INUV - Earnings call transcript Q2 2021

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Operator

Good day and welcome to the Inuvo Second Quarter 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd 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 morning. everyone XXXX us Shareholder thank Inuvo for to Quarter Second Update like for today joining the I Conference Call. Inuvo's Wallace your call, Chief today's Chief Richard Officer, On Howe; Financial Officer, Ruiz presenters. be will Executive and I this anticipate the our we shareholders filing like would Exchange XX-Q Commission to also and our that remind Securities evening. with

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

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

Richard Howe

Thank a and you, everyone, quarter. had strong second Valter, thanks, We us joining for today.

to $X.X margins, even XX% year-over-year EBITDA At XX% million XX, on we $XX.X up an revenue, months break our need and we in adjusted which cash million sequentially. is $X June three was up of operating ended expect XXXX, an no the the EBITDA marketable remains The additional unused be debt roughly current rates gross $XXX,XXX, strong which For COVID-related platform in in platform's the contributed roughly the and monthly development balance XXXX, exceed over was XXXX. growth June in million of which with in sheet off year monthly been Of financing of able up second flat through Adjusted $X.X May ends. delivered, currently when to securities X% capital. year-over-year sequentially. million, million basis was deliver loss The quarter before company XX%. to $XX a low which compounded the facility. expect and not million, rate revenue That we by has $XX.X was delivered run

and in have ValidClick's we clients post-pandemic the As most is is largest been where the of revised mentioned, -- mix evident previously of for Google. materially this revenue now main services have the ValidClick three

this rates future. sequentially. XX% contributed year-over-year our and goals the short the our dominant with growing offers client in on client strategy nothing the relationship marketplace for by product growth client client, results of this would [ph] million we conference. In double-digit most later on The are Inuvo platform in astounding. IntentKey world, towards goes believe revenue average like XXXX growth second XX% serving our in $X.X continue roughly We of that quarter, prospects. I objectives we The attractive effort more the exceeded we will foreseeable remind decade more line the advertising performance in -- for to ballots a than decided a XX%. As quarter, the this year-over-year refocus shareholders the associated to it's most expect back this of product the

continuing sequential we expect XXXX, of revenue both quarter growth strong third the year-over-year lines. within product For and

Let IntentKey me now both for provide insights the additional ValidClick. some and

our given first half we they a spend. into the April, XX% as of We the about market. IntentKey and budget through part running results IntentKey XX-to-X increase the associated performance allocating client then have return seen the sales on platform staggering retail presentations second XX prospective in continuing the of result we a XXXX, number a a total the quarter. of XX% campaigns as As a with first had won new to sold including delivered deals appears have in a a In the more our in for compared of since and service. that put our launched in quarter, only towards ad that by had to where campaigns client We same release in XX had Results the Market number rep period improved announced Canada expansion deal client now be as within the result, of out momentum are building. XXXX. a increase

that We client revenues. to report closed growth first us continues having with recently their that also surpassed spend in dollars gaming monthly media the I'm had we to client competitor the their our largest and casino recently state as announced pleased in accelerates,

gaming working will world initial an September this a in our currently publication are leading We a and article. highlighting on be proposal Casino for client the technology within International,

Within who tourism recreational company, the a agencies are promote a clients. and a retailer to large services awareness, added COVID vaccination we company, company, financial looking quarter, state vehicle healthcare a and some

data, the time solution competitive with interest to is make interest We can technology associated our gives allow third platform, as are the advertising opportunity fundamentally their the advancement is to years additional us who the in SaaS therefore we to and challenges numerous IP deprecation uses line spend. time added brands related proof those reliant change look clients continued scale has competitors to cookies and decisions, is to in ad of platform. recently to and version has select the worry artificial providers of their associated next IntentKey throughout we be advertising continuing delivered. We re-engineering now on differentiation prospects account the their implementations about of our Inuvo with experiencing what QX, hiring support resulting current we expect future from market few growing its for sales people to have this would over discussions prospects with to the list or employees. IntentKey begin currently a full for Since addresses and performance XX on sales, very same. prospects are in With already companies cookies, increased differentiation third within have of the the appreciate the sales are this prepared, Because the next been not and management intelligence XX extended a this active of prepare. while way part-time and party in we party our the and as online clients time roles. support Google working

client designed Canada. into our made our growing several expansion to accommodate base improvements and On the development we front, scalability

