Second Full Quarter as a Standalone
Public Company Produces $66.5 Million in Revenue,
Fluent, Inc. (NASDAQ:FLNT) a leading data-driven performance
marketing company, today announced financial results for the
quarter ended September 30, 2018.
“We are happy to report record numbers for our three key
operating metrics: revenue, adjusted gross profit, and adjusted
EBITDA,” stated Ryan Schulke, Fluent’s CEO. “The increased adoption
of our performance-based marketing services, coupled with operating
efficiencies, has allowed us to deliver a very good quarter for our
shareholders.”
Third Quarter Financial Results
For the three months ended September 30, 2018, as compared
to the three months ended September 30, 2017:
• |
Total
revenue increased 21% to $66.5 million, from $54.9 million. |
|
|
• |
Net income
from continuing operations was $4.5 million, compared to net loss
from continuing operations of $10.8 million. |
|
|
• |
Results
from discontinued operations were $0, compared to net loss from
discontinued operations of $3.3 million. |
|
|
• |
Basic
earnings per share from continuing operations was $0.06, compared
to a loss of $0.19 per share. |
|
|
• |
Adjusted
EBITDA grew 56% to $12.4 million, based on net income of $4.5
million, compared to adjusted EBITDA of $7.9 million on net loss of
$14.1 million. |
|
|
• |
Adjusted
gross profit increased 43% to $27.4 million, from $19.2 million.
Adjusted gross margin increased 600 basis points to 41%, from
35%. |
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.
Third Quarter and Recent Business
Highlights
• |
Surpassed
200 million unique email addresses in the Fluent Identity
Graph. |
|
|
• |
Expanded
revenue and margins as a result of consumer re-engagement through
lifecycle marketing initiatives. |
|
|
• |
Successfully deployed machine learning to enhance audience
segmentation and drive incremental monetization. |
|
|
• |
Increased
scale and profitability in our UK beta launch. |
|
|
Conference Call
Fluent, Inc. will host a conference call on Wednesday, November
7, 2018 at 4:30 PM ET to discuss its 2018 third 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 10123609. 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 and per share
data)(unaudited)
|
|
|
|
|
|
|
September 30, 2018 |
|
December 31, 2017 |
ASSETS: |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
17,361 |
|
|
$ |
16,564 |
|
Accounts receivable,
net of allowance for doubtful accounts of $1,751 and $1,624
at September 30, 2018 and December 31, 2017, respectively |
|
39,726 |
|
|
36,278 |
|
Prepaid expenses and
other current assets |
|
1,779 |
|
|
1,865 |
|
Current assets of
discontinued operations |
|
— |
|
|
2,274 |
|
Total current
assets |
|
58,866 |
|
|
56,981 |
|
Property and equipment,
net |
|
421 |
|
|
687 |
|
Intangible assets,
net |
|
66,065 |
|
|
74,354 |
|
Goodwill |
|
159,791 |
|
|
159,791 |
|
Other non-current
assets |
|
564 |
|
|
1,097 |
|
Non-current assets of
discontinued operations |
|
— |
|
|
24,089 |
|
Total
assets |
|
$ |
285,707 |
|
|
$ |
316,999 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
7,249 |
|
|
$ |
7,408 |
|
Accrued expenses and
other current liabilities |
|
15,395 |
|
|
14,967 |
|
Deferred revenue |
|
714 |
|
|
265 |
|
Current portion of
long-term debt |
|
7,227 |
|
|
2,750 |
|
Current liabilities of
discontinued operations |
|
— |
|
|
7,389 |
|
Total current
liabilities |
|
30,585 |
|
|
32,779 |
|
Promissory notes
payable to certain shareholders, net |
|
— |
|
|
10,837 |
|
Long-term debt,
net |
|
52,463 |
|
|
49,376 |
|
Total
liabilities |
|
83,048 |
|
|
92,992 |
|
Shareholders'
equity: |
|
|
|
|
Preferred stock -
$0.0001 par value, 10,000,000 shares authorized; 0 shares issued
and outstanding at September 30, 2018 and December 31,
2017 |
|
— |
|
|
— |
|
Common stock - $0.0005
par value, 200,000,000 shares authorized; 76,516,415 and
