Inuvo, Inc. (AMEX:INUV) Q4 2022 Earnings Call Transcript

Inuvo, Inc. (AMEX:INUV) Q4 2022 Earnings Call Transcript March 9, 2023

Operator: Greetings, and welcome to the Inuvo, Inc. Fourth Quarter and Full Year 2022 financial results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to hand over to Natalya Rudman of Investor Relations. Please go ahead, ma’am.

Natalya Rudman: Thank you, Sonia, and good afternoon. I’d like to thank everyone for joining us today for the Inuvo’s fourth quarter and full year 2022 shareholder update call. Today, Inuvo’s Chief Executive Officer, Richard Howe; and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would like to also remind our shareholders that we will file our 10-K with the Securities and Exchange Commission this afternoon. Before we begin, I’m going to review the Company’s safe harbor statement. The same is 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, forward-looking statements. 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 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 consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today’s news release on our website. With that out of the way, I’ll now turn the call over to CEO, Richard Howe. Please go ahead, Rich.

Richard Howe: Thank you, Natalia, and thanks, everyone, for joining us today. We are pleased to report that for the fiscal year 2022, Inuvo grew 26.4% having delivered $75.6 million in revenue as compared to $59.8 million in the prior year. Our growth rate over the last two consecutive years has now averaged 30%. Fourth quarter revenue was $17.3 million, which was roughly flat sequentially and down year-over-year from the $19.7 million reported in Q4 2021. We have observed an economic softening, which began for us in December of 2022. With that said, our 2023 pipeline of business opportunities is as robust as we have ever seen it, which we attribute to the growing demand for audience discovery and targeting solutions that do not depend on identity in the wake of the cookie and other identity-based advertising technologies fast becoming obsolete.

Gross margins increased throughout the year, rising from 53.5% in Q1 to 68.2% in Q4 and averaging 60% on the year. Year-over-year for the fourth quarter, gross margins improved 11%. On an annualized basis, gross margins declined roughly 13%, which reflects the growth of the Company and the change in revenue mix associated with the breadth of services and technology that were delivered directly to clients in 2022. To reflect better this shift in revenue mix that started in 2022, we have reclassified revenue into the two categories of direct and indirect. We have also retired the ValidClick classification within our financial disclosures in lieu of these more descriptive categories and the annual products that support them. Direct revenue is advertising-related revenue generally from relationships we have either with agencies or brands.

Indirect revenue is advertising-related revenue generally sourced through companies or platforms that have direct relationships with agencies or brands. Our Google client would, in this regard, be considered indirect. Direct revenue increased 73% year-over-year in 2022 to $36.2 million. Indirect revenue increased 2% to $39.2 million. Indirect revenues generally have higher gross margins and higher operating expenses than direct revenues. Coincident with this revenue classification change, we will also now be referring to Inuvo platforms that support direct and indirect revenue as the IntentKey and CAM site, respectively. We believe this better reflects the different development plans associated with these platforms that can be unique to their respective client bases.

Regardless of the direct or indirect designation, our revenues come from identifying and placing ads in front of audiences. And as a company, our resources are allocated across the enterprise based on client opportunities, not platform. On an individual client basis, we delivered technology and services that generated revenue across roughly 150 different programs in 2022. Any individual client can have multiple programs, which themselves can have multiple campaigns. On average, year-over-year, we saw our per program revenue increased roughly 33% to approximately $500,000 per program. We invested throughout the year in sales, sales support and marketing and added both new customers while also reengaging past customers. We added six new direct advertisers in the fourth quarter.

When the media buying recommendations of our artificial intelligence are implemented in accordance with best practice, we have yet to lose in head-to-head tests against competitors. In 2022, for clients using these best practices, we outperformed their expectations by over 60%. As a technology company on the forefront of artificial intelligence, we continue to make significant AI advancements in 2022. There are many companies now asserting the integration of artificial intelligence into their solutions. There are few companies whose AI definition revolves around an intelligence that can discern the needs, emotions and thinking of the humans, it is designed to interact with. And this is exactly what differentiates the IntentKey from all other technologies within advertising.

