Q2 2024 Inuvo Inc Earnings Call
Speaker Change: Good day, ladies and gentlemen, and welcome to the Inuvo Inc. second quarter 2024 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session.
Unknown Executive: This time our lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Natalya Rudman of Crescendo Communications. Please go ahead.
Speaker Change: If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Natalya Rudman of Crescendo Communications. Please go ahead.
Unknown Executive: Hey, it's Joanna, and good afternoon everyone. I would like to thank everyone for joining us today for the Inuvo Second Quarter, 2021 Shareholder Update Call. Today, Inuvo's Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wallace Ruiz, will be your presenters on the call.
Speaker Change: Hey, Joanna, and good afternoon, everyone. I'd like to thank everyone for joining us today for the Inuvo second quarter.
Natalya Rudman: 2024 Shareholder Update Call. Today, Inuvo's Chief Executive Officer Richard Howe and Chief Financial Officer Wallace Ruiz will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10-Q with the Securities and Exchange Commission this evening. 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 relating to future events, and as such, 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 using this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should project.
Natalya Rudman: and similar expressions as they relate to Inuva Inc. are such a forward-looking statement.
Natalya Rudman: 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: 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.
Natalya Rudman: In addition, today's discussion will include references to non-GAAP measures. The company believes that such information provides an additional measurement and a consistent historical comparison of its performance.
Rich Howe: A Reconciliation of the Non- GAAP measures to the Most Directly Comparable Gap Measure is available in today's news release on our website. With that, I'll now turn the call over to CEO Rich Howe. Please go ahead, Rich.
Richard Howe: Thank you, Natalya. And thanks to everyone for joining us today. We are pleased to report that for the quarter ended June 30, 2024, we delivered 9.4% year-over-year growth. For the first half of the year, we've delivered a healthy 23.6 percent year-over-year growth. And that, of course, is coming off of a very strong second half of 2023, where we also grew 32% year-over-year. The third quarter has also started off strong, with audited revenue coming in around $7.7 million for the month of July, and that compares to the roughly 5.9 million dollar per month average we experienced throughout the first half of 2024.
Rich Howe: Thank you, Natalya, and thanks, everyone, for joining us today. We are pleased to report that for the quarter ended June 30, 2024, we delivered 9.4% year-over-year growth.
Rich Howe: For the first half of the year, we've delivered a healthy 23.6 percent.
Rich Howe: year-over-year growth. And that, of course, is coming off of a very strong second half of 2023, where we also grew 32% year-over-year.
Rich Howe: The third quarter has also started off strong, with unaudited revenue coming in around $7.7 million for the month of July , and that compares to the roughly $5.9 million per month average.
Richard Howe: We also experienced a significant improvement in our adjusted EBITDA within the quarter, with a $1.1 million improvement year over year and a $2.4 million improvement for the first half, as compared to the prior year. Free cash flow has also improved over the first half of 2024, in comparison to last year. Wally will share more details about our second quarter 2024 financial results shortly.
Rich Howe: We experienced throughout the first half of 2024.
Rich Howe: We also experienced a significant improvement in our adjusted EBITDA within the quarter with a $1.1 million improvement year-over-year and a $2.4 million improvement for the first half.
Rich Howe: as compared to the prior year. Pre-cash flow has also improved over the first half of 2024 in comparison to last year. Wally will share more details about our second quarter 2024 financial results shortly.
Richard Howe: We've had strong momentum within existing and new clients. We've had some wins with our new product, newer product sales. And we've had a material and what we believe to be a positive vent occur across our industry in the second quarter. What I'd like to do now is spend some time discussing these items.
Wally: We've had strong momentum within existing and new clients.
Speaker Change: We've had some wins with our new product, newer product sales, and we've had a material and what we believe to be positive event occur across our industry within the second quarter.
Richard Howe: Let's begin with the industry. Google, of course, announced a new position on the deprecation of cookies within their Chrome browser this past quarter. For several years now, Google has been developing an alternative technology to replace cookies. This technology has aptly been named the privacy sandbox.
Wally: What I'd like to do now is spend some time discussing these items.
Wally: Let's begin with the industry. Google, of course, announced a new position on the deprecation of cookies within their Chrome browser this past quarter.
Wally: For several years now, Google has been developing an alternative technology to replace cookies.
Wally: This technology has aptly been named the Privacy Sandbox.
Richard Howe: I'm like Apple with their Safari browser and Google, whose business is predominantly advertising, and had to satisfy a chorus of constituents that include government, the ad tech industry, the consumer data industry, and various other groups with a vested interest in the cookie survival. Now, it's very likely their efforts to satisfy all these parties have been difficult, and consequently, what they have probably decided to do now is put the power of making the decision about the cookie in the hands of the consumers. As a reminder, the cookie is the way your browser tracks your activity around the internet and is the means through which consumer data is accessed.
Wally: Unlike Apple with their Safari browser, Google, whose business is predominantly advertising,
Wally: has had to satisfy a chorus of constituents that include governments, the ad tech industry, the consumer data industry, and various other groups with a vested interest in cookies survival.
Wally: Now, it's very likely their efforts to satisfy all these parties have been difficult, and consequently, what they appear to have decided to do now is put the power of making the decision about the cookie in the hands of consumers.
Wally: As a reminder, the cookie is the way your browser tracks your activity around the Internet and is the means through which consumer data is accessed.
Richard Howe: Google has not been specific about exactly how they plan to empower consumers, but we believe it will be similar to the way Apple engaged consumers when they wanted to eliminate app traffic. When Apple gave consumers that option to opt out, over 90% of them chose to do so.
Speaker Change: Google has not been specific about exactly how they plan to empower consumers, but we believe it will be similar to the way Apple engaged consumers when they wanted to eliminate app tracking.
Speaker Change: When Apple gave consumers that option to opt out, over 90% of them chose to do so.
Richard Howe: Consequently, Anuvo believes that this is good news for consumer privacy advocates because history has shown that when consumers are given a clear choice regarding the use of their data and the tracking of their activity, they overwhelmingly say no. The simple reason why this is a good thing for Inuvo is because the majority of our competitors need this cookie ID to decide whether or not to bid on a media placement transaction on behalf of their clients. And, of course, Inuvo's AI does not.
ANUVA: Consequently, what Inuvo believes is that this is good news for consumer privacy advocates because history has shown that when consumers are given a clear choice
Speaker Change: regarding the use of their data and the tracking of their activity, they overwhelmingly say no.
Anubo: The simple reason why this is a good thing for Inuvo is because the majority of our competitors need this cookie ID to decide whether or not to bid on a media placement transaction on behalf of their clients and of course Inuvo's AI does not.
Richard Howe: Within programmatic advertising channels, already 70% of these media transactions no longer contain a persistent, hooky idea. And that number includes everyone using Apple Safari browsers, where cookies will be blocked, starting in 2020. The remaining 30% are effectively Google Chrome users, and consequently, we fully expect that number to drop very quickly, following the informed consumer choice Google plans to give its users. While we have said this before, it's worth mentioning again that Anuvo's audience discovery and targeting AI already outperforms by a wide margin the best cookie-based technologies. So we have never required that the cookie disappear.
Anubo: Within programmatic advertising channels, already 70% of these media transactions no longer contain a persistent cookie ID.
