Q2 2024 AudioEye Inc Earnings Call
Operator: Good afternoon, and welcome to AudioEye's second quarter 2024 earnings conference call. Joining us for today's call are AudioEye 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 customer interest relations section of the company's website at www.audioeye.com.
Operator: Good afternoon and welcome to AudioEye 2nd quarter, 2024 Ernest conference call.
Good afternoon, and welcome to <unk> second quarter 2024 earnings conference call joining us for today's call are audio I CEO, Mr. David Marathi N V F O East County, Georgia is following their remarks, we will open the call for questions from the company's publishing analysts.
Operator: Joining us for today's call are AudioEye CEO, Mr. David Moradi, and CFO, Ms. Kelly Georgevich.
Operator: Following their remarks, we will open the call for questions from the company's publishing analyst. I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Coffin and Fresh Relations section of the company's website at www.audioeye.com.
Speaker Change: I would like to remind everyone that this call will be recorded and made available for replay via a link available in the.
Speaker Change: Press relations section of the company's website at Www Dot audio dot com.
Operator: Before I turn the call over to AudioEye 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 for the statements. The Private Security's Litigation Reform Act of 1995 provides a safe harbor for such for the statements. The words believe, expect, anticipate, estimate, confident, will, and other similar statements of expectation identified for the statements. These statements are predictions, projections, or other statements about future events in our based on current expectations and assumptions that are subject to risk and uncertainties.
Operator: 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 before the statement. 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 for the following.
Speaker Change: Before I turn the call over to <unk>, Chief Executive Officer, The company would like to remind all participants that statements made by audio management. During the course of this conference call. They are not historical facts are considered to be forward looking statements.
Speaker Change: The private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward looking statements.
Speaker Change: The words believe expect anticipate estimate.
Speaker Change: And it 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.
Operator: These statements are predictions, projections, or other statements about future events and are based on current expectations and assumptions that are subject to risk and uncertainty. Actual results could materially differ because of factors discussed in today's press release, 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 reports on Form 10-Q, and in its other reports and filings with the Securities and Exchange Commission.
Operator: Actual results could materially differ because the factors discussed in today's press release, in the comments made during this conference call, and in the risk-factor section of the company's annual report on Form 10-K. It's quarter reports on form 10-K and in its other reports in violence 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 of the date hereof. AudioEye does not undertake any duty to update or correct any four-looking statements.
Speaker Change: 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 reports on Form 10-Q.
Speaker Change: And its other reports and filings with the Securities and Exchange Commission.
Operator: Participants on this call are cautioned not to place too much reliance on these forward-looking statements, which reflect management's belief only as of the date hereof. AudioEye does not undertake any duty to update or correct any forward-looking statements. Furthermore, 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 or otherwise posted in the Investor Relations section of its 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.
Speaker Change: Participants on this call are cautioned not to place undue reliance on these forward looking statements, which reflect management's belief only as of the date hereof.
Speaker Change: Or do I 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 or otherwise posted in the Investor Relations section.
Operator: 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 or otherwise posted in the Investor Relations section of its website at www.audioeye.com.
Speaker Change: Right.
Speaker Change: W. W Dot Rui dotcom.
Operator: Now I'd like to turn the call over to AudioEye's Chief Executive Officer, Mr. David Murrady. Sir, please proceed.
Speaker Change: Now I'd like to turn the call over to audio ice Chief Executive Officer, Mr. David Variety. Sir. Please proceed.
David Moradi: Thank you, operator. We're pleased to report that our business momentum is strong. The Quential Revenue's grew from approximately 8.1 million to 8.5 million, representing an annualized growth rate of 19%. ARR increased sequentially by 1.3 million, an increase of 60% compared to ARR growth of 800,000 in the first quarter. We were able to grow revenues in ARR without adding additional costs, with operating expenses roughly flat sequentially. As a result of revenue growth and prudent expense management, we generated record adjusted EBITDA of approximately 1.5 million, a margin of 17%. Looking at free cash flow in terms of EBITDA minus CAPX, we generated our record 1 million of free cash flow from operations.
David D. Moradi: Thank you operator.
David D. Moradi: We are pleased to report that our business momentum is strong. Sequential revenues grew from approximately $8.1 million to $8.5 million, representing an annualized growth rate of 19 percent. ARR increased sequentially by 1.3 million, an increase of 60% compared to ARR growth of 800,000 in the first quarter. We were able to grow revenues in NARR without adding additional costs with operating expenses roughly flat sequentially. As a result of revenue growth and prudent expense management, we generated a record adjusted EBITDA of approximately $1.5 million, a margin of 17%. Looking at free cash flow in terms of EBITDA minus CapEx, we generated a record $1 million of free cash flow from operations.
David D. Moradi: We're pleased to report that our business momentum is strong.
Speaker Change: Sequential revenues grew from approximately $8 1 million to $8 5 million, representing an annualized growth rate of 19%.
Speaker Change: Air our increased sequentially by $1 3 million, an increase of 60% compared to the era of 800000 in the first quarter.
Speaker Change: We were able to grow revenues and IRR without adding additional costs with operating expenses roughly flat sequentially.
As a result of revenue growth and prudent expense management, we generated record adjusted EBITDA of approximately $1 5 million a margin of 17%.
Speaker Change: Looking at free cash flow in terms of EBITDA minus Capex, we generated a record $1 billion of free cash flow from operations.
David Moradi: We were close to achieving the rule of 40 in the second quarter and expecting to hit the rule of 40 in the third quarter. We sought notable growth in both our enterprise and partner and marketplace channels, with both channels contributing equally to revenue growth.
David D. Moradi: We were close to achieving the Rule of 40 in the second quarter and expect to hit the Rule of 40 in the third quarter. We saw notable growth in both our enterprise and partner and marketplace channels, with both channels contributing equally to revenue growth sequentially. The Enterprise Channel is growing at the fastest rate in several years due to our investment in R&D and the effective implementation of our go-to-market approach. We are excited to report that this momentum is continuing and driving a further increase in our full-year guidance, which I will discuss shortly.
Speaker Change: We were close to achieving the rule of 40 in the second quarter and expect to hit the rule of 40 in the third quarter.
We saw notable growth in both our enterprise and partner and marketplace channels with ball channels contributing equally to revenue growth sequentially.
David Moradi: Ashley. The Enterprise Channel is growing at the fastest rate in several years due to our investment in R&D and the effective implementation of our go-to-market approach. We are excited to report that this momentum is continuing and driving a further increase in our full-year guidance, which I will discuss shortly.
Speaker Change: The enterprise channel is growing at the fastest rate in several years due to our investment in R&D and the effective implementation of our go to market approach.
