Inuvo Inc. of Little Rock is in acquisition mode and has its sights set on being a “modern-day” Acxiom, according to CEO Richard Howe.
The publicly traded marketing technology provider is looking to buy with dreams of 10-figure revenue.
That’s a big leap for a company that lost more than $7 million on revenue of $44.6 million last year, but it raised $14.25 million in the first quarter of this year to make acquisitions, Howe said.
That is a complete change from November 2018, when Inuvo was the target in an announced deal to be acquired by privately held ConversionPoint Technologies Inc. of Newport Beach, California, for about $75 million. The deal unraveled eight months later; Howe said then that a federal government shutdown threw off the timing of the transaction.
In a recent interview with Arkansas Business, Howe said that Inuvo is no longer in “sell mode” and is not actively seeking a buyer.
“At this point, our primary objective is growth, not so much profitability — not that we don’t want to be profitable. Our margins are actually really great, but if we have extra money to spend, let me tell you, we’re driving it back into the business to try to drive growth,” Howe said.
“We want to try to maximize the value for shareholders. We think we can build another billion-dollar business like Acxiom here. We’re not thinking small, right? We know we’ve got the market. We’ve got the product. So why not just put our heads down and keep building this thing?”
Howe, who was previously chief marketing and mergers and acquisitions officer for Acxiom Corp., added that Inuvo’s balance sheet has “never been stronger.” Most of that success is due to one of its two lines of business, IntentKey.
IntentKey, which Inuvo launched in 2019, is a platform that uses artificial intelligence to provide data to Inuvo clients that is free and clear of the privacy concerns many consumers have.
“Investors see the value in the artificial intelligence technology that we’ve developed, and they see the size of the market potential associated with that, and they know privacy issues are everywhere these days. And we have a solution to that for the future,” Howe said.
Unlike the success the company has had in raising capital, raising revenue has been a mixed bag for Inuvo, and Howe blames the pandemic. First-quarter revenue declined by 28.9% year-over-year and revenue for fiscal year 2020 declined by 27%. The company also lost $2.2 million in the first quarter, a slight year-over-year improvement, after losing $7.3 million in 2020 and $4.49 million in 2019.
But Howe said things are looking up now. On July 7, the company reported preliminary second-quarter revenue of approximately $12.4 million, an increase of 63% from the second quarter of 2020. Its full earnings release is expected in mid-August. IntentKey revenue is expected to have increased during the second quarter of 2021 by approximately 40% year-over-year.
“That business didn’t see any decline mid-pandemic. It continued to grow throughout the pandemic. So yeah, we’re pretty excited that business is doing fabulous,” he said. “For us, that is the cornerstone of our overall growth strategy. But, with that said, the other business that we have also grew significantly year-over-year.”
Revenue for Inuvo’s second line of business, its ValidClick platform, was up 143% in March compared with its pandemic low in May 2020. ValidClick is a platform that helps large clients that include Google find ads to fill web spaces when their own systems fail to do so, Howe said.
He also expects the company to do well in the third and fourth quarters as the economy continues to recover. Recent GDP projections could spell out a few good years ahead,
Howe said, and Inuvo should be profitable by the fourth quarter.
Inuvo has new clients, is adding revenue and is growing its team in Arkansas and in California, he said. The company employs about 85 people at its headquarters — 500 President Clinton Ave., Suite 300, in Little Rock — and in San Jose, California, although it does have a few remote employees throughout the country and in Canada.
In addition, Howe said Inuvo’s stock is undervalued because of the company’s size. It closed at 82 cents a share on Wednesday, up from 64 cents the year before but down from when it spiked to $1.87 in February.
In other news, Inuvo recently changed its leadership structure. Chief Operating Officer Trey Barrett has left the company, but he will not be replaced by a new COO, Howe said.
Instead, Dana Robbins in Arkansas was promoted to head up Inuvo’s ValidClick product line, and Amir Bakhshaie in California was promoted to head up its IntentKey product line. Both will report directly to Howe.