Q4 2023 Inuvo Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the <unk>, Inc, fourth quarter and you're entering into any three conference call. At this time, all I'm, saying listen only mode.
Operator: Good day, ladies and gentlemen, and welcome to the Inuvo Inc. fourth quarter and year-end 2023 conference call. At this time, all answering is anonymous. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
Following the presentation, we will conduct a question and answer session.
If at any time during these calls you requirement assistance. Please press star zero for the operator. This call is being recorded I'm sorry as at February 29th Street train four.
Operator: This call is being recorded on Thursday, February 29, 2024. I would now like to turn the conference over to Alexandra Schultz. Please go ahead.
Oh, and I like to turn the conference or to Alexandra Shilton. Please go ahead.
Thank you operator and good afternoon.
Alexandra Schultz: Thank you, Operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo fourth quarter and full year 2023 shareholder update call. Today, Inuvo's Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10k with the Securities and Exchange Commission this afternoon. Before we begin, I'm going to review the company's Safe Harbor Statement. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events. And as such, all forward-looking statements are made pertinent to the Securities Litigation Reform Act of 1995.
Like to thank everyone for joining us today for <unk> fourth quarter and full year 2023 shareholder update call.
In diverse Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wally Ruiz will be your presenters on the call.
We would also like to remind our shareholders that we plan to file our 10-K with the Securities and Exchange Commission. This afternoon.
Before we begin I'm going to review the Companys Safe Harbor statements. The statements in this conference call that are not descriptions of historical facts are forward looking statements relating to future events and as such all forward looking statements are made pursuant to the Securities Litigation Reform Act of 90 95.
These forward looking statements are subject to risks and uncertainties and actual results may differ materially.
Alexandra Schultz: These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Inuvo Inc. are such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov.
This call the words anticipate could enable estimate intend expect believe potential will should project and similar expressions as they relate to a new boat Inc. Are as such a forward looking statement.
Masters are cautioned that all forward looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by newbuild at this time.
In addition, other risks are more fully described in <unk> public filings with the U S Securities and Exchange Commission, which can be reviewed at www Dot SEC Gov.
Alexandra Schultz: The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. With that, I will now turn the call over to CEO Richard Howe. Please go ahead.
The company makes no commitment to disclose any revisions to forward looking statements or any facts events or circumstances. After the date hereof that bear upon forward looking statements.
In addition, today's discussion will include references to non-GAAP measures. The company believes that such information provides an additional additional measurement and consistent historical comparison of its performance a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website.
With that I will now turn the call over to CEO Richard Howe. Please go ahead.
Richard K. Howe: Thank you, Ali. And thanks, everyone, for joining us today. We are pleased to report that for the quarter ended December 31, 2023, we delivered a strong 21% year over year quarterly growth and $20.8 million in revenue. For the year, while revenue was down 2% overall, it was largely a consequence of a weaker-than-expected first quarter. The real story, however, was how well the company performed in the second half of the year, where revenue was up 32% year over year. And, of course, in Q3, the company recorded its highest quarterly revenue ever at $24.6 million. A run rate at which we have stated many times in the past that, if maintained, we would expect to get us to free cash flow positive. It may be interesting to also note that since the COVID low point in the second quarter of 2020, we've had a 7.5% compounded quarterly growth rate through the end of the fourth quarter of 2023. This trajectory and several positive client, industry, and product announcements and advancements gives us confidence for the 2024 year. Wally will share more details about our 2023 financial results shortly. What I'd like to do is
Thank you Allie and thanks, everyone for joining US today, we are pleased to report that for the quarter ended December 31, 2023, we delivered a strong 21% year over year quarterly growth with $28 million revenue.
For the year, while revenue was down 2% overall it was largely a consequence of a weaker than expected first quarter.
The real story, however, with how well the company performed in the second half of the year, where revenue was up 32% year over year.
And of course in Q3, the company recorded its highest quarterly revenue ever at $24 6 million.
Our run rate at which we have stated many times in the past that if maintained we would expect to get us to free cash flow positive.
It may be interesting to also note that since the COVID-19 low points in the second quarter of 2020.
We've had a seven 5% compounded quarterly growth rate through the end of the fourth quarter of 2023.
This trajectory and several positive client industry and product announcements and advancements gives us confidence for the 2024 years.
While we will share more details about our 2023 financial results shortly.
I'd like to do is spend my time, bringing you up to speed on our industry, our products and our clients.
Richard K. Howe: I will spend my time bringing you up to speed on our industry, our products, and our clients. Let's begin with our industry. We believe the plumbing of the internet is literally being reimagined before our eyes.
Let's begin with our industry.
We believe the plumbing of the Internet is literally being re imagined before all this change.
Richard K. Howe: This change is accelerating, and it's being driven both by legislative and technological pressure resulting from the use of an individual's identity and data for ad targeting. The reason this is monumental is because the very foundation of digital advertising spend worldwide, that funds most activity on the internet, more than $600 billion annually, is having to be redesigned because of this change.
Is accelerating.
Being driven both by legislative and technological pressure, resulting from the use of an individual's identity and data for ad targeting.
The reason this is monumental is because the very foundation of digital advertising spend worldwide.
Funds most activity on the Internet.
Over $600 billion annually is having to be redesigned because of this change.
I would like to put this in perspective.
Apple constitutes roughly 50% of all mobile devices in the United States.
Richard K. Howe: Apple constitutes roughly 50% of all mobile devices in the United States. And because Apple has blocked user tracking, those devices, for the most part, are going untargeted across the open web. Apple has been the single biggest catalyst behind this reshaping of the internet in favor of ad targeting systems that do not use the consumer's identity and data. There is no turning back for iOS devices.
And because Apple has blocked user tracking those devices for the most part.
On targeted across the open web.
Apple has been the single biggest catalyst behind this reshaping of the internet in favor of AD targeting systems that do not use the consumer's identity and data.
There is no turning back for iOS devices, and if anything Apple continues to implement various browser technologies, specifically designed to prevent user tracking.
Richard K. Howe: And, if anything, Apple continues to implement various browser technologies specifically designed to prevent user tracking. The challenge is that there are hundreds of companies supporting this industry whose businesses and technology models are dependent on these identity-based methods. Inuvo's technology does not depend on these approaches, and consequently, we can identify suitable audiences, target those audiences, and predictably measure the effectiveness of those audiences across iOS or any other device. Generally, the incumbents are lobbying hard to keep the existing approach alive through engineering that uses less effective workarounds that were not originally designed to track people.
The challenge.
Is that there are hundreds of companies supporting this industry whose businesses.
And technology models are dependent on these identity based method.
A new <unk> technology does not depend on these approaches and consequently, we can identify.
Suitable audiences.
Target those audiences and predictably measure the effectiveness of those audiences across iOS or any other device.
Generally the incumbents are lobbying hard to keep the existing approach alive through engineering that uses less effective workarounds that were not originally designed to track people.
A host of other companies are scrambling to go back to building and using contextually based technologies.