Speaker Change: We are excited to report that this momentum is continuing and driving a further increase in our full year guidance, which I will discuss shortly.
David Moradi: I'll now cover a few other notable developments in the quarter. On our April Ernie's call, we discuss significant regulatory developments for digital accessibility, including the Department of Justice's final role under Title II of the Americans with Disabilities Act, which mandates that state and local government entities ensure their websites and mobile applications are accessible to people with disabilities. The regulation applies to a wide range of state and local government entities, including public schools, community colleges, universities, hospitals and clinics, police departments, libraries, and transit agencies. Shortly after the Title II announcement, the Department of Health and Human Services Office for Civil Rights published a final rule that bolstered protections for individuals with disabilities under Section 504 of the Rehabilitation Act.
David D. Moradi: I'll now cover a few other notable developments in the quarter. On our April earnings call, we discussed significant regulatory developments for digital accessibility, including the Department of Justice's final rule under Title II of the Americans with Disabilities Act, which mandates that state and local government entities ensure their websites and mobile applications are accessible to people with disabilities. The regulation applies to a wide range of state and local government entities, including public schools, community colleges, universities, hospitals and clinics, police departments, libraries, and transit agencies.
Speaker Change: I'll now cover a few other notable developments in the quarter.
Speaker Change: On our April earnings call, we discussed significant regulatory developments for digital accessibility.
<unk> the department of Justice to its final rule under title two of the Americans with Disabilities Act, which mandates that state and local government entities ensure their websites and mobile applications are accessible to people with disabilities.
Speaker Change: The regulation applied to a wide range of state and local government entities, including public schools community colleges universities hospitals, and clinics police departments library and transit agencies.
David D. Moradi: Shortly after the Title II announcement, the Department of Health and Human Services Office for Civil Rights published a final rule that bolsters protections for individuals with disabilities under Section 504 of the Rehabilitation Act. The rule stipulates that web content and mobile applications provided by organizations that receive funding from HHS, including hospitals, doctor's offices, social services, nursing homes, and others, are accessible to people with disabilities. Like the DOJ Title II Rule, the HHS will outline specific digital accessibility requirements, including adherence to WCAG 2.1 and requires compliance by May 2026 or May 2027, depending on the organization's size.
Speaker Change: Shortly after the title two announcement the department of Health and Human Services Office first double right published a final rule that bolsters protections for individuals with disabilities under section 504 of the Rehabilitation Act.
David Moradi: The rule stipulates that web content and mobile applications provided by organizations that received funding from HHS, including hospitals, doctors, offices, social services, nursing homes, and others, are accessible for people with disabilities. Like the DOJ Title II rule, the HHS roll outlines specific digital accessibility requirements, including adherence to WCAG 2.1, and requires compliance by May 2026 or May 2027 depending on the organization size. To understand the impact of the HHS roll, we scanned over 96,000 health care website pages over the United States. The average page has 84 accessibility issues, which is alarming. A approximately 96 percent of the internet is currently inaccessible to people with disabilities.
Speaker Change: The rules stipulate that web content and mobile applications provided by organizations that received funding from HHS.
Speaker Change: Including hospitals doctors offices, social services nursing homes, and others are accessible for people with disabilities.
Speaker Change: Like the Doj trial to enroll the HHS will outline specific digital accessibility requirements.
Speaker Change: Including adherence to wake up to your point, what and requires compliance by May 2026, our may 2027, depending on the organization size.
David D. Moradi: To understand the impact of the HHS role, we scanned over 96,000 healthcare website pages across the United States. The average page has 84 accessibility issues, which is alarming. Approximately 96% of the internet is currently inaccessible to people with disabilities.
Speaker Change: So I understand the impact that the HHS rule, we scatter over 96000 health care website pages over the United States.
Speaker Change: The average page had 84 accessibility issues, which is alarming.
Speaker Change: Approximately 96% of the Internet is currently inaccessible to people with disabilities.
David D. Moradi: Title II and HHS represent significant expansion opportunities, and we are uniquely positioned to meet the increase in demand with our direct sales team and reseller channel. Our AI and human-assisted technology approach is the only way to address a problem at scale and deliver a solution to millions of websites. Over the last three months, we have been working hard to develop strategic initiatives and growth plans with our existing partners, including FinalSight, the market share leader in K-12 schools.
David Moradi: Title II and HHS represent significant expansion opportunities, and we are uniquely positioned to meet the increase in demand with our direct sales team and reseller channel. Our AI and human assistance technology approach is the only way to address the problem at scale and deliver a solution to millions of websites. Over the last three months, we have been working hard to develop strategic initiatives and growth plans with our existing partners, including final sites, the market share leader in K-12 schools. The goal is to penetrate all of their install base over the next three years with a comprehensive go-to-market plan.
Speaker Change: Two N H H S represent significant expansion opportunities and we are uniquely positioned to meet the increase in demand with our direct sales team and reseller channel.
Speaker Change: Our AI and human assisted technology approach is the only way to address the problem at scale and deliver a solution to millions of websites.
Speaker Change: Over the last three months, we have been working hard to develop strategic initiatives and growth plans with our existing partners, including final site the market share leader in K through 12 schools.
David D. Moradi: The goal is to penetrate all of their installed bays over the next three years with a comprehensive go-to-market plan. Both of us will contribute significant resources to make this happen. There is a significant opportunity to penetrate other industries under Title II and HHS, which includes state and local government, higher education, and the healthcare industry.
Speaker Change: The goal is to penetrate all of their installed base over the next three years with a comprehensive go to market plan.
David Moradi: Both of us will contribute significant resources to make this happen. There is a significant opportunity to penetrate other industries under Title II and HHS, which includes state and local governments. Higher education and the healthcare industry. We already have a partnership with the dominant platform for cities, towns, and municipalities, as well as key partnerships in the healthcare industry.
Speaker Change: Both of us will contribute significant resources to make this happen.
Speaker Change: There is a significant opportunity to penetrate other industries under title two and HHS, which include state and local government.
Speaker Change: Higher education, and the healthcare industry.
David D. Moradi: We already have a partnership with the dominant platform for cities, towns, and municipalities, as well as key partnerships in the healthcare industry. We expect to create new partnerships in these industries as we execute our go-to-market plan and expect further announcements soon. We are also monitoring demand from the European Accessibility Act and California's AB1757 legislation. We expect to see further development on these items over the next few months. Moving on to guidance.
Speaker Change: We already have a partnership with the dominant platform for cities towns and municipalities as well as key partnership and the health care industry.