Anubo: And that number includes everyone using Apple Safari browsers where cookies were blocked starting in 2020.
Anubo: The remaining 30% is effectively Google Chrome users.
Anubo: And consequently, we fully expect that number to drop very quickly, following the informed consumer choice Google plans to give its users.
Anubo: While we have said this before, it's worth mentioning again that Inuvo's audience discovery and targeting AI already outperforms by a wide margin the best of cookie-based technologies.
Anubo: So we have never required that the cookie disappear. However, it's deprecation and ultimately obsolescence.
Anubo: is a catalyst for industry change.
Anubo: that we believe will accelerate demand for Inuvo, given our single biggest obstacle to adoption continues to be the hold incumbents have on clients.
Anubo: and the fear those clients have of a change.
Anubo: Let's shift now to products and clients.
Anubo: As we have discussed in the past, Inuvo has developed two AI technologies, one for audience discovery and targeting, and the other for the measurement of marketing's performance.
Richard Howe: We developed these solutions because we knew these would be the two biggest problems facing advertisers as the internet adapted to a consumer privacy-based paradigm. Across the industry, we continue to be amazed at just how inaccurate the systems are within corporations for measuring the effectiveness of what, for many of these brands, is their largest expense line. We frequently observe them using KPIs that incentivize poor behavior in their vendors while inactually measuring the influence of the various channels they're using on their bits, as has been the case with media targets.
Anubo: Now, we developed these solutions because we knew these would be the two biggest problems facing advertisers as the Internet adapted to a consumer privacy-based paradigm.
Anubo: Across the industry, we continue to be amazed at just how inaccurate the systems are within corporations for measuring the effectiveness of what, for many of these brands, is their largest expense line.
Anubo: We frequently observe them using KPIs that incentivize poor behavior in their vendors while inaccurately measuring the influence of the various channels they're using on their business.
Richard Howe: The industry has, over time, built technology to help companies understand performance. However, that technology has also depended on tracking consumers around the Internet. And, as I mentioned earlier, that mechanism is now severely broken, and consequently, so are these measurement solutions.
Anubo: as has been the case with media targeting.
Anubo: The industry over time has built technology to help companies understand performance.
Anubo: However, that technology has also depended on tracking consumers around the internet. And as I mentioned earlier, that mechanism is now severely broken, and consequently, so are these measurement solutions.
Richard Howe: This is why we built our predictive media mix modeling capability. We have a number of clients now using this technology, including our largest retail client, who began doing business with us not only for our audience technology but also for the capabilities of our media mix technology. This client now uses this capability to measure and optimize the contribution to sales resulting from the dozen or so different marketing channels that they deploy. Unlike existing methods that require a one-to-one consumer mapping of advertising clicks to conversion using the cookie ID. Our technology requires nothing other than the actual spend over time within channels, alongside the actual business. Using historical data, these very sophisticated machine learning algorithms we've developed.
Anubo: This is why we built our predictive media mix modeling capabilities.
Anubo: We have a number of clients now using this technology, including our largest retail client who began doing business with us, not only for our audience technology, but also for the capabilities of our media mix technology.
Anubo: This client now uses this capability to measure and optimize the contribution on sales resulting from the dozen or so different marketing channels that they deploy.
Anubo: Unlike existing methods that require a one-to-one consumer mapping of advertising clicks to conversions using the cookie ID, our technology requires nothing other than the actual spend over time within channels.
Anubo: alongside the actual business metrics.
Anubo: Using historical data, these very sophisticated machine learning algorithms we've developed.
Richard Howe: Ken detects patterns that allow the AI to predict the amount of money our clients should spend within each. This is an analytic product that strategically positions Inuvo alongside the corner office within our client. We see demand increasing for this product with a number of high-profile prospects in our pipeline, including a financial services company that is itself already using our audience technology. We see this product strategically, once installed within a client, also being a catalyst for the adoption and expansion of our audience technology, in part because it can accurately predict and contrast the value of our audience technology relative to the other marketing strategies being the While our managed services business continues to drive growth, and we signed up another three new agency clients in the quarter, we have also started scaling our self-serve capability, larger agencies, mostly owned by the holding company, have historically not been That has now changed.
Anubo: can detect patterns that allow the AI to predict the amount of money our clients should spend within each channel.
Anubo: This is an analytic product that strategically positions Inuvo alongside the corner office within our clients.
Anubo: We see demand increasing for this product with a number of high-profile prospects in our pipeline, including a financial services company that is itself already using our audience technology.
Anubo: We see this product strategically once installed within a client.
Anubo: also being a catalyst for the adoption and expansion of our audience technology in part because it can accurately predict and contrast
Anubo: the value of our audience technology relative to the other marketing strategies being deployed.
Anubo: While our managed services business continues to drive growth, and we signed up another three new agency clients in the quarter,
Anubo: We have also started scaling our self-serve capabilities.
Anubo: Larger agencies, mostly owned by the holding companies.
Richard Howe: And we've had a half dozen self-serve clients sign up, including a major technology company and one of the largest car manufacturers in the world. The elegance of this self-serve product lies in its flexibility to empower our clients with the ability to easily model and target audiences without our system. It also allows us to more quickly scale certain general audience categories, like say back to school or the Olympics or any one of hundreds of other similar audiences. But perhaps most importantly,
Anubo: have historically not been our target.
Anubo: That has now changed, and we've had a half-dozen self-serve clients sign up.
Anubo: including a major technology company.
Speaker Change: and one of the largest car manufacturers in the world.
Speaker Change: The elegance of this self-serve product lies in its flexibility to empower our clients with the ability to easily model and target audiences without our assistance.
Speaker Change: It also allows us to more quickly scale certain general audience categories like, say, Back to School or the Olympics, and any one of hundreds of other similar audiences.
Richard Howe: The self-serversion of our AI boasts, I'm Argyns, for Nubo, with Gross Profits ranging from 85 to 95%. So accelerated sales here will drop cash to the bottom line at scale. Across our agencies and brand clients, we outperformed KPIs once again on average by about 30% in the quarter. And we expect to sign a Master Services Agreement in the third quarter with one of the largest retailers in the world, which will allow media buyers across their enterprise to access our capabilities. We have already been serving this client for one of their private label brands, and the success of those efforts has now resulted in this agreement.
Speaker Change: but perhaps most importantly.
Speaker Change: The self-serve version of our AI boasts high margins for Inuvo.
Speaker Change: with gross profits ranging from 85 to 95 percent.
Speaker Change: So accelerated sales here will drop cash to the bottom line at scale.
Speaker Change: Across our agencies and brand clients, we outperformed KPIs once again, on average, by about 30% in the quarter.
Speaker Change: And we expect to sign a master services agreement in the third quarter with one of the largest retailers in the world, which will allow media buyers across their enterprise to access our capabilities.
Speaker Change: We have already been serving this client for one of their private label brands. And the success of those efforts has now resulted in this agreement.
Richard Howe: The client is forecasted to do roughly $2 million this year, with the potential to be significantly larger when the MSA is in place. This client has numerous private label brands in their portfolio, and each of those brands is generally limited to using vendors approved by the corporation, in total.
Speaker Change: The client is forecasted to do roughly $2 million this year, with the potential to be significantly larger when the MSA is in place.
