First Full Quarter as a Standalone Public
Company Produces $56.9 Million in Revenue,
Fluent, Inc. (NASDAQ: FLNT) a leading data-driven performance
marketing company, today announced financial results for the
quarter ended June 30, 2018.
“With our first full quarter as a standalone public company
under our belt, we are pleased with our team’s performance,” stated
Ryan Schulke, Fluent’s CEO. “Our data-driven, consumer-based
approach propelled our margin expansion and continued double-digit
year over year growth.”
Second Quarter Financial Results
For the three months ended June 30, 2018, as compared to the
three months ended June 30, 2017:
- Total revenue increased 12% to $56.9 million, from $51.0
million.
- Net income from continuing operations was $2.6 million,
compared to net loss from continuing operations of $8.3
million.
- Net loss from discontinued operations was $0, compared to $12.1
million.
- Basic earnings per share from continuing operations was $0.04,
compared to a loss of $0.15 per share.
- Adjusted EBITDA grew 53% to $10.9 million, based on net income
of $2.6 million, from $7.1 million on $20.4 million of net
loss.
- Adjusted gross profit increased 42% to $23.0 million, from
$16.3 million. Adjusted gross margin increased 800 basis points to
40%, from 32%.
Adjusted EBITDA, adjusted gross profit and adjusted gross margin
are non-GAAP financial measures. Reconciliation of these non-GAAP
measures are provided in the attached tables.
Second Quarter and Recent Business
Highlights
- Continued to expand margins through enhanced ad targeting and
distribution
- Surpassed 1 million user registrations in UK beta launch
- Launched first content-based mobile app to expand ad
distribution
- Initiated partnership with Live Ramp to make Fluent’s
first-party health-interest audiences available
programmatically
Conference Call
Fluent, Inc. will host a conference call on Tuesday, August 7,
2018 at 4:30 PM ET to discuss its 2018 second quarter financial
results. To listen to the conference call on your telephone, please
dial (888) 339-0797 for domestic callers or (412) 317-5248 for
international callers. To access the live audio webcast, visit the
Fluent website at www.fluentco.com. Please login at least 15
minutes prior to the start of the call to ensure adequate time for
any downloads that may be required. Following 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 dial (877) 344-7529 or (412) 317-0088 with the replay
passcode 10122670. The replay will also be available for one week
on the Fluent website at www.fluentco.com.
About Fluent, Inc.
Fluent (NASDAQ: FLNT) is the trusted acquisition partner for
growing brands. Leveraging our proprietary first party data asset,
Fluent creates marketing programs that deliver better digital
advertising experiences for consumers and measurable results for
advertisers. Founded in 2010, the company is headquartered in New
York City. For more information, visit www.fluentco.com.
FORWARD-LOOKING STATEMENTS
This press release and the conference call contain
"forward-looking statements," as that term is defined under the
Private Securities Litigation Reform Act of 1995 (PSLRA), which
statements may be identified by words such as "expects," "plans,"
"projects," "will," "may," "anticipate," "believes," "should,"
"intends," "estimates," and other words of similar meaning. Such
forward looking statements are subject to risks and uncertainties
that are often difficult to predict, are beyond our control and
which may cause results to differ materially from expectations.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which are based on our expectations as
of the date of this press release and the conference call and speak
only as of the date of this press release and the conference call
and are advised to consider the factors under the heading
"Forward-Looking Statements" and "Risk Factors" in the Company's
Annual Report on Form 10-K, as may be supplemented or amended by
the Company's Quarterly Reports on Form 10-Q and other SEC filings.
