AiAdvertising, Inc. (OTC: AIAD), an industry leader in AI-powered digital advertising solutions, has reported its financial and operational results for the year ended December 31, 2023.
Key Fourth Quarter and Subsequent 2024 Highlights and Business Update
- Revenue for Q4 2023 was $2.3 million, up 11% from $2.1 million in Q4 2022.
- Revenue for the year ended December 31, 2023, and 2022 was $8.2 million and $6.7, respectively, an increase of 21%.
- Gross profit margin of 1.9% in 2023, a notable increase as compared to (8.4%) in the same year ago period.
- Platform License revenues for the quarter ended December 31, 2023, decreased by 48% to $87,472 due to a business model shift.
- Digital Marketing revenues for the quarter ended December 31, 2023, increased by 14% to $1.76 million.
- Creative Services revenues for the quarter ended December 31, 2023, increased by 31% to $0.46 million.
- Net Loss for the quarter ended December 31, 2023, was ($2.0) million.
- Net Loss for the year ended December 31, 2023, improved by 26% to ($6.3) million.
- Net Cash used in the year ended December 31, 2023, was $5.5 million, compared to cash used of $4.9 million a year ago.
- 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 December 31, 2023.
- First half 2024 revenue expected to be in the $4.0 to $4.2 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
“We continued our systematic cadence of operational execution in the fourth quarter with 11% revenue growth,” said Jerry Hug, Chairman and CEO of AiAdvertising. “For the full year, both revenue and net loss improved as we began to see the cumulative results from our efforts over the last year to acquire new customers and strong growth from current customers in Digital Marketing. Moreover, our customer retention rate was a strong 94% year-over-year as of December 31, 2023, having lost only two customers; one due to an acquisition and the other due to the client taking marketing in house.
“Benefits of our Campaign Performance Platform and its targeting capabilities continued to garner interest among new clients as cookie-based tracking becomes more in doubt. By applying AI and ML technologies to marketing and advertising solutions, our AdTech software and optimization services allow advertisers to eliminate guesswork, predict creative, and prove performance.
“Operationally, we are absolutely seeing the benefits of leveraging our AI tools which augment and automate mundane and repetitive tasks typically thought of as human-like ‘seeing, listening, understanding, and creating’ by our team. This is evidenced by our operational expenses remaining flat year over year while managing more clients and increased revenue. We extended our partnership with Hexagon Partners with the recent $2.5 million second tranche of its strategic investment, enabling us to focus on further development of our AI-powered targeting solutions to generate more engaging, higher-impact campaigns that drive results for our clients. In addition, with the new investment from Hexagon to propel our sales efforts, we believe we will reach cashflow breakeven in the near term.
“As the industry shifts toward solutions leveraging AI, we are focused on scaling our platform while we deliver superior results to our clients and execute on our revenue backlog. We believe we are well positioned to deliver value to our customers, partners and shareholders with first half 2024 revenue expected to be in the $4.0 to $4.2 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. Lastly, we expect to report our first and second quarter 2024 financial results soon and resume timely reporting thereafter,” concluded Hug.
FY 2023 Financial Results
Revenue for the quarter ended December 31, 2023, and 2022 was $2.3 million and $2.1 million, respectively, an increase of 11%. The increase was primarily due to new customer wins in Digital Marketing. The Platform License segment revenues for the quarter ended December 31, 2023, decreased by 48% to $87,472 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 December 31, 2023, increased by 14% to $1.76 million as a result of this strategic shift.
Revenue for the year ended December 31, 2023, and 2022 was $8.2 million and $6.7 million, respectively, an increase of 21%. The increase was primarily due to new customer wins, but additional growth from current customers was additive due to a focus on reduced platform fees for the customer to drive higher budget spend creating more revenue and more profit for AI Advertising. Benefits of the Campaign Performance Platform and its targeting capabilities are garnering interest among new clients as cookie-based tracking becomes more in doubt. The Platform License segment revenues for the year ended December 31, 2023, decreased by 25% to $0.47 million from the prior year. Digital Marketing revenues for the year ended December 31, 2023, increased 33% to $6.1 million.
