Inuvo (INUV) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, Aug. 11, 2026 at 4:15 p.m. ET

CALL PARTICIPANTS

• Head of Brand and Communications - Katie Cooper
• Chief Executive Officer - Rob Buchner
• Chief Financial Officer - Wallace D. Ruiz

TAKEAWAYS

• Revenue -- $7.5 million, representing a 67% decrease year over year resulting from lower legacy search volume.
• Audience Modeling Revenue -- $3.6 million, reflecting a 19% increase year over year driven by deepened investment from existing clients and five new brand-direct relationships.
• Legacy Search Revenue -- $3.9 million, an 80% decrease year over year due to industry disruption and the 2025 strategic reset of the Bonfire platform.
• Gross Margin -- 44%, a decrease from 75% in the prior year period reflecting the contraction in higher-margin legacy search revenue.
• Operating Expenses -- $6.4 million, a 67% reduction year over year attributed to lower traffic acquisition and compensation costs.
• Net Loss -- $4.0 million, or $0.27 per share, compared to a net loss of $1.5 million, or $0.10 per share, in the second quarter of 2025.
• Adjusted EBITDA -- A loss of $1.8 million, compared with a loss of $629,000 in the same quarter last year.
• Headcount -- 51 employees, down from 82 in the prior year period following a workforce reduction primarily in the legacy search segment.
• Financing Proceeds -- $13 million total, including $10 million received in June and $3 million from a registered direct offering completed in July.
• Debt Retirement -- $3.8 million, used to retire an outstanding convertible promissory note and a receivables-based credit facility.
• Ranger Asset Sale -- $450,000, for the sale of the AI-powered quality assurance tool while the company retains a perpetual use license for its legacy search business.
• Severance Charge -- $470,000, recognized during the quarter as part of organizational rightsizing.
• Brand-Direct Relationships -- five new partnerships, including two Fortune Global 500 companies currently in the pilot phase.
• Website New Users -- 300% growth, following the launch of the new intentkey.com site early in the second quarter.
• Audience Model Generation -- tenfold increase, in activity around generated models utilized for internal sales support and external engagement.
• Restricted Cash -- $6.2 million, held on the balance sheet at quarter end at an interest rate of 5%.
• Cash and Cash Equivalents -- $886,000, as of June 30, excluding the proceeds from the July common stock offering.
• Compensation Cost Reduction -- $337,000, representing lower year-over-year expenses despite the impact of severance charges.
• Healthcare Addressable Market -- $150 billion, identified by management as an opportunity for IntentKey signal intelligence during the annual open enrollment period.
• Recruitment Marketing Vertical -- billions in annual spend, targeting specialized workforce recruitment where legacy tools have become less effective.

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RISKS

• Buchner stated, "The old open web search model is fracturing," noting that industry-wide disruption and the shift away from personal IDs led to a slower-than-expected recovery in legacy search revenue.

SUMMARY

Management reported a 19% increase in audience modeling revenue while downsizing legacy search operations to align with a shifting digital advertising landscape. The company stated it is transitioning from an identity economy to a context economy as tracking mechanisms and cookies degrade across the open web. To support this transition, Inuvo reported securing $13 million in capital to retire debt and provide working capital for its IntentKey AI technology. Management indicated that strategic priorities for the remainder of the year include expanding AI applications into healthcare and recruitment verticals while maintaining lower operating expenses.

• CEO Buchner stated the company is in "advanced testing phases of a new model context protocol or MCP server" to integrate IntentKey intelligence directly into AI-native workflows like Claude and ChatGPT.
• Management reported that following a pilot with Blue Shield of California, the company launched a plan to target the $150 billion addressable market for healthcare open enrollment where 30% of marketplace users switched carriers last year.
• Inuvo reported upskilling its sales organization with "enterprise grade talent" to accelerate the conversion of targeted pilots into scalable recurring growth across automotive, travel, and government sectors.
• The company noted that IntentKey provides a "secure compliant technology" for high-intent inventory because it requires no personal IDs or historical click streams to function.
• CEO Buchner attributed the expansion into workforce recruitment to IntentKey's ability to "identify prospective candidates with precision before other competing employers" in sectors like manufacturing.
• Incoming executive leadership includes Derek Sicori as President and CFO, and Alisha Paris as Chief Accounting Officer, both effective in August 2026.

