Inuvo, Inc. (NYSE:INUV) Q2 2022 Earnings Conference Call August 15, 2022 10:00 AM ET
Company Participants
Natalya Rudman – Crescendo Communications
Richard Howe – CEO
Wallace Ruiz – CFO
Conference Call Participants
Brian Kinstlinger – Alliance Global Partners
Jack Vander Aarde – Maxim
Operator
Good day, everyone, and welcome to the Inuvo, Incorporated Second Quarter 2022 Financial Results Conference Call. Today’s call is being recorded.
And now at this time, I’d like to turn the call over to Natalya Rudman of Crescendo Communications. Please go ahead.
Natalya Rudman
Thank you, April, and good morning. I’d like to thank everyone for joining us today for the Inuvo second quarter 2022 shareholder update call. Today, Inuvo’s Chief Executive Officer, Richard Howe; and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. We would also like to remind our shareholders that; we anticipate filing our 10-Q with the Securities and Exchange Commission today.
Before we begin, I’m going to review the company’s safe harbor statements. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project and similar expressions as they relate to the Inuvo Inc., are such forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo’s public filings with the U.S. Securities and Exchange Commission, which can be reviewed at www.sec.gov. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements.
In addition, today’s discussion will include references to non-GAAP measures. The company believes that such information provides an additional measurement and consistent historical comparison of it’s performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures available on today’s usually on website.
With that, I’ll now turn the call over to CEO, Richard Howe, please go ahead, Rich.
Richard Howe
Thank you, Natalya, and thanks, everyone, for joining us here today.
We had another exceptionally strong quarter, where for the three months ended June 30, 2022, we delivered $22.7 million in revenue, which was up 79% year-over-year. Our trailing 12-month year-over-year growth rate now stands at an impressive 72%, and we have delivered approximately a 15% compounded quarterly growth rate over the last 2-year period between the second quarter of 2020 and Q2 of 2022. As you know, Inuvo provides digital advertising, technology and services across channels.
Our ValidClick platform principally serves advertising within the search and social channels, while the IntentKey principally serves within the programmatic channels. Both platforms experienced significant growth in the second quarter with the IntentKey and ValidClick up roughly 197% and 44%, respectively year-over-year.
The social and search-related revenues from ValidClick represent roughly 62% of revenues, while the programmatic revenues associated with the IntentKey represent 38%. The company’s top three clients accounted for approximately 27.4%, 27.2% and 13.6% of overall revenue, respectively. The second quarter was seasonally higher than is typical.
The second and third quarter periods within advertising tend to be difficult to predict. There is variability year-over-year in both the time lines associated with advertiser budgets for the year, typically occurring in the first quarter. And there is some inconsistency in consumer purchasing behavior because of the summer months, typically in Q3.
We believe this variability has been compounded this year due to various uncertainties related to the economic environment. This seasonality tends to lead to years where sometimes the second quarter is higher than the third quarter and sometimes the opposite sequentially. Gross margins remained healthy in the second quarter at roughly 59%. Adjusted EBITDA was a loss of roughly $100,000. There were extenuating circumstances associated with expenses in the quarter that Wally will discuss in his review of the financials.
The company’s core strategy remains a growth-oriented strategy. As we have messaged on previous calls, we believe the industry we serve is not prepared for the implications of a consumer privacy-led future where consumer data is no longer available to facilitate behavioral targeting of advertising. Most of an advertiser’s return on advertising spend is related to the use of this data.
Currently, approximately 75% of the media purchase opportunities within the open web either do not have a consumer cookie ID or that cookie ID does not persist the next day, and as a result, is no longer targetable. Google does not need to kill the cookie, the consumer with VPN and incognito tools and the other browser developers have already done that.
We believe two things are occurring because of this new reality. First, the existing incumbent advertising technology and data companies are convincing their clients to use a variation on the existing consumer-based methods.
The industry is referring to this as a first-party cookie solution. For those companies, where hundreds of millions, sometimes billions of dollars have been invested in the various technologies and data that supports this approach, this is the only way to preserve those past investments.
Secondly, and because there is already limited media inventory available to these technologies, these same incumbents are all effectively competing for media placements on a consumer cookie ID pool that is shrinking by the day, which means they are only bidding up the price for each other because of a shrinking cookie supply with constant demand. Inuvo has no such limitations.
