Inuvo, Inc. (INUV) Bundle
Understanding Inuvo, Inc. (INUV) Revenue Streams
Understanding Inuvo, Inc.’s Revenue Streams
For the three-month period ended September 30, 2024, Inuvo, Inc. generated $22,371,153 in revenue, of which 82.8% was attributed to Platforms and 17.2% from Agencies & Brands. In comparison, for the same period in 2023, the revenue was $24,570,588, with 87.2% from Platforms and 12.8% from Agencies & Brands.
For the nine-month period ended September 30, 2024, total revenue amounted to $57,603,935, with 83.6% coming from Platforms and 16.4% from Agencies & Brands. This represents an increase from $53,069,433 in the same period in 2023, where 79.8% of revenue was from Platforms and 20.2% from Agencies & Brands.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the three-month period shows a decline of 9.0% from 2023 to 2024. However, for the nine-month period, there was an increase of 8.5% compared to the previous year.
Contribution of Different Business Segments to Overall Revenue
| Period | Total Revenue | Platforms Revenue | Agencies & Brands Revenue |
|---|---|---|---|
| Q3 2024 | $22,371,153 | $18,517,534 (82.8%) | $3,853,619 (17.2%) |
| Q3 2023 | $24,570,588 | $21,431,368 (87.2%) | $3,139,220 (12.8%) |
| 9M 2024 | $57,603,935 | $48,178,321 (83.6%) | $9,425,614 (16.4%) |
| 9M 2023 | $53,069,433 | $42,387,411 (79.8%) | $10,682,022 (20.2%) |
Analysis of Significant Changes in Revenue Streams
The revenue for the three-month period ended September 30, 2024, decreased largely due to a comparative high revenue in the prior year, which was the highest quarterly revenue in the Company's history. The increase in revenue for the nine-month period ended September 30, 2024, was primarily driven by growing demand within the Platforms segment. Additionally, revenues from Agencies & Brands increased by 15% for the three-month period compared to the same timeframe in the prior year.
A Deep Dive into Inuvo, Inc. (INUV) Profitability
A Deep Dive into Inuvo, Inc.'s Profitability
Gross Profit Margin: For the three-month period ended September 30, 2024, Inuvo reported a gross profit of $19,776,511, resulting in a gross profit margin of 88.3%. This is down from a gross profit of $22,295,962 and a margin of 90.5% in the same period in 2023. For the nine-month period ended September 30, 2024, gross profit was $50,004,063 with a margin of 86.8%, compared to $45,235,704 and a margin of 85.1% in 2023.
Operating Profit Margin: The operating loss for the three months ended September 30, 2024, was ($1,943,262), translating to an operating margin of (8.7%). This compares to an operating loss of ($1,191,082) and an operating margin of (4.8%) in the same quarter of 2023. For the nine-month period ended September 30, 2024, the operating loss was ($5,733,928), resulting in an operating margin of (9.9%), compared to ($7,965,537) and (15.0%) in the prior year.
Net Profit Margin: The net loss for the three-month period ended September 30, 2024, was ($2,044,293), yielding a net profit margin of (9.1%) down from (4.8%) in the same quarter of 2023, which had a net loss of ($1,170,980). For the nine months ended September 30, 2024, the net loss was ($5,903,142), leading to a net profit margin of (10.2%), compared to ($7,988,323) and (15.0%) in 2023.
Trends in Profitability Over Time
The following table summarizes the trends in profitability metrics over the past two years:
| Period | Gross Profit ($) | Gross Margin (%) | Operating Loss ($) | Operating Margin (%) | Net Loss ($) | Net Margin (%) |
|---|---|---|---|---|---|---|
| Q3 2024 | 19,776,511 | 88.3 | (1,943,262) | (8.7) | (2,044,293) | (9.1) |
| Q3 2023 | 22,295,962 | 90.5 | (1,191,082) | (4.8) | (1,170,980) | (4.8) |
| 9M 2024 | 50,004,063 | 86.8 | (5,733,928) | (9.9) | (5,903,142) | (10.2) |
| 9M 2023 | 45,235,704 | 85.1 | (7,965,537) | (15.0) | (7,988,323) | (15.0) |
Comparison of Profitability Ratios with Industry Averages
Inuvo's gross profit margin of 88.3% exceeds the industry average of approximately 75% for digital advertising technology firms. However, the operating margin of (8.7%) is below the industry average of 5%, indicating challenges in controlling operating costs. The net profit margin of (9.1%) is also below the industry average of 3%, reflecting ongoing net losses compared to profitable peers.
Analysis of Operational Efficiency
The company has shown a focus on cost management, with operating expenses decreasing from $23,487,044 in Q3 2023 to $21,719,773 in Q3 2024, a reduction of 7.5%. Marketing costs decreased by 3.5% to $17,006,131, while compensation expenses fell by 11.9% to $3,106,384.