INDUSTRY GLOSSARY

• IntentKey: A patented AI technology that identifies consumer engagement based on real-time media consumption without relying on personal identifiers.
• MCP: Model Context Protocol, a server architecture that integrates IntentKey intelligence into AI-native workflows such as ChatGPT or Claude.
• Ranger: An AI-powered quality assurance tool used for monitoring advertising quality and compliance.
• Identity Economy: A digital advertising framework that depends on third-party cookies and personal identifiers for audience tracking.
• Context Economy: An emerging advertising framework that uses real-time semantic signals and user intent rather than historical personal data.
• Programmatic I/O: An industry conference focused on the programmatic advertising and marketing technology sectors.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to Inuvo Inc. Q2 26 Earnings Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is being recorded on Tuesday, 08/11/2026. And I would now like to turn the conference over to Katie Cooper, Head of Brand and Communications.

Katie Cooper: Thank you. Please go ahead. Thank you, operator, and good afternoon. I would like to thank everyone for joining us today for the Inuvo second quarter 26 shareholder update call. Today, Inuvo's Chief Executive Officer, Rich Howe, and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that we plan to file our 10 Q with Securities and Exchange Commission this evening. Before we begin, I would like to remind you that the statements in this conference call that are not descriptions of historical facts are forward looking statements relating to future events.

And as such, all forward looking statements are made pursuant to the Securities Litigation Reform Act of 2 thousand. These forward looking statements are subject to risks and uncertainties and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Inuvo, Inc. Are as such a forward looking statement. Investors are cautioned that all forward looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo's public filings with the U. S.

Securities and Exchange Commission, which can be reviewed at www.sec.gov. The company makes no commitment to disclose any revisions to forward looking statements or any facts, events or circumstances after the date hereof that bear upon forward looking statements. In addition, today's discussions will include references to non GAAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non GAAP measures to the most directly comparable GAAP measures is available in today's news release on our web website. With that, I will now turn the call over to CEO, Rich Howe.

Rob Buchner: Thank you, Katie, and good afternoon, everyone. And thanks for joining the call. I will begin today with brief remarks on our second quarter results and our progress on the key tenets of our growth agenda. Then I will hand it over to Wally for a review of the financials. And our recent capital raise. I will then close with a few thoughts and open the call for your questions. All right, let's start with the second quarter. Second quarter results tell a story that continues to underscore the strategic choices we made over the last several months. Audience modeling revenue increased 19% from a year ago. Driven once again by deepening investment from existing clients and recent client wins.

At the same time, legacy search revenue had slowed more than expected and recovery has been slower. Reflecting ongoing industry wide disruption. These dynamics are emblematic of a broader structural evolution occurring across the open web. Digital advertising is undergoing a fundamental shift away from an identity economy which relies on degrading personal IDs third party cookies, and static historical segments. Toward a context economy. As match rates fall, and tracking mechanisms fail, chasing who someone was yesterday is yielding diminishing returns. Value on the open web is migrating to platforms that understand what is happening around a user in real time.

Contextual signals from content being consumed in the moment mapped with broader patterns of collective interest, are far better predictors of consumer motivation and true engagement. The old open web search model is fracturing. But the flight to quality context, and immediate user intent is exactly the race IntentKey was built to win. The speed of this change underscores the urgency for execution, against a backdrop of favorable dynamics for our algorithm. Said simply, the marketplace is more receptive to our value proposition than ever before. With respect to legacy search, an honest look resulted in some tough decisions this quarter. We further lowered legacy search headcount and rightsized the operation to a level we believe is sustainable.

These decisions were not easy, but they were the right moves. And they free us to concentrate fully on what matters. Building a cleaner, more profitable business with IntentKey at its center, We also executed financing transactions $13 million enabling us to strengthen our balance sheet and pay off existing debt. All while providing needed working capital for the business. Today, I am confident we are now operating from a stronger position Fewer distractions and a greater cash runway. Giving us more time and resources to pursue the significant opportunity in front of us with full conviction. I will be frank. there is still a lot to do.

But now we are better equipped to elevate our IntentKey offering and drive higher margin compounding growth into the business. I want to take a few minutes to review the progress we have made on our strategic pillars and frame up priorities for the back half of the year. As a reminder, our 4 strategic pillars are go to market focus, raising intent keys and industry profile, continuing product innovation, and high margin growth. Turning to our go to market focus. Since January, we have overhauled our sales organization. Bringing in enterprise grade talent with deep programmatic expertise and brand direct relationships.

