Inuvo - Q4 2023
February 29, 2024
Transcript
Operator (participant)
Good day, ladies and gentlemen, and welcome to the Inuvo, Inc. fourth quarter and year-end 2023 conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a Q&A session. If at any time during this call you require any assistance, please press star zero for the operator. This call is being recorded on Thursday, February 29th, 2024. I would now like to turn the conference over to Alexandra Schilt. Please go ahead.
Alexandra Schilt (Head of Investor Relations)
Thank you, operator, and good afternoon. I'd like to thank everyone for joining us today for the Inuvo fourth quarter and full year 2023 shareholder update call. Today, Inuvo's Chief Executive Officer, Richard 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-K with the Securities and Exchange Commission this afternoon. Before we begin, I'm going to review the company's safe harbor statement. 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 1995. 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, Inc. at this time. In addition, other risks are more fully described in Inuvo, Inc.'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 discussion 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 website. With that, I will now turn the call over to CEO, Richard Howe. Please go ahead.
Richard Howe (Chairman and CEO)
Thank you, Ally, and thanks everyone for joining us today. We are pleased to report that for the quarter ended December 31, 2023, we delivered a strong 21% year-over-year quarterly growth with $20.8 million revenue. For the year, while revenue was down 2% overall, it was largely a consequence of a weaker than expected first quarter. The real story, however, was how well the company performed in the second half of the year, where revenue was up 32% year-over-year, and of course, in Q3, the company recorded its highest quarterly revenue ever at $24.6 million. A run rate at which we have stated many times in the past that if maintained, we would expect to get us to free cash flow positive.
It may be interesting to also note that since the COVID low point in the second quarter of 2020, we've had a 7.5% compounded quarterly growth rate through the end of the fourth quarter of 2023. This trajectory and several positive client, industry, and product announcements and advancements gives us confidence for the 2024 year. Wally will share more details about our 2023 financial results shortly. What I'd like to do is spend my time bringing you up to speed on our industry, our products, and our clients. Let's begin with our industry. We believe the plumbing of the internet is literally being reimagined before our eyes. This change is accelerating, and it's being driven both by legislative and technological pressure resulting from the use of an individual's identity and data for ad targeting.
The reason this is monumental is because the very foundation of digital advertising spend worldwide that funds most activity on the internet, over $600 billion annually, is having to be redesigned because of this change. I'd like to put this in perspective. Apple constitutes roughly 50% of all mobile devices in the United States, and because Apple has blocked user tracking, those devices, for the most part, are going untargeted across the open web. Apple has been the single biggest catalyst behind this reshaping of the internet in favor of ad targeting systems that do not use a consumer's identity and data. There is no turning back for iOS devices, and if anything, Apple continues to implement various browser technologies specifically designed to prevent user tracking.
The challenge is that there are hundreds of companies supporting this industry whose businesses and technology models are dependent on these identity-based methods. Inuvo's technology does not depend on these approaches, and consequently, we can identify suitable audiences, target those audiences, and predictably measure the effectiveness of those audiences across iOS or any other device. Generally, the incumbents are lobbying hard to keep the existing approach alive through engineering that uses less effective workarounds that were not originally designed to track people. A host of other companies are scrambling to go back to building and using contextually-based technologies that are not dependent on using a person's identity. Neither approach is likely to produce acceptable results for advertisers.
Google, which represents 50% of the overall U.S. browser market share, finally jumped into the mix this year and has begun phasing out user tracking via the third-party cookie, which they suggest they will complete by December of this year. Inuvo was built for this moment in time, starting nearly seven years ago when we began making investments in this technology. We are the only company I am aware of that has implemented proprietary large language generative artificial intelligence in a manner that solves the identity targeting problem. In head-to-head testing, our solution has outperformed other technologies we've come up against competitively. I cannot emphasize enough how this technology is revolutionary and not derivative of some other company's technology and/or product. It is, in a literal sense, the next evolution in open web ad targeting.
In the same way, OpenAI, Google, and Microsoft have introduced their large language-based technologies as the next evolution in search. We recently signed up what could be a potentially large client, specifically because our product does not rely on identity and because of the early performance results and insights we delivered. That client is now starting to scale media spend with Inuvo. We beat out two other vendors to get that business, having gone through a vetting process in 2023. As the advertising industry goes through this transformation, we expect to experience increased demand for our products and services over the next few years as advertisers begin to better understand that this new consumer privacy paradigm is here to stay, and they start to experience the performance declines associated with this transformation.