David Moradi: We expect to create new partnerships in these industries as we execute our go-to-market plan and expect further announcements soon. We are also monitoring demand from the European Accessibility Act and California's AB 1757 legislation. We expect to see further development on these items over the next few months.
Speaker Change: We expect to create new partnerships in these industries as we execute our go to market plan and expect further announcements again.
Speaker Change: We are also monitoring demand.
Speaker Change: The European Accessibility Act and California's <unk> 17, 57 legislation.
Speaker Change: We expect to see further developments on these items over the next few months.
David Moradi: Moving on to guidance, we continue to expect quarterly revenues to increase without significant additional expense, resulting in increased operating leverage and cash flow generation. For the third quarter, we are guiding for revenue between 8.8 million, 6.95 million, representing an annualized growth rate of approximately 20 percent. We expect to generate adjusted EPA between 1.85 to 1.95 million, and adjusted EPS between 15 and 16 cents. We expect to become a Rule of 40 company in the third quarter with the potential to increase growth rates and adjusted EBITDA margins in 2025 and beyond. We are increasing our 2024 revenue guidance to between 34.5 and 34.8 million.
Speaker Change: Yeah.
Speaker Change: Moving on to guidance.
David D. Moradi: We continue to expect quarterly revenues to increase without significant additional expense, resulting in increased operating leverage and cash flow generation. For the third quarter, we are guiding for revenue between $8.85 million and $8.95 million, representing an annualized growth rate of approximately 20 percent. We expect to generate adjusted EPA between 1.85 to 1.95 million and adjusted EPS between 15 and 16 cents. We expect to become a rule of 40 company in the third quarter with the potential to increase growth rates and adjusted EBITDA margins in 2025 and beyond.
Speaker Change: We continue to expect quarterly revenues to increase without significant additional expense, resulting in increased operating leverage and cash flow generation.
Speaker Change: For the third quarter, we are guiding for revenue between $8 $85 million, the 95 million, representing an annualized growth rate of approximately 20%.
Speaker Change: We expect to generate adjusted EBITDA between $125 million to $195 million and adjusted EPS between 15th and 16th that.
Speaker Change: We expect to become a rule of 40 company in the third quarter with the potential to increase growth rates and adjusted EBITDA margin in 2025 and beyond.
David D. Moradi: We are increasing our 2024 revenue guidance to between $34.5 and $34.8 million. We are also increasing our adjusted EBITDA guidance from 4.5 to 5.5 million to 6 to 6.3 million. Adjusted EPS is now expected to be between $0.48 and $0.51 per share, an increase of $0.08 at the midpoint. This represents an increase of around 18% from previous guidance. I'll now turn the call over to AudioEye's CFO,
Speaker Change: We are increasing our 2020 for revenue guidance to between 34, five and $34 8 million.
David Moradi: We are also increasing our adjusted EBITDA guidance from 4.5 to 5.5 million to 6 to 6.3 million. Adjusted EPS is now expected to be between 48 and 51 cents per share, and increase of 8 cents at the midpoint. This represents an increase of around 18 percent from previous guidance.
Speaker Change: We are also increasing our adjusted EBITDA guidance from four five to five 5 million to six to $6 3 million.
Speaker Change: Adjusted EPS is now expected to be between 48 to 51 cents per share an increase of eight cents at the midpoint.
Speaker Change: This represents an increase of around 18% from previous guidance.
Kelly Georgevich: I'll now turn the call over to Adiweist UFO Kelly. Thank you, David. As David discussed, revenue again hit record levels with Q2 224 revenue at 8.5 million, marking our 34th quarter of record revenue and a 19 percent annualized growth rate. Annual recurring revenue, or ARR at the end of the second quarter of 2024, was 33.3 million, a 1.3 million increase and a 60 percent improvement in ARR growth from the first quarter of 2024. Our two revenue channels are both showing strong performance with high teen annualized sequential growth rates and both channels. The partner marketplace channel includes all revenue from our SMB focus marketplace product and revenue from a variety of partners who deploy these same products for their SMB customers.
Speaker Change: I'll now turn the call over to <unk> CFO Kelly.
Kelly Georgevich: Thank you, David. As David discussed, revenue again hit record levels, with Q2 2024 revenue at $8.5 million, marking our 34th quarter of record revenue and a 19% annualized growth rate. Annual recurring revenue, or ARR, at the end of the second quarter of 2024 was $33.3 million, a $1.3 million increase and a 60% improvement in ARR growth from the first quarter of 2024. Our two revenue channels are both showing strong performance with high teen annualized sequential growth rates in both channels.
Kelly: Thank you David as David discussed revenue again hit record levels with Q2 2020 for revenue at $8 5 million, marking our 34th quarter of record revenue and a 19% annualized growth rate.
Kelly: Annual recurring revenue or <unk> at the end of the second quite airplane 24 was $33 3 million a $1 3 million increase in a 60% improvement in aircrafts in the first quarter of 2024.
Kelly: Ideal revenue channels, and Bostonians Johnson formats with high teen annualized sequential growth rates in both channels.
Kelly Georgevich: The Partner and Marketplace channel includes all revenue from our S&B-focused Marketplace products and revenue from a variety of partners who deploy these same products for their S&B customers. In the second quarter of 2024, this revenue channel grew 13% year-over-year, representing 59% of revenue and around 60% of ARR. AudioEye's enterprise channel consists of larger customers and organizations, including those with non-platform websites who generally engage directly with AudioEye sales personnel for pricing and solutions.
Kelly: The partner marketplace channel.
Kelly: Our revenue from our F&B focus marketplace products and revenue from a variety of partners that have played the same products for their SMB customers.
Kelly Georgevich: In the second quarter of 2024, this revenue channel grew 13 percent year over year, representing 59 percent of revenue and around 60 percent of ARR. Adiweist enterprise channels consist of our larger customers and organizations, including those with non-platform websites who genuinely engage directly with Adiweist sales personnel for pricing and solutions. The enterprise channel grew 2 percent year over year and 5 percent sequentially, or 18 percent annualized. In the second quarter, the enterprise channel contributed 41 percent of revenue and around 40 percent of ARR. On June 30, 2024, our customer count was approximately 121,000, a 16 percent increase from 104,000 customers on June 30, 2023, and an increase of approximately 9,000 customers from March 31, 2024.
Kelly: In the second quarter of 2020 for describing the channel grew 13% year over year, representing 59% of revenue and around 60% of a R. R.
Speaker Change: How do you like in a price channel consists of our larger customers and organizations, including those with non class one website, who genuinely engaged directly with adding personnel or pricing and solution.