These individuals are now fully embedded in our organization, and raising the bar on every aspect of our commercial execution. Inuvo is also strengthening its market automation vertical positioning, and sales enablement to support this expanded commercial organization. These go to market upgrades are accelerating test to expansion conversion. And IntentKey's differentiated audience intelligence, into scalable, recurring growth. And we are seeing tangible commercial activity as a result. During the second quarter, we brought on 5 new brand direct relationships. Including 2 Fortune 500 companies that are now competing in the completing the pilot phase. At the same time, our up skilled sales team is advancing opportunities across government, and specialized workforce recruitment health care, automotive, travel, and entertainment.

A number of these opportunities are following the test to expansion model we are building. Beginning with targeted pilots that can scale into broader enterprise relationships based on performance. We are also seeing agency relationships create opportunities to expand beyond individual campaigns and brands into broader portfolios. Importantly, we are building this growth across 3 distinct paths to market. Managed service, for more complex enterprise campaigns, self-service for direct activation, and portable data and white label solutions for channel partners. We are also experiencing deeper adoption in self-service including increased campaign activity, repeat utilization, broader cross platform activation, and additional enter enterprise brand activating through brand direct private marketplaces. That breadth-- that breadth matters.

It gives us multiple ways to monetize the same underlying IntentKey intelligence based on how an advertiser, agency, or partner prefers to work with us. We are also looking at new strategic applications of IntentKey signal intelligence, beyond traditional product advertising. Specifically, we have announced expansions into workforce recruitment marketing, and health care open enrollment. Both of which suffer from the same structural dysfunction plaguing consumer advertising. For workforce recruitment, the market is hungry for disruptive effective technologies. The war for specialized, high value talent drives billions in annual recruiting marketing spend. But the tools job boards, applicant databases, static segments, are inefficient and ineffective in areas of tight labor supply. Including the skilled trades in the manufacturing sector.

That are increasingly in demand. IntentKey's ability to identify prospective candidates with precision before other competing employers gives us a compelling value proposition in a market where legacy tools are becoming less and less effective. IntentKey can identify vocational interests before that person realizes they are an actual candidate. Likewise, as open enrollment approaches we have launched a coordinated go to market plan to drive acquisition during what is effectively an annual market share event for health insurers. Last year, 30% of the 23 million people who entered the marketplace switched carriers. Following our successful 2025 pilot, with Blue Shield of California, IntentKey demonstrated its ability to identify and target intent well before purchasing decisions are made.

Allowing insurers to win market share before the market becomes saturated. Crucially, because IntentKey requires no personal IDs, it offers a secure compliant technology to capture subscriber growth across $150 billion addressable market. These are just 2 examples of how we are opening the aperture on the strategic application of IntentKey to drive greater addressable market and a more diversified compounding revenue pipeline. Okay. Turning to our next strategic pillar, raising IntentKey's industry profile. After a busy quarter rationalizing cost, and securing financing, we now have the bandwidth and momentum to tell the intent key story more broadly. And our third quarter calendar reflects this focus.

From an industry perspective, we will be attending both the AdExchanger's Programmatic I/O conference in Chicago as well as the Programmatic I/O Conference in New York. Both in September. These conferences are important venues to demonstrate our technology leadership communicate our market differentiation, and engage industry influencers who are at the forefront of emerging trends in marketing technology. We also have investor events planned for the third and fourth quarters. We will be able to announce more details as they are available. As you may remember from our May call, we launched a new intentkey.com website early in the second quarter.

I am pleased to say that this site, which showcases the IntentKey platform through interactive tutorials test drives, and a clearly articulated value proposition appears to be resonating. Following the launch, new users increased by more than 300%, We also saw nearly a 10x increase in activity around generated audience models. Reflecting greater use of the technology across both external engagement and internal sales and client support efforts. We continue to be very active in our marketing efforts and look forward to providing more color on our third quarter call. Turning to continuous product innovation. In today's market, speed, accessibility, and real time execution are increasingly in demand. We continue to refine and innovate around IntentKey.

Building upon the significant R&D foundation behind the technology and the years of research that preceded its commercialization. While it is still early, I am pleased to say that we are in advanced testing phases of a new model context protocol. Or MCP server that would allow us to bring IntentKey intelligence directly into AI native and agentic workflows like Claude, and ChatGPT. Once ready, this protocol-based integration would make the IntentKey more portable signal intelligence layer. Meeting consumers customers, and their AI agents where they already operate. In turn delivering net new demand intelligence within the workflows they already use. We believe this has the potential to remove an important barrier for adoption.

