Please stand by, we're about to begin. Good day and welcome to the Inuvo, Inc. 2021 Third Quarter Financial Results Conference Call. Today's conference is being recorded. I would now like to turn the conference over to Valter Pinto, Managing Director of KCSA Strategic Communications. Please go ahead, sir.

Thank you, Operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo Third Quarter 2021 shareholder update conference call. Today, Inuvo's Chief Executive Officer, Richard Howe, and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We'd like to remind our shareholders that we anticipate filing our 10-Q with Securities and Exchange Commission tomorrow morning. Before I begin, I'm going to review the Company's Safe Harbor Statement. Statements in this conference call that are not descriptions of historical facts are forward-looking statements related 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 Inuvo, Inc. are such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties that 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 sec.gov.

Thank you, Valter, and thanks everyone for joining us today. We had a very strong third quarter, where for the three months ended September 30, 2021, we delivered $16.8 million in revenue, which was up 83% year-over-year and up 33% sequentially. As we have communicated throughout the year, we expect to return to positive adjusted EBITDA in the back half of 2021. I'm pleased to report that Adjusted EBITDA in the month of September was, in fact, positive. For the third quarter, it was a loss of $338,000. The Balance Sheet remains strong with no debt and roughly $14.6 million in cash and marketable securities along with an unused $5 million financing facility. The Company is not currently in need of additional capital. Of the $16.8 million we delivered, the ValidClick platform contributed approximately $11.7 million, which was up year-over-year by 88% and up 21% sequentially. The platform's growth rate has been a steady 8% compounded monthly through September of 2021 off the COVID-related low in May of 2020. ValidClick's services include multichannel media buying in support of our largest clients. The product line has continued to enhance these competencies, having recently added Twitter to the stable of social media relationships. Much of the technological enhancements to ValidClick revolved around automating the numerous traffic sources under management, which are necessary to ensure the best quality consumers are delivered to our clients at the lowest cost. This automation continues to have a positive impact, most notably on the time and resources spent manually adjusting campaigns. We've seen a 50% reduction in this time spent optimizing campaigns because of these continuous enhancements to the platform. Additionally, we've continued to enhance our publishing technologies within ValidClick. Within the quarter, we were able to dynamically insert related articles into content at a time when our systems detect a user's engagement is declining. This feature now allows us to reignite engagement at the time of declining interest, and as a result, improve the opportunities to further monetize that engagement. Further, and in combination with our largest ValidClick clients, we began in-market testing of an innovative advertising unit that leverages the search intent of users on pages so it can customize content and advertising in a manner that improves the page's overall yield. While this program is in the initial test phase, it is showing positive results with significant upside opportunity. Consequently, we see this as a significant growth driver in 2022. Most notably in the quarter, and for the first time, we leveraged the services of ValidClick in combination with the services of the IntentKey to win larger direct clients where we now manage the entire multichannel online advertising spend across channels that include social, search, connected television, video, display advertising, streaming audio, and linear TV. This is a significant advancement of our strategy to sell directly to clients, where the competitive differentiation of our Artificial Intelligence, combined with this multi-channel capability, puts us in a position to win more and larger deals. This quarter's wins, which I will talk more about later, give us confidence in the strategy. One of the advantages of this approach is our ability to incorporate our AI into channels such as social and search, where we are confident that we can outperform existing performance within those platforms through this integration. We started executing on this capability in the third quarter as part of the larger media budgets we are now managing. Of the $16.8 million delivered, the IntentKey platform contributed approximately $5.1 million, which was up year-over-year by 71% and up 75% sequentially. The platform's growth rate has been and continues to be strong, based on the product's core value proposition as a replacement for third-party consumer data, which the industry uses universally today. In the third quarter, we signed more than $10 million worth of orders across a collection of businesses, both direct to client and through agencies. We anticipate that these orders will deliver over a nine-month period. Our sales outreach continues to improve, which has resulted in 31% more RFPs submitted compared to the same period last year. In addition, the dollar volume in RFPs submitted has also increased by 75%. This reflects our strategy to go after larger clients and to sell further up the chain. It's worth noting that not every deal we go after requires an RFP. We signed a diverse range of clients over the last three months. These include companies within insurance, online gaming, pet technologies, education, a number of states' COVID initiatives, real estate, e-commerce, investing, winemaking, urgent care, DNA screening, gym memberships, and personal lending, to name a few. Across the client base, we outperformed goals by 40% on average within the quarter. We ran 95 campaigns within the quarter, which is up 13% sequentially. 25 of these campaigns were new, and 70 were renewals of existing business. We continue to sign clients who understand that the future of online advertising is one where consumer data is no longer used as a part of a company's prospecting activities. The IntentKey, as you are aware, uses no consumer data as a part of its artificial intelligence. Rather than trying to identify who the people are that match a product, service, or brand interest, it determines why that interest exists to begin with. This intelligence is considerably more valuable and strategic to the clients adopting us as their go-to market technology for this privacy-first future. At its core, the cookie is an effective mechanism through which consumer data is onboarded for use within digital advertising. We believe strongly that the era of cookie-based marketing that uses this consumer data is coming to an end and believe we are well-positioned to win market share as companies and agencies accelerate their acceptance of this new reality. Apple has already adopted this future; we believe others will follow. We're often asked to prove that our cookie-less solution works as part of our sales cycle. In one such example within the quarter, we ran two large cookie-less tests for a client where we achieved a 50% lower cost for the same return. This not only means we can, in fact, deliver advertising effectively in this privacy-first future, but we can do so at a level of performance that already exceeds the best of the existing cookie-based methods currently in use. As mentioned in my comments related to ValidClick, we are now managing cross-channel advertising activity for a handful of clients. As a result, we are also building out reporting and performance tools required to support those campaigns. These new clients are preparing us for our revised sales strategy in 2022 where we sell a managed service directly to clients and our SaaS solution to agencies. Across the Company, we are hiring to ensure delivery of existing and future business with a continued focus on sales, account management, and campaign operations, along with select positions in development and marketing. We currently have 77 full and part-time employees. As we enter 2022, we are increasing our brand-building activities in support of our efforts to increase the awareness of our Company and its solutions. We plan to complement this awareness with a direct to CMO marketing plan that uses the IntentKey to identify and message to those CMOs, so as to create a funnel to qualified leads using the very technology we are selling to them. I would now like to turn the call over to Wally for a more detailed assessment of our financial performance within the quarter.

