AEYE · Research
AudioEye's Partner Channel Grew 14.30% and Made Q3 Profitable, but Twelve-Month Owner Cash Is Still Below Zero
Q3 revenue was $10.96M, up 7.20%, with operating income of $1.26M. ARR was approximately $43.3M.
| Scorecard | Read |
|---|---|
| Thesis | Website accessibility rules keep pushing small businesses to purchase through platforms and agencies, and AudioEye's partner channel turns that into steady recurring revenue |
| What proves it wrong | Partner and Marketplace growth slows below 10% while Enterprise keeps shrinking, or the two largest customers cut back |
| Next catalyst | Q4 2026 results in early 2027, with full-year ARR and the first quarter of the new $15.0M buyback program |
| Key multiple | 73.38x EV / GAAP EBITDA of $1.85M |
| Debt | $16.23M carrying at Sep 30, 2026: Western Alliance term loan, $17.0M drawn, due Mar 31, 2030 |
| Stock pay | $5.01M from the cash flow line, 11.72% of revenue |
What AudioEye sells
AudioEye sells software that makes websites accessible to people with disabilities and helps owners meet ADA and WCAG standards [1]. It also sells one-time audits and PDF remediation.
Q3 2026 revenue was $10,963K against $10,227K, up 7.20% [1]. Nine-month revenue was $32,232K against $29,817K, up 8.10%.
It sells through two channels. Partner and Marketplace, where platforms and agencies resell AudioEye to their customers, was $6,380K, or 58.20%, up 14.30%.
Enterprise, direct sales to larger companies, was $4,583K, or 41.80%, down 1.33% [1].
The plain split is all software and software services, with no hardware [1]. Recurring subscriptions are most of revenue, and non-recurring audits and PDF work are the rest.
ARR was approximately $43.3M at Sep 30, 2026, up 12% as the filing gives it [1]. Partner and Marketplace was about 59% of ARR and Enterprise about 41%, again as filed.
AudioEye had approximately 130,000 customers against 123,000 a year earlier, as filed [1].
Concentration
Two customers, each counted with affiliates, were 11% and 12% of Q3 revenue, 23% together [1]. One customer was 13% of nine-month revenue.
In our reading, these are large partners in the Partner and Marketplace channel, which means the fastest-growing channel also carries the most concentration. The filing does not name them.
Profit in the quarter
Gross margin was 82.93% in Q3 against 77.39% [1]. Cost of revenue fell to $1,871K from $2,312K.
Q3 operating income was $1,255K, or 11.45% of revenue, against a loss of $318K [1]. Net income was $990K.
The filing ties lower R&D and selling costs to fewer staff after the company adopted automation tools [1]. R&D fell to $889K and selling and marketing to $3,304K.
Nine-month operating loss was $1,226K [1]. General and administrative cost rose 22% over nine months, which the filing ties to litigation and stock pay.
The toll-gate test
A toll gate owns the record, owns the connection, prices on outcomes and spends R&D on the gate. AudioEye passes the connection test in part.
The partner channel is a real connection: platforms bundle AudioEye into what they offer, so AudioEye reaches small sites without its own sales force [1].
Pricing is mostly fixed subscriptions, with PDF remediation priced by usage [1]. That fails the outcome test.
Superintelligence cuts both ways here. AudioEye already uses automation to fix sites at lower cost, but our reading is that the same tools could let website builders fix accessibility themselves.
The owner-cash staircase
Start with GAAP EBITDA of $1.85M: operating income of -$2.04M plus D&A of $3.89M over the twelve months [1]. Each step down the staircase removes one thing an owner cannot spend.
Step one is operating cash flow of $6.57M, above EBITDA by $4.72M. Operating cash ran above EBITDA.
Nine-month operating cash flow was $4,035K against $2,220K, and stock pay is a large non-cash charge [1].
Step two subtracts stock pay of $5.01M, taken from the cash flow line. That leaves $1.56M.
Stock pay is 76.26% of operating cash flow, which is what turns owner cash negative [1].
Step three subtracts all capex of $1.77M, including capitalized software. Owner cash is -$0.21M, or -0.50% of revenue.