Gross profit in the fourth quarter of 2023, was ($0.1) million, or (4.2%) of revenues, compared to a gross loss of ($284,558), or (13.7%) of revenues, in the comparable year ago quarter. Gross profit in the year ended December 31, 2023, was $0.2 million, or 1.9% of revenues, compared to a gross loss of ($567,918), or (8.4%) of revenues, in the prior year. Gross profit and gross margin percentage improved due to leveraging our costs over a greater revenue base created by increased customer digital marketing budgets.
Total operating expenses for the quarter ended December 31, 2023, were $1.9 million, compared to $1.6 million in the prior year. Total operating expenses for the year ended December 31, 2023, were $6.9 million, compared to $8.0 million in the prior year.
Operating activities for continuing operations used $5.5 million in net cash for the year ended December 31, 2023, compared to $4.9 million for the year ended December 31, 2022. The increase in cash flow used in operating activities was primarily due to an increase in accounts receivable from revenue growth in the fourth quarter, reduced accounts payable from better liquidity reserves compared to a year ago and reduced deferred revenue at year-end.
Net loss for the quarter ended December 31, 2023, was ($2.0) million, as compared to a net loss of ($1.9) million in 2022. Net loss for the year ended December 31, 2023, was ($6.3) million, as compared to a net loss of ($8.5) million in 2022.
Cash and cash equivalents totaled $0.1 million at December 31, 2023, as compared to $0.1 million at December 31, 2022.
John C. Small, Chief Financial Officer of AiAdvertising, added, “As of today, we believe that our existing cash, together with the additional strategic investment of $2.5 million from Hexagon Partners and $0.7 million in account receivables, will be sufficient to meet our anticipated capital requirements to fund planned operations as we approach cash flow breakeven.”
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.
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AIADVERTISING, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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|
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December 31, |
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December 31, |
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||||
|
ASSETS |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash |
|
$ |
110,899 |
|
|
$ |
55,831 |
|
|
Accounts receivable, net |
|
|
517,344 |
|
|
|
95,300 |
|
|
Prepaid and other current Assets |
|
|
58,982 |
|
|
|
105,076 |
|
|
Total current assets |
|
|
687,225 |
|
|
|
256,207 |
|
|
|
|
|
|
|
|
|
||
|
Property and equipment, net |
|
|
72,948 |
|
|
|
102,659 |
|
|
Right-of-Use assets |
|
|
147,480 |
|
|
|
175,974 |
|
|
|
|
|
|
|
|
|
||
|
Other assets: |
|
|
|
|
|
|
||
|
Lease deposit |
|
|
8,939 |
|
|
|
8,939 |
|
|
Goodwill and other intangible assets, net |
|
|
20,202 |
|
|
|
20,202 |
|
|
Total other assets |
|
|
29,141 |
|
|
|
29,141 |
|
|
|
|
|
|
|
|
|
||
|
Total assets |
|
|
936,794 |
|
|
|
563,981 |
|
|
|
|
|
|
|
|
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|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
|
|
|
|
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||
|
|
|
