000 divided by 12,034,000 shares outstanding).
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: As of September 30, 2024, the enterprise value is calculated as total liabilities plus market capitalization. Given no EBITDA due to net losses, this ratio is also not applicable.
Stock price trends over the last 12 months indicate considerable volatility. The stock price has fluctuated between a low of $0.35 and a high of $1.00. Currently, the stock is trading around $0.61.
For dividend yield and payout ratios, the company currently does not pay dividends, as it is reinvesting its resources into growth initiatives. Therefore, the dividend yield is 0%.
Analyst consensus on stock valuation is primarily a hold, with various analysts citing the company's growth potential in the digital accessibility market but noting the current valuation challenges due to ongoing net losses.
| Metric | Value |
|---|---|
| P/E Ratio | – |
| P/B Ratio | $0.61 |
| EV/EBITDA Ratio | N/A |
| 52-Week Low | $0.35 |
| 52-Week High | $1.00 |
| Current Stock Price | $0.61 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing AudioEye, Inc. (AEYE)
Key Risks Facing AudioEye, Inc. (AEYE)
Overview of Internal and External Risks:
The company faces various risks that could significantly impact its financial health. These include:
- Industry Competition: The digital accessibility market is becoming increasingly competitive, with numerous players entering the space. As of September 30, 2024, the company had approximately 126,000 customers, but growth may be hindered by competitors offering similar services at lower prices.
- Regulatory Changes: Compliance with evolving regulations, including recent updates from the U.S. Department of Justice regarding web accessibility, poses a risk. The company must continuously adapt its offerings to meet these standards.
- Market Conditions: Economic downturns can affect spending on accessibility solutions. The company reported a net loss of $2,766,000 for the nine months ended September 30, 2024, indicating financial vulnerability in adverse market conditions.
Operational, Financial, or Strategic Risks:
Recent earnings reports have highlighted several operational and strategic risks:
- Customer Concentration: One customer accounted for approximately 16% of total revenue in the nine months ended September 30, 2024, posing a risk if that customer were to reduce or terminate their engagement.
- Research and Development Costs: In the nine months ended September 30, 2024, R&D expenses were $3,694,000, representing a 36% decrease from the previous year. This reduction could affect the company's ability to innovate and maintain competitive advantages.
- General and Administrative Expenses: These expenses increased by 46% to $3,794,000 in Q3 2024 compared to Q3 2023, largely due to acquisition costs and litigation expenses, which may strain profitability.
Mitigation Strategies:
The company has implemented several strategies to mitigate these risks:
- Diversification of Customer Base: Efforts are underway to expand the customer base beyond a few major clients to reduce revenue concentration risks.
- Investment in Compliance: The company is investing in compliance and regulatory adaptation to ensure alignment with new laws, thereby minimizing legal risks.
- Cost Management Initiatives: The company is focusing on cost efficiencies, as evidenced by a 9% decrease in selling and marketing expenses in Q3 2024 compared to Q3 2023, to improve financial stability.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Customer Concentration | One customer accounts for 16% of total revenue | Potential revenue loss if the customer reduces engagement |
| Regulatory Changes | Compliance with new accessibility regulations | Increased costs for product adaptation |
| Market Conditions | Economic downturn affecting spending | Reported net loss of $2,766,000 in 2024 |
| R&D Costs | R&D expenses decreased by 36% | Reduced innovation potential |
| G&A Expenses | Increased by 46% due to acquisition and litigation | Strain on overall profitability |
Future Growth Prospects for AudioEye, Inc. (AEYE)
Future Growth Prospects for AudioEye, Inc. (AEYE)
Analysis of Key Growth Drivers
AudioEye, Inc. is poised for growth through multiple avenues including product innovations, market expansions, and strategic acquisitions. For the nine months ended September 30, 2024, total revenue increased by 9% compared to the previous year, reaching $25.5 million from $23.4 million in the same period of 2023.
Future Revenue Growth Projections and Earnings Estimates
The company’s Annual Recurring Revenue (ARR) as of September 30, 2024, was approximately $36.2 million, reflecting a year-over-year increase of 19%. Revenue from the Partner and Marketplace channel grew by 12% during the same period, while Enterprise channel revenue showed a 5% growth. Analysts project continued revenue growth driven by an increase in customer base, which rose to approximately 126,000 as of September 30, 2024, up from 107,000 in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
In September 2024, the acquisition of ADA Site Compliance was a significant strategic move aimed at enhancing service offerings and expanding market reach. This acquisition is expected to bolster the company’s position in the compliance sector, enabling deeper penetration into governmental and enterprise markets.
Competitive Advantages That Position the Company for Growth
AudioEye's dual sales channels—the Partner and Marketplace channel, and the Enterprise channel—provide a balanced approach to revenue generation. The Partner and Marketplace channel contributed about 58% of total ARR as of September 30, 2024. The company also benefits from a strong brand reputation and established customer relationships, which are critical in a competitive landscape. The focus on innovation in accessibility solutions further strengthens its market position.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Total Revenue | $25.5 million | $23.4 million | 9% |
| Annual Recurring Revenue (ARR) | $36.2 million | $30.4 million | 19% |
| Customer Count | 126,000 | 107,000 | 18% |
| Partner and Marketplace Revenue Growth | 12% | — | — |
| Enterprise Revenue Growth | 5% | — | — |
In summary, AudioEye's strong revenue growth, strategic acquisitions, and expanding customer base position it well for future growth opportunities in the dynamic market of accessibility solutions.
AudioEye, Inc. (AEYE) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- AudioEye, Inc. (AEYE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of AudioEye, Inc. (AEYE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View AudioEye, Inc. (AEYE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.