Q1 2024 Inuvo Inc Earnings Call
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Operator: Good day, ladies and gentlemen, and welcome to the Inuvu Inc. first quarter 2024 conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator, and this call is being recorded on Tuesday, May 7, 2020. I would now like to turn the conference over to Natalya Rudman of Crescendo Communications. Please go ahead.
Good day, ladies and gentlemen, and welcome to the newly Inc. First quarter 2024 conference call.
Natalya Rudman: At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
Speaker Change: But any time during this call you to acquire immediate assistance. Please press star Zero 40, operator.
Natalya Rudman: And this call is being recorded on Tuesday may seven 2024.
Natalya Rudman: I would now like to turn the clock, Pennsylvania, and Italian Red Man of Crescendo Communications. Please go ahead.
Natalya Rudman: Thank you, Liria, and good afternoon, everyone. I'd like to thank everyone for joining us today for Inuvo's first quarter 2024 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 will file our 10-Q with the Securities and Exchange Commission this afternoon. Before we begin, I'm going to review the company's safe harbor statements, the statements in this conference call that are not descriptions of historical facts or forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995.
Natalya Rudman: Thank you Louis and good afternoon, everyone I'd like to thank everyone for joining us today for the first quarter 'twenty 'twenty four shareholder update call today, New Lewis 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 will file our 10-Q with the securities and exchange.
Natalya Rudman: These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When using 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.
Natalya Rudman: <unk> Commission this afternoon.
Speaker Change: Before we begin I'm going to review the company's Safe Harbor statements. The statements in this conference call that are not descriptions of historical facts are forward looking statements.
Natalya Rudman: 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 reference 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 out of the way, I'll now turn the call over to CEO Rich Howe. Please go ahead, Rich.
Richard K. Howe: Thank you, Natalya, and thanks, everyone, for joining us today. We are pleased to report that for the quarter ended March 31st, 2024, we delivered a strong 44% year-over-year quarterly growth with $17 million in revenue. This builds on the 32% growth rate we experienced in the second half of 2023 and provides us with continuing confidence in growth expectations for the remainder of the year. Our financial goals as a corporation have not changed
Richard K. Howe: Our objective remains to grow revenues above 100 million annually, which is approximately the revenue level at which we expect to become adjusted EBITDA and free cash flow positive. As Wally will point out in his summary of the quarter, we also saw improvements year over year in adjusted EBITDA and free cash flow. We aren't yet where we want to be, but we are on the right path.
Richard K. Howe: In the first quarter, the revenue split was 16% for agencies and brands and 84% for platforms. We tend to lean into our platform relationship in the first quarter, when the number of end clients is larger, and because agencies and brands tend to still be reviewing annual budgets in the first quarter. We generated $165,000 in revenue from the newer, higher-margin products we discussed on the year-end call in the first quarter.
Richard K. Howe: Future events and as such.
Richard K. Howe: All forward looking statements are made pursuant to the Securities Litigation Reform Act of 1995. 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 a new vote.
Richard K. Howe: Inc. Are such forward looking statements Busters are cautioned that all forward looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated binding vote at this time.
Richard K. Howe: This and other risks are more fully described in public filings with the U S Securities and Exchange Commission, which can be reviewed at Www SEC Gov Company makes no commitment to disclose any revisions to forward looking statements or any thoughts of events or circumstances. After the date hereof bear upon forward looking statements. In addition, today's with.
Richard K. Howe: The customer will include reference 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, but either way I'll now turn the call over to CEO Rich House.
Speaker Change: We don't have much.
Richard K. Howe: Yes.
Speaker Change: Thank you and Italia and thanks, everyone for joining US today, we're pleased to report that for the quarter ended March 31, 'twenty before we delivered a strong 44% year over year quarterly growth with $17 million in revenue.
Richard K. Howe: This builds on the 32% growth rate, we experienced in the second half of 2023 and provides us with continuing competency in growth expectations for the remainder of the year.
Richard K. Howe: Our financial goals as a corporation have not changed our objective remains to grow revenues above 100 million annually.
Richard K. Howe: As approximately the revenue level at which we'd be we expect it to become adjusted EBITDA and free cash flow positive.
Richard K. Howe: As Wally will point out in his summary of the quarter. We also saw improvements year over year in adjusted EBITDA and free cash flow.
Richard K. Howe: We arent, yet where we want to be but we are on the right past.
Richard K. Howe: In the first quarter, the revenue split was 16% for agencies and brands and 84% for platforms.
Richard K. Howe: We tend to lean into our platform relationships in the first quarter, where the number of end clients is larger and because agencies and brands can still be reviewing annual budgets in the first quarter.
Richard K. Howe: We generated $165000 in revenue from the newer higher margin products, we discussed on the year end call in the first quarter.
Richard K. Howe: What I'd like to do now is spend my time bringing you up to speed on our industry, our products, and our clients. Let's begin with the industry. In the first quarter, Google delayed again the elimination of third-party cookies within their Chrome browser. This is the third time Google has delayed this inevitable change. The takeaway from this delay is how dependent the advertising industry and, by extension, the internet are on the use of these cookies.
Speaker Change: What I'd like to do now is spend my time, bringing you up to speed on our industry, our products and our clients.
Richard K. Howe: Let's begin with the industry.
Richard K. Howe: In the first quarter, Google delayed again, the elimination of third party cookies within their chrome browser.
Richard K. Howe: This is the third time, Google has delayed this inevitable change.
Richard K. Howe: The takeaway from this delay is how dependent the advertising industry and by extension. The Internet is on the use of these cookies.
Richard K. Howe: As we have mentioned on previous calls, there are virtually hundreds of companies that serve the advertising industry whose business models have been built around and depend on these cookies and the consumer information that these cookies provide access to. These are the very companies lobbying to delay this Chrome-related change, and in many ways, a signal of just how far ahead Inuvo is of these advertising-related competitors, and indirectly, how serious an issue this is within the advertising industry.
Richard K. Howe: As we have mentioned on previous calls there are virtually hundreds of companies that serve the advertising industry, whose business models have been built around and depend on these cookies and the consumer information that these cookies provide access to.
