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    AEYE
    Earnings call· Jun 2026(Q2 FY26)

    AUDIOEYE Q2 FY26 earnings call AEYE

    Aug 13, 2026 Source

    Executive summary

    AudioEye Q2 FY26 — Record Revenue, Strong Adjusted EBITDA Growth, and Positive Free Cash Flow

    AudioEye delivered a strong second quarter, extending its streak of sequential revenue growth to 42 quarters, driven by solid ARR expansion and improved profitability. The company is seeing early momentum in the EU market due to increasing enforcement of accessibility regulations and is leveraging its proprietary data and AI tools to enhance its offerings and internal efficiencies. Management anticipates continued free cash flow generation and is evaluating capital deployment options.

    Highlights

    5

    • Q2 marked the 42nd consecutive quarter of sequential revenue growth.

    • Revenue came in at $10.7 million, a 9% increase from the comparable prior year quarter.

    • Adjusted EBITDA reached a record $3 million, representing 28% adjusted EBITDA margin, a 54% increase from Q2 2025.

    • Annual Recurring Revenue (ARR) grew $1.1 million sequentially to $42.3 million as of June 30, 2026.

    • Adjusted free cash flow was $2.6 million in Q2 2026, an improvement of $1.2 million from Q2 2025.

    Concerns

    2

    • Net loss in the second quarter of 2026 was $0.9 million or $0.07 per share compared to breakeven in the same year ago period.

    • Litigation expense, while expected to trend down, remains a factor in cash generation.

    Guidance & targets

    12
    CategoryTargetConfidence
    Revenue
    $10.85 million and $11.05 million
    high materiality
    High
    Sequential Revenue Growth
    further acceleration
    medium materiality
    High
    Full Year 2026 Revenue
    $43.5 million and $44 million
    high materiality
    High
    Adjusted EBITDA
    $3.4 million and $3.6 million
    high materiality
    High
    Adjusted EPS
    $0.26 and $0.28 per share
    high materiality
    High
    Full Year 2026 Adjusted EBITDA
    at least $12.7 million
    high materiality
    High
    Full Year 2026 Adjusted EPS
    at least $0.98
    high materiality
    High
    Run Rate Adjusted EBITDA
    over $15 million
    high materiality
    High
    Free Cash Flow Generation
    meaningful
    medium materiality
    High
    Adjusted Free Cash Flow
    $3.1 million
    high materiality
    High
    Adjusted Free Cash Flow
    accelerate further
    medium materiality
    High
    Litigation Expense
    come down
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Enterprise
    Lower nonrecurring revenue offset by increased recurring revenue. Enterprise ARR represented approximately 41% of total ARR as of June 30, 2026.
    Enterprise ARR: 41% of total ARREnterprise ARR growth YoY: 5%Enterprise ARR growth sequential annualized: 17%
    		flatflat——
    Partner and Marketplace
    Contributed meaningfully to ARR growth in the quarter. Accounted for approximately 59% of ARR as of June 30, 2026. Saw solid expansion from state and local government partners.
    Partner and Marketplace ARR: 59% of total ARR
    		—16%——

    Operational metrics

    23
    Revenue
    $10.7 million9% increase YoY
    Q2 FY26

    42nd consecutive quarter of sequential revenue growth.

    Adjusted EBITDA
    $3 million$1.1 million higher YoY
    Q2 FY26

    Record adjusted EBITDA.

    Adjusted EBITDA margin
    28%8 percentage points higher YoY
    Q2 FY26
    Adjusted EBITDA CAGR
    42%
    last 2 years
    Gross Profit
    $8.4 millionvs $7.6 million in Q2 2025
    Q2 FY26
    Gross Profit margin
    79%vs 77% in Q2 2025
    Q2 FY26
    Adjusted Gross Margin
    84%vs 83% in Q2 2025
    Q2 FY26

    Adjusted for noncash items in cost of revenue, such as amortization of capitalized software development costs and stock compensation expense.

    Operating Expenses
    $9 millionvs $7.4 million in Q2 2025
    Q2 FY26

    Year-over-year increase primarily due to a $1.4 million benefit from revaluation of contingent consideration in prior year not recurring.

    Total R&D Spend
    $1.2 milliondown from 17% of revenue in Q2 2025
    Q2 FY26

    Primarily due to reduced headcount resulting from efficiencies realized through AI tools and automation.

    Net Loss
    $0.9 millionvs breakeven in Q2 2025
    Q2 FY26

    Excluding the impact of the $1.4 million revaluation of contingent consideration in the comparable prior period, net loss improved mainly due to higher gross profit.

    Net Loss Per Share
    $0.07vs $0.00 in Q2 2025
    Q2 FY26
    Adjusted EBITDA Per Share
    $0.23vs $0.15 in Q2 2025
    Q2 FY26
    Cash and investments balance
    $8.7 million
    as of June 30, 2026
    Available revolving line of credit
    $3 million
    as of June 30, 2026
    Net Debt
    $8.1 million
    as of June 30, 2026

    Defined as total debt less cash.

    Net Debt to Adjusted EBITDA ratio
    0.6
    as of June 30, 2026

    Using 2026 adjusted EBITDA guidance.

    Customer count
    129,000up 9,000 from June 30, 2025
    as of June 30, 2026

    Increase primarily in partner and marketplace channel.

    WebAIM Study - Inaccessible Homepages
    95.9%
    latest study

    Of top homepages had detectable accessibility failures.

    WebAIM Study - Average Errors Per Page
    56.1up 10% YoY
    latest study

    First increase after 6 years of steady improvement. Driven by third-party framework and AI assistant code.

