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Inuvo, Inc. (INUV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $22.6M (+1% YoY) with gross margin compressing to 73.4% (88.4% LY) on Platform mix; net loss improved to $1.7M ($0.12) from $2.0M ($0.15) LY . Versus S&P Global consensus, revenue missed by ~12.7% ($22.6M vs $25.85M*) and EPS missed by ~$0.01 (-$0.092 vs -$0.08*); small miss but broad-based on both top and bottom line. Values retrieved from S&P Global.*
  • Management deliberately reduced advertising with the largest Platform client in mid-August to meet new compliance requirements, launching “Ranger,” an AI ad-quality system; Platforms fell ~5% sequentially while Agencies & Brands grew ~29% sequentially; 23 new clients were onboarded and self-serve brands reached 44 .
  • Liquidity: $3.4M cash and equivalents; $3.38M drawn on a $10M facility; management expects liquidity/borrrowing capacity sufficient for operations and growth .
  • Near-term catalysts/risks: government “multi-million” contract delayed by shutdown (timing risk); class action settlement payout expected in Q1’26 (cash inflow); top 5 Agencies & Brands clients expected >65% YoY growth in 2025 (demand signal) .

What Went Well and What Went Wrong

  • What Went Well
    • Agencies & Brands revenue up 7% YoY; 23 new clients in Q3; 44 self-service brands; A&B campaign performance 45% above client KPIs (supports differentiation) .
    • Operating discipline: opex down 16% YoY to $18.2M; net loss narrowed to $1.7M ($0.12) from $2.0M ($0.15) LY .
    • Second-largest Platform client ramped a new campaign, yielding a fourfold revenue increase YoY (partially offsetting the largest-client pause) .
    • Management quote: “Our pipeline of prospects across the business has never been stronger.”
  • What Went Wrong
    • Consensus miss: revenue ~$3.25M below S&P Global consensus and EPS ~$0.01 below; gross margin fell to 73.4% (88.4% LY) on mix and accounting treatment for a Platform campaign (COGS vs marketing) . Values retrieved from S&P Global.*
    • Intentional slowdown: management scaled back advertising mid-August for compliance, constraining Q3 growth; Platforms roughly -5% sequentially and flat YoY ($18.7M vs $18.8M LY) .
    • Adjusted EBITDA loss widened YoY to $(0.67)M from $(0.36)M; non-GAAP impacted by $150K separation accrual this quarter versus a $600K non-recurring adjustment in Q3’24 .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($)$22,371,153 $26,708,032 $22,671,333 $22,570,572
Gross Profit ($)$19,776,511 $21,087,091 $17,094,788 $16,568,149
Gross Margin (%)88.4% 79.0% 75.4% 73.4%
Total Operating Expenses ($)$21,719,773 $22,856,878 $19,138,345 $18,237,852
Operating Income (Loss) ($)$(1,943,262) $(1,769,787) $(2,043,557) $(1,669,703)
Net Income (Loss) ($)$(2,044,293) $(1,259,821) $(1,501,263) $(1,740,564)
Diluted EPS ($)$(0.15) $(0.01) $(0.10) $(0.12)
Adjusted EBITDA ($)$(357,328) $(21,890) $(629,219) $(669,609)

Segment breakdown (available periods):

SegmentQ3 2024Q1 2025Q3 2025
Platform Revenue ($)$18.8M $23.7M (approx) $18.7M
Agencies & Brands Revenue ($)—$3.0M (approx) $3.9M (approx; +7% YoY)

KPIs and operating metrics:

KPIQ3 2025
New clients onboarded23
Self-serve brands (count)44
A&B campaign performance vs client KPIs+45%
Headcount (quarter-end)80
Cash and Equivalents ($)$3.38M
Outstanding borrowings ($)$3.38M (on $10M facility)
Gross Margin (%)73.4%
Adjusted EBITDA ($)$(669,609)

Consensus vs Actuals (Q3 2025):

MetricConsensus*ActualSurprise
Revenue ($)$25,847,080*$22,570,572 -12.7%
Primary EPS ($)-0.08*-0.0923 (=$0.12/1.30 split-adjusted if any; reported $0.12 loss per share) -$0.01

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS guidanceFY2025None disclosedNone disclosedMaintained: no formal quantitative guidance
Top 5 A&B client growthFY2025—“Expected to have grown over 65% YoY by end of 2025” New qualitative
Government contractFY2025—Multi-million-dollar deal; signing delayed by government shutdown Timing pushed
Legal settlement cashQ1 2026—“Expect a substantial payout in Q1 2026” New qualitative

