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Aiadvertising Inc

AiAdvertising Reports First Quarter 2024 Financial Results

Campaign Performance Platform License Revenue up 32% in Q1 2024 on Customer Adoption of AI-Powered AdTech Software and Optimization Services

SAN ANTONIO, Texas--(BUSINESS WIRE)--Oct. 17, 2024-- AiAdvertising, Inc. (OTC: AIAD), an industry leader in AI-powered digital advertising solutions, has reported its financial and operational results for the first quarter ended March 31, 2024.

Key First Quarter and Subsequent 2024 Highlights and Business Update

  • Revenue for Q1 2024 was $2.0 million, compared to $2.2 million in Q1 2023.
  • Gross profit margin of 11.1% in Q1 2024, compared to 23.9% in the same year ago period.
  • Platform License revenues for Q1 2024 increased 32.0% to $147,849 due to a business model shift.
  • Creative Services revenues for Q1 2024 increased by 75.6% to $0.5 million due to customer wins in the second half of 2023.
  • Digital Marketing revenues for Q1 2024 decreased by 21.2% to $1.4 million.
  • Net Loss for Q1 2024 was ($1.9) million.
  • Net Cash used in operating activities for the three months ended March 31, 2024, was $1.4 million, compared to cash used of $0.6 million the year ago period as the company paid down outstanding payables.
  • Completed the second tranche of its securities purchase agreement with Hexagon Partners, Ltd., a Texas-based investment company, for a strategic investment of $2.5 million.
  • Customer retention rate was a strong 94% year-over-year as of March 31, 2024.
  • First half 2024 revenue expected to be in the $4.1 to $4.3 million range and FY 2024 revenue expected to be in the $9 to $10 million range on continued strong momentum driven by high customer retention, increased digital marketing budgets, and new customer wins.

Management Commentary

"The first quarter of 2024 was highlighted by strong revenue and growth momentum in our Campaign Performance Platform segment as its targeting capabilities and benefits continued to garner interest among clients,” said Jerry Hug, Chairman and CEO of AiAdvertising. “Our branding and creative design services, which we believe sets apart our clients from their competitors and establishes them in their specific markets, also drove results for the quarter with a 76% improvement in revenue year over year.

“The Campaign Performance Platform applies AI and ML technologies to marketing and advertising solutions, a key benefit as cookie-based tracking becomes more in doubt. Our AI-powered AdTech software and optimization services allow advertisers to eliminate guesswork, predict creative, and prove performance. We expect continued adoption as we continue to scale our platform and the industry shifts toward solutions leveraging AI.

“Looking ahead, we are focused on further development and scale of our AI-powered targeting solutions to generate more engaging, higher-impact campaigns that drive superior results for new and current clients. We are investing in sales efforts and executing on our revenue backlog, and believe our strategy will enable us to reach cashflow breakeven in the near term. We continue to expect first half 2024 revenue to be in the $4.1 to $4.3 million range and FY 2024 revenue is expected to be in the $9 to $10 million range, driven by high customer retention, increased digital marketing budgets, and new customer wins. We expect to provide second quarter 2024 financial results, along with updates on new business initiatives and new business traction soon,” concluded Hug.

Q1 2024 Financial Results

Revenue for the quarter ended March 31, 2024, and 2023 was $2.0 million and $2.2 million, respectively, a decrease of 7%. The decrease was primarily due to a decrease in client activity in Digital Marketing and Web Development, which was partially offset by increases in Creative Services and Platform revenues. The Platform License segment revenues for the quarter ended March 31, 2024, increased 32% to $147,849 from the prior year due to management’s focus on a hybrid model of lower platform fees to drive higher customer budget spend. Digital Marketing revenues for the quarter ended March 31, 2024, decreased 21% to $1.4 million as a result of this strategic shift. The Creative Design segment revenues for the quarter ended March 31, 2024, increased 76% to $0.5 million from the prior year due to customer wins in the second half of 2023.

Gross profit in the first quarter of 2024 was $0.2 million, or 11.1% of revenues, compared to a gross profit of $0.5 million, or 23.9% of revenues, in the comparable year ago quarter. Gross profit and gross margin percentage were lower due to lower recognized revenue in 1Q versus a year ago.