We ramp improvement are facing new way dashboards personnel time for and and as our reduce the streamlining also as internal hires rebuilding growth a with associated to up our continues. an as efficiency client

pulls regard, intelligence crawler has We day. for web knowledge. interpretation. system. a sends billion of continuously also our this six from pages enhance recently single akin librarian. millions Within crawler. web humanity's most AI over started already It This is pages from It internet, to covering to artificial learned then of interprets every In new which also our our it the content web our to

sentiment that would are enhancing individual within any in a English the concept is language. our allow related understand towards what working the We crawler to manner to AI this

the or brand, or given a of a example, place, or or the like thing crawler a language For a is can product, a towards person, we we currently, hashtags, given and the things and predominance understand these are can sentiment new updating so emojis constructs.

competitive growth compounded to earlier, focus XXXX. had improve that the that monthly whereas quarter. since the two is were X% market making a strong can we I within and about within was There Turning in our development ValidClick's noting. May small yield. such of scale enhancements are This often mentioned ValidClick, worth main COVID low now enhancements operational Increasing

First, the testing place infrastructure and we continued launched year. enhance to we in put AB last

of we this quarter, incremental spacing. about the before, XX client, power Of that positive resulted color, we size, largest revenue. XX good it's within where XX ran different In needs revenues. a adjustments these like the font talked haven't pages experiments, landing increases but of made and example experiments small and content on our have to can concert individual things with improvements We the in on in

typically our time ability to scale so increased X% to X%, competitive quickly revenues increase more relative XX% experimentation can this clients. improvement XXXX over services capability. the in about this that serve each test manner scaling by this in at enables the This add continuous ultimately to up websites, better-promote While in our around X% using those we've to while far, us represents clients, we be and needs estimate of marketplace to

effective efficient. each at number tools. prohibitive. that campaigns managers Using being campaigns every our The quarter were second can focus build was optimization, our a able makes of set in is manually variety because advertising campaigns developing campaign without internally that of managing wide of double I'd more media highlight the online achieved across to critical This tools, of topics, by is advertising proprietary developed this update scale to technology buying we like these enhancements which to process a a technology day. requires is The

our call viewed views. XXX by serving now high the ValidClick this is web that all-time I detailed serve ValidClick year within the the be to which ads like the quarter. In for or measures regard, ads million interesting of the by given the over monthly to to performance within number consumers hit any Wally page first financial half of of pages more might shareholders we an a assessment into roughly One turn would track we month. in into

Wallace Ruiz

second the Thank of recap financial you, quarter Good morning, Rich. I'll everyone. of results XXXX.

last quarter $XX.X customers. XX of advertising $X.X was This Inuvo of revenue approximately last and mentioned, on year, beginning the affected of in of by reported June Rich prior As year. quarter revenue ValidClick prior acquisition due quarter compares ended by of quarter XX% the the second year XX in had to this both for ended by the IntentKey for material exceeded April XX%. impact the exceeded the year exceeded June reported million that million Revenue the of platforms year. XXXX budgets COVID-XX to a in that quarter year. primarily of last was new second the revenue which the And and year pandemic, revenue the this ValidClick of IntentKey

to the within gross overall payments of app cost cost provide As expense has expense acquisition-related shifted. marketing through valid was app cost predicted of to to inventory, primarily to are the IntentKey a ValidClick. the that publishers revenue gross we traffic were second of quarter of second majority overall due The information and we a the using we the in category. where become IntentKey in primarily quarter website serve ad Last to and in in to revenue operating advertisements of mentioned. generated payments supply revenue by publishers payments has year, of that the margins XX%, just generated and access that primarily IntentKey hosted Cost Inuvo by The through compared reported XX% host components last shift that developers I our claim. greater serve the year decrease ValidClick's XXXX in cost media by therefore the extent, are quarter. advertisements the exchanges website to as revenue a revenue, of to serve platform the margins XX% and by was that of same the advertisements percentage developers that revenue lesser

