Good afternoon, and welcome to AudioEye's Third Quarter 2020 Earnings Conference Call. Joining us for today's call are AudioEye's Interim CEO, Mr. David Moradi; Executive Chairman, Dr. Carr Bettis; and CFO, Mr. Sach Barot. Following their remarks, we'll 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 link available in the Investor Relations section of the company's Web site 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, confidence, will and other similar statements of expectation identify forward-looking statements. These statements are predictions, projections or other statements of future events, and are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ from those factors discussed in today's press release and in the comments made during this conference call and in the Risk Factors section of the company's annual report on Form 10- K, its quarterly report on Form 10-Q and our 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 reflects 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 on the company's earnings release posted in the investor relations section of the company's Web site at www.audioeye.com. I’d now like to turn the call over to AudioEye's Executive Chairman, Dr. Carr Bettis. Thank you, sir. Please begin.

Thank you, operator. Welcome, everyone and thank you for joining us today. After the market closed, we issued a press release announcing our results for the third quarter ended September 30, 2020. A copy of the press release is also available in Investors section of our Web site at audioeye.com. I'll now begin, as we always do with an overview of our business. AudioEye is a leading provider of SaaS based digital content accessibility platform and solutions. Our mission, eradicate all barriers to digital accessibility. We pride ourselves in addressing the largest range of issues that impact many people around the globe. At AudioEye, we also do more than just identify accessibility issues. We strive to fix, maintain and continuously monitor them. We also certify websites to demonstrate compliance with both the American with Disabilities Act or ADA and the latest Web Content Accessibility Guidelines. Because many of the remediation capabilities we provide are highly automated, our customers can more quickly gain compliance with accessibility standards, regulations and laws. For our managed and enterprise offerings, these automated processes are coupled with manual testing and remediation by subject matter experts. The result is that we provide our clients with what we believe is the best platform to make their websites and digital content more accessible. We keep their content more accessible through continuous monitoring and remediation, and we offer a trusted certification of conformity with standards. Furthermore, for our private sector clients, we also provide them a product that gives them an opportunity to gain an ROI from their investment in and committed to the large population of individuals with disabilities. With the overview of the business completed, I'll move on to highlights around our Q3 execution and what we are seeing so far in the fourth quarter. We had another…

Thank you, Carr. It is my pleasure to speak with you today. I took on this role believing that we have a special opportunity, which is captured by our single minded determination to achieve our mission, eradicate all barriers to digital accessibility. This is a bold uncompromising mission, and one that requires execution and a great team of leaders and employees. During my tenure as CEO, we have added depth and experience to our leadership. As was discussed in the last earnings call, building on the strategic initiatives put in place last November, we have continued to implement organizational changes in order to accelerate our efforts to build out scalable technologies and our go to market. The center for our technology base is now Portland. This transition has gone very well and our pace of technology innovation has accelerated even during this transition. Over the past two months, we have added top tier talent at the company, including Bryan Rodrigues, our recently hired CMO. Most recently, Bryan was Vice President of Marketing and E-commerce at Tile, helping to drive significant growth of Tile's core business and playing a key role in the company's expansion through partnerships and subscription services. Prior to Tile, Bryan was part of Livescribe's executive management team where he oversaw the company's marketing, e-commerce and customer support organization, leading up to its acquisition by Anoto, a publicly traded Swedish firm. Last week, Russell Griffin joined the leadership team as CRO. Most recently, Russell was Vice President of Global Solution Partnership and Head of US Sales at ShipStation, driving overall revenue growth 100% year-over-year. Prior to that, Russell was Vice President of Enterprise Sales and agency partnerships at BigCommerce, the world's leading cloud e-commerce platform where he increased new sales by 50% year-over-year and set record revenue numbers.…

