AEYE

• Overall Business Momentum and Financial Progress

  • 42nd consecutive quarter of sequential revenue growth, with low double-digit year-over-year ARR growth
  • Adjusted EBITDA has achieved a 42% compound annual growth rate over the past two years, with incremental revenue increasingly flowing to the bottom line as ARR scales, a trend expected to accelerate in H2 2026
  • Management is evaluating deployment options for future excess cash, including potential share buybacks and dividends
  • R&D spend as a percentage of Q2 2026 revenue fell to 12% from 17% year-over-year, driven by headcount efficiencies from AI tool and automation implementation
  • The company ended Q2 2026 with $8.7 million in cash and $3 million available under its revolving line of credit, with a net debt to 2026 adjusted EBITDA ratio of approximately 0.6

• Market Dynamics and Accessibility Demand

  • Global web accessibility is worsening, driven primarily by AI-generated coding that was not built with accessibility standards in mind; a recent WebAIM study found 95.9% of top homepages have detectable WCAG failures, with average errors up 10% year-over-year, the first increase after six years of improvement
  • AudioEye's 2026 Digital Accessibility Index found unmonitored interior web pages carry 10% more accessibility issues than homepages and accounted for ~60% of 2025 accessibility claims, while EU websites average 25% more issues per page than comparable US sites one year after the European Accessibility Act (EAA) went into effect
  • AudioEye's scalable automated solution finds and fixes more accessibility issues than competing products in real time across all customer pages, with custom fixes addressing most remaining issues cost-effectively

• European Market Expansion

  • The EAA is shifting from compliance deadlines to active enforcement, with Sweden, the Netherlands, and Germany increasing enforcement activity, and a landmark June 2026 French court ruling requiring full (not partial) accessibility compliance under penalty of daily fines
  • Q2 2026 was AudioEye's strongest quarter ever for EU contribution to ARR growth; the company maintains a strategic multi-channel go-to-market approach to position itself for the upcoming demand inflection point

• Customer Growth

  • Total customer count reached approximately 129,000 as of June 30, 2026, an increase of 9,000 year-over-year, with growth driven primarily by partner and marketplace channel expansion

• Full year 2026 revenue guidance is maintained at the midpoint, with the range tightened to $43.5 million to $44 million
• Full year 2026 adjusted EBITDA guidance is increased from at least $12 million to at least $12.7 billion, representing 40% year-over-year growth and a 29% adjusted EBITDA margin at the revenue guidance midpoint
• Full year 2026 adjusted EPS guidance is set to at least 98 cents per share
• Management expects a run rate adjusted EBITDA of over $15 million by the end of Q4 2026
• Q3 2026 revenue is expected to be between $10.85 million and $11.05 million, with a sequential increase of ~$235,000 at the midpoint, with faster sequential revenue growth expected in Q4 2026
• Q3 2026 adjusted EBITDA is guided between $3.4 million and $3.6 million, representing a ~32% adjusted EBITDA margin at the midpoint, with adjusted EPS between 26 and 28 cents per share
• Adjusted free cash flow is expected to ramp significantly in H2 2026, reaching ~$3.1 million at the Q3 guidance midpoint, with further acceleration in Q4 2026 as litigation expenses decline
• Meaningful free cash flow generation is expected in H2 2026, with continued cash flow growth expected in 2027

AudioEye operates two core business segments: 1. Enterprise Channel: This segment serves large, direct customers with custom non-platform websites. In Q2 2026, enterprise revenue was flat year-over-year, as lower non-recurring revenue offset growth in recurring revenue. Enterprise annual recurring revenue (ARR) grew 5% year-over-year, with 17% annualized sequential ARR growth. As of June 30, 2026, enterprise ARR accounted for 41% of total company ARR. 2. Partner and Marketplace Channel: This segment serves small and medium-sized businesses (SMBs) via direct marketplace products and partner-deployed solutions. In Q2 2026, channel revenue grew 16% year-over-year, driving meaningful overall ARR growth. As of June 30, 2026, this channel represented 59% of total company ARR. Overall consolidated Q2 2026 revenue reached $10.7 million, a 9% increase year-over-year, marking the 42nd consecutive quarter of sequential revenue growth. Total ARR as of quarter-end was $42.3 million, growing 11% year-over-year and 11% annualized sequentially. Adjusted EBITDA hit a record $3 million (28% margin), a 54% increase year-over-year, and adjusted free cash flow was $2.6 million, an improvement of $1.2 million year-over-year.

• Forward-looking statements regarding future revenue, growth, profitability, enforcement activity, and cash flow are inherently uncertain, and actual results may differ materially due to unforeseen risks, including factors outlined in the company's SEC filings
• Growing use of AI coding increases the volume of inaccessible web content, but also creates uncertainty around potential new competitors developing native accessibility capabilities
• EAA enforcement timelines and intensity are still uncertain, with demand inflection timing difficult to predict
• Accessibility litigation remains a source of near-term cash outflow, even as expenses are expected to trend down in H2 2026

Q: How does management plan to scale EU sales investments and partnerships if EAA enforcement-driven demand accelerates in coming quarters? / A: Management is monitoring EU enforcement developments closely and is already strategically investing in the region via a multi-channel approach with existing on-the-ground resources. The company views current EU expansion as early innings, but is well positioned to capitalize on a future demand inflection from ongoing early market positioning.

Q: What impact is AI having on enterprise customer spending, and how is internal AI implementation driving operational efficiency? / A: AI coding is actually increasing demand for AudioEye's services, because LLMs are trained on inaccessible code and produce more non-compliant websites. Enterprise customers view AudioEye as critical accessibility and litigation risk protection, so there is no negative impact on spending from broader AI-driven software cost cutting. AudioEye leverages its proprietary 10-year dataset of millions of human-reviewed accessibility fixes that competitors do not have to improve product functionality and internal efficiency, with new AI-powered product updates expected in coming months.

Q: How does M&A fit into the company's upcoming excess cash deployment strategy? / A: The expected significant ramp in free cash flow in H2 2026 and 2027 opens up multiple capital deployment options, including M&A. Management continuously evaluates potential acquisitions, but will only pursue deals that are the right strategic fit at the right price.

Q: Can AI-powered accessibility capabilities from new entrants erode AudioEye's competitive advantage, and can new AI features drive higher pricing? / A: AudioEye's unique 10-year proprietary dataset of accessibility fixes is not available to LLMs or other competitors, giving the company a sustained edge. New AI-powered supplemental products are expected to increase average selling price per customer over time, as demand for accessibility solutions grows due to AI-generated non-compliant code.