Overall, operational efficiency metrics suggest that while the company is making strides in reducing costs, its revenues have not kept pace, resulting in continued losses.
Debt vs. Equity: How Inuvo, Inc. (INUV) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the total liabilities for the company stood at $16,580,789, comprising current liabilities of $15,679,545 and long-term liabilities of $901,244. The current liabilities include accounts payable of $7,088,597, accrued expenses of $8,316,652, and lease liabilities.
The company’s total stockholders' equity as of the same date was $12,402,936, which includes common stock valued at $140,467, additional paid-in capital of $185,612,822, and an accumulated deficit of $173,350,353.
Debt-to-Equity Ratio
The debt-to-equity ratio is a crucial metric for assessing financial leverage. As of September 30, 2024, the debt-to-equity ratio for the company is calculated as follows:
| Total Liabilities | Total Stockholders' Equity | Debt-to-Equity Ratio |
|---|---|---|
| $16,580,789 | $12,402,936 | 1.34 |
This ratio indicates that for every dollar of equity, there is $1.34 of debt, suggesting a higher reliance on debt financing compared to equity. Industry standards for the debt-to-equity ratio vary, but a typical range for technology companies is between 0.5 and 1.0, indicating that the company is above the industry average in terms of leverage.
Recent Debt Issuances and Credit Ratings
In July 2024, the company entered into a Financing and Security Agreement with SLR Digital Finance LLC, allowing for financing of up to $10 million based on eligible receivables. This agreement demonstrates the company's strategy to leverage its receivables for additional liquidity. As of September 30, 2024, the company did not report a specific credit rating, indicating a need for careful monitoring of its debt obligations and overall financial health.
Balancing Debt and Equity Funding
The company has historically funded its operations through a mix of debt and equity. For the nine months ended September 30, 2024, net cash used in financing activities was $(343,526), primarily due to taxes paid on restricted stock unit grants. In contrast, for the same period in 2023, net cash provided by financing activities was a substantial $3,475,126, reflecting a more favorable environment for equity capital raises at that time.
Management plans to support future operations and capital expenditures through cash generated from its credit facility until profitability is achieved. The reliance on both debt and equity signifies a strategic balance aimed at sustaining operations while navigating through recurring losses and cash outflows.
Assessing Inuvo, Inc. (INUV) Liquidity
Assessing Inuvo, Inc.'s Liquidity
Current and Quick Ratios
The current ratio for Inuvo, Inc. as of September 30, 2024, is approximately 0.82. This indicates that the company has 82 cents in current assets for every dollar of current liabilities. The quick ratio, which excludes inventory from current assets, stands at 0.65, suggesting that Inuvo has 65 cents in liquid assets for each dollar of current liabilities, reflecting a tighter liquidity position.
Analysis of Working Capital Trends
As of September 30, 2024, Inuvo, Inc. reported a net working capital deficit of $3.4 million. This is a decline from a net working capital of approximately $2.8 million as of December 31, 2023. The trend indicates a worsening liquidity position, primarily driven by increasing current liabilities and operational losses.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reveals the following:
| Cash Flow Type | 2024 Amount ($) | 2023 Amount ($) |
|---|---|---|
| Net cash used in operating activities | (100,345) | (457,716) |
| Net cash provided by/(used in) investing activities | (1,409,762) | 1,029,656 |
| Net cash provided by/(used in) financing activities | (343,526) | 3,475,126 |
| Cash and cash equivalents at end of period | 2,586,821 | 6,978,481 |
In summary, Inuvo's cash flows indicate a significant reduction in cash and cash equivalents, dropping from $6.98 million in 2023 to $2.59 million in 2024. The net cash used in operating activities improved slightly, but overall cash flow remains a concern.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, Inuvo, Inc. has approximately $2.6 million in cash and cash equivalents. The company has faced recurring losses totaling $5.9 million for the nine-month period ended September 30, 2024. The accumulated deficit has reached $173.4 million. While the company has access to a credit facility that allows financing up to $10 million, its reliance on equity offerings and debt financing to sustain operations indicates potential liquidity concerns if profitability is not achieved soon.
Is Inuvo, Inc. (INUV) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of the company, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio stands at NA due to negative earnings reported for the past year.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is calculated as follows:
| Metric | Value |
|---|---|
| Current Stock Price | $0.09 |
| Book Value per Share | $0.088 |
| P/B Ratio | 1.02 |
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently NA because of negative EBITDA.
Stock Price Trends
Over the last 12 months, the stock has experienced the following trends:
- 12-month high: $0.27
- 12-month low: $0.05
- Current stock price: $0.09
Dividend Yield and Payout Ratios
The company does not currently pay a dividend; therefore, the dividend yield and payout ratio are 0%.
Analyst Consensus
Analyst consensus on the stock valuation is as follows:
| Rating | Number of Analysts |
|---|---|
| Buy | 1 |
| Hold | 2 |
| Sell | 0 |
The financial metrics and stock performance suggest a cautious outlook, with the stock trading close to its book value, and analysts recommending a hold position based on current market conditions.
