INUV - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Inuvo Inc 2020 Second Quarter Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Valter Pinto, Managing Director of KCSA Strategic Communications. Please go ahead, sir.

Valter Pinto

Thank you, operator and good afternoon. thank quarter joining call. XXXX to the today like second Inuvo shareholder would everyone us for for I update conference Inuvo’s your Richard Wally Officer, Chief Chief Today Officer, Financial Howe; Ruiz, on presenters and be the call. will Executive letting and start a the remain Little both Rock, like pandemic, know in office of listeners by Arkansas would that our I San COVID-XX our to as consequence Jose, California closed. a are day-to-day are excited and to twice monitoring Little pandemic for our we on feel we returns and Rock, we recommend our can In if adequately only basis consecution. we leadership we have employees safeguard meetings, our from colleges run, August like filing reminder the Exchange with XX, I shareholders that Friday, and to XXXX. our would XX-Q we anticipate Securities also tomorrow, our Commission

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

the let’s public and more in the Inuvo’s U.S. now call Commission, at to that, can sec.gov. other fully which turn Howe. risks Richard filings are In reviewed be Securities over CEO, addition, With Exchange described with

Richard Howe

for joining thanks and us Thank you, today. Valter everyone

of X.X revenue, ValidClick it from million IntentKey three months we delivered X.X X.X roughly million approximately XXXX, the with platform For and XX, million in the coming ended June platform. from

was revenue the million, six-months from from three their the Lower the decreasing advertising and For and ValidClick ValidClick $X.X in budgets $XX isolated and first Revenue $XX.X year six-month and roughly was through million revenue $XX.X with respectively. million, the prior within $XX.X the period of caused predominantly platform. six million periods was with million month associated IntentKey. COVID-XX by

of of net approximately there the the from was from within contract number revenue of year-over-year. a second XX%, loss and to sharply by countered roughly implications improved adjusted lower loss quarter contained release. expense Net year-over-year quarter of over to or our XX% down adjusted in basis, within roughly income $X.X a On EBITDA of adjusted of the in million While loss an a second of quarter modifications going $X.X We revenue in or XXXX. million of million. roughly by two XX% improved loss EBITDA XXXX by the million. was the quarter short-term also is XX% improvement Reconciliation improved Sequentially EBITDA year-over-year within $XXX,XXX in to $XXX,XXX XXXX quarter. earnings approximately in our Sequentially the loss net implementing XXXX. X.X

that the ValidClick first on quarter was down business had half it XX% expected our we XX% influenced markets call, the on within and a materially pandemic the This basis. on serves. year-over-year ValidClick and had conference by was year, by As of messaged we be the QX the business the partially to roughly impact impacted for

As for their a ValidClick is extend platform the brands reach. marketing typically advertisers, tool by to used audience

in the budgets, they modify period to budgets ad had during to Bureau all to COVID, were ValidClick monthly with how XX% had steady The month better a of no the business the Within upward was COVID its lowest noting August undetermined. their recently were had ValidClick, Through have Interactive trend. likely XX% see modest, that responders Since but be had be reported July, down continuing as started then, we team their currently year plans for sequential May. of not to surveyed in-house but capitalize these they services to budget the quickly, marketing market contract negotiate deferred so a pass build to partners, that margin. the deals services their budgets Advertising better and adjustments advertisers when XX% on and during turns March been such traffic to among position have products, tend generally bring thinking that using understand between on as be growth, this also spend acquisition As as with about they and to time they only advertising a June. to noted more spends in improvements. XX% [indiscernible].

dramatic collaboration those in [indiscernible] businesses in of scaling of One products currently new reductions held industry. the budgets marketing The well in with is across spite Verizon up very and. IntentKey

the currently is revenue XXXX, period growth month the as For was April, as XX% is sequentially. flat have exceed within grew through improve month May prior XX, on XXXX, forecast now July as from The We in pause a COVID The through first six result in that to recruiting trend. within that business company hiring management additional We the the continued margins to in frozen roughly within in group. months and which impact June XX Having which had has sales, entity three months started to would positions recently averaging Gross expectations, all post-COVID. categorized is and economy have the lowest six rate, activity had XXX% COVID, the ended business people has approximately of XX% an a return year-over-year. year we perhaps improved continue over year-over-year. IntentKey but IntentKey. up period. added sales support the March July. of The currently the was to the is the account salesperson expect the August begins And month IntentKey year-to-date businesses the

