AudioEye AEYE is scheduled to release its fourth-quarter 2024 results on March 12. 

In the fourth quarter of 2024, the company expects to generate revenues between $9.7 million and $9.8 million, representing 24% year-over-year growth. It also expects adjusted EBITDA between $2.2 million and $2.3 million and adjusted EPS between 18 cents and 19 cents per share.

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $9.73 billion, suggesting a rise of 23.67% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 18 cents per share, suggesting a jump of 63.64% from the year-ago reported figure. The estimate has been unchanged over the past 30 days.

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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Earnings Surprise History

In the last reported quarter, AudioEye delivered an earnings surprise of 14.229%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 83.57%.

Earnings Whispers for AEYE

Our proven model does not conclusively predict an earnings beat for AudioEye this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

AudioEye has an Earnings ESP of 0.00% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Influence AudioEye’s Q4 Results

As AudioEye prepares to release its fourth quarter 2024 results, investors should consider maintaining current positions or awaiting a better entry point despite the company's strong growth trajectory. Following third-quarter's impressive performance with revenues of $8.93 million (14% year-over-year growth) and an adjusted EBITDA of $2 million, management guided fourth-quarter revenues between $9.7 million and $9.8 million, suggesting 24% year-over-year growth.

The digital accessibility provider is likely to have benefited from the continued expansion of its Enterprise and Partner/Marketplace channels, which grew at an annualized 21% rate in the third quarter. The recent acquisition of ADA Site Compliance, which generated approximately $2 million in 2023 revenues, is likely to have contributed to fourth-quarter performance, although integration costs might have temporarily offset some gains.
During the quarter, AudioEye launched its Accessibility Protection Status feature, moving beyond arbitrary scoring systems to provide more transparent risk assessments. This initiative is likely to have strengthened the company's competitive positioning against both traditional consulting firms and automation-only competitors. Management claimed this approach offers up to 300% greater protection than traditional accessibility consulting and 400% more than automation-only solutions.

The company also celebrated the third anniversary of its A11iance Team, accessibility experts with disabilities who have tested over 3,400 customer websites and identified more than 35,000 accessibility issues that automated tools couldn't detect. This differentiated approach enhances AudioEye's service offering but requires ongoing investment.

Expanded partnerships with Finalsite (K-12 schools) and CivicPlus (government) announced in the third quarter are expected to have gained traction in the fourth quarter, though full revenue impact will likely materialize over the next three years. CEO David Moradi previously indicated these partnerships could generate "tens of millions of dollars additional" revenues at full penetration.

With gross margins at 80% in the third quarter and a completed $7 million at-the-market offering at $24.65 per share, AudioEye's financial position remains solid. However, investors should monitor the company's progress toward its "Rule of 47" goal (combining growth rate and EBITDA margin) and evaluate how effectively management balances growth investments with profitability improvement before increasing positions.

AEYE Price Performance & Stock Valuation

In a remarkable display of market performance, AudioEye has emerged as a standout performer, with its stock price soaring an impressive 46.2% in the past year, outperforming the broader Zacks Computer and Technology sector. This remarkable surge has catapulted the digital accessibility solutions provider into the spotlight, leaving investors and analysts pondering over the sustainability of its growth and the best strategies for approaching the stock.

AEYE has also outperformed the Zacks Internet - Software industry peers, including Digital Turbine APPS, Olo OLO and CLEAR Secure YOU, over the past year. APPS, OLO and YOU have returned 2.9%, 17.9% and 26.2%, respectively, over the same time frame.

1-Year Performance

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However, the stock's dramatic ascent has not been without its share of obstacles. AudioEye's current valuation with a trailing-12 month price-to-earnings ratio of 74.18 is significantly higher than the Zacks Internet - Software industry average of 39.48 and may be unsustainable. There are concerns that the stock price may have outpaced the company's fundamental growth, potentially setting the stage for a correction.

AEYE’s P/E TTM Ratio Depicts Stretched Valuation

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Investment Thesis

AudioEye presents a compelling yet cautious investment case in the digital accessibility market, with strong revenue growth (21% annualized in the third quarter) and improving profitability (23% adjusted EBITDA margin). However, the stock's premium valuation relative to software peers warrants patience, especially considering intensifying competition from accessiBe, UserWay, Level Access, and Deque Systems. While recent partnerships with Finalsite and CivicPlus and the acquisition of ADA Site Compliance should drive future growth, investors should carefully weigh these opportunities against competitive pressures and integration execution risks. The company's innovative Accessibility Protection Status and A11iance Team offer differentiation, but prudent investors might wait for fourth-quarter results to confirm sustainable competitive advantages before establishing or adding to positions.

Conclusion

While AudioEye demonstrates promising growth in the digital accessibility market with expanding partnerships and innovative solutions, investors should exercise caution given its premium valuation and competitive landscape. Current shareholders may maintain positions, but prospective investors might benefit from waiting until after fourth-quarter results to assess execution on integration initiatives and sustainable competitive advantages before establishing new positions at potentially more favorable entry points.

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This article originally published on Zacks Investment Research (zacks.com).

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