Richard K. Howe: These are the very companies lobbying to delay this chrome related change and in many ways a signal of just how far ahead of new bow is.
Richard K. Howe: Of these advertising related competitors and indirectly how serious an issue this is within the advertising industry.
Richard K. Howe: Google had been working hard to satisfy these constituents having created the privacy sandbox.
Richard K. Howe: Google has been working hard to satisfy these constituents, having created the Privacy Sandbox as an alternative approach to the use of third-party companies within Chrome. The IAB, which is the industry organization that provides advertising standards, has been testing, along with no less than 65 companies, this new approach. The first task force report released earlier this year stated that most of the necessary advertising use cases were either explicitly not supported or had been degraded to the point of being untenable.
Richard K. Howe: As an alternative approach to the use of third party cookies within crowds.
Richard K. Howe: The I B, which is the industry organization that provides advertising standards has.
Richard K. Howe: <unk> been testing along with no less than 65 companies.
Richard K. Howe: This new approach.
Richard K. Howe: The first task Force report released earlier this year stated that most of the necessary advertising use cases.
Richard K. Howe: We're either explicitly not supported or had been degraded to the point of being untenable.
Richard K. Howe: Our position remains that there is no turning back from a future devoid of the technological mechanisms that have supported identifying and tracking consumers around the internet. Apple put the nail in that coffin when it introduced intelligent tracking prevention into its browsers in 2017, when it blocked third-party cookies in 2020, and when it introduced app tracking transparency in 2021. They have subsequently embedded into their browsers many other features that prevent the determination of a consumer's identity.
Richard K. Howe: Our position remains that there is no turning back from a future devoid of the technological mechanisms that have supported identifying and tracking consumers around the internet.
Richard K. Howe: Apple put a nail in that coffin when it introduced intelligent tracking prevention intuit's browsers to 2017.
Richard K. Howe: When it blocked third party cookies in 2020.
Richard K. Howe: And when it introduced app tracking of transparency in 2021.
Richard K. Howe: They have subsequently embedded into their browsers. Many other features that prevent determining a consumer's identity.
Richard K. Howe: As we may have stated in the past, Safari now holds 55% of the U.S. mobile browser market share. And despite the recent delay for Chrome, we observe that only 33% of the remaining third-party tracking cookies in circulation are actually useful after one day. You simply can't track people around the internet or measure the actions they are taking when their cookie tracker is no longer stable.
Richard K. Howe: And as we May have stated in the past.
Richard K. Howe: The FRE now holds 55% of the U S mobile browser market share.
Richard K. Howe: And despite the recent delay for crown, we observe that only 33% of the remaining third party tracking cookies in circulation.
Richard K. Howe: Our actually useful after one day.
Richard K. Howe: You simply can't track people around the internet or measure the actions they are taking.
Richard K. Howe: When Theyre Cookie tracker is no longer stable.
Richard K. Howe: Let's shift now to products and clients. In 2023, we made significant progress towards being able to widely distribute a self-service version of our artificial intelligence. This was a natural evolution of our managed services business model, where we typically use existing campaign management systems powered by our AI to deliver media services to our clients. What we haven't discussed previously was that, as part of this exercise, we also significantly rearchitected the foundation of our AI.
Speaker Change: Let's shift now to products and clients.
Richard K. Howe: In 2023, we've made significant progress towards being able to widely distribute a self service version of our artificial intelligence.
Richard K. Howe: This was a natural evolution of our managed services business model, where we typically use existing campaign management systems powered by our AI to deliver media services to our clients.
Richard K. Howe: What we haven't discussed previously was that a part of this exercise.
Richard K. Howe: We also significantly re architected the foundation of our AI.
Richard K. Howe: We wanted to not only provide a simpler way to deploy audience selection and targeting capabilities but also an easier way to access the rapidly expanding knowledge and insights our AI possesses. While the work for this is ongoing, we ultimately have a vision that would allow third parties to use an API into our AI platform from which they themselves could build applications. While it remains very early in our efforts, we have reason to believe, because of our own internal usage, that the knowledge our AI possesses could, for example, be predictive of all sorts of future events or even things like product sales.
Richard K. Howe: We wanted to not only provide a simpler way to deploy the audience selection and targeting capabilities.
Richard K. Howe: Also an easier way to access the rapidly expanding knowledge and insights our AI possesses.
Richard K. Howe: While the work for this is ongoing.
Richard K. Howe: Ultimately have a vision that would allow third parties to use an API into our AI.
Richard K. Howe: From which they themselves could build applications.
Richard K. Howe: While it remains very early in our efforts we have reason to believe because of our own internal usage.
Richard K. Howe: But the knowledge our AI possesses could for example be predictive of all sorts of future events.
Richard K. Howe: Or even things like product sales.
Richard K. Howe: This new foundation for our AI could open new use cases for the insights generated by our proprietary AI.
Richard K. Howe: This new foundation for our AI could open new use cases for the insights generated by our proprietary AI. Our three largest client categories remain auto, retail, and technology. The retail client we referenced signing in our year-end call is scaling, and we've had several similarly larger prospects in our pipeline. Within the quarter, we are seeing an acceleration in requests for proposal demand. Our performance for existing clients remains strong, and we signed three new brands in the quarter.
Richard K. Howe: Our three largest client categories remain auto retail and technology.
Richard K. Howe: The retail client we referenced signing in our year end call is scaling and we have several similarly larger prospects in our pipeline.
Richard K. Howe: Within the quarter, we are seeing an acceleration in request for proposal demand.
Richard K. Howe: Our performance for existing clients remained strong.
Richard K. Howe: We signed three new brands in the quarter.
Richard K. Howe: We continue to hire new sales people. We've also had an expansion in the clients we serve within the nonprofit sector. Industry conferences remain a great place to generate leads, and we've already attended seven of those so far this year.
Richard K. Howe: We continue to hire new salespeople.
Richard K. Howe: We've also had an expansion in the clients we serve within the new the nonprofit sector.
Richard K. Howe: Industry conferences remain a great place to generate leads and.