61,631,573 shares issued at September 30, 2018 and December 31,
2017, respectively; and 75,291,330 and 61,279,050
shares outstanding at September 30, 2018 and December
31, 2017, respectively |
|
38 |
|
|
31 |
|
Treasury stock, at
cost, 1,225,085 and 352,523 shares at September 30, 2018 and
December 31, 2017, respectively |
|
(3,253 |
) |
|
(1,274 |
) |
Additional paid-in
capital |
|
392,886 |
|
|
392,687 |
|
Accumulated
deficit |
|
(187,012 |
) |
|
(167,437 |
) |
Total
shareholders' equity |
|
202,659 |
|
|
224,007 |
|
Total
liabilities and shareholders' equity |
|
$ |
285,707 |
|
|
$ |
316,999 |
|
|
|
FLUENT, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in
thousands, except share and per share
data)(unaudited)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue |
|
$ |
66,535 |
|
$ |
54,942 |
|
$ |
179,459 |
|
$ |
155,167 |
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of revenue
(exclusive of depreciation and amortization) |
|
39,090 |
|
|
35,732 |
|
|
108,646 |
|
|
104,310 |
|
Sales and marketing
expenses |
|
4,186 |
|
|
5,105 |
|
|
11,870 |
|
|
13,478 |
|
General and
administrative expenses |
|
13,563 |
|
|
19,143 |
|
|
33,456 |
|
|
45,788 |
|
Depreciation and
amortization |
|
3,352 |
|
|
3,297 |
|
|
10,021 |
|
|
9,736 |
|
Write-off of long-lived
assets |
|
— |
|
|
— |
|
|
— |
|
|
3,626 |
|
Spin-off transaction
costs |
|
— |
|
|
— |
|
|
7,708 |
|
|
— |
|
Total costs and
expenses |
|
60,191 |
|
|
63,277 |
|
|
171,701 |
|
|
176,938 |
|
Income (loss)
from operations |
|
6,344 |
|
|
(8,335 |
) |
|
7,758 |
|
|
(21,771 |
) |
Interest expense,
net |
|
(1,882 |
) |
|
(2,426 |
) |
|
(6,209 |
) |
|
(7,098 |
) |
Income (loss)
before income taxes from continuing operations |
|
4,462 |
|
|
(10,761 |
) |
|
1,549 |
|
|
(28,869 |
) |
Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net income
(loss) from continuing operations |
|
4,462 |
|
|
(10,761 |
) |
|
1,549 |
|
|
(28,869 |
) |
Discontinued
operations: |
|
|
|
|
|
|
|
|
Loss from operations of
discontinued operations, net of $0 income taxes |
|
— |
|
|
(3,334 |
) |
|
(2,084 |
) |
|
(18,360 |
) |
Loss on disposal of
discontinued operations, net of $0 income taxes |
|
— |
|
|
— |
|
|
(19,040 |
) |
|
— |
|
Net loss from
discontinued operations |
|
— |
|
|
(3,334 |
) |
|
(21,124 |
) |
|
(18,360 |
) |
Net income
(loss) |
|
$ |
4,462 |
|
|
$ |
(14,095 |
) |
|
$ |
(19,575 |
) |
|
$ |
(47,229 |
) |
Basic and
diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
Continuing
operations |
|
$ |
0.06 |
|
|
$ |
(0.19 |
) |
|
$ |
0.02 |
|
|
$ |
(0.53 |
) |
Discontinued
operations |
|
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.34 |
) |
Net income (loss) |
|
$ |
0.06 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.86 |
) |
Weighted
average number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
78,199,579 |
|
|
55,390,247 |
|
|
73,941,595 |
|
|
54,665,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in
thousands)(unaudited)
|
|
Nine Months Ended September 30, |
|
|
2018 |
|
2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
Net loss |
|
$ |
(19,575 |
) |
|
$ |
(47,229 |
) |
Net loss from
discontinued operations |
|
21,124 |
|
|
18,360 |
|
Adjustments to
reconcile net loss from continuing operations to net cash provided
by operating activities: |
|
|
|
|
Depreciation and
amortization |
|
10,021 |
|
|
9,736 |
|
Non-cash interest
expense and related amortization |
|
1,491 |
|
|
2,268 |
|
Share-based
compensation expense |
|
11,855 |
|
|
25,456 |
|
Write-off of long-lived
assets |
|
— |
|
|
3,626 |
|
Provision for bad
debts |
|
462 |
|
|
2,175 |
|
Allocation of expenses
to red violet |
|
(325 |
) |
|
(2,849 |
) |
Changes in assets and
liabilities: |
|
|
|
|
Accounts
receivable |
|
(3,910 |
) |
|
(7,708 |
) |
Prepaid expenses and
other current assets |
|
(112 |
) |
|
(528 |
) |
Other non-current
assets |
|
533 |
|
|
71 |
|
Accounts payable |
|
(159 |
) |
|
(7,464 |
