Inuvo, Inc. (NYSE American: INUV), a leading provider of marketing technology, powered by artificial intelligence (AI) that serves brands and agencies, today provided a business update and announced its financial results for the fourth quarter and full year ended December 31, 2022.

Richard Howe, CEO of Inuvo, stated, “In 2022, we grew revenue, added new clients, and increased awareness. Throughout the year, we successfully implemented our strategy of bringing together Inuvo’s collective capabilities so we could better serve clients. As a result, I am pleased to report we achieved revenue growth of 26% for the fiscal year 2022.”

Mr. Howe continued, “As a technology company on the forefront of artificial intelligence, we continued to make significant AI advancements in 2022. There are many companies now asserting the integration of artificial intelligence into their solutions. There are few companies whose AI definition revolves around an intelligence that can discern the needs, emotions, and thinking of the humans it is designed to interact with, and this is exactly what differentiates the IntentKey from all other AI technologies within advertising.”

Financial Results for the Fourth Quarter and Full Year Ended December 31, 2022:

Net revenue for the fourth quarter of 2022 totaled $17.3 million, compared to $19.7 million for the same period last year. Although the fourth quarter of 2022 started strong, by December we experienced a softening in demand for advertising and lost a client. Net revenue for the full year ended December 31, 2022 totaled $75.6 million, an increase of approximately 26.4%, compared to $59.8 million for the same period last year.

Cost of revenue for the fourth quarter of 2022, totaled $5.5 million, compared to $8.5 million for the same period last year. The decrease in the cost of revenue for the three months ended December 31, 2022, as compared to the same period last year, was primarily related to the lower revenue in the current quarter. Cost of revenue for the full year ended December 31, 2022, totaled $30.2 million, as compared to $15.9 million for the same period last year. The increase in the cost of revenue for the full year ended December 31, 2022, as compared to 2021, was related to the growth associated with Direct revenue as a percentage of overall revenue.

Gross profit for the fourth quarter of 2022 and full year ended December 31, 2022 totaled $11.7 million and $45.4 million, respectively, as compared to $11.3 million and $43.9 million, respectively, for the same periods last year. Gross profit margin for the fourth quarter of 2022 and full year ended December 31, 2022 was approximately 68.0% and 60.0%, respectively, as compared to 57.1% and 73.4%, respectively, for the same periods last year.

Operating expenses for the fourth quarter of 2022 totaled $15.7 million, compared to $12.3 million for the same period last year. The higher operating expense is primarily due to increased traffic acquisition costs, corporate branding expense and accounts receivable reserve. Operating expenses for the full year ended December 31, 2022 totaled $58.0 million, compared to $51.7 million for the same period last year. Operating expenses for the full year ended December 31, 2022 included a marketing expense of $1.4 million related to client refunds for the invalid clicks purchased from a prominent advertising platform, from whom the Company expects reimbursement. The company has withheld payment of an equivalent amount of payables due to the advertising platform.

Other expense/income for the fourth quarter of 2022 and the full year ended December 31, 2022 was an expense of approximately $34 thousand and $436 thousand, respectively, compared to an expense of $158 thousand and an income of $257 thousand for the same periods last year. The other expense this year was due to unrealized and realized losses on trading securities. Other income, net, for the year ended December 31, 2021 included the reversal of deferred revenue from the contract cancellation of approximately $415 thousand and reversal of an accrued sales reserve of $50 thousand, partially offset by the unrealized losses on trading securities.

Net loss for the fourth quarter of 2022 was $4.0 million, or $0.03 per basic and diluted share, as compared to net loss of $1.2 million, or $0.01 per basic and diluted share, for the same period last year. Net loss for the full year ended December 31, 2022 totaled $13.1 million, or $0.11 per basic and diluted share, as compared to net loss of $7.6 million, or $0.06 per basic and diluted share, for the same period last year.

Adjusted EBITDA [see reconciliation table below] was a loss of approximately $1.8 million in the fourth quarter of 2022, compared to an Adjusted EBITDA income of approximately $307 thousand for the same period last year. Adjusted EBITDA was a loss of approximately $5.0 million for the full year ended December 31, 2022, compared to a loss of approximately $1.9 million for the same period last year.

Liquidity and Capital Resources:

On December 31, 2022, Inuvo had $4.5 million in cash, cash equivalents and short-term marketable securities, $2.8 million of working capital, an unused working capital facility of $5.0 million and no debt.

As of December 31, 2022, Inuvo had 120,137,124 common shares issued and outstanding.

Conference Call Details: Date: Thursday, March 9, 2023Time: 4:15 p.m. Eastern Time Toll-free Dial-in Number: 1-877-407-9208International Dial-in Number: 1-201-493-6784Conference ID: 13736863Webcast Link: HERE

A telephone replay will be available through Thursday, March 23, 2023. To access the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international). At the system prompt, please enter the code 13736863 followed by the # sign. You will then be prompted for your name, company, and phone number. Playback will then automatically begin.

About Inuvo

Inuvo®, Inc. (NYSE American: INUV) is a market leader in Artificial Intelligence built for advertising. Its IntentKey AI solution is a first-of-its-kind proprietary and patented technology capable of identifying and actioning to the reasons why consumers are interested in products, services, or brands, not who those consumers are. To learn more, visit www.inuvo.com.

