Fluent Announces Second Quarter 2024 Financial Results
Fluent Inc (NASDAQ: FLNT) reported its Q2 2024 financial results, showing a revenue decrease of 29% to $58.7 million compared to Q2 2023. The company faced challenges in its owned and operated marketplaces and new regulatory issues in Medicare and ACA verticals. Key financial highlights include:
- Net loss of $11.6 million ($0.75 per share)
- Gross profit of $12.6 million (21% of revenue)
- Media margin of $15.7 million (26.7% of revenue)
- Adjusted EBITDA of negative $4.5 million (-7.7% of revenue)
Despite challenges, Fluent saw growth in its syndicated performance marketplaces and added new partners. The company expects improved performance in H2 2024, driven by marketplace growth and expense discipline.
Fluent Inc (NASDAQ: FLNT) ha riportato i risultati finanziari del Q2 2024, evidenziando una riduzione del fatturato del 29% a 58,7 milioni di dollari rispetto al Q2 2023. L'azienda ha affrontato sfide nei suoi mercati di proprietà e problemi normativi nei settori Medicare e ACA. I principali punti salienti finanziari includono:
- Perdita netta di 11,6 milioni di dollari (0,75 dollari per azione)
- Utile lordo di 12,6 milioni di dollari (21% del fatturato)
- Margine media di 15,7 milioni di dollari (26,7% del fatturato)
- EBITDA rettificato negativo di 4,5 milioni di dollari (-7,7% del fatturato)
Nonostante le difficoltà, Fluent ha visto una crescita nei suoi mercati di performance sindacati e ha aggiunto nuovi partner. L'azienda prevede un miglioramento delle performance nella seconda metà del 2024, sostenuto dalla crescita del mercato e da una disciplina delle spese.
Fluent Inc (NASDAQ: FLNT) reportó sus resultados financieros del Q2 2024, mostrando una disminución de ingresos del 29% a 58,7 millones de dólares en comparación con el Q2 2023. La compañía enfrentó desafíos en sus mercados propios y operados, así como nuevos problemas regulatorios en los verticales de Medicare y ACA. Los puntos destacados financieros incluyen:
- Pérdida neta de 11,6 millones de dólares (0,75 dólares por acción)
- Beneficio bruto de 12,6 millones de dólares (21% de ingresos)
- Margen de medios de 15,7 millones de dólares (26,7% de ingresos)
- EBITDA ajustado negativo de 4,5 millones de dólares (-7,7% de ingresos)
A pesar de los desafíos, Fluent vio crecimiento en sus mercados de desempeño sindicado y agregó nuevos socios. La compañía espera un mejor rendimiento en la segunda mitad del 2024, impulsado por el crecimiento del mercado y la disciplina en los gastos.
Fluent Inc (NASDAQ: FLNT)는 2024년 2분기 재무 결과를 발표하며 29% 감소하여 5,870만 달러의 수익을 기록했습니다. 2023년 2분기와 비교하여 회사는 자사 운영 시장에서 어려움을 겪었으며 Medicare 및 ACA 분야에서 새로운 규제 문제에 직면했습니다. 주요 재무 하이라이트는 다음과 같습니다:
- 순손실 1,160만 달러 (주당 0.75달러)
- 총 이익 1,260만 달러 (수익의 21%)
- 미디어 마진 1,570만 달러 (수익의 26.7%)
- 수정 EBITDA -450만 달러 (-7.7%의 수익)
어려움에도 불구하고 Fluent는 보증된 성과 시장에서 성장세를 보였고 새로운 파트너를 추가했습니다. 회사는 시장 성장과 비용 관리를 통한 2024년 하반기 성과 개선을 기대하고 있습니다.
