Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the INUVO, Inc.

Third Quarter 2022 Financial Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Natalya Rudman. Please go ahead.

Natalya Rudman

good and Keith, you, morning. Thank thank I'd for joining today for Inuvo like Third to the Call. Quarter us Update everyone XXXX Shareholder Inuvo's your Richard Wally Today, Officer, Chief Executive Officer, Financial Howe Luis on presenters and be the call. will Chief

shareholders remind with and yesterday. like Commission filed Securities we our also our that We'd Exchange to XX-Q the

are to not Before I'm review to The events, going we the descriptions such, statements statement. call of this all relating Litigation in are to conference the Act statements forward-looking historical and as made facts begin, of XXXX. future the that company's are statements Reform safe forward-looking harbor Securities pursuant

enable, risks differ will, potential, intend, project forward-looking forward-looking are in are expect, and the used should, These they as a similar such Inc. and statement. could, actual call, Inuvo and materially. subject relate estimate, When as results to may to believe, this statements expressions anticipate, uncertainties, words

that cause and all this risks time. forward-looking involve to Investors anticipated new those results are from actual cautioned by statements may which uncertainties, differ

disclose statements risks Securities events date are U.S. Inuvo's revisions circumstances filings makes in public more The be that commitment described hereof forward-looking facts, upon after at fully the company no to other bear which to www.sec.gov. Exchange with reviewed or Commission, and statements. any addition, can the any or In forward-looking

news comparison our and non-GAAP direct historical available measures. believes the today's release that company the consistent most to its such reconciliation The In an website. measure today's comparable non-GAAP include provides additional will on is to addition, measurement reference discussion performance. in measures information GAAP of of A

Howe. CEO, Rich. go the out of that the With ahead, turn I'll now Please call to over Richard way,

Richard Howe

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

months XXXX. year. quarter revenues X to pleased sixth million We September of compared to period increased for growth are last XX, our same the the for as have XX% third the quarter ended $XX.X XXXX of year-over-year to Year-to-date, consecutive revenue report

basis, have $XX.X million. XX-month revenues trailing increased to On a XX%

disclosed For third we the delivered million in to invalid was $XX.X for experienced an carryover the we a year-over-year, advertising revenue. now quarter from second seeking spending, few quarter we in part of agency QX effects we full that are well-known believe from the loss We an whom the reimbursement purchased and growth minutes. in more unknowingly client, consumer deceleration in will I platform in XXXX, in detail and a which of a modest discuss revenue due which

such payment has invalid contributed to the in platform relates QX. and shut that Inuvo until the our lost it accounts, the issue $X roughly is In platform and resolved. due the affected time As down withholding has this in revenue we clients, estimate are reimbursed interim, as the traffic, million we the

the with in We dispute. are proceeding regarding platform an currently the arbitration

provides technology Inuvo know, you channels. As across and digital services advertising,

serves principally first search search-related revenues programmatic platforms experienced while up television, platform cable and roughly channels with ValidClick The XX%, serves revenues, and the XX%. the from represents display, the and principally year-over-year. ValidClick months both ValidClick advertising growth XXX% strong Through the within television respectively, IntentKey the connected social represent associated and online native channels. the IntentKey of XX% roughly with Our social and XXXX, IntentKey while of X the video, revenues

the For third XXXX, X% ValidClick quarter XX% year-over-year. of decreased revenue increased IntentKey and

quarter that economic a looming, were and expected. by impacted conditions QX such, could And the the seasonally in we that higher transcript, trend change than messaged the as mentioned revenues turned was out case. were second partially potential which As in quarter to that in be seasonal XXXX be

EBITDA EBITDA X-month roughly XX% this $X.X for And Adjusted this at expect would a revenues. quarter be quarter. was impacted strategy. the The growth-oriented in X- the company's the heading fourth more to strategy remained healthy Adjusted by than periods. we a core while expected, continues million. was margins roughly of quarter to mostly Gross third was and lower and in loss improve the into XX%

