AiAdvertising, Inc. (OTC: AIAD), an industry leader in AI-powered digital advertising solutions, has reported its financial and operational results for the second quarter ended June 30, 2024.
Key Second Quarter and Subsequent 2024 Highlights and Business Update
- Revenue for Q2 2024 was $2.3 million, compared to $1.6 million in Q2 2023, an increase of 45%.
- Gross loss margin of (6.6%) in Q2 2024, compared to (22.6%) in the same year ago period.
- Platform License revenues for Q2 2024 increased 77% to $0.3 million due to our continued sales efforts towards platform license customers.
- Creative Services revenues for Q2 2024 increased by 43% to $0.4 million due to customer wins from the second half of 2023.
- Digital Marketing revenues for Q2 2024 increased by 41% to $1.6 million due to increased budgets from customers over last year.
- Q2 2024 Total Operating Expenses of $1.3 million decreased 37% sequentially from Q1 2024.
- Net Loss for Q2 2024 was ($1.5) million.
- Net Cash used in operating activities for the six months ended June 30, 2024, was $2.1 million, compared to cash used of $3.2 million the year ago due to changes in the components of working capital.
- 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 second quarter of 2024 was highlighted by increased revenue across our business segments, and an improved bottom line as we focused on efforts to reduce costs across all expense categories, while maintaining momentum,” said Jerry Hug, Chairman and CEO of AiAdvertising. “Revenue in the second quarter for our Campaign Performance Platform segment improved 77% year over year, as clients continue to experience superior results from its targeting capabilities and benefits. Our branding and creative design services segment continued to showcase our clients’ brands uniquely and creatively to infuse the public with curiosity to learn more, improving 43% year over year. In the Digital Marketing segment, strong client activity from our efforts to acquire new customers also provided 41% increased revenue from the prior year quarter.
“Operationally, during the second quarter we focused on improving efficiencies across the organization including efforts to reduce costs across all expense categories, including payroll, promotion, and research and development. These measures are aimed at increasing efficiency and improving scalability while continuing to invest in our AI and ML technologies, and marketing, without sacrificing growth.
“Looking ahead, we are building revenue and executing on our backlog while managing costs efficiently. We believe our strategy will enable us to reach cashflow breakeven in the near term. We are focused on the further development and scale of our AI-powered targeting solutions, and sales and marketing efforts that highlight how our platform generates more engaging, higher-impact campaigns that drive superior results. We continue to expect FY 2024 revenue to be in the $9 to $10 million range, driven by high customer retention, increased digital marketing budgets, and new customer wins. We look forward to reporting our third quarter 2024 results in the very near term,” concluded Hug.
Q2 2024 Financial Results
Revenue for the quarter ended June 30, 2024, and 2023 was $2.3 million and $1.6 million, respectively, an increase of 45%. The increase was across all business lines. The Platform License segment revenues for the quarter ended June 30, 2024, increased 77% to $0.3 million 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 June 30, 2024, increased 41% to $1.6 million as a result of this strategic shift. The Creative Design segment revenues for the quarter ended June 30, 2024, increased 43% to $0.4 million from the prior year due to customer wins in the second half of 2023.
Gross loss in the second quarter of 2024 was ($0.2) million, or (6.6%) of revenues, compared to a gross loss of ($0.4) million, or (22.6%) of revenues, in the comparable year ago quarter. Gross loss and gross margin percentage improved due to on-going cost reductions and gross margin leverage.
Total operating expenses for the quarter ended June 30 2024, were $1.3 million, compared to $2.0 million in the prior year, due to concerted efforts to reduce costs across all expense categories, including payroll, promotion, and research and development.
Net loss for the quarter ended June 30, 2024, was ($1.5) million, as compared to a net loss of ($1.9) million in 2023.
Operating activities for continuing operations used $2.1 million in net cash for the six months ended June 30, 2024, compared to $3.2 million for the six months ended June 30, 2023. The increase in cash flow used in operating activities was primarily due to changes in the components of working capital including changes in accounts receivable balances and changes in deferred revenue.
Cash and cash equivalents totaled $0.5 million at June 30, 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.
