AudioEye targets at least $12M in 2026 adjusted EBITDA while extending focus on agentic AI and April 2027 Title II timeline

Earnings Call Insights: AudioEye (AEYE) Q1 2026

MANAGEMENT VIEW

* AudioEye highlighted continued growth and a leadership change, with Executive Chairman and Chief Product Officer David Moradi emphasizing, "The first quarter marks the 41st consecutive quarter of record revenue," and adding, "I'm highly confident that as CEO, she will lead the company through our next phase of growth and continued operating margin improvement." Moradi said his focus will shift to "long-term strategy and product innovation, including AI initiatives now possible with recent LLM improvements," and referenced "upcoming agentic product releases."
* CEO and CFO Kelly Georgevich framed market demand around worsening accessibility outcomes, saying, "The market environment continues to reinforce the need for solutions with accuracy and scale," and adding, "Agentic coding solutions are driving faster web development but are making the web less accessible." She said customer response to the platform launch has been strong: "We continue to see strong feedback and engagement with our next-generation platform introduced earlier this year."
* On regulation, CEO and CFO Georgevich said, "in April 2026, the DOJ published an interim final rule extending Title II Web Accessibility Compliance Guidelines by 1 year for state and local governments with enforcement now slated to begin in April 2027," and added, "The additional year gives AudioEye and our channel partners a broader runway to engage state and local government entities." On Europe, she said, "In the European Union, we continue to build pipeline and see steady positive early signs as enforcement time lines take shape," while noting, "We are being disciplined with our investments there."

OUTLOOK

* For Q2 2026, CEO and CFO Georgevich guided, "revenue of between $10.65 million and $10.75 million and adjusted EBITDA of between $2.6 million and $2.7 million" and "adjusted EPS of between $0.21 and $0.22 per share."
* For full-year 2026, CEO and CFO Georgevich said, "we are refining our revenue guidance to between $43.25 million and $44.25 million" and "we now expect full year 2026 adjusted EBITDA to be at least $12 million" with "adjusted EPS of at least $0.96." She also reiterated, "we continue to target a $15 million run rate adjusted EBITDA by the end of 2026."
* Compared with the prior quarter’s framing, the company moved from Q4 2025 guidance of "revenue of between $43 million and $44.5 million" and "adjusted EBITDA... of at least $11.8 million" (CEO David Moradi, Q4 call) to a narrower revenue range and a higher adjusted EBITDA floor in Q1 2026 (CEO and CFO Georgevich, Q1 call).

FINANCIAL RESULTS

* CEO and CFO Georgevich reported Q1 2026 revenue of "$10.6 million" and said ARR was "$41.2 million as of March 31, 2026, up from $40 million as of December 31, 2025." She also said, "As of March 31, 2026, AudioEye had approximately 127,000 customers," while noting "The 4,000 customer decrease from December 31, 2025, was driven by one partner's realignment of their own customer base" and that it "had no material impact on revenue or ARR."
* On channel mix and growth, CEO and CFO Georgevich said the enterprise channel "grew 9% year-over-year" and was "approximately 41% of ARR," while the Partner and Marketplace channel "grew 8% year-over-year" and was "approximately 59% of ARR."
* On profitability and costs, CEO and CFO Georgevich reported gross profit of "$8.3 million or approximately 78% of revenue" and adjusted gross margin of "84%." She reported operating expenses of "$10.1 million" and net loss of "$2.1 million or $0.17 per share." She attributed higher costs to "higher litigation expenses, depreciation and amortization expenses as well as additional investments in sales and marketing."
* On cash generation and leverage, CEO and CFO Georgevich said, "we achieved adjusted EBITDA of approximately $2.4 million" with a "22%" margin and "generated $1.9 million of free cash flow." She added, "We ended the quarter with $8.6 million in cash" and "our net debt... was $8.4 million" with net debt to adjusted EBITDA of "approximately 0.7x."