Richard K. Howe: And we've already attended seven of those so far this year.
Richard K. Howe: Concurrently, we continue to gain more brand recognition, and in the quarter, we had roughly 25 Inuvo Media mentions. We recently made a significant update to our portal, which, as you know, is a scaled-down version of our AI for public consumption. This portal also serves as a source of leads for Inuvo. The ability for our AI to generate audiences instantly means we can message prospects on LinkedIn and immediately send them a model representative of the audience associated with their product, service, or brand. This kind of instantaneous audience generation has never been possible before.
Richard K. Howe: Concurrently we continue to gain more brand recognition and.
Richard K. Howe: And in the quarter, we had roughly 25 Nouveau media mentioned.
Richard K. Howe: We recently made a significant update to our portal.
Richard K. Howe: As you know is a scaled down version of our AI for public consumption.
Richard K. Howe: This portal also serves as a source of leads for a newbuild.
Richard K. Howe: The ability for our AI to generate audiences instantly means we can message prospects on Linkedin.
Richard K. Howe: And immediately send them a model.
Richard K. Howe: Represented of the audience associated with their product service or Brent.
Richard K. Howe: This kind of instantaneous audience generation has never been possible before.
Richard K. Howe: We've seen growth in both our LinkedIn followers and in the consumption of our LinkedIn newsletter. This new version of the portal and our client-facing AI can now better and more timely associate transient trends within audiences in a manner that has never been possible before. Today, for example, we posted on LinkedIn how the Inuvo AI was able to predict both the sentiment and audience changes associated with the bourbon brand Woodford Reserve, recognizing that they were a premier sponsor of the once-yearly Kentucky Derby in that post.
Richard K. Howe: We've seen a growth in both our Linkedin followers.
Richard K. Howe: And in the consumption of our Linkedin newsletter.
Richard K. Howe: This new version of the portal and our client facing AI.
Richard K. Howe: And now better and more timely associate transient trends within audiences.
Richard K. Howe: In a manner that has never been possible before.
Richard K. Howe: Today for example, we posted on linked in how the <unk> AI was able to predict both the sentiment and audience changes associated with the Bourbon brand Woodford Reserve.
Richard K. Howe: Recognizing.
Richard K. Howe: But they were a premier sponsor for the once yearly Kentucky Derby.
Richard K. Howe: In that post <unk>.
Richard K. Howe: We showed the influence of the Derby on Woodford's brand according to our AI. You can access that post on the Inuvo company page on LinkedIn. The ability to understand and generate the influence of events on brands in real time has never been possible before with this level of accuracy. At this time, I would now like to turn the call over to Wally for a more detailed assessment of our financial performance during the quarter.
Richard K. Howe: We showed the influence of the Derby on Woodford brand according to our AI.
Wally: You can access that post at the new low company page on Linkedin.
Wally: The ability to understand and generate the influence of events on brands in real time.
Wally: That's never been possible before with this level of accuracy.
Wally: At this time.
Richard K. Howe: I'd now like to turn the call over to Wally for a more detailed assessment of our financial performance within the quarter.
Wally: Thank you rich.
Wallace D. Ruiz: Good afternoon, everyone. I'll recap the financial results for the first quarter of 2024. As Rich mentioned, Inuvo reported revenue of $17 million for the first quarter of 2024. That compares to $11.8 million for the same period last year. That's a 43.7% increase year over year. The higher revenue this quarter compared to the prior year was due to accelerating growth with our largest platform client and a new platform client we signed on at the end of last year.
Wally: Good afternoon, everyone.
Wallace D. Ruiz: I will recap the financial results of the first quarter of 2024.
Wallace D. Ruiz: As rich mentioned <unk> reported revenue of $17 million for the first quarter of 2024.
Wallace D. Ruiz: Compares to $11 $8 million for the same period last year, that's a 43, 7% increase year over year.
Wallace D. Ruiz: The higher revenue this quarter compared to the prior year was due to accelerating growth with our largest platform client.
Wallace D. Ruiz: And to a new platform client, we signed on at the end of last year.
Wallace D. Ruiz: This accelerating growth with our largest platform client is a result of the strategic initiative brought to market in 2023, last year, which we mentioned in our last call. Strategically, we continue to focus on scaling revenue from platform clients and signing new mid-sized agencies, as well as brands directly. 84% of the first quarter of 2024 revenue was from platform clients and 16% from agency and brand. That compares to 66% from platform clients and 34% from agencies and brands in the first quarter of last year. For the full year of 2023, approximately 80% of revenue was from platform clients and 20% from agencies and brands.
Wallace D. Ruiz: This accelerating growth with our largest platform client as a result of the strategic initiative brought to market in 2000, 22023 last year, which we mentioned in our last call.
Wallace D. Ruiz: Strategically we continue to focus on scaling revenue from platform clients and signing new mid sized agencies as well as brands directly.
Wallace D. Ruiz: 84% of the first first quarter of 2024 revenue was from platform clients and 16% from agency and brands.
Wallace D. Ruiz: That compares to 66% from platform clients at 34% from agencies and brands in the first quarter of last year.
Wallace D. Ruiz: For the full year of 2023, approximately 80% or so.
Wallace D. Ruiz: Platform clients and 20% from agencies and brands.
Wallace D. Ruiz: Okay.
Wallace D. Ruiz: The cost of revenue was $2.1 million for the first quarter of 2024 compared to $3.2 million for the same period last year. The increase in the cost of revenue for the three months ended March 31, 2024, as compared to last year, was due to revenue mix, where revenue from platform clients was a greater percent of the overall net revenue in the current. Cost of revenue is primarily composed of payments to advertising exchanges that provide access to digital inventory where we serve advertising. To a lesser extent, the cost of revenue includes payments to website publishers and app developers that host advertisements.
Wallace D. Ruiz: Cost of revenue was $2 $1 billion for the first quarter of 2024 compared to $3 $2 million for the same period last year.
Wallace D. Ruiz: The increase in the cost of revenue for the three months ended March 31, 2024, as compared to last year was due to revenue mix where revenue from platform clients.