Richard K. Howe: A host of other companies are scrambling to go back to building and using contextually based technologies that are not dependent on using a person's identity. Neither approach is likely to produce acceptable results for advertisers. Google, which represents 50% of the overall U.S. browser market share, finally jumped into the mix this year and has begun phasing out user tracking via the third-party cookie, which they suggest they will complete by December of this year. Inuvo was built for this moment in time, starting nearly seven years ago when we began making investments in this technology. We are the only company I am aware of that has implemented proprietary large-language generative artificial intelligence in a manner that solves the identity targeting problem. And in head-to-head testing, our solution has outperformed other technologies we've come up against competitively. I cannot emphasize enough how this technology is revolutionary and not derivative of some other company's technology and or products. It is, in a literal sense, the next evolution in open web ad targeting. In the same way, OpenAI, Google, and Microsoft have introduced their large language-based technologies as the next evolution in search.
We're not dependent on using a person's identity.
Neither approach is likely to produce acceptable results for advertisers.
Google.
Which represents 50% of the overall U S brower browser market share finally jumped into the mix this year.
And has begun phasing out user tracking via the third party cookie.
Which they suggest they will complete by December of this year.
<unk> was built for this moment in time.
Starting nearly seven years ago, when we began making investments in this technology.
We are the only company I am aware of that has implemented proprietary.
Large language generative artificial intelligence in a manner that salt.
All the identity targeting problem.
And in head to head testing our solution has outperformed other technologies, we've come up against competitively.
I cannot emphasize enough how this technology is revolutionary and.
And not derivative of some other companies technology in our products. It is in a literal sense. The next evolution in open web AD targeting in the same way open AI, Google and Microsoft have introduced their large language based technologies as the next evolution.
In search.
We recently signed up what could be a potentially large clients specifically because our product does not rely on identity and because of the early performance results and insights we delivered.
Richard K. Howe: We recently signed up what could be a potentially large client specifically because our product does not rely on identity and because of the early performance results and insights we delivered. That client is now starting to scale media spend with Inuvo. We beat out two other vendors to get that, having gone through a vetting process in 2023. As the advertising industry goes through this transformation, we expect to experience increased demand for our products and services over the next few years as advertisers begin to better understand that this new consumer privacy paradigm is here to stay, and they start to experience the performance declines associated with this transformation. Inuvo saw the importance of this large language model AI branch of data science many years ago when we started developing for a future that has well now arrived, a decision that has provided us with a significant Competitive Advantage, a moat of patents, and First Mover Advantage.
That client is now starting to scale media spend with a new boat.
We beat out to other vendors to get that business, having gone through a vetting process in 2023.
As the advertising industry goes through this transformation.
We expect to experience increased demand for our products and services over the next few years as advertisers begin to better understand that this new consumer privacy paradigm is here to stay.
And they start to experience the performance declines associated with this transformation.
We never saw the importance of this large language model AI branch of data science many years ago. When we started developing for a future that has well now arrived.
A decision that has provided us a significant competitive advantage a moat of patents and first mover advantage for the advertising use case or AI was designed for.
Richard K. Howe: For the advertising use case, our AI was designed to We've received more brand exposure in 2023 than at any time in our history. We've had over 35 media citations since the beginning of 2023. Let's shift now to products and clients. As we have discussed previously, as a company, we have been focused on using our various technologies and assets within a mostly managed service business. This is true across the entire business, where we now count among our clients some of the world's largest technology, retail, and automotive companies.
We've received more brand exposure in 2023 than at anytime in our history.
We've had over 35 media citations since the beginning of 2023.
Let's shift now to products and clients.
As we have discussed previously as a company we have been focused on using our various technologies that assets within and mostly managed service business model.
This is true across the entire business, where we now count among our clients.
One of the world's largest technology retail and auto companies.
We have sold our products and services to agencies brands and platform clients for whom we have placed over 11 billion ads in 2023.
Richard K. Howe: We have sold our products and services to agencies, brands, and platform clients for whom we placed over 11 billion ads in 2023. Going forward, we plan to disclose revenue across two client categories, agencies and brands, and platforms. We've defined platforms as large consolidators of advertising demand, in effect, another access point to media. Platform relationships require less investment in sales and support while providing broad access to advertisers.
Going forward, we plan to disclose revenue across two client categories agencies and brands and platforms.
We defined platforms as large consolidators of advertising demand in effect another access point to media budgets.
Platform relationships require less investment in sales and support while providing broad access to advertiser budget.
In 2023, the revenue split was 21% agencies and brands at 79% platforms.
Richard K. Howe: In 2023, the revenue split was 21% agencies and brands and 79% platforms. We had one new platform relationship and 56 new brand and agency relationships in 2023. These new clients crossed over many industries. Currently, our largest agency and brand relationships are within auto and retail.
We had one new platform relationship and 56, new brand and agency relationships in 2023.
These new clients crossover many industries.
Currently our largest agency and brand relationships are within auto and retail.
We ran over 280 individual campaigns for these agencies and brands and thousands of campaigns for our platform clients in 2023.
Richard K. Howe: We ran over 280 individual campaigns for these agencies and brands and thousands of campaigns for our platform clients in 2023. As we head into 2024, we are now able to deliver, scale, and support the future rich self-service version of the Intent PAI, having now served numerous clients through its beta implementation phase. The best way to understand this solution is to think about it as an artificial intelligence as a service product that can be frictionlessly accessed across several of the most popular advertising campaigns. For the open web, these are generally referred to as demand-side platforms.
As we head into 2024.
We are now able to deliver scale and support this feature rich self service version of the intent.
Having now serve numerous clients through its beta implementation phases.
The best way to understand this solution is to think about it as an artificial intelligence as a service product that can be frictionlessly accessed across several of the most popular advertising campaign system.
But the open web these are generally referred to as demand side platforms.
This is a higher margin product for a newbuild.
Richard K. Howe: This is a higher-margin product for Inuvo, so as we scale this over the next few years, it can significantly contribute to the bottom line. We are in the process of hiring additional salespeople dedicated to these self-service oriented buyers. As mentioned earlier, we also had a new platform client at the end of 2023. This integration is already delivering revenue at higher margins in this new opportunity. We leveraged existing assets from within both Bonfire and Intentions in a new and competitively differentiated way. The client in question is a large internet company.
So as we scale. This over the next few years it can significantly contribute to the bottom line.
We are in the process of hiring additional salespeople dedicated to these self service oriented buyers.
As mentioned earlier.
We also had a new platform clients at the end of 2023.
This integration is already delivering revenue at higher margins.
And this new opportunity.
We leveraged existing assets from within both bonfire and intent Keith.
New and competitively differentiated way.
The client in question as a large internet company.
The first four months have been encouraging already delivering roughly $60000 per month in revenue with only marginal additional cost.