Speaker Change: This client has numerous private label brands.
Speaker Change: in their portfolio, and each of those brands are generally limited to using vendors approved by the corporation.
Richard Howe: It's taken us roughly one and a half years to become this approved vendor, so the bar is high for competition here. Platform relationships continue to be a strong growth and working capital engine for our company. These clients grew roughly 11% in the quarter and, as a group, are scaling as we head into what is typically the strongest advertising quarters of our year. One of our platform clients uses our capabilities in a manner analogous to our self-serve intent keyprop.
Speaker Change: In total, it's taken us roughly one and a half years to become this approved vendor, so the bar is high for competition here.
Speaker Change: Platform relationships continue to be a strong growth and working capital engine for our company. These clients grew roughly 11% in the quarter and as a group are scaling as we head into what is typically the strongest advertising quarters of our year.
Speaker Change: One of our platform clients uses our capabilities in a manner analogous to our self-serve intent key product. And consequently, that revenue is also roughly at 90% margin contribution to the bottom line.
Wallace Ruiz: And consequently, that revenue is also roughly at a 90% margin contribution to the bottom line. As we have mentioned, this relationship only took hold in 2024, and in Q2, it generated over $200,000 of this high-margin revenue that flows to the bottom line. I want to also reinforce for our shareholders how important these platform relationships are to our business. Whereas our agency and brand clients require working capital, our platform clients generate positive working capital.
Speaker Change: As we have mentioned, this relationship only took hold in 2024, and in Q2 it generated over $200,000 of this high margin revenue that flows to the bottom line.
Speaker Change: I want to also reinforce for our shareholders how important these platform relationships are to our business.
Speaker Change: Our agency and brand clients require working capital. Our platform clients generate positive working capital. This important distinction is often missed by our shareholders.
Wallace Ruiz: This important distinction is often missed by our shareholders. These receivables, which historically have had low risk, can be borrowed against to fund working capital growth needs. You will also have noted from our press release that we closed a new $10 million credit facility in the quarter. We use this facility to fund working capital, and we had an existing $5 million facility in place with another financial institution. That facility had certain constraints that did not meet our needs.
Speaker Change: These receivables, which historically have had low risk,
Speaker Change: can be bored against to fund working capital growth needs.
Speaker Change: You will also have noted from our press release that we closed a new $10 million credit facility in the quarter.
Speaker Change: We use this facility to fund working capital. And while we had an existing 5 million facility in place with another financial institution, that facility had certain constraints that did not meet our needs.
Wallace Ruiz: We anticipate this new agreement will provide the flexibility we need to continue growing our business. At this time, I'd like to turn the call over to Wallace for a more detailed assessment of our financial performance.
Speaker Change: We anticipate this new agreement will provide the flexibility we need to continue growing our business.
Speaker Change: At this time, I'd like to turn the call over to Wally for a more detailed assessment of our financial performance. Wally?
Wallace Ruiz: Thank you, Rich. Good afternoon, everyone.
Wallace Ruiz: I'll recap the financial results of our second quarter of 2024. As Richard mentioned, Inuvo reported revenue of $18.2 million for the second quarter of this year, and that's compared to $16.7 million for the same period of the prior year. That's a 9.4% increase year over year. The higher revenue this quarter was driven by our largest platform client due to the collaborative effort that we initiated in 2023. Strategically, we are focused on scaling revenue from platform clients and signing new midsize agencies and brands directly.
Wally: Thank you, Rich. Good afternoon, everyone. I'll recap the financial results of our second quarter of 2024.
Wally: As Rich mentioned, ANUVO reported revenue of $18.2 million for the second quarter of this year, and that's compared to $16.7 million for the same period of the prior year. That's a 9.4% increase year over year.
Wally: The higher revenue this quarter was driven by our largest platform client.
Wally: due to the collaborative effort that we initiated in 2023.
Wally: Strategically, we are focused on scaling revenue from platform clients and signing new mid-size agencies and brands directly.
Wallace Ruiz: In the second quarter of 2024, 83% of our revenue came from platform clients, while 17% came from agencies and brands. That's compared to 79% from platform clients and 21% from agencies and brands in the second quarter of last year. We expect this revenue mix to continue for the remainder of the year. Cost of revenue was $2.9 million in the second quarter of 2024, compared to $2.4 million for the same period last year. The Cost of Revenue is primarily composed of media payments we make on behalf of our agency and brand clients and, to a lesser extent, payments made to website publishers and app developers that host our advertising.
Speaker Change: In the second quarter of 2024, 83% of our revenue came from platform clients, while 17% came from agencies and brands.
Speaker Change: That's compared to 79% from platform clients and 21% from agencies and brands in the second quarter of last year.
Speaker Change: We expect this revenue mix to continue for the remainder of the year.
Speaker Change: Cost of revenue was $2.9 million in the second quarter of 2024 compared to $2.4 million for the same period of last year.
Speaker Change: Cost of revenue is primarily composed of media payments we make on behalf of our agency and brand clients, and to a lesser extent, payments made to website publishers and app developers that host our advertisements.
Wallace Ruiz: We reported a gross profit of $15.3 million, compared to $14.3 million for the same quarter last year, a $1 million increase on $1.6 million higher revenue. The gross profit margin for the second quarter of 2024 was 84%, compared to 85.8% for the same period last year. We expect gross margins to increase in the current quarter. Operating expenses for the second quarter of 2024 totaled $17 million. Down from $17.6 million for the same period last year, primarily due to lower compensation and general and administrative.
Speaker Change: We reported a gross profit of $15.3 million compared to $14.3 million for the same quarter last year, a $1 million increase on $1.6 million higher revenue.
Speaker Change: The gross profit margin for the second quarter of 2024 was 84% compared to 85.8% for the same period last year. We expect gross margins to increase in the current quarter.
Speaker Change: Operating expenses for the second quarter of 2024 totaled $17 million, down from $17.6 million for the same period last year, primarily due to lower compensation and general and administrative expense.
Wallace Ruiz: Marketing costs were $12.4 million in the second quarter of 2024 compared to $12.1 million in the same quarter last year. Marketing costs increased primarily because of higher media expenses associated with higher revenue from platform clients.
Speaker Change: Marketing costs were 12.4 million dollars in the second quarter of 2024 compared to 12.1 million dollars in the same quarter last year.
Speaker Change: Marketing costs increased primarily because of higher media expenses associated with the higher revenue from platform clients.
Wallace Ruiz: Compensation expense for the second quarter of 2024 was $3 million, compared to $3.3 million in the same quarter of the prior year. Compensation expense was lower in the second quarter of 2024, due primarily to lower incentive expense. Lower Stock Base Compensation, and lower commission. Though the company continues to grow, we've reduced our workforce by 13 positions in the second quarter. Our total employment, both full and part-time, was 83 in the second quarter of 2024 compared to 84 in the same quarter of the prior year.
Speaker Change: Compensation expense for the second quarter of 2024 was $3 million, compared to $3.3 million in the same quarter of the prior year.
Speaker Change: Compensation expense was lower in the second quarter of 2024, due primarily to lower incentive expense, lower stock-based compensation, and lower commission expense.