Inuvo saw the importance of this large language model AI branch of data science many years ago when we started developing for a future that has, well, now arrived. A decision that has provided us a significant competitive advantage, a moat of patents and first mover advantage for the advertising use case our AI was designed for. We've received more brand exposure in 2023 than at any time in our history. We've had over 35 media citations since the beginning of 2023. Let's shift now to products and clients. As we have discussed previously, as a company, we have been focused on using our various technologies and assets within a mostly managed service business model. This is true across the entire business, where we now count among our clients some of the world's largest technology, retail, and auto companies.
We have sold our products and services to agencies, brands, and platform clients, for whom we have placed over 11 billion ads in 2023. Going forward, we plan to disclose revenue across 2 client categories: agencies and brands, and platforms. We've defined platforms as large consolidators of advertising demand. In effect, another access point to media budgets. Platform relationships require less investment in sales and support while providing broad access to advertiser budgets. In 2023, the revenue split was 21% agencies and brands, and 79% platforms. We had 1 new platform relationship and 56 new brand and agency relationships in 2023. These new clients crossed over many industries. Currently, our largest agency and brand relationships are within auto and retail. We ran over 280 individual campaigns for these agencies and brands, and thousands of campaigns for our platform clients in 2023.
As we head into 2024, we are now able to deliver, scale, and support a feature-rich self-service version of the IntentKey AI, having now served numerous clients through its beta implementation phases. The best way to understand this solution is to think about it as an artificial intelligence, as a service product that can be frictionlessly accessed across several of the most popular advertising campaign systems. For the open web, these are generally referred to as demand-side platforms. This is a higher-margin product for Inuvo, so as we scale this over the next few years, it can significantly contribute to the bottom line. We are in the process of hiring additional salespeople dedicated to these self-service-oriented buyers. As mentioned earlier, we also had a new platform client at the end of 2023. This integration is already delivering revenue at higher margins.
In this new opportunity, we leveraged existing assets from within both Bonfire and IntentKey in a new and competitively differentiated way. The client in question is a large internet company. The first four months have been encouraging, already delivering roughly $60,000 per month in revenue with only marginal additional costs. Along with the AI as a Service product, I described previously, this forms part of our overall 2024 bottom line improvement strategy. Our largest client, itself a platform, is scaling because of a strategic initiative that client brought to market in 2023. To meet this demand, we have been expanding digital properties, campaign automation, and predictive technologies, along with our advertising fraud detection capabilities. We see strong potential upside in this initiative over the next few years, and accordingly, see this as an important part of our top-line strategy.
One of the most significant consequences of no longer being able to track consumers is the inability to measure directly when those consumers convert. This creates a serious challenge for Chief Marketing Officers, who therefore will no longer be able to attribute the return on their media investments across the plethora of campaigns and channels they deploy. In much the same way Inuvo saw the audience selection and targeting challenge, we also saw this one. This is why in 2023, we incorporated into our IntentKey programmatic AI solution, a just-in-time analytical and reporting capability that predicts, across campaigns and channels, the optimal spend levels, giving these CMOs the dashboard they need to continuously tune their marketing investments. This was a critical feature in the larger client win I described earlier.
We put out a release this week discussing how this very capability can also be used to predict, relative to other advertising tactics, the optimal investment in Netflix advertising inventory. Traditional deterministic media measurement technologies will no longer work in that channel. In 2023, we were the first company ever to provide online access to a large language model, generative artificial intelligence, that is instantly capable of creating audiences based on a contextual description of those audiences. We made this available at inuvo.com/portal. I cannot stress this enough: Every piece of audience information presented at this portal is generated by AI. This has never been done before. The commercial version of this product allows our clients to generate, action, and measure audiences based on a collection of contextual information and imagery that is representative of their products, services, or brands, with a virtually unlimited audience curation flexibility.