Richard K. Howe: The first four months have been encouraging, already delivering roughly $60,000 per month in revenue with only marginal additional costs, along with the AI as a service product I described previously. This forms part of our overall 2024 bottom line strategy. Our largest client, itself a platform, is scaling because of a strategic initiative that it brought to market in 2023. To meet this demand, we have been expanding digital properties, campaign automation, and predictive technologies, along with our advertising fraud detection capabilities. We see strong potential upside in this initiative over the next few years and, accordingly, see this as an important part of our top line strategy. One of the most significant consequences of no longer being able to track consumers is the inability to measure directly when those consumers change.
Along with the AI as a service product I described previously this forms part of our overall 2020 for bottom line improvement strategies.
Our largest client itself a platform is scaling.
Of a strategic initiative that client brought to market in 2023.
To meet this demand we have been expanding digital properties campaign automation and predictive technologies, along with our advertising fraud detection capabilities.
We see strong potential upside in this initiative over the next few years and accordingly.
See this is an important part of our top line strategy.
One of the most significant consequences of no longer being able to attract consumers is the inability to measure directly when those consumers convert.
Richard K. Howe: This creates a serious challenge for Chief Marketing Officers, who will no longer be able to attribute the return on their media investments across the plethora of campaigns and channels they deploy. In much the same way, Inuvo saw the audience selection and targeting challenge. We also saw this.
This creates a serious challenge for chief marketing officers.
We therefore will no longer be able to attribute the return on their media investments across the plethora of campaigns and channels they deploy.
In much the same way and novo saw the audience selection and targeting challenge.
We also saw this one.
This is why in 2023, we incorporated into our intent key programmatic AI solution.
Richard K. Howe: This is why in 2023, we incorporated into our intent keep programmatic AI solution, a just-in-time analytical and reporting capability that predicts across campaigns and channels the optimal spend level, giving these CMOs the dashboard they need to continuously tune their marketing investment. This was a critical feature in the larger client win I described earlier. We put out a release this week discussing how this very capability can also be used to predict, relative to other advertising tactics, the optimal investment in Netflix advertising inventory. Traditional deterministic media measurement technologies will no longer work in that channel.
Just in time analytical and reporting capability that predicts a cross campaigns and channels.
The optimal spend levels, giving these CMO the dashboard they need to continuously tune their marketing investments.
This was a critical feature in a larger client win I described earlier.
We put out a release this week discussing how this very capability can also be used to predict relative to other advertising tactics the optimal investment in Netflix advertising inventory.
Traditional deterministic media measurement technologies will no longer work in that channel.
In 2023, we were the first company ever to provide online access to our large language model generative artificial intelligence.
Richard K. Howe: In 2023, we were the first company ever to provide online access to a large language model generative artificial intelligence that is instantly capable of creating audiences based on a contextual description of those audiences. We made this available on Inuvo.com forward slash portal. I cannot stress this enough; every piece of audience information presented at this portal is generated by AI. This has never been done before.
Instantly capable of creating audiences based on our contextual description of those audiences.
We made this available at <unk> dot com forward slash portal.
I cannot stress this enough every piece of audience information presented at this portal is generated by AI.
This has never been done before.
The commercial version of this product allows our clients to generate action and measure audiences based on a collection of contextual information and imagery that is representative of their products services or brands with a virtually on limited audience curation flexibility.
Richard K. Howe: The commercial version of this product allows our clients to generate action and measure audiences based on a collection of contextual information and imagery that is representative of their product, services, or brand with virtually unlimited audience curation flexibility. This is the first of its kind capability within advertising, made possible only because of Inuvo's proprietary patented AI.
This is the first of its kind capability within advertising possible only because of our newest proprietary patented AI.
Now as it relates to the continuing investments in our AI, we are not resting on our laurels.
Richard K. Howe: Now, as it relates to the continuing investment in our AI, we are not resting on our laurels. Rather, we are continuing to expand our AI training in ways that will make it increasingly harder for competitors to catch up. Our latest research involves generating audiences specific to events about to occur or that are currently occurring across the country. You'd have to be living under a rock to not have heard about Taylor Swift and Travis Kelce.
Rather we are continuing to expand our AI training and ways that will make it increasingly harder for competitors to catch up.
Our latest research involves generating audience is specific to events about to occur and or are currently occurring across the country.
You would have to be living under a rock did not have heard about Taylor Swift and Travis Kelsey.
If you are a brand that Kelsey endorses.
Richard K. Howe: If you're a brand that Kelsey endorses, you have both risk and reward associated with this kind of global attention. Imagine if you had AI technology that already knows you are associated with these two celebrities and could immediately and anonymously generate and target an audience of those people most loyal to this ongoing story.
Both the risk and reward associated with this kind of global attention.
Imagine if you had an AI technology that already knows.
Associated with these two celebrities and could immediately and anonymously generate and target an audience of those people most loyal to this ongoing story.
That would be just in time event, driven marketing in a manner that has never been possible.
Wallace D. Ruiz: That would be just-in-time event-driven marketing in a manner that has never been possible. At this time, I would like to now turn the call over to Wally for a more detailed assessment of our financial performance during the quarter and year. Thank you, Rich. Good afternoon, everyone.
At this time I would like to now turn the call over to Wally for a more detailed assessment of our financial performance within the quarter and year.
Thank you rich.
Afternoon, everyone I will recap the financial results of our fourth quarter and full year for <unk>.
Wallace D. Ruiz: I'll recap the financial results of our fourth quarter and full year for 2023. As Rich mentioned, Inuvo reported revenue of $20.8 million for the fourth quarter of this year, and that's compared to $17.3 million for the same period last year or the prior year, a 21% increase. As Rich pointed out in his remarks, going forward, we'll be disclosing revenue in two categories: Platform Customers and Agency of Brand Customers.
2023.
As rich mentioned <unk> reported revenue of $28 million for the fourth quarter of this year 2023, and that's compared to $17 3 million for the same period last year or the prior year.
The 21% increase.
As rich pointed out in his remarks going forward, we'll be disclosing revenue in two categories.
Platform customers and agency of brand customers we.
Wallace D. Ruiz: We believe this better reflects our go-to-market activity. We have 56 new agency and brand customers and one new platform customer in 2023. The higher revenue is due to the growth of our largest platform customer. We reported $73.9 million.
We believe this better reflects our go to market activity. We had 56, new agency of brand customers and one new platform customer in 2023.
The higher revenue was due to scaling of our largest platform customer.
We reported $73 $9 million.
Wallace D. Ruiz: Revenue for the full year of 2023, a slight decrease as compared to $75.6 million in 2022. The decrease is due to a slower than expected start in 2023 in the first half of the year. 79% of the full year of 2023 revenue was from platform customers and 21% from agency and brand customers. For the year that ended on December 31, 2022, 52% of the revenue was from platforms and 48% from agencies and brands.
Revenue for the full year of 2023, a slight decrease as compared to $75 6 million in 2022. The decrease is due to the slower than expected start in 2023, and the first half of the year.
79% of the full year of 2023 revenue was from platform customers and 21% from agency of brand customers.
For the year that ended in December 31, 2022 50.
52% of the revenue is from platforms and 48% from agencies and brands.