As serve not led implications consumer the previous future. for we the is messaged we of a we industry prepared believe on have privacy calls,

this in fact, begin In & rarely as threaten transition another. It data. as well this issue from industry billion to known consumer that lose to they technological $XXX that that make digital incumbents the XXXX, the [McKinsey advertising because one U.S. where early of shift Company industry reported on suggested paradigm would access would April to annual is starting XXXX

methods, leading companies currently continue by they the lost they losers Rather, Inuvo, future. from hang to and using the market are services be variably to technologies and define well and burdened will industry, aligned winners who use the positioned next with like on to The within years share to the the among is not outdated advertising and/or adapt winners. not Inuvo the few

and Our priority. #X opportunity growth period use therefore, remains technologies to these our take during market to remains incumbents outdated share where why continue this

deliver IntentKey results to clients within platform continued have our KPIs. XX% on where exceptional clients' we better the quarter, third the than We in average for performed

Most million lose spend through client situation. these lose such U.S. lost we agencies. agency always is owns digital it to performance. to We providing almost because In of occurs to to client, a yet $X related who estimated due a we of an campaigns QX, a have do advertising the client an When are we relationship.

the this frustration we yet experienced account result lost. in transition the the the one brands case, history, agency. client, of case and was In the that IntentKey was the months That a this were agency, best the was servicing preceding associated competing the performance with question the of The our to agency. performance still new accounts in to immediately lost

that in changes while are the industry as We new agency they advertising back decline delivered new yet directly win have the in to with signed this brand And we occurring opportunity performance contact XXXX directly. XX-month with to an have the agreement a by remained the may the within agency, continues brand overall. alongside the

continue marketing capitalizing to On of of go-to-market a the sales a changing team capable executives the out we build industry. on from resulting opportunities and front,

heavily profile that our size and increased their for We of performance. that supporting who the on We particularly by preparation growing through related traditional prospects, for while cycle. management the those brand see rely are Universally, they within XX% busy been industry sales Inuvo within platforms media and future. have with teams efforts account proposals that QX, marketing aligning privacy the in approximately performance we concern to this next year's in submitting raises activities

intelligence-based in solve and determine itself available optimized. an privacy is We channel now the contribution had another brand clients, an possess consequence larger seeing QX designed our metrics industry that call as our potential We of the can opportunities are and more started technology deprecation we additional used being becoming performance to As challenge emerge. we deploy yet noted artificial our make part how to recognized, deal each to the being of technology the of overall of mix cookie. the media generally to

they they reason of between the using improperly historical This technology and future the inability channels to any any patterns find understand This and choose mechanisms. why fail individual a and identity-based then be measure given channels media brands channels optimal to use. the for related to consumer interactions common can the period, limit should without expand is suggest performance mix the and to number of what

because disease, technology as industry currently example, scope clients across are and using for to off-line. many most products different of is it and their as significant data who online of advertising which of this the whom we our competence XX across these environments, The determining market warehouse have possesses. channels we complexity science how For both optimize beyond Inuvo data requires

time. in a characteristics must to advertising of it return. and capable investment and where away a scientifically when are demand the substantial be capability the and differentiation multichannel advertising the not continue this an and demand we of new as done optimal advertising For services to within channels significant supply This in they build future. can meeting from they are supply is a technology budgets We where back see metrics company and that channels brand, needs and has the industry as this then imperative just again world those move

I the financial detailed of to would call the assessment Wally for like within our over to now turn performance quarter. a more

Wallace Ruiz

I'll Thank results XXXX. financial quarter morning, everyone. and recap you, of for the our third good Rich,

