Good day and welcome to the Inuvo, Inc. 2015 First Quarter Earnings Conference Call. Today’s conference is being recorded. And at this time, I would like to turn the conference over to Mr. Alan Sheinwald of Capital Markets Group, LLC. Please go ahead, sir.

Thank you, operator, and good afternoon. I’d like to thank everyone for joining us today for the Inuvo first quarter 2015 shareholders update conference call. Today, Mr. Richard Howe, Chief Executive Officer; and Mr. Wally Ruiz, Chief Financial Officer of Inuvo will be your presenters on the call. Before we begin, I’m going to review the company’s Safe Harbor statement. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating 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 used in this call the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relates to Inuvo, Inc. are such a forward looking statement. Investors are cautioned that all forward-looking statements involve risks and uncertainties which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in the Inuvo’s public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. With that out of the way, now I’d like to congratulate management on their outstanding growth in the first quarter and terrific returns and turn the call over to Mr. Richard Howe, CEO of Inuvo. Rich, the floor is all yours.

Thank you, Alan, and thanks everyone for joining us today. We are very pleased to be announcing yet another strong quarter of revenue growth. Revenue in the fourth quarter was $13.4 million, up 33% from $10.1 million in the Q1 of last year. This now marks the second straight quarter of greater than 30% year-over-year growth and the fifth quarter of net income with $626,000 or $0.03 a share. Gross margins in the first quarter was solid 55% with gross profit up 14% year-over-year. Gross margins were slightly down year-over-year as a result of strong growth within the partner segment, which was up 39%. Owned and Operated grew 25% year-over-year. Wally Ruiz, our CFO, will be sharing additional details about our financial performance shortly. But the bottom line is we’re starting 2015 off strongly with both growth and earnings at the high end of our peer group. Let me share with you where we're headed for each segment of the business starting with the owned and operated segment. Within the O&O segment, we continued to focus on improving user engagement. We launched a new search experience for alot users in the quarter and we've been working on a vertical site expansion into education as a complement to our alot career site. Search is not new of Inuvo. We have a unique set of resources, technologies and intellectual property in search related products as a result of our previous experience with the tool bar and the solutions we've distributed for years within the partner segment of our business. Delivering a unique search experience for alot site users was something we wanted to include as part of the evolution of the alot properties and brand. This new search resource when fully implemented will provide our users with a much better overall search…

Thank you, Rich. Good afternoon everyone. We are reporting today another consecutive quarter of strong revenue growth and profitability. The Inuvo, reported revenue of $13.4 million in the first quarter of 2015 compared to $10.1 million in the first quarter of last year. That’s a 33% increase $7.6 million came from the partner network and $5.8 million from the owned and operated network. The partner network which delivers advertisements to our partners owned and managed websites and application reported $7.6 million in the first quarter of this year compared to $5.5 million in the same quarter of last, a 39% increase. Higher revenue in the partner network this year compared to the same quarter last year is due largely to the expansion of market share within the existing publisher base during the past 12 months. The innovative ad units we developed and tested on our owned web properties have been made available to our publishers and health publishers' sites to become more effective. The owned and operated network, which is made up of a collection of websites and apps we own and where income is derived from advertisements, represented 44% of the company's total revenue in the current quarter. The owned and operated network reported $5.8 million of revenue in the first quarter of 2015, a 25% increase over the same quarter last year. The growth in this business segment is largely due to the investment made in proprietary content and effective marketing campaigns resulting in a great number of transactions or clicks as well as the expansion of web property. Gross profit in the first quarter of 2015 was $7.4 million compared to $6.4 million last year, a 14%improvement. Gross margin was 55% in the first quarter of this year compared to 64% in the same quarter last year.…

Thanks, Wally. In summary, we had a terrific first quarter, the second consecutive quarter of greater than 30% revenue growth and the fifth consecutive quarter of profitability. In Q1, both segments of the business experienced significant growth. We remain excited about 2015, with a mission to continue to expand our digital publishing business leveraging the consumer engagement therein as the means for developing native advertising solutions we can sell to website and as publishers under the SearchLinks brand. We expect to continue to grow profitably while also investing in products, marketing and resource initiatives necessary to assure we capture market share essential for continued success. While we are only just completing the first month of the second quarter, Q2 is looking positive with April’s revenue likely to come in around 30% higher than last year. We are confident that our current strategy can continue to fuel growth throughout 2015 and we see additional segments of the digital advertising marketplace where we can successfully introduce products and services. I look forward to providing shareholders with additional update as we evaluate and execute on these new opportunity. With that, I’d like to now turn the call over to the operator for questions.

Thank you. [Operator Instructions]. And at this time, we will take a question from Eric Martinuzzi with Lake Street Capital Markets.

