AudioEye Narrows Losses Amid Double-Digit Revenue Growth

TL;DR

**AEYE is growing revenue but still losing money and taking on more debt; proceed with caution.**

AI Summary

AudioEye, Inc. (AEYE) reported a significant increase in revenue for both the three and nine months ended September 30, 2025. Revenue for the three months increased by 14.6% to $10.227 million from $8.925 million in the prior year, while nine-month revenue grew by 17.0% to $29.817 million from $25.478 million. Despite revenue growth, the company continued to report net losses, though these narrowed. The net loss for the three months ended September 30, 2025, was $0.554 million, an improvement from a $1.202 million loss in the same period of 2024. The nine-month net loss also improved to $2.025 million from $2.766 million. Key business changes include a substantial increase in the term loan, rising from $6.820 million at December 31, 2024, to $12.622 million at September 30, 2025, indicating significant new debt financing. Cash and cash equivalents decreased from $5.651 million to $4.550 million over the nine-month period. Strategic outlook appears focused on continued revenue growth, particularly in the Enterprise segment which saw a 26.2% increase in revenue for the nine months ended September 30, 2025, to $13.316 million. Risks include ongoing net losses and increased debt, alongside a loss on extinguishment of debt of $0.300 million for the nine months ended September 30, 2025.

Why It Matters

AudioEye's continued revenue growth, particularly in the Enterprise segment, suggests strong demand for its web accessibility solutions, which is crucial in a competitive market with increasing regulatory scrutiny on digital inclusivity. However, the persistent net losses and significant increase in long-term debt from $6.820 million to $12.622 million raise concerns about profitability and financial leverage for investors. The narrowing net loss, from $1.202 million to $0.554 million in the quarter, indicates some operational improvements, but the company still burns cash. Employees and customers might see this as a sign of a growing business, but the financial health needs close monitoring to ensure long-term stability and investment in product development.

Risk Assessment

Risk Level: medium — The company reported a net loss of $0.554 million for the three months ended September 30, 2025, and an accumulated deficit of $101.357 million, indicating ongoing unprofitability. Furthermore, the term loan, net, increased significantly from $6.820 million at December 31, 2024, to $12.622 million at September 30, 2025, increasing financial leverage and interest expense, which was $0.709 million for the nine months ended September 30, 2025.

Analyst Insight

Investors should closely monitor AudioEye's path to profitability and its ability to manage its increased debt load. While revenue growth is positive, the persistent net losses and rising interest expense suggest that the company's financial health is still precarious. Consider waiting for a clear trend towards sustained profitability and positive free cash flow before making a significant investment.

Financial Highlights

debt To Equity

4.39

revenue

$10.227M

operating Margin

N/A

total Assets

$30.478M

total Debt

$12.957M

net Income

($0.554M)

eps

N/A

gross Margin

77.4%

cash Position

$4.550M

revenue Growth

+14.6%

Revenue Breakdown

Key Numbers

• $10.227M — Revenue for Q3 2025 (Increased from $8.925M in Q3 2024, a 14.6% increase.)
• $29.817M — Revenue for nine months ended Sep 30, 2025 (Increased from $25.478M in the prior year, a 17.0% increase.)
• ($0.554M) — Net loss for Q3 2025 (Improved from a net loss of ($1.202M) in Q3 2024.)
• ($2.025M) — Net loss for nine months ended Sep 30, 2025 (Improved from a net loss of ($2.766M) in the prior year.)
• $12.622M — Term loan, net, as of Sep 30, 2025 (Increased significantly from $6.820M as of Dec 31, 2024.)
• $4.550M — Cash and cash equivalents as of Sep 30, 2025 (Decreased from $5.651M as of Dec 31, 2024.)
• $101.357M — Accumulated deficit as of Sep 30, 2025 (Increased from $95.746M as of Dec 31, 2024, indicating continued losses.)
• 13% — Revenue from one customer (Accounted for 13% of total revenue for the three and nine months ended September 30, 2025.)

