Audioeye ((AEYE)) has held its Q2 earnings call. Read on for the main highlights of the call.
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AudioEye’s recent earnings call painted a picture of robust growth, tempered by some transitional challenges. The company reported consistent revenue growth and a solid performance in Annual Recurring Revenue (ARR), largely driven by strategic expansions in Europe. Despite facing some challenges related to acquisition integrations and temporary margin impacts, the overall sentiment remained optimistic, particularly with future growth opportunities in the European market.
Consistent Revenue Growth
AudioEye reported $9.9 million in revenue for Q2 2025, marking the 38th consecutive quarter of revenue growth. This represents a 16% increase over the prior year, showcasing the company’s ability to sustain its upward trajectory.
Strong ARR Growth
The company achieved a notable increase in ARR, which rose by $1.1 million sequentially and $4.9 million year-over-year, reaching $38.2 million. This growth was primarily driven by enterprise deals and partner expansions, underscoring the strength of AudioEye’s business model.
European Expansion
AudioEye’s strategic expansion in Europe is expected to drive significant demand, particularly following the implementation of the European Accessibility Act (EAA). The company’s pipeline in the EU has tripled since the last quarter, indicating strong future potential.
Positive Adjusted EBITDA and Free Cash Flow
For Q2 2025, AudioEye reported an adjusted EBITDA of $1.9 million, reflecting a 31% increase year-over-year. The company also expects to maintain positive free cash flow throughout 2025, highlighting its financial health.
Strategic Stock Buybacks
In a move that reflects confidence in its growth trajectory, AudioEye repurchased approximately 144,000 shares in Q2 2025, signaling a commitment to returning value to shareholders.
Impact of Acquisition Churn
The phasing out of legacy services from recent acquisitions has led to a reduction in full-year 2025 revenue guidance and impacted ARR by an estimated $1 million to $1.5 million. This reflects the challenges associated with integrating new acquisitions.
Temporary Margin Decrease
AudioEye experienced a decrease in gross profit margin to 77% in Q2 2025 from 79% in Q2 2024, attributed to customer migration to an upgraded platform. This is seen as a temporary adjustment as the company transitions its customer base.
Reversal of Contingent Liability
The company reversed contingent liabilities related to earn-outs on acquisitions due to higher churn than expected, highlighting the complexities of acquisition integration.
Forward-Looking Guidance
AudioEye provided guidance for the upcoming quarters, anticipating revenue for the third quarter to range between $10.2 million and $10.4 million, indicating an annualized sequential growth rate of 18% at the midpoint. Adjusted EBITDA for the third quarter is expected to be between $2.2 million and $2.4 million, with adjusted EPS projected to fall between $0.17 and $0.19. For the full year 2025, the company revised its revenue guidance to a range of $40.3 million to $40.7 million, adjusting for the phaseout of certain acquisition-related customers. Despite these adjustments, AudioEye expects adjusted EBITDA margins to increase to the upper 20s by the fourth quarter.
In conclusion, AudioEye’s earnings call reflected a positive sentiment with consistent growth in revenue and ARR, bolstered by strategic expansions in Europe. While challenges related to acquisition integrations and temporary margin impacts were noted, the company’s forward-looking guidance remains optimistic, focusing on capitalizing on new market opportunities and regulatory changes.