Inuvo, Inc. (INUV) Q4 2025 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Inuvo's Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 5, 2026. I would now like to turn the conference over to Katie Cooper, Director of Marketing. Please go ahead.

Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo Fourth Quarter and Full Year 2025 Shareholder Update Call. Today, Inuvo's Chief Executive Officer, Rob Buchner; and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10-K with the Securities and Exchange Commission this evening. 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. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements. In addition, today's discussions will include references to non-GAAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's news release on our website. With that, I will now turn the call over to CEO, Rob Buchner.

Good afternoon. Thank you, Katie, and everyone for joining the call today. Before I begin, I'd like to take a moment to thank the entire Inuvo team as well as our broad group of clients and partners for your support as I've moved into my new position. Thank you for all you do, every day for this company. I'd also like to thank Rich Howe and the Inuvo Board for your confidence in me and for providing an excellent vantage point over these past months as I transition to the new role. As I mentioned on our call in January, I'm taking the helm as CEO at a decisive turning point for our company and for our industry at large. Specifically, as new technologies emerge, consumer behaviors and intent have become more widely distributed across digital media and a agentic systems, making consumer purchase intent more difficult to ascertain. At the same time, the industry has experienced an increase in sophisticated technologies, often nefarious that have allowed lower traffic to masquerade as legitimate, high-intent consumer demand, necessitating quality controls beyond those historically available. This is a systemic industry-wide issue. As such, the industry has been subject to increased regulation, both due to consumer privacy concerns and because of Platform partner's compliance measures to restore integrity of search ecosystems. All of these factors lead to a widening gap between perceived intent and true quality in the advertiser's digital media experience as well as a more difficult operating environment for those reliant on legacy technologies. Put simply, our industry is ripe for disruption. When I was contemplating the CEO role at Inuvo, I had a front row seat for nearly a year to IntentKey's leading-edge tech that I believe is both undervalued and a true antidote to the shortcomings of legacy systems. While today, the field is littered with legacy ad techs that overpromise and failed to deliver on their AI-powered premises, IntentKey was purpose built to the Agentic era. Advancements in adaptive buying systems are very real and establish a widening arena for our Generative AI to be deployed within other Agentic workflows as an intelligence layer. IntentKey provides custom, adaptive audience models in real time, utilizing a large language model that doesn't depend on cookies or other legacy technologies that are being scrutinized by increased regulation and privacy concerns. But the real value proposition is in its speed. IntentKey's actionable intelligence leverages predictive AI, enabling users to enter bid streams faster, up to 24 hours ahead of market moves. When supply and demand dynamics favor higher returns on advertising dollars. As budgets are tightening and return on advertising spend is decreasing at an alarming rate, we have a technology that can identify new prospects and accelerate conversion with dynamic audience modeling. What's more, I believe there is a tremendous opportunity for us as a data provider, leveraging our IntentKey product, there is a path to pursuing data deals that allow advertisers and marketers to directly use IntentKey to custom design their audience models and execute media buys with minimal friction. This shift will require deeper SSP and DSP integrations, but will return a more scalable, reoccurring revenue model going forward. I see an opportunity here to leverage this technology towards higher-margin growth, resulting in a more resilient business for Inuvo. And we have a team that's ready to execute. This shift will take time, but I believe we are well positioned to exploit this market window with a proprietary disruptive technology that is well ahead of the competition. 2026 Is about exploiting near-term opportunities, while laying the groundwork for this evolution. My plan is centered upon 4 strategic pillars: first, a refined go-to-market focus. As the ad agency complex continues to contract, it's imperative that we transition towards high-margin upstream strategic engagements. To do this, we will execute on 3 primary fronts: one, pursue large, high-value deals with CXOs inside of brand organizations, leaders who control budgets and are ensnared by diminishing returns in performance marketing. By pursuing relationships further up in brand authority, I believe we can harness an opportunity to provide brand stewards with greater transparency and actionable information that can help these brands grow, while also increasing our profit margins. Two, big partnerships where we can integrate IntentKey, both as a service and as a data provider because IntentKey can integrate into these legacy and emerging buying systems more effectively than other technologies, I believe we have an opportunity to create exponential growth through integration in ways traditional competitors cannot. What's more, we believe we have a commanding advantage in this area with our large language model, positioning us to become a leader in helping brands navigate this rapidly evolving programmatic landscape. And three, align our deal teams and sales organizations to support high potential verticals. This is a continuation of the work I started as Chief Operating Officer and is an important step toward the kind of growth I envision for the organization. My second pillar is raising IntentKey's industry profile. The evolution of our industry has laid bear 2 strategic imperatives for brands. The first imperative is speed, advertising alignment and ROI in an environment where structural foundations of legacy systems are faltering. The second of these imperatives is the need for privacy-first consumer protection. In this environment, IntentKey's value proposition is clear and significant, and