This is the first-of-its-kind capability within advertising, possible only because of Inuvo's proprietary patented AI. Now, as it relates to the continuing investment in our AI, we are not resting on our laurels. Rather, we are continuing to expand our AI's training in ways that will make it increasingly harder for competitors to catch up. Our latest research involves generating audiences specific to events about to occur and/or are currently occurring across the country. You'd have to be living under a rock to not have heard about Taylor Swift and Travis Kelce. If you're a brand that Kelce endorses, you have both risk and reward associated with this kind of global attention. Imagine if you had an AI technology that already knows you are associated with these two celebrities and could immediately and anonymously generate and target an audience of those people most loyal to this ongoing story.
That would be just-in-time, event-driven marketing in a manner that has never been possible. At this time, I would like to now turn the call over to Wally for a more detailed assessment of our financial performance within the quarter and year.
Wally Ruiz (CFO)
Thank you, Rich. Good afternoon, everyone. I'll recap the financial results of our fourth quarter and full year for 2023. As Rich mentioned, Inuvo reported revenue of $20.8 million for the fourth quarter of this year, 2023, and that's compared to $17.3 million for the same period last year or the prior year, it's a 21% increase. As Rich pointed out in his remarks, going forward, we'll be disclosing revenue in two categories: platform customers and agency and brand customers. We believe this better reflects our go-to-market activity. We have 56 new agency and brand customers and one new platform customer in 2023. The higher revenue is due to scaling of our largest platform customer. We reported $73.9 million revenue for the full year of 2023, a slight decrease as compared to $75.6 million in 2022.
The decrease is due to the slower than expected start in 2023 in the first half of the year. 79% of the full year of 2023 revenue was from platform customers and 21% from agency and brand customers. For the year that ended in December 31, 2022, 52% of the revenue was from platforms and 48% from agencies and brands. The change in mix was the result of focusing on and scaling a program brought to market in 2023 by our largest customer and to a lesser extent, the loss of an agency client late in 2022.
Cost of revenue was $2.6 million for the fourth quarter of 2023, compared to $5.5 million for the same period last year. Cost of revenue was $10.5 million for the full year ended December 31, 2023, compared to $30.2 million for last year. The decrease in the cost of revenue for the three months and the full year that ended December 31, 2023, as compared to the prior periods last year, was due to the change in revenue mix. Cost of revenue is primarily composed of payments to advertising exchanges that provide access to digital inventory where we serve advertisements. Gross profit improved in the fourth quarter of 2023, where it was $18.2 million, compared to $11.7 million for the same period last year.
The gross profit margin for the fourth quarter of 2023 increased to 87.3%, compared to 68% last year. Gross profit for the full year ended December 31, 2023, increased to $63.4 million, compared to $45.4 million last year. The gross profit margin for the full year that ended December 31, 2023, was 85.8%, compared to 60% last year. Again, as I, as I mentioned, the higher gross margin in the current year as compared to the prior year, is due primarily to the change in revenue mix, where a greater percentage of the, of the revenue this year was from platforms which typically has a higher gross margin.
Operating expenses for the fourth quarter of 2023 totaled $20.6 million, compared to $15.7 million for the same period last year. Operating expenses for the full year ended December 31, 2023, totaled $73.8 million, compared to $58 million. In 2023, we invested in our go-to-market team and marketing programs designed to increase our market exposure. Marketing costs were $15.2 million in the fourth quarter of 2023, compared to $10.1 million in the same quarter last year. Marketing costs increased primarily as a result of traffic acquisition or media costs associated with campaigns. Marketing costs were $52 million in the full year of 2023, compared to $36.9 million last year.
Compensation expense for the fourth quarter of 2023 was $3.6 million, compared to $2.9 million in the same quarter of the prior year. Compensation expense was higher in 2023, due primarily to higher salary, commissions, and incentive expenses. For the full year of 2023, compensation expense was $13.8 million, compared to $12.5 million in 2022. Our total employment, both full and part-time, was 93 at December 31, 2023, compared to 86 at the same time in 2022. In 2023, we added to our go-to-market sales and support team and to their commission and incentive programs. General and administrative expense for the fourth quarter of 2023 was $1.8 million, compared to $2.7 million in the prior year, a decrease of 32%.
General administrative costs were lower in 2023 compared to the same quarter in 2022, primarily due to a decrease in the reserve for doubtful accounts and professional fees. General administrative expense was $8 million for the full year, 2023, compared to $8.6 million in the prior year, a decrease of 6.7% on a full year basis. Net financing income was approximately $8,000 in the fourth quarter of 2023, compared to an expense of approximately $10,000 in the same quarter last year. Net financing expense was approximately $30,000 for the full year of 2023, compared to $21,000 last year.
