Good day and welcome to Inuvo’s 2016 Second Quarter Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Alan Sheinwald, Capital Markets Group, LLC. Please go ahead.

Thank you, operator and good afternoon. I’d like to thank everyone for joining us today for the Inuvo second quarter 2016 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 relate to Inuvo, Inc. are as 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 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 turn the call over to Mr. Richard Howe, CEO of Inuvo. Rich, the floor is yours.

Thank you, Alan and thanks everyone for joining us. We had an irregular second quarter but we feel like we have the issues identified. We experienced some disruption that was impart due to market demand associated with one of our advertising partners. However, late July and early August performance figures are now headed in the right direction, more on that a little later. On our first quarter call we messaged that we had expected first half growth year-over-year to be in the 15% to 20% range. We came in slightly below our low-end at 14% with total revenue over the first half of the year of $34.4 million, which was driven by a stronger than expected first quarter of $18.7 million and about lesser than expected second quarter with revenue of $15.6 million. On a GAAP basis, we had our first net income loss in some time at $575,000, resulted softness in ad revenues that we believe will be – in the backhalf of the year. While I’m upset about the quarter, I’m not overly concerned about it when I consider the drivers of our income statement, our long-term plan and our overall improving sequential performance. As it relates to our income statement, we have messaged on previous calls that we do have expense items that hit our financials that are not necessarily representatives of the operating performance of the core business. When we adjusted these items, we did in fact remain positive in the second quarter with an adjusted EBITDA of $282,000. Now we also had cash on hand of almost $4 million and we remain bank debt free. Now we’ve always run our business based on the cash we generated, so positive adjusted EBITDA gives us the operating comfort to continue executing on our forward-looking plan. We’d like…

Thank you, Rich. Good afternoon everyone. We reported today the results of the second quarter. Inuvo reported revenue of $15.6 million for the quarter that ended June 30, 2016, a decrease of 6.5% from the $16.7 million reported in the same quarter last year. For the six months ended June 30, 2016, Inuvo reported revenue of $34.4 million or 14% increase over the same six month period last year, attributable to the strong first quarter we experienced this year. Inuvo reported a net loss of $575,000 or $0.02 net loss per share in the quarter ended June 30, 2016. In the same quarter last year, we reported a net income of $445,000 or $0.02 per diluted share. The partner network delivers advertisements to our partners’ websites and applications. The partner network reported $4.7 million in the second quarter of this year compared to $9.3 million in the same quarter last year. As mentioned at the end of the first quarter, we started to experience lower average revenue per ad delivered. We deployed various solutions to mitigate what initially we thought was a belated seasonal change in demand. As the quarter progressed, it became obvious that the weakness in demand was more than seasonal and we adjusted our solutions to address it. The tactics deployed started to show improvement by the end of July. In addition, the uncertainty revolving around our advertising partner in this business segment, the partner network, Yahoo was resolved this week with the announcement of its sale to Verizon. As a result, we expect the steady increase in demand. Revenue from SearchLinks was up 60% in the second quarter over the first quarter of this year and we expect it to continue to grow throughout the year. We mentioned in a previous teleconference that the 2015 acquisition…

Thanks, Wally. With the second quarter now behind us, we remain focused on the future. Recent performance suggests we’ve isolated the causes of the Q2 challenges and that should mean that we return to sequential growth for Q3 and Q4. We’ve made some great progress both on the technology and with the accounts we signed up for SearchLinks and we’ve introduced some new, exciting and more engaging video and podcast content choices for our owned and operated business, while also building a number of direct advertiser relationships in the process. In closing, while Q2 was a challenge, we remain tremendously optimistic about our business prospect and our ability to deliver on the opportunities available to us. And with that, I’d like to turn the call over to the operator for questions. Operator?

Thank you. [Operator Instructions]. And our first question comes from Lisa Thompson with Zacks Investment Research.

Good afternoon guys.

Hello.

Hi, Lisa.

Hi, there. I actually wanted to clarify a little bit on what you said on the future, the first question is one of the things you said what happened in the quarter was to a lower revenue per ad, is that still down or has that recovered at all?

- recovered, yeah, well it hasn’t recovered in total Lisa, but the trend since about mid-July has been a pretty nice return back to the prior levels.

And when this – occurred, [indiscernible] how does that work?

Lisa, I wonder if you could re-ask the question because you were breaking up on a little bit there, we didn’t hear…

[indiscernible]

Sorry, Lisa, we’re still having troubles with your phone.

Yeah. Is that us operator or is that the caller?

That’s the caller. I think she has…

Is that better?

Yes, it is now. Go ahead and try again. We’re not hearing anything now, Lisa.

May be we should go on to a different caller and Lisa - we can come back to Lisa.

Okay. [Operator Instructions]. We don’t have any questions in the queue so we’ll give Lisa another minute to get her problems cleared up and queue up again.

Okay.

We have a question from Mike Schellinger with MicroCapClub

Hey, Mike.

Mike, your line is open, if you could check your mute function.

Sorry, can you hear me now.

Yes, we can Mike.

I was wondering if you could tell me what was the absolute level of revenue for SearchLinks? I know you said it grew by considerable amount.

Yeah, Mike we don’t provide sub-segment reporting in the two segments that we have, but what we said on the call it stands. The product line has been growing very nicely for us. We’ve been signing up lots of new customers, we in fact mentioned in my call script that we’re sitting on the homepage of Reuters which is a really nice milestone to be associated with a brand like that. So we’re signing new clients, we’re growing existing clients, we’re converting frankly other publishing clients that we have to SearchLinks. And I think when you think about the partner segment of our business, it’s important to think about it in the context that that partner segment will over time become SearchLinks. Everything we’re doing including converting existing partners that we have in this segment to SearchLinks is suggesting that that’s the place we’re headed.