Rich million for prior their quarter spend. Inuvo $XX.X reported the $XX.X to new quarter compared approximately the ended X% revenue by IntentKey due year to of IntentKey exceeded increase media reported solutions expanding last the and for revenue As million platforms, third of XX%, our an ValidClick September mentioned, our clients. multichannel customers Both XX, in primarily XXXX, year. serve

split between acquired ValidClick due year. quarter the to IntentKey and XX%, X% compared for second that invalid XX% XX% and quarter in XXXX Revenue last for was quarter prior in the period that respectively, revenue to ended third declined issues ended from resulting ValidClick incidental of XX, media to in the September by and XXXX, advertising the the last and XX%, period that -- same year. compares the of respectively,

concentrated Our revenue is than XXXX before. less in

of than year, different represented represented client revenue. client client, largest same the XX% And revenue. our our XX% largest total Our the last in of quarter year from a this

platform, $XX.X September quarter has the platform but gross million IntentKey percentage XX% XX% ended margin Gross compared million profit has to year last becomes a last net this totaled to period for period was the The this greater greater a for the of year. same the a revenue margin. quarter it margin total the year same third third XX as revenue. Inuvo the for than ValidClick margin compared profit IntentKey Gross overall lower decreases as year. gross The as $XX.X for of

margin. predominantly hosted the we cost past, a gross of developers quarters In high serve app publishers very that yielding to platform, payments ValidClick that through and revenue website advertisements was

clients, cost IntentKey programmatic inventory is percentage predominantly access on exchanges the the a continue they supply our become serve advertisements into grow, artificial As larger and of which advertising behalf of to payments with our cost we information associated of to revenue IntentKey intelligence. that channels revenue. to by of predicted of to a IntentKey the advertising have -- revenue using provide intend

not to cost very IntentKey have acquisition, profitable. is gross traffic payments time, cost for a greater does also made than a the a operating on The costs of historical have directly with marketing these basis, in which is have is at high associated it. as accounted This The net more margins but same expense the ValidClick publishers, cost. it we high

Our serve clients. of we Many multichannel a gross clients upon are mix our solution. media the require advertising channels digital of use that margins also dependent our to

to client video, yield these and for time. supply of of demand, varying serve and native. prescriptive gross TV, of to Each and as client mix One can across optimization ads advantages linear search the channels, such connected social, mobile, on channels TV, depending our display, media vary the is multiple ability margins over from highly the clients targeted

Generally, within search of channels the and walled that Internet work we are support gardens large these lower-margin channels. as social platforms

Open channels We opportunities expansion in the have better other related for Web. margin to

We year X%. were $XX.X in margins The X line year of gross for costs. we of be margins prior third million remainder year, marketing Operating the largest quarters year. of expenses to of roughly with expect compared reported this the the in the expense gross the first to quarter a this in of operating that million is component the in $XX.X decrease

overall this $X.X year. Note, due quarter to traffic quarter in marketing acquisition mentioned, costs same million ValidClick last $XX.X with the were of third is compared marketing predominantly The in cost costs previously the to million lower ValidClick. revenue. costs are as I the Marketing lower associated year

Going cost share from continues of the percent decline forward, IntentKey continue grow a revenue to Inuvo to as expect platform overall to of marketing revenue. and revenue we as

$X.X in and million $X.X quarter prior pay. the incentive was higher salary million compared year, higher to in expense employee to of compensation this expense third costs, primarily Compensation the stock-based due accrued year

at sales and compares full-time was the The year, September part-time year. management last related headcount within occurred to this sales, the at increase that XX% XX September IntentKey. support XX and and employment in of majority of of Our XX to account

and professional offset year. and Net $XX,XXX of approximately offset income The lower allowance, the third to partially and facility quarter a by year last by $X,XXX of net financing $X,XXX the and and securities. amortization in $XX,XXX of due in this prior of expense expense. charges, third travel expense interest to administrative the year partially was This quarter entertainment higher year increased dividend from finance doubtful was was marketable expense expense compared expense. fees compared $XXX,XXX debt this to General

