- Revenue of $64.5 million for Q3 2024 and $189.2 million for YTD 2024
- Commerce Media Solutions revenue grew 341% to $10.4 million (16% of revenue) from $2.3 (3% of revenue) in Q3 last year with gross profit margin of 33% in the quarter compared to 24% for the consolidated business
- Commerce Media Solutions annual recurring run rate currently exceeds $50 million demonstrating strong traction in executing strategic pivot to a fast-growing market
Don Patrick, Fluent's Chief Executive Officer, commented, "During the third quarter we continued to accelerate our shift in focus and revenue mix to Fluent's Commerce Media Solutions, previously referred to as our Syndicated Performance Marketplaces. This strategic shift represents a significant opportunity for our business, as a growing number of media owners and advertisers are turning to commerce media to maximize the impact of their digital advertising initiatives.
Mr. Patrick continued, "Commerce media enhances customer monetization by using first party data to interact with customers across the entire purchasing experience, and according to BCG estimates, experts are predicting commerce media will account for over 25% of digital media spending by 2026. Fluent is uniquely positioned to address this shifting demand with a comprehensive suite of solutions that address the numerous high volume verticals including ticketing, retail, quick-service restaurants, and more. Since its launch in early 2023, revenue generated from Commerce Media Solutions has grown year over year at a triple digit pace, with $10.4 million in revenue generated for the current quarter at 33% gross profit (exclusive of depreciation and amortization) margin and 33.7% media margin as a percentage of revenue, and a current annual revenue run rate of over $50 million1. This growth is supported by 14 years of deep industry experience with our owned and operated marketplaces where we have driven successful customer acquisition for our media partners and advertisers and built a robust database of first-party customer data that is a key differentiator for us in the market."
Mr. Patrick concluded, "We are intently focused on improving our operational performance to deliver enhanced value for our shareholders, and with our visibility today, we are targeting double digit consolidated revenue growth and enhanced profitability in 2025. We're encouraged by the opportunities we're seeing in the marketplace and while Fluent has faced some difficult headwinds during this fiscal year, we continue to believe that we are positioning the Company for long-term growth and value generation as we drive a strategic shift to the high-growth commerce media market."
Third Quarter Financial Highlights
- Revenue of $64.5 million, a decrease of 3%, compared to $66.2 million in Q3 2023
- Owned and Operated revenue decreased 18% to $43.5 million compared to $53.1 million in Q3 2023 as the company executed its shift in focus and revenue mix to higher margin Commerce Media Solutions.
Commerce Media Solutions revenue increased 341% to $10.4 million compared to $2.3 million in Q3 2023.
- Net loss of $7.9 million, or $0.48 per share, compared to a net loss of $33.6 million, or $2.43 per share, for Q3 2023.
- Owned and Operated revenue decreased 18% to $43.5 million compared to $53.1 million in Q3 2023 as the company executed its shift in focus and revenue mix to higher margin Commerce Media Solutions.
- Gross profit (exclusive of depreciation and amortization) of $15.7 million, a decrease of 3% over Q3 2023 and representing 24% of revenue. The Company's growing Commerce Media Solutions business reported gross profit (exclusive of depreciation and amortization) of $3.4 million, representing 33% of revenue, for Q3 2024 up from 11% of revenue in Q3 2023.
- Media margin of $18.2 million, a decrease of 6% over Q3 2023 and representing 28.1% of revenue. The Company's growing Commerce Media Solutions business reported media margins of 33.7% for Q3 2024 up from 11.3% in Q3 2023.
- Adjusted EBITDA of negative $0.1 million, an improvement of $1.7 million over Q3 2023 and representing (0.1%) of revenue.
- Adjusted net loss of $3.7 million, or $0.22 per share, compared to an adjusted net loss of $4.1 million, or $0.30 per share, for Q3 2023.
- Revenue of $189.2 million, a decrease of 16%, compared to $225.6 million for the nine months ended September 30, 2023.