Wallace D. Ruiz: We're a greater percent of the overall net revenue in the current quarter.
Wallace D. Ruiz: Cost of revenue was primarily composed of payments to advertising exchanges that provide access to digital inventory, where we served advertisements.
Wallace D. Ruiz: To a lesser extent the cost of revenue includes payments to website publishers and app developers that host advertisements.
Wallace D. Ruiz: Yes.
Wallace D. Ruiz: Gross profit improved in the first quarter of 2024. We reported a gross profit of $14.9 million compared to $8.7 million in the same quarter last year, a 72% increase. The gross profit margin in the fourth quarter of last year increased 87.7% compared to 73.1%. But actually, that's not right. The gross profit margin in the first quarter of this year increased to 87.7% compared to 73.1% last year. The higher gross margin in the current year as compared to the prior year is due to the change in revenue mix, where a greater percentage of the revenue this year was on platforms, which have a higher gross margin.
Wallace D. Ruiz: Gross profit improved in the first quarter of 2024, we reported a gross profit of $14 $9 million compared to $8 7 million in the same quarter last year, a 72% increase.
Wallace D. Ruiz: The gross profit margin in the fourth quarter of 2000.
Wallace D. Ruiz: On the fourth quarter of last year.
Wallace D. Ruiz: Yes.
Wallace D. Ruiz: Increased 80, 80, 787, 7% compared with the <unk>.
Wallace D. Ruiz: 73, 1%.
Wallace D. Ruiz: Okay.
Wallace D. Ruiz: Actually that's not right. The gross profit margin in the first quarter of this year increased 87, 7% compared to 73, 1% last year.
Wallace D. Ruiz: The higher gross margin in the current year.
Wallace D. Ruiz: As compared to the prior year is due to the change in revenue mix, where a greater percentage of the revenue this year with some platforms, which has a higher gross margin.
Wallace D. Ruiz: Operating expenses for the first quarter of 2024 totaled $17 million, compared to $12.1 million for the same period last year. The increase was due to higher marketing costs. Marketing costs were $13.1 million in the first quarter of this year compared to $7.1 million in the same quarter of last year. The increase was primarily because of media expenses associated with higher revenue from platform clients.
Wallace D. Ruiz: Operating expenses for the first quarter of 2024 totaled $17 million compared to $12 $1 billion for the same period last year.
Wallace D. Ruiz: The increase was due to higher marketing costs marketing costs were $13 $1 million in the first quarter of this year compared to $7 $1 million in the same quarter last year.
Wallace D. Ruiz: Marketing costs increased primarily because of immediate expenses associated with higher revenue from platform clients.
Wallace D. Ruiz: Compensation expense for the first quarter of 2024 was $3.2 million compared to $3.4 million in the same quarter of last year. Compensation expense was lower for the first quarter of this year compared to last year, due primarily to lower commission expense and lower incentive accrual, partially offset by higher payroll. Our total employment, both full and part-time, was 93 in the first quarter of this year, compared to 85 in the same quarter last year.
Wallace D. Ruiz: Compensation expense for the first quarter of 2024 was $3 2 million compared.
Wallace D. Ruiz: Compared to $3 4 million in the same quarter of last year.
Wallace D. Ruiz: Compensation.
Wallace D. Ruiz: <unk> expense was lower for the first quarter this year compared to last year.
Wallace D. Ruiz: Due primarily to lower commission expense and lower incentive accrual expense.
Wallace D. Ruiz: Partially offsetting offset by higher payroll.
Wallace D. Ruiz: Our total employment, both full and part time was <unk> 93 in the first quarter of this year compared to 85 at the same quarter last year.
Wallace D. Ruiz: General and administrative expense for the first quarter of this year was $688,000 compared to $1.6 million in the prior year. General and administrative costs were lower in the 2024 quarter compared to the same quarter last year primarily due to an adjustment to expected losses from accounts receivable for a balance that was due from a former client that now pays consistently and has significantly significantly reduced its outstanding amount owed. The net financing expense was approximately $20,000 in the first quarter of 2024, compared to an expense of $19,000 in the same quarter last year.
Wallace D. Ruiz: General and administrative expense for the first quarter of this year was $688000 compared to $1 6 million in the prior year.
Wallace D. Ruiz: General and administrative costs were lower in 2000, and the 2024 quarter compared to the same quarter last year, primarily due to an adjustment to expected losses from accounts receivable for a balance that was due from a former client that now pays consistently and has significantly significant.
Wallace D. Ruiz: <unk> reduced its outstanding amount owed.
Wallace D. Ruiz: Net financing expense was approximately $20000 in the first quarter of 2024.
Wallace D. Ruiz: <unk> to an expense of $19000 in the same quarter last year.
Wallace D. Ruiz: There was no other income or expense in the first quarter of this year, and that is compared to $14,000 of other income in the first quarter of last year. The income last year was due to an unrealized gain on a trading security. The net loss improved in the first quarter of 2024, where it was $2.1 million or two cents a loss per basic and diluted share compared to a net loss of $3.4 million or three percent or three cents a loss per basic and diluted share for the same period last year.
Wallace D. Ruiz: There was no other income or expense in the first quarter of this year.
Wallace D. Ruiz: And that is compared to a $14000 of other income in the first quarter of last year.
Wallace D. Ruiz: The income last year was due to an unrealized gain in trading securities.
Wallace D. Ruiz: Net loss improved in the first quarter of 2024, where it was $2 $1 million or <unk> <unk> loss.
Wallace D. Ruiz: Loss per basic and diluted share.
Wallace D. Ruiz: Compared to a net loss of $3 4 million or 3% or <unk> <unk> loss per basic and diluted share for the same periods last year.
Wallace D. Ruiz: Adjusted EBITDA loss also improved in the first quarter of 2024, where it was a $1 million loss compared to a $2.3 million loss in the same period of last year. On March 31st, 2024, we had cash and cash equivalents of $2.4 million. In addition, we maintain a $5 million working capital line of credit, which has no outstanding balance. Our capital structure is composed of 139 million common shares outstanding, 8.4 million employee restricted stock units outstanding, and 108,000 out-of-the-money warrants.