Speaker Change: So the company continues to grow. We've reduced our workforce by 13 positions in the second quarter.
Speaker Change: Our total employment, both full and part-time, was 83 for the second quarter of 2024, compared to 84 in the same quarter of the prior year.
Wallace Ruiz: At 83 associates, revenue per associate for the trailing 12 months is over $900,000. That's nearly double that of our nearest competitor. We're confident that we can deliver on our growth plans with the resources we have, and we do not expect to add additional resources this year.
Speaker Change: At 83 associates, our revenue per associate for the trailing 12 months is over $900,000. That's nearly double that of our nearest competitors.
Speaker Change: We are confident that we can deliver on our growth plans with the resources we have, and we do not expect to add additional resources this year.
Wallace Ruiz: General and administrative expense for the second quarter of 2024 was $1.5 million, compared to $2.3 million in the prior year. General and administrative costs were lower this year in this year's quarter, primarily due to lower doubtful accounts expenses as our collections have improved. Net Financing expense was approximately $42,000 in the second quarter of this year, compared to an expense of $38,000 in the same quarter of last year.
Speaker Change: General and administrative expense for the second quarter of 2024 was $1.5 million compared to $2.3 million in the prior year.
Speaker Change: General and administrative costs were lower this year, in this year's quarter, primarily due to lower doubtful accounts expense as our collections have improved.
Speaker Change: Net financing expense was approximately $42,000 in the second quarter of this year compared to an expense of $38,000 in the same quarter last year.
Wallace Ruiz: The net loss improved in the second quarter of 2024 to $1.7 million, or $0.01 per basic and diluted share, compared to a net loss of $3.4 million, or $0.03 per basic or diluted share for the same period last year. That's a $1.6 million year-over-year and proof improvement. Adjusted EBITDA loss also improved in the second quarter of 2024, improving to $668,000. That's compared to a loss of $1.8 million for the same period last year. That's an improvement of $1.1 million year over year.
Speaker Change: The net loss improved in the second quarter of 2024 to $1.7 million, or one cent per basic and diluted share.
Speaker Change: compared to a net loss of $3.4 million or 3 cents per basic or diluted share for the same period last year.
Speaker Change: That's a $1.6 million year-over-year improvement.
Speaker Change: Hello and welcome to my channel, Natalya Rudman, Wallace Ruiz
Speaker Change: adjusted EBITDA loss also improved in the second quarter of 2024, improved to $668,000. That's compared to a loss of $1.8 million for the same period last year. That's an improvement of $1.1 million year over year.
Wallace Ruiz: As of June 30th, 2024, we had cash and cash equivalents of $2 million. In addition, in July, as Rich mentioned, we closed a three-year, $10 million asset-based working capital line of credit. At June 30th, there was no debt outstanding. Our capital structure is composed of 140 million common shares outstanding, 7 million employee restricted stock units outstanding, and 107,000 out-of-the-money warrants. The company has reduced its cash burn by $1.6 million in the first half of 2024 compared to the first half of last year. We expect continued improvement throughout the rest of the year. With that, I'd like to turn the call back over to Rich.
Speaker Change: As of June 30, 2024, we had cash and cash equivalents of $2 million.
Speaker Change: In addition, in July, as Rich mentioned, we closed a three-year, $10 million asset-based working capital line of credit.
Speaker Change: At June 30th, there was no dead outstanding.
Speaker Change: Our capital structure is composed of
Speaker Change: 140 million common shares outstanding, 7 million employee restricted stock units outstanding, and 107,000 out-of-the-money warrants.
Speaker Change: The company has reduced its cash burn by $1.6 million in the first half of 2024 compared to the first half of last year. We expect continued improvement throughout the rest of the year.
Richard Howe: Okay, thanks, Wallace. We had a strong first half, achieving your over your growth of roughly 24%. Throughout this period, we have also improved our Justin Bieber doll and free cash flow. With $7.7 million in revenue entering Q3 for July, we are coming into the second half with strong momentum, and the second half of the year is almost always the stronger part of our year. Our higher-margin products have started to generate revenue, and we are seeing traction with our predictive media mix modeling product.
Speaker Change: With that, I'd like to turn the call back over to Rich.
Rich Howe: Okay, thanks, Wally. We had a strong first half, achieving year-over-year growth of roughly 24%.
Speaker Change: Throughout this period, we have also improved our adjusting EBITDA and free cash flow.
Rich Howe: With $7.7 million in revenue entering Q3 for July , we are coming into the second half with strong momentum, and the second half of the year is almost always the stronger part of our year.
Speaker Change: Our higher margin products have started to generate revenue, and we are seeing traction with our predictive media mix modeling product.
Richard Howe: We are extremely excited about the potential to scale our largest retail clients as a result of the Master Services Agreement, which is currently being circulated within that client for signature. Our platform relationships continue to scale, with significant upside potential remaining within those relationships. And with that, I will turn the call over to the operator to ask questions. Joanna. Thank you.
Speaker Change: We are extremely excited about the potential to scale our largest retail client as a result of the Master Services Agreement, which is currently being circulated within that client for signature.
Speaker Change: Our platform relationships continue to scale with significant upside potential remaining within those relationships.
Speaker Change: And with that, I will turn the call over to the operator to get questions, Joanna.
Operator: 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 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by 2. And if you are using a speakerphone, please lift the handset before pressing any key. The first question comes from Brian Kinstlinger at Alliance Global Partners. Please go ahead.
Joanna: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised.
Speaker Change: Should you wish to decline from the polling process, please press star followed by 2. And if you are using a speakerphone, please lift the handset before pressing any keys.
Speaker Change: First question comes from Brian Kinslingo at Alliance Global Partners, please go ahead.
Kevin: Hi, this is Kevin on behalf of Bryan. Thanks for taking our questions. So, first question: with Google's announcement regarding cookies and Apple already eliminating cookies, is there an event or an aha moment when a consumer needs to more quickly find the tools to advertise with products that can operate in the cookieless environment?
Speaker Change: Hi. This is Kevin for Bryan. Thanks for taking our questions.
Speaker Change: So first question with Google's announcement regarding cookies and Apple already eliminating cookies Is there an event or an aha moment where and when a consumer? Needs to more quickly find the tools to advertise with products that can operate in a cookie-less environment
Speaker Change: Kevin, can you just clarify the consumer aspect of that, please? And then I'll answer it that you're asking.
Kevin: I kind of like just your customers, in general.
Speaker Change: [inaudible]
Richard Howe: Um, so how are they feeling about this? Maybe, maybe is that what you're trying to figure out, like how a client's reacting to the nude from Google?
Speaker Change: So how are they feeling about this? Maybe is that what you're trying to figure out? Like how are clients reacting to the news from Google? Yes.
Kevin: Yes, okay.
Richard Howe: Okay, yeah, so the answer to that is probably not surprising. There's a certain number of them who, I guess, woke up after that ad announcement from Google and thought, oh, well, cookies aren't going away. And I wouldn't say that that was all of them, but probably a majority of them.
Speaker Change: Okay, yeah, so the answer to that is probably not surprising. There's a certain number of them who I guess woke up after that ad announcement from Google and thought, oh, well, so cookies aren't going away. And I wouldn't say that that was...