In many ways, the IntentKey is very much like the highly successful ChatGPT. Only it was created specifically for an advertising use case. The question the IntentKey is answering without knowing anything about the individual or using any third or first or any other party data is why is this unknown person in front of the screen at this very moment in time? It’s the answer to this question that determines whether or not Inuvo serves an add on behalf of its clients. The breadth of information our AI understands is nothing short of astounding. If you ask ChatGPT to tell you something about the people who are interested in purchasing an electric bicycle, you will get that they come from a wide range of backgrounds and demographics, are environmentally conscious, interested in fitness, cost-sensitive and adventurous.

These are great answers. When you ask the IntentKey, the same question, and keeping in mind that there is no database of information the IntentKey uses to pull its answers from, you get a detailed accounting of the age, ethnicity, income possible presence of children, possible gender and educational demographics associated with that audience. You get the specific drug fibers behind a purchase decision for that product, things like foldability, city riding, Shimano derailleur, shape batteries, hydraulic disc brakes, flat tires, titling assistance, long right ability and much, much more. You get specific geographical interest that tells you, for example, that Hawaiians are 3x more into e-bikes than people from Maryland. You get quantification of the market size, meaning the IntentKey tells you there are approximately 4 million people on any given day exhibiting the insights mentioned above and over 200 million places, you can buy media to target that audience.

And most importantly, you get the ability to instantly action this audience. There is no comparable capability within advertising. We increased the differentiation of our technology and our services significantly in 2022. And I’d like to share a few of those advancements now. As a result of serving clients with audiences that watch cable television, we were able to develop and integrate our AI into this medium in 2022. Given our AI continues to read and understand content, we were able to train the AI on television programming in a manner that allowed the AI to precisely match the insights it generates and uses to target audiences with individual cable television programs where advertising could be purchased. We are not aware of any other company with this capability.

We were also able in 2022 to build, test and successfully deploy artificial intelligence capable of determining the optimal mix of media spend across advertising channels without using consumer identity. Another consequence associated with the obsolescence of the cookie is the inability to accurately determine out of all the advertising channels being used, which most contributes to the objective. We are now in a position to arm our clients with this capability such that they can realize the competitive advantage of knowing out of the plethora of advertising channels being used, which are working the best at any given time. Additionally, we were able in 2022 to expose the insights behind our AI to clients. The things our AI knows can and should drive our clients’ go-to-market strategies.

This past year, we introduced to our clients a graphical interface that reveals the insights that drive their consumers’ behaviors. Demographics of the audience is exhibiting those behaviors, the geographical locations of the audiences and the market size and availability of media that can be purchased to reach those audiences. I want to reinforce that our AI knows all of these things without using consumer identity or consumer data. There is no other similar technological capability we are aware of. Further, we significantly enhanced our web crawler in 2022. This technology is the foundation of how our AI learns, humans learned from reading. Our brains are libraries and the neurons are the books in that library. It’s the connections between books that allows us to make decisions.

The IntentKey works the same way. It continually reads Internet content to refine its understanding of the relationship between words and pages, which is used to draw conclusions about consumer intent. In 2022, we also empowered our AI with another superpower. The ability to understand a consumer sentiment towards any one of the many concepts the AI associates with an audience. The power in our AI lies in its immediate ability to associate and action things that are important to consumers as part of their purchase decision. Often, these associations are not obvious to the marketer. And even if they were, there would be no conventional way to action them. Let’s consider a real-life home mortgage client example. In this case, the intent quickly uncovered numerous top of mind considerations likely to be associated with making a decision to get a home mortgage.

These included things like a down payment for approval, the 2000 housing bubble, housing insurance, Fannie Mae, FICO, interest rates, along with thousands more. It’s not any one of these that drives our AI’s decision to place an ad, but rather the collection and strength of each of them as determined by the AI in the moment when a media spot is being considered for purchase. Interestingly, the AI also identified NASDAQ as associated with making a decision to get a home mortgage. Now on the surface, home mortgage and NASDAQ appear to be two unassociated concepts. However, the realities of home purchase require capital, and for many Americans, that capital is likely tied up in their stock portfolio. So what the intent is saying is NASDAQ in the context of, say, a down payment in FICO suggests the consumer shopping for a mortgage.