Wallace D. Ruiz: Adjusted EBITDA loss also improved in the first quarter of 2024, where it was a $1 million loss compared to $2 $3 million loss.
Wallace D. Ruiz: The same period of last year.
Wallace D. Ruiz: On March 31, 2024, we had cash and cash equivalents of $2 $4 million. In addition, we maintain a $5 million working capital line of credit, which has no outstanding balance our capital structure is composed of 139 million common shares outstanding.
Wallace D. Ruiz: $8 4 million employee restricted stock units outstanding and 108000 out of the money warrants.
Wallace D. Ruiz: The company cut its cash burn by 50% in the first quarter compared to the first quarter last year and by 27% compared to the fourth quarter of last year. We expect to continue to see improvement throughout 2024. Now, with that, I'd like to turn the call back over to Rich.
Wallace D. Ruiz: The company cut its cash burn by 50% in the first quarter compared to the first quarter last year.
Rich: And by 27% compared to the fourth quarter of last year, we expect to continue to see improvement throughout 2024.
Wallace D. Ruiz: Now with that I'd like to turn the call back over to rich.
Richard K. Howe: Thanks, Wally. We had a year over year first quarter growth of 44%, which is a strong start to the 2024 year. From a development perspective, we continue to innovate in a manner that sets the bar high for our competition. From a market perspective, we continue to increase the size of our go-to-market and marketing organizations to both increase the awareness of our solutions and our pipeline of prospects. As we have mentioned in previous quarters, Inuvo's financial metrics begin to change at a threshold of roughly $100 million in annual revenue.
Rich: Thanks, Wally we had a year over year first quarter growth of 44%, which is a strong start to the 2024 year.
Richard K. Howe: From a development perspective, we continue to innovate in a manner that makes the bar high for our competition from a market perspective, we continue to increase the size of our go to market and marketing organizations.
Richard K. Howe: To both increase the awareness of our solutions and our pipeline of prospects.
Richard K. Howe: As we have mentioned in previous quarters, and numerous financial metrics begin to change at a threshold of roughly $100 million in annual revenue.
Richard K. Howe: At this level, we anticipate gross margins would absorb much of our fixed costs and therefore generate positive adjusted EBITDA and cash flow. I will now turn the call over to the operator for questions. Operator. Thank you, presenters, and ladies.
Richard K. Howe: At this level, we anticipate gross margins would absorbed much of our fixed costs and therefore generate positive adjusted EBITDA and.
Richard K. Howe: And cash flow.
Richard K. Howe: I will now turn the call over to the operator for questions operator.
Operator: Thank you, presenters. And ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number 1 on your touchtone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number 2. And if you're using a speakerphone, just lift the handset before pressing any key. And one moment, please, for your first question. Our first question comes from the line of Brian Kinstlinger of Alliance Global. Your line is now open.
Speaker Change: Thank you presenters and ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on you touched on selling and you'll hear a prompt that Jerry had has been based should you wish to decline from the polling process. Please press the star followed by the number too.
Brian David Kinstlinger: Thank you so much. Good results. Can you talk about revenue growth in terms of new logo revenue versus increased wallet share from existing customers, at least at a high level?
Brian David Kinstlinger: You're using a speaker phone please lift the handset before pressing any keys and one moment. Please for your first question.
Brian David Kinstlinger: Our first question comes from the line of Brian singer with Alliance Global Your line is now open.
Brian David Kinstlinger: How much good results.
Brian David Kinstlinger: Can you talk about revenue growth in terms of <unk>.
Brian David Kinstlinger: New logo revenue versus increased wallet share from existing customers at least at a high level.
Richard K. Howe: Well, I mentioned that we signed some new brands up in the quarter and, you know, The lion's share of our revenue is recurring again this year. I don't think we provide that have provided that split historically. But that's, that's the answer, Ron.
Brian David Kinstlinger: Well I mentioned that we signed some new brands up in the quarter end.
Richard K. Howe: The lion's share of our revenue is recurring again this year.
Richard K. Howe: I don't think we can provide that but have provided historically that split.
Ron: But that's that's.
Ron: That's the answer Brian.
Brian David Kinstlinger: Well, I guess as you look at the last four quarters of customer additions, which that'll be part of my next question, is that a meaningful piece to revenue? Is 10 percent of revenue coming from new customers added in the last four quarters? Is it a much smaller share given their generally new programs, you know, smaller new programs and be trying to gauge contribution, without exactly? It's at least.
Speaker Change: Well I guess as you look at the last four quarters, our customer additions, which that will be part of my next question.
Brian David Kinstlinger: Is that a meaningful piece to revenue was 10% of revenue coming from new customers added in the last four quarters is at much smaller share given generally new program smaller new programs going be trying to do.
Brian David Kinstlinger: Cage.
Brian David Kinstlinger: <unk>.
Brian David Kinstlinger: Without it so at least.
Richard K. Howe: Yeah, I'd have to go look at the numbers myself, but I can do some mental math in my head just based on what I know. And, you know, it's probably, you know, 10 to 20% is the new piece. Right, great.
Brian David Kinstlinger: Yes.
Richard K. Howe: I'd have to go look at the numbers myself, but I can do the mental math in my head just based on what I know.
Richard K. Howe: It's probably.
Richard K. Howe: 10% to 20% is the new east.
Brian David Kinstlinger: And then, can you guys provide, you added three, a customer count today versus last year? And then I know you mentioned conferences, more advertising, more press coverage, all great things. I've talked about getting your brand out there, and you clearly are doing everything to do that. But are you able to identify which avenues of marketing are driving more success and which maybe are having less success early on in these changes, in these new avenues?
Richard K. Howe: Alright, great that would be and then.
Brian David Kinstlinger: Can you guys provide you added three of customer account today versus last year, and then I know you mentioned comprehensive more advertising more price coverage all great things I've talked about getting your brand out there and you clearly are doing everything to do that are you able to identify which avenues of marketing are driving more success and which may be.
Brian David Kinstlinger: Our having less success.
