AEYE Stock's Outlook Robust on Q1 Results & Share Buybacks

AudioEye Inc (NASDAQ:AEYE) is an overlooked tech stock whose beaten-down share price is beginning to bounce back, rising by 32% over the last month alone. The big question is, can AudioEye stock sustain those gains? In a perfect world, it could.

Despite the current economic headwinds, including soaring inflation, rising interest rates, concerns about a recession, record-low consumer sentiment, and ongoing geopolitical tensions, AudioEye Inc continues to report record financial results.

In fact, for the first quarter of this year, the company reported its 25th consecutive period of record revenue. Moreover, management provided strong guidance, with the company's second-quarter revenue expected to climb by 25% year-over-year at the midpoint.

Things are going so well at AudioEye Inc that it recently announced a $3.0-million share repurchase program that expires on June 30, 2024. (Source: "AudioEye Announces $3 Million Stock Repurchase Program," AudioEye Inc, June 2, 2022.)

Some might think this dollar figure is small, but the company only has a market cap of $70.3 million. Regardless, the share repurchase announcement shows that AudioEye Inc has a solid balance sheet and cash position, and it reflects the strength of the company’s business and management's confidence in its future cash flow.

Cash flow is key right now. Before the recent stock market sell-off, investors didn’t care much about cash flow and sent tech stock valuations into nosebleed territory. Rising interest rates have forced investors to take a closer look at companies' fundamentals.

With cheap money evaporating, balance sheets have become even more important. If a company can’t make a profit or isn’t on its way to doing so, its share price will be punished. And with inflation still hot, the Federal Reserve will continue to raise interest rates, leading growth stocks to continue falling.

Stocks need a reason to rebound, but there isn’t one yet.

Unfortunately, timing a stock market bottom is impossible, and volatility is here to stay for the foreseeable future. This means investors should pay close attention to great names like AudioEye Inc, companies whose share prices have gone down significantly but have excellent underlying fundamentals.

Chart courtesy of StockCharts.com

About AudioEye Inc

AudioEye helps its customers make their web sites and digital media more accessible to people with disabilities. Three examples of making a web site more accessible are increasing the color contrast, adding alternative text, and improving the organization. (Source: "10 Web Accessibility Examples for ADA Compliance," AudioEye Inc, May 25, 2025.)

This is a massive untapped opportunity, with a staggering 97% of the Internet currently being inaccessible, in some form, to people living with disabilities. (Source: “Home Page,” AudioEye Inc, last accessed July 14, 2022.)

Under the Americans with Disabilities Act (ADA), which was enacted in 1990, any company that wants to do business in the U.S. is required to provide equal accessibility to all people with disabilities. (Source: “Web Accessibility Lawsuits: What’s the Current Landscape?” Essential Accessibility, April 20, 2021.)

With more than a billion active web sites online—and more and more people relying on the Internet for work and personal tasks—the demand for ADA-compliant web sites has never been higher.

That might explain why the number of Internet accessibility lawsuits continues to grow. In 2021, 11,400 people filed ADA lawsuits, up by four percent since 2020 and 320% since 2013. (Source: “Record Number of Lawsuits Filed Over Accessibility for People with Disabilities,” SHRM, March 23, 2022.)

In 2008, Target Corporation (NYSE:TGT) settled a lawsuit over web site accessibility complaints. The company paid $6.0 million in damages and more than $3.0 million in legal fees. (Source: Target’s $6M Web Accessibility Payout Is a Warning to all US Sites, Says Lawyer,” Pinsent Masons LLP, August 29, 2008.)

In 2016, Domino’s Pizza, Inc. (NYSE:DPZ) was sued by a blind individual who was unable to order a pizza on the company’s web site and mobile app. The court ruled in favor of the litigant. (Source: “Guillermo Robles V. Domino’s Pizza,” Brown Goldstein & Levy, September 14, 2021.)

DraftKings Inc (NASDAQ:DKNG) was recently sued over its web site's lack of accessibility and its incompatibility with screen-reading software. (Source: “DraftKings Sued for Alleged Website Accessibility Violations,” Lexology, July 4, 2022.)

25th Consecutive Quarter of Record Revenues

For the first quarter ended March 31, 2022, AudioEye announced that its total revenue increased by 19% year-over-year to a record $6.9 million. Its annual recurring revenue went up by 22% to $28.1 million. (Source: “AudioEye Reports Record First Quarter 2022 Results,” AudioEye Inc, May 5, 2022.)

In the first quarter, the company’s gross profit increased to a record $5.2 million (75.2% of its revenue) from $4.4 million (76.6% of its total revenue) in the same period of last year. AudioEye reported a first-quarter 2022 net loss of $3.6 million, or $0.32 per share, versus a first-quarter 2021 net loss of $2.8 million, or $0.27 per share.

AudioEye Inc's customer count was 74,000 at the end of the first quarter of 2022, compared to 68,000 at the end of the first quarter of 2021.

Furthermore, back in March, AudioEye Inc acquired Bureau of Internet Accessibility, Inc., a consulting firm with a leading automated accessibility-testing platform for web site owners and developers.

Dave Moradi, AudioEye Inc's CEO, commented, “AudioEye had a great first quarter of 2022, with revenues continuing to accelerate from Q4 2021 due to both organic growth and the acquisition of the Bureau of Internet Accessibility in March 2022. We are pleased to report revenue exceeded the guidance range provided.” (Source: Ibid.)

Analyst Take

AudioEye stock is a wonderful example of an excellent stock that has been punished in step with the broader market. AEYE stock might be down by more than 60% year-over-year, but during that time, AudioEye Inc reported record fourth-quarter and full-year 2021 results that were at the high end of its guidance.

As mentioned earlier, in the first quarter of 2022, the company had its 25th consecutive period of record revenue. That momentum is expected to continue in the second quarter.