Q&A

* George Sutton, Craig-Hallum: asked to expand on why "the Internet is becoming less accessible"; Chief Product Officer, Corporate Secretary & Executive Chairman Moradi responded, "The tools... are pulling from a lot of inaccessible content because the Internet wasn't coded with accessibility in mind," adding, "that's actually getting worse, not better."
* George Sutton, Craig-Hallum: asked about "agentic AI upcoming" plans; Executive Chairman Moradi said, "We're using agents to make products faster and better for clients," and added, "the goal is to make things easier for clients... and increase their protection even further."
* George Sutton, Craig-Hallum: asked what drives an ARR ramp in Q3/Q4; CEO and CFO Georgevich replied, "We're firing on all cylinders," citing "new business and expansion" and "great expansion from partners," and said, "the sequential growth in revenue should pick up notably in Q3 and Q4 with that compounding ARR."
* Joshua Reilly, Needham: asked why now is the right time for the leadership transition and confidence in product amid AI; Executive Chairman Moradi said, "things are jumping really well right now," and added, "it's just going to allow me to focus on product, AI, long-term strategy."
* Joshua Reilly, Needham: asked what customers understand about AI’s impact on development; Executive Chairman Moradi said, "most people are still trying to understand it," and added, "I don't think there's a uniform view at this point."
* Joshua Reilly, Needham: asked how Title II timing change affects behavior; CEO and CFO Georgevich said, "the DOJ seems pretty committed to accessibility," and added, "the message is full steam ahead."
* Richard Baldry, ROTH: asked if the Title II delay helps find more partners; CEO and CFO Georgevich replied, "Yes, absolutely," adding, "it gives us additional runway ahead of that April 2027 new deadline," while Executive Chairman Moradi added, "The market is still very wide open on that side of the business."
* Richard Baldry, ROTH: asked for a Europe update; CEO and CFO Georgevich said, "EU is moving a bit slower. It's a bit bureaucratic," and added, "we are seeing positive signals" and "the pipeline build."
* Richard Baldry, ROTH: asked about litigation expense and whether it peaked; CEO and CFO Georgevich said, "We can't comment on current litigation," adding, "There's a trial date for Q4" and "we do expect costs to go down substantially at some point this year."
* Erik Suppiger, B. Riley: asked about immediate strategic changes and AI automation opportunities; CEO and CFO Georgevich said, "we're in the best position we've ever been" and referenced "opportunities to leverage our tech and customer base in new verticals with AI advancements," while Executive Chairman Moradi said, "We're using our proprietary data with agents" and added, "we think that's going to drive our margins up over time."
* Erik Suppiger, B. Riley: asked if AudioEye can reduce professional services; Executive Chairman Moradi responded, "That's the goal" and "our goal to keep reducing that."

SENTIMENT ANALYSIS

* Analysts were slightly positive, pairing congratulations with probing execution questions on AI disruption, Title II timing, Europe pace, and litigation costs, including direct pressure on cost trajectory: "Did it peak in the quarter?" (Richard Baldry, ROTH) and adoption uncertainty: "what are you seeing from customers" on AI (Joshua Reilly, Needham).
* Management tone was positive in prepared remarks and confident in Q&A, using phrases such as "We're firing on all cylinders" (CEO and CFO Georgevich) and emphasizing differentiation and momentum, while remaining constrained on litigation: "We can't comment on current litigation" (CEO and CFO Georgevich).
* Versus the prior quarter, management continued the same themes (AI making accessibility worse; accelerating litigation; EU enforcement as a catalyst), but Q1 added a major leadership transition and a regulatory delay; in Q4, CEO Moradi framed AI/litigation similarly, saying accessibility "may even be getting worse" (Q4 call), consistent with Q1’s "getting worse, not better" (Executive Chairman Moradi).

QUARTER-OVER-QUARTER COMPARISON

* Leadership and structure shifted from David Moradi as "CEO" in Q4 2025 to Kelly Georgevich as "CEO and CFO" in Q1 2026, with Moradi stating, "My focus going forward will be... long-term strategy and product innovation," and Georgevich calling it "a well-planned evolution" supported by the board.
* Guidance language tightened around full-year profitability: Q4 guided adjusted EBITDA "of at least $11.8 million" (CEO Moradi, Q4 call) versus Q1 guidance of "at least $12 million" (CEO and CFO Georgevich, Q1 call), while maintaining the "$15 million run rate adjusted EBITDA" year-end target.
* Regulatory narrative changed from Q4’s expectation that Title II requirements "are going to go into effect next month" (CEO Moradi, Q4 call) to Q1’s confirmation of a DOJ extension "with enforcement now slated to begin in April 2027" (CEO and CFO Georgevich).
* Analyst focus remained consistent quarter-to-quarter on AI automation vs. human remediation, Europe ramp timing, and regulatory enforcement, while Q1 added questions centered on the CEO transition.

RISKS AND CONCERNS

* CEO and CFO Georgevich identified elevated litigation-related costs as a driver of higher net loss, stating the year-over-year increase was driven by "higher litigation expenses," and said, "There's a trial date for Q4" and "we do expect costs to go down substantially at some point this year."
* Management characterized Europe as slower-moving: "EU is moving a bit slower. It's a bit bureaucratic" (CEO and CFO Georgevich), while stating mitigation through pacing investments: "We are being disciplined with our investments there" (CEO and CFO Georgevich).
* Executive Chairman Moradi tied market risk to broader web development trends, saying accessibility is deteriorating because "The tools... are pulling from a lot of inaccessible content" and that the situation is "getting worse, not better."

FINAL TAKEAWAY

AudioEye’s leadership transition positioned Kelly Georgevich to run operations while David Moradi concentrates on product strategy and agentic AI, alongside continued emphasis that AI-assisted development is increasing accessibility failures and litigation risk. Management reported Q1 record revenue and ARR growth, reaffirmed a higher full-year adjusted EBITDA floor of at least $12 million, and maintained its $15 million run-rate adjusted EBITDA target by the end of 2026, while pointing to the DOJ’s one-year Title II enforcement delay to April 2027 as additional runway for state and local government partner-driven penetration and continued, measured investment in Europe ahead of enforcement.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/aeye/earnings/transcripts]

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