Kelly Georgevich: The enterprise channels grew 2% year over year and 5% sequentially, or 18% annualized. In the second quarter, the Enterprise Channel contributed 41% of revenue and around 40% of ARR. On June 30, 2024, our customer count was approximately 121,000, a 16% increase from 104,000 customers on June 30, 2023 and an increase of approximately 9,000 customers from March 31, 2024. The increase in customer count was driven by additions in both the partner marketplace and enterprise channels.
The enterprise channel grew 2% year every year, and 5% sequentially or 18% annualized in the second quarter. The enterprise channel contributed 41% of revenue and around 40% of error.
Speaker Change: On June 32000.
Speaker Change: 24, our customer count was approximately 121000% to 16% increase from 104000 customers on June 30 of 2023, and an increase of approximately 9000 customers from March 31st 2024.
Kelly Georgevich: The increase in customer count was driven by additions in both the partner marketplace and enterprise channels. Gross profit ticked up one percent sequentially and two percent year-over-year to 79 percent of revenue, or 6.7 million compared to 6 million in Q2 of last year. The increase in gross margin was a result of approximately 650,000 of revenue growth year-over-year and a 25,000 decrease in cost of revenue over the same period. While revenues increase approximately 650,000 from the second quarter of 2023, operating expenses decreased approximately 11 percent, or $900,000, to 7.2 million. The decrease in operating expenses was due primarily to increase sufficient season sales and marketing and the completion of significant initiatives in R&D, partially offset by higher non-reoccurring expenses in G&A.
Speaker Change: The increase in customer count was driven by additions in both the partner marketplace and enterprise channel.
Kelly Georgevich: Gross profit ticked up 1% concomitantly and 2% year-over-year to 79% of revenue, or $6.7 million compared to $6 million in Q2 of last year. The increase in gross margins was a result of approximately $650,000 of revenue growth year-over-year and a $25,000 decrease in cost of revenue over the same period. While revenues increased approximately $650,000 from the second quarter of 2023, operating expenses decreased approximately 11%, or $900,000, to $7.2 million. The decrease in operating expenses was due primarily to increased efficiencies in sales and marketing and the completion of significant initiatives in R&D, partially offset by higher non-recurring expenses in G&A.
Speaker Change: Gross profit ticked up why do you think it sequentially and 2% year over year to 79% of revenue.
Speaker Change: $6 7 million compared to $6 million in Q2 of last year.
Speaker Change: Increase in gross margin was the result of approximately 650000 of revenue growth year over year, and a 25000 decrease in cost of revenue over the same period.
Speaker Change: While revenues increased approximately 650000 from the second quarter of 2023 operating expenses decreased approximately 11% or $900000 to $7 2 million.
Speaker Change: The decrease in operating expenses was due primarily to increased efficiencies in sales and marketing and the completion of significant initiatives in R&D, partially offset by higher non reoccurring expenses and G&A.
Kelly Georgevich: Our total R&D spend in Q2 2024 was approximately 1.7 million, with approximately 450,000 reflected in software development costs in the investing section of the cash flow statement. This was down approximately $900,000 from 2.6 million in Q2 of 2023. The total R&D spend is about 20 percent of our revenue this quarter, versus 33 percent in the comparable period of the prior year, and 22 percent in the first quarter of 2024. We continue to believe the current investment in R&D of around 20 percent is appropriate for 2024.
Kelly Georgevich: Our total R&D spend in Q2 2024 was approximately $1.7 million, with approximately $450,000 reflected in the software development costs in the investing section of the cash flow statement. This was down approximately $900,000 from $2.6 million in Q2 2023. The total R&D spend is about 20% of our revenue this quarter versus 33% in the comparable period of the prior year and 22% in the first quarter of 2024. We continue to believe that our current investment in R&D of around 20% is appropriate for 2024.
Our total R&D spend in Q2 of 2024 with approximately $1 7 million with approximately 450000 reflected the software development cost in the investing section of the cash flow statement.
Speaker Change: This was down approximately $900000 from $2 6 million in Q2 of 2023.
Speaker Change: R&D spend is that 20% of our revenue this quarter versus 33, 8% in the comparable period of prior year and 22% in the first quarter 2024.
Speaker Change: We continue to believe the current investment in R&D and around 20% is appropriate for 2024.
Kelly Georgevich: Net loss in the second quarter of 2024 was $700,000 or $0.06 per share compared to a net loss of $2 million or $0.17 per share in the same year-ago period. Photonet's net loss decreased 63% or $1.2 million from the prior year's comparable period, driven by an increase in revenue, strategic and efficient spending in sales and marketing, and technological investments.
Kelly Georgevich: Net loss in the second quarter of 2024 was $700,000 or 6 cents per share, compared to a net loss of $2 million for 17 cents per share in the same year and go period. Total net loss decreased 63 percent, or 1.2 million, from the prior year's comparable period, driven by an increase in revenue, strategic and efficient spending, and sales and marketing, and technological investment. Our Q2 is just to be with us with a record 1.5 million or 12 cents per share, a 1.7 million dollar improvement year over year. The primary adjustments to gas earnings and EPS for Q2 of 2024 for non-cash-sharing compensation, depreciation, amortization, interest expense, and litigation expense.
Speaker Change: Net loss in the second quarter of 2024 by $700000 or six cents per share compared to a net loss of $2 million or 17 cents per share in the same year ago period.
Speaker Change: But on that last increased 16, 3% or one 2 million from the prior year's comparable period, driven by an increase in revenue strategic inefficient spending in sales and marketing and technological investment.
Kelly Georgevich: Our Q2 adjusted EBITDA was a record $1.5 million, or $0.12 per share, a $1.7 million improvement year-over-year; the primary adjustments to GAAP earnings and EPS for Q2 2024 for non-cash share-based compensation, depreciation, amortization, interest expense, and litigation expense. Our balance sheet continues to be well capitalized with $5.1 million of cash as of June 30, 2024. Cash decreased by approximately $1.9 million in the quarter, primarily due to the $2.4 million final earnable payment related to the acquisition of the Bureau of Internet Accessibility in March 2022.
Speaker Change: Our Q2, adjusted EBITDA was a record $1 5 million or 12 cents per share of.
Speaker Change: At $1.7 million improvement year over year.
Speaker Change: The primary adjustments to GAAP earnings.
Speaker Change: For Q2, 'twenty 'twenty four for noncash share based compensation depreciation amortization interest expense and litigation expense.
Kelly Georgevich: Our balance sheet continues to be well capitalized with 5.1 million of cash as of June 30, 2024. Cash decreased for approximately 1.9 million in the quarter, primarily due to the 2.4 million final earn-up payment related to the acquisition of the Bureau of Internet Accessibility in March 2022. In the second quarter of 2024, we also repurchased approximately $300,000 in shares and received net proceeds from our asset market offering of approximately $650,000. Three cash flow, calculated as 1.5 million of adjustity with us, less 450,000 of software development costs, was 1 million in the second quarter. We start free cash flow to continue to increase in the 3rd and 4th quarter of 2024.
