INUV - Earnings call transcript Q4 2017

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Operator

Ladies and gentlemen, thank you for standing by. Good day and welcome to the Inuvo 2017 Year-End Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Valter Pinto of KCSA Strategic Communications. Please go ahead, sir.

Valter Pinto

good and operator, you, afternoon. Thank thank I’d for Conference joining today for Inuvo like Call. Fourth Update to the Shareholders' Quarter us XXXX everyone and Full-Year Today, Mr. Richard Mr. Executive Howe, Chief Officer; Financial your Chief Wally will of call. the be Ruiz, presenters Officer on Inuvo

to similar used as may those the intent, are all forward-looking I'm relate statements Securities to expressions statement. may When These in future which statements differ the a estimate, conference that call, Inuvo relating are, review could, expect, at this as the materially. cause made of descriptions statement. and Safe results are Harbor to uncertainties anticipated that Before differ we will, subject not Act by words to such, cautioned historical actual and Reform and Company's statements of begin, such, statements Investors potential, time. call are going results risks uncertainties, enable, forward-looking and as pursuant all to anticipate belief, The from this forward-looking in forward-looking forward-looking and to they facts risks this project Inuvo involve statements Litigation events, actual are should, XXXX. are

strong of in turn other included quarter and U.S. public risks addition, that, Inuvo. can growth that yours. floor year now fourth management over on Richard the is fully sec.gov. to congratulate call described the to outstanding are and to Howe, would Rich, an like profit. With Mr. I more with at I In CEO the Exchange reviewed filings Inuvo's Securities be which Commission, would like

Richard Howe

demand side that another while growth for significantly us smaller disintermediate The growth players now number strategically technology nature Inuvo, the XXXX, and with designed our foundation has now calling where fuel XX% everyone, the XXXX. growth with rate with delivered to to in end-to-end on XX% and had platform, with our the clients finish strategy Leading our suppliers work for based up Important of product been of Financially, and technologies. an Valter, was to revenue of This a players. and Thank enhanced fourth joining the rationale looking This for us had maturing this to Inuvo we bigger acquisition acquisition those annual broadest exchange. for for $XX.X thanks, in learning and having prepared today. the revenue our and overall enhancing we components continued since are was performing a into of to year-over-year both they best in necessary compete compound year XX% of you, XX niche strategy million. also market strong the margin, which now own double-digit machine suite. into quarter and opting are year-over-year helped suppliers propel revenues million. Inuvo reduce performance strong XXXX $XX.X

were for to long-term quarter off profits earlier at of expense adjusted we fourth million the the year gross for target Now the in far opted $XX optimize not revenue. having slightly our

were that recall million. quarterly some target set when doubt no years we now ago only will You revenues that three $XX

of employee We $X full-time, part-time people Inuvo group from headcount year revenue to those our with for interns as As year and at amortization year items. net our the X million. for standpoint the year X and up $X.X fourth where $X.X XX EBITDA million operating also was a attract million had and expenses about those million efficiency February. costs We at roughly of currently of tax it current loss fourth quarter came for quarter on in costs the are from in an of annually remains part full-year. to fourth the one-time respectively. in EBITDA depreciation, expenses $X After was quarter variable also profit, end both in were acquisition made the acquisition the compensation traffic due and in associated XX% large peer in relates XX a our strong We marketing XX% million, million, acquisition we changes. January Further, roughly of income had of audiences Adjusted Traffic favorable standards $XXX,XXX. XXXX. from by the website. Adjusted year-end, the $X and a owned worth progress to to here Net gross positive $X.X with XXXX. the the of stock-based cost, adjusting gross quarter deployed positive of with we of year-over-year closed the portfolios non-cash influence an adjusted full-time have was and corporate profits roughly best-in-class income the

the income, and net consistent expect Going to reduction from XX% tax forward corporate carry as would rate XX%. loss net operating at deliver Inuvo the we and from more both to in new forward benefiting rate our anticipate

