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

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.

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