Turning to other income and expense, we reported an income of approximately $15,000 for the full year of 2023, compared to an expense of approximately $436,000 for last year in 2022. Last year's expense was associated with net realized and unrealized losses on trading securities. The net loss improved in the fourth quarter of 2023, where it was $2.4 million or $0.02 per basic and diluted share, as compared to a net loss of $4 million or $0.03 per basic and diluted share for the same quarter last year.
Net loss for the full year also improved at $10.4 million or $0.08 per basic share for the year ended December 31, 2023, compared to a $13.1 million net loss, or $0.11 per share in the prior year. Adjusted EBITDA also loss improved in the fourth quarter of 2023. It was $1.2 million, and that compared to a loss of $1.8 million in the fourth quarter of last year. The adjusted EBITDA loss for the full year ended December 31, 2023, was $5.3 million, compared to a loss of $5 million last year.
The company had a positive free cash flow from May through September of 2023, and for the full year, the cash flow used had improved by $3 million over the prior year, 2022. On December 31, 2023, we had cash and cash equivalents of $4.4 million and a net working capital of $211,000. In addition, we maintain a $5 million working capital line of credit, which had no outstanding balance. We have a simple capital structure with 138 million common shares outstanding, seven million employee restricted stock units outstanding, and 108,000 out-of-the-money warrants outstanding. With that, I'll turn the call back over to Rich for closing remarks.
Richard Howe (Chairman and CEO)
Thanks, Wally. We had a strong year-over-year fourth quarter growth of 21% and a second half year-over-year growth of 32%, which provides confidence that as we head into 2024, we have the momentum required to continue growing. As we have mentioned in previous quarters, Inuvo's financial metrics begin to change at a threshold of roughly $100 million in annual revenue. At this level, gross margins are capable of absorbing much of our fixed costs and therefore generate positive cash flow. An example of this occurred in the third quarter of 2023, where we reported revenue of $24.6 million, and we did have positive free cash flow in that quarter. We believe we have a plan to reach this threshold in 2024 and can be cash flow positive. I will now turn the call over to the operator for questions. Operator?
Operator (participant)
Thank you. Ladies and gentlemen, we will now begin the Q&A session. Should you have a question, please press star followed by the number one on your touch-tone phone. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Brian Kinstlinger from Alliance Global Partners. Please go ahead.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Great, thanks. Exciting news about measuring Netflix ads. Maybe highlight the testing that's been done with beta customers, the results, and how it's helped advertisers make budget decisions. And then second, related to that, how do you plan to educate advertisers and agencies?
Richard Howe (Chairman and CEO)
Yeah, Brian. So the budget decisions is a big issue. And in fact, it's a real weakness and has been a weakness within advertising for a long time. Not that there hasn't been technologies, you know, that are available to be purchased, but not all CMOs actually use them and perhaps maybe even know that they exist. The thing about it is, when the cookie breaks and when you can't track people anymore around the internet, all of the existing technologies that have historically been used to optimize media across channels and campaigns will no longer function, because there's no longer a one-to-one connection, and their technology was developed around that one-to-one connection.
So this component that of our technology that we completed in 2023 and have now implemented across a number of customers is proving to have been a really good initiative for us. In fact, the large client win I talked about earlier was one as much for this predictive budget optimization capability as it was for the cookieless audience targeting capability. I'm sorry, Brian, what was the second question?
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Yeah. So it sounds like you have a handful of customers, to answer the numbers question. I'm not mistaken, that were either beta or now customers. The other question I would have is, I mean, again, you're a small company, limited, limited capital to deploy. How do you educate the market? How do they become aware of this product that I'm not sure you can get anywhere else?
Richard Howe (Chairman and CEO)
Yeah. So, well, there's, you know, the people we have on the street, obviously talking, you know, to prospects all the time, and that's one avenue. But you're correct on that. You know, compared maybe to other better-funded companies, you know, we've got some fraction of the total, you know, sales force that they have. We did start investing in 2023 in marketing, and by that, by investing, I don't mean it's a lot of money. I actually believe most of the increase in the media exposure that we've gotten in 2023, or at least some large component of it, is just simply the result of the reality that the end is near. And as a result, you know, media is starting to jump on the story more than they have in the past.