Fluent Inc (NASDAQ: FLNT) a présenté ses résultats financiers pour le Q2 2024, montrant une diminution des revenus de 29% à 58,7 millions de dollars par rapport au Q2 2023. L'entreprise a rencontré des défis dans ses marchés détenus et opérés, ainsi que de nouveaux problèmes réglementaires dans les domaines de Medicare et de l'ACA. Les principaux points forts financiers incluent :
- Perte nette de 11,6 millions de dollars (0,75 dollar par action)
- Bénéfice brut de 12,6 millions de dollars (21% des revenus)
- Marge médias de 15,7 millions de dollars (26,7% des revenus)
- EBITDA ajusté négatif de 4,5 millions de dollars (-7,7% des revenus)
Malgré ces défis, Fluent a connu une croissance dans ses marchés de performance syndiqués et a ajouté de nouveaux partenaires. La société s'attend à une amélioration des performances au second semestre 2024, grâce à la croissance du marché et à une discipline dans les dépenses.
Fluent Inc (NASDAQ: FLNT) hat seine finanziellen Ergebnisse für das Q2 2024 veröffentlicht und dabei einen Umsatzrückgang von 29% auf 58,7 Millionen Dollar im Vergleich zu Q2 2023 verzeichnet. Das Unternehmen sah sich in seinen eigenen und betriebenen Marktplätzen Herausforderungen gegenüber, sowie neuen regulatorischen Problemen in den Bereichen Medicare und ACA. Die wichtigsten finanziellen Highlights umfassen:
- Nettoverlust von 11,6 Millionen Dollar (0,75 Dollar pro Aktie)
- Bruttogewinn von 12,6 Millionen Dollar (21% des Umsatzes)
- Medienmarge von 15,7 Millionen Dollar (26,7% des Umsatzes)
- Bereinigtes EBITDA von -4,5 Millionen Dollar (-7,7% des Umsatzes)
Trotz der Herausforderungen verzeichnete Fluent ein Wachstum in seinen syndizierten Leistungsmarktplätzen und hat neue Partner hinzugefügt. Das Unternehmen erwartet eine Verbesserung der Leistung in der zweiten Hälfte von 2024, bedingt durch das Marktwachstum und eine disziplinierte Kostenkontrolle.
- Growth in syndicated performance marketplaces, exceeding internal forecasts for revenue and gross profit
- Addition of new key partners in the second quarter
- Expansion beyond post-transaction solutions with encouraging early results
- Anticipation of margin expansion in the second half of 2024
- Expectation of mid-single digit adjusted EBITDA and revenue in H2 2024
- Revenue decreased by 29% to $58.7 million compared to Q2 2023
- Net loss of $11.6 million ($0.75 per share) compared to net income of $4.3 million in Q2 2023
- Gross profit decreased by 44% compared to Q2 2023
- Adjusted EBITDA of negative $4.5 million, a decrease of $10.1 million from Q2 2023
- $3.1 million write-down of accounts receivable due to regulatory challenges in Medicare and ACA verticals
Insights
Fluent's Q2 2024 results paint a challenging picture. Revenue dropped
However, there are silver linings. The company's syndicated performance marketplaces showed strong growth, outperforming internal forecasts. This diversification could help mitigate risks moving forward. Management's outlook for H2 2024 suggests potential stabilization, with expectations of mid-single-digit adjusted EBITDA and revenue growth.
Investors should closely monitor Fluent's ability to execute its strategic pivot and capitalize on new market opportunities while managing costs effectively.
Fluent's pivot towards syndicated performance marketplaces is a strategic move in response to market dynamics. The digital advertising landscape is rapidly evolving, with increased focus on performance-based models. Fluent's expansion beyond post-transaction solutions, particularly in retail, ticketing and grocery verticals, aligns with this trend.
However, the regulatory challenges in Medicare and ACA verticals highlight the volatility in certain sectors. This underscores the importance of Fluent's diversification strategy. The company's focus on traffic quality and advertiser engagement is important in a market increasingly concerned with ad effectiveness and ROI.
The success of Fluent's strategic shift will depend on its ability to adapt to market demands, navigate regulatory landscapes and deliver measurable results for advertisers in a competitive digital ecosystem.
