Inuvo, Inc.

Good day, ladies and gentlemen, and welcome to the ANUVO, Inc. second quarter 2024 conference call. At this time, our lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Natalia Rudman of Crescendo Communications. Please go ahead.

Thank you, Joanna, and good afternoon, everyone. I'd like to thank everyone for joining us today for the ANUVO Second Quarter 2024 Shareholder Update Call. Today, ANUVO's Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10-Q with the Securities and Exchange Commission this evening. Before we begin, I'm going to review the company's State 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 ANUVA Inc. are 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 ANUVA at this time. In addition, other risks are more fully described in ANUVA's public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussion will include references to non-GAAP measures. The company believes that such information provides an additional measurement and a consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measure is available in today's news release on our website. With that, I'll now turn the call over to CEO Rich Howe. Please go ahead, Rich.

Thank you, Natalia. And thanks, everyone, for joining us today. We are pleased to report that for the quarter ended June 30th, 2024, we delivered 9.4% year-over-year growth. For the first half of the year, we've delivered a healthy 23.6% year-over-year growth. And that, of course, is coming off of a very strong second half of 2023, where we also grew 32% year-over-year. The third quarter has also started off strong with unaudited revenue coming in around 7.7 million for the month of July. And that compares to the roughly $5.9 million per month average we experienced throughout the first half of 2024. We also experienced a significant improvement in our adjusted EBITDA within the quarter. with a $1.1 million improvement year over year and a $2.4 million improvement for the first half as compared to the prior year. Free cash flow has also improved over the first half of 2024 in comparison to last year. Wally will share more details about our second quarter 2024 financial results shortly. We've had strong momentum within existing and new clients. We've had some wins with our new product, newer product sales. And we've had a material and what we believe to be positive event occur across our industry within the second quarter. What I'd like to do now is spend some time discussing these items. Let's begin with the industry. Google, of course, announced a new position on the deprecation of cookies within their Chrome browser this past quarter. For several years now, Google has been developing an alternative technology to replace cookies. This technology has aptly been named the privacy sandbox. Unlike Apple with their Safari browser, Google, whose business is predominantly advertising, has had to satisfy a chorus of constituents that include governments, the ad tech industry, the consumer data industry, and various other groups with a vested interest in the cookie's survival. Now, it's very likely their efforts to satisfy all these parties have been difficult. And consequently, what they appear to have decided to do now is put the power of making the decision about the cookie in the hands of consumers. As a reminder, the cookie is the way your browser tracks your activity around the internet and is the means through which consumer data is accessed. Google has not been specific about exactly how they plan to empower consumers, but we believe it will be similar to the way Apple engaged consumers when they wanted to eliminate app tracking When Apple gave consumers that option to opt out, over 90% of them chose to do so. Consequently, what Anubo believes is that this is good news for consumer privacy advocates because history has shown that when consumers are given a clear choice regarding the use of their data and the tracking of their activity, they overwhelmingly say no. The simple reason why this is a good thing for Anubo is because the majority of our competitors need this cookie ID to decide whether or not to bid on a media placement transaction on behalf of their clients. And of course, Anubo's AI does not. Within programmatic advertising channels, already 70% of these media transactions no longer contain a persistent cookie ID. And that number includes everyone using Apple Safari browsers where cookies were blocked starting in 2020. The remaining 30% is effectively Google Chrome users. And consequently, we fully expect that number to drop very quickly following the informed consumer choice Google plans to give its users. While we have said this before, it's worth mentioning again that Anuvo's audience discovery in targeting AI already outperformed by a wide margin the best of cookie-based technologies. So we have never required that the cookie disappear. However, its deprecation and ultimately obsolescence is a catalyst for industry change that we believe will accelerate demand for a nouveau. Given our single biggest obstacle to adoption continues to be the hold incumbents have on clients and the fear those clients have of a change. Let's shift now to products and clients. As we have discussed in the past, Anubo has developed two AI technologies, one for audience discovery and targeting, and the other for the measurement of marketing's performance. Now, we developed these solutions because we knew these would be the two biggest problems facing advertisers as the Internet adapted, to a consumer privacy-based paradigm. Across the industry, we continue to be amazed