Inuvo(INUV) - 2019 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2019, the company reported revenue of $18.2 million, a sequential increase of 32% and a year-over-year increase of 7% [9] - Full year revenue was $61.5 million, down approximately 16% year-over-year [9] - Gross profit for Q4 increased by roughly 42%, while full year gross profit decreased by 11% [12] - Adjusted EBITDA for Q4 was $47,000, up from a loss of $1.2 million year-over-year; full year adjusted EBITDA was a loss of $2.3 million compared to a loss of $1.4 million year-over-year [13] Business Line Data and Key Metrics Changes - ValidClick revenue for Q4 was approximately $15.5 million, a year-over-year increase of about 4%; full year revenue was down roughly $11.2 million [11] - IntentKey revenue for Q4 was $2.7 million, with full year revenue at $8.5 million, showing significant growth [9][17] - IntentKey gross margins improved from 10% in January 2019 to 46% in December 2019 [17] Market Data and Key Metrics Changes - The company noted a modest reduction in Q1 2020 revenue expectations due to the impact of COVID-19, with a forecast of flat year-over-year performance [25] - The company experienced a reduction in costs associated with the IntentKey business due to increased website traffic during quarantine [24] Company Strategy and Development Direction - The company aims to improve gross margins and capitalize on growth opportunities within ValidClick [15] - IntentKey is expected to double its business year-over-year, with a focus on expanding its client base across various industries [20][18] - The company is taking a just-in-time approach to management in light of the economic contraction caused by COVID-19 [26] Management Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding the long-term impacts of COVID-19 on the business, noting that it is too early to predict outcomes [22] - The company is proactively managing its balance sheet and exploring ways to reduce operating expenses [28] - Management indicated that marketing budgets typically decline during economic downturns, but the current situation is unprecedented [26] Other Important Information - The company closed a loan agreement providing a $5 million line of credit to enhance working capital [45] - Insider purchases of stock totaled approximately $688,000, indicating confidence from management and the board [27] Q&A Session Summary Question: Outlook for Q1 and impact of new clients - Management confirmed that the revised expectation for IntentKey revenue growth to 48% was due to two new clients pausing their campaigns [51][53] Question: ValidClick traffic issues - Management indicated that the impact on ValidClick was traffic-related, with publishers facing challenges due to workforce issues [54][56] Question: Operating expenses and hiring strategy - Management stated that hiring has been paused across the company, with a focus on assessing market conditions before proceeding [64] Question: Cash situation and share count - Management projected cash to remain relatively flat exiting Q1, with an estimated share count of about 57 million [67]