yet I believe undervalued due to a lack of brand awareness. IntentKey is not just another AI-powered ad Platform. It's a Platform that provides intelligence and a meaningful strategic advantage to its users. We have a significant opportunity to drive growth by translating IntentKey's value proposition into sustainable, high retention revenue growth through vertical marketing of the IntentKey Platform, clearly articulated branding of IntentKey's value proposition and 24-hour advanced prediction capabilities and promotion of the brand by showcasing an elevated user experience through IntentPath. The third pillar is continuous product innovation. Inuvo's core competitive advantage is Intent Discovery, delivered through a suite of advanced visualization and compliance tools. We believe that continued advancement of those tools through the adoption of new features, integrations with new DSPs and enhanced privacy features can both deepen budget commitments from our traditional media customers and expand our potential addressable market into other privacy-sensitive verticals. And lastly, our fourth pillar is high-margin growth. Through successful execution on the first 3 pillars and an increased focus on driving Platform-led higher-margin revenue into the business, we can strengthen the company through improved profitability, liquidity and financial resilience. As I sit here today, I believe we're already making some early progress on these 4 pillars. With respect to our go-to-market strategy, we will continue to be drawn to enterprise-grade sales directors. Individuals who can engage with CXOs on a strategic plan versus a transactional basis. These sales directors will court evolve marketers who recognize IntentKey as a foundational intelligence layer for the age of Intent. With this talent in place and aligned with our target verticals, we are positioning ourselves to secure the large service contracts and integrations that can drive stickier, compounding revenue over the long term. As I mentioned on our January call, we entered 2026 with the strongest sales pipeline for IntentKey we've had to date. This builds upon the 83 new clients acquired in 2025. Overall, early year performance reflects improved retention quality, higher average budget commitments and stronger revenue visibility compared to the prior year. In addition, we continue to have active discussions with several high potential IntentKey customers. I hope to share a few of those brand names next quarter. The nature of IntentKey integration and testing necessitates a longer lead-up to deal closings. Still, we expect IntentKey's adoption trajectory to grow beyond historical levels. With respect to raising our industry profile, in the weeks ahead, we'll be launching a product-specific website for IntentKey to further support our sales teams and to encourage self-service trials. This site will host product videos and will showcase new product capabilities. Our corporate site inuvo.com was refreshed this week. And as a leading ad Platform in the search marketplace, we launched clicktransparency.org, which elevates an urgent existing industry initiative to restore click integrity by setting new standards that will drive out low-quality traffic to the ecosystem at large. This initiative is meant to drive greater transparency, effectiveness and safety for consumers, publishers and advertisers they serve. Its charter is aligned with our Platform partners, and we are already getting the attention of other ad tech, competitors and some of the largest ad tech platforms in the world. And with respect to product innovation, we've recently completed integrations with SSP and DSP providers that will expand our addressable market by enabling us to bring IntentKey to companies in new privacy sensitive industry verticals, including pharmaceuticals, health care and government. We are acting with urgency and investing in lead generation and outbound marketing campaigns, laying the groundwork for addressable market growth in the near term, and a transformation to a data provider in the long term. While it's still early, I'm happy to report, we are already in active discussions with companies who require the functionalities provided by these new integrations, whose needs we couldn't address under prior data sources. In addition, we recently began a pilot of a new social media offering that brings IntentKey Audience Intelligence to social media campaigns, effectively opening up a new channel to our sales function. And we are currently exploring ways to expand our offerings into the AI chat environment to harness opportunities arising out of the rapid adoption of AI-assisted surge. And lastly, we're in the process of migrating our data centers to the AWS Cloud, which will provide cost savings, greater scalability and resiliency as we accelerate growth. With respect to high-margin growth, successful execution in pursuing growth in our higher-margin, self-serve and IntentKey products, should translate into stronger financial results and a more financially resilient company in the future. Now I want to be frank, the last couple of months has been challenging to the Platforms side of our business, even though IntentKey is showing robust signs of growth early in the new year. After bottoming out in mid-January, I'm pleased to say that our Platform products have seen signs of recovery. However, we believe the recovery process will be gradual. In light of this, we're taking prudent steps to contain costs where we can until the business returns to normative sales velocity. We're onboarding new partners week-over-week. In the meantime, our AI-powered quality assurance feature, Ranger is live and is continuing to ensure quality, alignment and compliance, closing the gap that necessitated the fourth quarter reset of the system. We remain confident that as we work our way through the self-imposed pullback on this side of the business, we are unlocking our ability to grow sustainably in the future from a more solid foundation. Our industry is at an inflection point. However, it's clear to me that the market is coming around to us and importantly, to IntentKey. Now is the time to move with urgency, driving towards a more durable, compounding future that has much to offer in this changing marketplace. We are working to harness the opportunities before us and believe we have the right strategy to return to strength in the months ahead. With that said, I'll hand it over to Wally who will take you through the financials.

