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Presentation

Inuvo, Inc. beats earnings expectations. Reported EPS is $0.13, expectations were $-0.168.

Operator: Good afternoon, and welcome to Inuvo Incorporation Q1 2026 Earnings Call. [Operator Instructions] This call is being recorded on Thursday, May 4, 2026. I would now like to turn the conference over to Katie Cooper, Head of Brand and Communications. Please go ahead.

Katie Cooper: Thank you, operator, and good afternoon. I would like to thank everyone for joining us today for the Inuvo First Quarter 2026 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-Q 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 discussion 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. Before I turn the call over to CEO, Rob Buchner, a quick housekeeping note. As you will see in our release today and in our 10-Q, we are reporting our results in 2 business product lines: Audience Modeling and Legacy Search. The audience modeling business is anchored by IntentKey, our AI audience modeling intelligence platform and is what we formally called Agencies & Brands. The Legacy Search business we formally referred to as Platforms and encompasses the Bonfire platform and our legacy search-based ad placement business.

We will be referencing these product lines throughout the call today, and we encourage our listeners to review the more complete descriptions for these product lines in our 10-Q. Rob, over to you.

Rob Buchner: Thank you, Katie, and good afternoon, everyone, and thanks for joining the call. I’ll begin today with brief remarks on the first quarter and the strategic progress we’re making, then I’ll hand over the call to Wally for a review of the financials. I’ll close with a few thoughts and open the call for your questions. Turning to our first quarter results. Our first quarter results tell a diverging revenue story. Audience Modeling revenue increased 13% from a year ago, driven by deepening investment from existing IntentKey clients and meaningful early wins from our sharpened go-to-market strategy. Legacy Search, meanwhile, continued to absorb the aftershocks of our fourth quarter system reset, which weighed heavily on both revenue and margins.

None of this was surprising. We signaled these dynamics on our March call. As we head into the second quarter, the sales pipeline for IntentKey continues to build while recovery of Legacy Search revenue remains constricted. Specific to legacy search, this isn’t just an Inuvo phenomenon, it mirrors the fundamental disruption playing out across the search ecosystem at this point in time. Conversely, the Audience Modeling product line powered by IntentKey is proving our forward thesis. With 13% year-over-year quarterly revenue increase, this product line is now our primary growth vehicle. I believe the momentum we’re experiencing within IntentKey, Cornerstone clients and new brands we’re onboarding are indication that our audience modeling AI is set for scale.

In March, I laid out my plan for ensuring Inuvo cements its position at the forefront of this changing landscape. And I’m pleased to say that we’re making good early progress against those 4 strategic pillars. Let me take a moment to walk you through where we stand. Before I do, let me remind you of my 4 strategic pillars I laid out earlier in the year. One, go-to-market focus; two, raising IntentKey’s profile; three, continuing product innovation and for high-margin growth. Turning to our go-to-market focus. Over the last couple of months, we’ve made meaningful strides in aligning and upskilling our sales teams, sharpening our lead generation strategies and ensuring these strategies are well supported by the solutions engineering team. We recently added enterprise-grade sales talent to our team.

These are individuals who possess experience and relationships needed to elevate our conversations further up the value chain, selling directly into brand organizations and pursuing commercial integrations with stickier evergreen revenue streams. As we announced on our March call, we completed DSP and SSP integrations that meaningfully expand our addressable market, opening our sales aperture to privacy-sensitive verticals like government, pharmaceuticals and health care. These integrations are already paying off. I’m excited to share that we’ve already launched pilot programs with 2 major logos utilizing these integrations with yet more logos in queue for next quarter. These pilots are valuable proof points of our product road map and further validate that the market is coming to us.

As the industry pivots towards distributed intent and a genetic workflows, there will be growing demand for IntentKey’s data proposition. In total, during the first quarter, we added 5 new logos 2 IntentKey, including 3 in the Fortune 500. As we enter the second quarter, we continue to see opportunities with large privacy-sensitive companies and government organizations and we expect to add some large brand names to the growing list of logos on our platform. We continue to see strong momentum in our IntentKey pipeline. That said, the sales cycle from test to scale for larger integrations can be 6 to 9 months. Revenue builds as new customers typically run smaller pilots and test campaigns before deepening budget commitments. Case in point, we continue to play the waiting game on the large government contract we signaled last fall.

We remain optimistic that this will close in the weeks ahead. Although the government’s internal procurement process has moved much slower than we had anticipated. However, we find it encouraging that while we wait, this opportunity is already sparking interest from other governments and government adjacent players giving us greater conviction that the opportunity in the government vertical is meaningful. Turning to the next strategic pillar, raising our industry profile. We recently launched intentkey.com, a dedicated website that showcases the IntentKey platform through user tutorials, live test drives in a clearly articulated value proposition. It’s designed to make IntentKey more accessible, compelling and referenceable for the enterprise conversations that we’re having.

