Inuvo (NYSEAMERICAN:INUV) reported second-quarter revenue of $7.5 million, down 67% from the prior-year period, as a sharp decline in its legacy search business outweighed continued growth in audience modeling revenue tied to its IntentKey platform.
Chief Executive Officer Rob Buchner said audience modeling revenue rose 19% year over year, supported by deeper spending from existing customers and recent client wins. In contrast, legacy search revenue fell 80% from the year-earlier quarter amid continuing disruption in the web-search market.
Revenue Mix Shifts as Legacy Search Is Reduced
During the analyst question-and-answer session, Chief Financial Officer Wally Ruiz confirmed that quarterly legacy search revenue was approximately $4 million and audience modeling revenue was about $3.6 million.
The changing revenue mix contributed to a 44% gross margin in the second quarter, compared with 75% a year earlier. Ruiz said legacy search historically carried a higher gross margin because much of its expense is recorded as operating expense, while audience modeling costs are primarily reported in cost of revenue. However, he said audience modeling has historically been more profitable from an operating-margin perspective.
Inuvo continued to reduce the size of its legacy search operation during the quarter. Operating expenses fell $12.8 million, or 67%, year over year to $6.4 million, driven by lower traffic-acquisition and compensation costs. Compensation expense declined by $337,000 despite a $470,000 severance charge.
Headcount stood at 51 employees as of June 30, down from 82 a year earlier, with most of the reductions associated with legacy search. Buchner said the company had further lowered legacy-search headcount and right-sized the business to what it believes is a sustainable level.
“Legacy search remains part of our business,” Buchner said. “But we are now operating from a cleaner, more resilient foundation” that he said generates better margins and positive cash flow.
Sales Efforts Target Enterprise Clients and New Verticals
Buchner said Inuvo has revamped its sales organization since January, adding enterprise-focused personnel with programmatic advertising expertise and brand-direct relationships. The company added five new direct brand relationships in the second quarter, including two Fortune 500 companies that were completing pilot programs.
He identified recent wins as two auto brands, a tourism account, a pharmaceutical brand and a medical-device company. The company is pursuing a test-to-expansion sales model, in which pilots can develop into broader enterprise engagements based on performance.
Inuvo is selling through managed-service, self-service, and portable-data and white-label channels. Buchner said the company is seeing greater self-service activity, including repeat usage, cross-platform campaign activation and additional enterprise brands using private marketplaces.
The company is also pursuing applications beyond traditional consumer advertising. Buchner highlighted workforce recruitment and healthcare open enrollment as areas where IntentKey’s privacy-focused contextual targeting could be used. He said Inuvo has a signed government workforce-recruitment contract, although revenue has not yet been recognized because the government has not released funding and is determining job priorities for the pilot.
For health insurance, Buchner said Inuvo launched a coordinated go-to-market plan ahead of open enrollment. He cited a 2025 pilot with Blue Shield of California and said 30% of the 23 million people who entered the marketplace last year switched carriers.
Financing, Product Development and Leadership Changes
Inuvo completed financing transactions totaling $13 million in gross proceeds. The first transaction involved two notes with approximately $10 million in combined gross proceeds, including $3.8 million received June 29 that was used to repay and retire the company’s outstanding convertible promissory note and receivables-based credit facility. The remaining proceeds were retained for working capital.
A registered direct offering of common stock and pre-funded warrants closed July 1 and generated approximately $3 million in gross proceeds. Ruiz said the transaction was not reflected in the June 30 balance sheet.
The company reported $886,000 in cash and cash equivalents and $6.2 million in restricted cash at quarter-end. Inuvo recorded an $870,000 charge related to the extinguishment of its prior convertible promissory note and working-capital credit line. Net loss was $4 million, or $0.27 per share, compared with a $1.5 million loss, or $0.10 per share, a year earlier.
In July, Inuvo also sold Ranger, an AI-powered quality-assurance tool, subject to a 60-day trial period. The company expects to receive $450,000 and retain a perpetual license to use the technology in its legacy search business.
Buchner said Inuvo is in advanced testing of a model context protocol server that could make IntentKey intelligence available in AI-native and agentic workflows, including Claude and ChatGPT.
Ruiz will retire as CFO on Aug. 17 after 16 years with the company and remain as an adviser through year-end. Derric Ciccone, most recently global CFO and COO of Omnicom Commerce Group, will become Inuvo’s president and CFO that day. Alicia Parish was promoted from controller to chief accounting officer.
Looking ahead, Ruiz said Inuvo expects year-over-year audience modeling revenue growth in 2026, quarterly improvement in legacy search revenue for the rest of the year, and improving legacy-search margins and cash flow. Buchner said the IntentKey business could reach cash neutrality to positive cash flow in the mid-$20 million revenue range, with the company aiming to reach that level at some point in 2027.
About Inuvo (NYSEAMERICAN:INUV)
Inuvo, Inc (NYSE: INUV) is a marketing technology company specializing in artificial intelligence–driven digital advertising solutions. The company’s platforms leverage machine learning and proprietary algorithms to analyze consumer intent and deliver targeted advertising across desktop, mobile and connected TV channels. Inuvo’s core technology is designed to help advertisers optimize campaign performance and improve return on ad spend by focusing on contextual relevance rather than relying solely on cookie-based tracking.
Through its Pulpo Media division, Inuvo offers programmatic advertising services that reach both English- and Spanish-speaking audiences in the United States and select Latin American markets.