Thank you, Rob. Good afternoon, everyone, and thank you for joining us today. I'll start off my comments today with a review of the fourth quarter and full year, then I'll touch on liquidity and our near-term outlook, after which, I'll hand the call back over to Rob for closing comments. First, looking at the fourth quarter, the intentional moves we made with our Platform products resulted in a significant pullback in revenue during the fourth quarter. Fourth quarter 2025 revenue totaled $14.3 million, a decrease of $11.9 million or 46% compared to the fourth quarter of 2024. Partially offsetting this decline was a new campaign introduced in the prior year by another large Platform client that had increased its revenue by 30%. Cost of revenue was 8% higher in the fourth quarter compared to the same quarter a year ago, resulting in gross profit of $9.5 million, a decrease of $12.3 million or 56% from the fourth quarter of 2024. The higher cost of revenue this year was due to the new campaign I just mentioned. Unlike other Platform campaigns where their cost is reported as a marketing cost, this campaign is accounted for as a cost of revenue. Fourth quarter operating expenses were $10.7 million, down more than 50% compared to the fourth quarter of 2024. The driver of lower operating expense was a 60% year-over-year decrease in fourth quarter marketing expenses driven by lower revenue from our largest Platform client. However, all components of operating expense in the fourth quarter were lower than the prior year. This decline in operating expenses helped offset the year-over-year gross margin decline yielding a fourth quarter operating loss of $1.2 million compared to operating income of $220,000 in the same quarter last year. Net loss for the quarter was $594,000 or $0.04 per share. Adjusted EBITDA for the quarter was $360,000. For the full year 2025, revenue increased to $86.2 million compared to $83.8 million in 2024, driven by strong performance in the first half of the year, primarily from our 2 largest Platform clients. Cost of revenue increased to $22 million in 2025, an 83% increase compared to 2024's cost of revenue of $12 million. This increase is a result of the change in the Platform sales mix and in particular, growth with the Platform client with its new campaign, as I previously mentioned. As a reminder, cost of revenue consists primarily of payments to website publishers and app developers who host our ads as well as to media cost of agencies and brands clients. The increased cost of revenue caused gross profit to decrease $7.5 million or 11% in the full year of 2025 compared with 2024. Gross margin for 2025 was 74.5% compared to 85.6% in 2024. Full year 2025 operating expenses were $70.9 million, down $6.4 million or 8% from 2024, driven by a $7.8 million decrease in marketing expenses. General and administrative expenses increased by $1.4 million, primarily due to the reduction in the allowance for expected credit losses recorded last year. Operating loss for the full year 2025 was $6.7 million compared to $5.5 million in 2024. During 2025, we recognized $1.9 million of other income driven by employee credit -- employee retention credits of $1.1 million and $700,000 from a refund relating to a prior period, all of which were received during the year. As a result, we recognized a 2025 net loss of $5.1 million, an improvement of $667,000 compared to the net loss of $5.8 million in 2024. Net loss per share was $0.35 and $0.41 in 2025 and 2024, respectively. 2025 adjusted EBITDA was a negative $1.3 million compared to a negative $816,000 in 2024. Turning to liquidity. We ended the year with $2.8 million in cash and cash equivalents and $6.7 million availability under our borrowing facility as of December 31, 2025. In January, we entered into a $3.3 million subordinated convertible note and we received $6.2 million in connection with a class action settlement claim. These liquidity events have helped us navigate the cash consequences of the pullback in Platforms revenue. We believe we have adequate liquidity to execute on our strategic growth plans. Before I hand the call back to Rob, I want to give a few quick thoughts about 2026. Regarding the Platforms business, as Rob mentioned, we are beginning to see recovery in our revenue after what we believe was a bottom in mid-January. As a result, Q1 Platforms revenue is expected to remain light with recovery coming gradually over the course of the year. I also want to remind everyone that the first and second quarters of 2025 were record revenue quarters for us, making it extremely tough comps year-over-year. With respect to agencies and brands, we're forecasting strong double-digit growth for each quarter of 2026, driven by a very healthy sales pipeline. With that, I will hand the call back over to Rob. Rob?

