INUV - Earnings call transcript Q1 2018

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Operator

Ladies and gentlemen, thank you for standing by. Good day, and welcome to the Inuvo 2018 First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Valter Pinto, Managing Director at KCSA Strategic Communications. Please go ahead, sir.

Valter Pinto

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

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

risks with and Exchange are described In addition, Securities at public Commission, filings fully other www.sec.gov. Inuvo’s the which in reviewed can more found and U.S. be

XXth and Inuvo. presentations City; California. Howe our the XXth XX turn to in management New respectively. news I XXXX hope May XXst up attending person. be rates an XX% XX% will many QX, Micro several fourth Ladenburg and I in Richard growth in and XX like over like on regarding release More the you Los Riley details Technology congratulate of outstanding LD June turn and upcoming Howe, would Monica, that Conference I to to California; the Mr. be Before XXXX, now QX call call conferences; May in mention over see would to in like now quarter, consecutive would We I York Angeles, Richard through to to via will with available EXPO investor With that, B. CEO of Santa management, May coming. of

Richard Howe

year thanks strong in strong higher in in EBITDA today. EBITDA back year joining on Walter. part the quarter. the EBITDA gross cash of XXXX in followed us expected, do first After of everyone the adjusting positive showing the expect We to And demand free had end to for and flow adjusted a strong also up with the slightly $XXX,XXX. XX% had adjusted were early quarter year-over-year. first the Adjusted adjusted another to only acquisition basis as for And the annualized our also basis, quarter improvements On in profits We year-over-year improved XXXX. be an due you, positive EBITDA fluctuations for Thank $XX.X million. by cash traffic on of had in in costs, large seasonality. we negative quarter was we year-over-year tends part revenue

time new up intelligence that standpoint, was last of have on pipeline as this the both in artificial more in market the Through the IntentKey solution our more times privacy The as signed IntentKey for is headed in engage and experience interest confident where as have is five strong our and media we a already is it year, concerned, continued large April business few the and with tool merchants. minutes. with we three advertisers is we our building both far so audience we advertiser aligned from And advertising this visual an that year. grow as clients, and solution to more unique

and or insurance, a the This demand XXXX, technology. that online prospective world center. at beyond continues ability on the perform a the the and IntentKey of and digital implementation are to lead agencies as new standards canvas budgets. strong particularly The progress share issues of at clients their well of to of find our And customers our making suitable changing across business. landscape. a an the manner single largest result, diversify we privacy side packaged QX indication and at Facebook where from including of advancements our should rethinking is as activities other brands IntentKey's are revenue they goods industries, them. This result revenue to existing overall AI and ability experience for our suited pharma, ad-spend front acquisition is stream consumer of multiple consumers demand partner increasing came this Inuvo New to sources Concentration are are retail, new with dropped beginning X of consumer privacy the our recent XX% year-over-year. the companies which The target than in And percentage of online. this the consumer to and as Europe partner. points end Both are to automotive, as

statement, as these information it been third to-date. share information to As has issues not a relates And with sharing, not Inuvo consumer general Inuvo materially by parties. does impacted

Grapeshot used relevant on to responsive capability are to few is content important Our budgets brand ensuring against that This means conceptually that also by an technologies their safety Inuvo, continues while recently feature with deliver is Oracle. data aligned serve and become target can acquisition as audiences, with and evidenced that to the effectively as media those we companies better brand as objective. of by we the brand safely provide exclusively the clients their associated most those possess the