Thanks, David. As Carr mentioned, it is great to have you on board and partner with you to drive long term growth and deliver shareholder value. I hope everyone continues to be safe and well during this historic and challenging time. As Carr and David described, this was a strong quarter for AudioEye. Both the company and our customers continue to find ways to navigate through the ongoing crisis. Now onto the results, starting with revenue. Revenue in Q3 was a little over $500 million, reflecting a 92% increase over Q3 last year. Our revenue performance continues to to be launched by improved penetration in our vertical partner channel and also contributions from enterprise channel. As mentioned earlier, we continue to better our gross margins, which came in at 71% for this quarter. While this may fluctuate, we expect our margins continue to grow overtime. Moving to operating expenses. In Q3, OpEx was $5.4 million, which was an increase of about 43% versus Q3 last year. The drivers have increase in OpEx are mostly the same as the last few quarters, that is increased investments in talent across various functions, infrastructure and product development and sales and marketing to drive further growth. Q3 this year also had about $360,000 of costs related to severance workings restructuring. Turning towards the bottom line. Net loss available to common stockholders for the third quarter of 2020 totaled $1.1 million or a loss of $0.12 per share. This compares with the net loss of $2.2 million or a loss of $0.27 per share in Q3 last year. This improvement in net loss reflects the increase in gross profit as we scale and also includes a reversal of warrant liability costs, as the line of credit related warrants were exercised in August. This net loss also reflects our equity comp and service related charges. From a non-GAAP perspective, our net loss was about $200,000 and EPS was a loss of $0.02. The non-GAAP earnings and EPS reflects adjustment for service compensation, costs associated with warrant accounting, interest expense which mainly includes expense for debt issuance and certain severance cost. Now on to some additional metrics and starting with it as of September 30th. Monthly recurring revenue, or MRR, was $1.7 million, which was an increase of about 67% year-over-year. We ended the quarter with about $10.2 million in cash compared to about $2.1 million at the end of the second quarter. Our cash balance reflects contribution of about $900,000 from the warrants exercise of Sero Capital and from the secondary offering we conducted in August. In closing, I would like to thank all our employees, customers, partners and our shareholders for their continued support as we execute against our vision to bring equality and digital access. And I wish everyone and their family safety and sound health. With that we'll open the call for questions. Operator, please give the instructions.

Thank you [Operator instructions]. Our first question today is coming from Zach Cummins of B. Riley FBR. Please go ahead, sir.

I guess just first question is really going to be around the progress you've seen with transitioning your development resources to Portland. It sounds like that's been relatively smooth and just additional perspective on that would be helpful.

Yes, we are updating the product and technology stack. The transition of technology leadership of Portland has gone very, very well.

And then Carr, I know you mentioned in your script there a little is a little bit of elevated level of attrition here in some of these recent months. It sounds like some of that's out of your control. But I mean, can you give us a sense of how we should maybe be thinking about attrition as we go forward from here?

So I think that, again, the overall levels around 90, we have seen some turn. I would say the primary driven still by economic conditions like bankruptcies and business closures. And if you think about the retail space and even to some extent some of the automotive space is impacted as well. We do really expect renewals to continue to be strong and even strengthen with economic -- economies strengthening we expected to strengthen as well.

And then in terms of renewal cycle and sales cycle. I mean, it sounds like there was a few delays on both of those fronts and giving some flexible pricing to some customers when necessary. But can you give us an update on kind of what you have seen here in the first kind of month and half of Q4, has there been any improvement in either of those metrics? And what we should really be expecting moving forward?

So looking beyond the third quarter, we do feel pretty good about our growth over the coming quarters. We're not talking specifically about Q4 numbers, Zach, you know us pretty well in that regard. But again, we are expecting -- we liked the momentum in the fourth quarter and we're very good about the growth that we expect to see over the coming quarters.

And then just final question for me, I’ll gear it towards you David. Can you outline some of the areas that you think are going to be the biggest opportunity moving forward? We've seen this indirect partner channel really drive a lot of momentum in recent quarters. But just be curious to hear some of the major growth areas that you're thinking about moving forward and how your new executive hires are going to help play into that strategy?

I think the digital marketplace is going to be huge. This segment has the biggest potential for our business and fits our mission to eradicate all barriers to digital accessibility. Our technology and platform is the best available and we can deliver at scale. So that's what I'm most excited about.

Absolutely. Well, thank you for taking my questions. Congrats on a strong quarter.

Thank you. This concludes our question-and-answer session. I'd now like to turn the floor back over Dr. Bettis for his closing remarks.

Thank you very much, everyone for joining us today. I do want to especially thank our employees, our partners and our investors for the continued support. And we are looking forward to updating you on our next call. Thanks everyone. Have a good evening.

Thank you. Before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay via a link available in the Investors section of the company's Web site. Thank you for joining us today for AudioEye's third quarter 2020 earnings conference call. You may now disconnect.