AudioEye, Inc. Q4 FY2025 earnings call

• Achieved 40 consecutive quarters of record revenue growth. - Adjusted EBITDA grew ~35% in 2025 to $9.1 million with a 22% margin. - Integration of acquired customers is substantially complete, expected to drive ARR acceleration in 2026. - Released the Next Generation platform to address digital accessibility needs, unifying AI detection, expert audits, and custom fixes with a proprietary data engine. - Independent study showed AudioEye detected between 89 - 253% more WCAG issues than competitive products. - EAA expanding globally, DOJ rule increasing regulatory requirements, record litigation driving demand. - Pace of innovation leveraging proprietary data is rapidly accelerating

In 2025, AudioEye achieved record revenue with 40th consecutive quarter of growth. Adjusted EBITDA grew by approximately 35% to $9.1 million in 2025 with a 22% margin. For the fourth quarter of 2025, revenue was $10.5 million, an 8% increase from Q4 2024. Full year 2025 revenue grew 15% to $40.3 million from $35.2 million in 2024. The partner and marketplace channel grew 8% year-over-year in Q4 2025, representing approximately 59% of ARR, and full year revenue grew 10% to $22.2 million. The Enterprise Channel grew 8% in Q4 2025 and 21% full year to $18.1 million, representing approximately 41% of ARR as of December 31, 2025. Gross profit in Q4 2025 was $8.3 million (79% of revenue), and full year gross margin was approximately 78%. Adjusted gross margin in Q4 2025 was 85%, and full year 2025 adjusted gross margin was 84%. Operating expenses in Q4 2025 were consistent with the same quarter last year, while full year operating expenses increased 7% to $33.4 million. R&D spend in Q4 2025 was approximately $1.6 million, 15% of Q4 2025 revenue, and full year R&D spend was 16% of 2025 revenue. Net loss in Q4 2025 was $1.1 million, and full year 2025 net loss was $3.1 million. Adjusted EBITDA in Q4 2025 was approximately $2.8 million, and full year 2025 adjusted EBITDA was approximately $9.1 million

• 2026 first quarter revenue expected between $10.5 - $10.6 million, adjusted EPTA 2.2 - 2.3 million, adjusted EPS 17 - 18 cents. - Full year 2026 revenue expected between $43 - $44.5 million, adjusted EBITDA to grow at least 30% to at least $11.8 million. - Expect to generate a run rate adjusted EBITDA of $15 million by year end 2026, implying accelerating cash flow growth into 2027 potentially higher than the 30% growth targeted for 2026. - Less non-recurring revenue expected in 2026 as focus shifts to ARR, with ARR growth expected to outpace revenue growth

• Digital accessibility on the Internet not improving and potentially getting worse due to AI using non-accessible data. - Increased rates of litigation utilizing AI to detect accessibility issues, with 2026 expected to be the highest year of digital accessibility lawsuits on record. - Other accessibility solutions may make unsubstantiated claims of custom fixes. - EU adoption of accessibility may be affected by bureaucratic processes. - Compliance with DOJ Title II requirements has implications, but progress seen in reseller and direct channels

Q: About platform updates, how much human involvement in custom fixes going forward and how it furthers differentiation?

A: Tools aren't good at accessible content, human involvement is still needed as no one has the custom fix right on the platform, and they are using more agents to streamline further.

Q: Initial revenue guidance for 2026, puts and takes for investors?

A: Guidance implies revenue growth near 10% assuming lower non-recurring revenue, ARR growth expected mid-teens, non-recurring revenue ~5% of total, aiming to reduce it further.

Q: Update on EAA investments and Europe opportunity?

A: EU pipeline is building nicely, big deals in the pipeline, closed one in Q4, expect to ramp up EU, enforcement will drive quick demand.

Q: Update on DOJ Title II enforcement ramp-up and progress with partners?

A: DOJ requirements going into effect next month, seeing momentum in reseller and direct channels from states, strong momentum with Final Sight Civic Plus.

Q: Thoughts on gross margin on adjusted basis in 2026?

A: Expect gross margin mid to high 70s as paying for more AI compute, but could see higher margins in the next couple quarters; adjusted gross margin expected to be at similar levels with growth opportunities.

Q: Drivers of 8,000 customer ads and sales productivity investment?

A: A large reseller deal in the EU was a driver, expect more momentum in EU; strategic with sales and marketing investments, will continue to invest as long as ROI is seen, including in EU