Speaker Change: Our balance sheet continues to be well capitalized with $5 1 million of cash as of June 30th playing 24 cash.
Speaker Change: Cash decreased by approximately $1 9 million in the quarter, primarily due to the $2 $1 million million final earn out payment related to the acquisition of the Bureau of Internet accessibility in March 2022.
Kelly Georgevich: In the second quarter of 2024, we also repurchased approximately $300,000 in shares and received net proceeds from our at-the-market offering of approximately $650,000. Free cash flow, calculated as $1.5 million of adjusted EBITDA plus $450,000 of software development costs, was $1 million in the second quarter. We expect free cash flow to continue to increase in the third and fourth quarters of 2024. With that, we open up the call to questions. Operator, please give me the appropriate instructions.
Speaker Change: And the second quarter of 2024, we also repurchased approximately $300000 in shares RAC of net proceeds from our at the market offering of approximately $650000.
Speaker Change: Free cash flow calculated at $1 5 million of adjusted EBITDA less 450000 of software development cost was 1 million in the second quarter.
Speaker Change: Expect free cash flow to continue to increase in the third and fourth quarter of 2024.
Operator: With that, we open up the call for questions.
Speaker Change: With that we open up the call for questions operator, please give appropriate instruction.
Operator: Operator, please give appropriate instruction. Thank you. We will now take questions from the companies publishing, and at the end of it. At this time, we will be conducting a question and answer session. If you would like to ask a question, please first start one on your telephone keypad. A confirmation told with indicate a line is in the question queue. You may first start to, if you would like to remove your question from the queue. So, participants, use and speak your equipment and maybe necessarily pick up your hands at before pressing the start keys.
Operator: Thank you. We will now take questions from the companies publishing and editing. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question, for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Speaker Change: Thank you we will now take question from questions from the company's publishing it.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue participants using speaker equipment. It may be necessary to pick up your handset before pressing the star.
Operator: One moment, please, while we pull four questions.
Operator: One moment, please, while we pull for questions. Our first question comes from the line of Richard Baudry with Roth.
Speaker Change: One moment, please pull for questions.
Richard Baldry: Our first question comes from the line of Richard Baldry with Roth. Please proceed with your question. Thanks. You've done a really good job sort of growing your just deep it up pretty fast as revenues to start to grow again, even in a sort of a cost containment or in cutting mode.
Speaker Change: Our first question comes from the line of Richard Baldry with Roth.
Speaker Change: Please proceed with your question.
David D. Moradi: Thanks. You've done a really good job sort of growing your Just Leave It Up pretty fast as revenues have started to grow again, even in a sort of cost containment or cutting mode. How do you feel about the existing sort of infrastructure headcounts in different places? If the growth sort of continues to pick up the way it has, when do you feel like you really kind of need to get back to hiring, whether that's in sales or support areas to support the increasing revenue base?
Speaker Change: Thanks.
Richard Baldry: You've done a really good jobs for growing your just EBITDA pre fast as revenues start to grow again, even in a sort of a cost containment around cutting mode.
David Moradi: How do you feel about the existing sort of infrastructure, headcounts in different places, if the growth sort of continues to pick up the way it has? When do you feel like you really kind of need to get back to hiring, whether that's in sales or support areas to support the increasing revenue base. Thanks. As you can see, the model is pretty scalable. We've made a lot of investments in R&D, and they go to market. There would be some incremental investments generally to generate and that support new business, but a good amount of incremental revenue I think is going to drop straight down.
Richard Baldry: How do you feel about the existing infrastructure head count different places if the growth continues to pick up the way. It has you know when do you feel like you really kind of need to get back to hiring.
Speaker Change: Sales of our support areas to support the increasing revenue base. Thanks.
David D. Moradi: Hi, Rich. Yeah, as you can see, the model is pretty scalable. We've made a lot of investments in R&D and the go-to-market. There would be some incremental investments generally to generate and then support new business, but a good amount of incremental revenue, I think, is going to drop straight down. So I don't think we need to invest a ton more, just mostly in sales and marketing, not the infrastructure.
Speaker Change: Alright, yes, as you can see the model pretty scalable we've made a lot of investments in R&D and go to market.
Speaker Change: There would be some incremental investments generally to generate and that support new business, but a good amount of incremental revenue I think it is going to drop straight down.
David Moradi: So I don't think we need to invest. That's on more, just mostly on sales and marketing, not the infrastructure.
Speaker Change: So I don't think we need to invest more just mostly on sales and marketing not the infrastructure.
Speaker Change: Yeah.
Richard Baldry: Yeah, I wanted to ask specifically about the COGS line. It's been slapped to down even on a sequential basis. They're pretty steadily for almost last two years.
Kelly Georgevich: Yeah, I wanted to ask specifically about the COGS line because, you know, it's been flat to down, even on a sequential basis or pretty steadily for almost the last two years. What would cause that to start to climb again? Like, how fixed can that be as your top line?
Speaker Change: Yeah I wonder.
Speaker Change: Typically about the Cogs line.
Speaker Change: It's been flat to down even.
Speaker Change: On a sequential basis are pretty steadily for almost last two years, what would cause that to start to climb again like how fixed cannot be as your top line grows.
David Moradi: What would cause that to start to climb again? How fixed can that be as your top line grows? Yeah, we've been happy to see growth margin improve. Not 79%. We feel pretty good about the efficiencies. We've ran through that line. It is a matter of looking at the mixes of support and different investments in that line, but we feel pretty good about holding that 79% through 2024 and kind of continuing into 2025. We feel pretty good about our growth margins overall. Got it.
Kelly Georgevich: Yeah, we've been happy to see gross margin improve now to 79%. We feel pretty good about the efficiencies we've run through that line. It is a matter of looking at the mix of support and different investments in that line, but we feel pretty good about holding that 79% through 2024 and kind of continuing into 2025. We feel pretty good about our gross margins overall.
Speaker Change: Yeah, we've been happy to see gross margin improve.
Speaker Change: 9%, we feel pretty good about the efficiencies we've ran through that line. It is a matter of looking at the mix of support and different investments in that line, but we felt pretty good about holding.
Speaker Change: Holding that 79% through 2024 and kind of continuing into 2025, we felt the best margins out wrong.
