Inuvo, Inc.

Good day and welcome to the ANUVO Inc. 2021 Third Quarter Financial Results Conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Walter Pinto, Managing Director of KCSA Strategic Communications. Please go ahead, sir.

Thank you, Operator, and good afternoon. I'd like to thank everyone for joining us today for the ANUVO Third Quarter 2021 Shareholder Update Conference Call. Today, ANUVO's Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We'd like to remind our shareholders that we anticipate filing our 10Q with the Securities and Exchange Commission tomorrow morning. Before we begin, I'm going to review the company's Safe Harbor Statement, the 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 using this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to a new voting 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 U.S. Securities and Exchange Commission, which can be reviewed at sec.gov.

Thank you, Walter, and thanks, everyone, for joining us today. We had a very strong third quarter where for the three months ended September 30th, 2021, we delivered $16.8 million in revenue, which was up 83% year over year and up 33% sequentially. As we have messaged throughout the year, we expected to be back to positive adjusted EBITDA in the back half of 2021. I'm pleased to report that adjusted EBITDA in the month of September was in fact positive. For the third quarter, it was a loss of $338,000. The balance sheet remains strong with no debt and roughly 14.6 million in cash and marketable securities, along with an unused $5 million financing facility. The company is not currently in need of additional capital. Of the 16.8 million we delivered, the ValleyClick platform contributed approximately 11.7 million, which was up year over year by 88% and up 21% sequentially. The platform's growth rate has been a steady 8% compounded monthly through September of 2021 off the COVID related low in May of 2020. ValidClick's services include multichannel media buying in support of our largest clients. The product line has continued to enhance these competencies, having recently added Twitter to the stable of social media relationships. Much of the technological enhancements within ValidClick revolve around automating the numerous traffic sources under management. which are necessary to ensure the best quality consumers are delivered to our clients at the lowest cost. This automation continues to have a positive impact, most notably on the time resources spend manually adjusting campaigns. We've seen a 50% reduction in this time spent optimizing campaigns because of these continuous enhancements to the platform. Additionally, We've continued to enhance our publishing technologies within PalidClick. Within the quarter, we were able to dynamically insert related articles into content at a time when our systems detect a user's engagement is declining. This feature now allows us to reignite engagement at the time of declining interest, and as a result, improve the opportunities to further monetize that engagement. Further, and in combination with our largest ValidClick client, we began in-market testing of an innovative advertising unit that leverages the search intent of users on pages so it can customize content and advertising in a manner that improves a page's overall yield. While this program is in the initial test phase, it is showing positive results with significant upside opportunity. Consequently, we see this as a significant growth driver in 2022. Most notably in the quarter, and for the first time, we leveraged the services of ValidClick in combination with the services of the intent key to win larger direct clients, where we now manage the entire multi-channel online advertising spend across channels that include social, search, connected television, video, display advertising, streaming audio, and linear TV. This is a significant advancement of our strategy to sell directly to clients where the competitive differentiation of our artificial intelligence combined with this multichannel capability puts us in a position to win more and larger deals. This quarter's wins, which I will talk more about later, gives us confidence in this strategy. One of the advantages of this approach is our ability to incorporate our AI into channels such as social and search, where we are confident that we can outperform existing performance within those platforms through this integration. We started executing on this capability in the third quarter as part of the larger media budgets we are now managing. Of the $16.8 million delivered, the Intenke platform contributed approximately $5.1 million, which was up year over year by 71% and up 75% sequentially. The platform's growth rate has been and continues to be strong based on the product's core value proposition, as a replacement for third-party consumer data, which the industry uses today universally. In the third quarter, we signed more than $10 million worth of orders across a collection of businesses, both direct to client and through agencies. We anticipate that these orders will deliver over a nine-month period. Our sales outreach continues to improve. which has resulted in 31% more RFPs submitted compared to the same period last year. In addition, the dollar volume of RFPs submitted has also increased by 75%. This reflects our strategy to go after larger clients and to sell further up the chain. It's worth noting that not every deal we go after requires an RFP. We've signed a diverse range of clients over the last three months. These include companies within insurance, online gaming, pet technologies, education, a number of state COVID initiatives, real estate, e-commerce, investing, winemaking, urgent care, DNA screening, gym memberships, and personal lending to name a few. Across the client base, we outperformed goals by 40% on average within the quarter. We ran 95 campaigns within the quarter, which is up 13% sequentially. 25 of these campaigns were new and 70 were renewals of existing business. We continue to find clients who understand that the future of online advertising is one where consumer data is no longer used as a part of a company's prospecting activities. The intent key, as you are aware, uses no consumer data as a part of its artificial intelligence, rather than trying to identify who the people are that match a product service, or brand interest, it determines why that interest exists to begin with. This intelligence is considerably more valuable and strategic to the clients adopting us as their go-to-market technology for this privacy-first future. At its core, the cookie is in effect the mechanism through which consumer data is onboarded for use within digital advertising. We believe strongly that the era of who based marketing that uses this consumer data is coming to an end and believe we are well positioned to win market share as companies and agencies accelerate their acceptance of this new reality. Apple has already adopted this future. We believe others will follow. We are often asked to prove that our cookie list solution works as part of our sales cycle. In one such example, within the quarter, we ran two large cookie list tests for a client where we achieved a 50% lower cost for the same return. This not only means we can in fact deliver advertising effectively in this privacy-first future, but we can do so at a level of performance that already exceeds the best of the existing WHO-based methods currently in use. As mentioned in my comments related to ValidClick, we are now managing cross-channel advertising activity for a handful of clients. As a result, we are also building out reporting and performance tools required to support those campaigns. These new clients are preparing us for a revised sales strategy in 2022 where we sell a managed service directly to clients and our SaaS solution to agencies. Across the company, we are hiring to ensure delivery of existing and future business with a continued focus on sales, account management, and campaign operations, along with select positions in development and marketing. We currently have 77 full and part-time employees. As we enter 2022, we are increasing our brand-building activities in support of our efforts to increase the awareness of our company and its solutions. We plan to complement this awareness with a direct-to-CMO marketing plan that uses the intent key to identify and message to those CMOs so as to create a funnel of qualified leads using the very technology we are selling to them. I would now like to turn the call over to Wally for a more detailed assessment of our financial performance within the quarter.