Good day and welcome to the Inuvo Inc., 2016 Third Quarter Financial Results Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Alan Sheinwald, Capital Markets Group. 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 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 found and reviewed at www.sec.gov. With that out of the way now, I’d like to turn the call over to Mr. Richard Howe, Chairman and CEO of Inuvo. Rich, congratulations for returning to sequential growth in Q3 and the floor is now yours.

Thank you, Alan, and thanks everyone for joining us today. We recovered well from a softer than expected second quarter with revenue up strongly to $17.5 million or a 12% growth on a sequential basis. For the nine month period year-over-year growth was 5% and while our second quarter performance clearly impacted the short-term we remain on track from a growth perspective to reach our $25 million quarterly run rate target by the end of 2017. We expect to continue sequential growth throughout the fourth quarter of 2016. In Q3, we delivered $420,000 or $0.02 a share of non-GAAP adjusted EBITDA, up nearly 50% over the second quarter. Wally, will review the reconciliation between GAAP and non-GAAP income in his comments. At the end of Q3 we had cash on hand of $3.6 million and we remained free of bank debt. We also renewed under similar terms our $10 million bank revolving credit agreement for an additional two years. From a segment perspective the Owned and Operated business represented 65% of overall revenue and the partner business 35% of overall revenue in the third quarter. We continue to experience mobile expansion with 58% of overall revenue from mobile sources in the quarter and that’s up quite significantly from 38% in the same period of 2015. The partner network returned to sequential growth in the quarter with revenue up $6.2 million that’s up strongly at 30% from the prior quarter. And in line with the baseline Q4 2015 quarter that we had previously messaged as the best starting point comparison for that business following revenue reporting changes between segments that occurred in 2015. We’ve seen a stabilization of the demand issues we reported about in Q2 and we see renewed focus on growth within one of our major adverting suppliers post…

Thank you, Rich. Hello and thank you for joining us today. Inuvo reported revenue of $17.5 million for the quarter that ended September 30, 2016, a 12% increase from the immediate prior quarter and a 9% decrease from the $19.3 million reported in the same quarter last year. For the nine months ended September 30, 2016, Inuvo reported revenue of $51.9 million or 5% increase over the same nine-month period last year. EBITDA adjusted for stock-based compensation expense and non-GAAP financial measure was $420,000 in the quarter that ended September 30, 2016 or $0.02 per share compared to $282,000 or $0.01 per share in the immediate prior quarter and compared to $1.3 million or $0.05 per diluted share in the same quarter in the prior year. For the first nine months of 2016, adjusted EBITDA delivered $2 million or $0.08 per share compared to $3.1 million or $0.13 per diluted share for the same period last year. On a GAAP basis, Inuvo reported a net loss of $263,000 or $0.02 net loss per share in the quarter ended September 30, 2016. In the same quarter last year, we reported a net income of $651,000 or $0.03 per diluted share. We exited the second quarter of 2016 with the plan to remedy, the demand weakness, we identified on our last call and the strong third quarter over the second quarter growth reflects our recovery from those issues. The Partner Network delivers advertisements to our partners’ websites and application. The Partner Network reported $6.2 million in the third quarter of this year compared to $4.7 million in the immediate prior quarter and $7.2 million in the same quarter last year. As we have reported in prior teleconferences, 2015 had a number of inter segment revenue transfer that made year-over-year comparison at the…

Thanks, Wally. We made some solid progress in Q3 coming off, but weak Q2. Now we typically see strong demand from advertisers beginning in November through Christmas and expect as a result of these sequential growth in the final quarter of the year. As we look out towards 2017, the advancements we have made in areas like behavioral targeting within SearchLinks. The expanded content in video and on new sites like auto, along with a growing [indiscernible] of direct advertiser relationships that really support our current goal to get to $25 million by the fourth quarter of 2017, which implies the run rate on the business from that point of a $100 million. Now further to that, our trailing 24 month compounded annual growth rate has been 26%, which is inline with the growth rate required to actually hit our target. Now with that, I’d like to turn the call back over to the operator for questions. Operator?

Thank you. [Operator Instructions] And we will take our first question from Eric Martinuzzi of Lake Street Capital Markets.

Thanks and congrats on the return to sequential growth, curious to know the growth that we saw sequentially here as I look, it seems mostly on the partner side 6.2 up from 4.7 and 11.3 versus 10.9 on the O&O. As you look out to December and I know you’ve talked about sequential growth in both lines there comparatively speaking, do we continue to see the greater sequential growth on the partner side versus the O&O?

Yes.

Okay.

