Inuvo (INUV) 10 Aug 232023 Q2 Earnings call transcript

Good afternoon ladies and gentlemen and welcome to the Inuvo, Inc.

Second Quarter 2023 Conference Call. At this time, note that all participants are in a listen-only mode. But following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Also note that the call is being recorded on Thursday, August 10th, 2023.

to conference like Rudman, to would Relations. Investor I turn over the Natalya And ahead. go Please

Financial Commission with our the we shareholders shareholder Sylvie. you, We Officer, everyone will be for quarter Chief Chief this us thank the everyone. like Howe; Richard would filed for on today Today, Ruiz, and XXXX Executive second Officer, Inuvo's Thank the presenters will afternoon XX-K joining Good I'd Securities that Exchange call. Inuvo's and update like to afternoon. Wally our your call. also remind to

Before all company's statements this forward-looking we The statements to pursuant forward-looking of begin, Litigation conference I'm Harbor in are such, going facts relating to are Act made to descriptions review statements of Securities not XXXX. historical Safe the the future call events, Reform are that as statement. and

risks believe, subject as call in and statements they expect, intend, such anticipate, to results forward-looking Inuvo words and project, forward-looking relate used the and These When to differ are this expressions Inc. similar may potential, should, uncertainties, as will, estimate, materially. enable, statements. are actual could,

differ are at those all cautioned involve to statements and anticipated which Investors may results actual by forward-looking uncertainties, Inuvo this cause time. risks that from

forward-looking company are The in upon forward-looking or makes and with any the no that Exchange the bear In to more US statements fully date addition, www.sec.gov. circumstances Inuvo's after commitment other any Securities reviewed facts, be Commission, risks described public statements. to revisions at hereof filings events, which or disclose can

on historical directly measures an measures website. of believes will additional to to performance. A non-GAAP release that provides reconciliation our information today's is The comparison the discussion measures. its references company include today's most news in GAAP addition, of In measurement available comparable and consistent the such non-GAAP

out Richard I'll Go call of CEO, the now Howe. to that Rich. way, the over turn ahead, With

today. Thank you everybody Thank us so for you joining much Natalia.

XXth, in $XX.X June in has XX% quarter report to for quarter. grown $XX.X to first We are XXXX, that sequentially, million Inuvo having the the ended compared pleased million as delivered revenue revenue

year-over-year a roughly down was On XXXX basis, QX XX%.

as third current trends However, the be closing will suggest quarter. within back my that could year-over-year in to growth later I we remarks, discuss

roughly the yet $X.X and At improve into as audited, and in August the We loss to for head margins the second were adjusted of continued the end had quite quarter adjusted quarter. year. typically while million EBITDA strong EBITDA the gross half of at not a trends stronger revenue and it's have we XX%, July the

of the additional reported we as at million an end May, $X raised within the Also, quarter.

As a equivalents, of to $X million, result, debt, growth and aggressive support a we cash million which solid with no with strong sheet the unused borrowing cash facility $X an our us strategy. have and resources of balance provides approximately

custom capabilities the some that deliverables Throughout Let with with media indirect me larger new the In highlights. our required launch. operational we of testing working to building XXXX, product of growth various to clients out support performance a and anticipated were now planning we one they beta product and associated began the turn were the XXXX, launch. to with on associated

our project in the scalability initiative revenue within quarter. overall The which The this is at of XXXX. indirect the XX% now increase of of roughly launched potential the was reflected represented in second beginning sales,

customization that Inuvo and pages performance. of for was and of for has landing in Included design in this the enhancement to conversion improvements led a system development project

to for that our services investments Concurrently, initiative, marketing this we these as as improved buying continues and capabilities collective and of increasingly have supporting media tools important, These of demand also infrastructure. made become part grow. kinds the

has also required ad copy, and content including Client video. the and question of scalability

deliver these also have that several this for required allowing to to tools development for third-party us significantly customers. the We capabilities, future AI-based services, while these have resources adopted leverage decreased

campaigns, base our delivering strong excluding customer, Across our revenue-generating quarter. across roughly XX which are currently remains client largest these are we of Performance campaigns. new XX very against and KPIs client in the

new financial to in roster across quarter, the the Inuvo government added We entertainment, travel that industries services, tourism. second advertisers XX and and include

find we As past, able we've yet the perform. in stated have IntentKey industry been to has to where the an not

reasons returned also Notably, generated combined we our the clients as AI, by cited the quarter. return. Those our during the had two key to insights support behind Inuvo their with clients

have that for Artificial Throughout interviewed a on and on steady of interviews a Intelligence Finance. increase articles XXXX, segment within in advertising, the national recently, Inuvo. seen were Yahoo we feature we frequency Most

least been have like company year we more. in Arkansas state, cover AdExchanger, Collectively, Digiday, an and story this home our our already are and paradigm. a interviewed MediaPost publications had at times and/or about advertising In dozen we business excellent changing cited the how notable

the that organization increase to the end account the At at number of sales, second we number total within quarter, continued of stands We've now had the associates. marketing teams, management the associates XX XX. within and