This is the first step in a larger effort to bring greater brand awareness to what is, in our view, a defendable strategic advantage for IntentKey. Our aim is to translate that to sustainable high retention revenue growth for Inuvo. I encourage you guys to go to intentkey.com and give it a try. Turning to continuous product innovation. We’ve made great progress this quarter, enhancing the IntentKey platform with several new integrations and product updates. As I mentioned previously, we completed SSP and DSP integrations during the first quarter. These were immediately impactful to our IntentKey sales pipeline and our ability to secure conversations with large marquee brands, many of whom could not have worked with us under our old platforms.

More recently, we announced the integration of IntentKey into FreeWheel’s Buyer Cloud. This integration gives advertisers direct, customized control over how they buy ads while leveraging IntentKey’s AI-driven models directly into the bidding logic. This enables advertisers to drive greater performance for every dollar spent through a platform that offers customized model agility at speed. We also announced an updated version of the IntentKey platform, introducing more intuitive AI modeling, enhanced contextual analysis and sentiment understanding, also more flexible workflows and additional capabilities, including enhanced iterative model building. These enhancements are designed to drive more precise audience discovery and messaging insight, which can be activated, the moment signals are identified.

The industry is experiencing a surge in advertiser demand for connected TV media buys as brands continue to shift budgets from linear television to connected TV, which is growing 15% annually. Inuvo is in the midst of integrating our algorithm into the premium supplier of connected TV inventory to extend our reach into this critical media channel. Lastly, our fourth strategic pillar is high-margin growth. The moves we made to better align our business to support higher margin growth are producing real results, a strong IntentKey pipeline and a healthy revenue growth for audience modeling in the first quarter. That growth, however, was overshadowed by continued pressure in our legacy search business, which generated and continues to generate negative net margins and a net cash burn.

As I said previously, this is a systemic issue. Legacy systems are failing to generate historical velocity and predictable returns. Advertisers, we serve downstream in the supply chain are frustrated with the rigid compliance standards that are choking normative returns. This in spite of the compliance tools we brought to market. In light of this reality, we’ve taken steps to rationalize the business to focus on more promising relationships and service lines and lower costs, including eliminating certain nonperforming services and lowering head count in our Legacy Search product line by nearly 2/3. As I said in March, our industry is ripe for disruption. While advertisers lament diminishing returns they’re experiencing with legacy tech, our IntentKey sales pipeline continues to strengthen.

Our first quarter results underscore this dynamic. Through disciplined execution of our strategy, I believe we’re well positioned to not just perform through this period of rapid chain, but to emerge as the preeminent AI within audience modeling and real-time activation. With that, I’ll hand the call over to Wally.

Wally Ruiz: Thanks, Rob. Good afternoon, everyone, and thank you for joining us today. I’ll begin with a review of the quarter financial results. We’ll touch on liquidity and the outlook. And then I’ll turn the call back to Rob for questions. Results for the first quarter came in largely as expected after the reset of the Bonfire operations last year. Revenue for the first quarter was $7.9 million, down $18.8 million year-over-year due entirely to Legacy Search or what we used to call Platforms. Legacy Search was down 81% in the quarter as a result of the fourth quarter Bonfire reset. Revenue for Audience Modeling or what we used to call Agencies & Brands was up 13% in the first quarter. The resulting change in revenue mix drove gross margins lower to 43% from 79% a year ago.

As we have discussed in the past, legacy search historically has had higher gross margins than audience modeling due to the fact that most of its expense is recognized in marketing cost. On a net margin basis, Audience Modeling is more profitable than Legacy Search. Operating expenses were $7.5 million in the first quarter, $15.3 million lower than a year ago, driven by lower Legacy Search costs for traffic acquisition due to the Lower Legacy search revenue. During the quarter, compensation costs were up 2.5%, primarily driven by severances that offset lower salary expense due to headcount reductions in the quarter. As we reported to you on our last call, in January, we received $6.2 million in connection with the class action settlement claim.

These proceeds offset the operating loss in the quarter, resulting in a net income of $1.9 million in the current quarter compared with a loss of $1.3 million during the same period last year. In addition, in January, we entered into a $3.3 million subordinated convertible note. These liquidity events have helped us navigate the cash consequences of the pullback in legacy search revenue. We ended the quarter with $2.9 million in cash and cash equivalents with no amounts drawn on our $10 million working capital facility. Looking ahead, though we expect legacy search to gradually recover through the year, we will continue to closely monitor its margin and expenses and make further adjustments as necessary. For our Audience Modeling business, we continue to forecast strong double-digit year-over-year growth for each quarter in 2026 driven by a very healthy sales pipeline.

With that, I’ll turn the call back over to Rob.