earlier from to in the Now acquisition December. adjusted million gains That discussed completed the associated the margins into in February. that business Inuvo. gross win the are big year $XXX,XXX the in new result and which profit now partners, with growth February roughly is in technology, was higher employees acquired we The clients, in integrated of fully went that part business, $X.X of in

gross acquisition profit The traffic contributor in gains year. adjusted costs comes to from an overall in the other reduction

account in sales step which that acquisition big associated acquisition, by the Officer. Revenue a took first of concentration addition the management We started we to hiring our for Chief in In a growth group, that reducing with revenue XXXX. did with towards world-class preparation and and building

XXXX. significant, hire, us our in have Our from they organize this did came would ground train so and capable a hitting necessary team, XXXX was This in XX% but that investment building revenue the XXXX. in we this was in goal for effort in to be of XXXX. customers of not XXXX running

this made group. this people this we XX have in initiative. on talented regard, now So in great have progress already We

well office XXXX. our is new has good how a California Jose, with in Rock from both opened sales offices efforts, recruitment how associates. importantly clients, existing and the the building office with and individuals together. also couldn't for relationship San presence California in and of collaborating A in more We more new be pleased are We Little grown California that world-class

intended in strong can in to We had our small prove a some to audiences, we within and also advertisers, and on focused for to intent as could Chinese was our lead is demand from there some attention demand key fulfilled strategy XXXX. that a in result here a What in technology China build fact services. China expect U.S. that services through We in partnerships which be out for office some open We've and made relationships to progress XXXX XXXX. market. that

can capitalize to we opportunities. So these on begin

out have We where interest us are location Ad-Tech exploring in local a within we helping a located in government an Beijing financially. Park

third I back a to a XXXX. we the Moving mobile With roughly detailed us Wally of $X the to quarter, some to business the of We And in and our money, of now growing the in XX% will of of from more roughly that, the company. the now X.X XX% make pages to giving from call continue went XXXX over financial RPM become a revenue in perhaps reporting performance experienced to mobile quarter but billion rise RPM we X.X over dramatic the in to had XXXX. from pages QX, a $X.X number in for up in finally, turn QX, tends for opportunity pages, the billion overall more we in for more QX quarter.

Wallace Ruiz

afternoon, the good from December fourth We morning, Thank XXXX, reported last quarter full-year XX, that or ended Inuvo our year. $XX.X you, revenue Rich. for million a results reported Good $XX.X of XX.X% today of quarter quarter same increase financial in million the the everyone. reported everyone the results. and XXXX

loss later in to year. income a $XXX,XXX of $X.XX All $XXX,XXX to was the in business. loss financial other compared lines net in quarter million the stock-based totaled or digital adjusted revenue ended reported same Company’s increased For call. days November Monday, fourth period history. the four-day $X.XX of fourth fourth Inuvo in Of last XX a quarter XX, share the have our the diluted prior XX of Friday, the full-year on ahead quarter EBITDA net in $X fourth per our the the or for reported the business of revenue in year-over-year the income Inuvo XX.X% were in history. net Cyber a highest Black they of four or of for note through highest for Cyber measure share per on XXXX, year. of Monday a December XXXX that revenue quarter in $XX.X more from than November non-GAAP And we million the quarter XXXX, compared quarter, expense, publishing XXXX, the compensation $XXX,XXX the net

now As last on The call, acquisition to reduced our February also this line. digital will from this and XXXX publishing Those rebalancing. We mentioned technology higher shareholder believe accrue in indirect revenue two difference. with concentration revenue of in other all the of represent making our Company's risk, has customers XXXX. of and our customers largest business advertising our and the XXXX spend two have the profitability revenue marketing longer-term we of same represented relationships in XX% business better redirected up reduced where approximately value and XX% margin rebalancing direct total resources

anniversary operating XXXX complete acquisition the year-to-year associated incurred integrated. the trend of the basis We and NetSeer. acquisition. The business the continue resources forward, integration additional of of going have and integration with will of we From Overall, XXXX. is apples-to-apples. NetSeer in on IT Today teams, offices, expense the comparisons expect to be been this the approximately same this million in and $X acquired is

the selling, million acquisition Operating the compared the XXXX million marketing fourth comprised expense quarter same year. was was to $XX.X and fourth the a in expense, costs, in in general XXXX. $XX.X of is anticipated, compensation of of and quarter As last expense quarter administration credo Operating expense.