Media newly of is strategy the and Lowenthal. our and of executive the Advertising across recently relationships appointed knowledge, of a having member experience go-to-market Leading CEO Barry a most execution, brings Industry, Barry our President, agency the Kitchen. been and the team significant The collection

successes member industry's various having founding first desk. one Among programmatic been considerable the advertising trading of a of distinction of includes the

important technological company various well this that prediction obsolete. that become started identity building governmental since certainty. vision to a and In nearly we that is and years, announcement consumer using out six in milestone the model virtual language made a Barry's to was have with large We meet our of AI Inuvo changes the the future, ahead an generative our for advertising at appointment, data evolution. in its competition mentioned were As

stored. systematically their iOS private And have their release, to users been consumer's designed incorporating has They added address. where also eliminated prevent They within the historically now changes identity IP to cookies, completely They tracking consumer eliminate now their Apple changes allow has address. been the Alias now, used access methods addresses. which Technologically, consumers. all for obfuscates a generate has VPN, to third-party been allow to have example, specifically latest which in that identify URL users the e-mail place

in Legislatively, data are Consumer protection by at states the through regulations active consumer XX enacted with now shortly the Europe states other and of followed thereafter was Act, least Privacy five with there California data the in them general in actually bills heading XXXX, with laws legislature. and privacy

services ensure is to mission short-term pipeline, products of to the Barry's changing meet organization, industry. and this the demands growing have we

of of Specifically for targeting ahead audiences the without other identification comparable we any solution. many years and remain identity,

continue an enhanced version forefront product our advancement. launched at company an technology intelligence, to client, a We significant As ChatGPT. the of make that with includes of , we artificial integration

product, where We made interested launched media based why on the performance in service report machine online generated the portal, and we first AI or first audience brand. the its generally across on-demand channels. our now designed We system brand, that television kind for wherein can any predict learning, any available of behind be predicts advancement programs any contribution and audiences significant reasons are in of the a AI suitable can

number in audiences, latter finding two future. challenge keyless marketers a addresses behind industry This privacy-first and facing targeting development the

technological the competitors. developments more these come of between increasing and are and Inuvo barriers many All to its

quarter. to call within for to Wally? turn a assessment now our financial detailed more Wally of over the would like the I performance

second Good Thank I'll XXXX. results of recap year this quarter our the financial of afternoon. you, Rich.

revenue in million last of million That $XX.X the Inuvo June in reported mentioned, XXXX. As Rich lower of the $XX.X the XX, quarter second reported year. $X for that than ended million quarter

has quarter year revenue discussed due has customer, of the this fourth changed. calls, discussed, was year's of prior the in to direct lower second that XX% the to compared quarter on Due been an new Rich gross margins. mix the As year. the last had a and impact indirect positive a The of to revenue change as of indirect XX% year. a from launch loss revenue composed of This product customer revenue has in in last the loss customers with mostly customer, was mix

expect indirect revenue to the we customers grow, remainder mix revenue year. should our persist continue from of for to As the this

predominantly the supply inventory quarter our XXXX the information we quarter intelligence. IntentKey predicted advertisements which behalf in provide second the using access by million to $X.X advertising million placed that is of to $X.X of clients. into on year. to exchanges artificial was last revenue revenue serve payments compared a of same These are of of Cost Cost in advertising advertisements

of Gross profit last customer million totaled $XX.X for XX, XXXX, as XXXX June year, the the the in year. quarter higher second of margins Gross quarter period the last compared as for ended same XX% compared business. XX% for was second $XX.X the to indirect period profit the reflecting margin same to million

roughly be remainder the We quarter. the with expect the this to margins Inuvo of results gross for line of in year

largest of operating the costs. $X.X $XX.X in of in prior $XX.X million non-cash-based of $XX to had million. is $X.X the second acquisition in roughly We operating second same were costs are expenses an that in $XX.X year, component expenses predominantly quarter last expense were traffic year Operating million compared costs Marketing compared these of to of Marketing were The year. increase expenses. XXXX quarter million costs. this marketing the million quarter the million

percentage expect as of in this as Going cost pace continue revenue second a we a the of similar marketing year. to quarter forward, at

salary year, $X.X quarter cost. compared the higher to to $X.X expense this primarily million second year million prior Compensation in the employee in was due

