Inuvo (INUV) 8 Aug 242024 Q2 Earnings call transcript

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

Second Quarter 2024 Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Natalya Rudman of Crescendo Communications. Please go ahead.

good and Joanna, you, afternoon, everyone. Thank to the Inuvo like thank Update everyone for today us joining Second for Call. I'd Quarter Shareholder XXXX Officer, Executive and your Today, Richard on Wally Financial presenters Chief be Ruiz, call. Inuvo's the will Officer, Chief Howe; to Securities would the that we XX-Q Exchange Commission this our plan We remind shareholders file to like our also and with evening.

the Before we statement. harbor begin, I'm company's going safe to review

and descriptions Reform relating the in statements this events, such, The and to actual may historical statements statements are forward-looking Securities XXXX. uncertainties, that statements not conference forward-looking results risks forward-looking facts differ of are to future subject are Act as all pursuant to materially. are and These call made of Litigation

enable, similar potential, should, all risks such cautioned results those estimate, anticipated which intend, When forward-looking by as this expressions a differ are may involve from cause used Inuvo, in expect, project at forward-looking will, time. could, call, Inc. this and that relate Inuvo statements anticipate, the to they Investors are to uncertainties, statement. believe, and actual words

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

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 directly an measures and historical references

Rich to call the Rich. go turn now I'll ahead, over Hao. CEO, Please that, With

joining thanks, Thank everyone, us you, in Natalya, today. and for

report year-over-year are that XXXX, delivered ended we the X.X% XX, growth. for pleased quarter June to We

grew we that, half course, half a XXXX, first where strong year, year-over-year coming second very the year-over-year. XX.X% with of off XX% is the growth. healthy also delivered of we've a And of For

month has And around The compares unaudited we XXXX. per the strong the of coming to quarter of average half first July. started also off million with revenue the that month $X.X throughout experienced in third for million $X.X roughly

the We in $X.X year. $X.X also as the prior year-over-year first a EBITDA improvement million million within experienced a compared a with to and improvement our quarter adjusted improvement for significant half the

wins Free cash strong XXXX last XXXX quarter in over year. material newer of details first our new will we've our more product has flow we existing had the occur We've A shortly. share across within be also believe And positive we've improved with clients, momentum new comparison some results half to Wally and about had our and product. industry had quarter. sales. within a and the and second second what financial to

spend some now is to like I'd discussing these What do items. time

industry. of cookies their new the with browser this a Chrome the Google, course, announced within quarter. begin position on Let's deprecation of past

cookies. Google years several For been replace now, an alternative to technology developing has

chorus with in the a tech of This include technology whose industry cookies the sandbox, Google, named a to been predominantly groups the and vested their other consumer survival. interest business advertising Apple, Safari had constituents the ad Unlike has [indiscernible] privacy with is data various industry, satisfy has browser, that governments,

the is consumers. to in of hands cookie of all Now efforts likely And have put making these appear what it's consequently, power satisfy decision their they to very the the decided about have difficult. to parties now been do the

the Internet is and which way is As browser means activity is a your your reminder, around the cookie accessed. consumer the data the through tracks

of clear activity, option chose we Consequently, they Apple believe history because to their consumers Apple no. tracking. similar eliminate it the that the consumers tracking overwhelmingly has XX% given Inuvo when say, has empower gave what app to them they Google When that data shown is been to of how way be a of the and to over they not specific plan to about is when consumers that But engaged regarding so. exactly news wanted opt are will out, consumer good do advocates privacy choice this believes use for their consumers.

decide ID. contain cookie The does course, is bid already for XX% why a Within behalf persistent on not their of need programmatic this not. reason clients. thing longer cookie advertising is a media because ID to majority competitors placement this media transaction of a And on Inuvo's of simple AI good the Inuvo our no or channels, transactions these of to whether