- Owned and Operated revenue decreased 30% to $130.2 million compared to $185.8 million for the first nine months of last year as the company executed its shift in focus and revenue mix to higher margin Commerce Media Solutions.
- Commerce Media Solutions revenue increased 580% to $24.0 million compared to $3.5 million in the first nine months of last year.
- Net loss of $25.8 million, or $1.75 per share, compared to a net loss of $61.3 million, or $4.46 per share, for the nine months ended September 30, 2023.
- Gross profit (exclusive of depreciation and amortization) of $46.9 million, a decrease of 19% over the nine months ended September 30, 2023 and representing 25% of revenue. The Company's growing Commerce Media Solutions business reported gross profit (exclusive of depreciation and amortization) of $7.5 million, representing 31% of revenue, for the nine months ended September 30, 2024 up from negative 12% of revenue, for the nine months ended last year.
- Media margin of $56.0 million, a decrease of 17% over the nine months ended September 30, 2023 and representing 29.6% of revenue. The Company's growing Commerce Media Solutions business reported media margins of 32.1% for first nine months of 2024 up from negative 11.9% in the first nine months of last year.
- Adjusted EBITDA of negative $3.9 million, a decrease of $8.2 million over the nine months ended September 30, 2023 and representing (2.1%) of revenue.
- Adjusted net loss of $15.2 million, or $1.03 per share, compared to an adjusted net loss of $6.8 million, or $0.49 per share, for the nine months ended September 30, 2023.
Business Outlook & Goals
- Establish Fluent's Commerce Media Solutions business as a leader in the performance marketing sector among both media partners and advertisers to capitalize on the growing demand for this advertising channel across numerous high volume market verticals.
- Drive double digit revenue growth, improved gross margins, and improved net income and adjusted EBITDA as compared to 2024 in 2025 supported by the growth of Fluent's Commerce Media Solutions.
- Leverage 14-year leadership position at the forefront of customer acquisition and robust database of first-party user data to differentiate Fluent from its competitors in the commerce media space.
- Seasonality, the ongoing shift to commerce media, and expense discipline is expected to support low-single digit adjusted EBITDA margin as a percentage of revenue in the fourth quarter of 2024, driving enhanced profitability and improved value for stakeholders.
____________________
(1) Annual Revenue Run Rate is an operational metric that represents the annualized revenue of the Company's media partnerships at current monetization levels, as of the end of the reporting period. The Company calculates Annual Revenue Run Rate as follows:
- Media partners within Commerce Media Solutions with an active contract are assessed and assigned an annual media volume estimate based on the active term of the contract and the monetization rate at the end of the reporting period. The Company considers a media partner contract to be active when the contractual term commences (the "start date") until its right to serve the partner's commerce traffic ends. Even if the contract with the customer is executed before the start date, the contract will not count toward Annual Revenue Run Rate until the media partner's right to receive the benefit of the services has commenced.
- As Annual Revenue Run Rate includes only contracts that are active at the end of the reporting period, it does not reflect assumptions or estimates regarding new business. For contracts expiring within the 12-months after the period-end calculation date, Annual Revenue Run Rate does reflect expectations of renewal.
- The Company's Commerce Media Solutions platform provides the technology to effectively monetize the partner's media by placing relevant ads at a contracted moment of consumer engagement. Although from inception to date, improvements in the platform's AI-powered technology have consistently driven increased rates of monetization, for the purpose of Annual Revenue Run Rate, the Company assumes a consistent monetization level to that as measured on each media partner at the end of the reporting period.
Conference Call
Fluent, Inc. will host a conference call on Thursday, November 14, 2024, at 4:30 PM ET to discuss its 2024 third quarter financial results. The conference call can be accessed by phone after registering online at https://register.vevent.com/register/BI864a66719cf74bf5b6122e36d27dac25. The call will also be webcast simultaneously on the Fluent website at https://investors.fluentco.com/. Following the completion of the earnings call, a recorded replay of the webcast will be available for those unable to participate. To listen to the telephone replay, please connect via https://edge.media-server.com/mmc/p/j8zkwa2m. The replay will be available for one year, via the Fluent website https://investors.fluentco.com/.