) |
Accrued expenses and
other current liabilities |
|
628 |
|
|
8,900 |
|
Deferred revenue |
|
449 |
|
|
154 |
|
Net cash provided by
operating activities from continuing operations |
|
22,482 |
|
|
4,968 |
|
Net cash used in
operating activities from discontinued operations |
|
(5,835 |
) |
|
(7,902 |
) |
Net cash provided by
(used in) operating activities |
|
16,647 |
|
|
(2,934 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Purchase of property
and equipment |
|
(107 |
) |
|
(668 |
) |
Capitalized costs
included in intangible assets |
|
(995 |
) |
|
(694 |
) |
Capital contributed to
red violet |
|
(19,728 |
) |
|
— |
|
Net cash used in
investing activities from continuing operations |
|
(20,830 |
) |
|
(1,362 |
) |
Net cash used in
investing activities from discontinued operations |
|
(1,386 |
) |
|
(5,294 |
) |
Net cash used in
investing activities |
|
(22,216 |
) |
|
(6,656 |
) |
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 |
|
(72,229 |
) |
|
(3,472 |
) |
Taxes paid related to
net share settlement of vesting of restricted stock units |
|
(1,979 |
) |
|
(743 |
) |
Net cash provided by
financing activities from continuing operations |
|
6,366 |
|
|
9,824 |
|
Net increase in cash
and cash equivalents |
|
$ |
797 |
|
|
$ |
234 |
|
Cash and cash
equivalents at beginning of period |
|
16,564 |
|
|
10,089 |
|
Cash and cash
equivalents at end of period |
|
$ |
17,361 |
|
|
$ |
10,323 |
|
SUPPLEMENTAL DISCLOSURE
INFORMATION |
|
|
|
|
Cash paid for
interest |
|
$ |
4,931 |
|
|
$ |
4,940 |
|
Cash paid for income
taxes |
|
$ |
— |
|
|
$ |
— |
|
Share-based
compensation capitalized in intangible assets |
|
$ |
364 |
|
|
$ |
373 |
|
Reduction in value of
puttable common stock classified as liability |
|
$ |
(200 |
) |
|
$ |
— |
|
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 September
30, |
|
Nine Months Ended September
30, |
(In thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income (loss) |
|
$ |
4,462 |
|
|
$ |
(14,095 |
) |
|
$ |
(19,575 |
) |
|
$ |
(47,229) |
Net loss from discontinued operations |
|
— |
|
|
3,334 |
|
|
21,124 |
|
|
18,360 |
Interest expense, net |
|
1,882 |
|
|
2,426 |
|
|
6,209 |
|
|
7,098 |
Depreciation and amortization |
|
3,352 |
|
|
3,297 |
|
|
10,021 |
|
|
9,736 |
Share-based compensation expense |
|
2,593 |
|
|
10,508 |
|
|
11,855 |
|
|
25,456 |
Acquisition and restructuring costs |
|
119 |
|
|
2,474 |
|
|
3,149 |
|
|
4,792 |
Write-off of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
3,626 |
Litigation and other costs |
|
— |
|
|
3 |
|
|
185 |
|
|
3 |
Adjusted EBITDA |
|
$ |
12,408 |
|
|
$ |
7,947 |
|
|
$ |
32,968 |
|
|
$ |
21,842 |
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
(In thousands, except share data) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income (loss) from continuing operations |
|
$ |
4,462 |
|
|
$ |
(10,761 |
) |
|
$ |
1,549 |
|
|
$ |
(28,869 |
) |
Add back: Spin-off transaction costs |
|
— |
|
|
— |
|
|
7,708 |
|
|
— |
|
Adjusted net income (loss) |
|
$ |
4,462 |
|
|
$ |
(10,761 |
) |
|
$ |
9,257 |
|
|
$ |
(28,869 |
) |
Adjusted earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
0.06 |
|
|
$ |
(0.19 |
) |
|
$ |
0.13 |
|
|
$ |
(0.53 |
) |
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
78,199,579 |
|
|
55,390,247 |
|
|
73,941,595 |
|
|
54,665,776 |
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
(In thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue |
|
$ |
66,535 |
|
|
$ |
54,942 |
|
|
$ |
179,459 |
|
|
$ |
155,167 |
|
Cost of revenue (exclusive of depreciation and amortization) |
|
39,090 |
|
|
35,732 |
|
|
108,646 |
|
|
104,310 |
|
Adjusted gross profit |
|
$ |
27,445 |
|
|
$ |
19,210 |
|
|
$ |
70,813 |
|
|
$ |
50,857 |
|
Adjusted gross margin |
|
41 |
% |
|
35 |
% |
|
39 |
% |
|
33 |
% |
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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