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AIADVERTISING, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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June 30, |
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December 31, |
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(Unaudited) |
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ASSETS |
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Current assets: |
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|
|
||||
|
Cash |
|
$ |
465,957 |
|
|
$ |
110,899 |
|
|
Accounts receivable, net |
|
|
504,827 |
|
|
|
517,344 |
|
|
Prepaid and other current Assets |
|
|
104,379 |
|
|
|
58,982 |
|
|
Total current assets |
|
|
1,075,163 |
|
|
|
687,225 |
|
|
|
|
|
|
|
|
|
||
|
Property and equipment, net |
|
|
58,776 |
|
|
|
72,948 |
|
|
Right-of-Use assets |
|
|
125,692 |
|
|
|
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 |
|
|
1,270,000 |
|
|
|
936,794 |
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|
|
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|
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
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Current liabilities: |
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|
|
|
|
|
||
|
Accounts payable |
|
|
1,245,529 |
|
|
|
1,567,751 |
|
|
Accrued expenses |
|
|
216,652 |
|
|
|
46,430 |
|
|
Operating lease liability |
|
|
37,657 |
|
|
|
33,572 |
|
|
Deferred revenue and customer deposit |
|
|
781,399 |
|
|
|
533,386 |
|
|
Total current liabilities |
|
|
2,281,237 |
|
|
|
2,181,139 |
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|
|
|
|
|
|
|
|
||
|
Operating lease obligation, net of current portion |
|
|
93,868 |
|
|
|
113,907 |
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|
|
|
|
|
|
|
|
||
|
Total liabilities |
|
|
2,375,105 |
|
|
|
2,295,046 |
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|
|
|
|
|
|
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|
Shareholders’ deficit: |
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|
||
|
Preferred stock, $0.001 par value; 5,000,000 Authorized shares: |
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|
|
|
|
||
|
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 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 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; zero shares issued and outstanding |
|
|
– |
|
|
|
– |
|
|
Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,344,231,504 and 1,175,324,203 shares issued and outstanding, respectively |
|
|
1,344,238 |
|
|
|
1,334,415 |
|
|
Additional paid in capital |
|
|
57,933,119 |
|
|
|
56,865,961 |
|
|
Common stock payable, consisting of 5,000,000 shares valued at $0.1128 |
|
|
564,000 |
|
|
|
564,000 |
|
|
Preferred stock payable, consisting of 892,857 shares of Series I Preferred stock valued at $2.80 |
|
|
2,500,000 |
|
|
|
– |
|
|
|
|
|
|
|
|
|
||
|
Accumulated deficit |
|
|
(63,448,866 |
) |
|
|
(60,125,032 |
) |
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|
|
|
|
|
|
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||
|
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT) |
|
|
(1,105,105 |
) |
|
|
(1,358,252 |
) |
|
|
|
|
|
|
|
|
||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
|
$ |
1,270,000 |
|
|
$ |
936,794 |
|
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AIADVERTISING, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(UNAUDITED) |
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|
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Three Months Ended June 30, |
|
Six Months Ended June 30, |
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|
|
2024 |
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|
2023 |
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|
2024 |
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|
2023 |
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||||
|
|
|
(Unaudited) |
|
(Unaudited) |
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Revenue |
|
$ |
2,307,729 |
|
|
$ |
1,594,041 |
|
|
$ |
4,327,052 |
|
|
$ |
3,768,793 |
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|
|
|
|
|
|
|
|
|
|
|
|
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|
||||
|
Cost of Revenue |
|
|
2,459,866 |
|
|
|
1,953,936 |
|
|
|
4,255,139 |
|
|
|
3,609,385 |
|
|
Gross Profit (loss) |
