Good afternoon and welcome to AudioEye’s First Quarter 2022 Earnings Conference Call. Joining us for today’s call are AudioEye’s CEO, Mr. David Moradi; and CFO, Ms. Kelly Georgevich. 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 and 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 in 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 belief only as 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 our website at www.audioeye.com. Now I’d like to turn the call over to AudioEye’s Chief Executive Officer, Mr. David Moradi. Sir, please proceed.

Thank you, operator. Welcome, everyone and thank you for joining us. After the market closed, we issued a press release announcing our results for the first quarter ended March 31, 2022. A copy of the press release is also available on our website’s Investor Relations section at www.audioeye.com. To begin, we’d like to highlight our strong financial performance. We are pleased to announce we exceeded revenue guidance with $6.9 million in the first quarter. This continues our accelerated revenue trend with 19% year-over-year growth in the first quarter. We also ended the first quarter with accelerated growth in annual recurring revenue, or ARR, which was $28.1 million, up 22% in the comparable period. Our revenue and ARR increases resulted from continued organic growth across our enterprise, partnership and marketplace channels and our acquisition of the Bureau of Internet Accessibility, or BOIA, on March 9, 2022. As discussed on the previous earnings call, the acquisition of BOIA as a key dimension to our product suite for those customers who prefer to fix accessibility issues at the source, giving us an end-to-end solution for all customers in their accessibility journey. In terms of our large strategic partnerships initiative, we are now moving forward with 2 new significant partners and are already seeing them contribute to revenue. While these partnerships will take time to develop and meet their full potential, this is an exciting step in achieving one of AudioEye’s goals of expanding partners who can offer AudioEye to their vast customer base. While building out new partner relationships, we are also reviewing and revisiting existing partnerships, including our lower-tier offering and pricing. As you recall, our partner strategy for increasing ARR included a land-and-expand approach. While this has worked very well with some partners, others continue to have untapped potential. We are…

Thank you, David. As David mentioned, we are pleased with our first quarter 2022 performance. Q1 marks the 25th straight quarter of record revenue, ending the quarter at $6.9 million, which was 19% growth year-over-year. Annual recurring revenue, or ARR, at the end of the first quarter of 2022 was $28.1 million, a 22% increase over ARR at the end of the first quarter of 2021. Our 2 revenue channels continue to perform with the Bureau of Internet Accessibility acquisition also contributing to the enterprise revenue in the quarter. Looking at our revenue channels in more detail. As discussed in previous earning calls, the partner and marketplace channel includes all revenue from our SMB-focused marketplace products and revenue from a variety of partners to deploy these same products for their SMB customers. In the first quarter of 2022, this revenue channel grew 20% year-over-year and represented approximately 55% of revenue and ARR. We expect to continue to see this channel contribute significantly to our growth in revenue as we continue to have traction with larger partners. The enterprise channel inclusive of revenue from the acquisition of BOIA on March 9, 2022, continued to perform in the quarter, contributing approximately 45% of revenue and ARR. Decreases in project-oriented PDF revenue from Q1 2021 were fully offset by contributions from BOIA’s nonrecurring revenue. In addition, reoccurring revenue from the enterprise channel increased 18% over the same period in prior year. As David mentioned, the total customer count decreased from Q4 2021 as we look to expand our level of service with the partners still at an entry-level offering. We view these adjustments to be a positive step for our business, which will increase the average revenue per customer. On March 31, 2022, our customer count was approximately 74,000 compared to 68,000 customers…

Thank you. [Operator Instructions] The first question is coming from Zach Cummins with B. Riley Securities.

David, just starting off, can you give us a little more insight into the two partnerships that you mentioned during the transcript. It sounds like they’re relatively early days, but any sort of incremental detail or update you can give us there. And kind of what are the next steps that need to happen for this to start meaningfully scaling?

Sure. These are both large platform partnerships. One is a significant reseller platform, which we already started generating revenue from in the first quarter. This has a big opportunity in front of us that produce revenue over the next 1 to 2 years. The other one is one of the most significant website platforms in the world. We’re generating revenue from the enterprise side today, and we’re now in discussions with them on the platform side. So these are pretty significant. These deals have been worked on for a long time and have finally started to bear fruit. This is what I came in here to do and we’re actually doing it now. So we’re excited to work with these partners. I want to thank the AudioEye team for all their hard work getting to this point as well. We’re unaware of anyone else winning similar deals in the industry right now.

Understood. That’s great to hear. And in terms of the partner on the flip side of that, it seems like you’re kind of taking a pause with some of those customers. I mean, can you give us some more insight into kind of why you decided to go that direction? And is there still an opportunity to potentially get that partnership back and win some of those customers back?