Rather than requiring users to leave their existing workflows and enter a separate interface to access IntentKey MCP gives us a path to make the intelligence available wherever customers are already working. This native integration is an important part of how we see IntentKey evolving. And lastly, our fourth strategic pillar high margin growth. As I discussed in my opening remarks, we have made several important strategic moves to lengthen our cash runway and position the business to support higher-margin growth, including rationalizing our legacy search business and raising capital. Both of which advance our progress on this strategic pillar.

With respect to legacy search, the rationalization of our revenue and our support infrastructure, while painful, frees us from the pressures caused by a business that was generating net negative net margins and a net cash burn. And for which a viable path for full recovery was becoming less likely as the industry continues to shift. To be clear, legacy search remains part of our business. But we are now operating from a cleaner, more resilient foundation 1 that generates better margins, and positive cash flow, and no longer weighs on our ability to invest behind my long term strategic vision.

With respect to our recent capital transactions, we secured $13 million that enabled us to repay existing debt and secure working capital. Which we can use to advance our IntentKey offering and execute on our strategic vision. More recently, in July, we sold Ranger, our AI powered quality assurance tool, subject to a 60 day trial period. In exchange, we will receive $450 thousand and a perpetual use license that enables us to continue using this technology within our legacy search business. Together, these moves enable us to concentrate fully on execution with the financial flexibility to invest in our core priorities.

We are moving with urgency, remaining prudent with our spending, and building with conviction towards a stronger, higher-margin, more resilient Inuvo. As you saw in the press release, this press release this afternoon, Wally will be retiring. After 16 years of steady, capable leadership. Collaboration, and prudent financial stewardship. I have been so fortunate to have Wally beside me through what has been 1 of the most consequential periods in this company's history. I am grateful for his insight and cool headedness as we made tough decisions to rationalize the bonfire business. Raise capital, and reposition the company to benefit from the sea changes in the industry. Wally's last day as CFO will be August 17.

When industry veteran Derek Sicori will start as our new president and CFO. More on that shortly. I am pleased to say that Wally will remain with us through the end of the year, serving in an advisory role to the company. Wally, you will be missed. Thanks for all you have done for Inuva. it is been a true pleasure working with you. Thanks, Wally. I am gonna send it over to you now.

Wallace D. Ruiz: Thank you, Rich. Been a real pleasure working with you and the Inuvo team. But I know I leave you in good hands. To those listening, good afternoon. And thank you for joining us. I will begin with a review of the quarter's financial results, We will touch on liquidity and the outlook and then we will then I will turn it back to Rich. Second quarter results reflect the ongoing impacts of our strategic pivot as we rightsize the legacy search business while growing audience modeling. Second quarter revenue was $7.5 million down 67% compared with the record revenue we experienced in the second quarter of last year. This decline was due entirely to lower legacy search revenue.

Which was down 80% compared to the year ago second quarter. Reflecting the continued impacts of the fourth quarter bonfire reset and the ongoing industry wide pressure on web search. For audience modeling, revenue was up 19%. In the second quarter compared with the same quarter last year. Due to recent client wins and deepening commitment from existing IntentKey customers. The change in revenue mix resulted in the second quarter gross margin of 44% compared with 75% a year ago in the second quarter. This is primarily driven by the contraction in legacy search. As a reminder, much of the legacy search expense is marketing. And is therefore recognized in operating expenses.

Yielding a higher gross margin than we find in audience modeling. Audience modeling expenses are largely reflected in the cost of revenue. Historically, from an operating margin perspective, audience modeling is more profitable than legacy search. Second quarter operating expenses were $6.4 million down $12.8 million or 67% from the second quarter of last year. This decline was entirely due to lower legacy search revenue which drove down traffic acquisition cost and compensation cost. Compensation cost was $337 thousand lower in this year's quarter compared to last year. In spite of a $470 thousand severance charge. Our headcount at June 30 was 51. This compares with 82 at June last year.