expense to higher mostly where expect the the and platform. the components the of as significantly SaaS the this of year were of quarter component this $X.X million year $X same The response this in compared forward, are $X.X in costs of reduction last compared as $X.X higher associated and to was modeling $XX.X to year platform. of Marketing traffic to the increase $X.X year compared version the Operating is employee ValidClick. an ValidClick to gross we Marketing costs million acquisition salary compared lower operating the and costs IntentKey margins year be our that's expense traffic with in revenue result million. acquisition the mentioned, with a with largest as the margins this of expenses to year associated to It's due second expenses decision unusually higher based largest increase last were ValidClick Compensation expense stock with quarter $X.X last previously million The higher this to $X.X the costs. quarter million last last of second just quarter the primarily year compensation due AI, the expense second fixed predominantly are in associated to to operating expected cost. is million in year, Going COVID-XX activities million marketing million year costs associated year. pandemic.

sales employment The of XX year the June at of last XX this and year. sales, increase time headcount was account June XX to compared in this IntentKey. at the for occurred support full XX Our majority within management

to two-thirds leaving be by public hired held cap keep decreased brokers discretionary facilities $XXX,XXX a the may of shareholders for highest All broker of in approximately to accounts lower had is to to part Since due corporate of being lower difficult caused that believe broker. meeting obtain discretionary contracting lower of who is an incurred IT ValidClick due a brokerage the a aware enough significant, compared shareholder retail to to retail centers, support vote. shareholder to the within meeting shares this third pending. where also of insiders, increasingly small the by professionals bring expense independent and and the them interest cost expense not frequently prior cost shares These reach also the in reach vote Exchange. party higher The attempting was and due are the second were XX, expense, expense often returned Inuvo to a decline primarily attempts approved. shares offsetting retail in Yesterday, expense. our two was Of the lower discretionary votes data year by shares computing were lower granted our amortization of York identify acquisition becomes shareholders and August costs authority held are their $XXX,XXX, third voting company an higher an specific shareholders shareholders, higher company. marketable year, strategy to as same that otherwise second by our quarter in our second to the securities. $X,XXX this Stock We expenses shares quarter to consolidated quarter and last to We is of institutions Retail using large the shareholders. year. in administrative in-house. a expensive Net higher not other in partially uninstructed to the submitted from SG&A. brokers voted very the to and and by holders to real quorum approximately this gains expense. facilities returns $XX,XXX income the often Selling, of quarter from memory, held function outstanding, to year we shareholders holding to unrealized The Proxies meeting. is XX%, vote right [ph] cost New meeting the pass which and becoming $XX,XXX to to remind the million professional their year, to many compared proposals. recent by XXX the We the general under this proposals and issuers, voting depreciation expense holding by four surrendering expenses due we broker's in it's offset phone of concern particularly vote annual the

in marketable $XXX,XXX $XX.X the had due quarter loss the second compared million. per The and EBITDA $XXX,XXX, working million this year securities. $XXX,XXX. convertible other of a same last of June loss in securities We capital last of a compared debt per of of million, we June for XX year, share, year. and reported cash cash The loss, quarter base year was $X.X quarter $XX.X adjusted net expense ending equivalents a of million to At net to net net this or $X.XX $X.X conversion to the the basic $X.XX or loss to from was of

million a to line, restricted Rich closing has through a only to we I'd In employee With have addition, common working with plan. no outstanding we for structure cap balance capital and currently back call which $X the stock maintain equity like incentive an remarks. simple units that, turn and stock

Richard Howe

on had Thank between Wally. expect year-over-year basis. third and year-over-year XX% sequential XX% a growth growth. quarter We would and quarter up second to XX% a with you, XX% We be strong the

to both expect We the quarter. in growth lines product sequential third show

the We improve EBITDA within expect adjusted quarter. third our will

performance growing pipeline marketable over we consequently, in the At see securities, We client Operator? With win for and would expect rates. to strong back improving for I that, to or questions. debt operator cash and over remarkable to the IntentKey's million alongside is the with a $XX need balance call continue no immediate no capital. additional sheet turn like