perspective, within We The RFPs to quarter a client year. more expected performance majority renewals. were a XX responded of quarter our in well. client, across exceeded of operational in for allocated by had XX%. these continues largest were budgets increase IntentKey roughly have the KPIs were the prior the perform and three From as We a Roughly quarter to QX to QX. approximately and the of within RFPs. quarters we XX% that than campaigns number campaigns very to new be compared these Into the are

and in the testing for We and campaigns budget Our historically campaigns. have connected campaigns for One process are advertising. that had successful successful in turned desktop test we display TV currently of video, allocations. currently mobile video campaign include a recurring the client test into quarter

position put growth capital stronger. July, had for within would to to detailed been end roughly As towards of has never to which we like a more we At assessment million work the of XX time sheet our of performance financial a balance company, the initiatives. our to Wally cash our the turn on over I call quarter.

Wallace Ruiz

the afternoon, Thank Good you, quarter. recap Rich. I second results for our financial everyone. will

compared second compares June this is for ValidClick revenue primarily of million Inuvo in the of year. year offset in compared in the XX, decrease due $XX.X lower was revenue quarter higher operated revenue quarter quarter to to was mentioned, the of of $XX in with while quarter last million sites. year. ended second advertising operations. the $X.X our to ValidClick year. million last budgets, reported year’s current revenue second the Rich reduced XXXX, million, The the this this revenue virtually ValidClick owned by reported IntentKey, The $X.X in revenue particularly in As from was and quarter partially flat last

Compensation compared of ValidClick year of year generated and employee year, TAC. $X.X last conditions, XX% from quarter compared the known last a the conditions to Marketing is to is quarter costs revenue Operating to first these also websites of XX% expense lower $X.X stock-based the primarily in apps. margins increasing from Marketing XX% same expense incentive result partner. expense million the to compared compared same terms a compared prior were quarter year. the the renegotiation has to as And primarily IntentKey expenses gross last second costs, expense ValidClick revenue of of the last this due with second expense, a due the compensation and in therefore, to the marketing XXXX, margins of terms ValidClick primarily quarter this payment pay. to for required ValidClick predominantly ads year in websites. prior year six cost up costs served year. to the a of a this consumers same to to year. traffic was These XX% lower in provider. of $X.X accrued TAC benefits, payment are increase of a this compared in to are lower as to was quarter the up attract with So, to million Gross quarter quarter second accrued higher the to and of higher continue second year. quarter year, last months, it second renegotiation The to revenue ValidClick within prior million were primarily $X.X year, $X.X in the increased million to marketing acquisition due commissions, year to the compared in to the ValidClick made million in and TAC but XX% and lower

derivative the an The mark-to-market in second $XX,XXX headcount March was senior quarter per salaries June last higher and to of spite the lowering the in convertible loss XXXX headcount associated XXXX. to June promissory $X.XX or excess the a $X.X June XX Our XXth a per time in and and We at of professional was lower due basic XXth year in quarter year computer with million had employees agreement due is employees loss part notes the compared reported incurred second convertible we and ended this income mentioned, $XXX,XXX terminated liability second of an quarter decreased for XX higher equipment. payroll that of second to or $XXX,XXX a $X.XX to loss in notes year, June last share net share, year of for due liability quarter. income this prior compensation to in associated administrative for of expense was than compared $X $XXX,XXX adjusted the compared to same $XX,XXX last general we of loss to second lease compared was primarily loss the in year, at net of just to due expense expense year. in Last of full year quarter of June The quarter XX, the the expense, temporarily $XXX,XXX interest the included from item legal issued of the other quarter a which of that the officers EBITDA income buyout merger of a a with year’s this year’s last last the year. year. of year. to in a basic We the interest and this a of XXXX. quarter I Selling year, expense compared with derivative last associated ended XX of of year, per for last the fees with adjustment was the in for a second quarter quarter million year, which the $XXX,XXX interest to net Interest or this

had and of million. we XXXX In registered Also activities. Our of a capital quarter, offering, common of of and April, XX, Program PPP promissory in unsecured balance entirely costs. holders as for we a proceeds gross for their the the closed public of gross end note a closed $X.X I engaged June, sheet outstanding. for resulted reduction number loan We to monetization our tranche a and previously of gross of common word we to second to million offering that proceeds as the June, stock converted close that in we in of by the direct in loan. In a applications offering mentioned, additional of Inuvo. to May, at in And the $X.X common reduction Protection about our commitment quarter. debt million for June direct registered in sold program. underwritten XXXX, second raising second the we remaining the we use ValidClick April, In financing proceeds cash of notes of $X.X June as in that in million. a the our the Paycheck of various the $X.X In $XXX,XXX. today, apply on debts we the outstanding were million. Subsequent provided of now just which firm April July July stock cash websites in of And in notes available an no and serves. number reporting for those are $XX.XX equivalents forgiveness COVID-XX This all we under as a revenue proceeds and and traffic of an payroll follow had obtained for or or is ValidClick Beginning advertisers in decline result, late we started see a stock