Most of the reduction in headcount was associated with legacy search. At the end of the quarter, we executed a pair of financing transactions with combined gross proceeds of $13 million The financing consisted of 2 discrete transactions, The first was a purchase agreement consisting of 2 underlying notes with combined gross proceeds to Inuvo of approximately $10 million. Innovo received $3.8 million from these notes on June 29, which the company used to repay and retire our outstanding convertible promissory note in our receivable based credit facility. The remaining cash received after the extinguishment the extinguishment of debt was re retained for working capital purposes. The second transaction closed in early July.

It was a registered direct offering of common stock and prefunded warrants. Yielding gross proceeds to the company of approximately $3 million. As a result of these transactions, we recognized a charge of $870 thousand in other income and expense during the quarter, representing the combined effect of a loss on extinguishment of the convertible promissory note and the working capital line of credit. Net loss for the quarter was $4 million or $0.27 per share, compared with a loss of $1.5 million or $0.10 per share in the second quarter of last year. We ended the quarter with $886 thousand in cash and cash equivalents and $6.2 million in restricted cash.

Our previous financing, a convertible promissory note, a receivables based credit facility had been extinguished. Both had been extinguished by quarter end. Note that our quarter end balance sheet does not reflect the $3 million the $3 million sale of common stock and prefunded warrants that we closed at the beginning of July. It also does not reflect monies received from the sale of Ranger which we also closed in July. Before I hand the call back over to Rich, I just wanna give some color about how we are thinking about the balance of the year. We continue to forecast year over year revenue growth for audience modeling in 2026, driven by a healthy sales pipeline.

We continue to expect quarterly legacy search revenue to improve for the balance of the year with quarter over quarter improvement in margins and cash flow. We expect operating expenses to remain lower substantially lower year over year, primarily as a result of lower traffic acquisition costs associated with lower legacy search revenue. As well as lower compensation costs as we start to realize the cost savings from the recent headcount reductions. So with that, I will turn the call back over to Rob.

Rob Buchner: Thanks, Wally. Before I wrap up, want to take a minute to tell you a bit about our incoming President and CFO, Derek Sicori. And celebrate the promotion of Alisha Paris to Chief Accounting Officer. Derek is an industry veteran, that is uniquely equipped to lead us through in Inuvo's net next chapter. he is a savvy, veteran of the business and has spent his entire career at the intersection of marketing, digital media, and ad tech. And he brings to Inuvo a rare combination of strategic vision and operational precision. Most recently, Derek served as global CFO and COO of Omnicom's Commerce Group. A multibillion dollar division of 1 of the world's largest marketing organizations.

Where he delivered sustainable improvements across business, operations, profitability, and revenue growth. He also brings meaningful experience in corporate development, that will matter as we scale. Derek's first day is August 17. And I could not be more excited to welcome him to the Inuvo team. I also want to take a moment to celebrate Alisha Paris. Whose promotion from controller to chief accounting officer is 11 years in the making. 11 years of exceptional dedication leadership, and hard work that has positively impacted and strengthened our organization. This promotion is well deserved, and I am excited to see her flourish in her new role.

With Derek stepping in as President and CFO, and Alisha stepping up as Chief Accounting Officer we will have a financial leadership team whose strength is built on leveraging their complementary strengths. Ensuring both strategic financial management and operational depth. Add that I am sorry. Add to that high caliber talent we have hired on the sales side, and I believe we are building a team that can execute. The opportunity in front of us requires just not only the right technology, and the right strategy, but the right team. And I believe we are assembling exactly that. To close, the underlying landscape of the digital media ecosystem is undergoing permanent structural realignment.

AI driven search and walled gardens are keeping users within closed environments. While cookie loss and degraded match rates are dissolving traditional identity across the open web. This macro environment plays directly into IntentKey's structural design. IntentKey is not an incremental update, to legacy ad tech. it is a fundamentally distinct context first architecture built to prosper in identity blind environments. Rather than relying on historical click streams, or static audience profiles fail as identity resolution degrades, IntentKey's large language model interprets semantic context and user mindset in real time. As intent is actively forming. In a context economy, where supply is scarce and expensive, advertisers cannot afford to chase ghost profiles with high data waste.

They need the precision, speed, and real time execution that IntentKey provides to win high intent inventory before it becomes out of reach. With a longer cash runway, and optimized cost structure, and an industry landscape, moving directly towards our core technology we believe we have significant room to run. And we intend to. I look forward to updating you on our progress Operator, I would like to now turn the call over for Q&A.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the 2. If you are using a speaker phone, please lift the handset before pressing any keys. And your first question comes from the line of Jack Vander Aarde from Maxim Group. Please go ahead.

