Good day, and welcome to the Inuvo Inc 2020 Second Quarter Financial Results Conference Call. Today’s conference is being recorded. At this time, I would 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 would like to thank everyone for joining us today for the Inuvo second quarter 2020 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. I would like to start by letting our listeners know that as a consequence of the COVID-19 pandemic, both our office in San Jose, California and Little Rock, Arkansas remain closed. In our Little Rock, we are excited to have twice leadership meetings, we are monitoring pandemic on a day-to-day basis and we recommend returns for our employees if and only run, we feel we can adequately safeguard our colleges from consecution. I would also like to reminder our shareholders that we anticipate filing our 10-Q with the Securities and Exchange Commission tomorrow, Friday, August 14, 2020. Before we begin I’m going to review the company 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 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 sec.gov. With that, now let’s turn the call over to CEO, Richard Howe.

Thank you, Valter and thanks everyone for joining us today. For the three months ended June 30, 2020, we delivered roughly 7.6 million in revenue, with approximately 5.7 million of it coming from ValidClick platform and 1.9 million from the IntentKey platform. For the six month period revenue was $22.5 million, with $18.7 million from ValidClick and $3.8 million from the IntentKey. Revenue in the prior three and six-month periods was roughly $14 million and $29.5 million, respectively. Lower revenue through the first six-months of the year was predominantly caused by decreasing advertising budgets associated with COVID-19 and isolated within their ValidClick platform. While revenue was down sharply year-over-year. We countered the income implications of lower revenue by implementing a number of short-term expense and contract modifications within the quarter. Net loss year-over-year within the quarter improved 30% from roughly two million in 2019 to 1.4 million in 2020. Sequentially net loss improved by over 50% or approximately $1.5 million. On our adjusted EBITDA basis, there was also an improvement year-over-year within the quarter of roughly 84%, going from a loss of $854,000 in the second quarter of 2019 to a loss of $140,000 in the second quarter of 2020. Sequentially adjusted EBITDA improved by roughly 90% or approximately $1.2 million. Reconciliation of adjusted EBITDA to net loss is contained in our earnings release. As we had messaged on our Q1 conference call, we had expected the ValidClick business to be impacted materially by the pandemic and it was down roughly 29% for the first half of the year, and 53% within the quarter on a year-over-year basis. This impact on ValidClick was partially influenced by the markets that business serves. As a marketing tool for advertisers, the ValidClick platform is typically used by brands to extend their audience reach.…

Thank you, Rich. Good afternoon, everyone. I will recap the financial results for our second quarter. As Rich mentioned, Inuvo reported revenue of $7.6 million for the quarter ended June 30, 2020, while this compares to $14 million reported in the second quarter of last year. The decrease in this year’s revenue is primarily due to reduced advertising budgets, particularly in the ValidClick operations. ValidClick revenue in the current quarter was $5.7 million, compared to $12.1 million in the second quarter of last year. The lower ValidClick revenue was partially offset by higher revenue from our owned and operated sites. IntentKey, revenue was virtually flat in the second quarter of this year compared with last year. So, for the first six months, it was up to 70% from the prior year. Gross margins increased in the second quarter to 86% compared to 60% in the same quarter last year, due primarily to a renegotiation of payment terms and conditions, with a ValidClick marketing partner. IntentKey gross margins continue to increase within the second quarter of 2020, increasing to 55% compared to 24% in the same quarter of last year. Operating expenses were $2.7 million lower in the second quarter of this year compared to the prior year. Marketing costs are primarily made up of the expense required to attract consumers to websites and apps. These are the ValidClick traffic acquisition costs, also known as TAC ValidClick revenue is generated predominantly from ads served to these websites. And therefore, ValidClick has a lower cost of revenue but a higher marketing expense as a result of TAC. Marketing costs were $3.9 million in the second quarter of this year compared to $6.5 million in the same quarter last year. The lower expense this year compared to last year is primarily due to…

Thanks Wally. We continue to navigate our way through the economic changes associated with COVID and the early trends heading into the strongest part of our year suggests recovery has started. The IntentKey has continued to grow throughout the first half of the year in spite of significant and industry wide marketing budget declines resulting from COVID. And while ValidClick was impacted more severely than the intent key. We have seen encouraging monthly sequential growth within ValidClick, following its low points in May. With now the strongest balance sheet in the history of our company we feel confident in our ability to not only manage recovered but to thrive on the other side. I would like to turn it over to the operator.

Thank you. [Operator Instructions] And we will take our first question from Brian Kinstlinger of Alliance Global Partners.

Hi good evening guys thanks for taking my questions and pretty impressive breakeven on next lower revenue. In terms of IntentKey, can you talk about your ability to win new logos in this environment? Or when you look at leasing ramp, I guess month-by-month that you talked about that revenue growth coming from existing customers or coming from new customers?

It is coming from both, and leading into the second quarter, Brian. I believe our first quarter year-over-year growth rate alone for the IntentKey was north of 40% if memory serves which as why is apply for the second quarter, we had 17% growth in that business for the half of the year. But clearly to achieve kind of growth rate we are seeing in the first quarter, and the quarters before that, we need to try and get new logos and we have that, and we did find the new logos in all those in the quarter. It is really just that the marketing budget got pause for a lot of companies. But what we are seeing now is, we are starting to be released again. And so IntentKey is picking back up. It is hard for us to gauge since there has never been a COVID before. There has no example for us to quantitatively have new budgets come back to you, do they come back full form for full strength, full capacity, in Q3 and Q4 it was half capacity, I don’t know. But right now things are moving in that direction for sure.