Fluent's technological pivot towards syndicated performance marketplaces and the Adflow offering represents a significant shift in their business model. This move leverages their existing advertiser relationships and technology assets to create new revenue streams. The expansion beyond post-transaction solutions into various verticals demonstrates the scalability of their tech stack.
However, the challenges in their owned and operated marketplaces suggest potential technological or algorithmic issues that need addressing. The focus on sourcing high-quality consumer traffic indicates a need for advanced data analytics and possibly AI-driven solutions to improve targeting and engagement.
The success of this tech-driven strategy will hinge on Fluent's ability to innovate rapidly, adapt to changing market conditions and deliver measurable performance improvements for their advertising partners.
- Revenue of
$58.7 million for Q2 2024 and$124.7 for 1H 2024 - Net loss of
$11.6 million for Q2 2024 and$17.9 for 1H 2024 - Gross profit (exclusive of depreciation and amortization) of
$12.6 million for Q2 2024 and$31.2 for 1H 2024 - Media margin of
$15.7 million for Q2 2024 and$37.8 million for 1H 2024 - Adjusted EBITDA of negative
$4.5 million for Q2 2024 and$3.8 million for 1H 2024 - Adjusted net loss of
$7.3 million for Q2 2024 and$11.5 for 1H 2024
NEW YORK, Aug. 19, 2024 (GLOBE NEWSWIRE) -- Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance marketing company, today reported financial results for the second quarter ended June 30, 2024.
Don Patrick, Fluent’s Chief Executive Officer, commented, "We continued to drive key strategic initiatives in the second quarter of 2024 to accelerate our strategic pivot as we position the Company for enhanced results in the second half of the fiscal year. Our second quarter started with continued challenges in our owned and operated marketplaces as well as new regulatory challenges in Medicare and ACA verticals affecting our call solutions business and necessitating a
Mr. Patrick continued, "We remain optimistic about our growth prospects heading into the second half of 2024. With our visibility today, we’re anticipating margin expansion over the second quarter, driven primarily by relative stabilization of our owned and operated marketplaces, the growth of our syndicated performance marketplaces, and continued expense discipline across our business. Overall, we believe that our business is well positioned to benefit from strong demand and drive improved results through the balance of 2024, and we’re intently focused on generating enhanced value for all stakeholders."
Second Quarter Financial Highlights
- Revenue of
$58.7 million , a decrease of29% , compared to$82.1 million in Q2 2023 - Net loss of
$11.6 million , or$0.75 per share, compared to net income of$4.3 million , or$0.31 per share, for Q2 2023 - Gross profit (exclusive of depreciation and amortization) of
$12.6 million , a decrease of44% over Q2 2023 and representing21% of revenue - Media margin of
$15.7 million , a decrease of40% over Q2 2023 and representing26.7% of revenue - Adjusted EBITDA of negative
$4.5 million , a decrease of$10.1 million over Q2 2023 and representing (7.7% ) of revenue - Adjusted net loss of
$7.3 million , or$0.47 per share, compared to adjusted net income of$0.0 million , or$0.00 per share, for Q2 2023
Six Months Ended June 30, 2024 Financial Highlights
- Revenue of
$124.7 million , a decrease of22% , compared to$159.4 million in 1H 2023 - Net loss of
$17.9 million , or$1.11 per share, compared to$27.7 million , or$2.02 per share, for 1H 2023 - Gross profit (exclusive of depreciation and amortization) of
$31.2 million , a decrease of25% over 1H 2023 and representing25% of revenue - Media margin of
$37.8 million , a decrease of21% over 1H 2023 and representing30.3% of revenue - Adjusted EBITDA of negative
$3.8 million , a decrease of$9.9 million over 1H 2023 and representing (7.7% ) of revenue - Adjusted net loss of
$11.5 million , or$0.72 per share, compared to$2.7 million , or$0.20 per share, for 1H 2023
Media margin, adjusted EBITDA, and adjusted net income (loss) are non-GAAP financial measures, as defined and reconciled below.