We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law.
|
FLUENT, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(Amounts in thousands,
except share data)(unaudited) |
|
|
|
June 30, 2018 |
|
|
December 31, 2017 |
ASSETS: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
10,068 |
|
|
$ |
16,564 |
|
Accounts receivable,
net of allowance for doubtful accounts of $1,475 and $1,624
at June 30, 2018 and December 31, 2017, respectively |
|
|
37,978 |
|
|
|
36,278 |
|
Prepaid expenses and
other current assets |
|
|
1,840 |
|
|
|
1,865 |
|
Current assets of
discontinued operations |
|
|
- |
|
|
|
2,274 |
|
Total current
assets |
|
|
49,886 |
|
|
|
56,981 |
|
Property and equipment,
net |
|
|
531 |
|
|
|
687 |
|
Intangible assets,
net |
|
|
68,728 |
|
|
|
74,354 |
|
Goodwill |
|
|
159,791 |
|
|
|
159,791 |
|
Other non-current
assets |
|
|
556 |
|
|
|
1,097 |
|
Non-current assets of
discontinued operations |
|
|
- |
|
|
|
24,089 |
|
Total
assets |
|
$ |
279,492 |
|
|
$ |
316,999 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Trade accounts
payable |
|
$ |
11,994 |
|
|
$ |
10,666 |
|
Accrued expenses and
other current liabilities |
|
|
7,807 |
|
|
|
11,709 |
|
Deferred revenue |
|
|
843 |
|
|
|
265 |
|
Current portion of
long-term debt |
|
|
6,829 |
|
|
|
2,750 |
|
Current liabilities of
discontinued operations |
|
|
- |
|
|
|
7,389 |
|
Total current
liabilities |
|
|
27,473 |
|
|
|
32,779 |
|
Promissory notes
payable to certain shareholders, net |
|
|
- |
|
|
|
10,837 |
|
Long-term debt,
net |
|
|
56,697 |
|
|
|
49,376 |
|
Total
liabilities |
|
|
84,170 |
|
|
|
92,992 |
|
Shareholders'
equity: |
|
|
|
|
|
|
|
|
Preferred stock—$0.0001
par value, 10,000,000 shares authorized; 0 shares issued and
outstanding at June 30, 2018 and December 31, 2017 |
|
|
- |
|
|
|
- |
|
Common stock—$0.0005
par value, 200,000,000 shares authorized; 76,509,709 and
61,631,573 shares issued at June 30, 2018 and December 31,
2017, respectively; and 75,284,624 and 61,279,050 shares
outstanding at June 30, 2018 and December 31, 2017,
respectively |
|
|
38 |
|
|
|
31 |
|
Treasury stock, at
cost, 1,225,085 and 352,523 shares at June 30, 2018 and
December 31, 2017, respectively |
|
|
(3,253 |
) |
|
|
(1,274 |
) |
Additional paid-in
capital |
|
|
390,011 |
|
|
|
392,687 |
|
Accumulated
deficit |
|
|
(191,474 |
) |
|
|
(167,437 |
) |
Total
shareholders’ equity |
|
|
195,322 |
|
|
|
224,007 |
|
Total
liabilities and shareholders’ equity |
|
$ |
279,492 |
|
|
$ |
316,999 |
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in
thousands, except share
data)(unaudited) |
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenue |
|
$ |
56,935 |
|
|
$ |
51,031 |
|
|
$ |
112,924 |
|
|
$ |
100,225 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization) |
|
|
33,893 |
|
|
|
34,781 |
|
|
|
69,556 |
|
|
|
68,578 |
|
Sales and marketing
expenses |
|
|
3,678 |
|
|
|
4,678 |
|
|
|
7,684 |
|
|
|
8,373 |
|
General and
administrative expenses |
|
|
11,448 |
|
|
|
14,169 |
|
|
|
19,893 |
|
|
|
26,645 |
|
Depreciation and
amortization |
|
|
3,338 |
|
|
|
3,234 |
|
|
|
6,669 |
|
|
|
6,439 |
|
Write-off of long-lived
assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,626 |
|
Spin-off transaction
costs |
|
|
- |
|
|
|
- |
|
|
|
7,708 |
|
|
|
- |
|
Total costs and
expenses |
|
|
52,357 |
|
|
|
56,862 |
|
|
|
111,510 |
|
|
|
113,661 |
|
Income (loss)
from operations |
|
|
4,578 |
|
|
|
(5,831 |
) |
|
|
1,414 |
|
|
|
(13,436 |
) |
Interest expense,
net |
|
|
(1,933 |
) |
|
|
(2,445 |
) |
|
|
(4,327 |
) |
|
|
(4,672 |