Rob Buchner: Great. Thanks, Wally. Against the backdrop of growing demand for privacy led intent signals Inuvo will accelerate our investment in our proprietary algorithm for audience modeling. Using the same development methods of general purpose AI systems, we continue to advance our large language model to discover and target net new customers for brands. By mapping intent in real-time engagement patterns on the open Internet, we deliver valuable marketing intelligence. In so doing, our system bypasses the failings of media targeting infrastructure. We believe the data generated by our algorithm is the currency our future will trade upon in the agentic era. Our data is our data, our models ours. The more signals process, the fast through the learning accelerates, the broader the integrations, the greater the reach.

No other ad tech does precisely what IntentKey does. That’s why more prospective buyers are leaning forward during our demos. Its why our pipeline is so robust and it’s also why our cornerstone clients have upped their spend in the first quarter. The intrinsic value of IntentKey lies within the data created through our AI, the pace of adoption and the scale of the integrations across the broader ecosystem. As I look at this next phase, I’m committed to fortifying our competitive positioning. Our 4 strategic pillars keep us focused through the industry’s state of flux. Programmatic stakeholders are either wed to the past or are ready to embrace dynamic technologies that adapt as culture moves. The recruitment of progressive talent who share my ambitious vision is a vital component of my plan.

This extends to the board level. Earlier this month, we announced the addition of Sanja Partalo to our board slate. For those of you who are familiar — unfamiliar with her credentials, Sanja is arguably one of the most influential voices in ad tech today. She consistently identifies not just trends, but the underlying systems that power them. I’ve had the pleasure of knowing Sanja for the past decade and have done some work with her. I can assess that she’s one of the brightest mines in our space. At a time of profound structural transformation, we’re honored to bring her ever pointed voice to our Board. We are clear-eyed about the structural challenges facing the broader search marketplace. As our legacy search business faces continued pressure, we’ve taken appropriate measures to align our costs on this side of the house.

Our investment focus is squarely focused on extending the momentum of IntentKey. The sweeping changes in our industry have created a clear divide between legacy tech and the future of AI-driven media. While our financial results reflect a reduction in legacy search revenue following the Bonfire reset, we believe the actions we’re taking today position Inuvo for a more scalable and higher quality revenue mix. Our 2026 priorities are centered on increasing adoption and scaling IntentKey. We are well positioned to capture growing demand for intent-based audience modeling. This is a rapidly evolving space, and we remain at the forefront of this movement. We have built a foundational proven algorithm that we believe will translate to resilient growth and long-term shareholder value.

I look forward to updating you on our progress. Operator, I’ll now turn it over to you for Q&A. Thank you.

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Operator: [Operator Instructions] Your first question comes from Brian Kinstlinger from Alliance Global Partners.

Brian Kinstlinger: Rob, how has the go-to-market process changed, if at all, since you joined? What is Inuvo doing differently? And what are prospective customers’ feedback regarding IntentKey?

Rob Buchner: Well, listen, we’ve got a warm receptive audience. We’ve done a lot of work on the product. As it relates to go-to-market, I’m not casting any shade on the past, but we are in service of a lot of smaller budgets and clients regionally. And we’ve kind of upskilled our team, and we’re going after bigger budgets, more prominent brands for bigger prizes. And so all in all, we’re getting the meetings and getting the meetings is really hard to do when you’re trying to penetrate brand-direct opportunities, major blue-chip brands with sizable budgets. And we’re making some good progress there.

Brian Kinstlinger: And as you said it would take 6 to 9 months to go from kind of small pilots to larger share of the wallet. Should we begin to see the evidence of some of these larger customers in either the December quarter or the March quarter of next year? How should we evaluate the flow-through?

Rob Buchner: Right. Brian, I think a lot of the foundational work that we’re doing on go-to-market, the meetings that we’re getting, the pilots that are going to market, the sales cycle is long. It’s a 6- to 9-month kind of time horizon. given that we’ve had a good pipeline in Q1, Q2, it looks even better, you’re going to start seeing some velocity and impact to our revenues in the back end of the year, and it sets us up for a great 2027.

Brian Kinstlinger: Great. My last question is, you put out a press release, I think it was a week ago, maybe it was a little longer, 3 key new executives to help with brand recognition, I think, sales execution. Maybe talk about these strategic hires and why they’re important for shareholders to understand.

Rob Buchner: Well, look, Katie Cooper actually is an existing employee within who’s been elevated as I’m raising the profile of marketing and the brand within our industry. The other 2 hires are really to help us with business development. They’re accomplished salespeople who have had success in the programmatic arena and with larger scale clients. And not to, in any way, discriminate the difference between salespeople who maybe work regionally with smaller budgets because that’s important, too. I’m just going after people that are more confident in higher pressure environments and bring to the party a network of clients and agencies of scale. It’s not more complicated than that, Brian.

