{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "AEYE",
  "name": "AudioEye, Inc.",
  "url": "https://frontierpicks.com/dossiers/AEYE/",
  "json_url": "https://frontierpicks.com/dossiers/AEYE.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a4",
    "n": 4
  },
  "current_thesis": "AudioEye is now profitable, but 7% sales growth and its executive chairman's roughly $2.4 million of stock sales make the shares more likely to lag the S&P 500; the fourth-quarter report, due around March 2027, shows whether earnings keep rising.",
  "invalidation_trigger": "A daily close below $10.14, the first close after the 2026-10-26 report, which would reverse most of the post-earnings re-rating; or fourth-quarter adjusted EBITDA below the $4.2 million low end of guidance.",
  "catalyst_date": null,
  "pick": null,
  "themes": [
    "ai-enterprise-software"
  ],
  "tags": [],
  "sources": [],
  "notes": [
    "Adjusted figures differ sharply from GAAP: nine-month 2026 adjusted EPS was $0.72, while the GAAP result was a $1.99 million net loss.",
    "AudioEye is a micro-cap with 12,684,577 shares outstanding at 2026-10-26, so modest trading volume can move the price sharply.",
    "The $15 million repurchase authorisation runs through 2027-10-18; the term loan requires no event of default and at least $5.0 million of liquidity after any repurchase.",
    "Executive chairman David Moradi is also a director and 10% owner, and his sales through Sero Capital LLC are reported on SEC Form 4."
  ],
  "source_links": [
    {
      "title": "AUDIOEYE INC - Form 4 - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001362190/000165884326000010/form4-11032026_111154.xml",
      "date": "2026-11-03"
    },
    {
      "title": "AUDIOEYE INC - Form 10-Q - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001362190/000110465926118855/aeye-20260930x10q.htm",
      "date": null
    },
    {
      "title": "Audioeye (NASDAQ:AEYE) Stock: Insider David Moradi Sells 39,312 Shares - The Cerbat Gem",
      "url": "https://www.thecerbatgem.com/2026/11/05/audioeye-nasdaqaeye-stock-insider-david-moradi-sells-39312-shares.html",
      "date": "2026-11-05"
    },
    {
      "title": "AudioEye executive chairman Moradi sells $2.4M in shares at $13.33-$14.16 By Investing.com",
      "url": "https://www.investing.com/news/insider-trading-news/audioeye-executive-chairman-moradi-sells-24m-in-shares-at-13331416-93CH-4997232",
      "date": null
    },
    {
      "title": "Audioeye (NASDAQ:AEYE) Chairman David Moradi Sells 100,845 Shares of Company Stock",
      "url": "https://www.marketbeat.com/instant-alerts/insider-audioeye-nasdaq-aeye-chairman-david-moradi-sells-100845-shares-of-company-stock-2026-11-03/",
      "date": "2026-11-03"
    },
    {
      "title": "audioeye announces 15 million stock repurchase program",
      "url": "https://finviz.com/news/404586/audioeye-announces-15-million-stock-repurchase-program",
      "date": null
    }
  ],
  "body_markdown": "## Current Thesis\nAudioEye's shares are more likely to lag the S&P 500 than lead it over the next three months. The company is now profitable, but sales are growing 7%, its executive chairman sold about $2.4 million of stock right after the post-earnings surge, and the next report, due around March 2027, is what settles whether earnings keep rising.\n\nThe new fact is the insider sale. David Moradi, executive chairman, chief product officer, director and 10% owner, reported selling 177,641 shares through Sero Capital LLC between 2026-10-30 and 2026-11-03 (SEC Form 4). The form does not mark the sales as made under a Rule 10b5-1 pre-arranged trading plan. The shares closed at $13.03 on 2026-10-30 and $12.06 on 2026-11-05.\n\nThe business case still rests on margins. Third-quarter revenue rose 7% to $10.96 million, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation, adjusted for items the company excludes) rose to $3.89 million from $2.45 million, according to the 2026-10-26 release. Management guides 2026 adjusted EBITDA to $13.4–13.6 million.\n\nThe narrative is maturing: the earnings surprise is well known, and company news since the 2026-10-27 surge consists of Nordic accessibility research on 2026-11-03 and the insider-sale filing. AudioEye's AI-agent repositioning, including Agentic Audits launched on 2026-10-08, has yet to lift sales growth above single digits.\n\n## Bull Case\n- **GAAP profit arrived in the third quarter.** Net income was $0.99 million, or $0.08 per diluted share, against a $0.55 million loss a year earlier (company release, 2026-10-26). Adjusted gross margin rose to 88% from 83%.\n- **Earnings guidance beat consensus.** The 2026 adjusted earnings per share (EPS) guide of at least $1.04 compares with a $0.98 consensus, and the fourth-quarter guide of $0.32–$0.33 compares with $0.30 (Benzinga, 2026-10-26).\n- **Recurring revenue keeps growing.** Annual recurring revenue (ARR) reached $43.3 million on 2026-09-30, up 12% year over year (company release). The Form 10-Q counts about 130,000 customers on that date, up 6% from about 123,000.