Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance
marketing company, today reported financial results for
the third quarter ended 2020.
Ryan Schulke, Fluent’s Chief Executive Officer, commented, "We
are pleased to post a solid third quarter in terms of performance
and results, as we continue to leverage and expand our business and
performance marketplace, as well as evolve best practices for the
long term.”
“Innovation was an important theme underpinning the quarter’s
results, particularly relating to Fluent’s product and platform,
which we see as a reflection of our team’s agility and adaptability
through these highly unusual times. I again want to thank all of
our employees for their exceptional work under the most difficult
of circumstances and to reiterate that Fluent remains resilient and
steadfast in striving to support our colleagues, clients, consumers
and communities.”
Third Quarter Financial
Summary
- Q3 2020 revenue
of $78.3 million, up
21% over Q3 2019
- Net income of $1.2 or $0.01 per share,
compared to net loss of $4.5 million, or $0.06 per share,
in Q3 2019
- Media margin of $29.7 million, an increase
of 39% over Q3 2019 and representing 37.9% of
revenue
- Adjusted EBITDA of $11.6 million, an increase
of 167% over Q3 2019 and representing 14.8% of
revenue
- Adjusted net income of $6.3 million,
or $0.08 per share
Media margin, adjusted EBITDA and adjusted net income (loss) are
non-GAAP financial measures, as defined and reconciled
below.
Business Outlook
- Early indicators for Q4 2020 point to seasonal lift, albeit
with visibility constrained by unique circumstances regarding the
election, the COVID-19 pandemic and holiday shopping
patterns.
- The Media & Entertainment vertical remains the Company’s
most significant growth driver, underpinned by direct relationships
in the Streaming Services and Mobile Gaming
categories.
- Q3 2020 revenue from engaging consumers in international
markets, primarily the UK, grew sequentially as compared with Q2
2020, and represented more than 5% of total company revenue in
the quarter.
- Notwithstanding the extraordinary challenges imposed by the
global pandemic, the Company's business and operations have
remained on solid footing.
Conference Call
Fluent, Inc. will host a conference call on Thursday, October
29, 2020 at 4:30 PM ET to discuss its 2020 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 investors.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 10149165. The replay will also be
available for one week on the Fluent website at
investors.fluentco.com.
About Fluent, Inc.
Fluent (NASDAQ: FLNT) is a leading performance marketing company
with expertise in creating meaningful connections between consumers
and brands. Leveraging our proprietary first-party database of
opted-in consumer profiles, Fluent drives intelligent growth
strategies that deliver superior outcomes. Founded in 2010, the
company is headquartered in New York City. 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; failure to
safeguard the personal information and other data contained in our
database; unfavorable global economic conditions, including as
a result of health and safety concerns around the ongoing COVID-19
pandemic; failure to compete effectively against other online
marketing and advertising companies; dependence on third-party
publishers, internet search providers and social media platforms
for a significant portion of visitors to our websites; dependence
on our key personnel; dependence on emails, text messages and
telephone calls, among other channels, to reach users for marketing
purposes; competition we face for web traffic; ability to compete
and manage media costs in an industry characterized by
rapidly-changing internet media and advertising technology,
evolving industry standards, regulatory uncertainty, and changing
user and client demands; 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 of online
interactions from computers to mobile devices; dependence on
third-party service providers; management of the growth of our
operations, including the integration of the AdParlor and Winopoly
businesses and other acquired business units or personnel;
management of unfavorable publicity and negative public perception