About Fluent, Inc.
Fluent, Inc. (NASDAQ: FLNT) has been a leader in performance marketing since 2010, offering customer acquisition and partner monetization solutions that exceed client expectations. Leveraging untapped channels and diverse ad inventory across partner ecosystems and owned sites, Fluent connects brands with consumers at the most optimal moment, ensuring impactful engagement when it matters most. Constantly innovating and optimizing for performance, Fluent unlocks additional revenue streams for partners and empowers advertisers to acquire their most valuable customers at scale. For more insights visit https://www.fluentco.com/.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
The matters contained in this press release may be considered to be "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Those statements include statements regarding the intent, belief or current expectations or anticipations of Fluent and members of our management team. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following:
- Compliance with a significant number of governmental laws and regulations, including those regarding telemarketing, text messaging, privacy and data;
- The financial impact of compliance changes to our business, including changes to our employment opportunities marketplace and programmatic advertising businesses, and whether and when our competitors will implement similar changes;
- The outcome of litigation, regulatory investigations, or other legal proceedings in which we may become involved in the future;
- Failure to safeguard the personal information and other data contained in our database;
- Unfavorable publicity and negative public perception about the digital marketing industry;
- Failure to adequately protect intellectual property rights or allegations of infringement of intellectual property rights;
- Unfavorable global economic conditions, including as a result of health concerns, terrorist attacks or civil unrest;
- Dependence on our key personnel and ability to attract or retain employees;
- Dependence on and liability related to actions of third-party service providers;
- A decline in the supply or increase in the price of media available;
- Ability to compete in an industry characterized by rapidly-evolving standards and internet media and advertising technology;
- Failure to compete effectively against other online marketing and advertising companies or respond to user demands;
- Competition for web traffic and dependence on third-party publishers, internet search providers, and social media platforms for a significant portion of visitors to our websites;
- Dependence on emails, text messages, and telephone calls, among other channels, to reach users for marketing purposes;
- Credit risk from certain clients;
- Limitations on our third-party publishers' ability to collect and use data derived from user activities;
- Ability to remain competitive with the shift to mobile applications;
- Failure to detect click-through or other fraud on advertisements;
- Fluctuation in fulfillment costs;
- Dependence on the gaming industry;
- Failure to meet our clients' performance metrics or changing needs;
- Our need to raise capital, the uncertainty of which raises substantial doubt about our ability to continue as a going concern;
- Pricing pressure by certain clients and the ability of our marketplace to respond through allocating traffic to higher paying clients;
- Potential limitations on the use of the revolving credit line under our credit agreement to fund operating expenses based on the amount and character of accounts receivable at any given time and our ability to meet our financial forecast, the potential for which raises substantial doubt about our ability to continue as a going concern;
- Compliance with the covenants of our credit agreement in light of current business conditions, the uncertainty of which raises substantial doubt about our ability to continue as a going concern;
- Potential for failures in our internal control over financial reporting;
- Ability to maintain listing of our securities on Nasdaq or any stock exchange and potential impact on our stock price, liquidity, and ability to obtain financing; and
- Management of the growth of our operations, including international expansion and the integration of acquired business units or personnel.