And starting using remaining number XX% Chrome were browsers, that we users. users. expect to fully informed drop is Google effectively The following Apple quickly Google that to consequently, Safari includes where blocked cookies the very choice number plans consumer its give everyone in XXXX. And

it's and While discovery AI a of technologies. audience we this have mentioning targeting said wide before, best outperformed that Inuvo's cookie-based worth again the margin, already by

the that required never have disappear. we cookie So

for the fear ultimately, catalyst change will have change. a of on However, single accelerate have a those given incumbents for adoption to clients whole and industry believe to and deprecation continues we clients is be it's obstacle demand obsolescence our Inuvo that biggest the

now shift to Let's and products clients.

and As we for the performance. discussed marketing's audience of the developed in targeting has AI and X the technologies, Inuvo one, measurement have past, discovery X other

largest facing is corporations amazed the we a because to be these we systems adapted line. biggest X the would many to based within are what the we privacy the measuring at effectiveness industry, the problems consumer just how Now Internet as continue inaccurate paradigm. these advertisers for these for knew developed expense of be their solutions brands Across of

influence frequently various in on business. while vendors, incentivize them their the their behavior of KPIs channels measuring inaccurately the We using for they're observed that using

targeting, the over been companies industry help the built has performance. with media has to case As technology time understand

around now predictive these modeling However, media earlier, mentioned is consequently, broken is also the that mechanism capabilities. This on why we our built consumers Internet. measurement and as technology so mix And tracking has that depended severely I are solutions.

our began uses our doing who contribution technology. measure the so or client from client sales number deploy. they technology, us largest the This business capability using a on the and resulting not to retail this that for channels We dozen mix with but technology, audience for have now media our of clients this optimize only capabilities different including now also marketing of

require existing consumer Unlike that conversions advertising a mapping of ID. methods one-to-one cookie clicks the to using

developed clients send Our these within the other predict alongside algorithms metrics. detect actual channels Using machine than each actual learning technology very our of to that channel. historical over the requires nothing allow business should time within the we've spend AI patterns money data, the can sophisticated amount

is Inuvo within product office including demand of see an increasing clients. in already our our services This pipeline, company corner technology. our is this alongside strategically for analytic product We financial audience a using positions number with the prospects itself that a that high-profile

because this audience see strategically expansion part technology being installed other in technology the predict and the to We can deployed. within adoption audience and catalyst for of relative once a our strategies contrast value our marketing product accurately also client being it the a of

While agency services business continues to growth, clients managed X up quarter. our drive new the signed and in we another

and been car technology manufacturers in up, holding mostly self-serve capabilities. That started companies now we've half and We major sign changed, the target. one had historically including world. clients owned the by agencies, self-serve our our a dozen scaling the a have largest company. have has not Larger also of

margins audiences, Inuvo but product clients for empower the other audiences also self-serve our gross in similar elegance or of model and to general and to profits one of ability to with assistance. any to back-to-school perhaps allows categories lies without quickly our the Olympics scale easily the of importantly, this hundreds say, ranging like, its It both certain us of our The XX% self-serve target flexibility more XX%. high from version audience AI most with

we about sales And drop services a at line the XX% agreement clients, again, to across enterprise in agencies cash allow bottom on third outperformed once master media the accelerated our average access one will So here quarter our largest buyers the which their in with of we expect in sign quarter. the will capabilities. world, retailers to Across KPIs scale. and the brand to by

We The label the for this is to their be numerous in brands to significantly the potential do is serving label and with those year million client now portfolio. $X place. in efforts private roughly this private has MSA one client client larger when have success of the forecasted resulted agreement. their this has already been of brands in This

those so high the our are a this the And continue to each by engine be vendors In here. of Platform for capital working us brands become vendor years roughly relationships generally to is taken company. growth approved limited using strong and for approved bar it's to total, competition X.X corporation.

