Inuvo Announces Financial Results for the Second Quarter Ending June 30, 2020

LITTLE ROCK, AR – August 13, 2020 – Inuvo, INC. (NYSE AMERICAN: INUV) (“Inuvo” or the “Company”), a leading provider of marketing technology, powered by IntentKey™ artificial intelligence that serves brands and agencies, today announced its financial results for the second quarter and first six months ending June 30, 2020. The IntentKey, Inuvo’s proprietary machine learning technology, accounted for 25.6% of 2020 second quarter revenue and 16.9% of the first six months revenue, generating $1.94 million and $3.8 million, respectively.

Richard Howe, CEO of Inuvo, commented, “Lower revenue through the first six months of the year was principally caused by decreased advertising budgets associated with COVID-19 and primarily within the ValidClick Platform with May as the lowest revenue month of the year and where June, July and now August have all trended sequentially higher. Despite the Pandemic, the IntentKey business has grown 17% through the first half of the year.” Mr. Howe added, “Although revenue has been challenged during COVID-19, both the Net Loss and Adjusted EBITDA improved year-over-year within the quarter.”

Financial Results for the Three and Six Months Ended June 30, 2020: 
Net revenue for the three and six months ended June 30, 2020 totaled $7.6 million and $22.5 million respectively down 46% and 24% year-over-year. Lower revenue throughout the period was principally the result of decreasing advertising budgets associated with COVID-19 within the ValidClick Platform.

The IntentKey Platform revenue for the six months ended June 30, 2020 was up approximately 17% and flat year-over-year within the quarter.

The ValidClick Platform revenue for the six months ended June 30, 2020 was down approximately 29% and down 53% year-over-year within the quarter.

Gross profit for the three and six months ended June 30, 2020 totaled $6.5 million and $18.0 million, respectively, yielding gross profit margins during each period of 86% and 80%, respectively.

IntentKey gross margins were approximately 55% in the current quarter, up 125% from the 24% in the prior year.

Operating expenses totaled $7.8 million in the quarter, down 26% from the $10.5 million in the prior year.

Net loss for the three and six months ended June 30, 2020 improved 30% and 5% to $1.4 million and $4.2 million respectively.

Adjusted EBITDA for the 2020 second quarter improved 84% to a loss of $140 thousand as compared to a loss of $854 thousand for the same period in 2019.

At June 30, 2020 Inuvo had approximately $4.2 million in cash. On July 27, 2020 Inuvo closed a public offering for its common stock with gross proceeds of $10.75 million. The Company remains primarily focused on growing its AI technology, the IntentKey, where there is believed to be a technological and competitive advantage.



Conference Call Details:
Date: Thursday, August 13, 2020
Time: 4:30 p.m. Eastern Time

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Toll-free Dial-in Number: 1-800-263-0877
International Dial-in Number: 1-646-828-8143
Conference ID: 7887083
Participant Link: https://investor.inuvo.com/ir-calendar

A telephone replay will be available through August 27, 2020. To access the replay, please dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international). At the system prompt, enter the code 7887083 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, aligning and delivering consumer-oriented product & brand messaging strategies online based on powerful, anonymous and proprietary consumer intent data for agencies, advertisers and partners. To learn more, visit www.inuvo.com.
 
About the IntentKey™
Inuvo®’s IntentKey™ is a patented, machine-learning technology designed to mirror the manner in which the human brain instantly associates ideas, emotions, places, people, and objects. It creates an accurate, high-definition picture of consumer intent and sentiment related to a particular topic or item. Inuvo harnesses the power of the IntentKey™ to discover and reach high volumes of incremental in-market and relevant audiences that are hidden from typical marketing approaches. The IntentKey™ enables pinpoint media execution reaching consumers throughout the purchasing funnel all the way to conversion.

Safe Harbor / Forward-Looking Statements / Disclosures
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, statements made with respect to expectations with respect to the results of revenues from IntentKey in future periods, our lack of profitable operating history, changes in our business, potential need for additional capital, the ultimate impact of the COVID-19 pandemic on our industry in general and our business in particular, and other 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, 2019 as filed on May 12, 2020 and our other filings with the SEC. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Inuvo, Inc. and are difficult to predict. 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
 

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Investor Contact:
KCSA Strategic Communications
Valter Pinto, Managing Director
Tel (212) 896-1254
Valter@KCSA.com

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INUVO, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEET
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
June 30
 
December 31,
 
 
 
 
2020
 
2019
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash
 

$4,181,214

 

