AudioEye, Inc.

Good afternoon, and welcome to AudioEye's third quarter 2021 earnings conference call. Joining us for today's call are AudioEye's interim CEO, Mr. David Marotti, Executive Chairman, Dr. Carl Bettis, and CFO, Ms. Kelly Georgievich. Following their remarks, we will open up the call for questions from the company's publishing analysts. I would like to remind everyone that this call will be recorded and made available for replay via a link available in the investor relations section of the company's website at www.audioeye.com. Before I turn the call over to AudioEye's executive chairman, the company would like to remind all participants that statements made by AudioEye management during the course of this conference call that are not historical facts are considered to be forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, confident, will, and other similar statements of expectation identify forward-looking statements. These statements are predictions, projections, or other statements about future events and are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's press release. in the comments made during this conference call and in the risk factor section of the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and in its other reports and filings with the Securities and Exchange Commission. Participants on this call are cautioned not to place undue reliance on these forward-looking statements, which reflect management's belief only as of the date hereof. AudioEye does not undertake any duty to update or correct any forward-looking statements. Further, management's remarks today will include certain non-GAAP financial measures. A reconciliation of the most directly comparable GAAP financial measures to these non-GAAP financial measures is available in the company's earnings release posted in the investor relations section of our website at www.audioeye.com. Now, I would like to turn the call over to AudioEye's Executive Chairman, Dr. Carr-Bettis. Sir, please proceed.

Thank you, Operator. Welcome, everyone, and thank you for joining us today. First of all, happy Veterans Day, and a special thank you to all of the veterans for their service to our country. After the market closed, we issued a press release announcing our results for the third quarter ended September 30, 2021. A copy of the press release is also available in the investor relations section of our website at audiowire.com. We would like to begin, as usual, with an overview of our business. AudioEye is a leading provider of SaaS-based digital accessibility solutions. Our mission is to eradicate all barriers to digital accessibility. To deliver on that mission, we solve the largest range of issues that impact the way people around the globe browse and interact with online content. At AudioEye, we address every aspect of web accessibility, from finding and fixing issues to ongoing monitoring and upkeep. certify websites to demonstrate compliance with both the American with Disabilities Act, or ADA, and the latest Web Content Accessibility Guidelines, or WCAG 2.1. Our comprehensive digital accessibility solutions allow our private sector clients to expand their customer reach and grow revenue by serving individuals with disabilities to make up 15% of the world population. I'll now turn the call over to David, AudioEye's largest shareholder and our interim CIO. David.