Capex is mostly capitalized software development, $1,265K in nine months, plus small amounts of equipment [1].
| Step | Twelve months | What the gap is |
|---|---|---|
| GAAP EBITDA | $1.85M | Operating income plus D&A |
| Operating cash flow | $6.57M | Working capital, cash taxes, interest and non-cash items |
| After stock pay | $1.56M | Stock pay treated as a real cost |
| After all capex | -$0.21M | What an owner could take out |
Balance sheet and debt
The debt is a term loan from Western Alliance Bank under a credit facility that matures on Mar 31, 2030 [1]. AudioEye has drawn the full $17.0M, and the carrying value was $850K current plus $15,380K long-term.
The loan bears SOFR plus 3.25%, with a SOFR floor of 2.30% [1]. Quarterly principal payments of $213,000 began on Apr 10, 2026. A $3.0M revolving facility is also in place.
From Sep 30, 2026, the covenants require funded debt of no more than 2.50 times adjusted EBITDA and fixed charge coverage of at least 1.50 [1]. A Sep 18, 2026 amendment lets AudioEye add back some litigation costs.
The company was in compliance at Sep 30, 2026.
Cash and equivalents were $9,327K, up from $5,288K at Dec 31, 2025 [1]. Total stockholders' equity was $5,076K.
The cover-page share count was 12,684,577 at Oct 26, 2026 [1]. In October 2026, the board approved a new $15.0M buyback program through Oct 18, 2027, replacing the 2025 program.
What the multiple measures
EV is $135.52M: equity value at the Oct 27, 2026 close on 12.68M cover-page shares, plus debt of $16.23M at carrying value, less cash and equivalents of $9.33M.
On GAAP EBITDA of $1.85M that is 73.38x. On operating cash flow of $6.57M it is 20.63x.
Owner cash is -$0.21M, so there is no owner-cash yield to quote.
Net debt is $6.90M, or 3.74x GAAP EBITDA. The covenant uses adjusted EBITDA, which adds back stock pay and other items.
What gets overlooked
GAAP EBITDA of $1.85M is near zero over twelve months, so EV / EBITDA of 73.38x says little [1]. EV / operating cash flow of 20.63x is the better measure for now.
A $15.0M buyback program is large next to $9,327K of cash, and the credit facility limits repurchases per year [1]. In our reading, the program sets a ceiling, not a plan.
Deferred revenue was $8,431K at Sep 30, 2026 against $8,624K at Dec 31, 2025 [1]. In our reading, a flat deferred balance next to 12% ARR growth points to more monthly or quarterly billing, likely through partners.
Q3 net interest expense was $265K, and interest paid over nine months was $821K [1]. The term loan costs little next to operating income in a profitable quarter, but it is a fixed charge in a loss-making one.
Contingent consideration of $300K for the ADA Site Compliance acquisition remains on the balance sheet [1]. The earnout targets were measured at Dec 31, 2025.
Enterprise revenue fell because of lower non-recurring revenue [1]. In our reading, recurring Enterprise revenue is steadier than the channel total suggests.
Peers
The peer set is AvePoint, Freshworks and Box: subscription software sold to businesses, much of it through partners.
Peer figures come from each company's latest periodic filing [2][3][4]. Figures are derived from filed statements, and nothing here is a price view.
AudioEye is the smallest company in the set by far, and its EV / operating cash flow sits between Freshworks and AvePoint [1][2][3][4].
Bull, base and bear
| Case | What happens | What the filings would show |
|---|---|---|
| Bull | Partner channel keeps growing near 15% and margins stay level | ARR growth above 12% and quarterly operating income each quarter |
| Base | Revenue grows high single digits | Operating income near break-even over a full year |
| Bear | A large partner leaves and Enterprise keeps falling | Revenue decline and covenant pressure |
The base case is the nine-month shape: revenue up 8.10% and a small operating loss [1].
The bull case needs Q3 margins to last. Gross margin of 82.93% and lower staffing costs would have to carry into 2027 [1].
The bear case is concentration. Two customers were 23% of Q3 revenue [1].
What to watch
Watch Partner and Marketplace growth, 14.30% in Q3 [1].
Watch ARR, approximately $43.3M at Sep 30, 2026 [1].
Watch litigation costs inside general and administrative expense [1].
Watch the leverage covenant of 2.50 times adjusted EBITDA [1].
Watch buyback use under the new $15.0M program [1].
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