quarters advertising scaling are quarter, into These the clients head and strongest grew typically group, our XX% as roughly what the in we year. is as a of

intent capabilities revenue One margin self-serve of line. the to consequently, product. key contribution a XX% bottom is that at And clients manner analogous platform our in also to our uses roughly our

we our generated these mentioned, As our QX, how the revenue bottom line. I $XXX,XXX hold this platform of over in relationships are it to And flows shareholders only want reinforce have high that in relationship to this margin XXXX. business. also took to for important

capital. Our require clients and brand agency working

positive generate working clients capital. platform Our

our fund is growth This had shareholders. can bored to which be needs. low missed historically risk, distinction by These capital often important receivables, working have against

capital. We million have use we press the release facility in $XX working also new credit will from noted that You a fund our quarter. to this closed facility

need we $X another million We certain an provide meet existing business. with did needs. financial agreement new our had facility will flexibility while we not constraints that growing place And this that institution, had our facility in the continue to anticipate

to Wally the performance. of Wally? detailed this financial turn like time, a call to assessment At our more I'd over for

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

of revenue increase and to As that's period $XX.X Inuvo compared X.X% year, a Rich year. million same the That's for mentioned, the this quarter for of the million prior of $XX.X reported year-over-year. second

XXXX. revenue signing revenue and due In clients clients, the agencies our by our scaling effort largest higher brands initiated revenue brands. XX% of platform directly. new came this agencies XX% we of the was The midsized came while to from in that platform driven are and and from XXXX, client Strategically, we from on focused quarter collaborative platform second quarter

XX% to from of compared year. from That's second XX% in quarter and the agencies last and platform clients brands

XXXX the continue second revenue We of year. to of the compared was last in for revenue million of to $X.X million of the quarter same $X.X year. expect for remainder period Cost mix this the

last on agency period revenue and publishers advertisements. to for developers margin compared the media a website to of The that gross reported profit payments $X our the primarily second is and on million made to $X.X payments extent, XX.X% last gross a of of for our the and composed lesser compared clients We to million we of Cost host quarter same was make brand behalf profit of revenue. million increase same $XX.X quarter year, year. XX% million a for $XX.X XXXX higher app

the We expect increase quarter. in to gross current margins

expenses last administrative of were for $XX million and $XX.X for same from primarily general Marketing due $XX.X quarter million to Operating year, totaled the XXXX the and lower down period compensation costs in quarter million from second Marketing of revenue last platform expenses increased second clients. $XX.X XXXX of the media with the to the same higher in higher quarter because million compared primarily year. associated expense. costs

by second of incentive commission million reduced XXXX second to Though million XXXX in to the quarter Compensation and the the compensation lower quarter workforce expense compared prior to second for the we've in expense. expense quarter. Compensation company the in grow, lower of $X.X primarily was our positions continues lower same $X was lower stock-based year. due XX quarter expense, of the

was Our year. XX months double for full nearest At XX is XX% quarter for associate quarter of the XX% and same per nearly part-time total associates, the over That's the to of $XXX,XXX. our XXXX our second the compared trailing employment, prior competitors. of both in that revenue

expect We are we plans year. we with on add this resources we resources our and not additional deliver have to can confident growth the that do

this approximately million General was were expense second quarter expense doubtful of year the lower compared General primarily and our and costs the million lower to in the improved. quarter, year's quarter to administrative year. expense an same as have $XX,XXX collections XXXX for $X.X this administrative was second due in to in of compared Net $X.X prior of the $XX,XXX in this quarter year last expense accounts financing year.

million improvement. $X.XX quarter net year. compared improved to period share quarter year-over-year last the the also in basic per million second $X.X a of That's year. last period million and It EBITDA loss improved or loss net loss share XXXX diluted $X.X for basic to of Adjusted XXXX. compared to or loss million same to The second $X.X improved same of diluted $XXX,XXX the a $X.XX a per or the $X.X in for that's of

of an $X.X That's improvement year-over-year. million

XX, of cash XXXX, cash had June equivalents we million. $X and of As

$XX working we no capital Rich At a debt In addition, credit. line million X-year in outstanding. as was of XX, closed mentioned, July, there June asset-based

structure million XXX,XXX X capital employee units Our out-of-the-money common is XXX restricted warrants. composed outstanding, stock shares outstanding million of and