Business Outlook & Goals
- Expect to achieve improved performance through the balance of 2024 driven primarily by the growth of our syndicated performance marketplaces, which leverage our advertiser and technology assets to drive enhanced results for our advertising partners in growing market segments.
- Continue to make strategic progress scaling our Adflow offering, with new partners added in the retail and ticketing verticals in the second quarter, as well as penetration into the grocery vertical and plans to expand beyond post-transaction solutions.
- Fortify the long-term success of our owned and operated marketplaces and efficiently adjust to the regulatory changes in the Medicare and ACA industries for our call solutions business.
- Source consumer traffic that meets the internal quality standards, leading to higher engagement for advertisers.
- Continued expense discipline and prudent growth management are expected to support mid single digit adjusted EBITDA and revenue in the second half of 2024, driving enhanced profitability and improved value for stakeholders.
The Company cannot provide a reconciliation of adjusted EBITDA to expected net income or net loss for the remaining periods of 2024 due to the unknown effect, timing, and potential significance of certain operating costs and expenses, share-based compensation expense, and the provision for (or benefit from) income taxes.
Conference Call
Fluent, Inc. will host a conference call on Monday, August 19, 2024, at 4:30 PM ET to discuss its 2024 second quarter financial results. The conference call can be accessed by phone after registering online at https://register.vevent.com/register/BI3cd5c7e31c054f859ecfe19cf4b3a642. 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/wfthvf3y. 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:
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, 2023 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.
- 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;
- 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) | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS: | |||||||
| Cash and cash equivalents | $ | 4,973 | $ | 15,804 | |||
| Accounts receivable, net of allowance for credit losses of | 55,063 | 56,531 | |||||
| Prepaid expenses and other current assets | 7,109 | 6,071 | |||||
| Total current assets | 67,145 | 78,406 | |||||
| Restricted cash | 1,464 | — | |||||
| Property and equipment, net | 431 | 591 | |||||
| Operating lease right-of-use assets | 2,502 | 3,395 | |||||
| Intangible assets, net | 23,770 | 26,809 | |||||
| Goodwill | — | 1,261 | |||||
| Other non-current assets | 3,183 | 1,405 | |||||
| Total assets | $ | 98,495 | $ | 111,867 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
| Accounts payable | $ | 7,814 | $ | 10,954 | |||
| Accrued expenses and other current liabilities | 26,214 | 30,534 | |||||
| Deferred revenue | 717 | 430 | |||||
| Current portion of long-term debt | 32,538 | 5,000 | |||||
| Current portion of operating lease liability | 2,261 | 2,296 | |||||
| Total current liabilities | 69,544 | 49,214 | |||||
| Long-term debt, net | 750 | 25,488 | |||||
| Operating lease liability, net | 673 | 1,699 | |||||
| Other non-current liabilities | 75 | 1,062 | |||||
| Total liabilities | 71,042 | 77,463 | |||||
| Contingencies | |||||||
| Shareholders' equity: | |||||||
| Preferred stock — | — | — | |||||
| Common stock — | 44 | 43 | |||||
| Treasury stock, at cost — 768,595 and 768,595 Shares, respectively | (11,407 | ) | (11,407 | ) | |||
| Additional paid-in capital | 438,237 | 427,286 | |||||
| Accumulated deficit | (399,421 | ) | (381,518 | ) | |||
| Total shareholders' equity | 27,453 | 34,404 | |||||
| Total liabilities and shareholders' equity | $ | 98,495 | $ | 111,867 | |||
| 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, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 58,717 | $ | 82,145 | $ | 124,700 | $ | 159,399 | |||||||
| Costs and expenses: | |||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 46,109 | 59,540 | 93,457 | 117,812 | |||||||||||
| Sales and marketing | 4,605 | 4,215 | 9,417 | 9,028 | |||||||||||
