| • | Revenue of $82.1 million for Q2 2023 and $159.4 million for FY 2023 | |
| • | Gross profit (exclusive of depreciation and amortization) of $22.6 million for Q2 2023 and $41.6 million for FY 2023 | |
| • | Net income of $1.2 million for Q2 2023 and net loss of $30.8 million for FY 2023 | |
| • | Media margin of $25.9 million for Q2 2023 and $47.9 million for FY 2023 | |
| • | Adjusted EBITDA of $5.6 million for Q2 2023 and $6.0 million for FY 2023 | |
| • | Adjusted net income of $1.0 million for Q2 2023 and adjusted net loss of $1.7 million for FY 2023 |
NEW YORK, Aug. 14, 2023 (GLOBE NEWSWIRE) -- Fluent, Inc. ( FLNT), a leading data-driven performance marketing company, today reported financial results for the second quarter ended June 30, 2023.
Don Patrick, Fluent’s Chief Executive Officer, commented, "Our second quarter results continue to reinforce the imperative behind our commitment to enhance the quality of consumer engagements within our Performance Marketplace, while also reflecting the more volatile macro-economic and evolving regulatory environment we are operating within.
Our successful FTC settlement gives us important clarity on our strategic roadmap, and we will continue to appropriately invest in our growth agenda – 'Quality as our North Star'. We are excited about a future with a level competitive playing field that will allow Fluent to return to growth, at or above industry growth rates. However, in the immediate term, and as the market reacts to the new industry standard Fluent has chosen to establish, we believe it will take a few quarters or more for our competitors to implement new industry compliance standards, and some may try to take financial advantage of their current lower compliance posture. Fluent is prepared to gain market share with our media partners in future periods as the market evolves to incorporate the new compliance environment we are leading."
Second Quarter Financial Highlights
| • | Revenue decreased 16% to $82.1million, from $98.4 million in Q2 2022 | |
| • | Grossprofit (exclusive of depreciation and amortization) of $22.6 million, a decrease of 20% over Q2 2022 and representing 28% of revenue | |
| • | Net income of$1.2 million, or $0.01 per share, compared to net loss of $56.9 million, or $0.70 per share, for Q2 2022 | |
| • | Media margin of $25.9 million, a decrease of 20% over Q2 2022 and representing 31.5% of revenue | |
| • | Adjusted EBITDA of $5.6 million, a decrease of $3.8 million over Q2 2022 and representing 6.8% of revenue | |
| • | Adjusted net income of $1.0million, or $0.01 per share, compared to adjusted net income of $0.6 million, or $0.01 per share, for Q2 2022 |
Six Months Ended June 30, 2023 Financial Highlights
| • | Revenue decreased 15% to $159.4million, from $187.4 million for the six months ended June 30, 2022 | |
| • | Grossprofit (exclusive of depreciation and amortization) of $41.6 million, a decrease of 17% over the six months ended June 30, 2022 and representing 26% of revenue | |
| • | Net loss of $30.8 million, or $0.37 per share, compared to net loss of $59.0 million, or $0.73 per share, for the six months ended June 30, 2022, reflecting a larger goodwill impairment in the prior period | |
| • | Media margin of $47.9 million, a decrease of 18% over the six months ended June 30, 2022 and representing 30.0% of revenue | |
| • | Adjusted EBITDA of $6.0 million, a decrease of $8.1 million over the for the six months ended June 30, 2022 and representing 3.8% of revenue | |
| • | Adjusted net loss of $1.7 million, or $0.02 per share, compared to adjusted net income of $1.6 million, or $0.02 per share, for the six months ended June 30, 2022 |
Media margin, adjusted EBITDA, and adjusted net income are non-GAAP financial measures, as defined and reconciled below.