We're gonna continue to do that, Brian. In fact, I was just featured on a podcast recently about this. I see this accelerating for us. So I mean, these are the best two avenues we've got. Perform for our clients, you know, make sure that we're canvassing as much to the marketplace as we can and, you know, get the word out to increase the brand exposure for Inuvo.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Great. I have two more questions. The first, the ad market's had its challenges, but I think it showed some signs also of improving, but we've got also an election year. At a high level, maybe discuss with the opportunity you have with your IntentKey and your AI, how should we think about reasonable growth rate targets in 2024? And I assume the first quarter is seasonally weak as usual.
Richard Howe (Chairman and CEO)
Yeah. So we suggested, obviously, in the script that I just wrote, that, that we do have a plan that we believe we can execute on, that could get us to the $100 million mark. It doesn't mean we will, Brian, as you well know.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Yep.
Richard Howe (Chairman and CEO)
I can tell you, you know, we take our planning pretty seriously, and when we say we think we can get there, it means that, you know, with the customers we've got, with the traction we've got, with how things look just from today, we think we've got a good shot at getting there this year. You know, so that's the best I can give you. That's what I believe in.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
No, understood. This will be a tougher one then, though. You've got this product that solves this major problem, and I'm not- not to say your second half numbers aren't super. It's not to say achieving $100 million wouldn't be great either, but I guess I'd ask, why isn't adoption much faster? Why aren't agencies pushing this product so much more aggressively? Or why aren't advertisers giving you increased wallet share once they see the performance? I guess in another way, when do we see that hockey stick growth, that aha! moment of what's going on?
Richard Howe (Chairman and CEO)
So there's two primary reasons for that, for the, you know, for the question you're asking. And the third one's about hockey stick growth. I'll take that as the third. One is change. People don't like to change, Brian, okay? It's the one thing humans avoid at all costs. So you have to overcome the, you know, the aspect of change and then the reluctance to change. As I've said in the past about change, it's really helped along in a big way when there are catalysts that are forcing people to have to change. And in our case, that's a legislative catalyst, GDPR in Europe, California Consumer Privacy Act started it, but now 13 other states have, you know, data and consumer privacy, you know, legislation. Another 17 states, I think, have, you know, legislation in progress.
The change is going to occur whether the people who are reluctant to change want it to or not. Now, they may wait, which is what's happening. You know, I think a lot of people are waiting for Google to jump in this mix and finally start eliminating the cookie, and they did that, you know, in January. And they're saying they're gonna phase it out this year. So this change is now. It's happening now, and it's gonna accelerate. And all the people who have been waiting, you know, because they thought, "Oh, it's not gonna happen," or, you know, "I'm gonna use somebody else to do this," you know, are gonna find out that it's not gonna work. And that relates to the second issue with this that I answer on, which is the incumbents.
You know, as I said in my script, there are literally hundreds of companies, right? We're talking about a $600 billion worldwide industry. There are hundreds of companies that have built the entire tech stack that they have on this old way of doing it. Consider, you know, that of course, they own the majority of the market share compared to our... You know, if we do $100 million this year, they obviously don't have a lot more of it. They're not in a hurry to tell their clients, right, that they don't have a solution for this problem.
And so that, you know, causes, you know, the clients to think like, "Okay, well, we've got it covered." And all that does is it, you know, it just pushes them to have to be late adopters, because as the performance starts to decline, because their incumbents didn't have a solution to this problem or not an adequate solution to this problem, you know, we'll start hopefully getting more demand for what we have. So that probably answers the third thing, the hockey stick for us. You know, by the way, I should point out, I said it in my notes, but, you know, we have been growing at a 7.5% quarterly compounded growth rate since Q2 2020. That's not terrible. It's better-
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
It's not.
Richard Howe (Chairman and CEO)
Way better than terrible, okay? So but, but, but yes, I get your point on the hockey stick, and I think the next, you know, three years, you know, one, two, three years are gonna be really, really exciting years for us. Important and exciting years for us, because the game's over-
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Great.
Richard Howe (Chairman and CEO)
-Brian.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
But actually, last question I have. I heard it right, you had 56 new agencies, I think, for the year you added, and you ran 80-
Richard Howe (Chairman and CEO)
Agencies and brands. But it-
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Agencies and brands, right?