|
|
(152,137 |
) |
|
|
(359,895 |
) |
|
|
71,913 |
|
|
|
159,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Sales, general, and administrative expenses |
|
|
1,306,990 |
|
|
|
1,965,349 |
|
|
|
3,371,647 |
|
|
|
3,367,945 |
|
|
Impairment of intangible assets |
|
|
– |
|
|
|
– |
|
|
|
20,202 |
|
|
|
– |
|
|
Total operating expenses |
|
|
1,306,990 |
|
|
|
1,965,349 |
|
|
|
3,391,849 |
|
|
|
3,367,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Loss from operations |
|
|
(1,459,127 |
) |
|
|
(2,325,244 |
) |
|
|
(3,319,936 |
) |
|
|
(3,208,537 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other income (expense) |
|
|
(3,898 |
) |
|
|
435,021 |
|
|
|
(3,898 |
) |
|
|
435,026 |
|
|
Total other income (expense) |
|
|
(3,898 |
) |
|
|
435,021 |
|
|
|
(3,898 |
) |
|
|
435,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Loss from operations before income taxes |
|
|
(1,463,025 |
) |
|
|
(1,890,223 |
) |
|
|
(3,323,834 |
) |
|
|
(2,773,511 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Provision for income taxes |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Loss |
|
|
(1,463,025 |
) |
|
|
(1,890,223 |
) |
|
|
(3,323,834 |
) |
|
|
(2,773,511 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Dividends on preferred stock |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss attributable to common shareholders |
|
$ |
(1,463,025 |
) |
|
$ |
(1,890,223 |
) |
|
$ |
(3,323,834 |
) |
|
$ |
(2,773,511 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
Diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
|
1,348,367,967 |
|
|
|
1,329,921,400 |
|
|
|
1,343,888,370 |
|
|
|
1,281,214,213 |
|
|
Diluted |
|
|
1,348,367,967 |
|
|
|
1,329,921,400 |
|
|
|
1,343,888,370 |
|
|
|
1,281,214,213 |
|
|
AIADVERTISING, INC. AND SUBSIDIARIES |
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|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
(UNAUDITED) |
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|
|
|
For the Six |
|
For the Six |
||||
|
|
|
Months Ended |
|
Months Ended |
||||
|
|
|
June 30, |
|
June 30, |
||||
|
|
|
2024 |
|
|
2023 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
||||
|
Net Loss |
|
$ |
(3,323,834 |
) |
|
$ |
(2,773,511 |
) |
|
Adjustment to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
|
Loss on impairment of intangible asset |
|
|
20,202 |
|
|
|
– |
|
|
Depreciation and amortization |
|
|
14,172 |
|
|
|
16,099 |
|
|
Stock based compensation |
|
|
1,076,982 |
|
|
|
836,261 |
|
|
Provision for doubtful accounts |
|
|
(80,469 |
) |
|
|
– |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
|
Accounts receivable |
|
|
92,986 |
|
|
|
(632,632 |
) |
|
Amortization of ROU asset |
|
|
21,788 |
|
|
|
– |
|
|
Prepaid expenses and other assets |
|
|
(46,827 |
) |
|
|
(97,783 |
) |
|
Accounts payable |
|
|
(322,222 |
) |
|
|
(624,520 |
) |
|
Accrued expenses |
|
|
170,222 |
|
|
|
(15,688 |
) |
|
Customer deposit |
|
|
– |
|
|
|
46,162 |
|
|
Operating lease liability |
|
|
(15,954 |
) |
|
|
– |
|
|
Deferred revenue |
|
|
248,013 |
|
|
|
– |
|
|
Net cash used in operating activities |
|
|
(2,144,941 |
) |
|
|
(3,245,612 |
) |
|
|
|
|
|
|
|
|
||
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
||
|
Cash paid for fixed assets |
|
|
– |
|
|
|
– |
|
|
Proceeds from sale of discontinued operations |
|
|
– |
|
|
|
– |
|
|
Net cash provided by (used in) investing activities |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
||
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
||
|
Proceeds from sale of common stock, net |
|
|
– |
|
|
|
599,427 |
|
|
Proceeds from sale of preferred stock |
|
|
2,500,000 |
|
|
|
5,000,000 |
|
|
Redemption of Series K Preferred stock |
|
|
(1 |
) |
|
|
– |
|
|
Net cash provided by financing activities |
|
|
2,499,999 |
|
|
|
5,599,427 |
|
|
|
|
|
|
|
|
|
||
|
Net increase in cash and cash equivalents |
|
|
355,058 |
|
|
|
2,353,815 |
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at beginning of period |
|
|
110,899 |
|
|
|
55,831 |
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at end of period |
|
$ |
465,957 |
|
|
$ |
2,409,646 |
|
|
|
|
|
|
|
|
|
||
|
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 |
|
$ |
– |
|
|
$ |
6,655 |
|
|
Exercise of stock options |
|
$ |
9,823 |
|
|
$ |
3,931 |
|
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