The technical, regulatory and consumer issues facing first-party solutions suggest that they are challenged from the get-go. Less than 5% on of current open web media purchase opportunities are currently targetable in this first-party manner. This solution cannot and will not scale and literally uses a technical workaround that allows the continued use of a consumer’s data, something consumers have overwhelmingly told the industry, they no longer desire.
As a practical matter, this privacy movement has been self-evident in the response from consumers who use an Apple device, where they have been asked if they want their applications to track them. The vast majority have voted and the answer is no. Our opportunity is to take market share during this period where the incumbents continue to use outdated technologies, ill-aligned with the future and therefore, why growth is and remains our number one priority.
We continue to deliver exceptional results for clients within the IntentKey platform where in the second quarter, we performed on average 66% better than our clients’ KPIs. We ran over 80 open web campaigns in the quarter. We also put out a press release challenge to the industry in the quarter where we offered to compete head-to-head with any company, wherein if Inuvo lost, it would pay the invoice. We had no takers.
New customer acquisition was a highlight in Q2. We expanded further into the automotive, consumer packaged goods, financial services, political and tourism verticals. We hired an experienced sales leader in Q1 and have now organized all of our sales and account management under her. We remain active in our recruiting within this group, so we can meet the opportunities we see before us.
We’ve sponsored a first-of-its-kind conference on artificial intelligence within advertising, which took place in New York City and proved to be a huge success based on the number and variety of industry leaders in attendance. This subject was also top of mind at the Cannes Lions advertising festival we attended in July.
We have increased our marketing spending in support of our growth-oriented focus. Product development activity continued across both platforms. Within ValidClick, we added new features and tools that enhance automated, analytically based media buying within the search and social channels. Scaling campaigns, both in numbers and through automation, has been an ongoing focus of the ValidClick platform engineering teams.
Within the IntentKey, we launched a new graphical interface to the insights generated by the artificial intelligence that was well received by clients who can now interact with the information being generated by the AI in real time. We also started to commercialize a neural network-based media mix modeling solution, which we expect to make available to clients within the existing reporting dashboard they already use.
As the number of media channels has exploded, so too has the challenge to figure out how to optimize media spending across those channels. This is not only a highly nonlinear problem, but it’s also another problem being impacted by the cookie because traditional accounting for attribution between channels involves counting the cookies linked to that channel, a method also on its last legs. This sophisticated and AI-based approach to the media optimization challenge facing the industry will be yet another significant differentiator for Inuvo.
Managing multimedia is akin to conducting an orchestra. You want to turn down the horn section when it’s sounding a little flat. The challenge is how to figure out when and by how much it’s flat. This is the problem we figured out.
I would like to now turn the call over to Wally for a more detailed assessment of our financial performance within the quarter.
Wallace Ruiz
Thank you, Rich. Good morning, everyone.
I’ll recap the financial results for the second quarter of 2022. As Rich mentioned, Inuvo reported revenue of $22.7 million for the quarter ended June 30, 2022. That’s an increase of 79% compared to $12.6 million reported in the second quarter of the prior year.
Both platforms serving our multichannel solution, ValidClick and IntentKey, exceeded the prior year. ValidClick revenue exceeded the second quarter of last year by 44%, and the IntentKey revenue exceeded the prior year quarter by approximately 197%, primarily due to new customers expanding their media spend.
Revenue split between the IntentKey and ValidClick was 38% and 62%, respectively, for the second quarter of 2022, and that compares to 23% and 77%, respectively, for the same period last year. Our revenue is less concentrated in 2022 than ever before. Our largest client, a retailer, represented 27% of our total revenue in the quarter. The same quarter last year, our largest client was Google and represented 38% of our revenue. Google remains an important customer and in the second quarter represented 14% of our second quarter revenue.
Gross profit for the second quarter ended June 30, 2022, totaled $13.4 million as compared to $10.4 million for the same period last year. Gross profit margin for the second quarter of this year was 59%, and that compares to 82% for the same quarter last year. The IntentKey platform has a lower gross margin than the ValidClick platform, but has a greater overall net margin.
The Inuvo gross margin decreases as IntentKey revenue becomes a greater percentage of the total revenue. In quarters past, cost of revenue was predominantly payments to website publishers and app developers that hosted advertisements that we serve through the ValidClick platform yielding a very high gross margin.