Brian David Kinstlinger: Early on in these changes and these new avenues.
Richard K. Howe: I don't think we've provided specific client counts in the past, and I don't have them at my fingertips right now. I think we've generally provided some sense of how many clients, let's just say the makeup agency and brand section. So we'd have to take that up afterwards, Brian.
Speaker Change: I don't think we've provided specific client counts in the past and I don't have them at my fingertips right now I think we've generally provided some sense of how many.
Richard K. Howe: Client so, let's just say makeup agency brands section.
Brian: So we'd have to take that up afterwards Bryan.
Richard K. Howe: As it relates to the marketing activities, well, we see that we're kind of doing three things to support, you know, a field sales team, which is, you know, primarily the method through which we, we, close deals. One I mentioned in the script, which is, you know, the portal that we created, is itself a lead generation source. Us making our AI available, you know, online for anybody to use does, you know, solicit, you know, input.
Richard K. Howe: As it relates to the marketing activities.
Richard K. Howe: While we see what kind of doing three things.
Richard K. Howe:
Richard K. Howe: To support our.
Richard K. Howe: Our field sales team, which is.
Richard K. Howe: Primarily the method through which we we closed deals.
Richard K. Howe: One I mentioned in the script, which is the.
Richard K. Howe: The portal that we created.
Richard K. Howe: Is itself a lead gen source us, making our AI available.
Richard K. Howe: Online for anybody to use does.
Richard K. Howe: So that's one avenue. The second is, you know, we have found conferences to be useful, probably because you can meet more people in one place than in hand-to-hand combat on the field. So those are good sources of leads for us, and the third is just being picked up more generally, which, as we've said, has accelerated in the last year, mostly because, you know, the end of the cookie approaches, so, you know, more media outlets are, you know, hunting around interested in two things: one, anything with artificial intelligence tied to it, which clearly, you know, we're a good candidate for.
Richard K. Howe: Solicit.
Richard K. Howe: Input.
Richard K. Howe: So that's one Avenue the second is just.
Richard K. Howe: We have found conferences to be useful probably because you can meet.
Richard K. Howe: More people have one place than that.
Richard K. Howe: And then hand to hand combat in the field. So those are good sources of leads for us.
Richard K. Howe: And the third is just being picked up more generally which as we've said has accelerated in the last year.
Richard K. Howe: Year.
Richard K. Howe: Mostly because.
Richard K. Howe: The end of the.
Richard K. Howe: Cookie approaches so more media outlets are hunting around interested in.
Richard K. Howe: Two things.
Richard K. Howe: One anything with artificial intelligence tied to it.
Richard K. Howe: Which clearly.
Richard K. Howe: We are a good candidate for.
Richard K. Howe: And the second is, yeah, what's going on with the, you know, the cookie, the cookie store story and advertising. So those three things are all done to try to make our brand awareness easier for our salespeople in the field.
Richard K. Howe: And the second is yeah, what's going on with the.
Richard K. Howe: The cookie cookies store sorry in advertising so it's those three things.
Richard K. Howe: To try to make our brand awareness easier for our salespeople in the field.
Richard K. Howe: Great.
Brian David Kinstlinger: And then within your existing customer base, where they've already tested and are using the technology, what are they communicating about their future plans in a world without cookies and without the ability to track consumers? And is their concern and the reason they don't scale so much larger, because I know their wallet sizes are larger, is it the size of your company? Is it not wanting to shift away from other ad tech companies? It sounds like you're solving a problem others aren't solving, so I'm wondering what the reluctance to use more is if they already understand your technology.
Richard K. Howe: And then within your existing customer base, where they've already.
Brian David Kinstlinger: They're already using the technology.
Brian David Kinstlinger: What are they communicating about their future plans and a world without cookies and without the ability to track consumers and their concern and the reason they don't scale. So much larger because they know their wallet size or larger.
Brian David Kinstlinger: The size of your company is yet.
Brian David Kinstlinger: Outline your shift away from either.
Brian David Kinstlinger: Companies I'm, just trying to understand.
Brian David Kinstlinger: While you had fantastic growth.
Brian David Kinstlinger: It sounds like Youre solving a problem others arent solving so I'm wondering what their reluctance to use more is if they already understand your technology.
Richard K. Howe: I think the size of our company, the size of anybody's company, has an impact, particularly the larger the client is. So that definitely has an impact.
Brian David Kinstlinger: I think size of our company size of Anybody's company has an impact.
Richard K. Howe: Particularly the larger the client is.
Richard K. Howe: So that definitely has an impact, but I don't know that that's a new.
Richard K. Howe: But I don't know that that's a new phenomenon with Inuvo. I mean, it's been the same with every company that started. So it does exist, and it's real, but it's no different for us than it was for anybody.
Richard K. Howe: Phenomenon.
Richard K. Howe: With the new <unk> I mean, it's been the same with every company to start it.
Richard K. Howe: So.
Richard K. Howe: That it does exist and it's real.
Richard K. Howe: It's no different for us than it was for anybody.
Richard K. Howe: The second question, part of that question, is also a good one. Generally, what we find is the marketplace itself is less aware and knowledgeable about the underpinnings of how people actually do get tracked around the internet than we might want them to be. A consequence of that is, you know, a lack of a thorough understanding of how that all works leads some potential prospects to be complacent in the decisions they've already made, where they're getting input from existing vendors who tell them the problem's, you know, going to be fixed in some other way.
Richard K. Howe: The second question that part of that question I think is also a <unk>.
Richard K. Howe: Good one.
Richard K. Howe: Generally what we find is the marketplace itself is.
Richard K. Howe: Yes.
Richard K. Howe: Ware.
Richard K. Howe: And knowledgeable.
Richard K. Howe: About the.
Richard K. Howe: Underpinnings of how people actually do get tracked around the Internet then.
Richard K. Howe: We might.
Richard K. Howe: Want them to be.
Richard K. Howe: A consequence of that is.
Richard K. Howe: Lack of a thorough understanding of how that all works.
Richard K. Howe: Leads.
Richard K. Howe: Some.
Richard K. Howe: Potential prospects to be complacent.