concept at those because reads. this even stronger who build the relationships matching limit industry trillion continue contextually publisher or toward existing the this strategy smarter accommodate are company’s of is The have utilization pages. the to restrictive In to take and not us. with the auctioning feel a side as on of competitors gets more as AI of content advertiser by privacy business privacy the its Web AI and side future with the X about or shifts light is industry in is we pages our and successes pages, technology pages learning in every to client. behind and or organizations evaluating actually kind future, well of rely very many core which its to continue the of within information, advancements, knowhow in brain pay users contextually the have a by continues environment a to if the of new Conversely, more processing Web with built resources XX a ingested we demand heavily publisher-based machine day. to developed at of may believe technologies. every rooted around positioned goal it new It recent supply companies relationships pages opportunity process was Few this site based infrastructure to of publisher where fact, strong Inuvo artificial or their technology. The at evidenced advertising these is with on our advertisers a over transition the best, the expanding is technical our million to header third-party intelligence consumer the with firmly bidding our the of to abilities we excess billion we advantage learning The we’ve the advantage understand align core best, In of machine competitive ability our in centric one of We environment. the process retargeting our content scale. the a

we to bidding the will continue We leverage environment. expect those to where demand solutions develop within unique our supply-side for publisher-header

positive However, focus way we U.S. modest towards our We showing we demand side China business, EBITDA investors. the reach value with in this eventually began revenue. initiative technology and a XXXX, as impact on adjusted China. collaboration to a of year-over-year continuing result reduce within investment and our impact align higher from XXXX for AI continue the door are expenses in Chinese opened we demand resources side Chinese to products companies XXXX And believe technology began audiences to which in AI our that as and will in offer. towards possible interest the of with audiences The a

quarter, first in Chinese demonstrated Little a and in we investor our our Jose of hosted facilities San both the technology. where applicability Rock we the During reach and

current and controversy dialog and engagements. the trade these United China between won't that commercial that from hopeful and our are with the might opportunities come States the We continuing interfere shareholder

was And over could sources the for Wally money Inuvo, more I we will of was the pages year-over-year from mobile have the new back turn performance us. at XX% continue a in quarter. first flat vertical the make we lead the in to to pages about of revenue of about detailed first for with company. working mobile increase quarter. we overall software time per more with become pages installs from And that, started opportunity closing, quarter, roughly Revenue $X.XX. help whole software business We up to the to number a a products. call a Revenue Moving mobile thousand X.X In year. this on company their the them think the and more of now prior for reporting for directly financial the first X billion of billion to to QX, at now

Wally Ruiz

stock-based compensation to first results Good negative $XX.X a of year-over-year from Rich. from the XX, of first $XXX,XXX a year. I same in will the you, everyone. $XXX,XXX EBITDA last increase and going in measure, XX.X% for financial quarter adjusted our $XX.X negative quarter year. non-GAAP $XXX,XXX this a quarter. XXXX, now Inuvo quarter million revenue improved financial of reported the last quarter million for recap the the Thank ended in expense year March reported first afternoon, the

per million adjusted ended a the loss $X.XX For quarter $X.XX loss basis, loss loss per net by current in XXXX. XX, $X.X EBITDA quarter. to in prior GAAP of $X.XX compared or increase expenses share March the Inuvo least totaled or a over million the continuing operations reported net $X.X we Non-cash the net On year from share year, expect year. in XXXX double share per or $X.X at to million net

last and the we mentioned, first the had million Rich $XX.X of technology flow over year-over-year. quarter the Both As increased cash same growth the the quarter. sides $X.X free advertising in Revenue business in to million the of quarter publishing experienced a XXXX year. positive current

the Rich supply publishing providing test to important a an of remain ad-tech innovation. and optimize to laboratory and business advertisers As component Inuvo focused mentioned, will

from as we sourced the operating with implication revenue. operating the margin. In expense. However, revenue rebalancing of largest revenue emphasis represent to the partners virtually to reported demand or expense the XX.X% in concentration the reported XX.X% decline we business, year, with indirect in in The Last overall has costs the expect same cost the we on continues this at marketing expense. media overall reduced relationships cost revenue revenue TAC year, the costs. the XX% revenue. make in partners. new margin reductions over of the additional in improved difference. to two improved of correspondingly, quarter And being of to of predominantly concentration. associated no publishing it and future lower gross was ongoing the mix Publishing is percentage XXXX operating quarter traffic the and expense those expect planned year, marketing that the direct of Web of side as the our up margins Company's first last their of of has XX% the site quarter that the two and represented in revenue due expenses, Gross same acquisition and first as is its That's revenue are