| Product development | 4,717 | 4,615 | 9,557 | 9,553 | |||||||||||
| General and administrative | 8,856 | 3,941 | 19,221 | 16,266 | |||||||||||
| Depreciation and amortization | 2,567 | 3,095 | 5,138 | 5,454 | |||||||||||
| Goodwill and intangible assets impairment | 2,241 | — | 2,241 | 25,700 | |||||||||||
| Total costs and expenses | 69,095 | 75,406 | 139,031 | 183,813 | |||||||||||
| Income (loss) from operations | (10,378 | ) | 6,739 | (14,331 | ) | (24,414 | ) | ||||||||
| Interest expense, net | (1,015 | ) | (795 | ) | (2,430 | ) | (1,484 | ) | |||||||
| Loss on early extinguishment of debt | (1,009 | ) | — | (1,009 | ) | — | |||||||||
| Income (loss) before income taxes | (12,402 | ) | 5,944 | (17,770 | ) | (25,898 | ) | ||||||||
| Income tax (expense) benefit | 775 | (1,693 | ) | (133 | ) | (1,794 | ) | ||||||||
| Net income (loss) | (11,627 | ) | 4,251 | (17,903 | ) | (27,692 | ) | ||||||||
| Basic and diluted income (loss) per share: | |||||||||||||||
| Basic | $ | (0.75 | ) | $ | 0.31 | $ | (1.11 | ) | $ | (2.02 | ) | ||||
| Diluted | $ | (0.75 | ) | $ | 0.31 | $ | (1.11 | ) | $ | (2.02 | ) | ||||
| Weighted average number of shares outstanding: | |||||||||||||||
| Basic | 15,534,989 | 13,787,995 | 16,115,293 | 13,720,643 | |||||||||||
| Diluted | 15,534,989 | 13,792,108 | 16,115,293 | 13,720,643 | |||||||||||
| FLUENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (unaudited) | |||||||
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net loss | $ | (17,903 | ) | $ | (27,692 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 5,138 | 5,454 | |||||
| Non-cash loan amortization expense | 837 | 133 | |||||
| Non-cash gain on contingent consideration | (250 | ) | — | ||||
| Non-cash loss on early extinguishment of debt | 1,009 | — | |||||
| Share-based compensation expense | 1,030 | 1,997 | |||||
| Goodwill impairment | 1,261 | 25,700 | |||||
| Impairment of intangible assets | 980 | — | |||||
| Allowance for credit losses | 71 | (92 | ) | ||||
| Changes in assets and liabilities, net of business acquisitions: | |||||||
| Accounts receivable | 1,280 | 5,136 | |||||
| Prepaid expenses and other current assets | (1,579 | ) | (6,435 | ) | |||
| Other non-current assets | 191 | 244 | |||||
| Operating lease assets and liabilities, net | (168 | ) | (165 | ) | |||
| Accounts payable | (3,140 | ) | 7,113 | ||||
| Accrued expenses and other current liabilities | (1,443 | ) | (9,147 | ) | |||
| Deferred revenue | 474 | (119 | ) | ||||
| Other | (987 | ) | (76 | ) | |||
| Net cash (used in) provided by operating activities | (13,199 | ) | 2,051 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Capitalized costs included in intangible assets | (3,542 | ) | (2,370 | ) | |||
| Business acquisitions, net of cash acquired | — | (1,250 | ) | ||||
| Acquisition of property and equipment | — | (22 | ) | ||||
| Net cash used in investing activities | (3,542 | ) | (3,642 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Proceeds from issuance of long-term debt, net of debt financing costs | 42,917 | — | |||||
| Repayments of long-term debt | (44,475 | ) | (2,500 | ) | |||
| Debt financing costs | (968 | ) | (237 | ) | |||
| Proceeds from issuance of warrants | 9,900 | — | |||||
| Taxes paid related to net share settlement of vesting of restricted stock units | — | (236 | ) | ||||
| Net cash (used in) provided by financing activities | 7,374 | (2,973 | ) | ||||
| Net decrease in cash, cash equivalents, and restricted cash | (9,367 | ) | (4,564 | ) | |||
| Cash, cash equivalents, and restricted cash at beginning of period | 15,804 | 25,547 | |||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 6,437 | $ | 20,983 | |||
Definitions, Reconciliations and Uses of Non-GAAP Financial Measures
The following non-GAAP measures are used in this release:
Media margin is defined as that portion of gross profit (exclusive of depreciation and amortization) reflecting the variable costs paid for media and related expenses and excluding non-media cost of revenue. Gross profit (exclusive of depreciation and amortization) represents revenue minus cost of revenue (exclusive of depreciation and amortization). Media margin is also presented as percentage of revenue.