Richard K. Howe: In the decisions they've already made.
Richard K. Howe: Theyre getting input from existing vendors, who tell them the problems.
Richard K. Howe: So I think it's a combination of those two things that are still in front of us, you know, and it's all kind of the same, Brian. It's like there's always a certain subset of people who are early adopters. And then there's everybody else who waits until it's already happened. And then, you know, then they start scrambling around, trying to find a solution that works. That's not, you know, a general statement, because obviously, some people are working on this.
Richard K. Howe: Fixed in some other way.
Richard K. Howe: So.
Richard K. Howe: I think it's a combination of those two things that.
Richard K. Howe: That are still in front of us.
Richard K. Howe: It's all it's kind of the same Brian it's like there's always a certain subset of people who are early adopters and then there is everybody else who wait til.
Richard K. Howe: It's already happened and then then they start scrambling around trying to find a solution that works.
Richard K. Howe: Not that Thats not a general statement because obviously some people are working on this but I will tell you. Some people are working on the wrong problem right and so that happens to rite aid, they're convinced that theres, a certain path thats going to yield the right outcome and oftentimes they won't theres a lot of that going on.
Richard K. Howe: I will tell you some people are working on the wrong problem, right? And so that happens too, right? They're convinced that there's a certain path that's going to yield the right outcome, and oftentimes, it won't. There's a lot of that going on.
Brian David Kinstlinger: a plan to hire more salespeople
Richard K. Howe: So you mentioned.
Brian David Kinstlinger: <unk> planned to hire more salespeople.
Speaker Change: Can you talk about how many direct sales folks you have and where you hope to end the year at.
Richard K. Howe: You'd think we'd know the exact answer to this by now. I think it's been asked a few times, Brian. So, you know, I don't know what the exact number is, and I'd rather give you the exact number like what's in that organization. So maybe Wally can follow up and tell you exactly what it is. We'll go take the counts because we've been hiring and for some people we've let go, and, you know, so I don't know where the net is on that right now. Great. Thank you.
Brian David Kinstlinger: You'd think we'd know the exact answer to this by now I think it's been asked a few times Brian So.
Richard K. Howe: I don't know what the exact numbers and I'd, rather give you the exact number like within that organization.
Richard K. Howe: So maybe he can follow up and tell you exactly what it is we'll take the counts because we've been hiring some people. We let go and so I don't know where the net is on that right now.
Brian David Kinstlinger: Thank you. I'll get back in the queue with maybe another question or two.
Speaker Change: Great. Thank you I'll get back in the queue, maybe another question or two.
Brian David Kinstlinger: Okay.
Speaker Change: Thank you so much.
Operator: Thank you very much. Your next question comes from the line of Jack Godera of Maxim Group. You may now ask your question.
Brian David Kinstlinger: Your next question comes from the line of Jack <unk> with Maxim Group you May now ask your question.
Jack Vander Aarde: Hi, congratulations on a solid quarter. This is Jack Adair calling in for Jack Menderard.
Jack Vander Aarde: Hi, Congrats on a solid quarter. This is Jeff and Eric calling in for Jack Vander Ark.
Jack Vander Aarde: I wanted to touch on the DSP stuff. So, in early March, you put out a press release announcing the self-serve availability of the intent key. I was wondering if you could give any additional color on how this has progressed. How many platforms are you on? Any additional color there would be helpful.
Jack Vander Aarde: I wanted to touch on the DSD Scott. So in early March you put out a press release announcing the self serve availability of USEC.
Jack Vander Aarde: I was wondering if you could give any additional color. How has this progressed how many platforms are you on any additional color there would be helpful.
Richard K. Howe: Any major DSP can access our AI and run campaigns against it. You know, there are a lot of DSPs, but they're the ones that matter.
Jack Vander Aarde: Any major DSP can access our AI and run campaigns against it.
Richard K. Howe: There's a lot of DSP.
Richard K. Howe: There's no challenge with that. We have built an integration for that, but it's still slow going.
Richard K. Howe: Ones that matter.
Richard K. Howe: There is no challenge with that we have we built an integration for that.
Richard K. Howe: I mean, I, you know, we only really had what I would call, you know, beta clients. You go ahead. Was there a question in the middle there, or should I just continue? I guess I'll continue. We really, you know, only started materially, you know, signing beta clients for the self-serve in 2023. So this is the first year we're actually populating a sales force to go do it. In fact, you know, we hired our first salesperson to go do that, I believe, in the first quarter of this year.
Richard K. Howe: It's still slow going.
Richard K. Howe: We we only really had what I would call them beta clients.
Speaker Change: Go ahead.
Speaker Change: <unk> was there a question in the middle there or should I just continue.
Richard K. Howe: I guess I'll continue.
Richard K. Howe: We really only started materially.
Richard K. Howe: Signing beta clients for the self serve in 2023. So this is the first year, where actually populating our salesforce to go do it in fact, we hired our first salesperson to go do that.
Richard K. Howe: I believe in the first quarter of this year.
Richard K. Howe: Okay.
Speaker Change: Okay, that's actually really helpful.
Jack Vander Aarde: That's actually really helpful. Um, and then take the Google approach again. Given that they started phasing out third-party cookies, can you give any other additional color? How is this impacting conversations on the consumer decision-making side? Are you about to close deals, and this is a major lever? Can you give any additional color there?
Jack Vander Aarde: And then.
Jack Vander Aarde: Take the the Google approach again.
Jack Vander Aarde: Given that they started phasing out.
Jack Vander Aarde: Third party cookies.
Jack Vander Aarde: Can you give any other additional color how is this impacting conversations on the consumer decision making side.
Jack Vander Aarde: <unk>.
Jack Vander Aarde: To close deals in this space.
Jack Vander Aarde: A major lever can you give any additional color there.
Jack Vander Aarde: Yes.
