Inuvo Q1 Report Update
Inuvo reported first quarter results last week with top line revenue of $15.9m coming in just below management’s previous expected range of $16.2 – $16.5m and the bottom line EBITDA figure of $1.4m slightly better than had been anticipated. Inuvo’s Network segment contributed 68% of total revenue in the quarter delivering strong year over year and quarter over quarter growth. Inuvo’s Applications segment generated a disappointing, but not totally unexpected decline with $5.1m in top line revenue. The Applications segment numbers were heavily impacted by recent changes required by key monetization partner Google and the resulting pullback in Inuvo’s ad spend to promote this segment while the company retooled its customer acquisition model to reflect these changes.
Inuvo management’s comments on the Q2 performance to date suggested some slowing of the top line growth with day to day revenue numbers thus far coming in below Q1. On a brighter note, it appears that the company has subleased the NYC office space at cost and the income statement improvements from the other cost reductions measures should start to be fully realized by the end of Q2. Additionally, the company is working towards the roll out of several new websites and applications that should be live by the end of Q2 or early Q3 at the latest. Overall, the action in trading since the release appears to suggest investors have chosen to focus on the growth of Inuvo’s Mobile traffic and revenues rather than the recent revenue slowdown that was evident in the ALOT Appbar operations. Near term positive catalysts include the opening of a window that would allow insiders to purchase shares (a few Form 4’s would likely do much to boost the stock until all of the expense reductions start to show up in the reported numbers) and upcoming investor conference presentations that might bring more attention to the company.