Inuvo ekes out two cent per share profit in third quarter, revenue down $3 million year-over-year

by Wesley Brown (wesbrocomm@gmail.com) 122 views 

Thinly-traded Inuvo Corp., which called offer its $75 million merger with California-based ConversionPoint Technologies earlier this summer, eked out a third quarter profit shy of $1 million as the Little Rock tech firm seeks to gain a foothold in the fast-growing artificial intelligence (AI) marketing space.

For the period ended Sept. 30, the local data marketing provider reported net income of $787,900, or two cents per share, compared to a net loss of $1.4 million, or four cents per share, for the same period in the prior year. Revenues, however, fell 18% to nearly $13.8 million, compared to $16.8 million, in the same period of 2018.

During the third quarter, the Little Rock data marketer moved forward with its new strategic plan to grow the company’s sales and profits through its IntentKey platform, a patented, machine-learning technology designed to mirror the way the human brain instantly associates ideas, emotions, places, people and objects.

On Sept. 10, Inuvo added a new connected TV database through its IntentKey platform that includes Hulu, NBC, Roku, Apple TV and other media offerings that can reach audiences watching television online. Earlier this month, Inuvo released a cloud-based IntentKey-based product that will enable its marketing clients to connect with viewers and online audiences in real-time.

For the third and fourth quarters of 2019, Inuvo has forecasted the IntentKey platform to generate revenue of $2.6 million and $3.5 million, respectively. For the full year 2019, Inuvo expects the AI-enabled product to generate approximately $9.4 million in revenue.

“Revenue during the third quarter 2019 from the IntentKey revenue stream increased 61.6% year-over-year and approximately 30% sequentially,” said Inuvo Chairman and CEO Richard Howe. “We are pleased with the IntentKey’s progress year to date and continue to build onto this machine learning platform. We believe that our integration of Connected TV media inventory and the release of IntentCloud provides our customers broader reach, faster targeting and increased efficiencies.”

THE SHIFT
Inuvo began changing its business model earlier this summer after Little Rock’s lone publicly traded tech firm announced it had terminated its deal with privately held ConversionPoint to acquire Inuvo in a stock-and-cash deal valued at $75.5 million. In doing so, Inuvo said it came to an agreement on June 20 with Newport Beach, Calif.-based ConversionPoint for the forgiveness of a $1.1 million loan, a payment of $125,000 in cash from the transfer of assets, and the handover of clients associated with the AI-related business that had a revenue run rate of nearly $50,000 per month.

About a month later, on July 15, Inuvo closed on the underwritten public offering of 13,750,000 shares of common stock at a public offering price of 30 cents per share with participation from insiders, existing shareholders and new notable technology investors. On July 17, 2019, the local tech marketer issued 2,062,500 shares of common stock to Roth Capital Partners in connection with an over-allotment option, valuing gross proceeds from both offerings at $4.7 million.

At the company’s Oct. 4 board meeting, shareholders approved a request to amend the company’s articles of incorporation to increase the number of authorized shares in the thinly-traded Arkansas tech firm from 60 million to 100 million shares.

“The additional shares could be used, among other things, for potential conversion of the convertible note, for public or private financings to raise additional capital, for the declaration of stock splits or stock dividends, for acquisitions of other companies, for the expansion of business operations, or for the issuance of stock under warrants granted or to be granted in the future,” according to a proxy filing with the federal Securities and Exchange Commission.

“However, we have no specific plans or agreements at this time with respect to any additional acquisitions or financing transactions and no assurances can be given that an acquisition or financing transaction or transactions will take place or will be available on terms that are favorable to us,” the filing states.

As of today, about 16% of Inuvo shares are owned by company insiders and the tech firm’s largest shareholders include Howe and former Acxiom Chairman and CEO Charles Morgan. Howe, who also held several executive roles at Acxiom, held 1,112,300 shares as of Aug. 18, according to the latest Form 4 filing with the SEC. In his role as Inuvo’s lead independent director, Morgan held 2,061,200 shares of Inuvo stock as of March 28.

Inuvo, which has about 60 employees at its headquarters in Little Rock’s River Market district, also has several other company executives and board directors that are major holders of the company’s stock, which closed up two pennies at 30 cents per share in Thursday’s session on the NYSE American exchange for small and mid-cap concerns.

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