) |
Income (loss)
before income taxes from continuing operations |
|
|
2,645 |
|
|
|
(8,276 |
) |
|
|
(2,913 |
) |
|
|
(18,108 |
) |
Income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net income
(loss) from continuing operations |
|
|
2,645 |
|
|
|
(8,276 |
) |
|
|
(2,913 |
) |
|
|
(18,108 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations of
discontinued operations, net of $0 income taxes |
|
|
- |
|
|
|
(12,133 |
) |
|
|
(2,084 |
) |
|
|
(15,026 |
) |
Loss on disposal of
discontinued operations, net of $0 income taxes |
|
|
- |
|
|
|
- |
|
|
|
(19,040 |
) |
|
|
- |
|
Net loss from
discontinued operations |
|
|
- |
|
|
|
(12,133 |
) |
|
|
(21,124 |
) |
|
|
(15,026 |
) |
Net income
(loss) |
|
$ |
2,645 |
|
|
$ |
(20,409 |
) |
|
$ |
(24,037 |
) |
|
$ |
(33,134 |
) |
Basic earnings
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
Discontinued
operations |
|
$ |
- |
|
|
$ |
(0.22 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.28 |
) |
Net income
(loss) |
|
$ |
0.04 |
|
|
$ |
(0.37 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.61 |
) |
Diluted
earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
0.03 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.33 |
) |
Discontinued
operations |
|
$ |
- |
|
|
$ |
(0.22 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.28 |
) |
Net income
(loss) |
|
$ |
0.03 |
|
|
$ |
(0.37 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.61 |
) |
Weighted
average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
75,282,042 |
|
|
|
54,778,046 |
|
|
|
71,318,930 |
|
|
|
54,297,536 |
|
Diluted |
|
|
78,196,959 |
|
|
|
54,778,046 |
|
|
|
71,318,930 |
|
|
|
54,297,536 |
|
|
|
FLUENT, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in
thousands)(unaudited) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,037 |
) |
|
$ |
(33,134 |
) |
Net loss from
discontinued operations |
|
|
21,124 |
|
|
|
15,026 |
|
Adjustments to
reconcile net loss from continuing operations to net cash provided
by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
6,669 |
|
|
|
6,439 |
|
Non-cash interest
expense and related amortization |
|
|
1,079 |
|
|
|
1,497 |
|
Share-based
compensation expense |
|
|
9,262 |
|
|
|
14,948 |
|
Write-off of long-lived
assets |
|
|
- |
|
|
|
3,626 |
|
Provision for bad
debts |
|
|
93 |
|
|
|
945 |
|
Allocation of expenses
to red violet |
|
|
(325 |
) |
|
|
(1,888 |
) |
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(1,793 |
) |
|
|
(2,187 |
) |
Prepaid expenses and
other current assets |
|
|
(173 |
) |
|
|
(860 |
) |
Other non-current
assets |
|
|
541 |
|
|
|
- |
|
Trade accounts
payable |
|
|
1,328 |
|
|
|
398 |
|
Accrued expenses and
other current liabilities |
|
|
(3,902 |
) |
|
|
953 |
|
Deferred revenue |
|
|
578 |
|
|
|
820 |
|
Net cash provided by
operating activities from continuing operations |
|
|
10,444 |
|
|
|
6,583 |
|
Net cash used in
operating activities from discontinued operations |
|
|
(5,835 |
) |
|
|
(3,836 |
) |
Net cash provided by
operating activities |
|
|
4,609 |
|
|
|
2,747 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of property
and equipment |
|
|
(92 |
) |
|
|
(148 |
) |
Capitalized costs
included in intangible assets |
|
|
(512 |
) |
|
|
(550 |
) |
Capital contributed to
red violet |
|
|
(19,728 |
) |
|
|
- |
|
Net cash used in
investing activities from continuing operations |
|
|
(20,332 |
) |
|
|
(698 |
) |
Net cash used in
investing activities from discontinued operations |
|
|
(1,386 |
) |
|
|
(3,570 |
) |
Net cash used in
investing activities |
|
|