Yes. I think that something we’ve been saying in the past. Eric I think it remains true what we still expect the Partner Network time period to grow the asset.

Okay. And you talked about some of the expanded footprints with partners. Is this largely due to SearchLinks or is it due to something else?

Yes. The expansion we were speaking about was specifically related to SearchLinks and I think I know flat call probably one of the first times we have ever done it. Eric as we did actually to close some of the sites we are running SearchLinks on and those are the ones we are talking about and many of them with expanded relationships.

Okay. And it’s good to see the working capital number improve given the 400,000 plus of EBITDA I know we didn’t see an incremental improvement in the cash balance of a similar amount with what we spend in money on in the quarter from a CapEx perspective?

The CapEx is predominately development of our technology, but other than that it’s relatively small in terms of hardware and [indiscernible].

I wanted to dive a little bit deeper on a couple of things that you mentioned in the prepared remarks Rich you talked about behavioral targeting which is the term that I recognize for many, many years ago. I am wondering how you guys are doing it different and then you also talked about pre-bidding could you particularly layer deeper on those two?

Yes, so behavioral targeting is for the most part what I think you know it to be Eric this is you know look you’ve encountered – it is really a machine because privacy laws don’t allow you to profile consumers, nobody does that, but you do know there is a machine you’ve see before that was reading about [indiscernible] and through the technology of behavioral targeting there is the ability to store persistent ID associated with that engagement of the [indiscernible]. And then when that person lands on some other page where we either have content because I said digital property we all know it’s the SearchLinks, ad unit on some publishing site. And we make a determination at that point, is this page a better page to show this consumer an ad based on the content of that page maybe you’re on a page and reading now about travel to San Diego or this is a page that doesn’t really monetize well with content and we be better off showing you something else about [indiscernible] because you really look like you are interested in it you know at 30,000 or 40,000 feet that was going on there is various technologies quite sophisticated, quite frankly technologies required to make that what sounds simple happen.

That’s why you get to the pre-bank question just one follow-up on this behavioral or you blending this with data stream from other sources and if so is that changed the margin profile?

We haven’t yet incorporated third-party data sources we have a significant amount of data from interaction across our own networks quite vast quantities of it by the way and so we built the let’s call it the first phase of this thing on the back of our own proprietary information, which we think is better than many of the third-parties out there and what they have. But that doesn’t mean we’ve excluded the thought of it in fact you know we’ve sort of identified a number of third-party sources we might try to complement the data that we have ourselves but that’s a Phase II.

Okay and then the pre-bidding?

So I actually debated when I wrote the pre-bidding stuff because it’s such a complicated market price that I knew someone would want to delve into it. So I have to take this one up a level two otherwise we will get into the nuts and bolts of it but the sort of programmatic marketplace has changed quite a bit over the last mostly year, year and half. And essentially as I’ve said in my notes what is done is sort of level the playing field. So I guess in a way if the system prior to about a year and half ago with just some degree rigged in favor of those who were early into the marketplace, but the big players who I won’t name [indiscernible]. And some of the technology changes that are now being referred to is header bidding or pre-bidding which basically allows you to bid before the ad servers called gives publishers a better opportunity to get the best price with their inventory. And so we started looking into this some month back now and we found is to be very useful and in fact the economics whereas I said in my comments I think we saw somewhere between - with it I say 10% or 15%increase in the CPM’s that we get as a result of this on that, but I went on further to say like any marketplace right, Eric I mean there is two sides of it. And again one of the benefits are being Inuvo is we planned on both sides of the market. We are not just a digital publishing business that had ad inventory that we want to fulfill, but also an ad tech company that has the ability to fulfill. So when we look at these kinds of opportunities, we see an opportunity on both sides and on the advertiser side of that equation, we see SearchLinks is being the opportunity we could put into that marketplace.

Okay. And then lastly on that profitability for Q4, you talked about sequential growth in the topline, adjusted EBITDA I know historically you guys always been targeting to get into to kind of a million marks plus adjusted EBITDA for quarter. Do we get back to that level in Q4?

We are not giving a specific guidance for Q4, we think the way we are trending at the moment coming off of Q3 that sequentially we are going to be – Q4 is going to be ahead of the third quarter. The operating – the adjusted EBITDA should reflect that increase in revenue, so I think the EBITDA certainly be ahead and follow the increased revenue we are expecting.

Okay. Thanks for taking my questions guys. A - Richard Howe You bet, Eric.

And we will take our next question from Lisa Thompson of Zacks Investment Research.

Good afternoon.

Good afternoon, Lisa.