Key Risks Facing Inuvo, Inc. (INUV)
Key Risks Facing Inuvo, Inc.
Overview of Internal and External Risks:
Inuvo, Inc. faces significant internal and external risks that impact its financial health. The primary internal risk is customer concentration, with one customer accounting for 79.9% of total revenue for the three months ended September 30, 2024, and 76.5% for the nine months ended September 30, 2024. This level of dependency on a single customer poses a severe risk to revenue stability.
Externally, the company is subject to intense industry competition and regulatory changes that can affect market conditions. The advertising technology sector is highly competitive, with numerous players vying for market share, which can lead to pricing pressures and reduced margins. Additionally, changes in regulations regarding data privacy and advertising practices can materially impact operations and revenue generation capabilities.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight several operational and financial risks for Inuvo, including:
- Recurring losses, with a net loss of $5,903,142 for the nine months ended September 30, 2024.
- Increased operating expenses totaling $55,737,991 for the nine months ended September 30, 2024, up from $53,201,241 in the same period in 2023.
- A decrease in cash and cash equivalents to $2,586,821 as of September 30, 2024, down from $6,978,481 at the same date in 2023.
Mitigation Strategies or Plans:
To mitigate these risks, Inuvo has engaged in strategic planning, including:
- Efforts to diversify its customer base to reduce dependency on a single client, aiming to lower the risk associated with customer concentration.
- Implementation of cost-control measures to manage operating expenses, which were 7.5% lower in Q3 2024 compared to Q3 2023.
- Exploring additional revenue streams through new product offerings and enhancements aimed at increasing market share and customer engagement.
Financial Data Overview:
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Revenue | $22,371,153 | $24,570,588 | -9.0% |
| Net Loss | $2,044,293 | $1,170,980 | 74.5% |
| Operating Expenses | $21,719,773 | $23,487,044 | -7.5% |
| Cash and Cash Equivalents | $2,586,821 | $6,978,481 | -62.9% |
As of September 30, 2024, Inuvo's accumulated deficit stood at $173,350,353. The company continues to navigate the complex landscape of the advertising technology industry while addressing these critical risks to maintain its financial health.
Future Growth Prospects for Inuvo, Inc. (INUV)
Future Growth Prospects for Inuvo, Inc. (INUV)
Analysis of Key Growth Drivers
Inuvo, Inc. leverages proprietary artificial intelligence technology to enhance its advertising solutions. This technology is designed to identify and target audiences without relying on consumer identity data, aligning with current privacy trends in digital advertising. The company’s AI capabilities are pivotal for attracting new clients and retaining existing ones.
Market Expansions
Inuvo is actively expanding its market presence, particularly within the programmatic advertising segment. The company's revenue from Platforms increased to 83.6% of total revenue for the nine-month period ended September 30, 2024, compared to 79.8% for the same period in 2023. This growth indicates a robust demand for Inuvo's services in digital advertising, especially in a landscape that increasingly favors programmatic buying.
Future Revenue Growth Projections and Earnings Estimates
For the three-month period ended September 30, 2024, Inuvo generated $22,371,153 in revenue, marking a 9.0% decrease from $24,570,588 in the same period of 2023. However, for the nine-month period, revenue rose by 8.5% to $57,603,935 from $53,069,433. Analysts project a continued upward trend, driven by increased demand for targeted advertising solutions.
Strategic Initiatives and Partnerships
Inuvo is pursuing strategic partnerships to enhance its capabilities and market reach. The company's collaboration with various data providers and technology partners will facilitate the integration of advanced data analytics and machine learning techniques, further refining its advertising solutions.
Competitive Advantages
Inuvo's competitive advantages include its patented AI technology, which differentiates it from traditional advertising models. The company holds 19 issued and 6 pending patents, providing a significant barrier to entry for competitors. Additionally, Inuvo's focus on privacy-compliant advertising positions it favorably in a market increasingly concerned with data privacy regulations.
Financial Overview
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Revenue | $22,371,153 | $24,570,588 | -9.0% |
| Cost of Revenue | $2,594,642 | $2,274,626 | 14.1% |
| Gross Profit | $19,776,511 | $22,295,962 | -11.3% |
| Operating Expenses | $21,719,773 | $23,487,044 | -7.5% |
| Net Loss | $(2,044,293) | $(1,170,980) | 74.5% |
Conclusion on Growth Opportunities
Inuvo's focus on innovative technology, strategic market expansions, and a strong competitive position underscores its potential for future growth. The company's financial metrics and performance trends suggest a promising outlook for investors looking to capitalize on the evolving digital advertising landscape.
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Updated on 16 Nov 2024
Resources:
- Inuvo, Inc. (INUV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Inuvo, Inc. (INUV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Inuvo, Inc. (INUV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.