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
|
||
|
Accounts payable |
|
|
1,567,751 |
|
|
|
2,071,122 |
|
|
Accounts payable, related party |
|
|
– |
|
|
|
10,817 |
|
|
Accrued expenses |
|
|
46,430 |
|
|
|
39,233 |
|
|
Operating lease liability |
|
|
33,572 |
|
|
|
28,494 |
|
|
Deferred revenue and customer deposit |
|
|
533,386 |
|
|
|
791,133 |
|
|
Total current liabilities |
|
|
2,181,139 |
|
|
|
2,940,799 |
|
|
|
|
|
|
|
|
|
||
|
Operating lease obligation, net of current portion |
|
|
113,907 |
|
|
|
147,480 |
|
|
|
|
|
|
|
|
|
||
|
Total liabilities |
|
|
2,295,046 |
|
|
|
3,088,279 |
|
|
|
|
|
|
|
|
|
||
|
Shareholders’ deficit: |
|
|
|
|
|
|
||
|
Preferred stock, $0.001 par value; 5,000,000 Authorized shares: |
|
|
|
|
|
|
||
|
Series A Preferred stock; 10,000 authorized, zero and 10,000 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 and 90,000 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 and 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 and zero shares issued and outstanding; |
|
|
– |
|
|
|
– |
|
|
Series I Preferred stock; 3,000,000 authorized, 2,272,727 and zero shares issued and outstanding; |
|
|
2,273 |
|
|
|
– |
|
|
Series J Preferred stock; 700 authorized, zero and zero shares issued and outstanding; |
|
|
– |
|
|
|
– |
|
|
Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,334,408,773 and 1,175,324,203 shares issued and outstanding, respectively |
|
|
1,334,415 |
|
|
|
1,175,330 |
|
|
Additional paid in capital |
|
|
56,865,961 |
|
|
|
49,595,914 |
|
|
Common stock payable, consisting of 5,000,000 shares valued at $0.1128 |
|
|
564,000 |
|
|
|
564,000 |
|
|
|
|
|
|
|
|
|
||
|
Accumulated deficit |
|
|
(60,125,032 |
) |
|
|
(53,859,673 |
) |
|
|
|
|
|
|
|
|
||
|
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT) |
|
|
(1,358,252 |
) |
|
|
(2,524,298 |
) |
|
|
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
$ |
936,794 |
|
|
$ |
563,981 |
|
|
AIADVERTISING, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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|
|
Twelve Months Ended |
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|
|
2023 |
|
2022 |
||||
|
|
|
|
|
|
||||
|
Revenue |
|
$ |
8,170,957 |
|
|
$ |
6,744,297 |
|
|
|
|
|
|
|
|
|
||
|
Cost of Revenue |
|
|
8,018,382 |
|
|
|
7,312,215 |
|
|
Gross Profit |
|
|
152,575 |
|
|
|
(567,918 |
) |
|
|
|
|
|
|
|
|
||
|
Sales, general, and administrative expenses |
|
|
6,852,960 |
|
|
|
7,952,193 |
|
|
Total operating expenses |
|
|
6,852,960 |
|
|
|
7,952,193 |
|
|
|
|
|
|
|
|
|
||
|
Loss from operations |
|
|
(6,700,385 |
) |
|
|
(8,520,111 |
) |
|
|
|
|
|
|
|
|
||
|
Other income (expense) |
|
|
|
|
|
|
||
|
Other income |
|
|
435,026 |
|
|
|
4,990 |
|
|
Gain (loss) on Sales of Discontinued Operations |
|
|
– |
|
|
|
25,197 |
|
|
Total other income |
|
|
435,026 |
|
|
|
30,187 |
|
|
|
|
|
|
|
|
|
||
|
Loss from operations before income taxes |
|
|
(6,265,359 |
) |
|
|
(8,489,924 |
) |
|
|
|
|
|
|
|
|
||
|
Provision for income taxes |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
||
|
Net Loss |
|
|
(6,265,359 |
) |
|
|
(8,489,924 |
) |
|
|
|
|
|
|
|
|
||
|
Dividends on preferred stock |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
||
|
Net loss attributable to common shareholders |
|
$ |
(6,265,359 |
) |
|
$ |
(8,489,924 |
) |
|
|
|
|
|
|
|
|
||
|