Operator: Your next question comes from Jack Aarde from Luxon Group.

Jack Vander Aarde: Rob, I just want to kind of double-click on your update about the 5 new IntentKey logos. And I think you said 3 of them were Fortune 500 companies. Can you just talk about how does this actual contract duration and sort of ASP compare to maybe IntentKey was doing last year?

Rob Buchner: I think if you look at our client portfolio really over the last couple of years, it tends to be relatively small inflating. They come on, they come off, people get fired at agencies, brands get removed from — the brands that we’re bringing on now are doing pilots with larger budgets. They’re bigger brands. And when we move towards — first of all, performance is everything. We’ve got to perform, and we tend to perform very well. That’s why we’ve got really big cornerstone brands that have been with us for years who up their spend in Q1 as well. But when you do bigger pilots with greater outcomes on the back end, when they up their spend, it can lead to 7-figure renewable contracts year-over-year. And so there is a little bit of a compounding effect with more dollars in our coffers as a result. That’s really important.

Jack Vander Aarde: Excellent. Okay. I appreciate the color there. And it just sounds like that segment that we’re renaming now is ramping. And it sounds like that the larger government contract and a few others in the pipeline. I know you’ve been targeting upstream deals a bit with bigger ASPs. Have you seen — if this is the baseball analogy, what sort of inning are we in there for the sort of IntentKey or modeling run rates?

Rob Buchner: All right. Well, I guess we’re in the baseball season. And I would say that we’re — I think we’re still in the early innings, call it the second inning. I think there’s — I think the outlook, if I was to go forward beyond 2027, this is a sizable business, and it should compound upon itself. It’s like success begets success. You hire 5 good people, their networks bring in bigger clients. Clients like to see other blue-chip brands that have already been on the platform. It’s always been that case, I think. So I think we’ll continue to attract better talent, bigger brands with better budget and the performance of IntentKey historically delivers, and that helps us on the retention side. So I think it’s — I think all those vectors coming together will take us into deep innings in the years ahead. So I’d say we’re in inning 2.

Jack Vander Aarde: Excellent. I appreciate you entertaining that. And that’s good to hear. Maybe just a follow-up for Wally on the financial kind of OpEx run rate. So definitely substantial reductions in the first quarter to operating expenses with the headcount reductions. Just wondering how much of that is severance and how much of this is a normalized go-forward OpEx? I know it’s kind of a loaded question, but is anything still over severance-wise into the second quarter? And then obviously, depending on segment revenue mix, it can fluctuate.

Wally Ruiz: Yes. So in these numbers, there’s about — there’s over $900,000 in severances in the compensation number. And the headcount has come down almost 33 — almost 1/3, almost 1/3, right? And it’s all associated around Legacy Search. Going forward, you’re going to — well, you can see in the first quarter here — in the first quarter here, you can see that the marketing costs are substantially down from the prior year. And you can anticipate it being lower than 2025 for the rest of this year.

Jack Vander Aarde: Okay. Excellent. And maybe just one more — sorry, go ahead, Rob.

Rob Buchner: Yes. Jack, I wanted to just add that the emphasis toward more self-serve data deals, and that’s kind of why I added that point. Our data is our data, our algorithm is the currency, which we trade upon. When you’re a data play, for every $1 million of revenue, it doesn’t mean that we have to add 10 more bodies. So we’ve taken friction out. We scale faster, and we don’t have the same kind of overhead with the IntentKey business. It’s not going to be labor-intensive. It’s data-centric.

Jack Vander Aarde: Absolutely. And one more just kind of follow-up to that, and then I’ll hop back in the queue. In terms of the self-serve clients that you have, and there’s a lot of testing going on, I’m sure, with clients. Do you feel like it’s making an impact? Do they get it? Do they understand the value it’s providing where you’ll see the sort of self-market itself to open up the funnel. Just curious to hear what you’re finally hearing from your client base that are using it. Is it game changing to them? And do you see expansion with the existing clients?

Rob Buchner: Look, we live and die by performance and the outcomes. And since what the IntentKey does like no other is we help identify net new customers. So upper funnel activity and engagement in concepts related to the client’s business. And that’s always going to be in demand. That’s like an evergreen proposition, and that’s where the IntentKey shines. There’s a lot of noise. This is a highly fragmented marketplace. Once the clients are on, they start seeing results, they want more, they build confidence. And when we start getting higher up the food chain within branding companies, they get it because it’s a strategic integration versus a transactional expendable another ad tech that’s come and gone. So I’m really proud of the major brands that we’ve served in the last couple of years. I just want to grow on that foundation and get better. But yes, they see the value for sure.

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

Rob Buchner: That kind of concludes our session today. So unless anyone has any other questions, we look forward to seeing you in a few months. And feel free to contact me if anyone has questions between now and then. Thank you.

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

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