Operator

[Operator first you. And Partners. Instructions] we'll Thank to Global with Kinstlinger go Brian Alliance

Brian Kinstlinger

you with outcomes how you're Hi. IntentKey. trends number ran count that than like taking What success like Good more customer was from quantify you're might And for with sounds logos then winning quarter morning, second logos for year, It a the Thanks campaigns customer new you're of the Can at RFPs of new of having of my campaigns you the the [ph] where questions. be IntentKey? in on based lot for guys. for many -- XXXX? sounds of for XXXX? the and range end possible have ever more, you

Richard Howe

that a of questions. was lot Wow,

Some of ran the I I second answer. them, tell year-over-year. up quarter campaigns XX% what can't which the I is in and we you script, in was know IntentKey the said XX can I

half And year point number which least a we how It's counts did in there's what why other deals, number different. I the point means we're deals a big are last the see clients a I from well. of assimilate existing I evident not we're then of momentum of The is is is doing this to growth doing was it product your if tipping market point, XX%. that's more see think that which adding than more starts the The script I of building you're half, winning in actually your deal we year. Brian? that, year, in it's good question, were and the it run And do we're the easy kind number won at technology Brian, we which a deal. of and sort my said -- market, like news. because And we're So, as and a of win is talked last clients. about. of was new the earlier the we What year versus we than said this starting at I rates XX% campaigns have to winning think But what not quarter, in

Brian Kinstlinger

just looking more you XX% though? tech a guess growth. I'm XX% like I more time know that there have weren't curious, for new ad do it year customers Is in clients was the clients? more I

So, kind those I'm something about curious provide of metrics; exact just the of Xx? you with it that not can some [ph]

Richard Howe

Xx. It's about

Brian Kinstlinger

is Xx? evolution the Great. little ranges. bigger a typical new give small customer. on They start evolution then second the a the you more of Just a And campaign most bit maybe what short describe of through then us with budget take that start to [ph] before? and Do pie?

Richard Howe

how much anywhere it we and always to aware but and the and three technology We'll head-to-head against against cycle you, and sales and get we at defined way, they're us I we're our the implemented, win at the when tests to nine. they same from is and performance I we've Because nine XX%. my with second months -- competitors. but incremental. months when which much it will test -- typically, that's clients' I And a [ph]. more call losing the our is. when first XX% they by throughout test using. incumbent our Look look that's wants that's goals our someone we we how beaten ever -- go think sales test not I to three in script, do on number is, whatever months competition us three it's to of by those And our within whoever It's goals beating basis else competitors' the two quarters want I'm The tell us of close that the deals pretty spending we're regular goals are beat the that you what said that's months, every XXXX, time. same We gave it money one our three client And think performance cycle. the starts quarter and start in is

Brian Kinstlinger

or say purchases? closed sites loop competitors, click-throughs you being that's their getting And to and customers when that's

Richard Howe

many delivered return which retail know Every furniture a script, got where happens they care one, A customer is their in of to product likely XX-to-X retailer, talked we has spend. how selling ad customer a goals. a more different product on return spend. about to be ad retailer retail only we our the Like we on well-known the about a sold,

Just did -- We number. the by number. think a them. test was that about customer way, for we It's that the that with staggering basically that

Maybe rate. they the sales maybe trying are customer many through click-through a $XX,XXX that care be test your other promoting. how could might could $X.X then about use they're delivered, is that where with it to definitely optimize us it basically to they to They that goal. towards. gave clicking whatever that's staggering. what initial customers, a that worth people of as return They point, actually they're furniture. for came XX-to-X So, million It's is to we but and in, of spend And

frankly goal they to will vary. do automatically optimize care Our that the is, doesn't what AI it and goal target and learn

