Audioeye NASDAQ: AEYE reported second-quarter 2026 revenue of $10.7 million, up 9% from the prior-year period, as the digital accessibility software provider extended its streak of sequential revenue growth to 42 quarters.
Annual recurring revenue, or ARR, reached $42.3 million as of June 30, increasing $1.1 million from the end of the first quarter and 11% from the comparable period a year earlier. Chief Executive Officer Kelly Georgevich said the company’s results reflected continued momentum across the business, while profitability and cash flow reached what she described as a pivotal point.
“As ARR scales, a growing share of incremental revenue is flowing to the bottom line,” Georgevich said. “We expect that trend to continue and accelerate in the second half of 2026.”
Profitability improves as company raises EBITDA outlook
AudioEye generated adjusted EBITDA of approximately $3 million in the second quarter, representing a record 28% adjusted EBITDA margin. The result was more than $600,000 above the first quarter and $1.1 million higher than the year-earlier quarter, a 54% increase.
Chief Financial Officer Matthew Domeyer, who joined the company in July, said the year-over-year improvement in adjusted EBITDA was driven primarily by higher gross profit. Gross profit totaled $8.4 million, or about 79% of revenue, compared with $7.6 million, or 77% of revenue, a year earlier. Adjusted gross margin was 84%, up from 83%.
The company reported a net loss of $900,000, or $0.07 per share, compared with breakeven in the prior-year quarter. Domeyer said the prior-year period benefited from a $1.4 million revaluation of contingent consideration that did not recur in the current quarter. Excluding that item, he said the net loss improved mainly because of higher gross profit.
Adjusted free cash flow was $2.6 million in the quarter, calculated as adjusted EBITDA plus $400,000 of capitalized software development costs. That represented a $1.2 million improvement from the second quarter of 2025.
AudioEye increased its full-year adjusted EBITDA outlook to at least $12.7 million, from prior guidance of at least $12 million. The company said the revised forecast implies a 29% adjusted EBITDA margin at the midpoint of its revenue outlook and 40% year-over-year adjusted EBITDA growth. It also expects adjusted earnings per share of at least $0.98 for 2026 and a run-rate adjusted EBITDA level of more than $15 million by year-end.
Revenue mix shifts toward recurring growth
The company maintained the midpoint of its full-year revenue outlook while narrowing the range to $43.5 million to $44 million. For the third quarter, AudioEye forecast revenue of $10.85 million to $11.05 million, with further acceleration in sequential revenue growth expected in the fourth quarter.
AudioEye’s enterprise channel, which serves larger organizations and custom websites through direct sales, recorded flat revenue year over year. Domeyer said lower non-recurring revenue offset increased recurring revenue. Enterprise ARR grew 5% from a year earlier and posted 17% annualized sequential growth, accounting for approximately 41% of total ARR at quarter-end.
The partner and marketplace channel, which includes small and midsize business marketplace offerings and partner-deployed products, grew revenue 16% year over year. The channel represented about 59% of total ARR and benefited from expansion with existing partners, including state and local government partners.
Georgevich told analysts that enterprise revenue comparisons were affected by the shift from non-recurring to recurring revenue, and said ARR growth was the more relevant measure for the channel’s progress.
Accessibility risks and European enforcement remain focus areas
Georgevich said the growth of AI-assisted coding is contributing to web accessibility problems because large language models were not built with accessibility in mind. She cited a recent WebAIM study finding that 95.9% of leading homepages contained detectable Web Content Accessibility Guidelines failures, averaging 56.1 errors per page. According to Georgevich, the error count rose 10% year over year after six years of improvement.
The company’s Digital Accessibility Index, which covered more than 165,000 pages across 6,100 domains in the United States and Europe, found that interior pages averaged 10% more issues than homepages. Those interior pages accounted for roughly 60% of accessibility claims filed last year, Georgevich said.
She also said European websites had about 25% more accessibility issues per page than comparable U.S. sites. While describing enforcement under the European Accessibility Act as still in its early stages, Georgevich pointed to stepped-up market surveillance in Sweden and the Netherlands, warning letters in Germany targeting non-compliant e-commerce operators, and a French court ruling requiring a major retailer to achieve full remediation within six months under the threat of daily penalties.
AudioEye said the second quarter marked its strongest contribution from Europe to ARR growth to date. Georgevich said the company is pursuing a multi-channel European strategy and has resources in the region, while remaining prepared to increase its efforts if enforcement produces an inflection in demand.
Cash generation could broaden capital-allocation options
For the third quarter, AudioEye expects adjusted EBITDA of $3.4 million to $3.6 million and adjusted earnings per share of $0.26 to $0.28. At the midpoint, the company said $3.5 million in adjusted EBITDA plus approximately $400,000 in software development costs would imply $3.1 million of adjusted free cash flow.
Management expects free cash flow to accelerate further in the fourth quarter as litigation expense trends lower. Georgevich said litigation expense fell 40% in the second quarter from the first quarter and is expected to decline further during the second half.
AudioEye ended the quarter with $8.7 million in cash and $3 million available under its revolving credit line. Net debt was $8.1 million, and Domeyer said net debt to adjusted EBITDA, based on the company’s 2026 guidance, was approximately 0.6.
Georgevich said anticipated cash generation could support options including potential share repurchases, dividends, or acquisitions, though she said any merger-and-acquisition activity would need to be the right strategic fit and occur at the right price.
About Audioeye (NASDAQ:AEYE)
AudioEye, Inc is a provider of digital accessibility solutions, offering software and services designed to help organizations ensure their online properties comply with Web Content Accessibility Guidelines (WCAG), the Americans with Disabilities Act (ADA) and other global accessibility standards. Through its cloud-based platform, the company automates the detection and remediation of accessibility barriers in websites, mobile applications and multimedia content.
The company's flagship AEYE Platform leverages machine learning, artificial intelligence and human validation to continuously scan digital assets, identify potential compliance issues and deploy corrective overlays or code adjustments.
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