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
AI/technology initiativesEnhanced IntentKey Self-Serve; zip code-level targeting; strong KPI outperformance Mix-shift commentary; continued growth Launch of “Ranger” AI ad-quality/compliance; redesigned audience portal with next-day predictive indicators; MMM emphasis Accelerating product cadence
Compliance/qualityBuilding capabilities; onboarding speeds improved —Deliberate ad slowdown to meet Platform client requirements; “Ranger” embeds policy alignment Elevated priority
Platform vs A&B mixPlatform +61% YoY; A&B +31% YoY Rev +25% YoY; GM 75.4% on mix Platforms flat YoY ($18.7M vs $18.8M); A&B +7% YoY; sequential: Platforms -5%, A&B +29% Normalizing after pause
Partnerships/distributionMajor holding companies testing; rising brand awareness —Co-hosted TikTok webinar; >15 new media-buying prospects Expanding funnel
Macro/tariffsAuto demand intact; no broad demand impact yet (Q&A) —Not discussed materially in prepared remarks -Stable/monitor
Go-to-marketHiring sales; self-serve ease of onboarding —Upstream pivot to $1M+ brand-direct deals; COO appointment to scale GTM Strategic shift upstream
Regulatory/legal——Class action settlement payout expected Q1’26 New factor

Management Commentary

  • “In mid-August, we deliberately scaled back our advertising in order to comply with new requirements by our largest Platform client… the upgrades bolster our ability to ensure campaign compliance and drive sustainable long-term scalable growth.” — Richard Howe, CEO
  • “Ranger is a next-generation compliance and quality capability… It leverages advanced AI to ensure every ad creative we deliver is aligned with the post-click experience.”
  • “As of the end of the third quarter, we now have 44 self-service brands… this component of our business generates margins of nearly 90%.” — Rob Buchner, COO
  • “Our second largest Platform client continued to ramp the new campaign… a fourfold increase in revenue.” — Wally Ruiz, CFO
  • “We remain optimistic about achieving our revenue goals for 2025… Q3’s performance was not a function of reduced demand.” — Richard Howe

Q&A Highlights

  • The furnished Q3 call script did not include a Q&A transcript; no Q&A details were provided beyond prepared remarks .
  • Recent analyst focus areas (from Q1 Q&A for context): tariffs impact (no material demand impact observed), gross margin headwinds from a Platform campaign (expected to improve as campaigns scale), breakeven revenue level (~$26–$27M), and seasonality dynamics .

Estimates Context

  • Q3 2025 results vs S&P Global consensus: Revenue $22.57M vs $25.85M* (miss ~12.7%); Primary EPS -$0.092 vs -$0.08* (miss ~$0.01). Estimate counts: 4 for revenue, 3 for EPS. Values retrieved from S&P Global.*
  • Implications: Consensus likely needs to recalibrate gross margin assumptions (higher COGS treatment for a specific Platform campaign) and near-term Platform growth trajectory given compliance-driven pause; A&B momentum and self-serve margin profile are partial offsets .

Key Takeaways for Investors

  • Near-term: The compliance-driven Platform pause created a clean reset with the largest client; watch for Q4 run-rate normalization and early 2026 contribution from partnerships (e.g., TikTok prospects) .
  • Mix matters: Gross margin pressure reflects product/accounting mix (COGS for a Platform campaign); if Platform resumes with higher-quality/marketing-expensed mix, margin should stabilize; otherwise, model lower GM% vs 2024 .
  • Demand intact: A&B sequential +29% and +7% YoY, 23 new clients, 44 self-serve brands; self-serve carries ~90% gross margins, supporting medium-term margin accretion as it scales .
  • Balance sheet: $3.4M cash and $3.38M drawn on $10M facility—sufficient for operations per management; monitor working capital and AR collections given Platform scale-up needs .
  • 2026 cash inflow optionality: Expected class action settlement payout in Q1’26 provides potential non-operating liquidity to fund growth or reduce borrowings .
  • Pipeline and GTM: Upstream shift to $1M+ brand-direct deals, COO appointment, MMM and redesigned portal, and “Ranger” should expand pipeline quality and durability into 2026 .
  • Estimates: Street likely reduces near-term revenue/GM for Platform compliance timing while elevating A&B/self-serve trajectory; any confirmation of the delayed government contract signing would be a positive revision catalyst .

Appendix: Additional Detail

  • Liquidity details: Cash and cash equivalents $3.38M; borrowings $3.38M; total facility $10M; management asserts sufficient liquidity and borrowing capacity .
  • Non-GAAP reconciliation: Q3’25 Adjusted EBITDA $(669,609) includes add-backs for stock-based comp ($246,814) and $150,000 employee separation; Q3’24 included a $600,000 non-recurring item .

Notes on sources:

  • Press release and 8-K (including Exhibits 99.1 and 99.2):
  • Q2 2025 press release:
  • Q1 2025 press release and call transcript for trend and Q&A context:
  • S&P Global consensus via GetEstimates: Values retrieved from S&P Global.*