Thanks for taking my questions and congratulations on the good revenue growth there in Q1; it’s nice to see the second quarter. Just wanted to talk about the EBITDA, given the revenue growth I was kind of surprised to see that there wasn’t better EBITDA flow through with the revenue up 33% but the EBITDA down around $600,000 year-on-year; understanding that the growth margins were impacted by the mix towards the partners' side but also seeing that that partner gross margin declined. I was hoping when you could peal it backwards a little bit on why that partner gross margin declined.

Yes, I think you hit on most of it, Eric. The margins were lower in the quarter and there was additional marketing expense and as we talked about in previous quarters and teleconferences we’re focused on growing as quickly as fast as we possibly can and to gain market share. So any available cash that we have we've been either spending it to grow the both of the networks, the partner network and the owned and operated or to pay down debt. And so, right now, we remain focused on growing the top line and we feel pretty confident that the bottom line will follow in the subsequent quarters.

Okay. And you said you got a big cash payment in April. What was that dollar amount? Does that swing the -- or I'm looking at a net debt number of about $1.6 million I think; does that bring effect where we were kind of exit in Q4 we assume that payment was about similar in size?

It was a big number; it was almost $3 million, Eric. And it was unfortunate because we normally get it towards -- closer to the middle of the month actually and they had this system issue and it got delayed so.

I think and maybe, Eric, I know you probably realize it, but it wasn’t material for the operations of our business. The fact that we got the couple of days late was neither here nor there for us in running the business, right. We just usually typically get it in the last week of the month of the quarter, sometimes actually in the second last week --

Yes.

And like Wally, said it was a system error and so be it. Right so, cash was lower and receivables was higher, nets out the same.

Yes.

Does that go against any of the current portion of the term and credit notes payable or is that just going into cash and used for the working capital?

It wouldn’t -- you mean when we received it?

Yes.

Yes, no, it went right into cash.

No, but I mean because you’ve got looks like about $3.5 million outstanding, I know some of it is long term, some of it is short term; how nearer that short term payoff?

It just made -- there was really nothing unusual about the payables, is that what you’re asking? We just --

Yes. You got to determine the credit notes payable the total about $3.5 million, a million of its short-term, and $2.5 million of its long-term.

Oh I see, yes. Okay, yes we probably would have shaped off another $300,000 or $400,000 of our outstanding.

Okay. All right and then just I know you don't want to give too much color on guiding but for in 2014, you guys had EBITDA of, I think it was around $5 million -- $5.5 million you just did a Q1 with around $700,000. Is the thinking I understand you're investing in on the business and I did all that. But is it to if you've finished 2015 at a similar EBITDA rates to 2014 is that the goal is it just some positive number not necessarily trying to equalize to your -- what’s the thinking on the EBITDA?

So you're right, Eric. We haven't given guidance. But that being said, I think may be the way to look it, we expect our EBITDA to go up in subsequent quarters.

Okay. All right. And then lastly on the SearchLinks product get around online advertising for a while. What you described sounded kind of like contextual search right just contextual paper click model. How is SearchLinks different from contextual search?

That make take longer to describe then we have on this phone call. I think the best comps may be if people are interested in this product is to go look at companies like the Bull and Outbrain, albeit where they may drive customers to competing websites for the publishers where they have their technology residing, we don't do that. We drive the consumer to an ad, in which case we think which is one of ways we're focused on the content publishing side of the business because we think that there's a big market there for us because we don't do that.

Well I guess a big difference then would be a graphical or a display owner linked to the text then?

For the graphics there is content and then there is keywords that there is three elements to every -- we called panel associated with every ad unit. Three things the graphical image, some content, and then some key words.

Okay. All right. And could see the April revenue number looking as strong as it does. Thanks for taking the questions guys.

[Operator Instructions]. At this time we will take a question from Lisa Thompson with Zacks Investment Research.

Can we talk a little bit about this breadth between partner and owned and operated in the next few quarters. How does that change with seasonality and how you're spending and then once SearchLinks is launched is that going to change the split again?

Yes, I don't know about change in the split. But I think, yes, there is also I mean is always going to be a mix variation in our business simply because we got two segments and they don't grow at exactly the same rate rightly. So the answer to the question is as it relates to seasonality I wish there shouldn't be any expectation of seasonality variations on the partner side of the business at this point because the biggest seasonality component of that segment of our business is usually the first quarter, and we had a good first quarter, so we would expect to see that business grow continuously for the rest of the year. And we think the same is going to be true for the O&O business this year. Again Q1 is usually typically the down quarter in our business.

What do you mean on grow, do you mean sequentially or year-over-year?

Both.

Both, okay. So and then when SearchLinks launches does that then start skewing partner bigger?