(21,718 |
) |
|
|
(4,268 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from issuance
of shares, net of issuance costs |
|
|
13,392 |
|
|
|
- |
|
Proceeds from debt
obligations, net of debt costs |
|
|
67,182 |
|
|
|
14,039 |
|
Repayments of long-term
debt |
|
|
(67,982 |
) |
|
|
(2,636 |
) |
Taxes paid related to
net share settlement of vesting of restricted stock units |
|
|
(1,979 |
) |
|
|
(723 |
) |
Net cash provided by
financing activities from continuing operations |
|
|
10,613 |
|
|
|
10,680 |
|
Net (decrease) increase
in cash and cash equivalents |
|
$ |
(6,496 |
) |
|
$ |
9,159 |
|
Cash and cash
equivalents at beginning of period |
|
|
16,564 |
|
|
|
10,089 |
|
Cash and cash
equivalents at end of period |
|
$ |
10,068 |
|
|
$ |
19,248 |
|
SUPPLEMENTAL DISCLOSURE
INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for
interest |
|
$ |
3,342 |
|
|
$ |
3,195 |
|
Cash paid for income
taxes |
|
$ |
- |
|
|
$ |
- |
|
Share-based
compensation capitalized in intangible assets |
|
$ |
283 |
|
|
$ |
188 |
|
|
|
|
|
|
|
|
|
|
Use and Reconciliation of Non-GAAP Financial
Measures
Management evaluates the financial performance of our business
on a variety of key indicators, including adjusted EBITDA, adjusted
net income (loss), adjusted earnings (loss) per share, adjusted
gross profit and adjusted gross margin. Adjusted EBITDA is a
non-GAAP financial measure equal to net income (loss), the most
directly comparable financial measure based on US GAAP, adding back
net loss from discontinued operations, interest expense,
depreciation and amortization, share-based compensation expense,
acquisition and restructuring costs, write-off of long-lived
assets, and certain litigation and other costs, as noted in the
tables below. Adjusted net income (loss) and the related basic and
diluted per share amounts are non-GAAP measures equal to net income
(loss) from continuing operations, the most directly comparable
financial measure based on US GAAP, adding back the effect of
spin-off transaction costs. We define adjusted gross profit as
revenue less cost of revenue (exclusive of depreciation and
amortization), and adjusted gross margin as adjusted gross profit
as a percentage of revenue.
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(In
thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net income
(loss) |
|
$ |
2,645 |
|
|
$ |
(20,409 |
) |
|
$ |
(24,037 |
) |
|
$ |
(33,134 |
) |
Net loss from
discontinued operations |
|
|
- |
|
|
|
12,133 |
|
|
|
21,124 |
|
|
|
15,026 |
|
Interest expense,
net |
|
|
1,933 |
|
|
|
2,445 |
|
|
|
4,327 |
|
|
|
4,672 |
|
Depreciation and
amortization |
|
|
3,338 |
|
|
|
3,234 |
|
|
|
6,669 |
|
|
|
6,439 |
|
Share-based
compensation expense |
|
|
2,614 |
|
|
|
8,094 |
|
|
|
9,262 |
|
|
|
14,948 |
|
Acquisition and
restructuring costs |
|
|
317 |
|
|
|
1,650 |
|
|
|
3,030 |
|
|
|
2,318 |
|
Write-off of long-lived
assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,626 |
|
Litigation and other
costs |
|
|
92 |
|
|
|
- |
|
|
|
164 |
|
|
|
- |
|
Adjusted
EBITDA |
|
$ |
10,939 |
|
|
$ |
7,147 |
|
|
$ |
20,539 |
|
|
$ |
13,895 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(In thousands,
except share data) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net income
(loss) from continuing operations |
|
$ |
2,645 |
|
|
$ |
(8,276 |
) |
|
$ |
(2,913 |
) |
|
$ |
(18,108 |
) |
Add back: Spin-off
transaction costs |
|
|
- |
|
|
|
- |
|
|
|
7,708 |
|
|
|
- |
|
Adjusted net
income (loss) |
|
$ |
2,645 |
|
|
$ |
(8,276 |
) |
|
$ |
4,795 |
|
|
$ |
(18,108 |