David D. Moradi: Got it. And could you talk a little bit about the balance sheet? Your access to capital is obviously a lot better now. Does that change any of your acquisition plans or our willingness to sort of invest in the business on a more accelerated basis? You know, how comfortable do you feel with the debt levels where they're at? Would you prefer to basically just wipe them out ASAP and then move forward from there? Just help us think about that a little bit. Thanks.
Speaker Change: Got it.
Richard Baldry: If you talk a little bit about the balance sheet, your access to capital is obviously a lot better in recent periods now.
Speaker Change: And could you talk a little bit about the balance sheet. Your access to capital is obviously a lot better and a recent periods now.
David Moradi: Does that change any of your acquisition plans or our willingness to invest in the business on a more accelerated basis? How comfortable do you feel with the debt levels where they're at? Would you prefer just wipe them out ASAP and then move forward from there? Just help us think about that a little bit. Thanks. Yeah, we feel pretty good. Kelly can get into the ATM a little bit. I don't think we really need money, so that's the good news. We're cash flow generative. Kelly will get into the ATM a little bit, though. Yeah, we did open up an ATM for a relatively small amount compared to our market cap, with a 7 million.
Speaker Change: Does that change sort of any of your acquisition plans or our willingness to sort of invest in the business on a more accelerated basis.
Speaker Change: How comfortable do you feel you know what.
Speaker Change: Debt levels, where they're at what you prefer basically just wiped them out as a pea and then we'll move forward from there just help us think about that a little bit. Thanks.
David D. Moradi: Yeah, we feel pretty good. Kelly can get into the ATM a little bit. I don't think we really need money, so that's the good news. We're cash flow generative.
Speaker Change: Yeah, we feel pretty good Kelly you can get into the ATM, a little bit I don't think we really need money.
Speaker Change: The good news, we're cash flow generative Kelly I'll get into the ATM, a little bit though.
Kelly Georgevich: Yeah, we did open up an ATM for a relatively small amount compared to our market cap of $7 million. We do like to have that there and be opportunistic about potentially raising capital to pay down our debt and reduce our interest expense.
Kelly: Yes, we did open up an ATM for a relatively small amount compared to our market cap at the 7 million we do like.
Kelly Georgevich: We do like to have that there and be opportunistic about potentially raising capital to pay down our debt and reduce our interest expense.
Speaker Change: That's out there and be opportunistic about potentially raising capital to pay down our debt reduced our interest expense.
Kelly: Yeah.
David D. Moradi: And maybe just a few seconds on how you view acquisition potential now that you've got a much larger market cap to sort of deal with. We don't really discuss this.
David Moradi: And maybe just a few seconds on how you do view acquisition potential, now that you've got a much larger market cap to deal with. We don't really discuss on an A. We're always looking around, but we're not going to discuss it on this call. Thanks for your help. Thank you.
Kelly: And maybe just.
Kelly: Just a few seconds on how how you do view acquisition potential now that you've got you know a much larger market cap to sort of deal with.
David D. Moradi: We don't really discuss M&A. We're always looking around, but we're not gonna discuss it on this call.
Kelly: Yeah, we don't really discuss M&A, we're always looking around.
Speaker Change: We're not going to discuss it on this call.
Speaker Change: Okay. Thanks very helpful.
Speaker Change: Thank you.
Operator: Thank you. Our next question comes from the line of Zach Cummins with B Riley Security. Please proceed with your question.
Speaker Change: Thank you. Our next question comes from the line of Zach Cummins with B Riley Securities. Please proceed with your question.
Zach Cummins: Our next question comes from the line of Zach Cummins with B. Riley Security. Please proceed with your question. Hi, good afternoon. David and Kelly, congrats on the solid results, and thank you for taking my questions.
David D. Moradi: Hi, good afternoon, David and Kelly. Congratulations on the solid results and thank you for taking my questions. David, the first one for me is, can you just talk about the progress you're seeing in the enterprise channel there? And really, what sort of momentum are you expecting to see there in the coming quarters as you've really started to regain traction, but with that segment, returning to year over year growth?
Zachary Cummins: Hi, Good afternoon, David and telling you congrats on the solid results in group.
Zachary Cummins: For taking my questions.
David Moradi: David, first one for me is can you just talk about the progress you're seeing in the enterprise channel there in really what sort of momentum are you expecting to see there in the coming quarters as you've really started to regain traction, but with that segment, returning to your over your growth? Sure. Yeah, it's been pretty good. We've made a lot of investments there in R&D, which really give us a full product suite to beat the competition. We've also made a lot of investments in our go to market, and we're seeing record leads, strong conversion, the pipelines continue to grow.
Zachary Cummins: David first one for me is can you just talk about the progress you're seeing in the enterprise channel there.
Speaker Change: And really what sort of momentum are you expecting to see there in the coming quarters is really starting to regain traction, but with that segment returning to year over year growth.
David D. Moradi: Sure, yeah, it's been pretty good. We've made a lot of investments in R&D, which really gives us a full product suite to beat the competition. We've also made a lot of investments in our go-to-market, and we're seeing record leads, strong conversions, and the pipelines continue to grow, so it's really clicking. I think we're outgrowing the market generally by 2 to 3x right
Sure Yeah, it's been a pretty good we made a lot of investments there in R&D, but it's really gives us a full product suite to beat the competition.
We've also made a lot of investments in our go to market. We're seeing record leads strong conversion the pipelines continue to grow.
David Moradi: So it's really clicking. I think we're outgrowing the market generally by due to three X right now.
Speaker Change: Really clicking I think we are outgrowing the market generally by two to three X right now.
Zach Cummins: Got it.
David D. Moradi: Got it. And my follow-up question is really just around your partnerships. I think on the prior call, you mentioned that, within your current partners, you have access to 80,000 websites, and that would be really great targets under the new regulation. Can you talk about, obviously, you've made more inroads with the final site, but can you talk about some of the work that you're doing on that side to really accelerate momentum within that partner channel?
David Moradi: And my follow-up question is really just around your partnerships. I think on the prior call, you mentioned that just within your current partners, you had access to 80,000 websites that would be really great targets under the new regulation. Can you talk about, obviously, you've made more inroads with Final Site, but can you talk about some of the work that you're doing on that side to really accelerate momentum within that partner channel? You saw the press release for both super excited about the opportunity and penetrating their entire customer base. Both of us are going to have a huge focus on it, deploy resources.
Speaker Change: Got it and my follow up question is really just around your partnerships I think on the prior call you mentioned that just within your current partners you had access to 80000 websites.
Speaker Change: It'd be really great targets under the new regulation can you talk about obviously, you've made more inroads with our final site, but can you talk about some of the work that youre doing on that side to really accelerate momentum within that partner channel.
