Marketing technology firm Inuvo Inc. of Little Rock received a $1.1 million federal Paycheck Protection Program loan, CEO Richard Howe confirmed on Wednesday.
“Without this loan, Inuvo would have been forced to let go and/or furlough employees,” Howe said in an email to Arkansas Business, adding that senior company leaders will be on reduced salaries starting in May.
“We are in the business of marketing technology/data where economic downturns typically also result in reduced marketing budgets, which in turn impacts our business,” Howe said. “Like other businesses in this strange time, we are hopeful the spread of covid can be abated and the economy can return to normality as quickly as possible.”
The publicly traded company announced fourth-quarter and full fiscal year results on March 25. It reported a loss of $858,621 for the quarter, compared to a loss $2.2 million for the same quarter the year before. Inuvo also reported a loss of $4.5 million for the year, an improvement from a $5.9 million loss for 2018.
Fourth quarter revenue rose by 7% year-over-year to $18.2 million; revenue for the year dropped by 16.1% to $61.5 million.
The company said annual revenue was affected by “lost momentum” within its ValidClick business after a proposed merger was terminated in June 2019. It also noted the attrition of $3.5 million of publisher technology revenue associated with the re-engineering strategy for tis IntentKey product in 2018.
“We have a great business, a great team, a great product set and a strong collection of Fortune 500 clients,” Howe said. “We are doing what we need to do to weather the storm.”
In response to the pandemic, the company closed its downtown Little Rock headquarters and issued a work-from-home policy for employees. Inuvo also closed its research and development facility in San Jose, California.
“In addition to our office closures, we started to experience a decrease in revenue beginning in late March, a direct result of the unprecedented human and economic tragedy that is COVID-19,” Howe said. “This has now negatively impacted our business.”
IntentKey, Inuvo’s new proprietary machine learning technology, was responsible for about 14% of 2019 revenue, the company said in its financial results statement.
“2019 was a significant year for Inuvo, marking the first full operational year of the IntentKey integration with AppNexus,” Howe said in a news release. “During the period we generated $8.5 million of IntentKey sales with margins in the fourth quarter over 40% and a 2020 path to IntentKey break even at roughly $3.5 million in quarterly revenue.
“In the 2019 fourth quarter, we generated positive Adjusted EBITDA in large part due to the IntentKey revenue and margin contributions. We expect IntentKey revenue for the first quarter of this year to increase 48% over the $1.3 million revenue reported for the first quarter of last year.”
Howe said the company recently closed a loan and security agreement with Hitachi Capital America Corp., making Hitachi its new primary lender. Inuvo also closed a $688,000 private placement of common stock with board members.
Some public companies across the country have faced backlash for accepting PPP loans, with critics citing small businesses with fewer resources and less money unable to get aid. But Inuvo isn’t like those under fire, Howe told Arkansas Business.
Howe said Inuvo is much smaller, with a market capitalization of about $14 million. Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. The company has 65 employees.
“There is no meaningful way to compare Inuvo to the average public company, neither in terms of its ability to need and/or raise money as a result of being public,” he said. “In point of fact, Inuvo has, because of its size, struggled to raise adequate capital within the public markets.”
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