Richard Howe (Chairman and CEO)
Yes.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
You ran 80 campaigns, I think, for those customers, if I'm not mistaken. I'm not sure if I heard that right.
Richard Howe (Chairman and CEO)
We didn't. No, we didn't disclose that, and we won't disclose how many campaigns we ran for the 56.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
I guess my question still-
Richard Howe (Chairman and CEO)
We disclosed how many campaigns we had for the entire year. I think it was 218, wasn't it? Yeah, 218.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Ah, okay. So, but for the 86 new agencies and brands, I would think that they've started the change, they've started to see it. So, it's customers you add in year one that would drive substantial wallet share growth in year two and year three. Is that the right way to think about it?
Richard Howe (Chairman and CEO)
Yes, that's exactly how to think about it. I've said this before, so I'll say it again: We rarely lose a client, any client, unless they almost always are, when we do lose, it's a brand in an agency because the agency, we're working with lost the client. That's typically how we lose, you know, let's call it a client.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Right.
Richard Howe (Chairman and CEO)
Our strategies land and expand. So yes-
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Yep.
Richard Howe (Chairman and CEO)
You know, when we sign up 56, even if they're small now, that, you know, there's a good chance, unless an agency loses the client themselves, that those will continue to expand, right, you know, going forward for us.
Brian Kinstlinger (Managing Director and Senior Technology Analyst)
Great. Thanks for all your responses.
Richard Howe (Chairman and CEO)
Yeah. You bet, Brian.
Operator (participant)
Thank you. Your next question comes from Jack Vander Aarde from Maxim Group. Please go ahead.
Jack Vander Aarde (VP and Senior Research Analyst)
Okay, great. Thank you, Rich and Wally. And great to see the strong growth momentum in the back half of the year. So Rich, maybe just for clarity, because I think it's material and important to point out if this is correct, but considering the large agency customer, or the end customer that left in the fourth quarter of 2022, I think it was about $18 million-
Richard Howe (Chairman and CEO)
Mm-hmm
Jack Vander Aarde (VP and Senior Research Analyst)
-of your annual revenue. If you do it, is it correct to, if you adjust for that client, you know, back that revenue out, your 2023 full year revenue seems like it was up almost nearly 30%, which I think is important to point out if that is kind of the right way to think about it. Does that seem roughly correct?
Richard Howe (Chairman and CEO)
That is exactly what it is. Yes, I think-
Jack Vander Aarde (VP and Senior Research Analyst)
Okay
Richard Howe (Chairman and CEO)
That's exactly the way to look at it, Jack. And in fact, I think it's another reason why we have, you know, we feel good about that second half and why we emphasized it, because we effectively, which is what you're saying, you see, we backfilled that, you know? And that's not an insignificant amount of revenue, right? But we were able to plug that, you know, agency lost client. That was one of those examples, by the way, that I just said to Brian, right, of a loss. And so, yes, I think you're thinking about it the right way.
Jack Vander Aarde (VP and Senior Research Analyst)
Okay, great. And then maybe just further to that point, it was kind of my feeling or sense that, and I believe your guys' sense as well in previous quarters, following that event, that that was an isolated, kind of, one-time occurrence. And just to be clear, I mean, how is your relationship with that actual agency? Are you still growing and actively working with them?
Richard Howe (Chairman and CEO)
Lesser.
Jack Vander Aarde (VP and Senior Research Analyst)
Lesser. Okay. And then, you know, just sticking to the, you know, you signed these 56 new agency brands and one platform and customer in 2023. Given your comments about the strong outlook and pipeline, just hoping you could expand on that a little bit further. So, the 56 agency brands, how likely are those to be repeat customers in 2024? And are you how about expanding within those customers, or with those brands and agencies?
Richard Howe (Chairman and CEO)
Very likely, and yes, to the second. Very likely to all to be customers in 2024, this year. Good grief, we're 2024. And likely to expand.
Jack Vander Aarde (VP and Senior Research Analyst)
Okay, great. And then, just to follow up then, I caught the headcount. You've been hiring, and it sounds like you continue to plan to hire more. Just, and given your pipeline growth expectations, do you feel like you have sufficient capacity personnel today, or will you to service the kind of demand and pipeline growth you're expecting? How is the demand versus kind of your capacity balance today? Is it too much demand right now, or are you... Which would be a good problem to have. Just any color there would be helpful.
