AudioEye, Inc.

Good afternoon and welcome to AudioEye's third quarter 2023 earnings conference call. Joining us for today's call are AudioEye's CEO, Mr. David Marotti, and CFO, Ms. Kelly Georgievich. Following their remarks, we will open 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 chief executive officer, 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 factors section of the company's annual report on Form 10-K and its quarterly reports on Form 10Q, and 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 beliefs 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 its website at www.audioeye.com. Now, I'd like to turn the call over to AudioEye's Chief Executive Officer, Mr. David Marotti. Sir, please proceed.

Thank you, operator. Welcome, everyone, and thank you for joining us. We've been hard at work and are pleased to deliver several exciting announcements. First, record annual recurring revenue, or ARR, of $30.5 million, an increase of approximately $800,000 sequentially, representing the largest sequential growth in six quarters. Second, revenue of $7.84 million, representing the 31st sequential quarter of record revenue. Record reported non-GAAP profitability of $300,000 in the third quarter ahead of expectations of $100,000. Lastly, we remain on track to deliver positive free cash flow in the fourth quarter. Kelly will discuss the financial performance in more detail shortly. During the quarter, we released the industry's first digital accessibility index report. The results confirmed that traditional consulting approaches to solving web accessibility have failed and that most of the Internet remains inaccessible to those with disabilities. As part of this study, AudioEye conducted an automated scan of over 2 million pages across 40,000 websites from companies with over 100 million in annual revenue. More than 3 billion site-specific elements were tested, including images, links, and headers. Following the scan, accessibility experts, including members of the disability community, audited the top sites in each industry, revealing which issues are most disruptive to users. Of the 3 billion website elements tested, the findings concluded every page had at least one accessibility error and the average page had 37 items that filled one of the success criteria of WCAG. Our study found that the most frequent barriers were related to image accessibility, descriptive links, and keyboard accessibility, which significantly impacts people with a disability in the world trying to utilize the Internet. The barriers found were significant. preventing people with disabilities from accomplishing critical tasks that many of us regularly depend on, such as online shopping, banking, news access, and job-related activities. AudioEye has the best product in the market to solve digital accessibility at scale, utilizing a unique combination of AI coupled with a scalable approach to leverage human-assisted technology to catch errors that technology alone cannot detect. Recently, we also shared findings from an analysis of over 900 legal claims from over 100 lawsuits and demand letters. The data is compelling. Customers using AudioEye Managed Plan are 67% less likely to receive a lawsuit with a valid WCAG issue compared to competitors, offering the highest rates of protection against legal claims in the industry. In addition, While digital accessibility lawsuits increase year over year, lawsuits against audio-wide customers are decreasing. In the first half of 2023, lawsuits against audio-wide customers decreased by over 33% compared to the first half of 2022, despite an increase in industry-wide lawsuits.

Moving on to guidance.