David D. Moradi: You saw the press release. We're both super excited about the opportunity and penetrating their entire customer base. Both of us are going to have a huge focus on it, deploy resources, and really, the opportunity for Title II is huge, and we're in a great spot with the dominant platform in K-12. So we're really excited about that one, and more to come on the other ones. So stay tuned.
Speaker Change: And you saw the press release for both Super excited about the opportunity in penetrating their entire customer base. Both of us are going to have a huge focus on it.
David Moradi: And really the opportunity for Title II is huge, and we're in a great spot with the dominant platform in K-12. So we're really excited about that one, and more to come on the other one. So you stay tuned.
Speaker Change: Deploy resources and.
Speaker Change: Really the opportunity for title II is huge and we're in a great Bob with the dominant platform in K through 12.
Speaker Change: So we're really excited about that one and more to come on the other ones. So stay tuned.
Zach Cummins: Got it.
Operator: Got it. Well, thanks for taking my questions and best of luck with the rest of the quarter.
Zach Cummins: Well, thanks for taking my questions, and best of luck with the rest of the quarter. Thanks, Zach.
Speaker Change: Got it well thanks for taking my questions and best of luck with the rest of the quarter.
Zack: Thanks Zack.
Operator: Thank you. All right.
Operator: Thank you. Our next question comes from the line of George Sutton with Craig Howland Capital Group. Please proceed with your question.
Speaker Change: Thank you.
James: Next question comes from the line of George Sutton. We'll correct how the capital group. Please proceed with your questions. Good afternoon. This is James down for George. Nice results. As a follow-up to the final site commentary.
Speaker Change: Our next question comes from the line of George Sutton with Craig Hallum Capital Group. Please proceed with your question.
David D. Moradi: Good afternoon, this is James Dunn for George. Nice results. As a follow-up to the final site commentary, can you provide some more detail on sort of what those resources are that you might be contributing, quantify any incremental costs, and then how should we kind of think about operating expense growth or operating leverage over the next couple of years as you target some of these mandated opportunities?
Speaker Change: Good afternoon. This is.
Speaker Change: James on for George Nice results.
Speaker Change: As a follow up to the final site <unk> com.
Speaker Change: Commentary.
James: Can you provide some more detail on sort of what those resources are that you might be contributing, quantify any incremental costs, and then how should we kind of think about operating expense growth or operating leverage over the next couple of years as you target some of these mandated opportunities? Yeah, we're not really getting into the details of that, the confidential contract, but I would figure marketing resources and awareness campaign. Co-marketing, but I can't really get into all the details that we're going to do. What was the second part of your question? Just sort of how to think about operating leverage, operating expense growth over the next couple of years, sort of as you target these mandate opportunities, just because since you're kind of going indirectly that assume there wouldn't be a lot of incremental expense as you sort of add their customers.
Speaker Change: Can you provide some more detail on sort of what those resources are that you might be contributing.
Speaker Change: Quantify any incremental costs and then how should we kind of think about operating expense growth or operating leverage over the next couple of years as you target some of these mandated opportunities.
David D. Moradi: Yeah, we're not really getting into the details of that, the confidential contract. But I would guess marketing resources and awareness campaigns, and co-marketing, but I can't really get into all the details.
Speaker Change: Yeah, we're not really getting into the details of that are the confidential contract.
Speaker Change: But I would say the market any resources and awareness campaigns.
Speaker Change: Marketing.
Speaker Change: But I can't really get into all the details that we're going to do.
Speaker Change: What was the second part of your question.
David D. Moradi: to hear how to think about operating leverage, operating expense growth over the next couple of years, sort of as you target these mandate opportunities, just because you're kind of going indirectly at a time.
Speaker Change: Okay.
Speaker Change: Just sort of how to think about operating leverage operating expense growth over the next couple of years sort of as you target these mandate opportunities.
Speaker Change: Just because since you're kind of going indirectly, but assume there wouldn't be a lot of incremental expense as you heard about their customers.
Speaker Change: Yeah.
David Moradi: Yeah, I think we feel pretty good with where we're at. I've already made the investments, like I said, in R&D model of scalable, so we feel good about the investing a little bit on sales and marketing in the future potentially, but like I said before, I think that's a scalable model with potential to really increase margin. That was good.
David D. Moradi: Yeah, I think we feel pretty good with where we're at. I've already made the investments, like I said, and the R&D model is scalable. So we feel good about investing a little bit in sales and marketing in the future, potentially. But like I said before, I think that it's a scalable model with the potential to really increase margin.
Yeah, I think we feel pretty good with where we're at I've already made the investments like I said, an R&D model a scalable.
Speaker Change: So we feel good about the investing a little bit on sales and marketing in the future potentially but like I said before I think that it's a scalable model with potential to really increase margin.
David D. Moradi: Sounds good. And I'm just also kind of curious about any initial interactions you've maybe had with some of the constituents that are going to be impacted by the mandate. That's it for me. Thanks, guys.
Speaker Change: Sounds good.
David Moradi: And then just also kind of making me curious on any initial interactions you may have with some of the constituents that are going to be impacted by the mandate. That's it for me. Thanks, guys. I have constituents when trying to understand that. Just basically people that would be impacted by the mandate. So any government agencies, anybody that's reporting to you. Yeah, yeah, we're seeing a lot of government leads come in more than ever. So we're having a lot of conversations at the moment. Those deals aren't all closing, but we're having a lot of conversations, so they're very aware of it.
And then just also kind of curious.
Speaker Change: Any initial interactions you've had with some of the constituents that are going to be impacted by the mandate.
Speaker Change: That's it for me thanks, guys.
David D. Moradi: Constituents when trying to
Speaker Change: Constituents I'm trying to understand that.
Speaker Change: Yeah.
David D. Moradi: just basically people that would be impacted by the mandate. So any government agencies, anybody that's reporting? Yeah, we're seeing a lot more government leads than ever. So we're having a lot of conversations at the moment. Those deals aren't all closing, but we're having a lot of conversations. So they're very aware of that. I think it's going to start to take off into 2025 from a demand standpoint. We don't have this in our numbers for this year at all. Great, thank you.
Speaker Change: Just basically people that would be impacted by the mandate.
Speaker Change: Government agencies anybody that's right yeah, Yeah, we're seeing a lot of a lot of government leads come in.
Speaker Change: More than ever.
Speaker Change: Having a lot of conversations at the moment those deals aren't all closing, but we're having a lot of conversation. So they're very aware of it I think it's going to start to pick up into 2025 from a demand standpoint, we don't have this in our numbers for this year at all.
James: I think it's going to start to take up into 2025 from a demand standpoint. We don't have this in our numbers for this year at all. Great. Thank you.