due creating XXXX, cost of digital XXXX. primary to full-year marketing of year million quarter costs Marketing operating XXXX, the audience costs an of fourth Marketing million for traffic decrease X.X% the lower from $X.X same operation. referred a quarter were in last with the publishing to decrease also a $XX.X to costs. our acquisition are costs or entirely For were in expenses compared stack million, associated the $X.X

curtail million year. of and the operating quarter $X.X the to higher XXX interest from costs is redirect prior spend cost and in compared the compared the million investments function employees, million higher to at we At quarter decision amortization million The The acquisition. selling, balance part-time a Net the in year, expense full decrease quarter fourth coming and on The by and quarter rate. to was in expense XX quarter higher general by business, IT XXXX, higher average higher fourth fourth increase margin our outstanding was in to compared increase averaged to quarter primarily previously the expense acquired primarily higher year expense higher in amount the XX, rate increased a As this acquisition having not earlier $XXX,XXX lower expense expense $XX,XXX the or to part-time higher the in SG&A our higher are in fourth year associated in payroll same in expect fourth full higher the properties basis prior scalable quarterly expense the $XXX,XXX. synergies $XXX,XXX headcount revolver to and We the fourth quarter XXXX lines. due with Compensation resources and depreciation year. due in realized. as compensation newly and the to with same in last a of quarters, of we in to the February In is which XXXX administrative employees. costs. expect the $X.X mentioned, expense included SG&A margin focus quarter business the costs current of December higher do had lower of had point of X.XX%. toward of along is expense interest The $X.X is quarter $X impact by XXXX, to due the in XX we XXXX, full primarily XXXX. the

fourth The December Act Rich taxes XX%. law we quarter As from the mentioned, a benefit and XXXX. XX% income Tax due Cuts of of to the Jobs recorded passing one-time XXXX reversed new of in corporate to the tax

tax sheet benefit liability balance in diluted result, the and tax a were tax one-time The deferred a As were recorded consolidated deferred tax $X.XX Both rate. decrease assets deferred tax of and or liabilities in resulted the the asset our the new per at revaluated deferred $X.X both the in tax share. reduced. liabilities million

had dependent million commitment of and balance outstanding cash at $X.X equivalents XXXX, the The $X.X credit on revolver were availability sheet revolving cash the turn At credit of to the of line. we with December and bank million like has to Rich. million. million $X.X $XX receivable. total availability balance upon Our under additional had XX, a the XXXX, December call I'd our With over back XX, line accounts that,

Richard Howe

had fourth particularly quarter. We strong and a strong Wally. another Thanks, in year XXXX

on that confident can that are material floored acquisitions their the new based supply demand more their technology. now on be those scaled We we relationships a more business then technology future, of or we acquisitions or of will have without If additions in infrastructure. will be the consider they merits

needs improve yield point advertisers advertisers. with changing business of of publishers a publishers side core our in direct exchange Our we most more partnerships. at this see to platform growth as the require evolution, coming result to demand certainly our combined to will additional development designed But sale meet for and advancements Inuvo and continual

You online in should XXXX. be in QX of in higher forms enter of tended advertising. advertising also this for advertising have see than XXXX margins to Video having us positioned other video

new the roughly up out year Without Inuvo of up of comparisons first acquisition, quarter fiscal for strong revenue are volatile. the come has year-over-year. year-over-year revenue with million, been XX% nearly historically has of While January those $X.X January XX%. very

greater better for With to expecting XXXX are typically Operator? adjusted like quarter been in questions. we should EBITDA and rate growth visibility turn year the has we be line operator in and to should XXXX, seasonally. have I'd strong first our following or So growth call the positive which double-digit with over quarter lowest which another to than that, the