XXXX, XX, of that's Our sales, increase was to headcount employment and XX and within June occurred year. XX% individuals of support, hiring the June in compared majority administration account on management last corporate full-time and with The President. a at of the part-time XX sales

the quarter per or that equipment a also share, expense $X.X $X.XX year last second XXXX, compared in The was expense year. by quarter reported with credit expense costs to fees. doubtful lower and due professional account same travel administrative depreciation income prior is $X.XX the $X,XXX marketing and IT expense. amortization last year. financing various and and the to higher General Net increased in $X.X primarily to basic second maintenance have. or were that associated the compares per of in line $XXX,XXX of this in basic of loss the quarter have entertainment quarter year net We same to offset of million the $XX,XXX partially leases and lower of allowance that and we net This by and loss of we the expense million compared share

XXXX, $X million. XX, had June of of capital At million and cash working cash and we net $X equivalents

million balance a outstanding In addition, working we credit capital had that of $X line at XXth. June no have

we During XX our raised the common million of gross in of an quarter, shares the $X through stock. a offering sale proceeds registered direct in aggregate million of

under sold we April, in firm. banking agreement an addition, investment XXX,XXX shares an at-the-market In with

XXX,XXX and structure simple employees a to stock. million equity plan common outstanding, XXX shares purchase stock an common maintain units with million through restricted capital warrants We outstanding incentive X.X

With to that, remarks. the Rich I'd for over back to closing turn call like

had Thanks, up Wally. the We a growth XX% to for strong quarter, million. sequential $XX.X

the make scaling. And first services clients year, be scale and to that in the of our both an have is of initiative one technology significant larger advancements the Within required with continued half company. to that we our will we

Consequently, within double the the second growth corner we back digit the fourth are quarters and And forecasting was turn and June free to of to half year-over-year to of third revenue up Both the flow within be positive unaudited year. expect July to year-over-year. XXXX. cash

end, based to also artificial industry. recently information the its us associated well-respected programs, sales capitalize to from we've PR privacy to to and the New so applicability government, demand the continue technology consumers. on will We York capitalize the changing and advertising demand firm invest facing retained this intelligence related concerns by market, for growing driven a we privacy on awareness this and And in challenge can to with help

turn now call operator questions. will Operator? to the I over for the

be Kinstlingler sir. go [Operator Thank you, will Global question your from Partners. ahead. first Instructions] Alliance at And Please Brian

quarter. Congrats nice Hi, is for [ph] there. Brian. Sharmin This on on a

you. Thank

still seeing Could about IntentKey. ad And of the any in market how signs continued is smaller are pressure to Is improvement? longer the you sales you it translating or impacting talk cycles sizes? campaign

invest, not we big companies experience million. the by million us or your We're our finger where $XX whether spending, size clients challenges in a is are maybe enough, that knows I billion who might, a you to try it's if mean who kind yes, challenge revenue. difficult always whatever like million, can that, you're not. it's for this $XX your of $XX $X.X put to Brian, on of

cycles we're six are change much months. months, at we're clients. staying to the longer all sales probably to can doing. than regard with So sell Indirect seeing not much -- direct clients It often takes no The change what less pretty take three same.

have do is spoke our now. And of it kind position, this that's perspective privacy before, yes, the right I that bit is but of going not a and catalyst we unique So away. on a on

media advertisers demand happens for problem XX time in create it, have regard of come to next, create should months. call we've spend let's to what that regardless this the always and this with us. that So believe -- to solve would overall, ensuing continue And

That makes sense.

underlined marketing, in you should to said things we you this question. sales able mix sales elevated, coming of your are and the Next the quarters? headcount efficient, struggle rates foot is your you that are but Last drive year? sales in quarter, increased to increase an starting planning And are oversight being direct expect next a remaining progressing Barry’s in space? to get How the With door. close

the perspective, that why our Barry, which have the established. the first support here. that that's agencies fold Barry. sense that I one that, focus the I'll as surprisingly, not that makes is question? into result, the perfect Maybe these Sorry, a was market, first first. the channel gotten budgets, and come But is always last we in, underneath to given now. had Brian, Berry to as has and hyper-focused so world, We've who of that question sales question -- reasons a the we brought missed and his What channel been primary has from And for the answer is -- on he's

being Closing that main quarter, seen. foot executives main door in is Last but is is of the fine, the in you getting the issue mentioned issue. the front

made looking what see So in made changes sort if you've progress? you're and you've progressing this how space any to of just

tells challenge growth, some Well, us know, progress. there making you as the we're that The remains.