In 2022, we have further empowered the AI to now also associate the consumer sentiment towards these concepts. In this example, the AI actually suggested that consumers have an overall negative sentiment towards NASDAQ. And this is likely because they do not want to liquidate their securities to fund their down payment. Strategically, this would suggest the advertisers stay away from consumer messaging where the NASDAQ might be referenced alongside their home mortgage offers because the consumer is likely to view this negatively and as a result, possibly reject the offer. Looking forward now into 2023, we have numerous and exciting initiatives underway that are revolutionary and could lay the foundation for new markets for our AI. In one such case, we are in the early phases of a product launch, where for the first time in the world, the product category, the product design and the product advertising will all be done with Inuvo artificial intelligence.

This showcase for our technology which is in its early stages, is already demonstrating how the reasons behind why consumers are interested in products are the very same insights that should be incorporated into the design of those products. Tens of thousands of new consumer products are launched every year in the United States, having in many cases, taken years to bring to market. With the push of a button, the IntentKey can provide product, market research that is not only more accurate, but more insightful and ultimately reduces the cost and accelerates the time to market. We will talk more about this throughout the year. Additionally, we are closing in on the launch of a general consumer-facing interface that will allow anyone to explore just in time the power of the insights known to our AI for any market objective they want to discover.

In many ways, this will be our ChatGPT only instead of answering general questions, the AI will reveal what it knows about the audiences the user is wanting to study. We believe this will generate exposure for our capabilities and leads for our technology and services. We expect to have something before the end of the first half of the year. 2022 was an important year for Inuvo. It was a year where we were able to directly implement and test a series of technologies that now position us with the ability to be able to either empower clients with individual components of our technology or take on and support all of our clients’ media programs. This dual capability expands our market opportunities. I’d like to now turn the call over to Wally for a more detailed assessment of our financial performance within the call of the quarter.

Wally Ruiz: Thank you, Rich. Good afternoon, everyone. I will recap the financial results for the full year of 2022 and the fourth quarter. As Rich mentioned, Inuvo reported revenue of $75.6 million for the full year of 2022, a 26.4% increase over the prior year. For the fourth quarter ended December 31, 2022, we reported $17.3 million of revenue 12% lower than the $19.7 million reported in the fourth quarter of the prior year. As we mentioned throughout 2022, the services we provide our customers identifying audiences and presenting advertisements across marketing channels has increasingly blurred the line that distinguishes our products. Consequently, we began to classify revenue by type of customer rather than by product line.

Revenue is reported by direct customers, indirect customers and consulting and other services. During the full year 2022, revenue from direct customers was $36.2 million, a 73% increase over the prior year. Revenue from indirect customers was $39.2 million, a 2% increase over the prior year. Consulting revenue for the full year of 2022 was $129,000 compared to $416,000 in the prior year. For the fourth quarter of 2022, revenue from direct customers was $6.2 million, a 39% decrease from the prior year 2021. The Revenue from indirect customers was $11.1 million, a 17% increase from the prior year. Consulting revenue for the fourth quarter of was $15,000 compared to $72,000 in the fourth quarter of the prior year. The increase in revenue from direct customers in the full year 2022 was primarily due to new customers and the expansion of media spend by existing customers.

This was also true for the higher revenue associated with indirect customers in spite of having to absorb a $1.5 million refund provided to one of our indirect customers in the second quarter of 2022 because of a fraudulent ad placement that we had purchased from a well-known advertising platform. This is something that we had reported in the second quarter and reiterated it in the third quarter filings. The decrease in revenue in the fourth quarter of 2022 compared to the same quarter of prior year is primarily due to lower direct customer revenue that was $6.2 million in the quarter compared to $10.2 million in the prior year quarter. The decrease occurred in December and is attributable to lower advertising spend and the loss of a customer.

Indirect customer revenue in the fourth quarter of 2022 was $11.1 million an increase of 12% compared to the same quarter of the prior year. The increase was due primarily to strong demand from advertisers for display placements throughout the quarter. Gross profit for the full year ended December 31, 2022, totaled $45.4 million as compared to $43.9 million for the same period last year. And gross profit margin in 2022 was 60% as compared to 74% in the prior year. Gross profit in the fourth quarter ended December 31, 2022, was $11.7 million compared to $11.3 million for the same period last year. Gross profit margin for the fourth quarter of 2022 was 68% as compared to 57% in the same period or the same quarter of last year. Gross profit is heavily influenced by revenue mix, channel used to present an ad and seasonal supply and demand for media inventory.

