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INUV: 2018 EBITDA Expected to Double This Year With Margin Expansion

05/04/2018
By Lisa Thompson

NYSE:INUV

Inuvo (NYSE:INUV) reported another strong quarter with revenues of $20.5 million up 19% from a year ago. This is the last quarter that compares a full quarter of NetSeer without part of NetSeer a year ago. Net Seer was purchased on February 7, 2017. Margins improved versus last year with gross margin before marketing expense moved to 57% from 54% a year ago. After marketing spend, the margins were virtually the same as last year at 16.7%. Gross margin dollars after marketing costs were up 20.1% or $574,000.

In this year’s quarter Inuvo had the opportunity to make money on about 3.6 billion pages in Q1, up from 3.0 billion pages last year. RPM was roughly flat year-over-year at about $5.70 cents. Mobile was 70% of total revenue.

To date the company signed up five new advertisers and says its pipeline is three times larger than it was at this time last year.

Expenses increased less than gross margin dollars rising $240,000, and decreasing operating losses. Head count increased to 92 versus 87 in last year’s quarter. Of the expense increase, $86,000 was due to stock-based compensation. Operating losses were $1.6 million versus $1.3 million. Interest expense rose to $100,000 versus $42,000 last year due to increased borrowings.

GAAP net loss was $1.4 versus $1.7 but on a non-GAAP basis taking out stock based compensation and one-time expenses (from the NetSeer acquisition), the net loss was flat with last year at $1 million. GAAP EPS loss was $0.05 vs. $0.06, but on a non-GAAP basis is was $0.04 in both years.

The major positive for the quarter was that the EBITDA loss was reduced from last year, coming in at $145,000 versus $663,000. The first half of the year is typically the weakest and the company expects to be EBITDA positive in the second half. In fact, it believes it can double its EBITDA on an annual basis from $1.1 million last year. While the company maintains EBITDA positive operations, it still expects to plough back excess earnings into growth.

The strategy for Inuvo investors and management has always been to grow the business large enough to be attractive as an acquisition. Once the company reaches over $100 million in sales next year, we believe it could be large enough to be an attractive acquisition to a larger company.

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