So in the past, you’ve given us some description of how the revenues per day travel through the quarter so to speak, because you just kind of recap what happened with the whole Yahoo interruption followed by the android problem and kind of where you are now in this quarter? How do you started the quarter and how you see it trending?

As best we can, so in Q2 I believe what we said was in first – at least two months of the second quarter, we didn’t see necessarily a drop call it in the total number of clicks that we experienced on ads, but we saw a drop in the amount of money we actually get paid for each of those clicks. And when that happens, Lisa in our business it’s usually a reflection of the supply and demand economic, so less buyers of clicks, we get paid less. And as a result, that we saw a lower revenue, so that you don’t – systematically, the business didn’t changed at all, is not like we did things wrong or something both the android issue aside for a second. This was really simply a marketplace issue and so we saw some recovery from that starting – we actually made some changes to try to recover format technically and we can do that by making decisions about what ads to show and not show and what orders we can do some manipulating beyond the things that algorithms that we have and we did some of that and that had an impact. But the real impact was when the demand entered back into the marketplace and we saw that starting to happen while I guess in the latter part of the second quarter. And it’s been continuing through the third quarter.

Okay. And so how – when you entered the third quarter kind of where was revenue dollar per day and then where is it now, is it behaving as it typically does this time of the year?

Yes. We try not to disclose what’s going on right other than cases like in Q2 where we know that there was a weakness, so we think it’s important to shareholders now we are tracking. What I’ll tell you is, what I said on my comments is, right now we are expecting sequential growth in Q4 or Q3. So I guess my implication that means we are going to get – make more money on a daily basis, right.

Okay. So we’re getting more numbers anymore. Just a quick kind of top level on SearchLinks and you’ve had a number of customers that have been testing it for a while, given at some point where these people will get out of the test phase and kind of roll it out. Where are you with customer?

Yes. I wouldn’t call what we’re doing with a lot of those customers testing at this point. I mean, we’ve had longstanding, I mean the products only been in the market probably I don’t know less than a year. And so we’ve got relationships that go back, call it nine months. And in many of those cases, those are not tests anymore. I mean with the number of those publishing partners, many of them among the list that I named in the second quarter call, we’ve been expanding on a regular basis with them.

Okay, so it’s not like there is a bunch of big ones that are just going to kick in when they say, okay, tied it for six months and now we are ready to roll it to the whole?

Yes. That could happen, Lisa, but I think you’ve been asked this question in the past and I’m not sure what my answer was, but it’s probably this is answer I’m going to give, which is – publishers and we are one, of course, so we know how this works, because we do it ourselves. They don’t typically turnover all of their ad inventory to anyone to buyer, at least not immediately. That becomes sort of a risky endeavor for them. So there is a tenancy to have a gradual creep into more ad inventory as performance warrants creeping and so it’s a more steady increase.

Okay. And has anything changed in the dynamic with competition just to build that out…

No, we don’t see it. We’re having the same success rate in our sales activity as we’ve been having over the last six months and the marketplace is competitive. So it was when we went into this business and it’s going to be for the foreseeable future. So I think that’s why the investments and things like the way we are targeting and predicted analytics and better data sources, these are all the reasons why we’re going to be able to win.

All right, great. Thank you. That’s all my question.

Thank you, Lisa.

[Operator Instructions] And we will take a question from Jon Hickman of Ladenburg Thalmann.

Hi, thanks for taking my questions. So you mentioned that improvement started in the later part of the second quarter and the demand improvement, is that true? So was that I heard. So with the current noises that Verizon is making, you haven’t seen any change in the demand in the Yahoo platform?

No, we have not.

Okay. And then the comments you made about reaching the $100 million run rate which would be a $25 million quarter. Can you be like – do you expect that in the early part of the year or until a later part of 2017?

Yes, the current goal has it’s been stated is for Q4 of 2017.

Okay, all right.

And just to give you a historical context for that, I case you won’t aware of it, but the very first time we gave that goal was in the first quarter of 2014 and at the time we were doing $10 million of revenue in the quarter and that’s when we laid out that guidance for the marketplace, a guidance we stayed with and not altered by the way since, and the implication was that we’re going to get from that $10 million in the first quarter of 2015 to $25 million by Q4 of 2017 and that is essentially our guidance. So we don’t change it ever. We haven’t changed it. We don’t tend to change it. That’s where we think, we want to get to and the track we’re on. As I said in my comments, our current, at least trailing 24-month CAGR put us right on track for achieving that goal.

Okay, thank you. That’s it for me.

Thank you. End of Q&A

[Operator Instructions] And with no further questions in the queue, I would like to close the call. Thank you for participating. And have a great day.