    Digital Accessibility Index - Interior Pages Issues
    10%more issues than homepages
    annual study

    Interior pages accounted for roughly 60% of accessibility claims filed last year.

    Digital Accessibility Index - EU vs US Accessibility Gap
    25%more accessibility issues per page than comparable U.S. sites
    annual study

    Aligns with current state of EAA enforcement.

    French Court Ruling - Partial Compliance
    71%
    June ruling

    Court rejected argument that 71% conformance satisfies the law, stating digital accessibility is an obligation of results.

    Automation effectiveness vs competitors
    89% to 300% more
    latest study

    WebAIM study indicates AudioEye's automation finds and fixes 89% to 300% more issues than competitors.

    Industry KPIs

    7
    MetricValueDetails
    Capacity CAPEX$400,000USD
    Revenue growth$10.7 millionUSD
    Arr net new arr$42.3 millionUSD
    Pricing model mixcould grow up
    Customer account count129,000customers
    Operating FCF margin rule of 4028%%
    Ai product adoption monetization89% to 300% more%

    Orderbook & backlog

    1
    Annual Recurring Revenue (ARR)$42.3 millionJune 30, 2026

    up $1.1 million sequentially

    Up from $41.2 million as of March 31, 2026. Reflects low double-digit year-over-year ARR growth; 11% annualized sequential ARR growth; 11% YoY growth.

    Product announcements

    1
    ProductTypeDetails
    Digital Accessibility Indexmilestone

    Risks & headwinds

    4
    Increasing Web Inaccessibility due to AIOngoing

    WebAIM study found 95.9% of top homepages had detectable failures, averaging 56.1 errors per page, up 10% YoY.

    Mitigation: AudioEye's automation finds and fixes far more issues automatically in real time across every page; custom fixes handle remaining issues scalably.

    Litigation Risk from Interior PagesOngoing

    Interior pages averaged 10% more issues than homepages and accounted for roughly 60% of accessibility claims filed last year.

    Mitigation: AudioEye's solution is built to scale across all pages, not just homepages.

    Litigation Expense impacting cash generationExpected to trend down in H2 2026

    Q2 litigation expense came down 40% from Q1.

    Mitigation: Management expects significant additional cash generation as litigation expense trends down.

    Net loss in Q2 FY26Q2 FY26

    $0.9 million net loss, or $0.07 per share

    Mitigation: Primarily due to a non-recurring $1.4 million benefit in the prior year's comparable quarter; net loss improved excluding this impact, mainly due to higher gross profit.

    What to watch in Q3 FY26

    5

    Sequential Revenue Acceleration

    Q4 FY26
    CurrentQ2 revenue $10.7 million
    Targetfurther acceleration

    Why it matters

    Indicates continued business momentum and growth trajectory.

    We expect further acceleration of sequential revenues in Q4.

    Q&A highlights

    6

    How will AudioEye accelerate sales investments in Europe given increasing EAA enforcement, and how quickly can sales support scale?

    Management is strategically investing in a multichannel approach in the EU, has resources there, and is ready to capitalize on the anticipated inflection point in enforcement, making inroads now.

    “We are being strategic in investments in the EU. We do have resources in the EU and are investing in a multichannel approach. So I think we're ready when we've said -- we still view it as early innings, but at some point, it will hit an inflection point, and we're ready to capitalize that and making inroads now to do that.”

    asked by Joshua Reilly · answered by Kelly Georgevich

    2 min read5 chapters

    Detailed Narrative

    01

    Digital Accessibility Market Trends and AI Impact

    The internet is becoming increasingly inaccessible, with WebAIM's latest study showing 95.9% of top homepages having detectable accessibility failures, averaging 56.1 errors per page, a 10% increase year-over-year. This marks the first increase after six years of improvement, primarily driven by third-party frameworks and AI assistant code, as LLMs were not built with accessibility in mind. AudioEye's solution is designed to scale and address these issues, finding and fixing more problems automatically than competitors.

    02

    European Accessibility Act (EAA) Enforcement

    The EAA is transitioning from a compliance deadline to active enforcement, though still in "early innings." Sweden and the Netherlands have escalated market surveillance, and Germany has issued warning letters. A notable French court ruling in June rejected partial compliance (71% conformance) as sufficient, stating digital accessibility is an "obligation of results" requiring full accessibility within six months or daily penalties. These cases signal future enforcement, contributing to AudioEye's strongest EU ARR growth to date.

    03

    Proprietary Data and AI Strategy

    AudioEye leverages its unique proprietary dataset, built from millions of human reviews and billions of real-world fixes over 10 years, to enhance its offerings. This data is being used to simplify client reporting, streamline fixes, and integrate seamlessly with developer environments. The company plans to further utilize this data in new and exciting ways in the coming months⏳, differentiating itself from competitors whose AI tools are trained on inaccessible internet data.

    04

    Operating Model Scalability and Cash Deployment

    AudioEye has demonstrated a highly scalable operating model, with adjusted EBITDA growing at a 42% CAGR over the last two years. The company expects continued growth of cash flow in 2027 and is evaluating options to deploy excess cash, including potential share buybacks and dividends. This flexibility is supported by anticipated significant free cash flow generation in the second half of 2026, partly due to expected reductions in litigation expenses.

    05

    Enterprise vs. Partner & Marketplace Channel Dynamics

    Enterprise channel revenue was flat year-over-year in Q2 2026, primarily due to a shift from non-recurring📎 to recurring revenue. However, enterprise ARR grew 5% year-over-year and 17% sequentially on an annualized basis. The partner and marketplace channel saw 16% year-over-year revenue growth and contributed meaningfully to ARR growth, driven by expansion with existing partners, particularly in state and local government.

    AI-generated summary of the company’s earnings call. Not investment advice.