Inuvo(INUV)2022-03-17 20:57Revenue Performance - Inuvo's revenue increased approximately 34% in 2021 compared to 2020, with key customers Yahoo! and Google accounting for 48.6% of total revenue, down from 60.5% in 2020[21][46] - Year-over-year revenue increased by 34%, reaching $59.83 million for the year ended December 31, 2021, compared to $44.64 million in 2020[93] - Total revenue for the year ended December 31, 2021, was $59,830,688, representing a 34.0% increase from $44,640,007 in 2020[199] - Revenue from the ValidClick platform was $41,648,730, accounting for 69.6% of total revenue in 2021, down from 76.7% in 2020[199] - Revenue from the IntentKey platform increased to $18,181,958, making up 30.4% of total revenue in 2021, up from 23.3% in 2020[199] Profitability and Loss - The company's gross profit margin decreased to 73.4% in 2021 from 81.4% in 2020, primarily due to a change in revenue mix[46] - Inuvo reported an operating loss of approximately $7.8 million in 2021, slightly improved from an operating loss of approximately $8.1 million in 2020[46] - Net loss for 2021 was $7.60 million, compared to a net loss of $7.30 million in 2020, resulting in a basic and diluted loss per share of $0.06[177] - Operating loss for 2021 was $7.77 million, slightly improved from a loss of $8.05 million in 2020[177] - The accumulated deficit reached $144 million by December 31, 2021, indicating ongoing financial challenges despite liquidity from equity offerings[102] Expenses and Costs - Operating expenses increased by 16.4% to $51,675,492 in 2021 from $44,392,105 in 2020, driven primarily by a 20.7% rise in marketing costs[96] - Cost of revenue for 2021 was $15.93 million, a 92% increase from $8.30 million in 2020[93] - Marketing costs for 2021 were $33.10 million, up from $27.41 million in 2020, reflecting an increase of 20.7%[177] - Compensation expenses rose by 21.7% to $11,381,279 in 2021, attributed mainly to higher stock-based compensation and an increase in total employment from 75 to 78[97] Cash Flow and Financing - Net cash used in operating activities was $5,276,257 in 2021, with a reported net loss of $7,600,649, including non-cash expenses of $5,644,168[111] - Net cash used in investing activities surged to $4,597,885 in 2021 from $1,185,335 in 2020, primarily due to capitalized internal development costs and marketable securities purchases[113] - Net cash provided by financing activities was $12,459,441 in 2021, down from $14,302,346 in 2020, mainly from proceeds from common stock sales[114] - As of December 31, 2021, the company had approximately $13.3 million in cash, cash equivalents, and marketable securities, with a net working capital of $12.4 million[102] - The company raised $13,137,500 from the sale of common stock in 2021, compared to $16,432,190 in 2020, showing a 20% decrease in proceeds from stock sales[182] Technology and Innovation - The company has developed a proprietary AI technology, IntentKey, designed to predict consumer intent and optimize advertising placements[18][23] - Inuvo plans to focus resources on growing its AI technology, the IntentKey, aiming for a return to positive cash flow from operations[106] - The company has 17 issued patents and eight pending patent applications, protecting its intellectual property related to advertising technologies[34] - The company has 17 issued and eight pending patents protecting its intellectual property, which is crucial for its competitive advantage[187] Market and Business Strategy - Inuvo's business strategy includes evaluating acquisition candidates to enhance advertising relationships and expand market presence[24] - The second half of the year typically shows stronger performance due to increased demand for marketing placements leading into the holiday season[40] - The company maintains long-standing relationships with major partners, including Yahoo! and Google, which provide access to hundreds of thousands of advertisers[21][47] Risks and Challenges - The company is exposed to credit risk on accounts receivable, which is heightened during periods of economic downturn[49] - Regulatory and legal uncertainties could adversely affect the company's business, particularly with increasing scrutiny on internet-based commerce[57] - The company must adapt to rapid technological changes to remain competitive, which includes maintaining compatibility with various operating systems and devices[54] - The company relies on direct relationships with advertisers and advertising agencies, which can be terminated at any time with limited notice[50] Seasonal and Market Fluctuations - The company's financial results are subject to significant seasonal fluctuations, particularly in the fourth quarter and early first quarter[62] - The ValidClick platform experienced a significant reduction in demand during the COVID-19 pandemic, impacting revenue run rate[47] - The company experienced a significant reduction in marketing budgets due to COVID-19, impacting revenue run rates in 2020[90]