AiAdvertising Reports Fiscal Year 2023 Financial Results

Rhea-AI Summary

AiAdvertising (OTC: AIAD) reported 21% revenue growth to $8.2 million for fiscal year 2023. The company saw a 94% customer retention rate and improved gross profit margin to 1.9%. Q4 2023 revenue increased 11% to $2.3 million. Digital Marketing revenues grew 14% to $1.76 million in Q4, while Creative Services revenues rose 31% to $0.46 million. The net loss for 2023 improved by 26% to $6.3 million. AiAdvertising completed a $2.5 million strategic investment from Hexagon Partners. The company projects FY 2024 revenue between $9-10 million, driven by high customer retention and new customer wins. CEO Jerry Hug highlighted the benefits of their AI-powered Campaign Performance Platform in targeting capabilities and operational efficiency.

Positive

• 21% revenue growth to $8.2 million for fiscal year 2023
• 94% customer retention rate year-over-year
• Gross profit margin improved to 1.9% from -8.4% in the previous year
• Q4 2023 revenue increased 11% to $2.3 million
• Digital Marketing revenues grew 14% to $1.76 million in Q4 2023
• Creative Services revenues rose 31% to $0.46 million in Q4 2023
• Net loss for 2023 improved by 26% to $6.3 million
• Completed $2.5 million strategic investment from Hexagon Partners
• Projected FY 2024 revenue between $9-10 million

Negative

• Platform License revenues decreased by 48% to $87,472 in Q4 2023
• Net loss for Q4 2023 was $2.0 million
• Net cash used in 2023 increased to $5.5 million from $4.9 million in 2022
• Cash and cash equivalents remained low at $0.1 million as of December 31, 2023

2023 Revenue up 21% to $8.2 Million Driven by Creative Services and Digital Marketing

Customer Retention Rate 94% Year-over-Year as of December 31, 2023

SAN ANTONIO--(BUSINESS WIRE)-- 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.

AIADVERTISING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
		December 31, 2023				December 31, 2022
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
LIABILITIES AND SHAREHOLDERS’ DEFICIT
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
CONSOLIDATED STATEMENTS OF OPERATIONS
		Twelve Months Ended December 31,
		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
CONSOLIDATED STATEMENTS OF CASH FLOWS
		For the Twelve Months				For the Twelve Months
		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/

Investor Contact:

Larry Holub/Chris Tyson

312-261-6412

AIAD@mzgroup.us

www.mzgroup.us

Source: AiAdvertising, Inc.

FAQ

What was AiAdvertising's (AIAD) revenue growth in fiscal year 2023?

AiAdvertising (AIAD) reported a 21% revenue growth, reaching $8.2 million for fiscal year 2023 compared to $6.7 million in 2022.

How did AiAdvertising's (AIAD) gross profit margin change in 2023?

AiAdvertising's (AIAD) gross profit margin improved to 1.9% in 2023, up from -8.4% in the previous year.

What is AiAdvertising's (AIAD) projected revenue for FY 2024?

AiAdvertising (AIAD) projects FY 2024 revenue to be in the range of $9 to $10 million, driven by high customer retention and new customer wins.

How much strategic investment did AiAdvertising (AIAD) receive from Hexagon Partners?

AiAdvertising (AIAD) completed a $2.5 million strategic investment from Hexagon Partners, , a Texas-based investment company.

What was AiAdvertising's (AIAD) customer retention rate in 2023?

AiAdvertising (AIAD) reported a strong 94% customer retention rate year-over-year as of December 31, 2023.