AudioEye — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue increased 7% year-over-year to $11.0 million from $10.2 million in the prior year period.
• Annual Recurring Revenue (ARR) grew 12% year-over-year in the third quarter.
• Gross profit increased to $9.1 million (83% of revenue) from $7.9 million (77% of revenue) in the prior year period.
• Adjusted gross margin improved to 88% in Q3 2026 from 83% in the prior year period.
• Operating expenses decreased 5% year-over-year to $7.8 million, driven by lower sales and marketing expenses and reduced R&D expenses due to AI efficiencies.
• Net income was $1.0 million ($0.08 per diluted share), compared to a net loss of $0.6 million ($0.04 per diluted share) in the prior year period.
• Adjusted EBITDA was $3.9 million, up 58% year-over-year from $2.5 million; Adjusted EPS was $0.30 per diluted share, up from $0.19.
• Cash and cash equivalents were $9.3 million as of September 30, 2026.
• Deferred revenue was $8.35 million (current) and $81,000 (long-term) as of September 30, 2026.
• Total debt (term loan, current and long-term) was $16.23 million ($850,000 current, $15.38 million long-term) as of September 30, 2026.

Guidance and Future Outlook:

• Q4 2026 revenue guidance is set between $11.4 million and $11.6 million, implying full-year 2026 revenue between $43.6 million and $43.8 million.
• Q4 2026 adjusted EBITDA guidance is between $4.2 million and $4.4 million, raising full-year 2026 adjusted EBITDA guidance to between $13.4 million and $13.6 million (approximately 50% year-over-year growth).
• Q4 2026 adjusted EPS guidance is between $0.32 and $0.33 per share, with full-year 2026 adjusted EPS expected to be at least $1.04 per share.
• Management expects sequential annualized revenue growth of approximately 20% in the fourth quarter.
• Management expects adjusted EBITDA in the fourth quarter to be up 56% year-over-year.
• The company is on track to exceed its 2025-2028 goal of 30-40% annual growth in adjusted EBITDA and adjusted EPS, having achieved approximately 50% year-over-year growth in the second year of the plan.

Business Segments and Product Lines:

• In October 2026, the company launched two new AI products: Agentic Audits and the AudioEye SDK MCP, powered by AudioEye Intelligence.
• Agentic Audits utilize an AI agent to navigate sites like a human, finding up to 50% more high-severity issues than automation alone.
• The AudioEye SDK MCP integrates AudioEye Intelligence directly into AI coding tools used by developers.
• The company reduced emphasis on non-recurring revenue in 2026 to focus on growing Annual Recurring Revenue (ARR).
• Customer count reached approximately 130,000 as of September 30, 2026, an increase of 7,000 year-over-year, driven by growth in both Partner/Marketplace and Enterprise channels.

Market and Competitive Landscape:

• Research published in September 2026 indicated that 91% of accessibility issues found on websites built with leading AI coding tools were rated medium or high severity.
• Research published in September 2026 showed AI agents completed up to 68% fewer tasks and used 43% more tokens on inaccessible websites.
• The 2026 Digital Accessibility Index UK findings (August 2026) scanned over 14,400 pages across 475 UK websites, finding an average of 66 accessibility issues per page.
• The company holds 25 US patents and utilizes a proprietary dataset built from over one million human reviews over a decade.

Risks and Challenges:

• The press release notes inherent uncertainties and costs associated with litigation as a risk factor.
• Forward-looking statements highlight risks including variability in revenue and financial performance, product development changes, and general economic conditions.
• The company reported litigation expenses of $492,000 in Q3 2026 and $3.4 million for the nine months ended September 30, 2026.

Management Commentary and Tone:

• CEO Kelly Georgevich stated the business is "strong" and expects increased operating leverage in the fourth quarter.
• Management expressed confidence in exceeding its three-year aspirational goal of 30-40% annual growth in adjusted EBITDA and adjusted EPS.
• Georgevich noted that gross margins improved by over 550 basis points to 83% (GAAP) and 88% (Adjusted) in Q3.
• Management highlighted that the company is generating significant cash going forward.

Other Key Points:

• On October 20, 2026, the Board of Directors authorized a stock repurchase program of up to $15 million, representing 15% of outstanding shares at current prices, valid through October 18, 2027.
• The new share repurchase program replaces the prior authorization and is expected to be funded with working capital and cash from operations.
• The company reported a GAAP net income margin of 9% in Q3 2026, compared to a GAAP net loss margin of 5% in the prior year period.
• Adjusted EBITDA margin was 35% in Q3 2026, up from 24% in the prior year period.