In quarters past, cost of revenue was predominantly payments to website publishers and app developers that hosted advertisements we served to their properties. More recently, cost of revenue is predominantly payments to advertising exchanges that provide access to a supply of advertising inventory into which we serve on behalf of our clients, advertisements using information predicted by the IntentKey AI. As gross margins are also — our gross margins are also dependent upon the mix of advertising channels we use to serve our clients, many of our clients require multichannel digital media solution. One of our advantages is the ability to serve highly targeted prescriptive ads across multiple channels such as video, mobile, connected TV, linear TV, display, social, search and native.

Each of these channels yield varying gross margins depending on supply and demand, the optimization of the media mix for our clients can vary from client to client and over time. Gross margins from revenue associated with placing ads on our own websites is higher than many of the other services that we offer. The higher gross margin for the full year last year, 2021, compared to the current year and for the fourth quarter of 2022 compared to the same quarter in the prior year is primarily due to revenue mix, where in 2021, revenue contributions from indirect customers were higher relative to revenue from direct customers. Operating expenses were $58 million in the full year of 2022 compared to $51.7 million in the prior year, an increase of 12%.

Operating expenses for the fourth quarter of 2022 was $15.7 million compared to $12.3 million in the prior year, an increase of 27%. The largest component of operating expenses, marketing costs, marketing costs are predominantly traffic acquisition costs associated with our indirect customers. Marketing costs were $36.9 million in the full year of 2022 compared to $33.1 million last year. Marketing costs were $10.1 million in the fourth quarter of this year compared to $7.4 million in the same quarter of last year. The higher marketing cost is primarily due to increased brand marketing, business development fees and increased traffic acquisition costs that drove the higher revenue from indirect customers. In addition, included in the marketing expense is approximately million of fraudulent advertising we unknowingly purchased from a prominent advertising network in the second quarter of 2022.

We held back the $1.4 million in net payments due to the advertising network until such time as a satisfactory resolution is determined. Compensation expense for the full year of 2022 was $12.5 million compared to $11.4 million in the prior year. And for the fourth quarter, compensation expense was $2.9 million for both 2022 and 2021. Our full-time and part-time employment was 86 at the end of 2022. And it was 75 at the — 75 full and part-time employees at the end of 2021. The majority of the increase in headcount occurred within sales and sales support and account management. General and administrative expense was $8.6 million in the full year of 2022 compared to $7.2 million in the prior year, an increase of 20%. General and administrative expense for the fourth quarter of 2022 was $2.7 million compared to $2 million in the prior year, an increase of 36%.

The higher expense this year compared to the prior year is primarily due to a higher allowance for doubtful accounts associated with the higher accounts receivable balances at December 31 and an aging that has been extended since the prior year. Net financing expense was approximately $21,000 in the full year of 2022 compared to $87,000 last year. And net financing expense was approximately $10,000 in the fourth quarter compared to $50,000 in the fourth quarter of last year — of the prior year. Turning now to income and expenses. We reported an expense of $436,000 for the full year 2022 that’s associated with net realized and unrealized losses on trading securities. These securities are mark-to-market at each quarter end. We reported a net loss of $4 million or $0.03 per basic share in the fourth quarter of 2022 compared to $1.2 million net loss or $0.01 per basic share in the prior year.

The greater net loss in the current year quarter over the prior year quarter is due primarily to a $2.7 million higher marketing expense a $700,000 higher general and administrative expense and a $978,000 higher allowance for doubtful accounts, partially offset by $467,000 higher gross profit. The adjusted EBITDA loss for the quarter ended December 31, 2022 was $1.8 million compared to a gain in the quarter of 2021 of $307,000. On December 31, 2022, we had cash and cash equivalents and short-term marketable securities of $4.5 million and a net working capital of $2.8 million. In addition, we have a $5 million working line of credit, which currently has no outstanding balance. We maintain a simple capital structure with 120 million common shares outstanding and about 4.9 million employee restricted stock units outstanding through an equity incentive plan and 300,000 warrants to purchase common stock.

With that, I’d like to turn the call back over to Rich for closing remarks.