$372,989

 
Accounts receivable, net
 
3,256,697

 
7,529,785

 
Prepaid expenses and other current assets
 
243,137

 
243,888

 
Total current assets
 
7,681,048

 
8,146,662

 
 
 
 
 
 
 
Property and equipment, net
 
1,213,937

 
1,374,152

 
 
 
 
 
 
 
Goodwill
 
9,853,342

 
9,853,342

 
Intangible assets, net
 
9,518,841

 
10,451,593

 
Other assets
 
1,075,501

 
865,178

 
Total other assets
 
20,447,684

 
21,170,113

 
Total assets
 

$29,342,669

 

$30,690,927

 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 

$3,674,697

 

$7,520,567

 
Accrued expenses and other current liabilities
3,045,357

 
4,057,340

 
Financed receivables
 
2,158,443

 
3,381,364

 
Convertible promissory notes (net)
 
0

 
536,806

 
Derivative liability
 
0

 
182,250

 
Total current liabilities
 
8,878,497

 
15,678,327

 
Deferred tax liability
 
107,000

 
107,000

 
Other long-term liabilities
 
2,282,640

 
452,051

 
Total long-term liabilities
 
2,389,640

 
559,051

 
 
 
 
 
 
 
Total stockholders' equity
 
18,074,532

 
14,453,549

 
Total liabilities and stockholders' equity
 

$29,342,669

 

$30,690,927

 


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INUVO, INC.
 
 
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30
 
June 30
 
June 30
 
June 30
 
 
2020
 
2019
 
2020
 
2019
Net revenue
 

$7,590,187

 

$14,047,907

 

$22,523,170

 

$29,512,476

Cost of revenue
 
1,070,028

 
5,674,360

 
4,509,529

 
12,354,988

Gross profit
 
6,520,159

 
8,373,547

 
18,013,641

 
17,157,488

Operating expenses
 
 
 
 
 
 
 
 
Marketing costs
 
3,857,395

 
6,528,336

 
13,480,218

 
13,072,345

Compensation
 
2,118,311

 
1,735,489

 
4,462,546

 
3,544,045

Selling, general and administrative
 
1,781,121

 
2,213,507

 
3,839,963

 
4,590,568

Total operating expenses
 
7,756,827

 
10,477,332

 
21,782,727

 
21,206,958

Operating loss
 
(1,236,668)

 
(2,103,785)

 
(3,769,086)

 
(4,049,470)

Interest (expense) income, net
 
(72,681)

 
148,792

 
(225,192)

 
(367,916)

Other expense, net
 
(49,939)

 
-

 
(190,246)

 
-

Net loss
 

($1,359,288
)
 

($1,954,993
)
 

($4,184,524
)
 

($4,417,386
)
 
 
 
 
 
 
 
 
 
Earnings per share, basic and diluted
 
 
 
 
 
 
 
 
Net (loss) income
 

($0.020
)
 

($0.060
)
 

($0.070
)
 

($0.140
)
Weighted average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
66,023,317

 
32,570,866

 
59,835,925

 
32,484,878

Diluted
 
66,023,317

 
32,570,866

 
59,835,925

 
32,484,878



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RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS BEFORE TAXES TO ADJUSTED EBITDA
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30
 
June 30
 
June 30
 
June 30
 
 
2020
 
2019
 
2020
 
2019
Loss from continuing operations before taxes
 

($1,359,288
)
 

($1,954,993
)
 

($4,184,524
)
 

($4,417,386
)
Interest expense (income), net
 
72,681

 
(148,792)

 
225,192

 
367,916

Depreciation and amortization
 
925,206

 
813,510

 
1,866,632

 
1,637,275

EBITDA
 
(361,401)

 
(1,290,275)

 
(2,092,700)

 
(2,412,195)

Stock-based compensation
 
193,288

 
49,823

 
402,185

 
146,694

Non-recurring expense:
 
 
 
 
 
 
 
 
Costs incurred during the Terminated Merger
 
-

 
386,000

 
-

 
887,000

Adjustment to derivative liability accounts
 
28,057

 
 
 
168,364

 
 
Adjusted EBITDA
 

($140,056
)
 

($854,452
)
 

($1,522,151
)
 

($1,378,501
)

Reconciliation of Loss from Continuing Operations before Taxes to EBITDA and Adjusted EBITDA
We present EBITDA and Adjusted EBITDA as a supplemental measure of our performance. We defined EBITDA as net loss from continuing operations before taxes plus (i) interest expense, net, (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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