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AudioEye Inc: Overlooked Tech Stock Continues to Trounce Market, …

AudioEye Inc stockAudioEye Inc up 802% Since March, But Still Undervalued

AudioEye Inc (NASDAQ:AEYE) is an under-the-radar tech stock that has been on a tear over the last 12 months. While it doesn’t attract the same kind of attention as other tech stocks that have benefitted from the pandemic-fueled stay-at-home trade, it’s actually been one of the biggest beneficiaries.

AudioEye Inc stock is up 277% year-over-year, 273% since the start of 2020, and an eye-popping 802% since bottoming in March. Best of all, the company still has plenty of room to run.

The company just reported its 18th consecutive quarter of record revenue, nearly tripled its customer count, had its gross profits soar more than 180%, and improved its net loss. It continues to have a strong balance sheet, as well as reiterating its guidance to be cash-flow-positive in 2021.

Moreover, thanks to the niche market AudioEye operates in, the outlook for the company remains exceptional.

 

Chart courtesy of StockCharts.com

AEYE Stock Overview

In a nutshell, AudioEye Inc makes websites more accessible to people with disabilities. An example would be controlling or navigating a website through voice command.

The market is seriously untapped, with a whopping 98% of websites not fully accessible to people living with a disability. (Source: “About Us,” AudioEye Inc, last accessed September 22, 2020.)

Why is this a pressing issue?

There are more than 400 million active websites on the Internet, and any company that wants to do business in the U.S. is legally required to provide equal accessibility to all people with a disability. (Source: “Web Accessibility Lawsuits: What’s the Current Landscape?,” Essential Accessibility, May 6, 2020.)

This isn’t something new. The Americans with Disabilities Act (ADA) has been around for years; in fact, it turned 30 in 2020.

In addition to being something businesses are legally required to do, the fact is that making websites accessible to those with disabilities just makes sense. It can make a website rank better on search engines, which helps it reach a bigger customer base.

According to the Centers for Disease Control and Prevention, 61 million Americans, or one quarter of the adult population in the U.S., live with a disability. Together, this group has an estimated $645.0 billion in annual disposable income. Obviously, positive feedback about an accessible website can help a business grow even more.

On the other hand, not making a website accessible can result in lawsuits and lead to financial headaches. In 2019, the number of accessibility lawsuits filed in the U.S. hit 11,503, an 8.8% increase from 2018.

Costly lawsuits are filed against big and small businesses. In 2019, Beyoncé Knowles’ company, Parkwood Entertainment, was sued for violating the ADA.

The suit alleged that Beyonce.com was not accessible to blind people. And that the only way a blind person could access the site was to do so with the help of someone who can see.  (Source: “Beyonce’s Parkwood Entertainment Sued Over Website Accessibility,” Hollywood Reporter, January 3, 2019.)

Using AudioEye helps businesses, even Beyoncé’s, get their website ADA-compliant.

18th Consecutive Quarter of Record Revenue

On August 13, AudioEye announced that revenue for the second quarter ended June 30 increased 117% to a record $5.3 million. This was the first quarter with revenue that topped $5.0 million and the 18th consecutive quarter of record revenue. (Source: “AudioEye Reports Second Quarter 2020 Results,” AudioEye Inc, August 13, 2020.)

Monthly recurring revenue was $1.6 million, a 105% increase year-over-year. Meanwhile, deferred revenue was up 65% year-over-year at $5.2 million.

Gross profit increased more than 180% to $3.7 million. Net loss improved to $1.4 million, or a loss of $0.16 per share, compared with a second quarter 2019 net loss of $2.0 million, or a loss of $0.27 per share.

AudioEye ended the second quarter with $2.1 million in cash, compared with $1.8 million as of March 31, 2020.

As of June 30, AudioEye’s total customer account was up 80% sequentially and more than 1,300% year-over-year to over 20,000.

AudioEye’s executive chairman, Carr Bettis, noted, “Even though the impact from the global pandemic is still unknown, we are cautiously optimistic for the second half of this year. Customers have continued to demonstrate their commitment to digital inclusivity, and we are pleased to continue to elevate the importance of digital inclusion, encouraging businesses of all sizes to prioritize accessibility at a time when digital connectivity is critical.”

Analyst Take

AudioEye Inc is an overlooked tech stock that has benefitted from the stay-at-home environment. As a market leader with its digital accessibility platform, the company’s outlook remains solid. It has a strong balance sheet, reported another quarter of record revenue growth, and improved its net loss. Plus, its number of new customers is soaring. The economic environment remains uncertain, but for now, AudioEye is reiterating  its guidance to become cash-flow-positive in 2021.


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