Wallace D. Ruiz: The change in mix was the result of focusing on and scaling a program brought to market in 2023 by our largest customer and, to a lesser extent, the loss of an agency client late in 2022. Cost of revenue was $2.6 million for the fourth quarter of 2023, compared to $5.5 million for the same period last year. Cost of revenue was $10.5 million for the full year ended December 31, 2023, compared to $30.2 million for last year. The decrease in the cost of revenue for the three months and the full year that ended December 31st, 2023, as compared to the prior period last year, was due to the change in revenue. The Cost of Revenue is primarily composed of payments to advertising exchanges that provide access to digital inventory where we serve advertisers.
The change in mix was the result of focusing on scaling our program brought to market in 2023 by our largest customer and to a lesser extent the loss of an agency client.
In 2022.
Cost of revenue was $2 6 million for the fourth quarter of 2023 compared to $5 5 million for the same period last year.
Cost of revenue was $10 5 million for the full year ended December 31, 2023, compared to $30 2 million for last year.
The decrease in the cost of revenue for the three months and the full year.
That ended December 31, 2023.
Compared to the prior periods last year was due to the change in revenue mix cost of revenue was primarily composed of payments to advertising exchanges that provide access to digital inventory, where we serve advertisements.
Gross profit improved in the fourth quarter of 2023, where it was $18 $2 million.
Wallace D. Ruiz: Gross profit improved in the fourth quarter of 2023, where it was $18.2 million compared to $11.7 million for the same period last year. The gross profit margin for the fourth quarter of 2023 increased to 87.3% compared to 68% last year. Gross profit for the full year ended December 31st, 2023, increased to $63.4 million compared to $45.4 million last year. The gross profit margin for the full year that ended December 31st, 2023 was 85.8% compared to 60% last year. Again, as I mentioned, the higher gross margin in the current year as compared to the prior year is due primarily to the change in revenue, where a greater percentage of the revenue this year was from platforms, which typically have a higher gross margin. Operating expenses for the fourth year of 2023 totaled $20.6 million, compared to $15.7 million for the same period last year. Operating expenses for the full year ended December 31, 2023. The total $73.8 million compared to $58 million.
Compared to <unk> 11, $7 billion for the same period last year. The gross profit margin for the fourth quarter of 2023 increased to 87, 3% compared to 68% last year.
Gross profit for the full year ended December 31 2023.
Increased to $63 4 million compared to $45 $4 million last year. The gross profit margin for the full year that ended December 31, 2023 was 85, 8% compared to 60% last year.
Again as as I mentioned, the higher gross margin in the current year as compared to the prior year is due primarily to the change in revenue mix, where a greater percentage of the revenue this year with some platforms, which typically has a higher gross margin.
Operating expenses for the fourth year of 2023 totaled $20 6 million.
Compared to $15 $7 million for the same period last year.
Operating expenses for the full year ended December 31, 2023 totaled $73 8 million compared to $58 million in.
Wallace D. Ruiz: In 2023, we invested in our go-to-market team and marketing programs designed to increase our market exposure. Marketing costs were $15.2 million in the fourth quarter of 2023 compared to $10.1 million in the same quarter last year. Marketing costs increased primarily as a result of traffic acquisition or media costs associated with campaigns; marketing costs were $52 million in the full year 2023 compared to $36.9 million last year. Compensation expense for the fourth quarter of 2023 was $3.6 million compared to $2.9 million in the same quarter of the prior year.
In 2023, we invested in our go to market team and marketing programs designed to increase our market exposure.
Marketing costs were $15 2 million in the fourth quarter of 2023 compared to $10 1 million in the same quarter last year.
Marketing costs increased primarily primarily as a result of traffic acquisition or media costs associated with campaigns.
Marketing costs.
$52 million in the full year 2023, compared to $36 $9 million last year.
Compensation expense for the fourth quarter of 2023 was $3 6 million.
Compared to $2 9 million in the same quarter of the prior year.
Wallace D. Ruiz: Compensation expense was higher in 2023 due primarily to higher salary, commissions, and incentive expenses. For the full year of 2023, compensation expense was $13.8 million compared to $12.5 million in 2022. Our total employment, both full and part-time, was 93 at December 31, 2023, compared to 86 at the same time in 2022. In 2023, we added to our go-to-market sales and support team and to their commission and incentive program. General and administrative expense for the fourth quarter of 2023 was $1.8 million compared to $2.7 million in the prior year, a decrease of 32%. General administrative costs were lower in 2023 compared to the same quarter in 2022, primarily due to a decrease in the reserve for doubtful accounts and professional fees.
Compensation expense was higher in 2023, due primarily to higher salary commissions and incentive expenses.
For the full year of 2023 compensation expense was $13 8 million compared to $12 5 million in 2022.
Total employment, both full and part time was 93.
December 31, 2023 compared to 86 at the same time in 2022.
Okay.
In 2023, we added to our go to market sales and support team and to their commission and incentive programs.
General and administrative expense for the fourth quarter of 2023 was $1 8 million compared to $2 $7 billion in the prior year.
Decrease of 32%.
General and administrative costs were lower in 2023.
<unk> to the same quarter in 2022, primarily due to a decrease in the reserve for doubtful accounts and professional fees.
General and administrative expense was $8 million for the full year 2023, compared to $8 6 million.
Wallace D. Ruiz: General and administrative expense was $8 million for the full year 2023 compared to $8.6 million in the prior year, a decrease of 6.7% on a full year basis. Net financing income was approximately $8,000 in the fourth quarter of 2023, compared to an expense of approximately $10,000 in the same quarter last year. Net financing expense was approximately $30,000 for the full year 2023, compared to $21,000 last year.
In the prior year, a decrease of six 7% on a full year basis.
Net financing income was approximately $8000 in the fourth quarter of 2023.
Paired to an expense of approximately $10000 in the same quarter last year net financing expense was approximately $30000 for the full year 2023 compared to $21000 last year.
Wallace D. Ruiz: Turning to other income and expense, we reported an income of approximately $15,000 for the full year of 2023 compared to an expense of approximately $436,000 for last year in 2022. Last year's expense was associated with net realized and unrealized losses on trading security. The net loss improved in the fourth quarter of 2023, where it was $2.4 million or two cents per basic and diluted share, as compared to a net loss of $4 million or three cents per basic and diluted share for the same quarter last year. The net loss for the full year also improved at $10.4 million or $0.08 per basic share for the year ended December 31, 2023, compared to a $13.1 million net loss or $0.11 per share Adjusted EBITDA loss improved in the fourth quarter of 2023. It was $1.2 million, and that compared to a loss of $1.8 million in the fourth quarter of last year. His adjusted EBITDA loss for the full year ended December 31, 2023 was $5.3 million compared to a loss of $5 million last year.
Turning to other income and expense, we reported an income of approximately $15000 for the full year of 2023 compared to an expense of approximately $436000.
For last year in 2022.
Last year's expense was associated with net realized and unrealized losses on trading securities.
The net loss improved in the fourth quarter of 2023.