Adjusted EBITDA is defined as net income (loss), excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) share-based compensation expense, (5) loss on early extinguishment of debt, (6) accrued compensation expense for Put/Call Consideration, (7) goodwill impairment, (8) impairment of intangible assets, (9) loss (gain) on disposal of property and equipment, (10) acquisition-related costs, (11) restructuring and other severance costs, and (12) certain litigation and other related costs.
Adjusted net income (loss) is defined as net income (loss), excluding (1) share-based compensation expense, (2) loss on early extinguishment of debt, (3) accrued compensation expense for Put/Call Consideration, (4) goodwill impairment, (5) impairment of intangible assets, (6) loss (gain) on disposal of property and equipment, (7) acquisition-related costs, (8) restructuring and other severance costs, and (9) certain litigation and other related costs. Adjusted net income (loss) is also presented on a per share (basic and diluted) basis.
Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization), which we believe is the most directly comparable GAAP measure.
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except percentages) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 58,717 | $ | 82,145 | $ | 124,700 | $ | 159,399 | ||||||||
| Less: Cost of revenue (exclusive of depreciation and amortization) | 46,109 | 59,540 | 93,457 | 117,812 | ||||||||||||
| Gross profit (exclusive of depreciation and amortization) | $ | 12,608 | $ | 22,605 | $ | 31,243 | $ | 41,587 | ||||||||
| Gross profit (exclusive of depreciation and amortization) % of revenue | 21 | % | 28 | % | 25 | % | 26 | % | ||||||||
| Non-media cost of revenue (1) | 3,057 | 3,300 | 6,561 | 6,281 | ||||||||||||
| Media margin | $ | 15,665 | $ | 25,905 | $ | 37,804 | $ | 47,868 | ||||||||
| Media margin % of revenue | 26.7 | % | 31.5 | % | 30.3 | % | 30.0 | % | ||||||||
| (1) Represents the portion of cost of revenue (exclusive of depreciation and amortization) not attributable to variable costs paid for media and related expenses. | ||||||||||||||||
Below is a reconciliation of adjusted EBITDA from net loss for the three and six months ended June 30, 2024 and 2023, respectively, which we believe is the most directly comparable GAAP measure.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net income (loss) | $ | (11,627 | ) | $ | 4,251 | $ | (17,903 | ) | $ | (27,692 | ) | ||||
| Income tax expense (benefit) | (775 | ) | 1,693 | 133 | 1,794 | ||||||||||
| Interest expense, net | 1,015 | 795 | 2,430 | 1,484 | |||||||||||
| Depreciation and amortization | 2,567 | 3,095 | 5,138 | 5,454 | |||||||||||
| Share-based compensation expense | 430 | 936 | 1,030 | 1,997 | |||||||||||
| Loss on early extinguishment of debt | 1,009 | — | 1,009 | — | |||||||||||
| Goodwill impairment | 1,261 | — | 1,261 | 25,700 | |||||||||||
| Impairment of intangible assets | 980 | — | 980 | — | |||||||||||
| Acquisition-related costs(1) | 25 | 562 | 807 | 1,185 | |||||||||||
| Restructuring and other severance costs | 611 | — | 1,276 | 480 | |||||||||||
| Certain litigation and other related costs | — | (5,736 | ) | — | (4,358 | ) | |||||||||
| Adjusted EBITDA | $ | (4,504 | ) | $ | 5,596 | $ | (3,839 | ) | $ | 6,044 | |||||
| (1) Balance includes compensation expense related to non-competition agreements and earn-out expense incurred as a result of business combinations. The earn-out expense was ( | |||||||||||||||
Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the six months ended June 30, 2024 and 2023, respectively, which we believe is the most directly comparable GAAP measure.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (In thousands, except share and per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net income (loss) | $ | (11,627 | ) | $ | 4,251 | $ | (17,903 | ) | $ | (27,692 | ) | ||||
| Share-based compensation expense | 430 | 936 | 1,030 | 1,997 | |||||||||||
| Loss on early extinguishment of debt | 1,009 | — | 1,009 | — | |||||||||||
| Goodwill impairment | 1,261 | — | 1,261 | 25,700 | |||||||||||
| Impairment of intangible assets | 980 | — | 980 | — | |||||||||||
