Inuvo(INUV) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Inuvo reported revenue of $16.7 million for Q2 2023, a decrease of $6 million from $22.7 million in Q2 2022, primarily due to the loss of a direct customer in the previous year [27] - Gross profit for Q2 2023 was $14.3 million, compared to $13.4 million in the same period last year, with a gross margin of 86% [28] - The company experienced a net loss of $3.4 million or $0.03 per basic share, compared to a net loss of $3.2 million or $0.03 per basic share in the same quarter last year [50] Business Line Data and Key Metrics Changes - Revenue mix shifted significantly, with 80% of revenue coming from indirect customers in Q2 2023, compared to 46% in the same quarter last year [27] - The company delivered approximately 80 revenue-generating campaigns, with 20 being new in the quarter, and performance against client KPIs remained strong [23] Market Data and Key Metrics Changes - The company added 10 new advertisers across various industries, including financial services, entertainment, government, and travel [43] - The advertising market continues to face pressure, but the demand for solutions addressing privacy concerns is expected to create ongoing opportunities for Inuvo [34] Company Strategy and Development Direction - Inuvo plans to continue investing in sales and marketing to capitalize on changing market demands driven by privacy concerns [32] - The company is focused on enhancing its technology and services to scale effectively, with a particular emphasis on AI capabilities [46] - The appointment of a new President, Barry Lowenthal, is aimed at strengthening the go-to-market strategy and execution [81] Management's Comments on Operating Environment and Future Outlook - Management indicated that trends in July and August showed improvement in revenue and adjusted EBITDA, suggesting a potential return to year-over-year growth in Q3 2023 [21][52] - The company is confident in its client retention rate, which is reportedly above 80%, and believes that its technology works effectively when clients are educated on its use [9] Other Important Information - Inuvo raised $4 million in gross proceeds during the quarter, strengthening its balance sheet with approximately $5 million in cash and no debt [41] - The company has adopted AI-based tools to enhance content and ad copy scalability, reducing resource requirements for delivering these capabilities [79] Q&A Session Summary Question: Can you provide details on the new and returning clients? - Management confirmed the addition of 10 new clients and two returning clients, with the returning clients citing the insights generated by AI as a key reason for their return [80][67] Question: How long does it take for new sales associates to achieve productivity? - It typically takes three months for training, with productivity expected to begin in the three to six-month period [6][7] Question: How is the advertising market pressure affecting sales cycles? - Sales cycles for direct clients are longer, while indirect clients typically take three to six months to close [55]