Thanks, Wally. It's an exciting time to be part of Inuvo. We say that the precipice of an industry sea change, armed with proprietary technology that we believe can be a wellspring of new growth in the programmatic Agentic era. AI agents will soon handle complex workflows, audience discovery, custom modeling and activation that previously required hours of manual work across multiple platforms. But this shift requires an industry-wide approach with data and technology providers, agencies, DSPs and SSPs collaborating to realize the promise of Agentic advertising. Some of this development is happening today, much of it is still hype. My aim is not to add to the hyperbole, but to pierce it with a bone honest value proposition that resonates with major marketers who are frustrated, confused and mistrusting. I intend to bring the IntentKey story to advertisers through more plain spoken marketing programs that compel trial of our products. The very name IntentKey was [ pressioned ]. It provides a foundational intelligence layer for the so-called age of intent. The marketplace is finally catching up to the reality that success during these seismic shifts require the very things IntentKey provides, speed and real-time, actionable, privacy-first intelligence. With a focus on a clear go-to-market strategy, leveraging our core strengths in audience modeling, building a strong brand presence and driving towards higher-margin opportunities, we believe we can build a stronger, more resilient, compounding business that will translate to greater value for our customers and shareholders. I look forward to updating you on our progress next quarter. With that, I'll now open the call to Q&A.

[Operator Instructions] Your first question comes from the line of Brian Kinstlinger from Alliance Global Partners.

Congrats, Rob, on the new role. Can you speak to capital -- the capital deployment strategy between your 2 existing businesses plus the new data offering, maybe in the context of the Platforms business requires this substantial marketing dollars which creates a very small return on investment? And then maybe discuss, if any, what investments are needed to make to start that new data opportunity?

Brian, thanks. And I think I've met many of the people on this call, and Brian, I look forward to working with you in the years ahead. As it relates to capital deployment on the Platforms business, the marketing expense kind of rises and falls with the sales velocity and demand on that platform. So it's a variable that is kind of fixed to that side of the business. Capital as it relates to marketing on IntentKey is really about demand creation and incenting trial of our product, and we're going to be putting a lot of energy in that direction through outbound campaigns and some lead management. Some of those are already in place.

Yes. Which leads me to my second question. It sounds like you agree Inuvo to me was a first mover in AI for ad tech, but it hasn't capitalized. What are the plans to improve that awareness of IntentKey, maybe give some specifics. I know you mentioned social media, but how else do you gain awareness. You've got these 83 new customers that you added last year. How do you get them to increase wallet share as well. .

Yes. In terms of raising the profile for IntentKey, that's going to come gradually in time as we free up more cash to invest in marketing. But having -- through thought leadership having more presence at industry conferences. I'm attending Marketecture next week already in New York. That's a very high-profile event, while this industry has gone through change. So I think it's being present where the minds of this industry are. And then it's also beginning to take our use cases to market, especially in some of these high-priority verticals where we have good credentials in getting some of those logos to be referenceable for new. And again, I want to concentrate our marketing against the highest potential high-yield segments, if you will, or verticals, like life sciences, pharmaceutical, health care, automotive, government, where privacy and our differentiation shines the best. So it's getting out there, and it's doing it quarter-over-quarter and building a brand, and the brand is IntentKey.

Great. My last question maybe for Wally, but maybe Rob chime in if you think. It sounds like revenue will be down substantially next year as you gradually recover from a low point in the March quarter. How should we think about the expenses, given an increased focus on marketing, what we see SG&A increase from the sales side, will that show up in marketing costs like how should we think about the expense side growing from these need to increase that brand awareness for yourself?

Wally, do you want to take that one?

Yes. Thanks. The revenue throughout the year is going to increase. Yes, as we mentioned, Q1 will be light. But the IntentKey is on target, starting in Q1, and we'll continue to grow into each of the succeeding quarters. And the Platform revenue is -- will also -- is at a low point as Rob pointed out in January and is ramping up now. So yes, there is an opportunity for us to catch up in revenue. But to your point, it being lower than last year, we have already started paring back some expenses. And we're being very careful with the expenses that we have for the remainder of the year. I think that one of the things that you had mentioned about the cash deployment on the Platforms earlier is that, yes, the Platforms business does take a lot of cash, but it also gives us an opportunity to use our credit because we're able to receive payments of our revenue prior to having to pay our vendors. One of the advantages of the Platforms business is that it does provide a number of days of working capital to us. So in some ways, I'm not going to say it's entirely self-funding, but it does fund itself to some extent by providing working capital. But yes, I think that the SG&A, I think the G&A, the general and administrative will be -- will remain being flat to down in 2026. Compensation expense will be -- I suspect in our forecast is that it will be lower in 2026 than in 2025. And the marketing cost, as Rob pointed out, is pegged primarily, not entirely, but primarily to revenue growth in the Platforms business. Does that give you some guidance, Brian?