Thank you, Rich. Good afternoon. I'll recap the financial results of the Third Quarter of 2021. As Rich mentioned, Inuvo reported revenue of $16.8 million for the quarter ended September 30, 2021. This compares to $9.2 million reported in the third quarter of last year. Both platforms, ValidClick and IntentKey, exceeded the prior year. ValidClick revenue exceeded the revenue in the third quarter of last year by 88% and the IntentKey revenue for the three months ended September 30, 2021, exceeded the prior year quarter by approximately 71%, primarily due to the acquisition of new customers. IntentKey revenue represented 30% of total revenue in this year's quarter, compared to 32% in the same quarter last year. This year's quarter is a bit of an anomaly in that ValidClick, being the most affected by the COVID-19 pandemic last year, came roaring back starting in the Second Quarter this year. However, due to the strong growth we are seeing in the IntentKey, in the fourth quarter we expect the IntentKey revenue to continue to grow as a percent of the total revenue. Inuvo gross margins decreased in the Third Quarter to 78% compared to 82% in the same quarter last year. The IntentKey gross margins were 36% in the third quarter compared to 49% in the same quarter last year. Our new customers are requiring us to deliver ads in a multi-channel environment. The different channels have different gross margins. Though we attempt to optimize gross margins, we want to deliver to the customers the multi-channel campaigns that they seek. Going forward, IntentKey gross margins may increase due to the increased use of the SaaS version of IntentKey, where margins are expected to be significantly higher as a result of the mostly fixed costs associated with operating just the AI modeling and decision components of the platform. The majority of ValidClick's costs are traffic acquisition-related and not reported as cost of revenue, rather as a marketing expense. ValidClick's gross margins were 96% in the third quarter compared to 98% in the same quarter last year. This also is due to the multichannel environment we are now operating in. As Rich mentioned, we have started to integrate the ValidClick services with the IntentKey customers and we expect the ValidClick gross margins to stabilize. Operating expenses were $14.8 million in the third quarter of 2021 compared to $10 million the prior year, an increase of $4.8 million. The largest component of operating expense is marketing costs. Marketing costs are predominantly traffic acquisition costs associated with ValidClick, which is the largest expense associated with the ValidClick platform. Marketing costs were $10.2 million in the third quarter this year, compared to $5.7 million in the same quarter last year. The $4.5 million higher expense this year is mostly due to the reduction of traffic acquisition activities last year in response to the unusually low ValidClick revenue last year, again associated with the COVID-19 pandemic. Compensation expense was $2.8 million in the third quarter this year compared to $2.5 million in the prior year, primarily due to higher stock-based compensation expense and to a lesser degree, higher employee salary costs. Our full-time employment was 73 at September 30, and that compares to 66 at September of last year. The majority of the increase in headcount occurred with ad sales, sales support, and account management for the IntentKey. We also hired traffic acquisition professionals within ValidClick to support a strategy to bring the function in-house. Selling general and administrative expense decreased by $45,000 in the third quarter. This compares to the prior year, and that's due to lower professional fees and IT costs this year where we consolidated operating facilities. Net interest expense was $6,000 in the third quarter of this year compared to $26,000 last year. This year’s expenses are associated with the leasing of IT equipment, and last year’s expense was primarily related to the outstanding debt on our line of credit. We had other expenses of $79,000 in the third quarter of this year due to an unrealized loss from marketable securities. The other gain of $54,000 in the third quarter last year was associated with the recognition of deferred revenue from a contract to license ValidClick Technology. We reported a net loss of $1.8 million or $0.02 per basic share compared to a $2.4 million net loss or $0.03 per basic share for the same quarter last year. Non-cash-based expenses totaled approximately $1.5 million in the quarter. The adjusted EBITDA for the quarter ended September 30 of this year was a loss of $338,000. That compares to a loss of $1.2 million for the same time period last year. As mentioned, we had a positive adjusted EBITDA in the month of September. We believe we should be positive adjusted EBITDA for the fourth quarter. On September 30, 2021, we had cash and cash equivalents and marketable securities of $14.6 million and a net working capital of $13 million in addition to having a $5 million working line of credit, which currently has no outstanding balance. To maintain a simple capital structure with only common stock, employee restricted stock units 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.

