AudioEye, Inc. (NASDAQ:AEYE) Q1 2023 Earnings Conference Call May 10, 2023 4:30 PM ET

Company Participants

David Moradi - Chief Executive Officer

Kelly Georgevich - Chief Financial Officer

Conference Call Participants

Zach Cummins - B. Riley FBR

Scott Buck - H.C. Wainwright

George Sutton - Craig-Hallum

Operator

Good afternoon, and welcome to AudioEye's First Quarter 2023 Earnings Conference Call. Joining us for today's call are AudioEye's CEO, Mr. David Moradi; and CFO, Ms. Kelly Georgevich. Following their remarks, we will open the call for questions from the company’s publishing analysts.

I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's site at www.audioeye.com.

Before I turn the call over to AudioEye's Chief Executive Officer, the company would like to remind all participants that statements made by AudioEye management during the course of this conference call that are not historical facts are considered to be forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, confident will and other similar statements of expectation identify forward-looking statements. These statements are predictions, projections or other statements about future events and are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could materially differ because of factors discussed in today's press release in the comments made during this conference call and in the Risk Factors section of the company's annual report on Form 10-K its quarterly reports on Form 10-Q and its other reports and filings with the Securities and Exchange Commission.

Participants on this call are cautioned not to place undue reliance on these forward-looking statements which reflect management's belief only as of the date hereof. AudioEye does not undertake any duty to update or correct any forward-looking statements.

Further, management's remarks today will include certain non-GAAP financial measures. A reconciliation of the most directly comparable GAAP financial measures to these non-GAAP financial measures is available in the company's earnings release posted in the Investor Relations section of our website at www.audioeye.com.

Now, I'd like to turn the call over to AudioEye's Chief Executive Officer, Mr. David Moradi. Sir, please proceed.

David Moradi

Thank you, operator. Welcome everyone and thank you for joining us. To begin, we'd like to highlight our strong financial performance and continued focus on efficiencies. We are pleased to announce record revenue of $7.77 million in the first quarter. We ended the first quarter with sequential growth in our key performance indicator, annual recurring revenue or ARR, which was $29.6 million up from $29.2 million on December 31, 2022. Gross margins were 78% versus 75% in the year-over-year quarter.Gross profit increased to $6.1 million versus $5.2 million year-over-year, representing a 100% flow-through of additional revenue into gross profit. Revenue increased 13% year-over-year while operating expenses decreased by 8%. Net loss decreased and we achieved a near non-GAAP breakeven versus a $1 million loss in the year-over-year quarter. We were able to achieve near non-GAAP breakeven despite increased R&D investment of approximately $200,000, compared to the first quarter of 2022.