to overcome. in the have we before, for them. It's I which I And the approaches. getting this people so version easy. the but that is simple of is that's of suspect would but I as getting answer. challenge buyers change probably challenge industry, ahead be year, if And I to have on a say, as that easier, want to not recognizing mature I've on might is a the not a spoken In who to be D-day maybe easier last don't sort identity the biggest new interpreted thing

All any right. or? about coming you. one there coming contract. sort of are regarding And communication yet month. Thank question I larger the has see a Google been every contract soon last renewals But

Yes.

about all. no. think I our at So We don't talking clients like

have fact, right the many to. in In we don't cases,

my answer this is, So to yes.

right. hop back All I'll in queue. the

[Operator next Vander you. at ahead. Please Thank Your Instructions] Jack question Aarde Maxim will be from go Group.

would around Are client campaigns to first returning quarter? they two the clients Congrats maybe Thanks they taking and about clients Great. the Rich. large Okay. they you strong in be returning on -- a question. more produced two helpful. the similar what in particularly clients for Can just how the And scale? XX any little detail, relative? my last new Just color are results, are two increasing talk returning the

go Yes, I remember some they anymore, like than exact more quarter, when amount don't maybe a quite out even least time clients the a of it's at more two than time two. ago. returning so ones, it's year, but the weren't they

realized. one So small then they're bring for the most but to right? answer as to how get the part, performance still everybody is the starts, that's which starts Everybody that is, added we small, campaigns, Jack, on

universally. true that's So

kind programmatic start display, clients accounts. television, component The are advertising, good big be could campaigns off open they're good is and that And new most big a and -- part, sizes, of what games of they they're connected and do web not account. the They doing. online don't display where they're for they're the new we video the the they're what

actually helpful. a doing since ago came a it. be that's No, back, that's they there were Got and so, clients probably over size positive And something year or right. must I

to good that's So hear.

like likelihood then many that's are scale turning near in it potential -- How And increasing expected to on quarter growth new XX sounds them also third the new year-over-year in XX of you of on the of going the quarter? clients and in these driver the of the what's giving then for the of kind future? turn third clients returning are to confidence in and

they're sure, but think I on I Jack, now. don't know all for

So XXX%, exactly me be XXX% without is, quarter. the that near the knowing on it's answer they'll guess, I third right, in

Fantastic.

Richard, like then, sales And sounds it Great. Okay. up really you've your ramped marketing hiring. and

your like thoughts? levels? be from productivity Just to year curious based Is months how year, expectations, perspective takes it I but on it achieve hear I'm associates does think, long curious, for your a it take I'd six your to sales optimal typically a your

of training different, when course, be to trained take been are the learning months find years, we XX even that has approach they and school. able three everybody given Jack we is and through what to first went audience for last The -- the than

with learning there's an a component, So educational the comfortable component, getting materials.

months, to And three so any don't as they've a of and got the tenure somewhere executive. get long for us friend a to they unless, sales it's typically a they've usually months time zero close in deal known managed that three they've a their first deals

But start productive period, productive if then let's the they not going going not to the we to we ever they're it, look cadence six-month be And probably a in then start they're becoming period. in productive nine-month or to whether to wondering be this, call six three that would at.

last sense. that, that's a and of Sure. customer direct say one-off, wind Makes was that just a other your get unique such new I is thoughts. you're of you thing I major sound those hear then would Was it just but Was clients. And truly large a what situation that are -- that the the bit. because any isolated didn't the client, little -- a sales that took Yes. clients like out lost done for that and one to really case, large bumps? was confident And Sure. have you it that one past you've kind left or like doesn't it any

We most result them, business but in the I've do cases, of the lose most doing client. those of in in an this who to lost with we're cases, clients, those past, not all agency of spoken the of and it's

up be may our want that's I number, number give why client That's is But really true, it. retention lose properly, a I past I high. is about educated the quite and don't think know. of audiences, The new XX. XXs. I works. the it's when careful there rate way it's so It and the to them that And how it know exact don't many in aren't when the client you way retention rate don't to we technology even be client always not strong. properly, works. a it's that's is used but when And very implemented about but

gaining fantastic it and Okay. again Great. see momentum for great guys back. results Well, me. you bouncing to and That's

Thank you.

with Thank we you. remarks. time, further appears have closing at questions. it this And no any Please proceed

thank you, joined Thank today's on call. interest us everyone like your would We company. our Sylvie. appreciate continued who in to I

conclude and disconnect indeed Ladies time, conference do this thank call sir. And lines. you, gentlemen, please your we Thank you Once for you does at that for this today. your ask again, attending.