Total operating expenses for the quarter ended March 31, 2024, were $2.1 million, compared to $1.4 million in the prior year.

Operating activities for continuing operations used $1.4 million in net cash for the three months ended March 31, 2024, compared to $0.6 million for the three months ended March 31, 2023. The increase in cash flow used in operating activities was primarily due to increased net loss for the period, decrease in accounts payable to vendors from paying invoices faster, and a reduction in customer deposits from activating media budgets faster.

Net loss for the quarter ended March 31, 2024, was ($1.9) million, as compared to a net loss of ($0.9) million in 2023.

Cash and cash equivalents totaled $1.2 million at March 31, 2024, as compared to $0.1 million at December 31, 2023.

About AiAdvertising

AiAdvertising is an AI-powered solutions leader employing the industry’s most scientifically advanced, patent-pending AI targeting process. Transforming marketing and customer experiences, allowing marketers to personify client data and scientifically target their ideal customers with hyper-personalized campaigns. By harnessing artificial intelligence (AI) and machine learning (ML), we empower brands to easily target, predict, create, scale, measure campaign performance and reduce waste. Our clients gain the intelligence they need to prove advertising’s impact on the bottom line. This means more engaging, higher-impact campaigns that drive conversions and results.

For more information about the Company, please visit www.AiAdvertising.com or our LinkedIn or Twitter pages.

Forward-Looking Statements

This press release may contain "forward-looking statements." Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are included in our filings with the Securities and Exchange Commission, including the "Risk Factors" section of our annual report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise, except as may be required under applicable law.

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,
2024

 

 

December 31,
2023

 

(Unaudited)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash

 

$

1,187,895

 

 

$

110,899

 

Accounts receivable, net

 

 

647,940

 

 

 

517,344

 

Prepaid and other current Assets

 

 

15,577

 

 

 

58,982

 

Total current assets

 

 

1,851,412

 

 

 

687,225

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

65,643

 

 

 

72,948

 

Right-of-Use assets

 

 

134,269

 

 

 

147,480

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

Lease deposit

 

 

10,369

 

 

 

8,939

 

Goodwill and other intangible assets, net

 

 

-

 

 

 

20,202

 

Total other assets

 

 

10,369

 

 

 

29,141

 

 

 

 

 

 

 

 

 

Total assets

 

 

2,061,693

 

 

 

936,794

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

 

1,088,156

 

 

 

1,567,751

 

Accrued expenses

 

 

38,798

 

 

 

46,430

 

Operating lease liability

 

 

34,922

 

 

 

33,572

 

Deferred revenue and customer deposit

 

 

739,696

 

 

 

533,386

 

Total current liabilities

 

 

1,901,572

 

 

 

2,181,139

 

 

 

 

 

 

 

 

 

Operating lease obligation, net of current portion

 

 

104,679

 

 

 

113,907

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

2,006,251

 

 

 

2,295,046

 

 

 

 

 

 

 

 

 

Shareholders' deficit:

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 Authorized shares:

 

 

 

 

 

 

 

Series A Preferred stock; 10,000 authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Series B Preferred stock; 25,000 authorized; 18,025 shares issued and outstanding

 

 

18

 

 

 

18

 

Series C Preferred stock; 25,000 authorized; 14,425 shares issued and outstanding

 

 

14

 

 

 

14

 

Series D Preferred stock; 90,000 authorized; 86,021 shares issued and outstanding

 

 

86

 

 

 

86

 

Series E Preferred stock; 10,000 authorized; 10,000 shares issued and outstanding

 

 

10

 

 

 

10

 

Series F Preferred stock; 800,000 authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Series G Preferred stock; 2,600 authorized; 2,597 shares issued and outstanding

 

 

3

 

 

 

3

 

Series H Preferred stock; 1,000 authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Series I Preferred stock; 3,000,000 authorized; 2,272,727 shares issued and outstanding

 

 

2,273

 

 

 

2,273

 

Series J Preferred stock; 700 authorized; zero shares issued and outstanding

 

 

-

 

 

 

-

 

Series K Preferred stock; 1,000 authorized; 1,000 and zero shares issued and outstanding