second growth second rate the number sales year-over-year. paused, expenses, months reporting of curtailed in had first clients low resulting number quarter including of have down in IntentKey and us marketing XXXX, Additionally, travel. flat the a a quarter, had while at compensation we slowing a to of and XX% a spend the flaws the Generally, growth, of clients

home issues or our and families. from policy have employees to protect work We their

also As compensation we and mentioned to senior and implemented change earlier, temporary a employees managers. officers

yet improve. mentioned certainty how comfortable rate XXXX, be trend predict Rich the do quarter. continuing run mid-June second As half to into appears any not will enough year We feel third our nor continue improvement of we the the which in materialize, with daily whether revenue in with will to revenue, t the beginning an experienced

focusing operations are find potential we our areas has We expense and continuing of disruption our resources to with reductions necessary, daily little on possible. an as believe revenue as as immediate all to

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

Richard Howe

Thanks Wally.

more continue We changes strongest early of way and trends continued navigate heading associated COVID the into has started. suggests year part through to economic IntentKey the with has the our our recovery The year from half significant declines key. wide of the impacted And throughout intent the grow resulting severely ValidClick in was while COVID. than first the to marketing industry of spite and budget

encouraging but history to strongest balance it turn only sheet on operator. growth not within company monthly would to seen low over the to May. in other ValidClick, like our its sequential have in We in side. recovered to points following ability our we confident feel now the With manage thrive I the of the

Operator

from Thank our question Brian will Instructions] we you. Partners. take of And first [Operator Kinstlinger Global Alliance

Brian Kinstlinger

evening good taking my and revenue. thanks Hi for questions next breakeven on impressive lower pretty guys

Or coming you win I guess from you or new terms ability logos look In IntentKey, can growth leasing of revenue you in this your environment? existing that at talk about about ramp, new coming to customers that customers? talked when month-by-month from

Richard Howe

in for our It is coming business had from quarter growth rate that both, half growth achieve to the and a marketing we leading and the into starting the But the as second the quarter, north pause quarter, kind to new quarter. memory are the rate year-over-year just year. budget Brian. first and companies. new first But It we alone is for I quarter, lot we apply try of of be that, find the in and is if to XX% logos did seeing get seeing need really that, of clearly got and released in second that IntentKey the which is, why those for all the of was again. we believe we the we what are logos for we XX% now growth have before are serves in quarters

to in us QX for in has capacity, right no they gauge have But has been quantitatively half full that are to now moving sure. is don’t full us I things capacity, for direction back picking form hard COVID was you, for come come full never QX before. a and back it There do new strength, back know. since IntentKey up. is budgets for so to It And there example

Brian Kinstlinger

- can of and you versus a quantify March end at your the customer June for at count provide when look So - you IntentKey maybe maybe the of today? end

Richard Howe

IntentKey. have out don’t there handy customer customers think give lots I we don’t But Yes. with I it and the of counts. are

for the in mentioned I XX quarter. the people I for is people to running in that I campaigns, sometimes fill have second we budgets XX QX, trying that XX second your campaigns thing are RFPs, customers second about I their in had multiple season. I like running mentioned for we season the the way. think other And good were think think there up but for demand, question the maybe pick their to of marketing pick script, we IntentKey And on my in campaigns the tends believe, now think - there should are I in big end course, QX quarter, quarter quarter. I budgetary up the towards is, And to to second of a

So, is the a they like asking demand money are coming it planning that is an many all the sign the of year, feeling are the we and to wasting the back back spend. is otherwise be time that us RFP be good to companies actually RFPs half for - not going for for

Brian Kinstlinger

transpire, And Okay. how can new you a campaign cycle start the unique logos, quickly and sale test talk - does can how ramp? it made then something about that for with quickly and

Richard Howe

to not answer simple can is vary it think the have seen you is that because as the quite question we So results dramatically.

is to business And closed us nine in months close business. have it We XX-days. taken

actually, clients is number new but the So, a the budget even terms what capabilities to right when of new is in more test for almost and you it the that the like good. are is on client our are client be closing know that for of now, for results in started range. proving period, look add TV the is basically determination you they be whatever I test likely largest testing mentioned all a up material even they is starts nine I Yes, you is to would exactly that with a fails, those is, reality know of And us, you budget it big range always that tests connected logo, we is invariably, middle towards versus between doing to to they a know I say and my the quality happened. to performance said, use happens XX-days August. a happens we script, material maybe with end substantial test are the higher them. regular in with somewhere allocation Invariably, what customers, a things making of at factor pretty there. test. closer a signs and the looking the which what largest our starts salespeople want in month

