Inuvo, Inc. :INUV-US: Earnings Analysis: Q4, 2016 By the Numbers : March 10, 2017

Inuvo, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Inuvo, Inc. – IAC/InterActiveCorp., Microsoft Corporation,, Inc., Blucora, Inc., eBay Inc., Yahoo! Inc., Alphabet Inc. Class A and Marchex, Inc. Class B (IAC-US, MSFT-US, AMZN-US, BCOR-US, EBAY-US, YHOO-US, GOOGL-US and MCHX-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 19.67 million, Net Earnings of USD -0.29 million.
  • Gross margins narrowed from 77.73% to 59.46% compared to the same period last year, operating (EBITDA) margins now 1.78% from 5.85%.
  • Year-on-year change in operating cash flow of -37.87% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 19.67 17.49 15.65 18.73 21.04
Revenue Growth (%YOY) -6.51 -9.19 -6.45 39.56 35.63
Earnings (mil) -0.29 -0.43 -0.57 0.37 0.62
Earnings Growth (%YOY) -147.05 -170.22 -224.66 -38.59 -17.55
Net Margin (%) -1.49 -2.49 -3.66 1.99 2.95
EPS -0.01 -0.01 -0.02 0.02 0.02
Return on Equity (%) -10.08 -14.87 -19.58 13.15 23.54
Return on Assets (%) -4.32 -6.61 -8.67 5.37 8.87

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Market Share Versus Profits

Revenues History
Earnings History

INUV-US‘s change in revenue this period compared to the same period last year of -6.51% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that INUV-US is holding onto its market share. Also, for comparison purposes, revenues changed by 12.47% and earnings by 32.85% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 77.73% to 59.46%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 5.85% to 1.78% in this time frame. For comparison, gross margins were 58.00% and EBITDA margins were 0.60% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

INUV-US‘s change in operating cash flow of -37.87% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 3.47% to -1.02% and (2) one-time items that contributed to a decrease in pretax margins from 3.33% to -1.17%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Inuvo, Inc. is an internet marketing and technology company, which engages in delivering targeted advertisements into websites and applications reaching desktop and mobile devices. It operates through Partner Network, and Owned and Operated Network. segments. The Partner Network segment involves in delivering advertisements for websites and applications on desktop, tablet, and mobile devices. The Owned and Operated Network segment offers designing, building, and marketing consumer websites and applications. The company was founded in October 1987 and is headquartered in Conway, AR.

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