Thanks, Wally. We had a very strong Third Quarter, with 83% year-over-year and 33% sequential growth. We signed over $10 million worth of IntentKey orders within the quarter, an all-time high. We expect to report strong year-over-year growth in the Fourth Quarter. We expect both product lines to show sequential growth in the Fourth Quarter. We are forecasting adjusted EBITDA to be positive in the Fourth Quarter coming off a positive month in September. We expect the IntentKey notable client performance to continue alongside a growing pipeline with improving win rates. Our Balance Sheet is currently strong enough to accommodate the working capital needs of the growing business. As a result, we have no immediate plans to raise capital. With that, I will now turn the call over to the Operator for questions.

Thank you. We will pause for a moment to allow everyone the chance to ask questions. Our first question will come from Brian Kinstlinger with Alliance Global Partners.

Great, thanks. The third quarter seemed to be a breakout quarter for IntentKey. I'm sure it's very satisfying as it's been a long time coming. As you mentioned, the leverage on ValidClick that you're using, as well as the clear changes in privacy that drove some of the performance. Can you talk about the number of RFPs in the fourth quarter you're bidding or tracking? Is it tracking higher than the third quarter? And just maybe from a higher perspective, talk about how the pipeline is building?

I don't know the exact number of where we stand today, Brian, for the fourth quarter, but the third quarter's RFP counts, I think, were somewhere near 100 or so, if memory serves. And it has been increasing steadily. I think I referred to that in the call notes. We feel good about the way the pipeline is evolving for the product. I don't know if I would categorize the IntentKey's quarter as a breakout quarter. Certainly, it was a good quarter, but the IntentKey has grown pretty much continuously since it was launched in 2019. So, sure, it took a bump up in Q3 of this year, but it really has not ever grown since it was launched at that point.

I guess I'd look at it differently. By far the best quarter in revenue and I think there's more to come, but we'll see. You guys were in preparing for new privacy roles by Apple and others for some time and first-party data. Can you talk about how your offering is resonating with customers? And then with that and how demand and more RFPs are being bid on? Maybe a what's a reasonable goal for either 12 or 24 months of growth for IntentKey with this trend?

Yes. So, I think like any change that affects an industry. There are individuals within clients that we will sell to directly or through agencies who are ahead of the curve. Let's call them early adopters, and then there will be others that aren't. I would say to a large degree, we're getting to the early adopter phase of the disruptive changes coming. As privacy rules continue to get more stringent and as the cookie issue comes to a head in 2023, and as companies like Apple continue to essentially forge ahead and try to create the world that they want created, people are going to be forced to deal with the situation. The good news is, we'll be ready, willing, and able to help when they get there.

You gave $10 million in 10-Q orders from the third quarter. I can't remember or I didn't look quickly through my model. Can you provide what that was in the second quarter and the first quarter just to see how that's progressed?

We didn't provide that information in those quarters, so I'm not sure what it is. By the way, it's significantly larger. That's why I mentioned it's the largest we've had on record.

Okay.

I'm sorry. I can't provide those figures. I don't have that information. We did not track it back then.

The last question is about the seasonal strength in the fourth quarter and whether there is any impact from supply chain issues on demand for CPMs. Some companies have indicated that ad budgets may not be as robust as usual in the fourth quarter, while others report no effects. It seems to vary by portfolio, depending on which companies are experiencing difficulties. Could you share any insights on how supply chain challenges might be affecting your customers?

It's quite challenging to anticipate these factors as we approach Thanksgiving and Christmas, since they can vary. We're not particularly affected by the chip issues in the auto industry or similar sectors. In fact, from our viewpoint, advertising seems to be recovering well. The majority of our discussions with potential and current clients indicate they're looking to increase their budgets rather than cut them. However, it's important to note that our business does have a seasonal pattern, generally being weaker in the first half of the year and stronger in the second half.