Net loss per share: |
|
|
|
|
|
|
||
|
Basic |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
Diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
||
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
||
|
Basic |
|
|
1,313,030,101 |
|
|
|
1,123,312,864 |
|
|
Diluted |
|
|
1,313,030,101 |
|
|
|
1,123,312,864 |
|
|
AIADVERTISING, INC. AND SUBSIDIARIES |
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|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
|
|
For the |
|
For the |
||||
|
|
|
Ended |
|
Ended |
||||
|
|
|
December 31, |
|
December 31, |
||||
|
|
|
2023 |
|
2022 |
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
|
Net Loss |
|
$ |
(6,265,359 |
) |
|
$ |
(8,489,924 |
) |
|
Adjustment to reconcile net (loss) income to net cash used in operating activities: |
|
|
|
|
|
|
||
|
Bad debt expense |
|
|
272,532 |
|
|
|
(1,180 |
) |
|
Depreciation and amortization |
|
|
31,813 |
|
|
|
37,553 |
|
|
Gain on extinguishment of debt |
|
|
|
|
|
(4,990 |
) |
|
|
Gain on sale of discontinued operations |
|
|
– |
|
|
|
(25,197 |
) |
|
Stock based compensation |
|
|
1,831,977 |
|
|
|
1,891,371 |
|
|
Non-cash service expense |
|
|
– |
|
|
|
123,374 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
|
Accounts receivable |
|
|
(694,576 |
) |
|
|
403,302 |
|
|
Prepaid expenses and other assets |
|
|
46,094 |
|
|
|
77,351 |
|
|
Costs in excess of billings |
|
|
– |
|
|
|
27,779 |
|
|
Lease deposit |
|
|
– |
|
|
|
861 |
|
|
Right-of-use assets |
|
|
28,494 |
|
|
|
– |
|
|
Accounts payable |
|
|
(514,188 |
) |
|
|
1,279,395 |
|
|
Accrued expenses |
|
|
7,197 |
|
|
|
(32,925 |
) |
|
Operating lease liability |
|
|
(28,495 |
) |
|
|
– |
|
|
Deferred revenue |
|
|
(257,747 |
) |
|
|
299,498 |
|
|
Net cash (used in) provided by operating activities |
|
|
(5,542,258 |
) |
|
|
(4,413,732 |
) |
|
|
|
|
|
|
|
|
||
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
||
|
Cash paid for fixed assets |
|
|
(2,102 |
) |
|
|
(20,973 |
) |
|
Proceeds from sale of discontinued operations |
|
|
– |
|
|
|
25,197 |
|
|
Net cash provided by (used in) investing activities |
|
|
(2,102 |
) |
|
|
4,224 |
|
|
|
|
|
|
|
|
|
||
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
||
|
Proceeds from sale of common stock |
|
|
599,428 |
|
|
|
1,033,884 |
|
|
Proceeds from sale of preferred stock |
|
|
5,000,000 |
|
|
|
– |
|
|
Net cash provided by (used in) financing activities |
|
|
5,599,428 |
|
|
|
1,033,884 |
|
|
|
|
|
|
|
|
|
||
|
Net increase in cash and cash equivalents |
|
|
55,068 |
|
|
|
(3,375,624 |
) |
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at beginning of period |
|
|
55,831 |
|
|
|
3,431,455 |
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at end of period |
|
$ |
110,899 |
|
|
$ |
55,831 |
|
|
|
|
|
|
|
|
|
||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
||
|
Interest paid |
|
$ |
– |
|
|
$ |
– |
|
|
Income taxes paid |
|
$ |
– |
|
|
$ |
– |
|
|
|
|
|
|
|
|
|
||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
|
Right of use asset exchanged for lease liability |
|
$ |
– |
|
|
$ |
186,706 |
|
|
Change in right of use asset |
|
$ |
– |
|
|
$ |
(70,608 |
) |
|
Retired stock issuance |
|
$ |
– |
|
|
$ |
2,940 |
|
|
Exercise of stock options |
|
$ |
3,931 |
|
|
$ |
3,190 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240912466664/en/