Is AudioEye (NASDAQ:AEYE) Using Too Much Debt?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about... and every practical investor I know worries about.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. Importantly, AudioEye, Inc. (NASDAQ:AEYE) does carry debt. But the real question is whether this debt is making the company risky.

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When Is Debt A Problem?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is AudioEye's Net Debt?

As you can see below, at the end of September 2025, AudioEye had US$13.0m of debt, up from US$9.14m a year ago. Click the image for more detail. On the flip side, it has US$4.55m in cash leading to net debt of about US$8.41m.

How Strong Is AudioEye's Balance Sheet?

The latest balance sheet data shows that AudioEye had liabilities of US$11.9m due within a year, and liabilities of US$12.9m falling due after that. Offsetting these obligations, it had cash of US$4.55m as well as receivables valued at US$6.34m due within 12 months. So its liabilities total US$13.9m more than the combination of its cash and short-term receivables.

Since publicly traded AudioEye shares are worth a total of US$112.5m, it seems unlikely that this level of liabilities would be a major threat. But there are sufficient liabilities that we would certainly recommend shareholders continue to monitor the balance sheet, going forward. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately the future profitability of the business will decide if AudioEye can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Check out our latest analysis for AudioEye

In the last year AudioEye wasn't profitable at an EBIT level, but managed to grow its revenue by 19%, to US$40m. We usually like to see faster growth from unprofitable companies, but each to their own.

Caveat Emptor

Importantly, AudioEye had an earnings before interest and tax (EBIT) loss over the last year. To be specific the EBIT loss came in at US$3.0m. When we look at that and recall the liabilities on its balance sheet, relative to cash, it seems unwise to us for the company to have any debt. Quite frankly we think the balance sheet is far from match-fit, although it could be improved with time. For example, we would not want to see a repeat of last year's loss of US$3.5m. So we do think this stock is quite risky. When I consider a company to be a bit risky, I think it is responsible to check out whether insiders have been reporting any share sales. Luckily, you can click here ito see our graphic depicting AudioEye insider transactions.

When all is said and done, sometimes its easier to focus on companies that don't even need debt. Readers can access a list of growth stocks with zero net debt 100% free, right now.

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