Key Players & Entities

• AUDIOEYE INC (company) — registrant
• ADA Site Compliance, LLC (company) — wholly-owned subsidiary
• Criterion 508 Solutions, Inc. (company) — wholly-owned subsidiary
• Ability, Inc. (company) — wholly-owned subsidiary
• SEC (regulator) — Securities and Exchange Commission
• Nasdaq Capital Market (regulator) — exchange where common stock is registered
• U.S. GAAP (regulator) — accounting principles
• ASC 606 (regulator) — Revenue from Contracts with Customers accounting standard

FAQ

Risk Factors

• Continued Net Losses [high — financial]: The company continues to report net losses, with a loss of $2.025 million for the nine months ended September 30, 2025. While this is an improvement from the $2.766 million loss in the prior year, sustained unprofitability poses a risk to long-term viability.
• Increased Debt Load [high — financial]: The term loan balance significantly increased from $6.820 million at December 31, 2024, to $12.622 million at September 30, 2025. This substantial increase in debt raises financial leverage and interest expense, increasing financial risk.
• Loss on Extinguishment of Debt [medium — financial]: A loss of $0.300 million was recognized for the nine months ended September 30, 2025, related to the extinguishment of debt. This indicates potentially unfavorable debt restructuring or refinancing activities.
• Customer Concentration [medium — operational]: One customer accounted for 13% of total revenue for the nine months ended September 30, 2025. A significant loss of this customer could materially impact revenue and profitability.
• Declining Cash Position [medium — financial]: Cash and cash equivalents decreased from $5.651 million at December 31, 2024, to $4.550 million at September 30, 2025. This reduction in liquidity, coupled with ongoing losses, could strain operational flexibility.
• Growing Accumulated Deficit [medium — financial]: The accumulated deficit increased from $95.746 million at December 31, 2024, to $101.357 million at September 30, 2025. This reflects the company's history of net losses and its cumulative impact on equity.

Industry Context

AudioEye operates in the digital accessibility and compliance software market, a growing sector driven by increasing regulatory requirements and corporate responsibility initiatives. The competitive landscape includes various players offering solutions for website accessibility, ADA compliance, and WCAG adherence. Trends indicate a rising demand for automated and integrated solutions that can scale across large digital footprints.

Regulatory Implications

The company's services are directly tied to regulatory compliance, particularly the Americans with Disabilities Act (ADA) and Web Content Accessibility Guidelines (WCAG). Changes in these regulations or their enforcement could significantly impact demand for AudioEye's services. Failure to maintain compliance for its clients also presents reputational and legal risks.

What Investors Should Do

1. Monitor debt levels and repayment capacity.
2. Analyze the sustainability of revenue growth.
3. Evaluate the impact of customer concentration.
4. Assess cash burn rate and runway.

Key Dates

• 2025-09-30: Quarter and Nine-Month Period End — Reporting period for the financial results discussed in the 10-Q, showing revenue growth but continued net losses and increased debt.
• 2025-12-31: Prior Fiscal Year End — Baseline for comparison of financial metrics, particularly the term loan and cash position, which have changed significantly.

Glossary

Accumulated deficit

The cumulative net losses of a company since its inception, minus any cumulative net profits. It represents a deficit in retained earnings. (Indicates the company's history of unprofitability, which has increased to $101.357 million as of September 30, 2025.)

Deferred revenue

Revenue that has been received by a company but not yet earned, as the goods or services have not been delivered or performed. (Represents future revenue obligations, with $7.463 million in current deferred revenue as of September 30, 2025.)

Term loan, net

A loan from a financial institution that has a specified repayment schedule and maturity date, net of any unamortized discount or premium. (Shows a significant increase to $12.622 million as of September 30, 2025, indicating substantial new borrowing.)

ASC 606

Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, which provides a single, comprehensive framework for revenue recognition. (The accounting standard governing how AudioEye recognizes its revenue, primarily SaaS and support services.)

SaaS

Software as a Service, a software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet. (The primary delivery model for AudioEye's software products, contributing to its subscription revenue.)