\n- **Cash generation improved.** Operating cash flow for the first nine months of 2026 was $4.04 million, against $2.22 million a year earlier (Form 10-Q). Cash rose to $9.33 million on 2026-09-30 from $5.29 million on 2025-12-31.\n- **The lender loosened buyback terms.** A loan modification dated 2026-10-26 removed the dollar cap on repurchases under the term loan (Form 10-Q). The board authorised up to $15 million of repurchases through 2027-10-18, announced on 2026-10-20.\n\n## Bear Case\n- **The executive chairman sold after the surge.** Moradi's Sero Capital sold at weighted averages of $13.33 and $14.16 on 2026-10-30, $13.48 on 2026-11-02 and $13.45 on 2026-11-03 (Form 4).\n- **Sales growth is single-digit.** Third-quarter revenue grew 7%. The 2026 sales guide narrowed to $43.6–$43.8 million from $43.5–$44.0 million, against a $43.619 million consensus (Benzinga, 2026-10-26).\n- **The buyback is authorised, not yet used.** The company bought no shares under the new programme through 2026-10-26 and none under the prior one in the third quarter (Form 10-Q). Repurchases require no event of default and at least $5.0 million of liquidity afterward, and the $15 million authorisation exceeds the $9.33 million of cash on 2026-09-30.\n- **Debt exceeds cash.** Term loan principal was $16.6 million on 2026-09-30, and stockholders' equity was $5.08 million. Covenants cap funded debt at 2.50 times adjusted EBITDA through 2027-06-30, then 2.00 times (Form 10-Q).\n- **Revenue is concentrated.** Two customers accounted for 11% and 12% of third-quarter revenue (Form 10-Q).\n- **Litigation costs still weigh on GAAP results.** Litigation expense was $3.40 million for the first nine months of 2026, against $1.94 million a year earlier, and the nine-month GAAP net loss was $1.99 million (company release).\n- **Analyst targets have not visibly moved.** The consensus target was $14.62 on 2026-11-05, from four Buy, one Hold and one Sell rating (The Cerbat Gem). Searches through 2026-11-06 found no post-report target revisions from individual firms.\n\n## Setup & Price Structure\nThe shares closed at $7.42 on 2026-10-26, $10.14 on 2026-10-27, $13.03 on 2026-10-30 and $12.06 on 2026-11-05 (adjusted daily closes). The last close is 16.4% below the $14.43 52-week high and 105.8% above its level three months earlier.\n\nCrowding is visible in three places. The 14-day relative strength index, a momentum gauge, stood at 71.4 on 2026-11-05, above the 70 level commonly read as overbought. The 50-day simple moving average was $8.01 and the 200-day was $7.19 (The Cerbat Gem, 2026-11-05), both far below the last close. The insider sale also came into the surge, with Benzinga's movers lists having featured the shares on 2026-10-26 and 2026-10-27.\n\nEarnings are not an imminent crowding factor, since no report is due until about March 2027. With 12,684,577 shares outstanding on 2026-10-26 (Form 10-Q), modest volume can move the price sharply. The $10.14 close is the reference level for the post-report move, and $7.42 marks where it began.\n\n## Catalyst Calendar (next 30 days)\nNo company event with a confirmed date falls between 2026-11-06 and 2026-12-06. The third-quarter Form 10-Q is already on file. Any further insider trade would appear on a Form 4 within two business days.\n\n- **~2027-03-05, est.: fourth-quarter and full-year 2026 report.** It tests fourth-quarter revenue against the $11.4–$11.6 million guide, adjusted EBITDA against the $13.4–13.6 million full-year guide, and ARR growth against 12%. It should also show whether the company used the buyback.\n\n## What Would Change Our Mind\nThe profitability case breaks if fourth-quarter adjusted EBITDA comes in below the $4.2 million low end of guidance, or if ARR growth slows below 10%. A daily close below $10.14, the first close after the 2026-10-26 report, would show most of the post-earnings gain reversed.\n\nThe lag view is wrong if the shares outrun the S&P 500 through the next three months. Evidence for that would be a close above the $14.43 52-week high, repurchases funded from operating cash, or post-report target increases from covering analysts. Further Form 4 sales by Moradi after 2026-11-03 would strengthen the lag view, and a halt to them alongside continued director buying would weaken it.\n\n## Correlation Notes\nAudioEye's move came from its own results, so the read depends little on its peer group. The AI enterprise software group, which includes Appian, EPAM, Accenture and Braze, gained attention in the week to 2026-11-06 after cooling from mid-October. The 36.66% rise on 2026-10-27 followed AudioEye's own report. This view would be wrong if AudioEye's largest daily moves began tracking the group on days with no company news.",
  "first_seen": "2026-11-01",
  "last_analyzed": "2026-11-06T11:21:02+00:00",
  "last_synthesized": "2026-11-06",
  "last_update_source": "watchlist_research",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}