So when you look at your - can you provide - maybe quantify a customer count for IntentKey at the end of June versus the end of March and maybe today?

Yes. I don’t have it handy and I don’t think we give out the customer counts. But there are lots of customers with IntentKey. I think in my script, I mentioned that we are running in second quarter, I think we have 50 campaigns, now there are sometimes multiple campaigns for customers but there were 50 campaigns running for the IntentKey in the second quarter. And maybe to your question about demand, I think the other thing I mentioned that is good to - people should pick up on is, I believe, we had like 60 RFPs, I think in the second quarter. And the budgetary season for marketing tends to pick up in a big way. And towards the end of the second quarter of course, people trying to fill their budgets for their Q3, Q4 season. So, that many RFPs for us actually is - we are feeling like it is a good sign that the demand is going to be coming back and the back half of the year, otherwise all the companies be wasting the time asking for an RFP for money they are not planning to spend.

Okay. And then can you talk about the sale cycle for new logos, how quickly - unique and made something transpire, does it start with a test campaign and how quickly can that ramp?

So the answer to question is it is not simple as you think because the results that we have seen can vary quite dramatically. We have closed business in 22-days. And it is taken us nine months to close business. So, you are looking at a pretty substantial range there. I would say that like all things fails, the quality and determination of the salespeople is proving to be a big factor in terms of making the number closer to 22-days versus nine month period, but the reality is you know closing a material logo, with a material budget is likely to be somewhere in between and maybe even you know on the higher end of the middle of that range. Yes, it is almost invariably, new clients always starts with a test. I mentioned in my script, even our largest customers, when they add new capabilities that they want to test with us, they use a test which is exactly what happened. I said, we are doing connected to the TV test for our largest client right now, actually, started in August. And what happens is, you know the performance results for those tests look good. Invariably, what happens is the client basically signs up and starts a more regular budget allocation towards whatever it is that we are testing for them.

Great. Now I think you clearly laid out the strength in demand trends for IntentKey, month-by-month, and maybe I missed it, but can you kind of lay out how you are seeing ValidClick and was that business recovering albeit much slower clip over the last few months?

So, ValidClick was expected to have a greater, let’s say impact as a result of COVID been in IntentKey was, and the reason for that is because it is not a primary budget source for marketers. Unlike the IntentKey, it is like a major channel, a major spend category, it tends to be an add on budgetary expense. Now the good news about ValidClick is it is an add-on budgetary expense for hundreds of thousands of advertisers, which is the advantage of that business for us, because globally our integrations with the demand side partners we have access to, many, many, many advertisers. So, you kind of get a little bit of budget from a lot of brands. The challenge is, when budgets pull back, when a marketer tends to pull back it is those kinds of budgets that pull back first. And so that is why we saw disproportionate reduction in the ValidClick business. Now, with that being said, the business did bottom out in May. And we saw sequential growth in June, over May and we saw sequential growth July over June and we are seeing at least through yesterday, growth trends in August that are above July. So we feel like the ValidClick business is coming back up, and it we will come back up - the stack as it goes down, but it will come back.

Okay. That puts me around I mean, IntentKey have you been able to scale that business. You have already had your margins dramatically expand there, what is a mature gross margins in IntentKey business?

I have said a few times when I have been asked this question that I think that the sustainable margins for the IntentKey are probably in the 50% to 60% kind of margin range. Now, however, with that being said, I also mentioned and perhaps it would not picked up enough that we are actually in the process of building a SaaS version of the IntentKey keys on the clients to run their own campaigns. And we expect that to be launched upon in 2021 and when we launch that product, there will be margins you know north of 90% for that business model and this was always been a part of the design for the IntentKey business model, but we wanted to offer it as a service before we offer the new SaaS products, so that we could generate excitement proved results that are significant revenue base running our program to have, proof points, success proof points to claim to for the SaaS version. Going forward, we think past 2021we have always have a services business that we will have a complimentary SaaS business, while the result of that is we should see increasing margins that they won’t start until we launch the SaaS version.

Great. Thanks for taking my questions.

Thank you.

[Operator Instructions] And we will go next to Ryan Meyers of Lake Street Capital Markets.

Hello guys, thanks for taking my questions. First one from me. What was the cash at the end of July given the equity raise?

It was approximately $12 million.

Okay. And then just one more sort of housekeeping item. What should we be using for share count to account for the recent equity raise?

Should be approximately $97.5 million.

Alright, that is helpful. Thank you. So then do you expect the IntentKey revenue to be up sequentially or how should we think about the seasonality for the rest of the year?

Well we are certainly hopefully and not planning [indiscernible] not to be reliant. As I said, in my preamble, COVID is just - listen none of us had deal with COVID, nor as anyone else. So it is hard for me to take a trend that we are seeing right now, which for the IntentKey by the way, growth May over April. April was the lowest month for the IntentKey and May, growth over April, June over May, July grown over June and August is forecast to be higher than July. So there is the trend that is headed in the right direction as it relates to the IntentKey. But I don’t know if that trend is going to continue. I suspect it will, it looks like it will. And if it does, then, we should be back to year-over-year, quarterly growth in Q3.

Okay. And then you mentioned you guys added one salesperson in July probably you guys thinking about that for the rest of the year, as far as adding more sales reps?

I’m looking right now to hire at least two more, in preparation for the budgetary season coming up and for next year, so we are identifying candidates, we are actively pursuing candidates for sales right now.

Great. Thanks, guys.

You, bet Ryan.

And with that last question. This will conclude today’s calls. We appreciate everyone’s participation today. And you may now disconnect.