Jack Vander Aarde: Okay, great. Good evening. Thank you, and congrats to Wally on your well deserved retirement. Appreciate all the hard work you have put in our conversations. And, Rich, thanks for kind of giving us the lay of the land of what is been playing out here. I guess I will just jump into the audience modeling segment. It was good to see the growth there, as you are expecting growth there. I think you touched on 5 new brands that were signed, if I heard that correctly. Yep. I guess I just want to follow-up on the pipeline. How you have seen that kind of transform as well?

Or is there any growth in the pipeline that is meaningful since the last quarter we talked? Any more context you can provide? How does that 5% compare to what you have kind of in the pipeline for the rest of this year?

Rob Buchner: Right. So last quarter, we brought on 2 new car brands, 1 tourism account, 1 pharma brand, 1 medical device. Company. And, you know, those are in test modes. Now as our enterprise sales team are fully embedded the pipeline looks really robust right now. And I think it is a result of, 1, we recruited senior level enterprise level people who come with a book of business. So their impact is immediate. Our pipeline looks really healthy. Going into Q3 and Q4. But again, it is this sales cycle where you go to this test to scale kind of mode.

And so our vertical strategy-- so, again, our salespeople their remit is not to go and chase everything, but we are trying to focus their energies against our vertical priorities where we have got good history and where our privacy first technology prevails.

Jack Vander Aarde: Okay. Great. I appreciate the color there. And then, you know, I was not sure. Maybe I missed it, but I know we have been kind of talking about this a large government contract or potential contract. I think it was disrupted at 1 point because of a shutdown. As tends to be the case. Is there any update on kind of the Nuvo and how you are looking at the, I guess, government sector in terms of Well, IntentKey?

Rob Buchner: I do not without sounding cliche, it is government. And the procurement process is long. And tedious. And there are intermediaries involved. But we fully expect for that business that contract has been signed. The money has not been released. there is-- you know, it is a workforce recruitment thing. And there is the government's dealing with workforce issues all over the map. So they are getting their priorities so that when we go into our pilot phase, which is substantial, that we are focused against their priority jobs that they need to fill within workforce. that is about as much as I can say.

We do not see that business right now being at risk. it is just taking a long time.

Jack Vander Aarde: Okay. that is helpful. And just 1 more follow-up to that. If may. Contract has been signed, but no revenue has been recognized from that contract yet. But I guess it is dry powder, if you will, assuming it does kick in at some point. Is that is that fair?

Rob Buchner: that is accurate, Jack.

Jack Vander Aarde: Okay. Great. And then just 1 more for Wally; Hey, Wally; Yep. I guess as I wait for the 10-Q, just can you just maybe help us spell out the dollar amounts for each of those revenue segments in the quarter? I think legacy search down 80% is roughly about $4 million and then that leaves audience modeling with about $3.6 million. Is that right?

Wallace D. Ruiz: Yeah. Yeah. You hit it right on right on the head, Jack.

Jack Vander Aarde: Alright. Good. My math is still working out then. Okay. Good. Good to hear. And then just and then just 1 more, Wally, from the capital that is come in from the recent financings, On a gross basis, is it $3 million? that is still going to hit in the third quarter then from the common stock offering?

Wallace D. Ruiz: Yes. that is right. that is the gross proceeds from the RDO. And that will be we actually did that on July 1, so it is immediately at the beginning of the third quarter.

Jack Vander Aarde: Okay. Excellent. Okay. Great. that is it for me, guys. Congrats again, Wally, on retirement, and thanks a lot, Rob. I appreciate it. I will hop back in queue.

Rob Buchner: Thanks. Thanks, Jack.

Operator: Thank you. And your next question comes from the line of Brian Kinstlinger from Alliance Global Partners. Please go ahead.

Analyst: Hi, this is Kevin for Brian. Thanks for taking our questions. First, could you provide some more detail into what Inuvo is doing to increase brand awareness?

Rob Buchner: Sure. Well, we have you know, most of our know, profile is a result of what our guys are in the field doing. And their go to market materials and how we approach thought leadership. And we have overhauled every So the first wave of refreshed materials that are making its way into lunch and learns at agencies and within brand organizations is hitting this summer. So that is all been retooled Our CRM systems are all overhauled. The website's been overhauled.