| Acquisition-related costs(1) | 25 | 562 | 807 | 1,185 | |||||||||||
| Restructuring and other severance costs | 611 | — | 1,276 | 480 | |||||||||||
| Certain litigation and other related costs | — | (5,736 | ) | — | (4,358 | ) | |||||||||
| Adjusted net income (loss) | $ | (7,311 | ) | $ | 13 | $ | (11,540 | ) | $ | (2,688 | ) | ||||
| Adjusted net income (loss) per share: | |||||||||||||||
| Basic | $ | (0.47 | ) | $ | 0.00 | $ | (0.72 | ) | $ | (0.20 | ) | ||||
| Diluted | $ | (0.47 | ) | $ | 0.00 | $ | (0.72 | ) | $ | (0.20 | ) | ||||
| Weighted average number of shares outstanding: | |||||||||||||||
| Basic | 15,534,989 | 13,787,995 | 16,115,293 | 13,720,643 | |||||||||||
| Diluted | 15,534,989 | 13,792,108 | 16,115,293 | 13,720,643 | |||||||||||
| (1) Balance includes compensation expense related to non-competition agreements and earn-out expense incurred as a result of business combinations. The earn-out expense was ( | |||||||||||||||
We present media margin, media margin as a percentage of revenue, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per share as supplemental measures of our financial and operating performance because we believe they provide useful information to investors. More specifically:
Media margin, as defined above, is a measure of the efficiency of the Company’s operating model. We use media margin and the related measure of media margin as a percentage of revenue as primary metrics to measure the financial return on our media and related costs, specifically to measure the degree by which the revenue generated from our digital marketing services exceeds the cost to attract the consumers to whom offers are made through our services. Media margin is used extensively by our management to manage our operating performance, including evaluating operational performance against budgeted media margin and understanding the efficiency of our media and related expenditures. We also use media margin for performance evaluations and compensation decisions regarding certain personnel.
Adjusted EBITDA, as defined above, is another primary metric by which we evaluate the operating performance of our business, on which certain operating expenditures and internal budgets are based and by which, in addition to media margin and other factors, our senior management is compensated. The first three adjustments represent the conventional definition of EBITDA, and the remaining adjustments are items recognized and recorded under U.S. GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. These adjustments include certain litigation and other related costs associated with legal matters outside the ordinary course of business. We consider items one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. There were no adjustments for one-time items in the periods presented in this Quarterly Report on Form 10-Q.
Adjusted net income (loss), as defined above, and the related measure of adjusted net income (loss) per share excludes certain items that are recognized and recorded under U.S. GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded. We believe adjusted net income (loss) affords investors a different view of the overall financial performance of the Company than adjusted EBITDA and the U.S. GAAP measure of net income (loss).
Media margin, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per share are non-GAAP financial measures with certain limitations regarding their usefulness. They do not reflect our financial results in accordance with U.S. GAAP, as they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations. Accordingly, these metrics are not indicative of our overall results or indicators of past or future financial performance. Further, they are not financial measures of profitability and are neither intended to be used as a proxy for the profitability of our business nor to imply profitability. The way we measure media margin, adjusted EBITDA, and adjusted net income (loss) may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in our various agreements.
Contact Information:
Investor Relations
Fluent, Inc.
InvestorRelations@fluentco.com
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