Brian Kinstlinger

Great.

you laid out I that in Now seeing kind trends missed you it, slower of business I think the strength demand IntentKey, clearly ValidClick you few albeit was over but the and month-by-month, recovering how can last lay months? clip out for maybe and much are

Richard Howe

was and is ValidClick of budgetary have category, be So, impact major a not COVID to a reason greater, channel, expense. it a was, been primary budget a Unlike for it an on the in a expected the like to major add is is say it let’s for source IntentKey, IntentKey result spend as tends that because marketers.

integrations side Now the that good is news of our about for the to, us, add-on access thousands advertisers, expense hundreds because ValidClick have globally which we is advertisers. business with many, it the is for many many, demand of partners budgetary an of advantage

when those kinds pull of a you pull brands. marketer back, The a tends back that it first. of is, kind of of is budgets a from challenge when budgets back to bit lot budget So, pull get little

And we reduction in so ValidClick saw the why business. that disproportionate is

we that through sequential growth July Now, did and in June we are bottom that we seeing business growth in yesterday, out saw and May sequential in at trends August being over July. said, May. June, above the are least growth over And saw with

up, goes ValidClick up like feel is and back back come it will down, come business we but it the we stack it - So coming the will back. as

Brian Kinstlinger

business. mean, Okay. been able That IntentKey to scale around I you puts me have that

gross expand in IntentKey business? You is there, margins a what mature your dramatically have already had margins

Richard Howe

range. the question I are the this have when I kind margins probably XX% XX% in of margin to been said few asked have the sustainable that a times I IntentKey think that for

proved the with perhaps to the own that it know the there process to when and their version are keys however, upon for to the for running that model to XX% on base generate SaaS of new campaigns. and said, offer wanted north we always that XXXX IntentKey being run would but product, products, been the a a we Now, service proof also that proof enough SaaS points I we mentioned IntentKey will was are success program a clients excitement expect so and launched part And business picked results in model, it up significant of our you claim the version. be that actually in business that SaaS we to design this of as not offer of be launch that margins could to we building for have, revenue points, we before the

Going that XXXXwe see past we forward, have until SaaS services result complimentary the won’t version. we launch is the of SaaS should have that we a start they have increasing a will business that business, we think margins while always

Brian Kinstlinger

for taking questions. Thanks my Great.

Richard Howe

you. Thank

Operator

will [Operator Instructions] to of Lake And Street go Markets. Ryan Capital Meyers next we

Ryan Meyers

my Hello questions. guys, taking for thanks

cash the of given First one What end from equity was me. the raise? at the July

Wallace Ruiz

$XX approximately was million. It

Ryan Meyers

housekeeping What recent equity just item. for sort of raise? count then more share using should for be to we And Okay. the one account

Wallace Ruiz

Should approximately be million. $XX.X

Ryan Meyers

helpful. is Thank you. that Alright,

you the revenue IntentKey think about do should the rest then or for to the year? seasonality So be how up expect of we sequentially the

Richard Howe

planning be not to Well not [indiscernible] and we certainly are hopefully reliant.

in nor deal said, none just preamble, else. as had of - I As anyone COVID, is COVID us my listen with

the lowest to So over now, is higher July. August way, June over me we trend April. seeing and July April growth over June it IntentKey May, for than are for take that month which the May, is May by a be IntentKey right April, hard for growth forecast over and the was the to grown

back the is if suspect like will. I looks is it continue. relates IntentKey. the should does, So And it be headed there if right will, going it I that it trend know then, trend it quarterly to in we in But to is to QX. growth the that year-over-year, as don’t direction

Ryan Meyers

then you in thinking added one about for year, reps? as you Okay. rest the more that you of the salesperson adding guys And as sales guys far mentioned July probably

Richard Howe

budgetary so candidates, looking we now pursuing two identifying for least are sales I’m more, hire for season preparation up at we are coming right in and candidates actively year, to right next now. the for

Ryan Meyers

Thanks, Great. guys.

Richard Howe

You, bet Ryan.

Operator

And We conclude with that today’s participation question. This now calls. today. you disconnect. last appreciate may everyone’s will And

Inuvo (INUV) 13 Aug 202020 Q2 Earnings call transcript