Business Goals
| • | Leverage our leadership position with the new compliance standards we have set to level the industry playing field, create additional competitive differentiation and increase market share. |
| • | Ensure we source customer traffic that meets our internal quality and regulatory requirements, leading to higher quality consumer engagement. |
| • | Strengthen our Performance Marketplace through leveraging our Influencer Platform, and vertical expansion in our Call Solutions and AdFlow businesses. |
| • | In the current economic environment, continue to be prudent in managing our growth, margin, and investment initiatives for long-term success. |
Conference Call
Fluent, Inc. will host a conference call on Monday, August 14, 2023, at 4:30 PM ET to discuss its 2023 second quarter financial results. The conference call can be accessed by phone after registering online at https://register.vevent.com/register/BI5074a47802e64f8bbe5a221b3f7002be . 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/bvmdcboj. The replay will be available for one year, via the Fluent website https://investors.fluentco.com/.
About Fluent, Inc.
Fluent, Inc. ( FLNT) is a leader in customer acquisition, leveraging its direct response expertise to drive engagement and power discovery for leading brands. Backed by proprietary data science, Fluent drives opted-in consumers to targeted offers, allowing them to find new opportunities, content, and products that enhance their lives. Established in 2010 and headquartered in New York City, Fluent’s team of experts has spent over $1B in media across its digital media portfolio to build a global audience available through 500+ DSPs, DMPs, online publishers, and programmatic platforms. For more information, visit 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 laws and regulations regarding 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; | |
| • | 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 and safety concerns around the ongoing COVID-19 pandemic; | |
| • | Dependence on our key personnel; | |
| • | Dependence on third-party service providers; | |
| • | Management of the growth of our operations, including international expansion and the integration of acquired business units or personnel; | |
| • | The impact of the Traffic Quality Initiative, including our ability to replace lower quality consumer traffic with traffic that meets our quality requirements; | |
| • | Ability to compete and manage media costs in an industry characterized by rapidly-changing internet media and advertising technology and evolving industry standards; | |
| • | Regulatory uncertainty, and changing user and client demands; management of unfavorable publicity and negative public perception about our industry; | |
| • | Failure to compete effectively against other online marketing and advertising companies; | |
| • | The competition we face for web traffic; | |
| • | 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; | |
| • | Liability related to actions of third-party publishers; | |
| • | Limitations on our or 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; | |
| • | The impact of increased fulfillment costs; | |
| • | Increased dependence on a single advertiser client; | |
| • | Failure to meet our clients’ performance metrics or changing needs; | |
| • | The effect of pricing pressure by certain clients and the ability of our marketplace to respond through allocating traffic to higher paying clients; | |
| • | Compliance with the covenants of our credit agreement in light of current business conditions; and | |
| • | The potential for failures in our internal control over financial reporting. |
These and additional factors to be considered are set forth under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in our other filings with the Securities and Exchange Commission. Fluent undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations.
FLUENT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
(unaudited)
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS: | ||||||||
| Cash and cash equivalents | $ | 20,983 | $ | 25,547 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $209 and $544, respectively | 58,120 | 63,164 | ||||||