Richard Howe: And of course, you know, that's not what's happening, and so a lot of people, you know, you know, want that to happen. And certainly the people that we compete with want that to happen, but that's not what is going to happen here, which is why we, you know, we put our own press release on this issue and clarified this issue. Google has been investing in the privacy sandbox for many years now.
Speaker Change: All of them, but but probably a majority of them. And of course, you know, that's not what's happening. And so a lot of people, you know, you know,
Speaker Change: want that to have happened, and certainly the people that we compete with want that to happen, but
Speaker Change: That's not what is going to transpire here, which is why we, you know, we put our own press release on this issue and
Richard Howe: And they were very clear in, you know, in their statement that they're going to continue investing in that. Now, why would you bother doing that if you're not going to do away with cookies anymore? That's the first thing one should ask themselves.
Speaker Change: clarified, you know, this issue. Google has been investing in the privacy sandbox for many years now. And they were very clear about, you know, in their statement that they're going to continue investing in that. Now, why would you bother doing that if you're not going to do away with cookies anymore? That's the first thing probably one should ask themselves.
Richard Howe: And the second thing is that they were pretty clear that they were going to move to a consumer, an informed consumer, you know, prompt related to this. Our belief, just with our knowledge of the industry, for why they're moving to this method is because of what I said in my grip. It's like Google has this tremendously difficult job to try to satisfy a lot of different people, and I think they probably found that almost an impossible thing to do.
Speaker Change: And the second thing is, they were pretty clear that they were going to move to an informed consumer prompt related to this.
Speaker Change: Our belief, just with our knowledge of the industry, for why they're moving to this
Speaker Change: method is because of what I said in my
Speaker Change: Ripped, it's like Google has this tremendously difficult job to try to satisfy a lot of constituents and I think they probably found that almost an impossible thing to do.
Richard Howe: So the best thing to do in such cases is to try not to satisfy everybody and simply have to consume, or whether or not they want to be tracked around the internet at all. The Historical Relevance Test for such a question is clearly Apple, and as I said in my script. Well, and for anybody listening to this call right now who has an iPhone, we've all been asked this question, and we all answer the same question when it comes up on our phone, and the answer is no, thank you.
Speaker Change: And so the best thing to do in such cases is to try to not satisfy everybody and simply ask the consumer whether or not they want to be tracked around the Internet. And the best historical litmus test for such a question is clearly Apple. And as I said in my script.
Speaker Change: Well, and for anybody listening to this call right now, who has an iPhone, we've all been asked this question and we all answer the same question when it comes up on our phone and the answer is no thank you.
Richard Howe: So yeah, we think it's going to accelerate. As soon as Google finally puts the prompt in front of Chrome browser users, and provided it's the right prompt, I mean, the cookies will go away rapidly. There'll always be a certain number of them that will remain in circulation, but we think it's going to accelerate the deprecation, not slow it down.
Speaker Change: So, yeah, we think it's going to accelerate as soon as Google finally puts the prompt in front of the Chrome browser users.
Speaker Change: And provided it's the right prompt, I mean, the cookies will go away rapidly. There'll always be a certain number of them that will remain in circulation, but we think it's going to accelerate the deprecation, not slow it down.
Richard Howe: Great, thank you. Um, could you maybe talk about the demand for IntentKey both from an existing customer as well as from a new logo standpoint? And how much wallet share are you gaining from the budgets of existing customers? And then have you seen any acceleration in the rate of new logo creation?
Speaker Change: Good, thank you.
Speaker Change: Could you maybe talk about the demand for intent key, both from an existing customer as well as a new logo standpoint?
Speaker Change: How much wallet share are you gaining from the budgets of existing customers and then have you seen any acceleration in the rate of new logo wins?
Richard Howe: The pipeline looks healthy, so I can't speak specifically to the size of our pipelines.
Speaker Change: The pipeline looks healthy, so I can't speak specifically to the size of our pipelines, but we spent quite a bit of time, I don't know, that always said, upscaling our sales organization over the last year.
Richard Howe: But, you know, we spent quite a bit of time, I don't know how to say it, upscaling our sales organization over the last year, notably, you know, bringing Barry in. Barry as president, and who, you know, for people who don't know, this was the former chief executive officer of a very successful technology-oriented agency called Media Kitchen, and so he's helped us, you know, if you will upgrade our policy, our process is our training, and we're seeing the benefits of that now.
Speaker Change: notably, you know, bringing Barry in, Barry as president and who, you know, for people who don't know, this was the former, you know, chief executive officer of a very successful technology oriented agency called Media Kitchen.
Speaker Change: And so he's helped us, you know, if you will upgrade, you know, our policy, our process is our training and
Richard Howe: The only challenge we have in the sales cycle, well, I mentioned them in my call script, is that the incumbents are really good at trying to change the narrative within our clients. So we're fighting, if I can call it ignorance, associated with the problem, being propagated by the incumbents that we're up again. And then, of course, it's just the natural inertia that people don't like change that we have to fight, you know, time and time again.
Speaker Change: And we're seeing, you know, the benefits of that now. The only challenge we have in the sales cycle. Well, I mentioned them in my call script is like the incumbents.
Speaker Change: are really good at trying
Speaker Change: to change the narrative, you know, within our clients. So we're fighting.
Speaker Change: if I can call it an ignorance associated with the problem, you know, being propagated by the incumbents that were up again. And then of course, there's just the natural inertia that people don't like change.
Richard Howe: So that means that our sales cycle tends to be, you know, long. I think I mentioned the large retail client that we would like to get a lot more like that, by the way. You know, we've been at it for at least a year and a half with them. You know, it was a year before we ever started generating revenue, and it took another six months for us to get a, you know, start a business. If you get in, and you're locked in like that, things can escalate quickly.
Speaker Change: that we have to fight, you know, time and time again. So, so that means that our sales cycles tend to be, you know, long.
Speaker Change: You know, I think I mentioned for the large retail client, of which we would like to get a lot more like that, by the way.
Speaker Change: You know, we've been at it at least a year and a half with them. You know, it was a year before we ever started generating an revenue and it took another six months for us to get a, you know, to get a, you know, us in a place where we can get us faster service during the time. But once you get in and you're locked in like that things can scale quickly.
Richard Howe: Great, thank you. Last question I have is: Are you seeing any benefits of the presidential election in the third quarter and also as you look to the fourth quarter, which is already seasonally strong? Do you have any thoughts on the impact of the election on that quarter? As a company, we have
Speaker Change: Great, thank you. Last question I have is...
Speaker Change: Are you seeing any benefits of the presidential election in the third quarter and also as you look to the fourth quarter, which is already seasonally strong? Do you have any thoughts on the impact of the election on that quarter?
Richard Howe: As a company, we have done a few, a very few number of campaigns over the years. But, we do have a sort of view on not going after that business, at least not right now in the evolution of our company. So we try to stay away from politics. Frankly, we don't have the relationships or the context necessary to be able to close that business.
Speaker Change: As a company, we have...