at just how inaccurate the systems are within corporations for measuring the effectiveness of what for many of these brands is their largest expense line. We frequently observe them using KPIs that incentivize poor behavior in their vendors. while inaccurately measuring the influence of the various channels they're using on their business. As has been the case with media targeting, the industry over time has built technology to help companies understand performance. However, that technology has also depended on tracking consumers around the internet. And as I mentioned earlier, that mechanism is now severely broken. And consequently, so are these measurement solutions. This is why we built our predictive media mix modeling capabilities. We have a number of clients now using this technology, including our largest retail client who began doing business with us, not only for our audience technology, but also for the capabilities of our media mix technology. This client now uses this capability to measure and optimize the contribution on sales resulting from the dozen or so different marketing channels that they deploy. Unlike existing methods that require a one-to-one consumer mapping of advertising clicks to conversions using the cookie ID, our technology requires nothing other than the actual spend over time within channels alongside the actual business metrics. Using historical data, these very sophisticated machine learning algorithms we've developed can detect patterns that allow the AI to predict the amount of money our clients should spend within each channel. This is an analytic product that strategically positions Anubo alongside the corner office within our clients. We see demand increasing for this product with a number of high profile prospects in our pipeline, including a financial services company that is itself already using our audience technology. We see this product strategically, once installed within a client, also being a catalyst for the adoption and expansion of our audience technology in part because it can accurately predict and contrast the value of our audience technology relative to the other marketing strategies being deployed. While our managed services business continues to drive growth, and we signed up another three new agency clients in the quarter, we have also started scaling our self-serve capabilities. Larger agencies, mostly owned by the holding companies, have historically not been our target. That has now changed, and we've had a half dozen self-serve clients sign up, including a major technology company and one of the largest car manufacturers in the world. The elegance of this self-serve product lies in its flexibility to empower our clients with the ability to easily model and target audiences without our assistance. It also allows us to more quickly scale certain general audience categories, like, say, back to school or the Olympics, and any one of hundreds of other similar audiences. But perhaps most importantly, the self-serve version of our AI boasts high margins for a nouveau. with gross profits ranging from 85% to 95%. So accelerated sales here will drop cash to the bottom line at scale. Across our agencies and brand clients, we outperformed KPIs once again on average by about 30% in the quarter. And we expect to sign a master services agreement in the third quarter with one of the largest retailers in the world. which will allow media buyers across their enterprise to access our capabilities. We have already been serving this client for one of their private label brands, and the success of those efforts has now resulted in this agreement. The client is forecasted to do roughly 2 million this year, with the potential to be significantly larger when the MSA is in place. This client has numerous private label brands in their portfolio. And each of those brands are generally limited to using vendors approved by the corporation. In total, it's taken us roughly one and a half years to become this approved vendor. So the bar is high for competition here. Platform relationships continue to be a strong growth and working capital engine for our company. These clients grew roughly 11% in the quarter and as a group are scaling as we head into what is typically the strongest advertising quarters of our year. One of our platform clients uses our capabilities in a manner analogous to our self-serve intent key product. And consequently, that revenue is also roughly at 90% margin contribution to the bottom line. As we have mentioned, this relationship only took hold in 2024. And in Q2, it generated over $200,000 of this high margin revenue that flows to the bottom line. I want to also reinforce for our shareholders how important these platform relationships are to our business. Our agency and brand clients require working capital. Our platform clients generate positive working capital. This important distinction is often missed by our shareholders. These receivables, which historically have had low risk, can be bored against to fund working capital growth needs. You will also have noted from our press release that we closed a new $10 million credit facility in the quarter. We used this facility to fund working capital, and while we had an existing $5 million facility in place with another financial institution, that facility had certain constraints that did not meet our needs. We anticipate this new agreement will provide the flexibility we need to continue growing our business. At this time, I'd like to turn the call over to Wally for a more detailed assessment of our financial performance. Wally?