As the programmatic channels associated with the IntentKey continue to grow, they become a larger percent of our revenue and cost of revenue. IntentKey cost of revenue was predominantly payments to advertising exchanges that provide access to a supply of advertising inventory into which we serve on behalf of our clients, advertisements using information predicted by the IntentKey artificial intelligence. This is a greater cost than the historical payments we have been making to publishers associated with ValidClick. But at the same time, on a net basis, it is more profitable.
The very high ValidClick gross margin also has a high cost of traffic acquisition, which is accounted for in operating expenses as a marketing expense. The IntentKey is not burdened with any of those types of expenses, traffic acquisition expenses.
Our gross margins are also dependent upon the mix of advertising channels serving the client. Many of our clients require a multichannel digital media solution. One of our advantages is the ability to serve highly targeted prescriptive ads across multiple channels, such as video, mobile, connected TV, linear TV, display, social, search and native. Each of these channels yield varying gross margins depending on supply and demand. The optimization of the media mix for clients can vary from client to client and from time to time.
Generally, search and social are lower-margin channels as we have to work within the walled gardens of the large Internet platforms that support these channels. We have better opportunities for margin expansion in other channels on the open web. We expect Inuvo gross margins for the remainder of the year to be roughly in line with sales of the first and second quarters of this year.
Operating expenses were $16.2 million in the second quarter of 2022 compared to $12.8 million in the prior year. That’s an increase of $3.4 million. The largest component of operating expense is marketing costs. Note, as I previously mentioned, marketing costs are predominantly traffic acquisition costs associated with ValidClick. Marketing costs were $11 million in the second quarter of this year compared to $8.2 million in the same quarter last year.
This brings us to the first of two matters that impacted the second quarter. Within the quarter, we purchased and placed approximately $2 million of media from one of the largest and a well-known platform provider. The technologies we have for measuring quality of the media we purchased determined that the media platform provider sent us large volumes of fraudulent traffic.
The media platform gave us a credit of approximately $600,000 for the fraudulent traffic and as a result, the net amount of $1.4 million. That’s the difference between the total amount of $2 million that we purchased versus the credit of $600,000. The net amount of $1.4 million was absorbed into marketing expense with no corresponding revenue associated with it.
While the media platform provider has acknowledged the fraudulent traffic issue and granted us as partial credit, we firmly believe we are due a full refund for all the fraudulent data and media we had purchased. And we intend to utilize all the avenues available to us to pursue our claims. In the meantime, we have held back an equivalent amount of payments we owed this plan provider pending resolution.
Going forward, we expect marketing cost as a percent of revenue to continue to decline as revenue from the IntentKey platform continues to grow in overall share of Inuvo revenue relative to ValidClick. Compensation expense was $3.2 million in the second quarter this year compared to $2.9 million in the prior year, primarily due to higher employee salary cost and higher stock-based compensation expense. Our full-time and part-time employment was 83 at June 30, 2022, compared to 73 on June 30 of last year. The majority of the increase in head count occurred within sales, sales support and account management for the IntentKey.
General and administrative expense increased by $334,000 in the second quarter of this year compared to the prior year due to higher bad debt allowance, travel and entertainment expense and professional fees, partially offset by $269,000 of lower amortization expense. Net interest was income of $3,000 in the second quarter of this year compared to $8,000 expense in the same quarter last year.
Turning now to other income and expense. This brings us to the second matter that impacted the quarter. As we disclosed last year, we identified a portion of our cash that would not be needed during the next 12 months and transferred that cash to a fund manager.
Since the third quarter of last year, we have been reporting unrealized gains as the securities are mark-to-market at quarter end. However, with the recent increase in interest rates and the downturn in the stock market, the same securities reported an unrealized loss at the end of June of approximately $395,000.
However, as of last Friday, that portfolio had regained approximately $300,000 in value. We reported a net loss of $3.2 million or $0.03 per basic share compared to $2.4 million net loss or $0.02 per basic share in the same quarter last year.
Recall, this year’s quarter includes a $1.4 million expense for fraudulent traffic that we expect to receive full reimbursement for and a $395,000 unrealized loss on marketable securities, neither of these two expenses diminished cash, though we did recognize the expense we did not and shall not pay the invoices for the fraudulent media.