| Prepaid expenses and other current assets | 5,920 | 3,506 | ||||||
| Total current assets | 85,023 | 92,217 | ||||||
| Property and equipment, net | 783 | 964 | ||||||
| Operating lease right-of-use assets | 4,278 | 5,202 | ||||||
| Intangible assets, net | 28,525 | 28,745 | ||||||
| Goodwill | 30,966 | 55,111 | ||||||
| Other non-current assets | 1,486 | 1,730 | ||||||
| Total assets | $ | 151,061 | $ | 183,969 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||
| Accounts payable | $ | 13,303 | $ | 6,190 | ||||
| Accrued expenses and other current liabilities | 26,525 | 35,626 | ||||||
| Deferred revenue | 895 | 1,014 | ||||||
| Current portion of long-term debt | 5,000 | 5,000 | ||||||
| Current portion of operating lease liability | 2,309 | 2,389 | ||||||
| Total current liabilities | 48,032 | 50,219 | ||||||
| Long-term debt, net | 32,989 | 35,594 | ||||||
| Operating lease liability | 2,734 | 3,743 | ||||||
| Other non-current liabilities | 2,249 | 458 | ||||||
| Total liabilities | 86,004 | 90,014 | ||||||
| Contingencies (Note 10) | ||||||||
| 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 — 85,751,226 and 84,385,458, respectively; and Shares outstanding — 81,139,657 and 80,085,306, respectively (Note 7) | 43 | 42 | ||||||
| Treasury stock, at cost — 4,611,569 and 4,300,152 Shares, respectively (Note 7) | (11,407 | ) | (11,171 | ) | ||||
| Additional paid-in capital | 425,491 | 423,384 | ||||||
| Accumulated deficit | (349,070 | ) | (318,300 | ) | ||||
| Total shareholders' equity | 65,057 | 93,955 | ||||||
| Total liabilities and shareholders' equity | $ | 151,061 | $ | 183,969 | ||||
FLUENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 82,145 | $ | 98,361 | $ | 159,399 | $ | 187,424 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 59,540 | 70,026 | 117,812 | 137,589 | ||||||||||||
| Sales and marketing | 4,215 | 4,484 | 9,028 | 8,336 | ||||||||||||
| Product development | 4,615 | 4,802 | 9,553 | 9,357 | ||||||||||||
| General and administrative | 7,962 | 11,688 | 20,287 | 22,975 | ||||||||||||
| Depreciation and amortization | 3,095 | 3,332 | 5,454 | 6,639 | ||||||||||||
| Goodwill impairment and write-off of intangible assets | — | 55,400 | 25,700 | 55,528 | ||||||||||||
| Loss on disposal of property and equipment | — | 21 | — | 21 | ||||||||||||
| Total costs and expenses | 79,427 | 149,753 | 187,834 | 240,445 | ||||||||||||
| Income (loss) from operations | 2,718 | (51,392 | ) | (28,435 | ) | (53,021 | ) | |||||||||
| Interest expense, net | (795 | ) | (430 | ) | (1,484 | ) | (814 | ) | ||||||||
| Income (loss) before income taxes | 1,923 | (51,822 | ) | (29,919 | ) | (53,835 | ) | |||||||||
| Income tax expense | (750 | ) | (5,122 | ) | (851 | ) | (5,122 | ) | ||||||||
| Net income (loss) | 1,173 | (56,944 | ) | (30,770 | ) | (58,957 | ) | |||||||||
| Basic and diluted income (loss) per share: | ||||||||||||||||
| Basic | $ | 0.01 | $ | (0.70 | ) | $ | (0.37 | ) | $ | (0.73 | ) | |||||
| Diluted | $ | 0.01 | $ | (0.70 | ) | $ | (0.37 | ) | $ | (0.73 | ) | |||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 82,727,971 | 81,493,821 | 82,323,854 | 81,193,107 | ||||||||||||
| Diluted | 82,752,646 | 81,493,821 | 82,323,854 | 81,193,107 | ||||||||||||
FLUENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (30,770 | ) | $ | (58,957 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 5,454 | 6,639 | ||||||
| Non-cash loan amortization expense | 133 | 135 | ||||||
| Share-based compensation expense | 1,997 | 1,851 | ||||||
| Goodwill impairment | 25,700 | 55,400 | ||||||
| Write-off of intangible assets | — | 128 | ||||||
| Loss on disposal of property and equipment | — | 21 | ||||||
| Provision for bad debt | (92 | ) | 158 | |||||
| Deferred income taxes | — | — | ||||||
| Changes in assets and liabilities, net of business acquisitions: | ||||||||
| Accounts receivable | 5,136 | (7,913 | ) | |||||
| Prepaid expenses and other current assets | (2,414 | ) | 488 | |||||
| Other non-current assets | 244 | (25 | ) | |||||
| Operating lease assets and liabilities, net | (165 | ) | (85 | ) | ||||
| Accounts payable | 7,113 | 913 | ||||||
| Accrued expenses and other current liabilities | (10,091 | ) | (451 | ) | ||||
| Deferred revenue | (119 | ) | ||||||