Operator

Martinuzzi you. Thank And from Lake Street. our [Operator question Instructions] first come with will Eric

Eric Martinuzzi

talked but the with on between the and the model. quite numbers, the Congratulations have January of – had any curious an you NetSeer going accomplishment about It’s in January was on you the is of Thanks. organic to strength shifting January NetSeer you the in on XXXX. I'm here January business everything acquisition in know, XXXX? obviously Do not I don't XXXX, but view think XXXX. the

Richard Howe

to this year. expecting to We're that grow business Yes. continue

growth was equation, We’re year-over-year, not not what we acquisition providing it. call the rate on guidance my about acquisition, like actually associated January-to-January with the we’ll notes, NetSeer magnitude in said specifically of be I in the of that up we But continue out fuel was acquired XX%. technology that NetSeer taking our But to to from expect itself clients do the core growth. the

Eric Martinuzzi

Okay.

headed. question You was answered about my were the that’s XX% I

I in which just discussion XXXX, given about in release million, growth sake what As full-year on for mean at the look pretty double-digit the will it’s wide here but obviously XXXX, say grow is you've in $X your XX% for double-digit range, let's is you guidance above revenue grew that now press XXXX.

anything be expectation The Inuvo So incremental could from there sort this revenue or XXXX. back profit to expansion million is of of EBITDA going number goes business the $X XXXX? up into is expectation in on a comment above an investing a at in you profitability, XXXX was for positive

Wallace Ruiz

have Eric, that we every as into see and sales goes a and ourselves technology. dollar expert and company growth marketing our our we

our the cash debt yes, we have to to positive and able technology. as philosophy revenue the – that we a quickly to to grow here we So as order are be the in service that is flow have grow continue and can

your So I hope – question? does that answer

Eric Martinuzzi

on Google. Yes, Yahoo go layer hoping it and a does. was I to deeper the

one those revenue terrific down up did any now we there XX%. between of two big with see. to concentration, either that renewal have in mention decrease is Do partners? issues to them, which coming contract the the You of They're

Wallace Ruiz

with believe renews do. Yahoo We in our May. the I contract

Eric Martinuzzi

those on Okay. I now. assume going are right discussions

Wallace Ruiz

are. They

Richard Howe

is another Google out year.

Eric Martinuzzi

right. And partners at I us business. to their relationship that or Okay. business. Acxiom, All you plan neutral for for your a then one between do you Acxiom? you negative Yesterday Could their talked saw – own positive, XXXX restructuring give on what and of your about Inuvo business thoughts as more some or they the see lastly specifically within me, think I LiveRamp is least

Richard Howe

don't comment from and would I company their executives comment guess that think it's the of I on pretty have can But at here itself the want we I on Acxiom. I well known Inuvo that to strategy. restructuring think many I came

is deep there good some relationship company them, that got we've together. do relationship have So more it that make I'm expanding pretty relationships continue But it, for and some to and we ones that respect been a hopeful the with we can were having helping what was.

Eric Martinuzzi

congrats questions for again. and my Thanks taking

Richard Howe

you, Thank Eric.