) |
Adjusted
earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
(0.15 |
) |
|
$ |
0.07 |
|
|
$ |
(0.33 |
) |
Diluted |
|
$ |
0.03 |
|
|
$ |
(0.15 |
) |
|
$ |
0.06 |
|
|
$ |
(0.33 |
) |
Weighted average number
of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
75,282,042 |
|
|
|
54,778,046 |
|
|
|
71,318,930 |
|
|
|
54,297,536 |
|
Diluted (1) |
|
|
78,196,959 |
|
|
|
54,778,046 |
|
|
|
74,233,847 |
|
|
|
54,297,536 |
|
- The diluted weighted average number of shares outstanding for
the three and six months ended June 30, 2018 is computed based on
the basic weighted average number of shares outstanding plus the
dilutive impact of outstanding restricted stock units as of June
30, 2018.
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(In
thousands) |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenue |
|
$ |
56,935 |
|
|
$ |
51,031 |
|
|
$ |
112,924 |
|
|
$ |
100,225 |
|
Cost of revenue
(exclusive of depreciation and amortization) |
|
|
33,893 |
|
|
|
34,781 |
|
|
|
69,556 |
|
|
|
68,578 |
|
Adjusted gross
profit |
|
$ |
23,042 |
|
|
$ |
16,250 |
|
|
$ |
43,368 |
|
|
$ |
31,647 |
|
Adjusted gross
margin |
|
|
40 |
% |
|
|
32 |
% |
|
|
38 |
% |
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We present adjusted EBITDA, adjusted net income
(loss), adjusted earnings (loss) per share, adjusted gross profit
and adjusted gross margin as supplemental measures of our operating
performance because we believe they provide useful information to
our investors as they eliminate the impact of certain items that we
do not consider indicative of our cash operations and ongoing
operating performance. In addition, we use them as an integral part
of our internal reporting to measure our performance, evaluate the
performance of our senior management and measure the operating
strength of our business.
Adjusted EBITDA, adjusted net income (loss), adjusted earnings
(loss) per share, adjusted gross profit and adjusted gross margin
are measures frequently used by securities analysts, investors and
other interested parties in their evaluation of the operating
performance of companies similar to ours and is an indicator of the
operational strength of our business. Adjusted EBITDA eliminates
the uneven effect of considerable amounts of discontinued
operations, interest expense, non-cash depreciation and
amortization, share-based compensation expense, acquisition and
restructuring costs, write-off of long-lived assets, and certain
litigation and other costs. Adjusted net income (loss) and adjusted
earnings (loss) per share eliminate the effect of the spin-off
transaction costs. Adjusted gross profit and adjusted gross margin
are calculated by using cost of revenue (exclusive of depreciation
and amortization).
Adjusted EBITDA, adjusted net income (loss), adjusted earnings
(loss) per share, adjusted gross profit and adjusted gross margin
are not intended to be performance measures that should be regarded
as an alternative to, or more meaningful than, either operating
income (loss) or net income (loss) as indicators of operating
performance or to cash flows from operating activities as a measure
of liquidity. The way we measure adjusted EBITDA, adjusted net
income (loss), adjusted earnings (loss) per share, adjusted gross
profit and adjusted gross margin 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:
Investors:Jordyn TaraziFluent,
Inc.(646)356-8469JTarazi@fluentco.com
Media:North 6th Agency, Inc.(212)334-9753 ext.
143fluent@n6a.com
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