Inuvo Reports 2010 Second Quarter Financial Results

Revenue Increases 20% Over First Quarter 2010

CLEARWATER, Fla.--(BUSINESS WIRE)-- Inuvo(TM), Inc. (NYSE Amex: INUV), a company focused on bringing the power of predictive modeling to the world of performance-based advertising, announced today its financial results for the second quarter ended June 30, 2010.

Inuvo reported today that revenue for the quarter ended June 30, 2010 was $11.5 million, a 20% increase over the first quarter of 2010 and a 21% increase from the same quarter last year. The Company also reported that the technology focused Exchange segment grew 56% in revenue over the same quarter in 2009. For the six months ended June 30, 2010, revenue was slightly lower year-over-year.

Richard K. Howe, Inuvo's CEO said, "The Exchange segment of our business, which now represents about 83% of overall revenue, has been growing at about 12% compounded quarterly since Q2 of 2009. The Direct segment, after a year of transformation, is now ready to grow again and both business segments showed progress by posting increases in gross margin."

Gross profit was up 15% in the second quarter to $4.3 million and 37.7% of revenue compared to $3.8 million or 39.7% of revenue for the same quarter last year. For the six month period ended June 30, 2010, gross profit was $8.1 million or 38.3% of revenue compared to $7.9 million or 37.0% of revenue for the same six-month period last year.

The net loss for the second quarter was $1.1 million compared to a net loss of $773 thousand for the same period last year. The increased loss was the result of discontinued operations, which reported a net loss of $7 thousand in the second quarter of 2010 versus $508 thousand of net income in the same quarter last year. Discontinued operations include the iLead business that was exited in March 2010 and MarketSmart Advertising. Further contributing to the net loss in the second quarter of 2010 was a charge of $150 thousand to increase the allowance for doubtful accounts. For the six-month period ended June 30, 2010, the net loss was $2.1 million compared to $1.6 million for the same period last year.

Adjusted EBITDA, a non-GAAP measure was $582 thousand in the second quarter of this year compared to $961 thousand in the same quarter last year. However, the adjusted EBITDA excluding discontinued operations for the second quarter was $589 thousand this year compared to $452 thousand for the comparable period last year and a loss of $219 thousand in the first quarter of 2010.

Bank debt has been decreased since the start of the year by $2 million.

Conference Call Information

The Company will host a conference call today, Tuesday, August 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 August 17, 2010.

To access the replay, please dial 888-632-8973 (domestic) or 201-499-0429 (international). At the system prompt, enter the code 53388802 followed by the # sign. Playback will automatically begin.

About Inuvo(TM), Inc.

Inuvo(TM), Inc. (NYSE Amex: INUV), is an online advertising technology and 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 and the Inuvo Platform, 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

                                                  June 30,      December 31,
                                                                2009
                                                  2010

                                                  (Unaudited)

Assets

Current Assets:

Cash                                              $ 1,326,707   $ 4,843,128

Restricted Cash                                     576,883       638,285

Accounts Receivable, net                            5,399,703     4,691,127

Other Current Assets                                529,469       455,145

Current Assets of Discontinued Operations           2,128,951     2,382,548

Total Current Assets                                9,961,713     13,010,233

Property and Equipment, net                         4,447,087     4,881,168

Goodwill                                            3,351,405     3,351,405

Intangible Assets                                   3,172,516     3,805,707

Other Assets                                        11,257        1,657

Other Assets of Discontinued Operations             775,000       775,000

Total Assets                                      $ 21,718,978  $ 25,825,170

Liabilities and Stockholders' Equity

Current Liabilities:

Term and Credit Notes Payable - Current Portion   $ 6,147,806   $ 2,324,000

Accounts Payable                                    5,800,138     4,518,933

Deferred Revenue                                    58,468        112,773

Accrued Expenses and Other Current Liabilities      1,337,974     1,757,208

Current Liabilities of Discontinued Operations      1,313,846     2,430,679

Total Current Liabilities                           14,658,232    11,143,593

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

Other Long Term Liabilities                         396,691       456,340

Long Term Liabilities of Discontinued Operations    198,983       214,829

Total Liabilities                                   15,253,906    17,601,568

Total Stockholders' Equity                          6,465,072     8,223,602

Total Liabilities and Stockholders' Equity        $ 21,718,978  $ 25,825,170





INUVO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

                Three Months Ended June 30,      Six Months Ended June 30,

                2010             2009            2010             2009

Net Revenue     $ 11,547,044     $ 9,526,245     $ 21,144,515     $ 21,423,775

Cost of           7,198,995        5,745,610       13,054,273       13,489,877
Revenue

Gross Profit      4,348,049        3,780,635       8,090,242        7,933,898

Operating
Expenses:

Search Costs      889,309          176,167         1,413,853        377,487

Compensation
and               2,473,109        2,710,885       5,307,544        5,304,177
Telemarketing

Selling,
General and       1,888,444        1,980,806       3,936,151        4,396,908
Administrative

Total
Operating         5,250,862        4,867,858       10,657,548       10,078,572
Expenses

Operating Loss    (902,813    )    (1,087,223 )    (2,567,306  )    (2,144,674  )

Interest and
Other             (150,509    )    (194,164   )    (310,766    )    (454,785    )
Expenses, Net

Loss from
Continuing        (1,053,322  )    (1,281,387 )    (2,878,072  )    (2,599,459  )
Operations
Before Taxes

Income Tax        (795        )    -               (882        )    -
Expense

Net Loss from
Continuing        (1,054,117  )    (1,281,387 )    (2,878,954  )    (2,599,459  )
Operations

Net (Loss)
Income from       (6,535      )    508,323         787,067          1,044,858
Discontinued
Operations

Net Loss          ($1,060,652 )    ($773,064  )    ($2,091,887 )    ($1,554,601 )

Per Common
Share Data:

Basic and
Diluted:

Net Loss from
Continuing        ($0.01      )    ($0.02     )    ($0.03      )    ($0.04      )
Operations

Net (Loss)
Income from       (0.00       )    0.01            0.01             0.02
Discontinued
Operations

Net Loss          ($0.01      )    ($0.01     )    ($0.02      )    ($0.02      )

Weighted
Average Shares

(Basic and        84,597,059       65,508,063      84,517,911       65,511,378
Diluted)

By Segment

Net Revenue

Exchange        $ 9,534,299      $ 6,120,052     $ 16,961,275     $ 14,739,481

Direct            2,012,745        3,406,193       4,183,240        6,684,294

Total           $ 11,547,044     $ 9,526,245     $ 21,144,515     $ 21,423,775

Gross Profit

Exchange        $ 2,965,155      $ 1,577,403     $ 5,218,786      $ 3,476,321

Direct            1,382,894        2,203,232       2,871,456        4,457,577

Total           $ 4,348,049      $ 3,780,635     $ 8,090,242      $ 7,933,898




INUVO, INC.

RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA

(Unaudited)

                  Three Months Ended June 30,     Six Months Ended June 30,

                  2010            2009            2010            2009

Net Loss          $ (1,060,652 )  $ (773,064   )  $ (2,091,887 )  $ (1,554,601 )

Interest, net       150,509         194,232         310,766         360,731

Taxes               795             -               882             -

Depreciation        469,487         540,320         935,822         1,041,124

Amortization        784,060         905,889         1,668,108       1,890,502

Stock based         237,777         93,405          333,357         196,487
compensation

Adjusted EBITDA   $ 581,976       $ 960,782       $ 1,157,048     $ 1,934,243

By Segment

Exchange segment  $ 887,519       $ 384,347       $ 1,366,522     $ 971,892

Direct segment      755,123         1,473,820       1,371,406       2,880,540

Discontinued        (6,535     )    508,323         787,067         1,044,858
operations

Corporate           (1,054,131 )    (1,405,708 )    (2,367,947 )    (2,963,047 )

Adjusted EBITDA   $ 581,976       $ 960,782       $ 1,157,048     $ 1,934,243



Reconciliation of Net Loss 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 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.