Speaker Change: Great. Thank you.
Operator: Okay. Thank you.
Speaker Change: Thank you.
Yeah.
Operator: Thank you. Our next question comes from the line of Scott Buck with HC Wainwright. Please proceed with your question.
Speaker Change: Thank you. Our next question comes from the line of Scott Buck with H C. Wainwright. Please proceed with your question.
Scott Buck: Our next question comes from the line of Scott Buck with HC RAINWright. Please proceed with your question. Hi, guys. Thanks for taking my questions. David has a bit of a follow-up to that last question. I'm curious. Historically, have you seen, you know, customers be proactive in addressing these mandates, or typically does it take, you know, more of a push past the mandate date, whether that's, you know, DOJ lawsuits or whatnot to, you know, really get people moving in the right direction? We don't have a lot of experience with this, so I can't really tell you.
David D. Moradi: Hi guys. Thanks for taking the time to answer my questions. David, as a bit of a follow-up to that last question, I'm curious, historically, have you seen customers be proactive in addressing these mandates, or typically does it take, you know, more of a push past the mandate date, whether that's DOJ lawsuits or whatnot to really get people moving in the right direction? We don't have a lot of experience with this, so I can't really tell you.
Scott Christian Buck: Hi, guys. Thanks for taking my questions. David It is a bit of a follow up to that last question I'm curious historically.
Scott Christian Buck: Have you seen.
You know customers being proactive in addressing these mandates or typically does it take them you know more of a push past the mandate date.
Speaker Change: Whether that's you know Doj lawsuits or whatnot to really get a get people moving in the right direction.
Speaker Change: We don't have a lot of experience with that so I can't really tell you. There's a lot of mandates happening at the moment with the EU title two and HHS now so we'll have to see how that plays out my guess is in 2025, it's going to really start to pick up.
David Moradi: There's a lot of mandate happening at the moment with the EU Title Two in HHS now, so we'll have to see how that plays out. My guess is in 2025. It's going to really start to pick up. Right. Okay. So, that's perfect.
David D. Moradi: There's a lot of mandates happening at the moment with the EU, Title II, and HHS now, so we'll have to see how that plays out. My guess is in 2025, it's going to really start to pick up.
David D. Moradi: Right. Okay. Okay. So, that's perfect.
Speaker Change: Right. Okay. Okay. So that's perfect and then in terms of capital allocation are.
David Moradi: And then, in terms of capital allocation, as you guys build cash through the remainder of the year and then to next with positive free cash flow, how are you thinking about allocation? I mean, do you start filing more into marketing at that point to, you know, further accelerate growth, or just what are your thoughts there? Yeah, we like being profitable. You look at the LTV to cash increases. We'd like to potentially spend more on sales and marketing there, but that would really have to take up. But we'd like to run off free cash flow, so expect back to continue.
Speaker Change: As you guys.
David D. Moradi: And then in terms of capital allocation, as you guys build cash through the remainder of the year and into the next with positive free cash flow. How are you thinking about capital allocation? I mean, do you start plowing more into marketing at that point to, you know, further accelerate growth, or just what are your thoughts there? Yeah, we like being profitable. You look at the LTV, the cash increases; we'd like to potentially spend more on sales and marketing there, but that would really have to take up.
Speaker Change: Build cash through the remainder of the year and into next.
Speaker Change: With positive free cash flow.
Speaker Change: How are you thinking about allocation I mean do you start.
Speaker Change: Thailand more into marketing at that point to.
Speaker Change: Further accelerate growth or just what are your thoughts there.
Speaker Change: Yeah, we like being profitable like if the LTV to CAC increases, we'd like to potentially spend more on sales and marketing there, but that would really have to pick up but.
David D. Moradi: But we'd like to run off free cash flow, so expect that to continue. Okay. And then last thing, I know you guys repurchased some shares during the quarter. The stocks obviously moved in your favor. How are you feeling about the repurchase today and what's left on that authorization? Yeah, we were buying the stock pretty cheap, like, I don't know, two to three times revenue, and it's a lot higher, so I don't know if we're going to be buying back anymore. And we have an ATM out there, so I don't think so on the buyback side.
Speaker Change: But we like throwing off free cash flow so.
Speaker Change: Back to companion.
Scott Buck: Okay.
Scott Buck: And then last thing, I know you guys are purchasing shares during the quarter. Stocks obviously moved in your favor. How are you feeling about the repurchase today, and then what's left on that authorization? Yeah, we are buying the stock pretty cheap, like, I don't know, two to three times revenue, and it's a lot higher, so I don't know if we're going to be buying back anymore. And we have an 18 on both there, so I don't think so. I'm going to buy back, so I say. Yeah. All right, sir. Appreciate it, guys. Thanks for the time.
Speaker Change: Okay, and then last thing I know you guys repurchased some shares during the quarter stocks.
Speaker Change: Stock's, obviously moved in your favor how how are you feeling about the repurchase today and then what's left on that authorization.
Speaker Change: Yeah, we were buying the stock pretty cheap like I don't know two to three times revenue.
Speaker Change: Lot higher so I don't know, if we're going to be buying back anymore, and we have an ATM out there so.
Speaker Change: Don't think so on the buyback side.
Speaker Change: Yeah.
David D. Moradi: All right. Fair. Appreciate it, guys. Thanks for your time. Thank you.
Speaker Change: Alright I appreciate it guys. Thank for your time.
Operator: Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Operator: Thank you. At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Moradi for his closing remarks.
Operator: At this time, this concludes our question-and-answer session.
Speaker Change: Thank you at this time this concludes our question and answer session.
David Moradi: I would now like to turn a call back over to Mr. Moradi for his close remarks. Thank you for joining us today. I want to thank our employees, partners, and investors for their continued support. We look forward to updating you on our next call.
Speaker Change: I'd like to turn the call back over to Mr. Marotta for his closing remarks.
David D. Moradi: Thank you for joining us today. I want to thank our employees, partners, and investors for their continued support. We look forward to updating you on our next call.
Mr. Marotta: Thank you for joining us today I want to thank our employees partners and investors for their continued support we look forward to updating you on our next call.
Operator: And before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay meetings and available in the investor's section of the company website. Thank you for joining us today for AudioEye's second quarter 2020 for Ernest Cox's call.
Operator: And before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay, available in the investors section of the company website. Thank you for joining us today for AudioEye's second quarter, 2024, Earnings Conference. You may now disconnect.
Mr. Marotta: And 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.
Mr. Marotta: Billable in the investors section of the company's website. Thank you for joining us today for <unk> second quarter 2024 earnings Conference call you may now disconnect.
Operator: You may now disconnect. Thank you very much.
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