Year-Over-Year Comparison

Compared to the prior year, AudioEye has demonstrated robust revenue growth, with a 14.6% increase in Q3 2025 revenue to $10.227 million and a 17.0% increase for the nine-month period to $29.817 million. Net losses have narrowed, improving from ($1.202 million) to ($0.554 million) for the quarter and from ($2.766 million) to ($2.025 million) for the nine months. However, this period also saw a significant increase in total debt, with the term loan rising from $6.820 million to $12.622 million, and cash reserves declined from $5.651 million to $4.550 million. New risks include a $0.300 million loss on extinguishment of debt.

Key Financial Figures

• $0.00001 — ich registered Common Stock, par value $0.00001 per share AEYE The Nasdaq Capital M

Filing Documents

• aeye-20250930x10q.htm (10-Q) — 1598KB
• aeye-20250930xex10d1.htm (EX-10.1) — 39KB
• aeye-20250930xex31d1.htm (EX-31.1) — 11KB
• aeye-20250930xex31d2.htm (EX-31.2) — 11KB
• aeye-20250930xex32d1.htm (EX-32.1) — 16KB
• aeye-20250930x10q001.jpg (GRAPHIC) — 11KB
• 0001104659-25-106406.txt ( ) — 6022KB
• aeye-20250930.xsd (EX-101.SCH) — 35KB
• aeye-20250930_cal.xml (EX-101.CAL) — 55KB
• aeye-20250930_def.xml (EX-101.DEF) — 148KB
• aeye-20250930_lab.xml (EX-101.LAB) — 363KB
• aeye-20250930_pre.xml (EX-101.PRE) — 257KB
• aeye-20250930x10q_htm.xml (XML) — 846KB

Financial Statements

Financial Statements 1 Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (unaudited) 2 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (unaudited) 3 Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024 (unaudited) 4 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 (unaudited) 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 Item 4.

Controls and Procedures

Controls and Procedures 26 PART II OTHER INFORMATION 28 Item 1.

Legal Proceedings

Legal Proceedings 28 Item 1A.

Risk Factors

Risk Factors 28 Item 2. Issuer Purchases of Equity Securities 28 Item 5. Other Information 29 Item 6. Exhibits 29

SIGNATURES

SIGNATURES 30 Table of Contents

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements The financial information set forth below with respect to the consolidated financial statements as of September 30, 2025 and December 31, 2024 and for the three- and nine-month periods ended September 30, 2025 and 2024 is unaudited. This financial information, in the opinion of our management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the three- and nine-month periods ended September 30, 2025 are not necessarily indicative of results to be expected for any subsequent period. Our fiscal year end is December 31. The Company presents its unaudited consolidated financial statements, notes, and other financial information rounded to the nearest thousand United States Dollars ("U.S. Dollar"), except for per share data. 1 Table of Contents AUDIOEYE, INC. CONSOLIDATED BALANCE SHEETS (unaudited) September 30, December 31, (in thousands, except per share data) 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 4,550 $ 5,651 Accounts receivable, net of allowance for doubtful accounts of $ 749 and $ 511 , respectively 6,341 5,932 Prepaid expenses and other current assets 970 537 Total current assets 11,861 12,120 Property and equipment, net of accumulated depreciation of $ 353 and $ 294 , respectively 160 215 Right of use assets 208 385 Intangible assets, net of accumulated amortization of $ 12,293 and $ 9,793 , respectively 11,486 10,276 Goodwill 6,682 6,661 Other 81 109 Total assets $ 30,478 $ 29,766 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 3,873 $ 3,870 Operating lease liabilities 213 199 Deferred revenue 7,463 7,502 Term loan, current 335 — Total current liabilities 11,884 11,571 Long term liabilities: Term loan, net 12,622 6,820 Operating lease liabilities 56 218

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 1 — BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements of AudioEye, Inc. and its wholly-owned subsidiaries, ADA Site Compliance, LLC, Criterion 508 Solutions, Inc., and Ability, Inc. ("we", "our" or the "Company"), have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") and the rules of the Securities and Exchange Commission (the "SEC"), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Form 10-K"), as filed with the SEC on March 12, 2025. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain information and disclosures normally contained in the audited consolidated financial statements as reported in the Company's Annual Report on Form 10-K have been condensed or omitted in accordance with the SEC's rules and regulations for interim reporting. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are presented in "Note 2 – Significant Accounting Policies" in the 2024 Form 10-K. Users of financial information for interim periods are encouraged to refer to the footnotes to the consolidated financial statements contained in the 2024 Form 10-K when reviewing interim financial results. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the r