Net income in this year’s quarter also includes $1.3 million of noncash depreciation, amortization and stock compensation. The adjusted EBITDA loss for the quarter ended June 30, 2022, was $142,000 compared to a loss of $965,000 last year.
On June 30, 2022, we had cash and cash equivalents and marketable securities of approximately $8.4 million and a net working capital of $8.9 million. In addition, we have a $5 million working capital line of credit, which we currently have no outstanding balance on.
We maintained a simple cap structure with almost $120 million – 120 million common shares outstanding, 5.1 million employee restricted stock units outstanding through an equity incentive plan and 300,000 warrants to purchase common stock.
With that, I’d like to turn the call back over to Rich for closing remarks.
Richard Howe
Thanks, Wally.
At 75% year-over-year growth in the first quarter and now 79% in the second quarter, we’ve had a very strong first half of 2022. Our trailing 12-month growth rate now stands at 72%. And our 2-year compounded quarterly growth rate is now at 15%. But we had an adjusted EBITDA loss of $100,000 in the second quarter.
We continue to develop and deploy artificial intelligence-based innovations that serve to further the gap between our capabilities and those of our competitors. For the most part, appear to be doubling down on existing methods and technologies. Our balance sheet remains strong enough to accommodate the working capital needs of the growing business. And as a result, we have no immediate plans to raise capital.
With that, I will now turn it over to the operator for questions. April?
Question-and-Answer Session
Operator
[Operator Instructions] Brian Kinstlinger of Alliance Global Partners has our first question.
Brian Kinstlinger
Hi, good morning, guys. And thanks for taking my questions. My first question. I’d say you’ve successfully articulated why the older technologies or legacy technologies out there will have difficulty in the new world of privacy lives and lack thereof cookies. Although you’ve talked about it in the past, maybe you could do – maybe it would be helpful for you to articulate at a high level, how IntentKey is able to bypass this so-called first-party data and be so successful?
Richard Howe
Yes, Brian. Clearly, we’re talking about artificial intelligence here. So the answer to the question, unfortunately, is a complicated one. One, conventional technologies are based on identity, and we have no such construct. Meaning we built the technology from the get-go to not be dependent upon figuring out who someone is, who a person is.
The only information our technology needs to achieve its objective is actually the content of the Internet. And maybe more specifically, when it’s trying to make a decision about placing an ad on a page, the content on the page where the ad is available to be purchased. And in a nutshell, the brain, if you will, behind the technology has this ability to understand the relationship between every concept in the human lexicon and every other concept.
And what that allows us to do is actually open up opportunities for ad placements against an objective in a way that’s never been done before, in large part because of the construct and constraint of using people as the center of the data. That’s the best I can do in – whatever, in two minutes.
Brian Kinstlinger
Yes. So basically, it’s information and base as opposed to people based. Where are you searching, what are you searching as opposed – what page are you want as opposed to…
Richard Howe
No, it’s none of that. It’s none of that, Brian. I should make that clear because those are behavioral elements. We don’t care about what you’re searching for or why you’re searching for it. Again, the only thing our technology needs is the content of a page that’s available and freely there to read.
It maybe said a different way, while our technology is not contextual in the classic sense of the way ad tech knows contextual, it is contextually based in the sense that it needs and does read the information that’s available. But no, none of those behavioral things that you’re mentioning are necessary in our technology which is why technology is so powerful and ready for this new future.
Brian Kinstlinger
Now the growth of IntentKey has been super over the last six quarters. You – really the adoption, the execution as ad spending has picked up has been solid. So I don’t want to say it hasn’t. But if I exclude the sequential period from the fourth quarter of 2021 to the first 2022, I exclude that period, sequential growth slowed. Now you’ve talked about uncertainty in 2Q and 3Q with economic uncertainty.
So maybe it would be helpful to understand the dynamics in 2Q that maybe saw slower sequential growth than you’ve enjoyed for so long? Is it the larger – law of large numbers? Is it changing economy? Just maybe any detail would help provide some context to that.
Richard Howe
Well, as you pointed out, it’s hard to say that there’s anything amiss when we had a 79% year-over-year growth rate. And I think you don’t – look, over the last two years, that’s why I provided this number in my conference note. I mean, we’ve seen 15% quarterly compounded growth rate for the company.
And a lot of that is on the back of the programmatic channels, i.e., the IntentKey. But I think it is important to recognize, and I keep reemphasizing this in my communications that managing digital media for clients now means you have to manage across channels. And the search and social channels, they’re not going away.
