Inuvo Announces Revenue Increase of 66% Year-Over-Year for the Second Quarter Ending June 30, 2021

Inuvo, Inc., a leading provider of marketing technology, today announced its financial results for the second quarter and six-month periods ending June 30, 2021.

Richard Howe, CEO of Inuvo, stated, “Revenue for the second quarter was strong across each of the IntentKey and ValidClick product line both year-over-year and sequentially. During Q2 the IntentKey performed 74% better than our clients’ goals and its 50% year-over-year and 37% sequential growth are indicative of those results. We expect to see a continuation of double-digit year-over-year growth throughout the second half of 2021 and would expect Adjusted EBITDA to turn positive when monthly revenue run rates exceed $5.5 million.”

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Operational Highlights During 2021 to Date:

• A 56% increase in prospect presentations and a 70% improvement in deals won for the IntentKey.
• Launched IntentKey SaaS, with multiple clients now committed and/or already using the solution.
• Delivered results to IntentKey clients that exceeded their goals by 60% and in at least one case delivered in excess of an 88:1 Return on Advertising Spend.
• Renewed our largest ValidClick partner, one of the largest companies in the world, for an additional 2-year term.
• Expanded IntentKey AI platforms for advertising into the Canadian market and signed a first client.
• Signed multiple new clients for the IntentKey platform within private and public sectors and across industries.
• Signed a Casino/Resort company where the entire suite of IntentKey capabilities and channels were leveraged concurrently.
• ValidClick hit an all-time monthly high within the first half by serving Ads into roughly 100 million pageviews.
• Raised $14.25 million in additional capital resulting in a cash balance at the end of June 2021 of $17.3 million.
• Continued to successfully deliver cookieless campaigns well ahead of the industry disruption coming in 2023.
• Expanded sales, sales support, and account management to 20 people, including hires in Canada to support the IntentKey’s expansion North.

Financial Results for the Second Quarter and Six Month Periods Ended June 30, 2021:

Inuvo experienced higher year-over-year revenue for the three and six months ended June 30, 2021 as compared to the same periods in 2020. Net revenue for the second quarter and first six months ended June 30, 2021 totaled $12.6 million and $23.3 million, respectively, an increase of 66.5% and 3.2% as compared to $7.6 million and $22.5 million for the same period the prior year. Second through fourth quarter revenue in 2020 was affected by the COVID-19 pandemic, which had a material impact on the advertising industry beginning in April of 2020.

ValidClick revenue, which accounted for 77% of total revenue for the second quarter of 2021, has rebounded and exceeded the revenue of the second quarter of 2020 by 72%. Revenue from the IntentKey platform, which contributed 23% of total revenue for the three months ended June 30, 2021, exceeded the prior year quarter by approximately 50%.

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Revenue increased sequentially 19% for the second quarter of 2021 as compared to the first quarter of 2021. IntentKey revenue increased 36.3% sequentially.

Cost of revenue for the second quarter and first six months ended June 30, 2021, totaled $2.3 million and $3.7 million as compared to $1.1 million and $4.5 million during the same periods the year prior. The increase in the cost of revenue for the three months ended June 30, 2021 was associated with revenue growth. For the six month period, cost of revenue improved by 18%.

Gross profit for the second quarter and first six months ended June 30, 2021, totaled $10.4 million and $19.5 million as compared to $6.5 million and $18 million during the same periods the year prior. Gross profit margin for the second quarter of 2021 was 82.1% as compared to 86% for the same period the year prior. Gross profit margin for the first six months ending June 30, 2021 were 84% as compared to 80% for the same period the year prior.

Operating expenses totaled $12.8 million for the second quarter of 2021 as compared to $7.8 million for the same period the year prior. Operating expenses totaled $24.5 million for the first six months of 2021 as compared to $21.8 million for the same period the year prior.

Marketing costs or traffic acquisition costs (“TAC”) include those expenses required to attract an audience to the ValidClick platform. The increase in the cost of revenue for the three and six months periods ended June 30, 2021 as compared to the same time periods in 2020 was largely due to the 72% increase in ValidClick revenue discussed above in the Net Revenue section.

Compensation expense was higher for the three and six-months ended June 30, 2021 compared to the same time periods in 2020 due primarily to higher employee salary expense and stock-based compensation. Total employment, both full and part-time, was 76 at June 30, 2021 compared to 70 at June 30, 2020. The higher headcount this year over last year was primarily due to hiring additional sales and sales support personnel for the IntentKey platform.

Selling, general and administrative costs were lower for the three and six-month periods ended June 30, 2021 compared to the same time period in 2020 due was primarily due to lower IT costs, lower facilities, travel and entertainment, corporate expenses and depreciation and amortization expense.

For the six month period in 2021, there was other income during the first quarter that included $420,000 dollars in licensing obligations for the use of ValidClick associated with a contract signed in March of 2020 that ended in March of 2021.

The net loss for the second quarter of 2021 totaled $2.4 million or $0.02 per basic and diluted share as compared to the net loss of $1.4 million or $0.02 per basic and diluted share for the same period the year prior. The net loss for the first six months period of 2021 totaled $4.5 million or $0.04 per basic and diluted share as compared to the net loss of $4.2 million or $0.07 per basic and diluted share for the same period the year prior.

Adjusted EBITDA was a loss of $965 thousand in the second quarter of 2021.

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