Your next question comes from the line of Jack Vander Aarde from Maxim Group.

Okay. Welcome on board, Rob. Congrats on the role. Maybe just a quick question for Rob. You mentioned the IntentKey Self-Serve product being a key focus, it sounds like, and it's a very high margin, but maybe lower ASP product line, but I know it's been rapidly growing. Just wondering where does this fit in though in terms of your growth roadmap in terms of, is this going to be the focus and a material part of revenue within the IntentKey segment or overall revenues going forward? How does this play into your overall vision?

Yes. I would say it's a longer-term ambition because those deals take longer to cultivate. When we get them, and we have several enterprise [ clients ] now, they tend to be stickier. They're almost pure margin. But it's a longer-term evolution of the business on the IntentKey side. But with this Agentic era occurring and us being able to integrate IntentKey into these workflows, both as an intelligence tool, a strategy tool, if you will, and then an audience activation at the executional level. When we can play at a data level, I think it's kind of a game changer, but it's a longer-term ambition rather than a near-term impact.

Okay. Got you there. And then maybe just for Wally and Rob, I know in the past, there was kind of a soft sort of breakeven target for EBITDA in terms of revenue. Given some of the strategic moving parts here, has -- is there any changes to that nuance as an aggregate, maybe there's changes to the gross margin trade-off versus the OpEx. But are we still looking at kind of $100 million, roughly, revenue as a breakeven? Or -- how do we think about that now as this business roadmap plays out?

Yes. I think that's right, Jack. The sales mix in 2026 and beyond is going to change considerably from 2025 and prior. So the -- so having said that, I think that we will be at breakeven. We've always said that $25 million quarter we could be breakeven. And I think we're back to that again.

Okay. And then just in terms of the operating expenses kind of just going forward is they really did drop off here. Was it really a one-for-one, just with Google or your largest Platform customer? Or is there something else to this we're looking at 2026. Is this a fair -- just under $11 million of total OpEx, it can bounce depending on mix. But it's well below the historical period. So just looking forward into the first quarter, can you give us a sense there?

Yes. So yes, marketing costs dropped off because of revenue dropping off from the largest Platform client, and that's -- and that client is starting to ramp up in Q1. So you should expect marketing costs to continue to be low because of that in Q1. As far as compensation goes, I think it's going to be in line with the past quarters, although we have made some adjustments, and there are some severances in Q1 that would affect compensation. G&A, general and administrative is going -- as it's always been, it's been relatively flat, and there's no reason to think that it would grow.

Okay. Great. And then maybe just one more for Rob, and then I'll hop back in the queue. Just given the long-standing importance of the relationship with Google to the business' history and looking forward and then the recent cash award that you guys received in January, and some of your other larger Platform customers have been long standing. Can you maybe just touch on how do you view these relationships? Is there -- I think the contracts keep getting extended a couple of months at a time. Can you just maybe provide a view on your perspective on that relationship and looking forward?

Well, listen, it's a key part of the business. And it's important that we stay on the right side of quality and keep the integrity of our network up to those standards. And try to lead the industry and our partner network along those lines. So we continue week over week to do everything that we can to be as compliant and to be a leader in the industry. And that's why we started that industry initiative, clicktransparency.org, I mean, these are all kind of moves that we make to stay on the right side of those contracts.

Congrats again on the role and look forward to tracking the story.

[Operator Instructions] Your next question comes from the line of Bruce Hood from Excel Group.

So I just had a quick question following up on previous quarters. There has been mention of a government contract potentially being signed. Is that still in the works? Or is that kind of being pushed off?

Bruce, no, it's very much alive, and we're weeks away now. I'm very close to that. This is a multiyear, multimillion dollar engagement. These contracts take a long time to work their way through procurement. We've cleared every hurdle and have every indication that we are weeks away from realizing execution of the contract.

[Operator Instructions] There are no further questions at this time. I will now turn the call over back to Rob Buchner, CEO. Please go ahead, sir.

Hey guys, I just wanted to say thank you for joining us for this call. I'm getting to know some of you since I was at the LD Micro Conference as COO back in October. I'm only 5 weeks in the chair, there's a lot of moving parts, but I'm incredibly optimistic about the moves that we're making. And if we continue to execute along the lines which we articulated over the course of the last hour, I think it's going to be a really great future. So thanks again, everyone. I look forward to working with all of you going forward.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.