prior or a now We an income reported are is net as loss year last year. due and share only of million other $X.X expense. quarter expense compared losses on expense. Turning by per profit, to end. greater quarter net the with lower loss offset to the or $XX,XXX basic quarter is associated $X.X that of same over to The We million mark-to-market at million operating the $X.X lower of net $X.XX in $X.XX loss per trading unrealized these gross current in reported share year securities securities primarily basic $XXX,XXX

also Net XX quarter loss $X.X items, stock-based year income in noncash includes September of $XXX,XXX year's including of loss this adjusted depreciation, and EBITDA of quarter year. was to ended The the compensation. $X.X this million amortization million a last compared for

and we XX million. working and September marketable year, had equivalents At securities of million of $X.X a and $X.X this net capital cash cash of

outstanding, with units capital working purchase outstanding million -- have stock line have common balance and $X maintained million X.X warrants simple on common structure a structure shares stock. a -- XXX,XXX we credit, outstanding no addition, restricted million we In currently of we XXX employee which cap to

I'd that, call back the turn over like Rich. With to to

Richard Howe

year-over-year within increasing Thanks, is company. Consequently, no garnering laser-focused technology, identity-based first targeting IntentKey XX% delivering on for traction of will year-over-year positive revenue for Wally. extremely feedback quarters scale. adoption a basis believe of current the the we growth XXXX brand can X At technologies be even the on is remain and the our awareness a transformative through more and where which market anticipate solid and growth we longer AI XXXX, gaining year

grow growing turn latter Operator? revenue. I flow we the trends continue, of to our we expect highly million. the questions. balance the enough revenue Should the over of needs would we operator as and accommodate to between strong will building $XX to scalable call capital fourth during a business. working and current believe quarter model for continue Overall, the remains generate We expect to to be $XX now million positive XXXX are sheet cash half

Operator

and take Global Partners. Alliance -- [Operator first Instructions] you ladies gentlemen. question from We'll Thank with Kitslinger our Brian

Unidentified Analyst

seeing advertising I Brian. is questions Sherman I about the here. on sizes could the on This And it's you want if segments fewer campaign are of budgets. with is talk than IntentKey, And for ValidClick, small less budget? few on for you more search start to have overall both on your budgets, corporate campaigns? pressure a pressure ad or if it or turning does the ad pressures

Richard Howe

second didn't one, again, got all please? catch the you the ask question Could second I first but I the of one.

Unidentified Analyst

ad ValidClick, or corporate you budgets? pressure the see ad that budgets? as On having do on you Do search Yes. generally pressure see less more overall than the

Richard Howe

Okay.

So budgets? was is let running. the me we're the question, which both pressure yes campaigns the start with that do and And we no. is see And in that first on answer represented

we situation see believe we we see and our clients see. economic I same think an is that things that the uncertain,

we of but did as for not Now number that, of big consequence start way, the a a clients. run way, see dropping actually a campaigns to in smaller being in

fewer relative to prior in see yes, did to we the campaigns answer the quarter. is, question the So that quarter

or or other cover, it's channels we As throughout. relates whether search not to the generally it social we or that see it

them, to by something So, maybe pause uncertain away want to I not causing are continue or a mostly related both we're to this inflation. period. say, is sure there continue fashion not just fashion a potentially going and -- end, economy to upward for issues see if second whether point. all in downwards It you some advertisers let's early some that is this. the impacted quite an or of there's some, going an indicators are go to don't or related But if degree, to at to is this mislead. will, being Like the

Unidentified Analyst

said of campaigns consistent? part have you overall remained those, fewer But for the maybe is slightly most

Richard Howe

Yes.

With the reduction.