$2 4 million or <unk> <unk> per basic and diluted share.
Compared to a net loss of $4 million or <unk> <unk> per basic and diluted share for the same quarter last year.
Net loss for the full year also improved at $10 $4 million or <unk> <unk> per basic share.
For the year ended December 31, 2023 compared to <unk>.
$13 1 million net loss or <unk> 11 per share in the prior year.
Adjusted EBITDA.
Loss improved in the fourth quarter of 2023.
Was $1 2 million and that compared to a loss of $1 $8 million in the fourth quarter of last year.
The adjusted EBITDA loss for the full year ended December 31, 2023 was $5 3 million.
Compared to a loss of $5 million last year.
Wallace D. Ruiz: The company had a positive free cash flow from May through September of 2023, and for the full year, the cash flow used had improved by $3 million over the prior year, 2022. On December 31, 2023, we had cash and cash equivalents of $4.4 million and a net working capital of $211,000. In addition, we maintain a $5 million working capital line of credit, which had no outstanding balance.
The company had a positive free cash flow from May through September of 2023.
For the full year free cash flow used.
Had improved by $3 million over the prior year 2022.
On December 31, 2023, we had cash and cash equivalents of $4 4 million and a net working capital of $211000. In addition, we maintain a $5 million working capital line of credit.
Which had no outstanding balance.
We have a simple capital structure with 138 million common common shares outstanding 7 million employee restricted restricted stock units outstanding.
Richard K. Howe: We have a simple capital structure with 138 million common shares outstanding, 7 million employee restricted restricted stock units outstanding, and 108,000 out-of-the-money warrants outstanding. With that, I'll turn the call back over to Rich for closing remarks. Thanks, Wally.
And 108000 out of the money warrants outstanding.
With that I'll turn the call back over to rich for closing remarks.
Thanks Wally.
We had a strong year over year fourth quarter growth of 21% and a second half year over year growth of 32%, which.
Richard K. Howe: We had strong year-over-year fourth-quarter growth of 21% and second half year-over-year growth of 32%, which provides confidence that as we head into 2024, we have the momentum required to continue. As we have mentioned in previous quarters, Inuvo's financial metrics begin to change at a threshold of roughly $100 million in annual revenue. At this level, gross margins are capable of absorbing much of our fixed costs and therefore generating positive cash.
Provides confidence.
As we head into 2024, we have the momentum required to continue growing.
As we have mentioned in previous quarters, and numerous financial metrics begin to change at a threshold of roughly a $100 million in annual revenue.
At this level gross margins are capable of absorbing much of our fixed cost.
And therefore generate positive cash flow.
An example of this.
Operator: An example of this occurred in the third quarter of 2023, where we reported revenue of $24.6 million, and we did have positive free cash flow in that quarter. We believe we have a plan to reach this threshold in 2024 and can be cash flow positive. I will now turn the call over to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. Should you wish to decline from the polling process, please press star followed by the number. If you are using a speakerphone, please lift the handset before pressing any key.
Occurred in the third quarter of 2023, where we reported revenue of $24 6 million and we did have positive free cash flow in that quarter.
We believe we have a plan to reach this threshold in 2024 and can be cash flow positive.
I will now turn the call over to the operator for questions operator.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session shows you have a question. Please press star followed by the number one on your stock selling phone should you wish to take back from the polling process. Please press star followed by the number too.
If you are using a speaker phone please lift the handset before pressing any case.
Operator: One moment, please for your first question. Your first question comes from Brian Kinstlinger from Alliance Global Partners. Please go ahead.
One moment. Please for your first question.
Your first question comes from Brian singer from Alliance Global Partners. Please go ahead.
Great. Thanks, exciting news about measuring Netflix ads.
Brian David Kinstlinger: Great, thanks. Exciting news about measuring Netflix ads. Maybe highlight the testing that's been done with beta customers, the results, and how it's helped advertisers make budget decisions. And then, related to that, how do you plan to educate advertisers and agencies? Um, yeah, Brian.
Maybe highlight the testing that's been done with beta customers the results of <unk>.
It has helped advertisers make budget decisions and then second related to that how do you plan to educate advertisers and agencies.
Okay.
Yes, Brian.
<unk>.
Richard K. Howe: The budget decisions are a big issue, and in fact, it's a real weakness and has been a weakness within advertising for a long time. Not that there haven't been technologies, you know, that are available to be purchased, but not all CMOs actually use them and perhaps, maybe even know that they exist. The thing about it is, when the cookie breaks and when you can't track people anymore around the internet, all of the existing technologies that have historically been used to optimize media across channels and campaigns will no longer function, because there's no longer a one-to-one connection. And their technology was developed around that one-to-one connection.
The budget decisions.
It's a big issue and in fact, it's a real weakness and has been a weakness within advertising.
For a long time not that there hasnt been technologies.
That are available to be purchased but not all CMO.
Actually use them and perhaps maybe even though that they exist.
The thing about it is.
When the when the cookie breaks and when you can't track people any more around the internet.
All of the existing technologies that have historically been used to optimize media.
Across channels and campaigns will no longer function because there is no longer a one to one connection and their technology was developed around that one to one connection.
Richard K. Howe: So this component, that of our technology that we completed in 2023 and have now implemented across a number of customers, is proving to have been a really good initiative for us. In fact, the large client win I talked about earlier was one as much for this budget optimization capability as it was for the cookie list audience targeting capability. I'm sorry, Brian. What was the second question?
So this component.
Of our technology that we can.
<unk> in 2023 and have now implemented across a number of customers.
Moving.
You have been a really good.
Initiative for Us in fact, the large client win.
Talked about earlier was one as much for this.
Predictive budget.
Brian David Kinstlinger: Yeah, so it sounds like you have a handful of customers to answer the numbers question. I'm not mistaken that we either have beta or no customers. The other question I would have is...
Budget optimization capability as it was for the cookie lists audience targeting capability.
I am sorry, with Brian what was the second question, yes. So it sounds like you've got a handful of customers to answer the numbers question, if I'm not mistaken that we either better or now customers. The other question I would have is I mean.
Richard K. Howe: I mean, again, you're a small company with limited capital to deploy. How do you educate the market? How do they become aware of this? I'm not sure you can get anything else.
And again, you're a small company limited.
Limited capital to deploy how do you educate the market how do they become aware of this.
Richard K. Howe: Yeah, so, well, there's, you know, the people we have on the street, obviously talking, you know, to prospects all the time, and that's one avenue. But you're correct on that, compared maybe to other better-funded companies, we've got some fraction of the total sales force that they have. We did start investing in 2023 in marketing. And by investing, I don't mean it's a lot of money.
Alright, I don't not sure you can get anywhere else.
Yes so.
Well there is the <unk>.
People, we have on the street, obviously talking to prospects all the time and Thats One Avenue.
But you are correct on that compare maybe to other better funded companies. We've got some fraction of the total sales force that they have.
We did start investing in 2023 in marketing.