the company the The reduced million $X.X by of last first half first has of to its half in XXXX cash compared year. burn

like expect of over improvement rest call continued I'd With the that, to Rich. We back throughout to the the year. turn

always stronger flow. Wally. And coming a EBITDA half Okay. we achieving Thanks, into our the year. improved roughly year-over-year revenue period, million XX%. the our $X.X for of of and We the half, Throughout second in half QX With first we had also year almost strong free growth part this are strong cash of adjusted momentum. entering have with July, is second

have traction products predictive modeling media started revenue, mix our to generate are and with we seeing higher-margin product. Our

extremely the currently agreement for client a are client the within our master as circulated scale is excited to which result potential retail about that of largest signature. being We services

Our And platform I the get with upside operator Joanna? scale that, over significant relationships relationships. those turn call continue to potential the to will remaining to within questions. with

Global comes First from Brian Kinstlinger Partners. Instructions] at Alliance [Operator question

This for Brian. is Kevin

already first consumer where to environment? moment quickly eliminating announcement products question with when Apple in a operate aha regarding and So the Google's that with a or event is cookieless an needs and tools there cookies an advertise to can fund cookies, more

that And Kevin, asking? of can please? it clarify answer just aspect I'll the you're you consumer that, then

general? in Just your customers

they to maybe? Is reacting are what this feeling that like news to out from about how the figure trying how appliances Google? you're So

Yes.

Yes. Okay.

that, what's that So happening. up is cookies to away. majority and a going a woke probably of answer say surprising. of I them, them course, And number after and announcement from the of all probably oh, There's guess, of was well, not not Google wouldn't who, certain that aren't them thought, I that but so that's

that want And lot a of so people to happen.

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were That's move and the to the related thing first themselves. that this. pretty ask going prompt probably one informed And clear were should a consumer second thing to consumer is, they to they

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The pipeline looks healthy.

we a So over our this bringing don't of last sales don't President was a specifically quite the know, speak former notably, our Chief who say to time, Officer it the but organization bit successful I various always of called of I pipelines, who for very know and upscaling spent size can't people Kitchen. the I agency year, technology-oriented Executive Media

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don't again. just time that change people And have fight then, to that we course, of natural inertia the there's time like and

that be to tend cycles So means that our long. sales

I It clients, been the ever it faster get and another think more in can I at agreement the X get mentioned of months that, revenue, we it for was which signed. with like to us we would We've we a get services years place for to a lot them. started before in at a where generating a year X.X took least way. retail by like large us

once you're you get locked like and in things that, scale But in can quickly.

is quarter? are of you the as third -- any on election is already have fourth quarter? seasonally thoughts you Do any a of the the presidential have on that to look which I impact also question the election And Last you strong. Great. seeing benefits in quarter, the

on have a in As our But right a number few that least not company. sort business, we the -- very of years. a going after do few campaigns of now have view evolution of a a not the at done we company, over

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tried from stay we've it, Kevin. to So away

So impact business. should on a the be no. election the X is answer There our

question Ladenburg. Jon next from comes The from Hickman

question, not. is website already cookies every visit maybe if but Rich, a I every naive want -- ask me this I almost or

do to me going So what's than cookies? ask different now I Google that's want if

questions them. a One really from part was asked as it behind is The to GDPR have twofold you're the the Yes. reason of website getting required do issues.

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is an so for And to nobody Hickman. ID going get Jon

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uninformed And so the consumer they word use did choice.

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have another Then I question. Okay.

that XX% cookie So performance your I KPI mentioned you the was option. better than your guess, like on

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And decline they performance to a result, change. then to have starts as And precipitously.

that -- at comes comments what for Will Okay. my mean your gross you about Wally. said? margin, margin I'm looking is gross My next you XX%. gross of Is I a question margin

That's correct. XX%. Yes.

to the future? said get then was And going better going in you it

mix the we margin the of customers that is dependent some -- have. It's upon of Yes. Yes.

lot was it a customers. And it mix. had on QX. of In bit little in is it based current based increasing that the of anticipated a start again And quarter, lower than to the mix we on fact, we expect

not to better, materially get going It's John. though,

side you. we're an as tell a extremely margin. will gross already I which note, Just at Wally mean, high right,

there, So on thing. this or we're talking about right, a point here

Okay.

marketing you gross if revenues. the cost Can buy or with forward? be what number can quarter. might about margin line That expenses XX.X% Wally, So the this of pontificate was you that number going

Sure.