Unidentified Analyst

That's helpful.

be -- Or modest trying guess are to term? get new the new percentage will the level, to wins new Could the during the enterprises high the I be tech? And share third was in for misspoke. near should then at, they quarter? number Second logo you we sorry, in I of quarter? wins how a I'm during wins trended period, logo logo a recessionary expect new ad IntentKey trying fourth is at

Richard Howe

question have. logos haven't The answer to the many the disclosed of new we that how is we

look right do will I what generally. In see industry, new could financial third year. in to So, up if their new go advertising Most it and seasonal every the companies actually the e-commerce the quarters and into do changes the make not answer of it those I sign-up services it won't advertising so want realm, heading related I is. are providing typically, you quarters now fourth have especially cycle But to almost most the of to the their to within year in it is whoever the performance. most because that's significant to logos technology

is in the of half of slowdown the there the end So, the logos front signed we in of year. a compared generally to year back number new the

Unidentified Analyst

helpful. That's

the fourth provide helpful. revenue? the So, the would talking help you that of be quarter of from you the this coming quarter year the the about be how strong. Or so understand fourth Can strongest in seasonally quarter? be is fourth quarter? anything usually Will will Any to third there quarter fourth see us details pressure below be will terms

Richard Howe

gave I We my for guidance comments -- in some this. summary

on somewhere XX, we've revenue revenue XX, million. seen November between with and today, based $XX fourth the we're where we through So quarter November $XX in projecting are million the

Unidentified Analyst

that And terms anything revenue. your your decreased top revenue IntentKey? then your to of in clients, you Have client of near-term to your related you they from XX% total ad strategy communicated total its XX% largest mentioned to of

Richard Howe

we go Well, ahead, -- So them to Wally. all talk

Wallace Ruiz

same the client right? just was from Rich, say, last that wasn't to different going I -- year are those clients, That

Richard Howe

the And the medium the with associated incredible components the the to we're in again, base with way deliverable. and is, answer mentioned today, again of channels have to we things call to some I the quarter. course, particularly actually as optimize mean as that of as grow. been as of in of across various which in advertising, mix technology a general time not is done itself, tell, before the Optimizing probably second actually I our about media the all highlighted, I of intelligence one dialogue question on do clients is media But channels we it's can us artificial in the mix that far allows significant. this it yet number channels across the has impact hardest the

Operator

We'll Jack with question Group. Maxim Instructions] from Vander take next [Operator Aarde our

Jack Codera

This the Jack for color, could Jack just EBITDA randomness I in adjusted think if adds also much. that? macro already, still some so on you growth, I'm goal Aarde. know the close basis, calling is to is to to And one any hear. question. you're Kodera question. Vander mentioned nice actually to I wondering breakeven you my I'm adjusted had environment you share focusing is That's operate EBITDA? guys on if wondering you Thank only which

Wallace Ruiz

of kind -- you Jack, broke

Richard Howe

want do Wally, you -- to take the

Wallace Ruiz

kind it Jack? EBITDA were adjusted What of question. about it asking, broke I entire Yes, that was didn't the up. hear you

Jack Codera

Yes. Sorry.

So, close operate to to to then -- And adjusted also how any any randomness macro is that EBITDA? breakeven wondering color goal affects if your operating on there's if

Wallace Ruiz

Yes, on question. Jack, for growing as absolutely. we're the quickly as focused Thanks possible.

window we opportunity his market see for is in an over mentioned comments, to opportunity share. had that's get Rich an us X giving As years, that It's the next us. this a

constraints now, be we negative possibly quickly neutral. as to we we can continue be within been to attempting the but we we future. a hit have of we're quarters in and can have where positive, We're positive at as believe the growing So, EBITDA

neutral to focus can, positive EBITDA as growing but as quickly and as the also. possible we is as adjusted So, quickly remain to

that yes, So goal. our is

Jack Codera

the That's only I had. goal. amazing question That's

Operator

to session. the this question-and-answer Rich I'd or At for gentlemen, like conclude this Howe and Ladies conference today's to back any additional remarks. closing does turn time,

Richard Howe

I'd appreciate in Thank to interest you, who on thank us joined Operator. like And continued call of today. our We everyone course, company. this your

Operator

We appreciate participation. concludes your gentlemen, and Ladies this conference. today's

may disconnect. now You

Inuvo (INUV) 15 Nov 222022 Q3 Earnings call transcript