AiAdvertising Reports Fiscal Year 2023 Financial Results
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.”
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