Richard Howe (Chairman and CEO)
Well, you know, whenever you grow as much as we did in the second half, you feel some strain. But I would say we're not feeling a strain in the sense that we're scared of continued growth. So maybe that's the best way to say it. So there's clearly still utilization, you know, potential within the resources we have, although we do run about as efficient as a technology company that's doing the kind of that has the kind of technology we have. I can't remember what the number is, but I think we run about $900,000 in revenue per employee. You know, it's a pretty high number relative to comps. So we're efficient in that regard.
You know, if we add resources, we've said this before, it'll really be all client-facing for the most part. We may add more engineers and data scientists, you know, around the company here and there, but it won't be a significant number relative to the client-facing components, the go-to-market, which is sales and account managers and campaign people.
Jack Vander Aarde (VP and Senior Research Analyst)
Okay, great. And then just one more for me. And I apologize. I kind of missed it, but I caught a lot of your comments. Just the large customer you were talking on your prepared remarks that I think it boiled down to you-
Richard Howe (Chairman and CEO)
Mm-hmm
Jack Vander Aarde (VP and Senior Research Analyst)
-competing in a bake-off against two other competitors.
Richard Howe (Chairman and CEO)
Yep.
Jack Vander Aarde (VP and Senior Research Analyst)
And then you eventually won, you know, you won the deal. Just how long was that kind of, you know, from initial discussions to, you know, signing the bottom line, how long did that process interaction kind of take? And then any, any color on, you know, on who those two customers, potential competitors were, slash, was it a bigger handful of competitors originally? Just that, walk me through that whole kind of process and how, how you, how long it took and, eventually why you won it, I guess.
Richard Howe (Chairman and CEO)
Yeah, nine months is the answer to the first question.
Jack Vander Aarde (VP and Senior Research Analyst)
Okay.
Richard Howe (Chairman and CEO)
The second question, you know, I don't like if I name that, these other companies. We're in this incredibly competitive, you know, environment, Jack. So, if I name them, then they're gonna, you know, know who it is. They may not know that they've even lost at this point, and so I'm reluctant to do that. I will tell you that they're, you know, much bigger than we are, you know, which means they have, you know, a lot more resources and been around a while.
Jack Vander Aarde (VP and Senior Research Analyst)
Yep.
Richard Howe (Chairman and CEO)
They're considerably bigger than we, which is a testament, quite frankly, to our technology, to be able to beat out, you know, the companies we did.
Jack Vander Aarde (VP and Senior Research Analyst)
No, that's, and that's totally fair. I'm not looking for you to disclose anything that you shouldn't. I guess that's what I was really looking for, is what was the kind of caliber or size of, of these competitors you were going against? Was it kind of a David versus Goliath story here? And it's kind of proof in the pudding; your technology is definitely-
Richard Howe (Chairman and CEO)
Yep
Jack Vander Aarde (VP and Senior Research Analyst)
-proving itself and gaining traction. And then just, one more thing, which in terms of platforms, now that with this new segmentation, how do you expect these two segments, if you had a crystal ball and you're looking forward, how do you expect these two to ramp and kind of in terms of the revenues, going forward? Are they gonna be, one gonna outpace the other? Are they ever gonna be kind of at parity? How do you just think about the opportunity near term, long term?
Richard Howe (Chairman and CEO)
In the future, they should be parity. So, I think, yeah, in an end state, you know, some years down the road, I would expect the agency and brand component to continue in terms of the mix, to be a bigger part of the overall mix. Albeit it could surprise us, because the platforms by default, you know, are bigger, and they do tend to scale faster, so it's hard to predict. They're both looking really good right now, is the bottom line. We see potential in both of them, right? In fact, like I said, we added a new platform relationship, you know, in 2023, which is, you know, also exciting for us.
Jack Vander Aarde (VP and Senior Research Analyst)
Absolutely. Okay, well, great! That's, that's all I have for you. I appreciate the time. Thank you.
Richard Howe (Chairman and CEO)
Thank you, Jack.
Operator (participant)
Thank you. There are no further questions at this time. I'll turn it over to management for closing remarks. Please go ahead.
Richard Howe (Chairman and CEO)
Thank you, Sergio. And everyone, thank you for joining us today on the call. We appreciate your continued interest in the company, and we look forward to keeping you apprised of our progress on the next call.
Operator (participant)
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.