Speaker Change: We have done a few, a very few number of campaigns over the years, but we do have a
Speaker Change: a sort of a
Speaker Change: a view on not
Speaker Change: going after that business, at least not right now in the evolution of our
Speaker Change: of our company. So we try to stay away from from politics. Frankly, we don't we don't have the relationships or the context necessary to be able to close that business. And then of course, there's always the you know, the challenge of if you go into that business, and you end up
Richard Howe: And then, of course, there's always the challenge of if you go into that business and you end up doing business with one or the other, you offend half the country, you know, and our buyers, you know, or who we're trying to go after. So we've tried to stay away from Kevin, so the answer is no, there's no shipping zero, we impact on the, you know, the election for our business.
Speaker Change: doing business with one or the other, you offend, you know, half the country, you know, and our buyers, you know, or who we're trying to go after. So we, we've tried to stay away from it, Kevin. So the answer is no, there's no, there should be zero impact on the prejudice, you know, the election on on our business.
Operator: Thank you. The next question comes from Jon Hickman from Latinberg. Please go ahead.
Kevin: Great, thank you very much.
Kevin: You bet.
Speaker Change: Thank you. The next question comes from Jon Hickman from Lattinburg. Please go ahead.
Jon Hickman: Hey, Rich, can you... Maybe this is a naive question, but almost every website I visit already asks me if I want cookies or not. So what we're going to do that's different now than ask me if I want them out of case.
Speaker Change: Rich, can you?
Speaker Change: Maybe this is a naive question, but almost every website I visit already asked me if I want cookies or not.
Jon Hickman: So what's Google going to do that's different now than ask me if I want cookies?
Richard Howe: Yeah, the questions you're getting asked from the website really have a two-fold reason behind them. One is that it was required to do as part of the GDPR issues, so publishers were forced to have to ask consumers about that.
Speaker Change: Yeah, the questions you're getting asked from the website.
Speaker Change: really have a twofold reason behind them. One is that it was required to do as part of the GDPR.
Speaker Change: issues. So publishers were forced to have to ask consumers about that. And the second is it allows those websites, the publishers, to store your data.
Speaker Change: and keep it for themselves. It's a very different problem, cookie-oriented problem than what Google is going to do. The difference is, the cookies get set by the browser.
Speaker Change: So the browser owns
Speaker Change: actually assigning an ID to you, irrespective of whatever the publishers do.
Speaker Change: Right. And so that's what this is going to do. They're likely to ask you, you know,
Speaker Change: If they follow the Apple cadence for this, which they may or may not, but I suspect they will do something like what Apple did, they'll probably ask you, you know, do you want to be tracked around the Internet?
Speaker Change: And then when you say, if you say no to that, then the cookies will be defaulted off for you. And so, you know, nobody's going to get an ID for John Hickman.
John Hickman: So, what are they going to just ask me one time?
Richard Howe: I don't know the answer to that. I don't think anybody knows. I would suspect strongly that it will be one time.
Speaker Change: or every time I open the browser.
Speaker Change: I don't know the answer to that. I don't think anybody knows. I would suspect strongly that it will be one time.
Jon Hickman: It doesn't need to be asked every time, like a publisher page does. It can be asked once and then just turned off for you. Frankly, you could do it yourself now, right, if you wanted to, right, just a lot of consumers don't do that because it's not informed. Right, and I think that's why, you know, I can't speak for Google, and I won't speak for Google, but they're very careful with their language, and so they did use the word informed consumer choice.
Speaker Change: It doesn't need to be asked every time, like a publisher page does. It can be asked once and then just turned off for you.
Speaker Change: Frankly, you could do it yourself now, right? If you wanted to, right? Just a lot of consumers don't do that because it's not informed.
Speaker Change: Right, and I think that's why, you know, I can't speak for Google and I won't speak for Google, but they use, you know, they're very careful with their language. And so they did use the word an informed consumer choice. So, you know, if you use a Chrome browser today, you could go into there and turn off your third party cookies and then they won't be using them.
Speaker Change: But it's hard to find, you know, it's like it's buried in settings and whatnot. So consumers just don't bother doing it. This is gonna, I think, you know, make it front and center. And they'll just ask you. And then when you say no, I don't want it, then it'll be off.
Richard Howe: Okay, then I have another question, so you mentioned that your performance on your KDI was like 30% better, and then I guess the cookie option. So I have a hard time understanding why people are so reluctant, your customers are so reluctant to go with something that's better, so they can see this better. Yeah, you, I'm sorry, I'm sorry, Yeah, sure can.
Speaker Change: Okay, then I have another question, so you mentioned that your performance on your KDI was like 30% better.
Speaker Change: and I guess the cookie option, so I have a hard time understanding why people are so reluctant.
Speaker Change: Your customers are so reluctant to...
Speaker Change: Go with something that's better, that they can be the better.
Richard Howe: Yeah, sure can. So actually, first thing is the 30% is really just the 30% improvement over the KPI average across our clients. There's not necessarily, against cookie-based, it's like every quarter or so we, with our existing clients, they reset our goal, you know, and so that just tells you where we continue to outperform the goals our clients are giving us. Historically, though, it has been a good measure of how much better we are than behavioral targeting, but it's not necessarily that. So the answer to the question is the aversion to change, the risk aversion to change, even when there's a significant financial incentive involved. A very, very difficult thing.
Speaker Change: Yeah, you, all right, I'm ready for that.
Speaker Change: Yeah, sure can. So actually first thing is the 30% is really just the 30% improvement.
Speaker Change: over the KPI average across all our clients is not necessarily against cookie base. It's like every, you know, every quarter or so we, with our existing clients, they reset our goal, you know, and so that just tells you when we continue to outperform the goals our clients are giving us.
Speaker Change: Historically, though, it has been a good measure of how much better we are than behavioral targeting.
Speaker Change: But it's not necessarily that. So the answer to the question is the aversion to change, the risk aversion to change, even when there's a significant financial incentive involved.
Richard Howe: You know, it seems particularly the larger the corporation gets, the more people change, and to your questions alone, asking me this whole issue of privacy and the implications of it. There are so many companies who literally have literally their, you know, the life of their company at stake in this game. And they're, you know, telling their clients that this is not a problem or that they have a solution to the problem.
Speaker Change: Very, very difficult thing. You know, it seems particularly the larger the corporation gets.
Speaker Change: for folks to change, and to your questions alone asking me this whole issue of privacy and the implications of it.
Speaker Change: There's so many companies who have literally their, you know, the life of their company at stake, you know, in this game. And they're, you know, they're telling their clients that this is not a problem.
Richard Howe: And, you know, that confuses clients in their decision-making. It procrastinates a decision by them, you know, and if you think about that in the context of organizations that are already risk-averse, it's just obstacles that we have to overcome in our sales cycle, right? So the best thing that could happen for us is just, you know, you wake up one morning, and they're almost all gone, and then, you know, performance starts to decline precipitously, and as a result, they have to change, you know.
Speaker Change: or that they have a solution to the problem.
Speaker Change: And, you know, that confuses clients in their decision-making, it's protracts a decision by them, you know, and, and if you think about that in the context of organizations that are already risk-averse, it's just obstacles that we have to overcome in our sales cycle.
Speaker Change: Right, so the best, that's why we think the best thing that can happen for us is just, you know, you wake up one morning and they're almost all gone and then, you know, performance starts to decline precipitously and as a result, they, they have to change, you know.
Jon Hickman: Pugate, my Ninsuit is for Wawling. Well, you're coming to about Gross Martian. My close margin comes, I mean, I'm looking at a growth margin of 84%.