Richard K. Howe: I actually believe most of the increase in the media exposure that we've gotten in 2023, or at least some large component of it, is just simply the result of the reality that the end is near. And as a result, you know, the media is starting to jump on the story more than they have in the past. We're going to continue to do that. Brian, in fact, I was just featured on a podcast recently about this. I see this accelerating. So, I mean, these are the best two avenues we've got to perform for our clients, you know, make sure that, you know, we're canvassing as much of the marketplace as we can and, you know, get the word out to increase the, you know, brand exposure for Inuva. We have two more questions. The first...
And by that by investing I don't mean, its a lot of money.
I actually believe most of the increase in the media exposure.
Exposure that we've gotten in 2023 or at least some large component of it is just simply the result of the reality that the end is near.
And as a result media is starting to jump on the story more than they have in the past we're going to continue to do that.
Brian in fact I was just featured on our podcast recently about this I see this accelerating for us.
So I mean these are the best two avenues that we have got perform for our clients.
Sure.
Investing as much to the marketplaces, we can and get the word out to increase the brand exposure for enable.
Great two more questions to first.
Brian David Kinstlinger: The ad market had its challenges, but I think it showed some signs of improving, but we've got also an election year, where issues at a high level may be discussed, with the opportunity you have with your intent key and your AI. How should we think about reasonable growth rate targets in 2024? And I assume the first quarter will be seasonally weak as usual. Yeah, so, we suggested, obviously in the script that I just wrote, that we do have a plan that we believe we can execute on that could get us to the 100 million mark. It doesn't mean we will, Brian, as you well know. But I can tell you we take our planning pretty seriously, and when we say we think we can get there, it means that, you know, with the customers we've got, with the traction we've got, with how things look just from today, we think we've got a good shot at getting there this year. You know, so that's the best I can give you. That's, that's what I believe. No, understood. This will be a tougher one then, though.
The AD market has had its challenges, but I think it showed some signs also are improving but we've got also an election year.
At a high level and maybe discuss.
With the opportunity you have with your <unk> and your AI.
How should we think about reasonable growth rate targets in 2024.
Assume that first quarter seasonally weak as usual.
Yes, so we.
We suggested.
Obviously in the script that I just wrote that we do have a plan that we believe we can execute on that could get us to the 100 million Mark.
It doesn't mean, we will Brian as you well know, but I can tell you, we take our planning pretty seriously and.
When we say we think we can get there it means that with the customers. We've got with the traction we've got with how things look just from today. We think we've got we've got a good shot at getting there this year.
So that's the best I can give you that's what I believe no understood.
This will be a tougher one than now.
Brian David Kinstlinger: You've got this product that solves this major problem, and I'm not saying your second half numbers aren't super. It's not to say achieving $100 million wouldn't be great either. But I guess I'd ask why isn't adoption much faster?
So you've got this private solve this major problem.
And I'm not not to say your second half numbers arent Super let's not to say achieving $100 million wouldnt be great either.
But I guess I would ask why isn't adoption much faster why aren't agencies pushing these products, so much more aggressively or wire and advertisers, giving you increased wallet share once they see the performance I guess said another way when do we hit hockey stick growth at Aha moment of what's going on.
Richard K. Howe: Why aren't agencies pushing this product so much more aggressively? Or why aren't advertisers giving you increased wallet share once they see the performance? I guess, in another way, when do we see that hockey stick growth, that aha moment of what's going on? So there are two primary reasons for that, for the question you're asking. And the third one's about hockey stick growth.
So there's two primary reasons for that.
For the further question, you're asking and the third one is about hockey stick growth I'll take that as a third.
Richard K. Howe: I'll take that as a third. One is change. People don't like change, Brian, okay? It's the one thing humans avoid at all costs.
One is change.
People don't like to change Brian Okay.
The one thing humans avoid at all costs.
So you have to overcome that.
Richard K. Howe: So you have to overcome the aspect of change and then the reluctance to change. As I've said in the past about change, it's really helped along in a big way when there are catalysts that are forcing people to have to. And in our case, that's a legislative catalyst, GDPR. In Europe, the California Consumer Privacy Act started it, but now 13 other states have, you know, data and consumer privacy legislation.
The aspect of change and then the reluctance to change.
I've said in the past about change.
And really help along.
Big way when there are catalysts that are forcing people to have to change and in our case.
Legislative catalyst GDP are in Europe.
<unk> consumer Privacy Act started it but now 13 other states have data and consumer privacy.
Legislation. Another 17 states I think have legislation in progress.
Richard K. Howe: Another 17 states, I think, have, you know, legislation in progress. Change is going to occur whether the people who are reluctant to change want it to or not. Now, they may wait, which is what's happening. You know, I think a lot of people are waiting for Google to jump into this mix and finally start eliminating the cookie. And they did that, you know, in January. And they're saying they're going to phase it out this year.
The change is going to occur whether the people who are reluctant to change wanted to or not now they may wait which is what's happening I think a lot of people are waiting for Google to jump into this mix and finally start eliminating the cookie and they did that.
In January and they are saying, they're going to phase that out. This year. So this changes now what's happening now and it's going to accelerate and all the people who have been waiting.
Richard K. Howe: So this change is now. It's happening now, and it's going to accelerate. And all the people who have been waiting, you know, because they thought, oh, it's not going to happen, or, you know, I'm going to use somebody else to do this, are going to find out that it's not going to work.
Because they thought oh, it's not going to happen.
I'm going to use somebody else to do this.
We're going to find out that it's not going to work and that relates to the second issue with this answer.
Richard K. Howe: And that relates to the second issue with this that I'll answer, which is the incumbents. And as I said in my script, there are literally hundreds of companies, right? We're talking about a $600 billion worldwide industry. There are hundreds of companies that have built the entire tech stack that they have on this old way of doing it.
On which is the incumbent.
As I said in my script, there are literally hundreds of companies that we're talking about a $600 billion worldwide industry. There are hundreds of companies.
That has built the entire tech stack that they have on this old way of doing it and consider.
Richard K. Howe: And consider, you know, that, of course, they own the majority of the market share compared to our, you know, if we do 100 million this year, they obviously, they don't have a lot more of it. They're not in a hurry to tell their clients, right, that they don't have a solution for this problem. And so that causes clients to think like, okay, well, we've got it covered. And all that does is, you know, it just pushes them to have to be late adopters because as the performance starts to decline because their incumbents didn't have a solution to this problem, or not an adequate solution to this problem, we'll start, hopefully, getting more demand for what we have. So that probably answers the third thing, the hockey stick for us. You know, by the way, I should point out, I said it in my notes, but you know, we have been growing at a seven and a half percent quarterly compounded growth rate since Q2 2020. That's not terrible.
But of course, they own the majority of the market share compared to our if we do 100 million. This year. They obviously they all have a lot more of it theyre not in a hurry to tell their client.
They don't have a solution for this problem.
And so that causes the clients to think like okay, well, we've got it covered and all that does is it pushes them to have to be late adopters because thats. The performance starts to decline because their incumbents didn't have a solution to this problem, we're not an adequate solution of this problem.