I mean, these large platforms, notably Google on the search side, the dominant platform and to a lesser extent, Bing and others. And then, of course, Facebook on the social side, these are platforms that clients want to use and should be using. And they’re going to remain to be a big part of the overall mix of the media relative to the open web-based advertising channels. So I don’t know that you can’t look at it in any individual period quarter-to-quarter.
Specifically, as it relates to my statements about Q2 and Q3. The real issue in the third quarter always is about July and August and September, probably most notably September because September is almost always a large month because you’re heading into the, call it, the money months for advertisers.
It’s just very difficult to predict, especially July and August, with all of the consumer vacation schedules and whatnot. And that’s why I made the point, which makes it hard to predict Q2 and Q3 relative to one another in any given period.
Brian Kinstlinger
All right. Okay. So I wanted to touch on the IntentKey KPIs. I’m not sure that you explained it – well, it’s something we’ve talked about the last several quarters. So maybe you can talk about new logo wins? You made a comment that the pace of new logos per month remained consistent in the second quarter and thus far in the third quarter compared to the previous few quarters? Is it slower? And then maybe campaign sizes, are you seeing those increase as well?
Richard Howe
We’re seeing budgets increase. With that said, I think the economic environment we’re in, we do see our clients starting to think about whether or not we are in or headed for a recession. But we don’t yet see them acting on it. I guess they’re like the rest of us. We’re not quite sure what’s going on.
We have increasing – or reduce unemployment with jobs, but yet at the same time, we got high interest rates been shrinking GDP. So we’re not quite sure it’s an anomaly. So our clients are thinking about it just like we are, but we’re not really seeing the actions of that. The actions would normally reduce marketing spend.
It’s hard for us to measure anything with the kind of growth that we had relative to some other period when we weren’t growing this much, which, as I pointed out, is now a 2-year period. All I can say is we continue to add new clients, and I said it on the call, we’ve added CPG in political and automotive clients and travel clients. And we do see not among all of our clients, but we do see our clients generally adding budget in the clients that we we’ve taken on.
Brian Kinstlinger
Great. That’s great to hear. Last question I have for now is you mentioned your largest customer was a retail customer. So I assume that’s IntentKey, it’s not a search. What percent of revenue was that customer in the second quarter of 2021? I kind of want to see what they’re generating in terms of the growth? And then maybe can you give us a sense if there’s any other concentration in IntentKey itself?
Richard Howe
I don’t believe we give client-based numbers like that, Brian. And I don’t think we’re going to start on this call. I would say this though, to the best of my knowledge, I’d have to go back and check, but I think the client in question did actually grow. Although Wally can probably – maybe he knows that, maybe doesn’t. And I don’t want to be held to that because I’m not sure because I don’t have the numbers in front of me, I’d have to go look at them in the period that you’re asking for.
And then I’m sorry, Brian, what was the – the other question in there – was another question in there, that I wanted to…
Brian Kinstlinger
I’m just trying to understand – yes, I was trying to understand if there’s other concentration in IntentKey or inside IntentKey, that customer, obviously, is the largest. Are there another one or two or three that make up a big percentage of IntentKey’s revenue?
Richard Howe
Yes, there’s a couple of them. I mean, I think it’s like any other business that I’ve ever been a part of developing that’s at this stage. In this stage for us means, I guess, $22.7 million in a quarter. Yes, there’s a handful, three or four or five customers who, I don’t know, are the, let’s call it, the 70%-30% or 60%-40% of the revenue split, right?
Wallace Ruiz
Brian, I don’t know I could tell you that the large retailer came on since the second quarter of last year. So it’s…
Brian Kinstlinger
So they went basically from 0% to 20% to 27% when you gave the number at 0% to 27% of revenue over it was?
Wallace Ruiz
Yes. That’s right. That’s right.
Operator
[Operator Instructions] We will now move on to Jack Vander Aarde of Maxim.
Jack Vander Aarde
Great. Good morning, guys. Really good to see the strong results. Thanks for taking my questions. So as this has been great top line results and good to see strength across both ValidClick and IntentKey. Question on the gross margin result, which was ahead of my expectations. Does IntentKey have a more favorable channel mix – and channel mix just because I know gross margins are sensitive depending on that channel mix. You’re a full multichannel platform service now, so just wondering what that kind of mix was at was that the result did that drive gross margin up better than I would have expected? Or is it more just because of the high margin ValidClick margins?