-- XX%. Although it Yes, will it be minus our expectation or was plus will it about so X.X%. be in ballpark, that

Okay.

For the rest of the year?

For year, in the Well, the quarter. certainly rest the possibly. of current

Okay.

then any the about of to run that So guys last $XXX Do talked getting quarter? about this hitting you have kind close quarter, getting this year. potential revenue or that million comments rate you of

I gave for so the we million. were going gave July think this never themselves. make guidance to We could we do decision $XXX number people that

what where chasing return the sorry, we're us for think -- positive, we've a I said number. flow why is cash revenue which consistently, $XX we quarter John, that free a is number month is million

of we did course, But $XX last year. million

So not significant is $XXX only leap. in million

So first number with all in year-over-year pretty trends. we're entering obviously given based a on the and up since haven't that guidance, XX% can we second say July half we in half we're good -- historical the

prior cash flow third positive quarter free were We the year. the of in

Okay. again going we're shot good be to a there's So

question Group. Next from Maxim at Jack comes Kodera

just cookies important the in for wait works. just get the a for and Rich, ask slowly the see or customer in they foot how clients is to a Is basically more Jack way. for Jack it different to to it about Vander Aarde. is is in third could so well maybe If new third-party erode strategy with time the friction this door ask the your Codera I it can about

getting do How -- it's color improve friction, helpful. cycle any be improve that rid possible of sales to you the think would there

spending is way and I been you least are for think to said, is out there. the latter, it's Jack, -- some money us, which brand try it's marketing why our the playing get on out things at we've

of understanding a where seen we've obviously, better You this work, get work promotional try the lot the LinkedIn, in the literally probably they on biggest problem us of to been to world, because don't. CMOs doing companies have

level shouldn't ignorance just them, normalized say amongst of let's itself. all the Well, of a certain I there's say industry

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That's helpful. may. then And one I more, if

Just on demand. speaking broader of kind market

do have Given can you more agencies on versus just expectation or clarify for of platform new in your expect comments brands to product remainder the shift and in of growth you year see clients, longer clients terms where the general, you any for and mix term?

have both opportunities. upside believe We

grow, that's both one for both the to agencies brands not platforms point it's and good trade-off. that And than if We So that things made mentioning of call But us. on other will want grow. a and I just of write-out a fact we the and growth this want

are platforms to of size, another that is think capital. a leagues. get I always to company their fund done consequence just there's quite It's for don't time trying a working of sub-XXX size trying being our our to is strategic note why into we've some companies for the reason big important of

to And the it's the of borrow and positive key. often the mix, more missed which fund can capital, by our our working the something capital actually produced working AI the that is negative is platform coming from which, intent component that's against again, we differentiated have shareholders we relations

to in very very, to mind, building thing thing keep important mind important from an that's a keep a a in So business perspective.

up, XX down of mix XX-XX when see in think, The the optimize it's that, XX would rise. we a basis, which right net kind now, second questions Hickman believe does over happen, we John mix increase. was that is, one that maybe bringing And will We margin of to is will right? drop answer will I question the your time, think on an meaning

So quite go the net the number can that about mix, when the margins XX% net of was talking increase significantly up margin we will that XX/XX [indiscernible] actually.

behind reasons the what are doing. kind we're those of So

There are turn the back closing no Richard to I Howe comments. questions. for further will call

Joanna. always, your you, of and we the on everyone, Thank who course, joined appreciate you, our Okay. company. as interest today, in continued thank us And call

your Ladies lines. and disconnect and We that today. this concludes conference for gentlemen, please we thank for ask you you participating, your