It could. Of course it's all a function of how successful we are with that product. But I can tell you that we have large aspirations for that product based on results we've already seen from it to-date with trials based on the size of the market for it and based on the what we think is lack of competitor specifically in the niche we're in. So yes it could that product ends up being a successful as we think it will be, it could well grow much faster than our O&O business.

And how long do you think it takes for you figure out if it's working well or not?

We're already seeing that it's working well. Now the question becomes can we execute, meaning can we sell it, can we get it on pages in the kinds of numbers we need to scale it. And I don't think I'll have a read on that until the later part of Q3 and Q4 because that's when we plan to really roll it out in a big way.

Okay. And then going back to your comment about looking at website to acquire. What would be characteristics that you're looking for and or the topics? Are you -- I know are they something you would try to integrate with what you've got or something that's totally standalone?

There's two different schools of thought with this. One goes to by the website and then roll them into to be a lot brand. And then of course the other thought is more of a strategy that is been executed on successfully by companies like Internet brand which is just to acquire a whole bunch of other web properties and let the brands be as they may. I don’t know that we've settled on the right strategy there because both can work. But we are looking at verticals that will complement what we're already doing without telling you which one, Lisa.

But would that mean like a website where you can just take the relationships with their and kinds of advertisers and say this would be a good place to put their ad too, that's the thinking?

Well most certainly that's the case. So as I said in my script the reason why this is an effective strategy for Inuvo is only because we have technology resources and abilities that these smaller websites which is the ones that we would target do not posses. One of those being the one you desire which is again as you all know we serve all on our own ads. So we can acquire a small website where the individuals cutting deals for ad with someone else in the Internet ecosystem and getting terrible shares as a result, that’s an easy problem for us to fix because we serve our own ad technology and we can then also take those web properties and market to them which is something smaller size web properties usually don’t have the ability to do. Not certainly not at the level of certification that we do given our size and our expertise.

And then how do -- how do those things what’s the pricing on those websites -- how do they people grow with their work?

It varies but probably the bottom-line for our shareholders is it's really not material these are inexpensive way to scale that business. Often times we might actually able to do with a little bit stock.

Okay. And how do they -- would they do it by web in multiple revenue or one people with the website how does that work?

Well we would typically if we're going to do a deal like this we would, like I said, there might be some small amount of cash and some small amount of stock, right, not material is the bottom-line. But we would then hold the original owners of the website accountable to revenue growth trajectories for their payment of those things.

Okay. All right. Certainly sounds interesting will have this effect. I think that's all the questions I have right now.

[Operator Instructions]. As of time we'll take a question from Brandon Weiser, Private Investor.

Congratulations on another great quarter. I just have a question or two about well first off about apps. I know that you guys have some apps in the Google play store. But I don’t think you guys have any apple app store yet. Do you guys plan in the next quarter or in the coming year to rollout apps in the app store?

Yes, hey Brandon, interesting article about you by the way so congratulations on that.

Thank you.

Yes, I think the answer is yes but it's probably important that people who are following or who understand that the internal app strategy for us is not as important for strategy. When we first started developing apps to be candid we did it one because we thought we could offer our website users something that they may want. But more importantly we wanted to get our ad technology working. And I don’t say that because I don’t think it's important mobile apps are obviously important. But if you visit our web properties that we first built the web properties with mobile in mind mobile web as it turns out. That’s really difficult for us to do any better than we’ve already done with the experience on a mobile phone for our website. So the concept of an app is just not that important to us.

Okay.

But that being said we still continue to build them, we still continue to produce them, and we will be complementing with IOS as opposed to just android in the future.

All right, cool. And also congratulations in getting the new property in Little Rock. So this you new guys are trying to expand along and get employees. And if so where or what segment are the majority of these employees going to go to?

Yes, that’s a good question too. So I think in 2014 headcount was 35-ish, 36-ish I don’t know Wally something like that, right.

Full time.

And do you that's -- that's probably at the end of 2013 at the end of 2014 it was we were up what at 54 or 55 now.

We are presently at 52.

52.

Full and part time.

Yes and I think I think our plan for the year is to get to 60 something 62, or 63, if I remember something like that. So as a result there may be 10 people or something for the year at least according to our current plan. The majority of those people will be development, account management with sales.

Okay.

And I'd say the bulk of them likely to be targeted at our SearchLinks product.

Okay that sounds great. Well that's all my questions. Thanks a lot and again congratulations on another great quarter.

At the time we have no further questions in the queue. I’ll turn things back over to management for any additional or closing remarks.

Thank you, Operator. I’d like to thank everyone who joined us on today’s call. We appreciate your continued interest in Inuvo and we look forward to reporting progress over the coming quarters.