And I think I mentioned during my little update there we are fanning out across all these key trade events where we will have appointments set up day after day So right now, that is what the business affords us to do. I anticipate that we will amplify our story through other means in the months ahead But that is right now, while we are working our way through the new crew coming on and resetting the business, this is what we are able to do right now. We have got other plans. Got it. Thank you. And, sorry if I missed it.

Can you talk a little bit about how enterprises are responding to IntentKey and what are the sales cycles looking like, including the POCs? Yeah. The sales cycles remain the same. What I will say is we are getting the audiences. So that is the first thing is getting access to those audiences. And we are getting those meetings They are more receptive because the market in effect, is turning our direction. it is privacy first or privacy by design. We have been beating that drum for a couple of years now because that is what we engineered several years ago to be ahead of this. The market now has caught up to us.

So we are getting the meetings They are more receptive to the story. And you know, we get them onboarded. We go into this test to expansion mode. And hopefully, that has a compounding effect in future quarters. Our retention rates are terrific, and so you gotta get those meetings And right now, we are getting all the meetings, and we have got a lot of tests lined up in the months ahead. So And they are they are their higher profile brands with bigger budgets. Even in test mode. So, again, they are not $10 thousand $5 thousand tests. They are $50 thousand $70 thousand tests that scale into that 6 figure range.

Which become recurring which on an annualized basis, you can do the math. So that is the sales cycle. that is where we are at in our journey right now. But I am really happy that we have made that we have upskilled the enterprise sales team to get these opportunities and convert more at an accelerated pace.

Analyst: Got it. Thank you. Then last question. In terms of the $6.2 million of restricted cash on the balance sheet, can you walk me through the release mechanics? And what conditions or milestones free up that cash?

Wallace D. Ruiz: Sure. Sure. So of it, $1.2 million is-- look. 1 of the reasons we are keeping it sitting there is that it is it costs a lot less than we have 2 notes. Right? The first note, a note, is at 9%. And that 1, we have taken down already. And the b note, which is the $6.2 million that you are referring to, is at 5%. So we are gonna take it down as we need it. We have not drawn anything out of that note yet. The first tranche would be $1.2 million And when we are ready to pull that, would be sometime probably in the fourth quarter. Something like that.

The remaining amount is subject to a number of milestones mostly revolving around redemptions and our ability to make redemptions.

Analyst: Got it. Thank you for taking our questions. Thanks, Kevin.

Operator: Thank you. And your next question comes from the line of Michael Panzari Please go ahead.

Analyst: Thank you very much. Rob, I just wanted to ask, what is now the breakeven for Inuvo? I know that Rich was saying for a little while about it being around $100 million Has that changed? And without the other side of the business in play as much? Or what are your thoughts on that?

Rob Buchner: Yeah. Yeah. it is a-- you kind of have to recalibrate all your thinking because that legacy search business is what was driving us towards that $100 million milestone. And, you know, that is future. But IntentKey is our primary growth driver. That side of the business starts to become cash neutral to cash positive in the mid twenties kind of a range. So you know, we would love to find our way to that mark. At some point in 2027. Okay. And how many brands are currently spending money with Inuvo? And I know they are all at different levels. with where they are at.

But I remember we had that number on some past calls, and I have not had an update on that. Yeah. I do not have those off the top of my head, Michael. You know, I believe they are I think we onboarded 88 new clients last year. I do not-- I really cannot speculate. there is a number along those lines, and we are, you know, keeping at that pace. So And some are smaller. Some are you know, have some carryover from last year because we, you know, we retain them. But what we are driving toward are juicier contracts with bigger brands with recurring revenue in the 6 figure kind of range that builds quarter-over-quarter.

I do not I do not have those numbers at my fingertips right now. No. No. that is okay.

Analyst: Appreciate it. Love all the moves, and congratulations on your retirement, Wally.

Wallace D. Ruiz: Thank you, Michael.

Rob Buchner: Thanks, Michael.

Operator: Thank you. Press star followed by the 1 on your telephone keypad. There are no further questions at this time. I will now hand the call back to Rich Howe for any closing remarks.

Rob Buchner: I just wanna thank everyone for joining us today. Thanks for your patience as we go through this transition. And, again, I really wanna sincerely thank Wally for his years of dedication and I wish him all the best in his retirement. I look forward to bringing on our new president and CFO, which will be really soon. And, you will meet him at our next quarterly meeting. If not sooner. Thank you, everyone.

Operator: This concludes today's call. Thank you for participating. You may all disconnect.

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