Inuvo's Q3 2025 Earnings Call: Key Contradictions Emerge on Onboarding Delays, Rising Expenses, and Shifting Marketing Priorities

Date of Call: November 6, 2025

Financials Results

• Revenue: $22.6M, roughly flat year-over-year (Wally stated 1% increase YOY)
• EPS: $0.12 loss per share, improved from $0.15 loss a year ago
• Gross Margin: 73.4%, declined from 88.4% in the prior year

Guidance:

• Top 5 clients projected to grow over 65% year-over-year by end of calendar 2025
• Company remains optimistic on achieving 2025 revenue goals; Q4 expected to be the strongest quarter and could enable ~$100M TTM
• Class-action settlement expected to yield a multi-million dollar payout likely starting Dec/Jan, collectible in Q1 2026
• Platform compliance upgrade (Ranger) completed; expect Platform revenue ramp and corresponding increase in sales & marketing spend
• Anticipate meaningful high-margin enterprise revenue in 2026 from integrations, holding-company partnerships and large brand-direct deals

Business Commentary:

• Revenue Fluctuations and Strategic Adjustments:
• Inuvo delivered $22.6 million in revenue for Q3 2025, roughly flat year-over-year.

• The decline in Platform revenue was due to a deliberate reduction in advertising spend to align with updated requirements from their largest Platform client.

• Strong Growth in Agencies and Brands:

• Revenue from Agencies and Brands totaled approximately $3.9 million for the quarter, a 7% increase over last year.

• Growth was driven by increased demand and the addition of new clients, including a major healthcare provider for open enrollment.

• Technological Investments and Product Enhancements:

• Inuvo introduced Ranger, a new AI-driven ad quality system, to ensure ad creative aligns with post-click experiences.

• This investment is aimed at strengthening Inuvo's foundation and positioning it for a sustained scalable growth, particularly with large clients.

• Key Hires and Strategic Focus:

• The hiring of Chief Operating Officer Rob Buchner, with extensive experience in the ad industry, is expected to help monetize Inuvo's products at a critical stage.

• Buchner is focusing on growing high-margin self-service deals and strategic brand-direct agreements to increase enterprise adoption.

• Legal Settlements and Financial Expectations:

• Inuvo expects a significant payout in Q1 2026 related to a settled class action lawsuit, indicating a substantial financial benefit.
• The company remains optimistic about achieving its 2025 revenue goals, supported by the strong growth in Agencies and Brands and a major government contract pending.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized optimism on 2025 goals and product-led growth: "We remain optimistic about achieving our revenue goals for 2025," top 5 clients expected to grow >65% YOY, October Platform revenue was back up YOY, Q4 expected to be the best quarter, and launch of Ranger cited as opening new Platform opportunities.

Q&A:

• Question from Scott Buck (H.C. Wainwright): When you onboard 23 new clients in the quarter, do they immediately start generating revenue or is there typically a 30-, 60-, x-day lag before you start to see a real ramp?
  Response: Self-serve clients begin spending quickly in small test amounts and then ramp over time.

• Question from Scott Buck (H.C. Wainwright): As the self-service business scales to 44 clients, what feedback are you getting and is it changing how you market the product to new Brands or Agencies?
  Response: Client feedback drove a complete overhaul of the self-serve portal and is shaping product development and go-to-market messaging.

• Question from Scott Buck (H.C. Wainwright): Will sales and marketing expense move back to prior run rate in Q4 after the Q3 dip?
  Response: Yes — S&M spend should increase in direct relation to the Platform revenue ramp; the Q3 reduction was temporary.

• Question from Brian Kinstlinger (Alliance Global Partners): How is Rob thinking about advertising and marketing to address brand awareness and what has held back broader adoption of IntentKey?
  Response: Focus on memorable, ROI-driven messaging and thought leadership to demonstrate incremental return on ad spend and drive adoption.

• Question from Brian Kinstlinger (Alliance Global Partners): Can you talk about advertising and marketing budgets in 2025 and how you're thinking about 2026?
  Response: Plan to increase visibility via conferences, thought leadership and key executives' social footprints; targeted ad spend is under review as budgets are finalized.

• Question from Brian Kinstlinger (Alliance Global Partners): You mentioned your largest Platform provider may reward based on performance — can you expand on how distribution or rewards might be evaluated?
  Response: Details are not yet clear, but management expects potential quality-based rewards/redistribution tied to measured quality improvements.