Okay, great. And may be one other thing, can you -- our margins on SearchLinks revenue basically similar to that of what you’ve done in the past or are they different?

We’ve discussed this I guess once before and I guess my message will be the same, you’ll probably go back and check Mike but here’s the way we’ve positioned it. Look when you launch new products in the ad tech world, typically you’re trying to win market share, so margins would typically be less than the say more mature products than you might have had in the segment in the early phases of the product. But the technology that supports that product, the way we’re doing the targeting and the analytics and the data analysis capability that we’ve built around that product, it’s far superior to anything else that we’ve ever built. So we would expect over time that the SearchLinks margins would be at least as good as the partner segment margins have been historically and better.

Okay, great. I don’t have any further questions.

Alright. Thanks, Mike.

And we do have Lisa back.

Great. Hi, Lisa.

Hi. Alright, can you hear me now?

Much better.

Okay, so I’m sitting next to the microcell so this has got to work. So my question initially was about Yahoo, did that disruption -- did you not figure it out because it affected the whole industry or was it just people said we don’t want to put ads with Yahoo right now?

That’s a good question but I’ll just caveat that I don’t feel comfortable nor am I qualified to speak specifically about Yahoo business, so I can answer it from our perspective Lisa. Interestingly, we saw demand issues and demand issues for us really means sort of the advertiser mix that we see and that’s a complicated issue for a company like Inuvo because we’re dealing with hundreds of thousands of advertisers through the app relationships. The reason why it looked very much to us like it was a late seasonality issue which impart was true because we always do have seasonality because the seasonality issue is exactly the same problem, it becomes a demand issue. And I’ll caveat to describe it as follows, at the beginning of the year in Q1, marketing budgets usually drop that means advertisers come in and out of the marketplace that means the demand drops. And that’s sort of exactly the same problem we saw that wasn’t related to seasonality which is now you could maybe understand why we saw some confusion here, is this seasonality or is this not seasonality, what is this? It’s something different. Now whether or not that’s related to all of the things that were going on with Yahoo’s process is not for me to comment on. The good news, as I said, in the last at least two weeks we’ve seen pretty nice improvements associated with that demand and so we feel like the problem is behind us at this point and we should be moving forward from here.

Okay. And so I just want to also clarify what you said about reaching the $100 million revenue run rate, you said it was doable. Did you mean in Q4 you could do $25 million or did you… Okay. Go ahead.

Yeah, Q4 of 2017, so just to be specific about this because we’ve put this out as a milestone, but when you take the first quarter of 2014 which is what we were originally looking at when we set that goal for ourselves and project that out, we said that we could get to $100 million run rate the implication is that in the fourth quarter of 2017, we would be at $25 million quarterly run rate. And as I said on the call script, that’s a pretty significant compounded annual growth rate it’s around 26% or 27% so when we set that goal for ourselves, we knew we were setting a goal that was pretty aggressive. But I did point, we still feel great about that. Now we’re obviously over exceeded that goal up until the first quarter and now we have the softness in the quarter but we feel like things are back on track. So we see no need to modify our plans, we still believe that that’s an achievable goal for our company.

Okay. And then one other thing was I know we had a conversation while back about you hiring may be somebody from the competition or something to sell SearchLinks or headed up or something. Did that get put on hold with this quarter or what happened there?

I don’t recall that conversation Lisa but we continue to hire in the SearchLinks team across the sales account management and tech functions. To-date I don’t believe we’ve hired anybody specifically out of the competition, doesn’t mean we won’t. I mean it’s usually a pretty good way of getting the knowledge capital perhaps we didn’t have. We don’t feel like we’re missing anything, I don’t think we need on the sales side specifically that the product itself is not a difficult product to sell. So we don’t feel like we need any special skills other than just great hunting skills to sell the product because the product performs well and there’s a good – of clients now who are using it so the sales process has reference that will account to point to. So that’s kind of what we are doing.

Okay. And then…

Lisa I don’t think this quarter, the softness this quarter didn’t slow us down at all on the SearchLinks side. We are hiring – in fact you can see it on our website, we are hiring on the account management side and the sale side specifically for the SearchLinks.

Okay. Alright. So given that it’s already August 04, do you have a feel for what this quarter’s going to look like revenue wise? Can you get back where you were in the first quarter?

We don’t provide guidance but I think we’ve given information for people to kind of do their own calculations on that and I’ll give you my view of it based on what we said in the call script. But if you look at the second quarter, the average revenue for the company was around $170,000 a day, give or take, I think we’ve said over the last few weeks, we’ve been averaging about $185,000 a day. I will tell you that the first few day of August averaged about $191,000 and we’ve said that we had $200,000 a day. So from our perspective we’re headed back in the right direction, just to give you a benchmark for that is to give you some more data may be. Last year at the beginning of August, we were doing about $203,000. So we’re a little bit behind August where we were last year but not terribly behind and we’re wrapping back up because we only started to get the issues fully resolved and the network back up here in the late part of July and early August.

Okay, great. Thank you. Sorry about the telephone issues.

No worries, Lisa.

This does conclude our question-and-answer session. As we have no further questions, I’d like to turn the call back over to Richard Howe for any closing comments.

Thank you, operator. I’d like to thank everyone again 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.

Thank you very much. And that does conclude our conference for today. I’d like to thank everyone for your participation.