Yes. It’s just being caused by a renegotiation with the digital agency. We’re moving away from that very basic tier to a more advanced offering, which will give the client a much higher level of accessibility. So it’s better for them, better for us, and we expect that to hit later in the year.

Understood. That’s helpful. And then in terms of just the acquisition of BOIA, I mean, can you give us some insight into how the integration with that’s been going thus far? And maybe a question more geared towards Kelly, but can you give me any sort of sense of the contribution that we saw from BOIA in Q1? And maybe what’s really baked into your Q2 revenue guidance in terms of contribution from BOIA?

Yes. I’ll start with that. It’s going very well. It’s a very complementary product what we have. If customers have more complex sites or using languages like React, they may prefer to fix accessibility issues at the source. So now we have an end-to-end solution for any customer coming to us depending on their needs. And I’ll pass it off to Kelly now.

Yes. BOIA was acquired in late Q1, so it contributed nominally to enterprise revenue and net income. As David mentioned, looking ahead, we expect BOIA to be integrated into our product suite and expect it to have overlapping services. So going forward, we will likely not be splitting out legacy BOIA revenue contribution, but instead folding it into the enterprise number. So looking at guidance in the Q2, we don’t provide specific guidance on each of our revenue channels, but do think it will contribute in the quarter.

Understood. And finally, just on the cash usage front, I think nice to see that from operations was only $2 million in usage this quarter. I think you were guiding to around $3 million, if I recall correctly from the last quarter. And it sounds like it should continue to improve in the second half of the year as well as we approach that breakeven number. Is it safe to assume as you continue to scale, we’re likely going to see this business at least staying near breakeven or potentially generating cash as we get beyond this year?

Yes. We weren’t happy to see cash come in lower than expected and our cash burn coming lower than we expected in Q1, and we expect that to continue into Q2. And as we mentioned on the call, we expect it to continue to tick down and get – approach breakeven by Q4. We’re not commenting specifically on what it looks like for 2023, but we do see efficiencies across all of our departments. And we do see as we’re adding revenue and gross profit, we’re not scaling expenses to the same rate. So should continue to see efficiencies there.

Understood. That’s helpful. Thanks for taking my questions and best of luck here with the rest of Q2.

Thanks, Zach.

[Operator Instructions] Up next, we have Scott Buck with H.C. Wainwright. Your line is live.

Hi, good afternoon, guys. Thank you for taking my questions. The first one, just on the renegotiation that you had going on with the digital agency, was there any revenue impact from that during the quarter?

It was fairly small. Kelly can get into that.

Yes, I would say it was nominal. It was more – it was the lowest you’re operating, so not a material impact to revenue.

Okay. I appreciate that. And it looks like – I know OpEx is up year-over-year, but you’re down from the last couple of quarters. Is that just seasonal? Or is there something structurally different in the way that you’re looking at OpEx going forward?

Yes. Overall, we’re being strategic with our investments. So we are gaining efficiencies year-over-year. And so I think that’s what you’re seeing there is just efficiencies across all of our departments. We will continue to invest, but just doing better in each of those departments.

Okay. Very good. That’s helpful. And then just a bit of a follow-up on Zach’s question. Now that you’ve had a chance to kind of peak behind the curtain with BOIA, do you see a need for increased investment there? Or were all there – was their platform kind of up to your expectations pre deal?

Yes. We are really excited about the acquisition, kind of looking under the hood a little bit, now that it’s integrated. We think there’s a really good upsell opportunity and integration into our product suite. We don’t see significant additional investment needed in the BOIA space.

Okay. And what’s the time line for integration? I mean, when could you be out marketing kind of joint services?

Yes. We’re moving forward with that currently. So we’re taking initial steps to do integration as we speak. We actually expect it to be folded into our product suite and upsell in new business offerings sooner than later.

Okay. Perfect. And then just last one for me. If we could get a little more color on the pipeline, obviously, a lot of distractions in the world these days. I’m curious how conversations are going and then whether you’ve seen either an acceleration or a slowdown in how active people are on the other side of the table?

Yes. We’re feeling pretty good. The revenue is accelerating. We’re guiding for a 25% at the midpoint. We feel good about our position in the industry and the investments we’re making into technology. Look, as we scale, it’s going to become more and more difficult for the smaller players to compete with us, especially when you factor in the R&D budget, product development, marketing and sales. So this is kind of a scale game, I think we’re winning at.

Okay. Great. Well, I appreciate all the added color guys. Have a good rest of the quarter.

Thank you.

Okay. We have no further questions in queue at the moment. I’d like to turn the floor back to management for any remarks.

Yes. Thank you for joining us today. As always, I want to thank our employees, partners and investors for their continued support. We look forward to updating you on our next call.

Thank you, ladies and gentlemen. This does conclude today’s conference call. You may now disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.