or higher the this TAC of XXXX million our quarter due marketing expect higher of year expenses of in operating was Operating in and also headcount The higher expense of Net the Operating the traffic prior expenses XX compensation during the quarter expense to compared the $XX,XXX quarter increase costs, or websites. in first to $XXX,XXX SG&A were this in and expect to in virtually prior $X.X first of third and higher margins quarter compared first expense; All the $X.X quarter expense. quarter an quarter was expenses million not the prior costs. composed If Marketing in The in part-time, of of of from the as by components composed expense same XXXX from first to headcount, of the of last or year current the cost first and known marketing the acquisition average versus TAC unchanged $XXX,XXX is was quarter higher in last expense year TAC revolver category full-time costs; for XXXX, XXXX higher in primarily include then is year, SG&A the last average marketing year. expense the We at to general same Compensation profit, you and quarters. of year. to unchanged XX rate. to last selling, first this next for increased the in in the costs compensation year. finally gross administrative is compared to operating do basis also compared both selling, million over the due not the to on year gross XXXX a year. $XX quarter expensing the general quarters. quarter increase was quarters. two XX or expect increase outstanding million coming the administrative driving in more year. are XX.X% do traffic not interest We $XX same point to the this first quarter due quarter coming do We payroll to balance same expense of the were year. expense virtually to

We for The the rate the averaged of first interest year. during quarter expect the remainder higher interest of X.X% expense this year.

The had $X.X million cash and million. credit has of dependent balance March credit our $XX availability Our we March under upon on XXXX, balance million with At commitment additional XX, our availability a XXXX on a total sheet a an equivalents XX, $X.X receivable. cash of had and bank line. outstanding revolving of accounts line million revolver $X.X

would remarks. to I Now, like turn for Rich over closing back to call the

Richard Howe

shaping had start or strong line. to XX% We is better and trend historical Wally. up year-over-year. Thanks QX growth have along quarters the year of consecutive a had

on do some revenue we I modest script, As mentioned publisher in expect of business. my side decline the the

to as impacted positively result. a profitability We be expect

own his in expect solid out improvements the shareholders. our year-over-year exclusively excited pointed has the of exceptionally in value to and We our and about Wally As EBITDA. adjusted script, technology both we we remain that clients AI

turn operator on other to that, this would We roadmap. like I With the have applications the over questions. many for our for call technology to

Operator

[Operator Street. you take Thank We’ll Lake question first from Eric Martinuzzi Instructions]. our with

Eric Martinuzzi

sure XXXX. get the from profitability, say that will here to I similar number strongly take I that wanted number just million. will to dive XX% it. to When and to revenue profitability the you trying $XX.X into flat and QX back revenue then that understand finished QX, that it but to sequentially? here. suggest the an just of probably on for make was get publisher understand the quarter here. you’re absolute improve the multiply it’s see I did outlook where we just terms in help a tax I But brand we down wrong just Is roughly -- could We to

Richard Howe

Eric. I think makes sense that

the of and and similar. fairly QX is are QX half the our know first you year half As lower

in are by start at in very stronger. ends start dissimilar; month, when you But weaker strong end one weaker; similar. one and and they're look end, the Although, they it

to QX, be than year. better So last we expect

overall. we And margins thesis lower costs so profitability QX than to about from better is talked there your and that some side QX Rich demand things better the having the expect in and of shift in the correct,

Eric Martinuzzi

first do of time I for an close that we And for appreciate here net February that given in your the XXXX. that organic get comp fact QX acquisition the in

largest in to you there? missed updates renewal to quarter I know you But moving partner one on XXXX with of issues commented your get last talked guys of that out, I .Any May about it. major hammered a you the need Just other and