We'll start hopefully getting more demand for what we have.
So that probably answers the third thing the hockey stick for us.
By the way I should point out I said it in my notes, but we have been growing at a seven 5% quarterly compounded growth rate since Q2 2020.
That's not terrible.
Brian David Kinstlinger: It's better, way better than terrible. Okay, so, but yes, I get your point on the hockey stick. And I think the next, you know, three years, you know, one, two, three years are going to be really, really exciting years for us, important and exciting years for us, because the game's over, Brian. Actually, last question I have, did I hear right that you had 56 new agencies, I think for the year you added? and you ran agencies and brands, right? And you ran 80 campaigns, I think for those customers, if I'm not mistaken. I'm not sure if I heard that right.
Better way better than terrible, okay, So, but yes, I get your point on the hockey stick and I think the next.
Three years.
Two three years are going to be really really exciting years for us important and exciting year for us.
Because the Gainesville right Brian.
Last question I have.
I heard it right you had 56, new agencies I think for the year you added.
You ran agencies and brands.
Agencies and brands right and you had 80 campaigns I think for those customers if I'm not mistaken I'm not sure if I heard that right now we didn't disclose that.
Richard K. Howe: We did. No, we didn't disclose that. And we and we and we won't disclose how many campaigns we ran for the 56. We disclosed how many campaigns we had for the entire year. I think it was 218, wasn't it? Okay, so but for the 86 new agencies and brands, I would think that they've started to change. They've started to see it.
We won't disclose how many campaigns we ran for the 56.
Well I guess maybe slightly.
How many campaigns we had for the for the entire year I think it was 218 wasn't it.
Uh huh.
Okay, so but for the 86, new agencies and brands.
I would think that.
They've started the change they started to see it so its customers you added in year one.
Richard K. Howe: So it's customers you add in year one that would drive substantial wallet share growth in years two and year three. Is that the right way to think about it? Yeah, that's exactly how I think about it. I've said this before, so I'll say it again.
That would drive that.
<unk> wallet share growth in year, two and year three is that the right way to think about it.
Yes.
How to think about it.
Said this before so I'll say it again, we rarely lose a client any client unless.
Richard K. Howe: We rarely lose a client, any client, unless they almost always are when we do lose, it's a brand in an agency because the agency we're working with lost the client. That's typically how we lose, you know, let's call it a client. Our strategies land and expand. So yes, you know, when we sign up 56 new clients, even if they're small now, there's a good chance, unless an agency loses the client themselves, that those will continue to expand right now, you know, going forward for us. Great. Thanks for all your responses.
They almost always are when we do lose its our brand in an agency because the agency, we're working with lots of clients.
Typically how we lose.
I would call it a client.
Our strategy is land and expand so yes, when we sign up 56, even if they're small now that there's a good chance unless an agency loses the client themselves that those will continue to expand right now going forward for us.
Great. Thanks for all your responses.
Yes, you bet Brian.
Brian David Kinstlinger: Yeah, you bet, Brian. Thank you. Your next question comes from Jack van der Aarde from Maxim Group. Please go ahead.
Thank you.
Your next question comes from Jack Vander <unk> from Maxim Group. Please go ahead.
Okay, great. Thank you rich and Wally and great to see the strong growth momentum in the back half of the year.
Jack Vander Aarde: Okay, great. Thank you, Rich and Wally. And great to see the strong growth momentum in the back half of the year. So, Rich, maybe just for clarity, because I think it's material and important to point out if this is correct, but considering the large agency customer or the end customer that left in the fourth quarter of 2022, I think it was about $18 million of your annual revenue. Is it correct that if you adjust for that client, back that revenue out, your 2023 full-year That's exactly what it is.
So rich maybe maybe just for clarity because I think its material and important to point out. If this is correct but.
Considering the large agency customer are they.
The end customer that left in the fourth quarter of 2022, I think it was about $18 million of annual revenue.
If you does it is it correct. If you adjust for that client back that revenue out your 2023 full year revenue seems like it was up almost nearly 30%.
Which I think is important to point out if that is kind of the right way to think about it.
That is what it is.
Richard K. Howe: Yes, I think that's exactly the way to look at it, Jack. And in fact, I think it's another reason why we have, You know, we feel good about that second half and why we emphasized it because, We effectively, which is what you're saying, we, you see, we backfilled that. You know, and that's not an insignificant amount of revenue, right? But we were able to plug that, you know, agency lost client. That was one of those examples, by the way, that I just said to Brian, right of a lot.
Yes, I think that's exactly the way to look at it Jack and in fact I think it's another reason why we we have.
We feel good about that second half and why we emphasized it because.
<unk> effectively which is what you are saying you see we backfill that.
And that's not an insignificant amount of revenue, but we were able to deploy.
Plug that.
Agency lost client.
That was one of those examples by the way, but I, just said to Brian quite of a loss and so yes, I think youre thinking about it the right way.
Richard K. Howe: And so yes, I think you're thinking about it the right way. Okay, great. And then, maybe just, just further to that point, it was kind of my feeling or sense, and I believe your guys' sense as well in previous quarters, following that event, that that was an isolated kind of one-time occurrence.
Okay, Great and then and then maybe just just further to that point.
It was kind of my feeling a sense of that and I believe youre guys of sense as well in previous quarters. Following that event that that wasn't isolated kind of one time occurrence and just to be clear I mean, how is your relationship with with that actual agency are you still growing and actively working with them.
Jack Vander Aarde: And just to be clear, I mean, how is your relationship with that actual agency? Are you still growing and actively working with them? Lesser. Russer.
Lessor.
Lesser okay.
Richard K. Howe: Okay. And then, you know, just speaking to the people you signed these 56 new agency brands and on one platform and customer in 2023, giving your comments about the strong outlook and pipeline. Just hoping you can expand on that a little bit further. So the 56 agency brands, how likely are those to be repeat customers in 2024? And are you how about expanding within those customers with those brands and agencies? Very likely.
And then.
Just sticking to the signing 66, new agencies brands and in one platform.
Thus far in 2023.
Given your comments about the strong outlook and pipeline just hoping you can expand on that a little bit further.
So the 56 agency brands.
Likely are those to be repeat customers in.
In 2024 and how.
How about expanding within those customers with those brands and agencies.
Very likely and yes.
Jack Vander Aarde: And, and yes, to the second very likely to all be customers in 20 this year 2024 good grief for 2024 and likely to expand. Okay, great. And then just to follow up, then I caught the headcount, you've been hiring, and it sounds like you continue to plan to hire more. Just given your pipeline growth expectations, do you feel like you have sufficient capacity personnel today? Or will you service the kind of demand and pipeline growth you're expecting? How is the demand versus capacity balance of your capacity today? Is there too much demand right now? Or would it be a good problem to have just any color there would be helpful?
The second very likely.
It did.
<unk> customers in 2000, and this year 2020 for the Greek for 2024 and and likely to expand.
Okay, Great and then just a follow up then.
