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.
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.
Released August 3, 2010