Inuvo, Inc. (NYSE MKT:INUV) Q3 2019 Earnings Conference Call - Final Transcript

Nov 14, 2019 • 04:30 pm ET


Inuvo, Inc. (NYSE MKT:INUV) Q3 2019 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Inuvo 2019 Third Quarter Financial Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Valter Pinto, Managing Director at KCSA. Please go ahead, sir.

Valter Pinto

Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo Third Quarter 2019 Shareholder Update Conference Call. Today, Inuvo's Chief Executive Officer, Richard Howe; and Chief Financial Officer, Wally Ruiz, will be our presenters on the call.

Before we begin, I'm going to review the company's safe harbor statement. Statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially.

When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to Inuvo are, as such, a forward-looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo's public filings with the US Securities and Exchange Commission, which can be reviewed at

With that, I'd now like to turn the call over to CEO, Richard Howe.

Richard Howe

Thank you, Valter, and thanks everyone for joining us today. For the three months ended September 30, 2019, we delivered $13.8 million in revenue compared to $14 million and $16.8 million for the three months ended June 30, 2019 and September 30, 2018, respectively. For the nine months ended September 30, 2019, we reported revenue of $43.3 million compared to $56.3 million for the nine months ended September 30, 2018.

Overall gross margin, net of traffic acquisition costs, was approximately 64% for the third quarter. As we have discussed in the past, our traffic acquisition costs are reported in our operating expenses.

Lower year-over-year revenues in the nine months and third quarter come from declines in the ValidClick revenue streams and from attrition associated with a business line we began deemphasizing in 2018. For additional context, this latter business line contributed approximately $11.3 million in 2017, $5.8 million in 2018, and is expected to produce $2.4 million in 2019. We will talk more about the ValidClick business later in the script. In the quarter, the ValidClick revenue streams delivered $11.2 million and the IntentKey delivered $2.6 million. The IntentKey was in line with our expectations.

As Wally will discuss in more detail later, we did have a positive net income of roughly $800,000 in the quarter, or approximately $0.02 per share. We had a negative adjusted EBITDA of approximately $769,000. Net income in the quarter was positively impacted by other income associated with the termination of the merger in June of 2019.

Revenue within the quarter