Inuvo Reports 2010 Third Quarter Financial Results

Revenue Increases 53% Over Third Quarter 2009

CLEARWATER, Fla.--(BUSINESS WIRE)-- Inuvo(R), Inc. (NYSE Amex: INUV), an online technology and services company, announced today its financial results for the third quarter and nine months ended September 30, 2010.

Inuvo reported today revenue of $14.3 million for the quarter ended September 30, 2010, a 53% increase from the same quarter last year and a 26% increase over the immediate prior quarter this year. The Company also reported that the technology focused Exchange segment grew 87% in revenue over the same quarter in 2009. For the nine months ended September 30, 2010, the Company's revenue was 16% higher than the same period last year.

Richard K. Howe, Inuvo's CEO said, "The third quarter was another solid showing for Inuvo. We entered 2010 with a $9.6 million quarterly run rate and we exit Q3 at $14.3 million. This 49% increase over these three periods places our growth rate well ahead of our peer group average. The team is executing well, and we are excited about our progress."

Gross profit was up 63% in the third quarter to $5.8 million and 40.8% of revenue compared to $3.6 million or 38.3% of revenue for the same quarter last year. For the nine-month period ended September 30, 2010, gross profit was $13.6 million or 38.8% of revenue compared to $11.1 million or 36.7% of revenue for the same nine-month period last year.

The net loss from continuing operations for the quarter ended September 30, 2010 was $322,000 compared to a net loss of $1.5 million for the same period last year. The net loss including discontinued operations for the third quarter was $2.2 million compared to a $2 million loss for the same period last year. The current year's net loss including discontinued operations is largely due to a $1.5 million loss resulting from the sale of the advertising agency operations. Contributing to the net loss in the third quarter of 2010 was a charge of $129,000 to increase the allowance for doubtful accounts. For the nine-month period ended September 30, 2010, the net loss from continuing operations was $3.4 million compared to a net loss of $4.2 million for the same period last year. The net loss including discontinued operations for the nine-month period ended September 30, 2010 was $4.3 million compared to $3.6 million for the same period last year.

Adjusted EBITDA, a non-GAAP measure was $1.2 million in the third quarter of this year compared to $52,000 in the same quarter last year. The adjusted EBITDA for the nine-month period this year was $1.4 million compared to $490,000 for the comparable period last year.

Bank debt has been decreased since the start of the year by $3.2 million to $5 million at the end of the third quarter.

Conference Call Information

The Company will host a conference call today, Wednesday, November 3, 2010 at 5:00 p.m. Eastern Time.

Participants can access the call by dialing 888-669-0684 (domestic) or 201-604-0469 (international). In addition, the call will be webcast on the Investor Relations section of the Company's website at www.inuvo.com where it will also be archived for 45 days. A telephone replay will be available through Tuesday, November 17, 2010.

To access the replay, please dial 888-632-8973 (domestic) or 201-499-0429 (international). At the system prompt, enter the code 29931028 followed by the # sign. Playback will automatically begin.

About Inuvo, Inc.

Inuvo(R), Inc. (NYSE Amex: INUV), is an online marketing services company specialized in driving clicks, leads and sales through targeting that utilizes unique data and sophisticated analytics. To find out more about how you can work with Inuvo, please visit http://www.inuvo.com.

Comparable companies include: ValueClick, Inc. (VCLK), Marchex, Inc. (MCHX), InterCLICK, Inc. (ICLK), LookSmart, Ltd. (LOOK), and Local.com Corp. (LOCM).

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this document and elsewhere by Inuvo are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such information includes, without limitation, the business outlook, assessment of market conditions, anticipated financial and operating results, strategies, future plans, contingencies and contemplated transactions of the Company. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors which may cause or contribute to actual results of company operations, or the performance or achievements of the Company or industry results, to differ materially from those expressed, or implied by the forward-looking statements. In addition to any such risks, uncertainties and other factors discussed elsewhere herein, risks, uncertainties and other factors that could cause or contribute to actual results differing materially from those expressed or implied for the forward- looking statements include, but are not limited to fluctuations in demand; changes to economic growth in the U.S. economy; government policies and regulations, including, but not limited to those affecting the Internet. Inuvo undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in Inuvo's filings with the Securities and Exchange Commission.


INUVO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

                                                  September 30,  December 31,
                                                  2010           2009

                                                  (Unaudited)

Assets

Current Assets:

Cash                                              $ 1,644,263    $ 4,843,128

Restricted Cash                                     170,658        638,285

Accounts Receivable, net                            5,700,667      4,671,510

Other Current Assets                                508,252        435,552

Current Assets of Discontinued Operations           555,047        2,421,758

Total Current Assets                                8,578,887      13,010,233

Property and Equipment, net                         3,202,915      4,881,168

Goodwill                                            3,351,405      3,351,405

Intangible Assets                                   2,790,529      3,805,707

Other Assets                                        92,005         1,657

Other Assets of Discontinued Operations             -              775,000

Total Assets                                      $ 18,015,741   $ 25,825,170

Liabilities and Stockholders' Equity

Current Liabilities:

Term and Credit Notes Payable - Current Portion   $ 4,955,660    $ 2,324,000

Accounts Payable                                    5,646,441      4,431,285

Deferred Revenue                                    48,419         112,773

Accrued Expenses and Other Current Liabilities      1,749,922      1,743,934

Current Liabilities of Discontinued Operations      544,184        2,531,601

Total Current Liabilities                           12,944,626     11,143,593

Term and Credit Notes Payable - Long-Term           -              5,786,806

Other Long-Term Liabilities                         378,900        456,340

Long-Term Liabilities of Discontinued Operations    213,516        214,829

Total Liabilities                                   13,537,042     17,601,568

Total Stockholders' Equity                          4,478,699      8,223,602

Total Liabilities and Stockholders' Equity        $ 18,015,741   $ 25,825,170




INUVO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

                Three Months Ended September    Nine Months Ended September 30,
                30,

                2010            2009            2010            2009

Net Revenue     $ 14,270,285    $ 9,317,368     $ 34,974,369    $ 30,176,970

Cost of           8,454,134       5,747,961       21,398,837      19,088,113
Revenue

Gross Profit      5,816,151       3,569,407       13,575,532      11,088,857

Operating
Expenses:

Search Costs      1,705,124       113,716         3,059,407       330,284

Compensation
and               2,525,672       2,882,104       7,808,735       8,052,410
Telemarketing

Selling,
General and       1,785,609       1,898,327       5,707,928       6,234,764
Administrative

Total
Operating         6,016,405       4,894,147       16,576,070      14,617,458
Expenses

Operating Loss    (200,254   )    (1,324,740 )    (3,000,538 )    (3,528,601 )

Interest and
Other             (120,123   )    (183,839   )    (430,889   )    (638,624   )
Expenses, Net

Loss from
Continuing        (320,377   )    (1,508,579 )    (3,431,427 )    (4,167,225 )
Operations
Before Taxes

Income Tax        (1,760     )    -               (2,642     )    -
Expense

Net Loss from
Continuing        (322,137   )    (1,508,579 )    (3,434,069 )    (4,167,225 )
Operations

Net (Loss)
Income from       (1,910,302 )    (519,798   )    (890,252   )    584,247
Discontinued
Operations

Net Loss        $ (2,232,439 )  $ (2,028,377 )  $ (4,324,321 )  $ (3,582,978 )

Per Common
Share Data:

Basic and
Diluted:

Net Loss from
Continuing      $ (0.00      )  $ (0.02      )  $ (0.04      )  $ (0.06      )
Operations

Net (Loss)
Income from       (0.02      )    (0.01      )    (0.01      )    0.01
Discontinued
Operations

Net Loss        $ (0.02      )  $ (0.03      )  $ (0.05      )  $ (0.05      )

Weighted
Average Shares

(Basic and        85,217,805      65,655,515      84,753,772      65,559,952
Diluted)

By Segment:

Net Revenue:

Exchange        $ 12,594,687    $ 6,739,052     $ 29,555,964    $ 21,478,535

Direct            1,675,598       2,578,316       5,418,405       8,698,435

Total           $ 14,270,285    $ 9,317,368     $ 34,974,369    $ 30,176,970

Gross Profit:

Exchange        $ 4,707,247     $ 1,835,388     $ 9,926,033     $ 5,311,708

Direct            1,108,904       1,734,019       3,649,499       5,777,149

Total           $ 5,816,151     $ 3,569,407     $ 13,575,532    $ 11,088,857




INUVO, INC.

RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA

(Unaudited)

               Three Months Ended September 30,  Nine Months Ended September 30,

               2010            2009              2010            2009

Net Loss from
continuing     $ (322,137   )  $ (1,508,579 )    $ (3,434,069 )  $ (4,167,225 )
operations

Interest         133,257         181,626           444,023         542,357
expense, net

income tax       1,760           -                 2,642           -
expense

Depreciation     454,717         580,231           1,390,541       1,313,245

Amortization     724,220         701,797           2,392,329       2,513,299

Stock based      246,059         96,602            579,416         288,537
compensation

Adjusted       $ 1,237,876     $ 51,677          $ 1,374,882     $ 490,213
EBITDA

By Segment

Exchange       $ 1,832,225     $ 596,942         $ 3,150,552     $ 1,700,183
segment

Direct           425,136         642,202           1,590,824       2,928,716
segment

Corporate        (1,019,485 )    (1,187,467 )      (3,367,244 )    (4,138,686 )

Adjusted       $ 1,237,876     $ 51,677          $ 1,374,132     $ 490,213
EBITDA



Reconciliation of Net Loss from Continuing Operations to Adjusted EBITDA

In addition to disclosing financial results in accordance with United States generally accepted accounting principles ("GAAP"), our earnings release contains the non-GAAP financial measure "Adjusted EBITDA."

Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, management believes that Adjusted EBITDA is useful to investors in evaluating the Company's performance because Adjusted EBITDA is a commonly used financial analysis tool for measuring and comparing companies in the Company's industry in areas of operating performance.

Management believes that the disclosure of Adjusted EBITDA offers an additional view of the Company's operations that, when coupled with the GAAP results and the reconciliation to GAAP net loss, provides a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business.

We present Adjusted EBITDA as a supplemental measure of our performance. We defined Adjusted EBITDA as net loss from continuing operations plus (i) interest expense, net, (ii) provision for taxes, (iii) depreciation and amortization, and (iv) stock based compensation. These further adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating 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 Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.


    Source: Inuvo, Inc.