Web accessibility and ADA compliance provider AudioEye (AEYE) had a breakout year in 2024, making great strides in the sector with its inventive technology and successful partnerships, sending the stock surging up 245% over the past year. Backed by industry heavyweights like the Federal Communications Commission (FCC), Samsung (SMSN), and Tommy Hilfiger (PVH), AudioEye is expanding its reach through collaborations with Finalsite and CivicPlus. Further, the acquisition of ADA Site Compliance expands AudioEye’s client base and bolsters its financial profile.
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The company’s full-year 2024 revenue guidance and expected adjusted EBITDA have increased. Wall Street analysts have shown faith in AudioEye’s accelerating growth, with firms raising their share price targets. Despite a bit of a downturn at the end of the year, ongoing optimism in AudioEye’s prospects makes it a technology company investors might want to monitor in 2025.
Partners, Prospects, and an Acquisition
AudioEye is a technology platform specializing in ensuring large-scale Americans with Disabilities Act (ADA) and Web Content Accessibility Guidelines (WCAG) compliance for websites. The company offers accessible technology, constant monitoring, and automated remediation features. The company provides cloud-based cross-platform, cross-browser screen reader solutions for the internet, focusing on developing voice-driven technology to enhance the mobility, usability, and accessibility of online content.
Audioeye’s technology has been adopted by large-scale clients such as the FCC, Samsung, and Tommy Hilfiger. A substantial partner base further strengthens the company’s prospects. Notably, its partnership with Finalsite, a leading player in K-12 education, is helping AudioEye increase its footprint in the education sector. Additionally, an expanded partnership with CivicPlus gives AudioEye access to more than 10,000 government clients, positioning the company to drive its adoption in the local government market via specially tailored go-to-market strategies.
The company has also completed a strategic acquisition of ADA Site Compliance, a provider of website accessibility compliance solutions that include audits and best practices. This move will broaden AudioEye’s offering and provide an impressive client list to expand its customer relationships further. Financially, the acquisition is set to benefit AudioEye’s bottom line immediately, with recurring revenue making up approximately 70% of revenue.
Growing Revenue Leads to Bottom-line Beat
The company’s fiscal third-quarter financial results included a year-over-year increase in revenue at $8.9 million and gross profit at $7.1 million, a 14% and an 80% increase, respectively. However, the increasing revenues were accompanied by a 9% increase in total operating expenses to $8.1 million. This increase is primarily related to the acquisition of ADA Site Compliance and litigation expenses.
The company’s net loss improved by 11% to $1.2 million despite the increased operating costs. Adjusted EBITDA of $2.0M marked a substantial increase compared to the preceding year, helping earnings per share (EPS) of $0.16 beat expectations by $0.01.
As of the quarter’s end, the company reported a cash reserve of $5.5 million, which represented an increase compared to the previous quarter.
Following last quarter’s impressive results, AEYE’s management has offered guidance for Q4 2024, projecting revenue of $9.7 million and $9.8 million, along with adjusted EBITDA of $2.2 million to $2.3 million. The adjusted EPS is also anticipated to be between $0.18 and $0.19 per share. Looking beyond the quarter to the entire year of 2024, management has revised its revenue guidance upwards and now expects $35.2 million to $35.3 million. EBITDA is projected to be between $6.62 million and $6.72 million. The expected adjusted EPS for the fiscal year is between $0.54 and $0.55 per share.
A Bumpy Ride, But Showing Progress
The stock has been on a turbulent journey, with a beta of 3.4, as it has climbed 136% over the past three years. It trades near the middle of its 52-week price range of $4.52 – $34.85, and the December downturn shows negative price momentum as it trades below major moving averages. Despite the price correction, it still reflects a bit of premium at a P/S ratio of 5.52x relative to the Information Technology sector average of 3.32x.
Wall Street analysts covering the company have been constructive on the stock. H.C. Wainwright and Roth MKM have significantly raised their share price targets while maintaining a Buy rating on the company’s shares. H.C. Wainwright’s Scott Buck increased the price target from $28 to $37 and expects the company’s revenue to accelerate through 2025. Similarly, Roth MKM’s five-star analyst Richard Baldry raised the price target from $25 to $35, noting the company is early in its profitability development and has shown rapid progress in improving its adjusted EBITDA in recent quarters.
Four analysts recently recommended that AudioEye be rated a Strong Buy overall. Their average price target for AEYE stock is $34.83, representing a potential upside of 123.27% from current levels.
Final Analysis on AudioEye
After a successful 2024, AudioEye shows no signs of slowing down. Its recent partnership with Finalsite and CivicPlus, followed by the significant acquisition of ADA Site Compliance, has broadened its client base while strengthening its financial profile. This growth, paired with increased full-year revenue guidance, has caught the eye of Wall Street analysts, leading them to raise their price targets. Despite a slight dip late in the year, the company’s recurring revenue, promising partnerships, and analysts’ continued faith indicate that AudioEye is a tech company to watch in 2025.