Speaker Change: [inaudible]
Wallace Ruiz: Okay, my next question for Wallace.
Wallace Ruiz: Well, you, you're coming to about Gross Martian.
Wallace Ruiz: My close margin comes.
Wallace Ruiz: I mean, I'm looking at a gross margin of 84%
Wallace Ruiz: Yeah, 84%. That's correct.
Speaker Change: Who's that?
Speaker Change: Is that what you said?
Speaker Change: Yeah, 84%. That's correct.
Speaker Change: And then you said it was going to get better going.
Wallace Ruiz: Yeah, yeah, some of the margin is dependent upon the mix of customers that we have; in fact, a lot of it is based on the mix of customers. And It was a little bit lower than we had anticipated, based on that mix, and we expected it to start increasing again in the current quarter.
Speaker Change: in the future.
Speaker Change: Yeah, yeah, it's, you know, some of the margin is dependent upon the mix of customers that we have, in fact, a lot of it is based on the mix of customers.
Speaker Change: It was a little bit lower than we had anticipated based on that mix, and we expect it to start increasing again in the current quarter, Q3.
Jon Hickman: Okay, it's not going to get materially better, though, Jon, just, you know, as a side note, which Wally will tell you, I mean, we're already at an extremely high growth margin. So we're talking about, you know, a point here or there on this thing.
John Hickman: It's not going to get materially better though, John, you know, just, you know, as a side note, right, which Wally will tell you, I mean, we're already at a, an extremely high growth margin. So we're talking about, you know, a point here or there, right on this thing.
Wallace Ruiz: Okay, um... So, Wally, if you combine marketing expenses with the Cost of Revenue, that number was 15.8% this quarter. Can you all... pontificate about what that number might be going forward?
Speaker Change: Okay.
Speaker Change: So, Wally, if you combine marketing expenses with the...
Wally: Gross margin liters, costs to revenues.
Wally: That number was 16.8% to this quarter.
Speaker Change: can you
Speaker Change: pontificate about what that number might be going forward?
Wallace Ruiz: Uh, sure. Uh, although our expectations were about 15% uh... yeah, it will be. It will be in that ballpark, plus or minus a half a percent.
Speaker Change: Sure, hello, you know.
Speaker Change: Our expectation, so it was about 15%.
Speaker Change: Um...
Speaker Change: Yeah, it will be...
Speaker Change: It will be in that ballpark, plus the minus I have for percent.
Jon Hickman: Okay, for the rest of the year.
Speaker Change: Okay, for the rest of the year.
Speaker Change: For the rest of the year.
Speaker Change: Possibly, well, certainly in the current quarter.
Speaker Change: Okay, so then last quarter you guys talked about...
Speaker Change: hitting the potential of hitting $100 million revenue.
Speaker Change: kind of run rate or being close to that this year.
Natalya Rudman: Do you have any comments about Natalya's quarter?
Richard Howe: I think we gave the July number so people could, you know, make this decision for themselves. We never gave guidance that we were going to do 100. I think, Jon, what we've said consistently is that, you know, the $25 million a month, I'm sorry, a quarter revenue number for us is where we return free cash flow positive, which is why we're chasing that number. But of course, you know, we did 74 million last year.
Jon Hickman: I think we gave the July number so people could, you know, make this decision for themselves. We never gave guidance that we were going to do 100. I think what we've said, you know, consistently, Jon, is
Kevin: Kevin, can you just clarify the consumer aspect of that place, and then I'll answer the question that you're asking.
Speaker Change: The $25 million a month, I'm sorry, a quarter revenue number for us is where we return free cash flow positive, which is why we're chasing that number. But of course, we did 74 million last year, so 100 is not an insignificant leap.
Richard Howe: So 100 is not an insignificant leap. So all we can, since we haven't given guidance, all we can say is that we're up 24% year-over-year in the first half, and we're entering the second half, you know, with a pretty good number in July based on historical trends. We were, you know, free cash flow positive in the third quarter of the prior year. So, you know, there's a good shot we're going to be again.
Speaker Change: So all we can, since we haven't given guidance, all we can say is that we're up 24% year over year in the first half, and we're entering the second half, you know, with a pretty good number in July based on historical trends.
Speaker Change: We were, you know, free cash flow positive in third quarter of the prior year. So, you know, there's a good shot we're going to be again.
Jon Hickman: Okay, thanks.
Operator: Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star 1. The next question comes from Jack Codera at Max and Group; please go ahead.
Speaker Change: Okay, thanks.
Speaker Change: We'll see you in the next video.
Speaker Change: [inaudible]
Speaker Change: Next question comes from Jack Codera at Maxson Group. Please go ahead.
Jack Codera: Hi, Richard. Well, this is Jack Codera, Kong, and for Jack Codera, ready.
Speaker Change: Hi Rich, this is Jack Codera calling in for Jack Van Der Aarde. Thanks again for taking my questions.
Jack Codera: You know, if I could ask about the third party cookies, you know, for a third time, and maybe ask about the customer friction in a different way.
Speaker Change: Is it, is it the strategy to...
Speaker Change: You know, basically wait for the cookies to slowly erode, or is it more important to just get your foot in the door with new clients just so they can see how well it works? You know, how do you think it's possible to improve, you know, getting rid of that friction, improve the sales cycle? Any color there would be helpful.
Jack Codera: Any color there would be helpful. Thank you.
Richard Howe: I think it's, at least the way things are playing out for us, Jack. It's the ladder you said, but which is why we've been spending some money on marketing and trying to get our brand out there. You know, you probably have seen us on LinkedIn, where we've been doing a lot of work. Promotional work you know to try to get, obviously, CMOs of the biggest companies in the world to understand this problem better because they LITERALLY DON'T, well, I shouldn't say ALL of them but let's just say there is a CERTAIN normalized level of ignorance hm, you know, among the industry itself. So yeah, you know, get in, start delivering results.
Jack Codera: I think it's at least the way things are playing out for us, Jack, is it's the latter, you said, which is why we've been spending some money on marketing and trying to get our brand out there. You know, you probably have seen us on LinkedIn, where we've been doing a lot of work.
Jack Codera: promotional work, you know, to try to get.
Jack Codera: You know, obviously the CMOs of, you know, the biggest companies in the world understanding this problem better because they literally don't.
Jack Codera: Well, I shouldn't say all of them, but let's just say there's a certain normalized level of ignorance, you know, amongst the industry itself.
Richard Howe: And, you know, start getting more of the budget as we do that, as our CMO customers and our agency customers start to realize that we have a better performing product that provides them with more insights, that makes them ready, you know, for the end, the end game, so to speak.
Jack Codera: So, yeah, you know, get in, start delivering results.
Jack Codera: and
Jack Codera: You know, start getting more of the budget as we do that as our CMO.
Jack Codera: customers, you know, and our agency customers start to realize that we have a better performing product that provides them with with more insights, that makes them ready, you know, for the, you know, for the, for the, the end, the end game, so to speak.
Jack Codera: That's helpful. And then, yeah, one more, if I may, just speaking on kind of broader market demand. Can you clarify what you expect to see more growth in terms of platform clients versus agencies and brands? Or, you know, just in general, do you have any expectations for products and metrics for the remainder of the year in the longer term?