I kept the head count you've been you've been hiring in your it sounds like you continue to plan to hire more.
<unk>.
And given your pipeline and growth expectations.
Do you feel like you have sufficient capacity personnel.
Today or will you have to service the kind of demand and pipeline growth you are expecting.
How is the demand versus kind of your capacity balance today.
Is it too much demand right now.
It would be a good problem NAV just any any color there would be helpful.
Richard K. Howe: Unknown Speaker: Well, you know, whenever you grow as much as we did in the second half, you feel some strain. But I would say we're not. We're not feeling a strain in the sense that we're scared of Continued Growth.
Okay.
Well whenever you grow as much as we did in the second half you feel some strain.
But I would say.
We're not.
We're not feeling it.
Train in the sense that we're scared.
Of continued growth.
Richard K. Howe: So maybe that's the best way to say it. So there's clearly still utilization, you know, potential within the resources we have, although we do run about as efficiently as a technology company that's doing the kind of, that has the kind of technology we have. I can't remember what the number is, but I think we make about $900,000 in revenue per employee.
So maybe that's the best way to say it. So there is clearly still utilization potential within the resources, we have although we do run about as efficient as a technology company, that's doing the kind of.
That has the kind of technology, we have I can't remember what the number is but I think we run about $900000 in revenue per employee.
Jack Vander Aarde: You know, it's a pretty high number relative to comp. So we're efficient in that regard. You know, if we add resources, we've said this before, it'll really be all client facing for the most part. We may add more engineers and data scientists around the company here and there, but it won't be a significant number relative to the client-facing components that go to market, which are sales and account managers and campaign people. Okay, great. And then just just one more for me. And I apologize, I kind of caught a lot of your comments, just the large customer you're talking to in your prepared remarks that I think it boiled down to you're competing in a bake-off against two other competitors. And then you eventually won. You know, you won the deal.
Pretty high number relative to comps.
So we're efficient in that regard.
We add resources, we said this before it will really be all client facing for the most part we may add more engineers and data scientists around the company here and there, but it won't be a significant number relative to the client facing components that go to market sales and account managers and campaign people.
Okay, Great and then just one more for me and I apologize I kind of I kind of missed if I caught a lot of your comments just the large customer you were talking on your prepared remarks that I think it boiled down to you're getting in a bake off against two other competitors.
And then you eventually want do you want the deal.
Richard K. Howe: Just how long was that kind of, You know, from initial discussions to, you know, signing the bottom line, how long did that process interactions going to take, and then any any color on who those two customers potential competitors were slash was it a bigger handful of competitors originally just that walking through that whole kind of process and how long it took and eventually why you wanted it, I guess. Yeah, nine months is the answer to the first question. Okay, the second question, you know, I don't like it if I name these other companies. We're in this incredibly competitive environment, Jack. So if I name them, then they're gonna know who it is. They may not know that they've even lost at this point.
Just how long was that kind of.
From initial discussions to signing the Bottomline, how long did that process interaction is going to take and then any color on.
Who those two customers potential competitors were slash was it a bigger a handful of competitors originally just.
Walk me through that whole kind of processing.
How long it took and.
Eventually why you want it I guess.
Yes, nine months since the answer to the first question.
Okay. The second question.
I don't like if.
If I name that these these other companies.
We're in this incredibly competitive.
<unk> Jack.
If I name them, then they're going to they're going to know who it is they may not know that they've even lost at this point.
Richard K. Howe: And so I'm reluctant to do that. But I will tell you that they're much bigger than we are. You know, which means they have, you know, a lot more resources and have been around a while. They're considerably bigger than we are, which is a testament, quite frankly, to our technology, to be able to beat out, you know, the companies we did. No, that's it. That's totally fair. I'm not looking for you to disclose anything that you shouldn't.
And so I'm reluctant to do that I will tell you that they are much bigger than we are.
Which means they have.
A lot more resources and been around a while they are considerably bigger than one which is a testament quite frankly to our technology.
Would you be able to beat out the companies we did.
No that's totally fair I am not looking for you to disclose anything that you Shouldnt I guess, that's what I was really looking for is what was the kind of caliber or size of these competitors are doing it as a kind of a david versus Goliath story here and it's kind of proof in the putting your technology is death.
Richard K. Howe: I guess that's what I was really looking for, is what the kind of caliber or size of these competitors. You're going into kind of a David versus Goliath story here, and it's kind of proof in the pudding that their technology is definitely proving itself and gaining traction. And then just one more thing, which in terms of platforms, now that with this new segmentation, is there? How do you expect these two segments if you had a crystal ball and you're looking forward? How do you expect these two to ramp up, and kind of in terms of revenues going forward? Are they going to be one going to outpace the other? Are they ever going to be in some kind of parity?
Definitely yes, leaving yourself and gaining traction.
And then just one more thing which in terms of platforms now that with this new segmentation.
Is there.
How do you expect these two segments.
Had a crystal ball and Youre looking forward.
How do you expect these two to ramp and kind of in charge of the revenues.
Going forward are they going to be one going to outpace the other or are they ever going to be kind of at parity. How do you just think about the opportunity near term long term.
Richard K. Howe: How do you just think about the opportunity near term and long term? In the future, they should be parity. So I think, yeah, in an end state, you know, some years down the road, I would expect the agency and brand component to continue to be a bigger part of the overall mix. But it could surprise us because the platforms, by default, are bigger, and they do tend to scale faster.
In the future they should be parity.
So I think yes in an end state some years down the road I would expect the agency and brand component to continue in terms of the mix to be a bigger part of the overall mix.
Albeit it could surprise us because the platforms by default.
Our bigger.
And they do tend to scale faster so.
Richard K. Howe: So, it's hard to predict. They're both looking really good right now, is the bottom line.
It's hard to predict they are both looking really good right now is the bottom line, we see potential in both of them right. In fact like I said, we added a new platform relationship.
Jack Vander Aarde: We see potential in both of them, right? In fact, like I said, we added a new platform in 2023, which is, you know, also exciting. Absolutely. Okay. Well, great. That's all I have for you.
In 2023.
Which is also exciting for us.
Absolutely, Okay, well, great. That's all I have I appreciate the time. Thank you.
Jack Vander Aarde: I appreciate your time. Thank you. Thanks.
Thank you Jay.
Operator: Thank you, Jack, and thank you. There are no further questions at this time; I'll turn it over to management for closing remarks. Please go ahead.
Okay.
Thank you.
There are no further questions at this time I will turn it over to management for closing remarks. Please go ahead.
Richard K. Howe: Thank you, Sergio. And everyone, thank you for joining us today on the call. We appreciate your continued interest in the company, and we look forward to keeping you apprised of our progress on the next call. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.
Thank you Sergio.
Everyone. Thank you for joining us today on the call. We appreciate your continued interest in the company and we look forward to keeping you apprised of our progress.
On the next call.
Okay.
Ladies and gentlemen, this concludes your conference call for today.
Thank you for participating and ask that you. Please disconnect your lines. Thank you.