Brian Kinstlinger

at of are at then once? gross is growth And a that paper forward each for all how this to SaaS going option over client revenue part from does or we have may higher the introduction be campaigns Or the second about So, the to campaign? margin? model And this recognized us the of as think given Right. lead then Will slower perspective? SaaS generally should is P&L time? a

Richard Howe

of and SaaS. two is one One service product. fully the There's managed other flavors the

better claim than do Nobody both sell do. a SaaS evolution. natural continue will the products have It's products. We just most as we they who companies knows use how to to

willing to their sophisticated and to we're probably are. they're would to campaigns clients, recognizing for acquiesce a And sophisticated of managing say going responsibilities they client, so, they sort that be recognize job it us; the of doing better the that than most I

still that of see business of not the fully It's are now the 'and'. we more we're closing deals our service 'or', one components. the it's managed biggest and So, continuing. the and majority service The of it's not piece an services right

the the version certain very run XX%. average version the who product that north of technology client more market. that applicable of all themselves more they SaaS XX% the managing And to want the of to and around is to the are parts The is probably AI because business XX. use have, think for that on to I and of be of allow that the really, to SaaS the campaigns managed a bottom service can that Agencies run XX% business margins sales the do, being we bottom, we relationships the to want said, and of that ends anywhere the into and to the want do these plug driver are what way. agencies client-facing see the who components will more With probably of sort line. the IntentKey we is throw of up of course, down between in

Brian Kinstlinger

on then And search.

search the the are and from away shrunk QX to market still still think budgets market QX to below is XX% XXXX. do Or into other recovery? in Your mediums? shifted about revenue you Is has and

Richard Howe

can't you up No. fast scale It not doesn't way. or that shrunk that work as the opportunity about market scale ValidClick as side more back It's down. It's has you the or shrunk.

prior then is they're the And business recovering where different exceeding strongly. trajectory, I scale with as return before. in look [ph], that at correct a we you're when seeing business it's were What at so, us the are allow scaling is actually our my our was back and growth our And it's, very will projections should we if a it to shareholders ValidClick beyond with that it what to recovering it's looking of script, said that where bounced and and has very, ValidClick mix believe a pandemic.

Brian Kinstlinger

guys. you, thank Great,

Richard Howe

you, Thank Brian.

Operator

Brian go back to Kinstlinger. [Operator Instructions] we'll And

Brian Kinstlinger

wanted I I make one question. wanted if but have are whole Look, there more else. ask, the sure didn't to else one no take somebody to I time

about on strong landscape kind M&A. strategy your the sheet. and highlighted You've your M&A balance high-level Talk of

Richard Howe

that's Brian. sit shareholders and a we're calls on good question, it's and our are Yes, on our objective on think well guess aware, on not that I opined we, prior cash. to sitting $XX And million this I

money operationally EBITDA I us are end cash And put I've adjusted towards that's we're still the because we as to to basis. use. think our end said, that it year. on going But shareholders burning the gave probably to of

we yes, will growth objectives. result, could this, already And in looking are that a the the our for But with actively most in are advertising market as So, help assets The is in say I technology. we we IntentKey this. country. of sophisticated know not technology need

So, buy we don't need to technology.

we Because that we're can do other client performance they list a portfolio some year of some reasons. list, So, may in do, grow is got for that so as or we buy the the clients. our million we great then may we We're a of company are we've the to with job looked the not if for able companies companies that that's as revenue. revenue a focus we better be $XX who of we is at those each look do much strong, a will when are IntentKey looked and their as small about as associated clients. more around at looking focused We $X care client for million company know more that evaluating, the of and things performance really varying obvious those We are client believe that sizes.

focus. the So, that's

Brian Kinstlinger

Thanks. all were my questions. Those Great.

Richard Howe

Brian. you, Thank

Operator

are time. the And questions further there at no in this queue

Richard Howe

us joined thanks, in interest who today. everyone Inuvo. and continued Operator, appreciate you, Thank We your

Operator

Thank And that today's for your you conference. concludes participation.

may disconnect. now You

Inuvo (INUV) 12 Aug 212021 Q2 Earnings call transcript