Richard Howe: Thanks, Wally. We had a strong year, growing 26.4% year-over-year. We made and continue to make significant advancements both in the technology and the services that are required to meet the needs of our advertiser, clients and prospects. While we saw a softening of advertising spend in December that has continued into the seasonally lower first quarter. We do have a pipeline of potential new business in 2023 that looks very encouraging. As a company, we believe we have three things going for us that can be tailwinds. First, we have an artificial intelligence technology purposely built for a consumer privacy based advertising future that is significantly ahead of any competitor. Second, we have a market catalyst in the obsolescence of the cookie that will force changes in buyer behavior that align with our technology.

And thirdly, we have a significant market interest in artificial intelligence technologies that has now made its way into our prospects boardrooms. We will continue to invest in sales and awareness programs so that we can capitalize on these tailwinds. I will now turn the call over to the operator for questions. Operator?

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Q&A Session

Operator: The first question comes from Brian Kinslingler from Alliance Global Partners. Please proceed with your question, Brian.

Unidentified Analyst: This is Sharmin on for Brian. Thank for taking my question. Can you provide an update on the Google search contract renewal? I think you have a few more weeks to get that done. And in addition, do you expect any prices — any changes to pricing?

Richard Howe: So the — as has happened historically. Sometimes the renewal date gets pushed out most of the time by Google just because they’re busy and so they can’t get to it. So, there’s no issues associated with the renewal, but I think we did extend the renewal date, perhaps for a month, Wally, maybe you can do that. We’ve done that before. We don’t see any issues. We don’t talk about whether or not we have pricing advantages or disadvantages on these calls associated with that agreement as there’s a lot of proprietary aspects and disclosure requirements associated with doing business with that company that we have to be careful about.

Wally Ruiz: Yes, they did ask us to extend it 30 days. Apparently, their legal department is busy, and they have bigger fish to fry right now. But we have indications that there are no significant changes in the offering.

Unidentified Analyst: All right. Thank you. Next question. In terms of IntentKey, can you talk about how the more challenging ad market is impacting the business? Is it smaller campaign sizes, fewer new customer wins, less usage by existing customers, et cetera, et cetera?

Richard Howe: Can you just ask that question again? I’m sorry, I look at you broke up a little bit, so I didn’t hear it…

Unidentified Analyst: Yes, my fault. Talk about how the more challenging ad market is impacting the business in terms of IntentKey. Are we seeing smaller campaign sizes, your new customer wins, less usage, anything along those lines?

Richard Howe: Yes. I think the general answer to that question is in times of uncertainty, and I think we kind of are in that — Well, we’d probably get in that period in the United States here now for a little while. But in those times, typically, advertisers tend to be a little bit more cautious with regard to the amount of money they’re looking to spend and wait and see attitude. And we do see that generally.

Unidentified Analyst: So in regards to customer acquisition, new customer win trends, sales cycles, you see a little bit of lengthening in those, a little bit more difficulty

Richard Howe: I don’t think we’re seeing any material changes in our, let’s say, win rates or the number of prospects. And as I said, I think in my script at one place, the pipeline, the risk-adjusted pipeline that we manage on a regular basis actually is larger right now than it’s ever been. So it’s not — that’s not the issue. I think it’s more like when you do signed clients, let’s just say they’re probably going to spend — and when — for clients we already have, they’re spending perhaps a little less than they would normally, that may change, of course, as the seasons change here because our advertising obviously has seasonality associated with it to the larger spend in Q3 and Q4.

Unidentified Analyst: Makes sense. Pivoting towards advantages IntentKey which you talked about a lot, what do you think your results will be going to be impacted and your revenue growth would accelerate given your advantage in a cookie-less environment?

Richard Howe: I think the only thing between us and that, let’s call it, hyper accelerated growth is awareness. One of the good things about being in the industry that we’ve designed our technology to service that it’s a gigantic industry, one of the downsides is you have to get awareness to get yourself known to even be considered cost a lot of money, and we spent more money on marketing last year than we have probably in the history of the Company. And it’s really — that’s the only thing between us and I think, continued and maybe accelerated growth is just trying to get our awareness spend more time at conferences, get our names and publications be proactive with our outreach for marketing is a big part of this.

Unidentified Analyst: All right. And one last question. Whereas fourth quarter revenue is usually seasonally strong for both businesses, should we expect the first quarter will be seasonally light?

