Inuvo Corp. on Wednesday reported that its first quarter profits were down a penny from a year ago as the debtless Little Rock tech firm looks to scale up its advertising technology and digital publishing business.
For the period ended March 31, Inuvo reported first quarter earnings of $374,000, or two cents per share, compared to $626,000, or three cents per share, in the same period a year ago. However, Inuvo’s revenue jumped 40% to $18.7 million, compared to $13.4 million a year ago.
“We continue to realize the vision we laid out for our shareholders almost two years ago: strong growth, profitability and cash generation. Our investment in SearchLinks is starting to hit its stride, attracting many new customers this quarter. Our confidence in its ability to contribute materially to our on-going performance is growing,” said Inuvo Chairman and CEO Rich Howe.
According to Inuvo’s last year financial results, net income included an income tax benefit of $406,000 from a favorable settlement dispute. Adjusting for that one-time item, the Arkansas company’s earnings were three cents per share, one penny better that analysts’ expectations, according to Thomson Reuters.
Inuvo, which last year moved its headquarters from Conway to Little Rock’s downtown Creative Corridor, operates two business divisions. The Partner Network business handles transactions between advertisers and partner websites and applications. The Owned and Operated Network business designs, builds and markets mobile-ready consumer websites and applications mainly under the ALOT brand. Both segments utilize the company’s ad delivery software as service (SaaS) technologies.
Revenue from Inuvo’s smaller Partner Network division fell by 30% to $5.3 million in the first quarter of 2016 compared to $7.6 million in the same quarter last year. The reason for the lower revenue is partially due to the exclusion of sales from sites acquired by the company earlier in 2015 that is now accounted for in the Owned and Operated Network business, company officials said.
Sales from the larger Owned and Operated Network rose to $13.4 million in the first quarter, up 131% compared to $5.8 million in the same quarter last year. Company officials said that at the end of the first quarter the Arkansas tech firm had $4.4 million cash-on-hand and no bank debt.
On March 14, the company sent a letter to its stockholders announcing that it had retired its debt and hoped to see annual revenue of $100 million by the end of 2017. The letter, signed by Howe, also explained that the growing tech company wishes to remain in Arkansas.
“We believe strongly that our Arkansas-based team and our location in the heart of Little Rock are strategic advantages,” Howe said. “The technology community within Arkansas, the quality and focus of the University programs in software, analytics and engineering and a state and local government committed to advancing curriculums designed to encourage knowledge-based professions has fueled our ability to hire and retain exceptionally talented and loyal inuvians.”
Former Acxiom Chairman Charles Morgan is an Inuvo board director and one of the company’s largest stockholders. Howe, also a former Acxiom executive, said that “profitable growth” remains a cornerstone of the company’s longer-term scale strategy.
“As I reflect on the last few years, it is amazing to have witnessed a transformation from challenged growth, recurring losses, increasing bank debt and a narrow scope of differentiable technologies to high growth, profitability, no bank debt and a collection of patentable supporting technologies,” Howe said. “We believe we have the right strategy, the right people, the right partners and the means to execute and we are applying these things towards the building of a business designed for the present and the future.”
At the Wednesday closing bell, Inuvo’s thinly traded shares were up four cents at $1.90. The tech company’s stock has traded in the range of $1.67 and $3.57 over the past 52 weeks.