Jack Codera: i
Speaker Change: Nice to meet you.
Speaker Change: And then one more, if I may, just speaking on kind of broader market demand, you know, given your comments on new clients, can you clarify where you expect to see more growth in terms of platform clients versus agencies and brands, or, you know, just in general, do you have any expectation for products from a shift for the remainder of the year and longer term?
Richard Howe: We believe both have upside opportunities, so it's not a trade-off. We want both to grow, and other than just the, you know, the obvious fact that we want growth and if both platforms, agencies, and brands grow, that's good for us. But one of the things I made a point of mentioning on this call that I don't think we've done for quite some time is to note that there's another strategic reason why platforms are important for a company of our size.
Speaker Change: We believe both have upside opportunities. So it's not a trade-off.
Speaker Change: We want both to grow.
Speaker Change: and other than just the, you know, the right out, you know, fact that we want growth and it's both platforms and agencies and brands will grow that's good for us.
Speaker Change: But one of the things I made a point of mentioning on this call that I don't think we've done for quite some time is to note
Speaker Change: that there's another strategic reason why platforms is important for a company of our size. Companies of our size, you know, are always, you know, trying to fund their working capital. It's just a consequence of being, you know, sub 100 trying to get into the big leagues.
Richard Howe: Companies of our size are always, you know, trying to fund their working capital. It's just a consequence of being, you know, sub-100 trying to get into the big leagues, and it's often noted by our shareholders that the platform relations we have actually produced positive working capital, which, again, is something we can borrow against to fund the negative working capital that's coming from, you know, the more differentiated component of our Mix, which is the AI in the intent. So that's an important thing to keep in mind, a very, very important thing to keep in mind, from a building a business perspective.
Speaker Change: and it's often missed.
Speaker Change: by our shareholders that the platform relations we have actually produced positive
Speaker Change: working capital, which again, is is something we can borrow against to fund the negative working capital that is that's coming from, you know, the more differentiated component of our
Jon Hickman: So are they going to just have to be one time? or every time I open the browser?
Speaker Change: Mix, which is the AI and the intent key.
Speaker Change: So, that's an important thing to keep in mind, a very, very important thing to keep in mind.
Richard Howe: The second maybe answer your question is we believe the mix is kind of 80-20 right now, right? We think that that mix, you know, will optimize down over time, meaning 80 will drop and 20 will rise, and when that does happen, on a net margin basis, which is, I think, one of the questions Jon Hickman was bringing up, we would see an increase. So the net margins that Wally was talking about at 15%, when we can increase the 20% of the 80-20 mix, that net margin number will go up quite significantly, actually. So those are kind of the reasons behind what we're doing.
Speaker Change: from a building a business perspective. The second maybe answer your question is we believe the mix, it's kind of 80-20 right now right, we think that that mix you know will
Speaker Change: will optimize down over time, meaning 80 will drop and 20 will rise. And when that does happen,
Jon Hickman: on a net margin basis, which is, I think, one of the questions Jon Hickman was bringing up. We would see an increase.
Speaker Change: So the net margins that Foley was talking about at 15% when we can increase the 20% of the 80-20 mix. That net margin number will go up quite significantly, actually.
Speaker Change: So those are kind of, you know, the reasons behind what we're doing.
Jack Codera: Thank you. That's helpful. You know, congrats on a quarter off.
Jon Hickman: Thank you. That's helpful. You know, congrats enough. I'll hop back into the queue.
Operator: Thank you. There are no further questions. I will turn the call back to Richard Howe for closing comments.
Speaker Change: Thank you.
Speaker Change: Thank you. There are no further questions. I will turn the call back to Richard Howe for closing comments.
Richard Howe: Okay, thank you, Joanna. And, of course, as always, thank you to everyone who joined us on the call today, and we appreciate your continued interest in our company.
Richard Howe: Okay, thank you, Joanna. And of course, as always, thank you everyone who joined us on the call today and we appreciate your continued interest in our company.
Operator: Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.
Speaker Change: Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.
Speaker Change: [inaudible]
Wallace Ruiz: Um, for the rest of the year, possibly, will certainly happen in the current quarter.
Jon Hickman: So, then last quarter you guys talked about hitting the potential of hitting $100 million in revenue. Um, kind of run-rate, thing close to that this year. Do you have any comments about that this quarter?
Jon Hickman: And then you said it was going to get better.
Richard Howe: However, its deprecation and ultimately, off for less, is a catalyst for industry change that we believe will accelerate demand for Inuvo, given our single biggest obstacle to a Dash continues to be the whole incumbents have on clients and the fear those clients have of a change. Let's shift now to products and class. As we have discussed in the past, I've developed two AI technologies, one for audience discovery and targeting, and the other for the measurement of marketing performance.
Jack Codera: Thanks again for taking my questions. You know, if I could have asked about the third-party cookies, you know, for a third time, and maybe asked about customer friction in a different way. Is that the strategy too? Basically, wait for the cookies to slowly erode, or is it more important to just get your foot in the door with new clients just so they can see how well it works? How do you think it's possible to improve getting rid of that friction and improve the sales cycle?
Unknown Executive: We would also like to remind our shareholders that we plan to file our 10Q with the Securities and Exchange Commission this evening. Before we begin, I'm going to review the company's State Harbor Statement. The same is in this conference call that are non-descriptions of historical facts, our forward-looking statements relating to future events, and as such, all forward-looking statements are made for students to the Securities, we should report back in 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially.
Jon Hickman: So, you know, if you use a Chrome browser today, you could go into there and turn off your third-party cookies, and then they won't be using them. But it's hard to find, you know; it's like it's buried in settings and whatnot, so consumers just don't bother doing it. This is going to, I think, you know, make it front and center, and they'll just ask you. And then when you say, no, I don't want it, then it'll be off.
Richard Howe: And the second is that it allows those websites, the publishers, to store your data and keep it for themselves. It's a very different problem, a cookie-oriented problem, then what Google is going to do. And the difference is the cookies get set by the browser. John, so the browser is actually assigning an ID to you, irrespective of whatever the publishers do, right? And so that's what this is going to do. They're likely to ask you, if they follow the Apple cadence for this, which they may or may not, but I suspect they will do something like what Apple did, they'll probably ask you if you want to be tracked around the internet. And then when you say, if you say no to that, then the cookies will be defaulted off for you. And so, you know, nobody's going to get an ID for Jon Hickman.
Unknown Executive: When using this call, the words anticipate, could enable estimates, and tends to expect to believe potential will, should project in similar expressions as they relate to Inuvo Inc., are such a forward-looking statement. And investors are cautioned that all forward-looking statements amount to risk and uncertainties which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, the risks are more fully described in Inuvo's public filings with the US Securities and Exchange Commission, which can be reviewed at www.scc.gov.
Unknown Executive: The company makes no commitment to disclose any revisions to forward-looking statements or any tax events or circumstances after the day zero of the bare-pond forward-looking statements. In addition, today's discussion will include references to non-gap measures; the company believes that such reformation provides an additional measurement and a consistent historical comparison of its performance. A reconciliation of the non-gap measures to the most directly comparable gap measures is available in today's news release on our website. With that, I'll now turn the call over to CEO Rich House.