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. Our SaaS revenue is comprised of fixed subscription fees from customer accounts on our platform related to our software products. Our support revenue is comprised of subscription fees for customers for periodic auditing, human-assisted technological remediations, legal support, and other professional support services. SaaS and support (also referred to as "subscription") revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS and support fees are invoiced in advance on an annual, semi-annual, or quarterly basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when the related performance obligations have been satisfied. Our subscription agreements are generally non-cancelable, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations. Non-subscription revenue consists primarily of PDF remediation and one-time website and mobile application reporting services and is recognized upon delivery. Consideration payable under PDF remediation arrangements is based on usage. Consideration payable under non-subscription website and mobile application reporting services arrangements is based on fixed fees. The following tables present our revenues disaggregated by sales channel: Three months ended September 30, (in thousands) 2025 2024 Partner and Marketplace $ 5,582 $ 5,226 Enterprise 4,645 3,699 Total revenues $ 10,227 $ 8,925 Nine months ended September 30, (in thousands) 2025 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) As of September 30, 2025 and December 31, 2024, one customer represented 13 % and 14 % of total accounts receivable, respectively. Deferred Costs (Contract Acquisition Costs) We capitalize initial and renewal sales commissions in the period the commission is earned, which generally occurs when a customer contract is obtained, and amortize deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less. The table below summarizes the deferred commission costs as of September 30, 2025 and December 31, 2024, which are included in Prepaid expenses and other current assets (current portion) and Other assets (noncurrent portion) on our consolidated balance sheets: September 30, December 31, (in thousands) 2025 2024 Deferred costs – current $ 30 $ 28 Deferred costs - noncurrent 30 32 Total deferred costs $ 60 $ 60 Amortization expense associated with sales commissions was included in Selling and marketing expenses on the consolidated statements of operations and totaled $ 9,000 and $ 26,000 for the three and nine months ended September 30, 2025, respectively, and $ 11,000 and $ 27,000 for the three and nine months ended September 30, 2024, respectively. Business Combinations The assets acquired, liabilities assumed and any contingent consideration in business combinations are recorded at their estimated fair value on the acquisition date with subsequent changes recognized in earnings. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as part of the purchase price allocation process to value

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Debt Discount and Debt Issuance Costs Costs related to the issuance of debt due to the lender (debt discount) or to third parties (debt issuance costs) are capitalized and amortized to interest expense over the term of the related debt on a straight-line basis, which is not materially different from the effective interest method. Debt discount and debt issuance costs are presented on the Company's consolidated balance sheets as a direct deduction from the carrying amount of our term loan. Employee Stock Purchase Plan In May 2022, the stockholders of the Company approved the Company's Employee Stock Purchase Plan (the "ESPP"), which provides for the issuance of up to 500,000 shares of common stock. Eligible employees may elect to have a percentage of eligible compensation withheld to purchase shares of our common stock at the end of each purchase period. The Company expects each purchase period to be the six-month periods ending on June 30 or December 31 of each calendar year. Beginning in 2025, the purchase price per share equals 85 % of the fair market value of our common stock on the first trading day or the last trading day of each purchase period , whichever amount is lower. As a result, the fair value of shares of common stock to be issued under the ESPP is measured on the first day of each offering period using a Black-Scholes option pricing model. Under the ESPP, a participant may not be granted rights to purchase more than $ 25,000 worth of common stock for each calendar year and no participant may purchase more than 1,500 shares of our common stock (or such other number as the Compensation Committee may designate) on any one purchase date. As of September 30, 2025, 27,530 shares had been issued under the ESPP and 472,470 shares remained available under the plan. Stock-Based Compensation The Company perio

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (Unaudited) NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table summarizes the stock-based compensatio

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