Richard K. Howe: Yes, you know, like anything, somebody as large and successful and powerful as Google is, it can complicate people's decisions and, potentially, confuse people's decisions. And I think that's probably the best way to look at it. You know, again, maybe pointing back to what I said earlier in that there are a lot of buyers we encounter who, in our opinion, don't understand all of the applications to their business. You know, they can be, you know, maybe misread something like this and think, Oh, it's like, this problem's not going away at all. In which case, I can just, you know, keep going with what I've got because that's one potential thought that could go through the minds of someone. Right?
Jack Vander Aarde: Yes.
Richard K. Howe: Like any thing somebody is.
Richard K. Howe: Large and successful and powerful as Google is.
Richard K. Howe: It can.
Richard K. Howe: Complicate people's decisions and confuse potentially peoples decisions.
Richard K. Howe: And I think that's probably the best way to look at it.
Richard K. Howe: Again, maybe pointing back to what I said earlier than that.
Richard K. Howe: There's a lot of buyers we encounter.
Richard K. Howe: Jeremy.
Richard K. Howe: In our opinion don't understand all of the applications to their business.
Richard K. Howe:
Richard K. Howe: They can be.
Richard K. Howe: Maybe misread something like this and think Oh. This problem is not going away at all.
Richard K. Howe: In which case I can just keep going with what I've got that's one potential.
Richard K. Howe: Thought that could go through the minds of somewhat right.
Jack Vander Aarde: Okay, that's helpful, Kola. Congratulations again on the solid quarter. I'll hop back in a few. Thank you.
Speaker Change: Okay. That's helpful color Congrats again on the solid quarter I'll hop back in queue.
Speaker Change: Thank you.
Operator: Thank you so much. And again, if you would like to ask a question, please press star one on your touchtone phone. Your next question comes from the line of John Hickman of Flandenburg. Your line is now open.
Jack Vander Aarde: Thank you so much and again, if you would like to ask a question. Please press star one on your Touchtone phone. Your next question comes from the line of Jon Hickman of Ladenburg. Your line is now open.
Operator: Hi.
John Hickman: Could you, according to kind of my historical numbers, and maybe I'm wrong here, but it seemed like the media buying and marketing expenses were somewhat higher than they have historically been for the level of revenues. Was there something going on in the first quarter that made that happen?
John Hickman: Could you.
John Hickman: According to kind of my historical numbers.
John Hickman: And maybe I'm wrong here.
John Hickman: But it.
John Hickman: It seemed like the media buying.
John Hickman: Marketing expenses were somewhat higher than they have historically been.
John Hickman: For the level of revenues.
John Hickman: Was there something going on in the first quarter that made that happen.
John Hickman: Wally.
Unknown Executive: I think it's Now, if it's higher, it's, It's just the cost of media. I mean, it's, you know, supply and demand, but No, there was nothing going on in the quarter that would increase the media spend more than the prior quarters.
John Hickman: I think.
John Hickman: Okay.
Unknown Executive: Okay.
Unknown Executive: It's the.
Unknown Executive: No.
Unknown Executive: If it's higher.
Unknown Executive: It's just the cost of media or.
Unknown Executive: Supply and demand but.
Unknown Executive: No there was nothing going on in the quarter that would.
Unknown Executive: Increase the.
Unknown Executive: The media spend more than.
Unknown Executive: Then in prior quarters.
John Hickman: Okay, thank you.
Speaker Change: Okay. Thank you.
Brian David Kinstlinger: Thank you so much. And we have a follow-up question from Brian Kinstlinger of Alliance Global. Your line is now open.
Brian David Kinstlinger: Thank you so much and we have a follow up question from Brian singer with Alliance Global Your line is now open.
Brian David Kinstlinger: Question.
Brian David Kinstlinger: You help us with what the expectation you might have of the impact of the election on your business. In which quarter also, if there is an impact, do you expect to begin to see it? And how will we see that?
Brian David Kinstlinger: Can you help us with.
Brian David Kinstlinger: What the expectation you might have.
Brian David Kinstlinger: The impact on the election on your business.
Brian David Kinstlinger: And which quarter also if there is an impact do you expect to begin to see it and how will we see that.
Richard K. Howe: At this point, Brian, we may have answered this before, but there will be virtually no impact from the election on us, only because we purposefully try to stay away from the election area for now. There's plenty of other opportunities for us. With that being said, I should be clear about this. We have run some smaller state and local election campaigns. But as a rule, as a company, it's not an area that we chase, actively; rightly or wrongly, we just haven't. So I don't expect any impact on us one way or the other. [inaudible]
Speaker Change: At this point Brian.
Richard K. Howe: We may have answered this before but does theirs.
Richard K. Howe: There will be virtually no impact from the electron us.
Richard K. Howe: Only because we can.
Richard K. Howe: Purposefully.
Richard K. Howe: Tried to stay away from.
Richard K. Howe: The election area for now there's plenty of other opportunities for us with that being said I should be clear because we have run.
Richard K. Howe: Some smaller.
Richard K. Howe: State and local election.
Richard K. Howe: Media, but as a rule of the company, it's not an area that we've chased.
Richard K. Howe: Actively rightly or wrongly we just haven't so I don't expect any impact on us.
Richard K. Howe: Way or the other.
Brian David Kinstlinger: Understandable. Thank you so much. Thank you again, ladies and gentlemen. If you would like to ask a question,
Brian: Understood. Thank you so much.
Brian David Kinstlinger: Yeah.
Operator: Thank you. Again, ladies and gentlemen, if you would like to ask a question, please press star one. And there are no further questions at this time. I would now like to turn the call back to Richard for his closing remarks.
Speaker Change: Thank you again, ladies and gentlemen, if you would like to ask a question. Please press star one.
Operator: Yeah.
Operator: And there are no further questions at this time I would now like to turn the call back to Richard for closing remarks.
Richard K. Howe: Thank you, operator. And, of course, I'd like to thank everyone who joined us on the call today. We appreciate your continued interest in our Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect. Have a good day.
Richard: Thank you operator and of course I'd like to thank everyone, who joined US on the call today. We appreciate your continued interest in our company.
unknown: [inaudible]
unknown: Yeah.
unknown: Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect have a good day.
unknown: Okay.
unknown: Yes.
unknown: Yeah.
unknown: Okay.
unknown: Okay.