Richard Howe

that all and the we’re we talk out want. to both what will I the amended we’ll time get contract. look public we So about which in we of together extend our it -- that we you they to the sit things to filings, if sides at ensure think agreement when you past that renew at need with we’ve done and And see our partner that working on -- more the the date

read over agreement completed indication of So to no one a going just is it other should always the seen last get that than good the has years. that amendment anything like out

arising at that of So issues no point. I process see out this

Eric Martinuzzi

the starting cash you from $X.X from adjusted $X encouraging other EBITDA a exiting of the we’re here. EBITDA have And the XXXX, that of number? or first words, about doubling end cash me, translate $X.X million then year cash lastly into million $X the million free for debt XXXX. talked of flow free exiting the very million million a entering amount -- small How the guidance translate But In $X.X and does by did in I balance year the that we year, of you know flow? into

Wally Ruiz

going debt Yes, towards have be we working I quarters. we’ll With the of it’d greater would in year, point. in our ballpark, be in the I generating at cash. X.X much this is the similar our of lowest our year. that we’re and one probably with expect thing quarter, wouldn’t first and repayment which cash as half the end same to we needs of But expect, the of capital the last did because for be growing

positive continue to cash next We the generate have will cash three in and quarters flow. then

cited, yes, So, in ballpark the that Eric. less more or you just

Operator

Thompson Research. And with we’ll moving Investment go on Lisa Zacks to

Lisa Thompson

then excess Have go the growing past, at that grow So EBITDA whole is all, company. conversation, the company into back to the in to or the resiliency it back plough changed any be and cash you let’s your to objective because profitable? going back

Richard Howe

as a business. objective our still No, that’s

It’s the to are market we’re in more some cash $XX generated line result to as a bottom or just in are and bigger. we of that we million much company be dream the million, going line. $XX but to have top making being have to is business, As large stated, and our considerably is the as we’re sensitive changes that the our we

Lisa Thompson

you how you, finding doing Can the right people with Could talk how and you? AI is your go customer privacy. maybe might your of about about then bit contrast it might little that you in benefit advertising and your comments and methodology other change and be it a benefit how for back will

Richard Howe

how to intelligence that a aligned for page do. But any I the the It’s the exactly to the gets a a we technology, particular the an that today, that think environments as is answer and away what I about immediately that’s that our to complicated the our going on call, the ever based on environment result, move in a we I it’s methodology says, but is are most other that privacy based thing be even technology I with direction its the not that best contextual behavioral content, that is result, know form of Lisa. change that this artificial that do with technology basis probably I with to way. i. thing everything never ones if are think we brands They that’s And can used. which is is a moves page know this we approach. as do e. page sensitive think And of beyond of could exist probably with where scope the do regard fundamentally, on content realize in cookies, away targeting things done going don’t to really

Lisa Thompson

don’t So tracking and topic, interested that’s to that personally. not the you’re just who that you identify focused in finding on someone is, you’re and reader me the page it what that care sounds to really does

Richard Howe

States. by if about the the in policy that it could with all already a is say even our to Europe issue of in in not the That’s the changes United companies those. have but States real towards Google we not occurring of adapting industry lot been result like some seeing in here have mean impacted be the in not I are can standards as or changes case case, that the the the talked there moves is that of in are environment exactly you're been in I to Europe. that exactly. implications But And the some that U.S. a United

it. them. you think that partnership going And this. and we seeing not from to it. with problem the We We but we other And we’re they're regard are in doing. a We with we’re do as these so to talk are, not way know, large know do people not experience we companies will, impact what expecting to

Operator

Instructions] And or presenters I in questions back the comments. turn additional will [Operator no closing it our for to more any queue, with

Richard Howe

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

Operator

We’d Thank you. like conclude thank for And to everyone that their does conference. participation. today's

disconnect. now may You

Inuvo (INUV) 7 May 182018 Q1 Earnings call transcript