 

 

1

 

 

 

-

 

Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,334,408,773 and 1,334,408,773 shares issued and outstanding, respectively

 

 

1,334,415

 

 

 

1,334,415

 

Additional paid in capital

 

 

57,640,463

 

 

 

56,865,961

 

Preferred stock payable, consisting of 892,857 shares of Series I Preferred stock valued at $2.80

 

 

2,500,000

 

 

 

-

 

Common stock payable, consisting of 5,000,000 shares valued at $0.1128

 

 

564,000

 

 

 

564,000

 

 

 

 

 

 

 

 

 

Accumulated deficit

 

 

(61,985,841

)

 

 

(60,125,032

)

 

 

 

 

 

 

 

 

TOTAL SHAREHOLDERS' EQUITY (DEFICIT)

 

 

55,442

 

 

 

(1,358,252

)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

 

$

2,061,693

 

 

$

936,794

 

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

 

 

(Unaudited)

 

 

 

 

 

Revenue

 

$

2,019,323

 

 

$

2,174,752

 

 

 

 

 

 

 

 

Cost of Revenue

 

 

1,795,273

 

 

 

1,655,449

 

Gross Profit

 

 

224,050

 

 

 

519,303

 

 

 

 

 

 

 

 

Sales, general, and administrative expenses

 

 

2,064,657

 

 

 

1,402,596

 

Impairment of intangible assets

 

 

20,202

 

 

 

-

 

Total operating expenses

 

 

2,084,859

 

 

 

1,402,596

 

 

 

 

 

 

 

 

Loss from operations

 

 

(1,860,809

)

 

 

(883,293

)

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

Other expense

 

 

-

 

 

 

(5

)

Total other income (expense)

 

 

-

 

 

 

(5

)

 

 

 

 

 

 

 

Loss from operations before income taxes

 

 

(1,860,809

)

 

 

(883,288

)

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Net Loss

 

 

(1,860,809

)

 

 

(883,288

)

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Net loss attributable to common shareholders

 

$

(1,860,809

)

 

$

(883,288

)

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

Basic

 

$

(0.00

)

 

$

(0.00

)

Diluted

 

$

(0.00

)

 

$

(0.00

)

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

1,339,408,773

 

 

 

1,231,401,433

 

Diluted

 

 

1,339,408,773

 

 

 

1,231,401,433

 

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the

 

For the

 

 

Three Months
Ended

 

Three Months
Ended

 

 

March 31,

 

March 31,

 

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Loss

 

$

(1,860,809

)

 

$

(883,288

)

Adjustment to reconcile net (loss) income to net cash used in operating activities:

 

 

 

 

 

 

Loss on impairment of intangible asset

 

 

20,202

 

 

 

-

 

Depreciation and amortization

 

 

7,305

 

 

 

8,050

 

Stock based compensation

 

 

774,503

 

 

 

462,163

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(130,596

)

 

 

(784,769

)

Amortization of ROU asset

 

 

13,211

 

 

 

-

 

Prepaid expenses and other assets

 

 

41,975

 

 

 

11,076

 

Accounts payable

 

 

(479,595

)

 

 

(34,714

)

Accrued expenses

 

 

(7,632

)

 

 

117,315

 

Customer deposit

 

 

-

 

 

 

493,086

 

Operating lease liability

 

 

(7,878

)

 

 

-

 

Deferred revenue

 

 

206,310

 

 

 

-

 

Net cash (used in) provided by operating activities

 

 

(1,423,004

)

 

 

(611,081

)

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from sale of common stock, net

 

 

-

 

 

 

556,006

 

Cash received for Preferred stock payable

 

 

2,500,000

 

 

 

-

 

Net cash provided by (used in) financing activities

 

 

2,500,000

 

 

 

556,006

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

1,076,996

 

 

 

(55,075

)

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

110,899

 

 

 

55,831

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

1,187,895

 

 

$

756

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Interest paid

 

$

-

 

 

$

-

 

Income taxes paid

 

$

-

 

 

$

-

 

 

Investor Contact:
Larry Holub/Chris Tyson
312-261-6412
AIAD@mzgroup.us
www.mzgroup.us

Source: AiAdvertising, Inc.