Thank you, Kar. It is my pleasure to speak with you today. I am pleased with the third quarter as we continue to transition to a highly scalable SaaS company. Revenue grew across all channels, and we increased MRR while achieving high logo and dollar retention. Gross margins remain healthy in the mid-70s, up substantially from prior years. As previously communicated, we have continued investing in R&D, and sales and marketing to capitalize on our industry's long-term expected growth trends. Over time, we expect that R&D and sales and marketing will come down as a percentage of revenue as we increase sales and benefit from efficiencies. Earlier this year, we announced our next generation platform, which features always-on monitoring, analysis of issues fixed and remaining, and an accessibility score. These features have not only resonated with our existing customer base, but have also supported additional wins this year. Now, I'm very excited to discuss our next major release, issue reporting. Yesterday, we publicly unveiled issue reporting. Our technology and transparent approach to solving accessibility for our clients has always been distinct from the competition. But with the release of issue reporting, this puts us at another level. Customers can now quickly sort accessibility issues by type and severity to view those fixed automatically and those requiring additional attention. Because AudioEye now includes issue reporting with all next-gen subscriptions, these advancements allow us to offer a comprehensive accessibility solution for a fraction of the price of traditional approaches. I want to thank our product and engineering teams for their hard work in delivering this world-class product. We have already seen an enthusiastic response to issue reporting from our customers and prospects. During the quarter, one of the largest and fastest-growing U.S. digital agencies partnered with AudioEye. They indicated how much more manageable and affordable our solution is than the one we displaced. Their old solution required their engineers to update sites for every accessibility item every time the website changed and frequent expensive audits. Additionally, Amid a significant acquisition involving thousands of sites, an existing agency customer said they would be using AudioEye as a go-forward solution, replacing a competing product in the acquired business. They indicated they would only use AudioEye due to its ease of use, accuracy, and issue reporting. As these wins demonstrate, we continue to hear the same feedback over and over. Our efficient, accurate, and transparent solution reduces or eliminates engineering time and resources that alternative options require. Today, AudioEye's value proposition is the most compelling at any time in the company's history. To understand why that is the case, it makes sense to understand the overall landscape. Outside of AudioEye, there are three approaches to fixing accessibility errors on a website today. The first is building an accessible website from the onset and ensuring accessibility is part of every update process. Two, software-only products, which address only a subset of the issues and do not offer issue reporting, leaving website owners in the dark. Three, traditional approaches, which require expensive and recurring manual audits during which developers fix issues in the source code. This costly process must then be repeated to maintain accessibility whenever a website is modified. Unless a website is built with accessibility during the design and development phase and updated accordingly, which is only a small percentage of websites, we offer the most cost-effective and straightforward solution. We fix many issues automatically and provide issue reporting bundled into our next-gen offerings at no extra charge. Customers can use issue reporting to resolve the remaining problems independently or hire us to do the rest with our human-assisted technologies. AudioEye has made tremendous progress in our R&D efforts over the last year, and issue reporting is just one exciting outcome of this process. We are unaware of any competitor with our amount of product and engineering talent or any other competitor investing in R&D at a similar rate. The pace of development has continued to increase, and we look forward to announcing additional features and products as they are released over the next few months. This would not be possible without product and tech leadership, which has instilled processes for repeatable excellence and the tireless efforts from the product and engineering teams. In addition to our success with business partners, I'm excited to discuss our outreach with the disability community. In early October, we announced the AudioEye Alliance Community at M-Enabling, an event hosted by Mike Paciello, a prominent accessibility advocate and founder of WebABLE. The AudioEye Alliance Community is a community-based initiative that brings people with disabilities to the forefront of the product development and quality assurance process. The Alliance's creation makes sure that our technology is backed by the human element of people living with disabilities who rely on assistive technology to navigate websites in their everyday lives. By including this feedback in the development process, AudioEye can continue to build the best solutions that allow people with disabilities to navigate the web naturally. I encourage you to go to our website where we showcase their experiences and feedback as part of our Making Accessibility Visible series at www.audioeye.com forward slash blog. Also, at the M-Enabled event, our CEO, Dominic Marchelli, co-led a discussion on the contributions of technology and digital accessibility alongside Anil Lewis, the Director of Advocacy and Policy for the National Federation of the Blind. If you'd like to hear the discussion, please go to www.audioeye.com forward slash enable. The trend of web accessibility lawsuits continues to rise. This year, we expect almost 4,200 cases versus 3,500 in the previous year. In addition to private litigation, we have noticed increased activity from the Department of Justice. On November 1st, Justice announced an agreement with Rite Aid requiring the pharmacy to make its COVID-19 vaccine content accessible. And on September 20th, Justice filed a statement of interest in a federal court case in Los Angeles called Vargas and American Council of the Blind versus Quest Diagnostics. The DOJ statement agrees with the plaintiff's claim that inaccessible kiosks violate the FDA. Against this backdrop, the team at AudioEye is working tirelessly toward providing the most efficient and transparent solution to the ever-present need for digital accessibility. Moving on to guidance. In terms of guidance for the fourth quarter, we believe revenue will be between $6.3 to $6.5 million, representing 15% year-over-year growth at the midpoint. We remain very well capitalized, with $22 million of cash in the books at September 30th. and we have the runway to continue investing in the business for long-term success. I would now like to turn the call over to Kelly, AudioEye's CFO. Kelly.