| FLUENT, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) (unaudited) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| ASSETS: | ||||||||
| Cash and cash equivalents | $ | 6,587 | $ | 15,804 | ||||
| Accounts receivable, net of allowance for credit losses of $497 and $231, respectively | 52,635 | 56,531 | ||||||
| Prepaid expenses and other current assets | 7,060 | 6,071 | ||||||
| Total current assets | 66,282 | 78,406 | ||||||
| Restricted cash | 1,255 | - | ||||||
| Property and equipment, net | 362 | 591 | ||||||
| Operating lease right-of-use assets | 2,016 | 3,395 | ||||||
| Intangible assets, net | 22,666 | 26,809 | ||||||
| Goodwill | - | 1,261 | ||||||
| Other non-current assets | 3,364 | 1,405 | ||||||
| Total assets | $ | 95,945 | $ | 111,867 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||
| Accounts payable | $ | 7,902 | $ | 10,954 | ||||
| Accrued expenses and other current liabilities | 27,273 | 30,534 | ||||||
| Deferred revenue | 428 | 430 | ||||||
| Current portion of long-term debt | 32,582 | 5,000 | ||||||
| Current portion of operating lease liability | 2,222 | 2,296 | ||||||
| Total current liabilities | 70,407 | 49,214 | ||||||
| Long-term debt, net | 500 | 25,488 | ||||||
| Convertible Notes, at fair value with related parties | 4,860 | - | ||||||
| Operating lease liability, net | 152 | 1,699 | ||||||
| Other non-current liabilities | 47 | 1,062 | ||||||
| Total liabilities | 75,966 | 77,463 | ||||||
| Contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Preferred stock - $0.0001 par value, 10,000,000 Shares authorized; Shares outstanding - 0 shares for both periods | - | - | ||||||
| Common stock - $0.0005 par value, 200,000,000 Shares authorized; Shares issued - 17,645,368 and 14,384,936, respectively; and Shares outstanding - 16,876,773 and 13,616,341, respectively | 46 | 43 | ||||||
| Treasury stock, at cost - 768,595 and 768,595 Shares, respectively | (11,407 | ) | (11,407 | ) | ||||
| Additional paid-in capital | 438,705 | 427,286 | ||||||
| Accumulated deficit | (407,365 | ) | (381,518 | ) | ||||
| Total shareholders' equity | 19,979 | 34,404 | ||||||
| Total liabilities and shareholders' equity | $ | 95,945 | $ | 111,867 | ||||
| FLUENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) (unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 64,516 | $ | 66,239 | $ | 189,216 | $ | 225,638 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 48,861 | 50,148 | 142,318 | 167,960 | ||||||||||||
| Sales and marketing | 3,983 | 4,426 | 13,400 | 13,454 | ||||||||||||
| Product development | 4,124 | 4,511 | 13,681 | 14,064 | ||||||||||||
| General and administrative | 9,067 | 8,725 | 28,288 | 24,991 | ||||||||||||
| Depreciation and amortization | 2,369 | 2,658 | 7,507 | 8,112 | ||||||||||||
| Goodwill and intangible assets impairment | - | 29,705 | 2,241 | 55,405 | ||||||||||||
| Total costs and expenses | 68,404 | 100,173 | 207,435 | 283,986 | ||||||||||||
| Loss from operations | (3,888 | ) | (33,934 | ) | (18,219 | ) | (58,348 | ) | ||||||||
| Interest expense, net | (1,281 | ) | (936 | ) | (3,711 | ) | (2,420 | ) | ||||||||
| Fair value adjustment of Convertible Notes, with related parties | (2,810 | ) | - | (2,810 | ) | - | ||||||||||
| Loss on early extinguishment of debt | - | - | (1,009 | ) | - | |||||||||||
| Loss before income taxes | (7,979 | ) | (34,870 | ) | (25,749 | ) | (60,768 | ) | ||||||||
| Income tax (expense) benefit | 35 | 1,243 | (98 | ) | (551 | ) | ||||||||||
| Net loss | (7,944 | ) | (33,627 | ) | (25,847 | ) | (61,319 | ) | ||||||||
| Basic and diluted income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.48 | ) | $ | (2.43 | ) | $ | (1.75 | ) | $ | (4.46 | ) | ||||
| Diluted | $ | (0.48 | ) | $ | (2.43 | ) | $ | (1.75 | ) | $ | (4.46 | ) | ||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 16,452,273 | 13,813,423 | 14,783,253 | 13,751,910 | ||||||||||||
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