Richard Howe: Our first quarter is typically lighter right? Wally, go ahead, but…

Wally Ruiz: Yes. Yes. So yes, there is seasonality. You’re absolutely right, right? So what historically we’ve seen with — in recent memory, the only exception to that I can think of was in 2022. But other than the 2022, typically, we see the first quarter lower than the fourth quarter.

Operator: The next question comes from Jack Vander Aarde from Maxim Group. Please proceed with your question, Jack.

Jack Vander Aarde: Okay, great. Appreciate the update guys. Encouraged to hear your pipeline, Rich, I believe, is the strongest it’s ever been. I’ll get into my questions with that kind of opening statement. So Rich, can you just talk about the pipeline in a little more detail? Or how granular you can get with it? Can you just help me maybe understand if you provide a breakout of how — what you point to indicate that as the strong as it’s been? How do you calculate that? And is it really on the IntentKey side or, I guess, direct and indirect and maybe consulting as well? Anything you could provide regarding the pipeline.

Richard Howe: Well, yes, sure, absolutely. I guess like most companies, maybe it’s a stretch to say even that. But we track our pipeline quite meticulously, which means that every opportunity that we think exists, gets entered into, we use Salesforce. And then that opportunity is — has a cycle to it that we attribute some probability in terms of where it is relative to its cycle to a likely close. And of course, the probability either goes up or down depending upon how much we’re advancing within the sales cycle. And so there are literally, I don’t know how many of the — Jack, there are in that pipeline, but I’m trying to think in my head because I do look at it on a regular basis, but there’s at least 40 things in there. And so — and many of them — and they canvass a lot of ranges.

I mean they can be as small as $20,000, and they can be as much as million, right, is probably the biggest one I can remember just thinking about it that’s on the pipeline. So the answer is we track it. We track it very carefully. We’ve always tracked it. So we know relative to other years where we stand relative to that. And right now, there’s a lot of really nice opportunities.

Jack Vander Aarde: Great. No, that’s helpful. I appreciate that. And maybe just in regards to kind of what you’re talking about with there’s an overall industry kind of buzz or market appetite for AI technologies in general. Obviously, ChatGPT come into the marketing causing quite a stir. I imagine is a benefit to you guys. You’re ramping up your headcount, added some more salespeople. How much of your pipeline is growing now from your own sales efforts and headcount expansion versus maybe word of mouth of just more educated market environment where people are coming to you now? Is that pipeline coming from a mix of both your own headcount and also word of mouth?

Richard Howe: Yes, that’s a good question. And I think it parlays into what I said as an answer to the last question, it’s more of the former and less of the latter. It’s all of our pipeline, for the most part is — well, maybe other than — I shouldn’t say all because it’s not that black and white Jack. But I’d say less than 10% of the pipeline is inbound from somewhere that there’s nobody really was talking to the person. So that means, of course, we’re in the field talking to people with our salespeople, and that’s where most of our leads come from. It’s this awareness piece that we’re trying to improve. And I think as I alluded in my script, we have a construct for this. And I guess, to some degree, it was designed and is designed around the huge success we’ve seen with ChatGPT.

So if we accomplish what we would like to with this initiative, coming soon. And by soon, I mean, maybe before the end of the first half of the year, you’ll be able to go online and going in an interface, much like you do with ChatGPT. And instead of asking general questions, you can ask questions about audience, tell me about my electric bike audience, tell me about a home mortgage audience, tell me about the checking account, mortgage, checking account product market, anything. Tell me about German Shepherd audience. There’s really no limitation to what the IntentKey can do because it doesn’t think in those contexts. And we think that could be a powerful way for us to build awareness much in the same way we’ve seen ChatGPT be successful with it.

Jack Vander Aarde: Okay. That’s helpful. And maybe a question for both Rich and Wally, just in terms of — I see your current liquidity. It seems like you guys are confident you have at least 12 months of runway. You have a lot of new products that you’re in development and planning to launch and you’ve also made some headcount ramp as well. Can you maybe just talk about, I think, the prior quarter or maybe two quarters ago, you had comments around how you were thinking about managing growth versus close to adjusted EBITDA positive. Can you just provide an update on the puts and takes there? I’m sure some of it is in your control, how fast you want to ramp up development or certain expenses to drive growth. But I don’t know, can you just help us understand where we are in terms of setting expectations for revenue and EBITDA in that trade-off?