Operator

ROTH on, go with Capital William Moving Gibson Partners. will we to

William Gibson

cutting about that can changing you year, back expect XXXX from that this up spend we keep the you we Do talked to on see. do be Rich, marketing which number? or

Richard Howe

I'll an Bill. Thanks a you the expect that on in marketing taking as costs of we said goal. number. go were then I we're I the trying script look to make why. In number trying out the gross really between have adjusted year, I calls, by costs, we that script, of to And and take my that those and year. XXXX, of was my good find the gross that which in profit, means, to said think I to at the call And adjustment right in number accomplishing growing job up marketing this actually call balance sure to as track did that we tell said sort us profit couple for I a as that

technology period behind the the the we with the on part of that could we there, we were reduction the was makes Interestingly they that our did to actually trying on with I that the pretty we the business, also improve that in to support more a for that seeing during have working parts fourth that And have scenes other nice growing Now a of quarter. as start margins business enhancement margin than again business that where confidence lower start the that at we that so sense. we were were that said that business, the start actually that business. result were. on implication perhaps way in margin which can renewed that And the some

William Gibson

the Okay. we you. with on stand changes loss then law, just Thank currently do in where the the net And carry-forward? tax

Wallace Ruiz

Yes.

right. million, a approximately So loss net we have $XX of carry-forward

decreased has deferred – you XX% don't we very, Now the actually from XX%, the tax tax large tax number. substantial still against NOL a down. deferred dollar, value gone – we has have that to but have tax it’s rate has sitting the asset of The that because gone on allowance on rate a see the and because the valuation NOL very for tax a balance for dollar asset very asset but sheet

William Gibson

Thank Okay. you.

Operator

Moving on, Lisa Thompson we’ll go Zacks Research. with Investment to

Lisa Thompson

guys. Hi

Wallace Ruiz

Lisa. Hi

Lisa Thompson

about bit that This going margins business quarter this to you marketing looks as we little to look continued XX% go talk cost? or went the You that growth fantastic. do you think year? increase after for your where Is XX.X% at Can from how are a year software to year. last coming

Wallace Ruiz

Yes.

we we adjusted So continue the see to Lisa, those, so is call what year gross profit. answer in increase expect this yes, to do an

profit gross So minus costs. our the marketing

we there – higher. it or two be this as material be Now improvement a year, but we think a are saw point won't on planning it'll we don't

Lisa Thompson

bumped bunch there a cost kind third quarter $X year-end of to fourth to compared Okay, of that then that or going the up something? up million? bonuses Is stay quarter. Is compensation over And in great. the

Richard Howe

needed expect estimate than should year-end Yes, part were forward less expense it, for, we be you be of going Lisa. to that compensation but was some That that $X to million. incentive accrued there that

Lisa Thompson

how going did describe invested I you play get marketing that more out like a year then about thought hired little this was they And Okay. when in could and and sales hired kind year? this of got who just you bit and how to

Richard Howe

four executives could we that existing And the I Wally really income management the we that then end someone on I bring a Chief and resources time the Revenue and was I’ll functions the who bad in we whole organized have believe of of the June other hired we memory. her all a the But I need Company hired given since the bunch a exercise June catalyst Officer on under right? of her. seasons do the sales joining another sales between in best under professionals her can, for and year, because

Wallace Ruiz

fourth quarter. in the Mostly

Richard Howe

the and Yes, so group now XX. is number total entire that of

Lisa Thompson

year – to or to Great, and going wait you for so is that kick-in? more them this just increase

Richard Howe

think is wait be and what say, want see. yes. the to to we like you more, but I would hiring We answer

team plan team. So successfully will resources the we've now. think have out. that than see we to that We performing got I believe team had start laid people there a the we hit If enough good we we we've to adding forecast, additional more

Lisa Thompson

Great, you. I how turns wait all out. either to it That's can't Thank questions. see my

Richard Howe

Q&A of End Lisa. Thanks,

Operator

question-and-answer comments. conclude that any And closing like session. will or I’d back to the our additional conference for Howe Richard Mr. to turn

Richard Howe

the Thank joined and today look call. interest continued your Inuvo in over you, thank coming on quarters. operator. appreciate everyone up the to us forward reporting course, we to progress And We of like I'd who

Operator

would their And for that conclude participation. today's everyone thank conference. like will to We

You may now disconnect.

Inuvo (INUV) 7 Feb 182017 Q4 Earnings call transcript