Safe Harbor / Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, without limitation risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading "Risk Factors" in Inuvo, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed on March 9, 2023, and our other filings with the SEC.  Additionally, forward looking statements are subject to certain risks, trends, and uncertainties including the continued impact of Covid-19 on Inuvo’s business and operations. Inuvo cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Inuvo does not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events or otherwise. Inuvo further expressly disclaims any written or oral statements made by a fourth party regarding the subject matter of this press release. The information, which appears on our websites and our social media platforms is not part of this press release.

Inuvo Company Contact: Wally Ruiz Chief Financial Officer Tel (501) 205-8397 wallace.ruiz@inuvo.com

Investor Relations:David Waldman / Natalya RudmanCrescendo Communications, LLCTel: (212) 671-1020inuv@crescendo-ir.com

      (Tables follow)

               
INUVO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
               
               
    Three Months Ended   Twelve Months Ended
    December 31   December 31   December 31 December 31
      2022       2021       2022     2021  
Net revenue   $ 17,270,886     $ 19,736,261 $ 75,603,745   $ 59,830,688  
Cost of revenue     5,527,244       8,459,820       30,244,387     15,925,837  
Gross profit     11,743,642       11,276,441       45,359,358     43,904,851  
Operating expenses              
Marketing costs     10,143,119       7,414,070       36,921,139     33,096,000  
Compensation     2,852,084       2,923,046       12,463,095     11,381,279  
General and administrative     2,680,971       1,971,476       8,624,998     7,198,213  
Total operating expenses     15,676,174       12,308,592       58,009,232     51,675,492  
Operating loss     (3,932,532 )     (1,032,151 )     (12,649,874 )   (7,770,641 )
Financing expense, net     (10,033 )     (50,342 )     (21,111 )   (86,983 )
Other income (expense) , net     (34,218 )     (158,493 )     (435,554 )   256,975  
Net loss     (3,976,783 )     (1,240,986 )     (13,106,539 )   (7,600,649 )
Other comprehensive income              
Unrealized gain (loss) on marketable securities     47,634       53,737       (138,605 )   53,737  
Comprehensive loss     (3,929,149 )     (1,187,249 )     (13,245,144 )   (7,546,912 )
               
Earnings per share, basic and diluted              
Net loss   ($ 0.03 )   ($ 0.01 )   ($ 0.11 ) ($ 0.06 )
Weighted average shares outstanding              
Basic     120,137,124       117,613,845       119,826,036     117,613,845  
Diluted     119,995,367       117,613,845       119,826,036     117,613,845  
INUVO, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
           
    (Unaudited)      
    December 31   December 31  
 
      2022       2021  
Assets          
           
Cash and cash equivalent   $ 2,931,415     $ 10,475,964  
Marketable securities-short term     1,529,464       1,927,979  
Accounts receivable, net     11,119,892       9,265,813  
Prepaid expenses and other current assets     798,977       1,408,186  
Total current assets     16,379,747       23,077,942  
           
Property and equipment, net     1,668,972       1,506,766  
           
Intangible assets, net of accumulated amortization   9,853,342       6,720,585  
Goodwill     5,649,291       9,853,342  
Other assets     2,005,957       2,838,439  
           
Total assets   $ 35,557,310     $ 43,997,074  
           
Liabilities and Stockholders' Equity          
           
Current liabilities          
Accounts payable   $ 8,044,802     $ 4,844,716  
Accrued expenses and other current liabilities   5,550,984       5,817,823  
Total current liabilities     13,595,786       10,662,539  
           
Long-term liabilities     212,208       526,540  
           
Total stockholders' equity     21,749,316       32,807,995  
Total liabilities and stockholders' equity   $ 35,557,310     $ 43,997,074  
   
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(unaudited)
             
    Three Months Ended   Twelve Months Ended
    December 31   December 31   December 31 December 31
      2022       2021       2022     2021  
Net loss   $ (3,976,783 )   $ (1,240,986 )   $ (13,106,539 ) $ (7,600,649 )
Financing expense, net     10,033       50,342       21,111     86,983  
Depreciation     402,989       332,918       1,527,663     1,277,664  
Amortization     276,738       551,700       1,175,222     2,188,251  
   EBITDA     (3,287,023 )     (306,026 )     (10,382,543 )   (4,047,751 )
Non-recurring or non-representaive items:          
Stock-based compensation     459,323       613,238       2,350,314     2,179,254  
Expense of fraudulent media     -       -       1,367,800     -  
Realized and unrealized loss on investments     34,218       -       435,554     -  
Doubtful account reserve     975,243       -       1,237,774     -  
   Adjusted EBITDA     (1,818,239 )     307,212       (4,991,101 )   (1,868,497 )
               

Reconciliation of Operating Loss to EBITDA and Adjusted EBITDA 

We present EBITDA and Adjusted EBITDA as a supplemental measure of our performance. We defined EBITDA as Net loss plus (i) interest expense, (ii) depreciation, and (iii) amortization. We further define Adjusted EBITDA as EBITDA plus (iv) stock-based compensation and (v) certain identified expenses that are not expected to recur or be representative of future ongoing operation of the business. These adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same or similar to some of the adjustments in the presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

 

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