Thank you, Brian.

Moving on, we go to Aaron Warwick with Breakout Investors.

Hey, Rich and Wally. I hope you're doing well today. I wanted to ask you more about the Twitter deal and if you could comment on that, perhaps discussing what you expect in terms of its potential compared to your previous and current business with other clients on ValidClick.

Yes, it's important to note that we live in a modern digital world with numerous advertising channels. The more skilled you become at understanding the specifics of each channel, including Twitter, which has unique features compared to other social media platforms, the better you can meet your clients' needs. Recently, we have been adding new channels regularly, even though it's challenging to manage everything. We've found Twitter to be quite responsive and eager to collaborate with companies like ours, providing internal resources to help us utilize their platform effectively. This level of support is not as common with larger social media platforms where we have connections. Consequently, we've experienced strong performance and results, and we anticipate further scaling.

That sounds very promising. Thank you. With IntentKey, you had mentioned that $10 million sounds really good, and then the additional whatever it was, 70% to 80% in RFPs year-over-year in terms of the dollar amount. What are you seeing though in terms of client retention and then even current clients expanding their campaigns? Are you pretty well keeping all of your clients and getting them to expand? What do you see in there?

The interesting aspect of media is that clients can frequently come and go, often not spending money consistently. They may invest in one quarter, pause in another, and then resume their spending later. We have clients who have spent for a couple of quarters, stopped, and then returned the following year, making it challenging to determine whether we've truly lost a client. While we have lost some clients, the number is so minimal that I can't even recall who they are. When we do lose clients, it's typically due to an agency we are collaborating with losing them, as these agencies manage the client relationships while we act as service providers. As I've mentioned consistently with IntentKey, our performance is robust, and our approach yields valuable and strategic outcomes by focusing on the motivations behind consumer actions rather than simply their identities. This focus tends to help us retain clients, as they discover new insights and opportunities to market effectively, overcoming the limitations of existing consumer data.

Thank you for that. Appreciate that. Did I hear you correctly? I know you've been saying here recently that you can sort of leverage some of the clients at IntentKey, get them over to ValidClick, but did I hear you mention something in your opening remarks about integrating certain aspects of IntentKey and the AI into ValidClick, or was that a misunderstanding on my part?

No, that's exactly right. Social and search. ValidClick has an extremely robust competency in media buying in social and search. We have been doing that for many years. And so now we're offering that in combination with all of the other channels that the IntentKey provides, including connected TV, display, video, and streaming audio, etc. Yes, we've now incorporated the AI directly into the social and search-based media campaigns that we're running, which is pretty cool. To be able to add that value into those channels and, as a result, identify audiences within those platforms and then market to those audiences using identifiers created by our artificial intelligence. So that was a big step in our minds towards our desire to sell directly to clients, recognizing our huge competitive differentiation within the so-called programmatic space. But recognizing also that when you try to sell us bigger deals, you've got clients who don't want to have multiple vendors. It becomes difficult for them to manage. Let's just say I do my social buying somewhere, my search buying somewhere else, and I do better known video somewhere else and programmatic somewhere else. There's a lot of companies in the range of $0.5 billion to $1 billion a year that would rather just have a single provider of those services. We find, as a result of the clients that we were able to sign and work with in the third quarter, we now have this ability that we've wanted to have, to go out and sell these bigger deals which we plan to start doing in 2022.

Yes, that sounds great. My final question is about your discussions in previous calls regarding potential acquisitions with your available cash. Can you share your current thoughts on that? Is it still something you are considering, or has it been set aside for now?

We did push it aside, Aaron, but not because we don't want to do it. It's more like the growth, as you can tell, has been so strong that we find ourselves in a good position of having to be 100% focused on not dropping the ball on client relationships that we've now closed. We don't want to be distracted, and we don't want the resources of the Company to be distracted to have to work on an integration as a result of the acquisition of a Company, not right now. With that said, we still believe that an acquisition of some kind should be in our future. As I've said on prior calls, my preference right now would be to acquire a digital marketing and advertising consultancy because the resources in those consultancies tend to be more knowledgeable about the complexities associated with advertising. They tend to be more successful at selling bigger deals or client's value because of the consulting that comes with a sale.

Guys, I appreciate your time, and I'm looking forward to the end of this year in '22. Keep up the good work. Thank you.

Thanks, Aaron.

And that does conclude the question-and-answer session. I'd like to turn it back to management for any additional or closing comments.

Thank you, Operator. I'd like to thank everyone who joined us on today's call. We appreciate your continued interest in our Company.

Thank you. That does conclude today's conference. We'd like to thank everyone for their participation. You may now disconnect.