Wallace Ruiz
Yes. We got – actually, the IntentKey did better in gross margin in the second quarter that showed improvement. But what you’re looking at is a result of the mix between the ValidClick and IntentKey revenue. So it’s a mix of the business that. And as I had mentioned in prior calls, you should expect that trend to continue as the IntentKey becomes a larger portion of the total revenue for Inuvo. But IntentKey itself actually did see some improvement in the second quarter.
Jack Vander Aarde
Great. Great. Rich, you mentioned you’re seeing budget increase, but you don’t necessarily see the customers, the end customers acting on the increasing budget quite yet. Maybe for the IntentKey product revenue specifically, are you seeing new intensity customer orders coming in, and how many in the second quarter?
And then are you expecting those budgets to be acted on and drive increased IntentKey orders during the back half of the year? I’m assuming yes, but maybe how much are like on the potential of IntentKey orders you think are on the sidelines just waiting for the trigger to be pulled?
Richard Howe
There’s lots of sort of, call it, variables at play here in answering this question adequately. I’ll start with the first of them. Look, the change that’s occurring in the industry is creating some demand for our technology, and that would be irrespective of any seasonality or budget or other issues. I think the smarter companies on the planet who recognize this challenge, this phase in the industry, are already starting to look for solutions that can address those challenges. So we have that tailwind, if you will, behind us, pushing us forward.
The economics of the U.S. GDP and whether or not we’re in a recession or not, I don’t – we have no control over that. I think my comment for that was more about what we see is, like a lot of us, people are aware that there could be an issue, but they’re not necessarily seeing it day to day yet. So they’re thinking about it and talking about it, but it doesn’t seem to be impacting at least the baseline for the amount of budget that they’ve allocated to us. Whether or not that will change? I don’t know. All I can say is, at this point, we’re not seeing those economic concerns impacting us. They could in Q3 and Q4, I guess, we’ll all find out as we progress.
Jack Vander Aarde
Got it. That’s helpful color. And then maybe another one for Wally. Just on the operating expenses, as you pointed out, they increased quite a bit. But mostly because this fraudulent data from this large media customer. It sounds like you expect a full refund of about $1.4 million for that ? And then just looking at the back half of 2022, do you expect marketing costs to look similar to last year or maybe a little bit of growth on that last year? Just wondering how you’re thinking of the marketing expense.
Wallace Ruiz
Yes. Marketing expense, we – as a dollar amount, we do expect it to increase, yes. But not as significantly as we saw in the prior year in 2021. But yes, as a dollar amount, yes, we do expect it to increase quarter – for the next couple of quarters.
Jack Vander Aarde
Okay. And then just –
Richard Howe
I might add – If I could just add a statement on to Wally’s. When we do talk about marketing expenses, we do tend to fragment that a little bit. Of course, the lion’s share of our marketing expenses are related to the purchase of media within social and search. But there’s another component of marketing that we spend dollars on in any given year, and that’s the marketing of our own company and have increased that spending.
I don’t know if materially is the word, but significantly, it was never a big number. And so relatively speaking, it’s a big number year-over-year. I’m not sure what it is, Wally, and I’m not sure – I don’t know if we disclosed it or not, but I know it’s going to be around $1 million or something for the year, which is a lot more than we spent in prior years.
And we’ve done that in large part, so that we can get our brand out there as being this company that has a solution to the problem facing the industry because we’re not well recognized yet in an industry that spends $300 billion or $400 billion a year.
Jack Vander Aarde
Okay. Understood. I appreciate the added color there. Go ahead, Wally.
Wallace Ruiz
Yes. Jack, as a percent of revenue, it will continue to be lower, but the dollar amount will increase modestly and for the reasons Rich just mentioned.
Jack Vander Aarde
Okay. Got it. And good to see the top line continue to grow at a pretty robust rate.
Operator
At this time, it appears there are no further questions. I’ll turn the call back over to Richard for any additional or closing comments.
Richard Howe
Okay. Thank you, April. And of course, as always, I want to thank everyone who joined us today on the call, and we appreciate your continued interest in our company.
Operator
And that does conclude today’s call. Thank you all for your participation. You may now disconnect.
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