Wally Ruiz: Yes, absolutely. Yes. We do have capital at the end of December. We are — the focus — and I think what you’re alluding to, the focus for us has been to be — grow as quickly as possible and yet maintain a breakeven adjusted EBITDA or as close to it as we possibly can. That pretty much still sums up the — our strategy. We’re going to grow at a rate — look, if we had more capital, we would try to grow even faster. But we’re going to try to grow at a rate that makes sense in terms of capital preservation. So we have no plans of going back to the capital markets right now. We do have a line of credit that we have that’s been unused. And so it gives us some leeway. So it’s going to be a balancing act to how fast can we grow and at the same time, have adequate cash to fuel that growth.

Right now, as you said, we do have sufficient capital to get us through 2023. So, it’s something that we watch. We’re being very careful with our expenses and our hiring. I think we’re pretty excited about our pipeline. Our sales force has been doing a very good job. As Rich mentioned, the pipeline has probably never been as strong as it is now. There’s just a lot of new names on it and increasing budgets on some of the existing names that we think will come to fruition over the next several quarters. And our business development efforts also have been producing nice results in terms of new customers and new revenues. So we’re very excited about ’23. We’re going to have to be careful with our capital. We’re going to have to grow as quickly as we can see that this pipeline gets turned into revenue.

Jack Vander Aarde: Excellent. And maybe just one more follow-up from me. Another analyst asked about the Google relationship and something I just want to touch on another key partner of yours is Xander as well as Yahoo. Can you maybe just provide just a quick update on how those relationships are going today and.

Richard Howe: Yes, there’s no issues associated with either of those. The relationships are strong in place, have been, obviously, for many years. I can tell you, Wally and I don’t lose any sleep over thinking about those relationships we’re executing — they’re making money off of us. That’s why they’re partners, right? So it’s not something I spend time too much time worrying about.

Jack Vander Aarde: Excellent. And maybe just one more, actually, Rich, just if you were to look two years ago, put yourself back in your shoes two years ago or so and you look at where Inuvo was. And now today, when you look at the technology you have in the current market environment. A lot of things have played out that no one could predict in the world. How does kind of your outlook for Inuvo, the products you have, the team you have in the market environment that we’re in. how does it kind of compare in terms of, I guess, how you see success going forward relative to where you were two years ago? Are you on track? Are you ahead of schedule? Is it a different game than you were expecting? I’d just be interested to hear your thoughts.

Richard Howe: Technologically, it’s not even close between our nearest competitor and us. So in that regard, I mean, I could not be more excited about our opportunities. So what we’re trying to do is make sure we can maintain our competitive advantage. But as I said, the single biggest thing — obstacle between us and, I think, accelerated — significant accelerated growth is just awareness. It’s like even though we’re not a small company anymore, at roughly $80 million in revenue, relative to the kinds of companies that are in the media and ad tech space, we are small. So oftentimes, we do interact with prospects. And sometimes they might say, yes, I think I’ve heard you Inuvo, but a lot of times, it’s the first time they’re encountering us.

And so that’s what I lose sleep over is there’s hundreds if not thousands of RFPs going out today, and we may not even be included in some of them simply because people don’t know who we are. They would — if they knew who we are and what we can do because a lot of the RFPs or RFIs speaking of which a few of them we’re working on right now are coming out these days where the clients, the prospects are specifically looking for companies that have technologies that don’t require the use of cookies or identity or first any kind of data. So that’s my feeling. It’s like I guess that’s where my anxiety comes, not related to our ability to deliver not our technology, not how much advanced. Our AI is those things I know are incredible. It’s how do we make sure that we’re in the game, so to speak, in the big game right?

Jack Vander Aarde: Well, if I call it a problem, that’s the best problem to have, it sounds. So I’m encouraged by your guys’ momentum, and I look forward to keeping track.

Operator: Thank you. There are no further questions at this time. I’d now like to turn the call over to Rich Howell for closing remarks. Thank you, sir.

Richard Howe: Thank you, operator, and thanks, everyone, for joining us today on the call. We appreciate your continued interest in our company.

Operator: Thank you. Ladies and gentlemen, that does conclude today’s teleconference. Thank you very much for joining us. You may now disconnect your lines.