• Question from Brian Kinstlinger (Alliance Global Partners): You mentioned the class action payout in Q1 — can you quantify it?
  Response: Management declined to quantify, stating it will be 'in the millions' and expects payouts to start in late Dec or Jan, collectible in Q1 2026.

• Question from Jack Vander Aarde (Maxim Group): Are there out-of-the-box opportunities for IntentKey beyond AdTech, such as hiring or prediction markets?
  Response: Some non-advertising use cases (e.g., hiring via the pending government contract) exist, but the company will keep primary focus on advertising.

• Question from Jack Vander Aarde (Maxim Group): Any plans or thoughts on digital assets, cryptocurrencies, or NFTs?
  Response: Management is following the space cursoryly but has no formal plans or initiatives at this time.

• Question from Jon Hickman (Ladenburg): The payout you referenced — is that money you're receiving and not money you owe?
  Response: Confirmed the company is a plaintiff and will receive the settlement proceeds.

• Question from Jon Hickman (Ladenburg): You said you're on track with revenue goals — is the $100M target for the year still realistic?
  Response: Management cited 25% growth through nine months, TTM revenue of ~$98M, and expects Q4 to be the strongest quarter, making the $100M target possible.

Contradiction Point 1

Onboarding Clients and Revenue Generation

It involves the timeline and process of new clients generating revenue after onboarding, which directly impacts revenue expectations and growth projections.

Do the 23 new clients onboarding this quarter generate revenue immediately, or is there typically a 30- to 60-day lag before revenue ramps up? - Scott Buck (H.C. Wainwright & Co, LLC)

20251107-2025 Q3: They get on pretty quickly and start spending small amounts initially, testing the system before ramping up. It's a cumulative effect as they increase spending over time. - Richard K. Howe(CEO)

Do new clients immediately generate revenue, or is there typically a 30- to 60-day lag before revenue begins? - Scott Buck (H.C. Wainwright & Co, LLC)

2025Q3: It's -- they get on pretty quickly and they start spending, but it's typically small amounts, Scott. So they're sort of testing the wires, I guess, and the plumbing and seeing how it works. And then you see it ramp. And then they start spending more, and they start spending more, and they start spending more. - Richard K. Howe(CEO)

Contradiction Point 2

Sales and Marketing Expenses

It involves the expected trajectory of sales and marketing expenses, which directly impacts financial projections and operational efficiency.

Will sales and marketing expenses return to their previous run rate in Q4? - Scott Buck (H.C. Wainwright & Co, LLC)

20251107-2025 Q3: Yes, expenses should increase as Platform revenue ramps up. - Wally Ruiz(CFO)

Will sales and marketing expenses return to prior levels in Q4 after the decline in Q3? - Scott Buck (H.C. Wainwright & Co, LLC)

2025Q3: Yes. It should start moving up in direct relation to our Platform revenue ramping up. - Wally Ruiz(CFO & Secretary)

Contradiction Point 3

Revenue Growth and Confidence

It involves changes in the company's confidence and expectations regarding revenue growth, which are critical for investor expectations.

Are you on track to meet your revenue goals? - Jon Hickman (Ladenburg)

20251107-2025 Q3: We are on track with a 25% growth rate through 9 months, aiming for a strong Q4 to reach our goal. - Richard K. Howe(CEO)

Have any events in the past 3-4 months, particularly related to Inuvo, affected your confidence in achieving the $100 million annual target this year? - Brian Kinstlinger (Alliance Global Partners)

2025Q2: We feel pretty good about the $100 million. Generally speaking, within the market or the industry as a whole, every quarter that's going by, I guess, we're getting more confident that people are starting to realize that there's better technology out there for -- to improve the marketing activity and maybe better understanding the nature of the problem that exists. - Richard K. Howe(CEO)

Contradiction Point 4

Advertising and Marketing Budget

It involves changes in the company's advertising and marketing budget, which are critical for growth strategies and financial planning.

What is the company's 2025 and 2026 advertising and marketing budget? - Brian Kinstlinger (Alliance Global Partners)

20251107-2025 Q3: Marketing efforts will increase, focusing on thought leadership and leveraging social media. The budget is being discussed at an upcoming off-site meeting. - Rob Buchner(COO)

Why is gross margin lower despite lower marketing costs? - Brian Kinstlinger (Alliance Global Partners)

2025Q2: We're going to continue to invest in marketing. Again, with that $100 million, we think we can help drive that additional growth. - Richard K. Howe(CEO)