about our industry; failure to meet our clients’ performance
metrics or changing needs; risks associated with the expansion of
our international operations; failure to detect click-through or
other fraud on advertisements; achievement of some or all of the
benefits that we expect to achieve as a stand-alone company;
failure to adequately protect intellectual property rights or
allegations of infringement of intellectual property rights;
compliance with the covenants of our credit agreement; 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, 2019 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)
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
15,394 |
|
|
$ |
18,679 |
|
Accounts receivable, net of
allowance for doubtful accounts of $334 and $1,967,
respectively |
|
|
59,411 |
|
|
|
60,915 |
|
Prepaid expenses and other
current assets |
|
|
2,878 |
|
|
|
1,921 |
|
Total current assets |
|
|
77,683 |
|
|
|
81,515 |
|
Restricted cash |
|
|
1,480 |
|
|
|
1,480 |
|
Property and equipment,
net |
|
|
2,396 |
|
|
|
2,863 |
|
Operating lease right-of-use
assets |
|
|
8,665 |
|
|
|
9,865 |
|
Intangible assets, net |
|
|
48,149 |
|
|
|
55,603 |
|
Goodwill |
|
|
165,088 |
|
|
|
164,774 |
|
Other non-current assets |
|
|
1,852 |
|
|
|
993 |
|
Total
assets |
|
$ |
305,313 |
|
|
$ |
317,093 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
7,478 |
|
|
$ |
21,574 |
|
Accrued expenses and other
current liabilities |
|
|
26,229 |
|
|
|
20,358 |
|
Deferred revenue |
|
|
2,440 |
|
|
|
1,140 |
|
Current portion of long-term
debt |
|
|
4,750 |
|
|
|
6,873 |
|
Current portion of operating
lease liability |
|
|
2,283 |
|
|
|
2,282 |
|
Total current liabilities |
|
|
43,180 |
|
|
|
52,227 |
|
Long-term debt, net |
|
|
36,388 |
|
|
|
44,098 |
|
Operating lease liability |
|
|
7,736 |
|
|
|
9,056 |
|
Other non-current
liabilities |
|
|
1,865 |
|
|
|
775 |
|
Total
liabilities |
|
|
89,169 |
|
|
|
106,156 |
|
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 — 80,260,475
and 78,642,078, respectively; and Shares outstanding — 76,323,720
and 75,873,679, respectively |
|
|
40 |
|
|
|
39 |
|
Treasury stock, at cost —
3,936,755 and 2,768,399 shares, respectively |
|
|
(9,974 |
) |
|
|
(8,184 |
) |
Additional paid-in
capital |
|
|
411,165 |
|
|
|
406,198 |
|
Accumulated deficit |
|
|
(185,087 |
) |
|
|
(187,116 |
) |
Total shareholders'
equity |
|
|
216,144 |
|
|
|
210,937 |
|
Total liabilities and
shareholders' equity |
|
$ |
305,313 |
|
|
$ |
317,093 |
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenue |
|
$ |
78,280 |
|
|
$ |
64,552 |
|
|
$ |
228,723 |
|
|
$ |
201,673 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
|
|
52,771 |
|
|
|
44,568 |
|
|
|
158,402 |
|
|
|
138,530 |
|
Sales and marketing (1) |
|
|
2,925 |
|
|
|
2,717 |
|
|
|
8,643 |
|
|
|
9,209 |
|
Product development (1) |
|
|
3,355 |
|
|
|
2,040 |
|
|
|
9,201 |
|
|
|
6,485 |
|
General and administrative (1) |
|
|
12,772 |
|
|
|
14,049 |
|
|
|
33,892 |
|
|
|
34,378 |
|
Depreciation and amortization |
|
|
3,906 |
|
|
|
3,642 |
|
|
|
11,492 |
|
|
|
10,265 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
817 |
|
|
|
— |
|
Write-off of long-lived assets |
|
|
— |
|
|
|
280 |
|
|
|
— |
|
|
|
280 |
|
Total costs and
expenses |
|
|
75,729 |
|
|
|
67,296 |
|
|
|
222,447 |
|
|
|
199,147 |
|
Income from
operations |
|
|
2,551 |
|
|
|
(2,744 |
) |
|
|
6,276 |
|
|
|
2,526 |
|
Interest expense, net |
|
|
(1,317 |
) |
|
|
(1,719 |
) |
|
|
(4,182 |
) |
|
|
(5,264 |
) |
Income (loss) before
income taxes |
|
|
1,234 |
|
|
|
(4,463 |
) |
|
|
2,094 |
|
|
|
(2,738 |
) |
Income tax (expense) benefit |
|
|
(65 |
) |
|
|
— |
|
|
|
(65 |
) |
|
|
35 |
|
Net income
(loss) |
|
|
1,169 |
|
|
|
(4,463 |
) |
|
|
2,029 |
|
|
|
(2,703 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
Diluted |
|
$ |
0.01 |
|
|
$ |
(0.06 |
) |
|
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
78,577,974 |
|
|
|
79,569,210 |
|
|
|
78,564,262 |
|
|
|
79,389,131 |
|
Diluted |
|
|
79,172,578 |
|
|
|
79,569,210 |
|
|
|
79,214,619 |
|
|
|
79,389,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts include
share-based compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
$ |
172 |
|
|
$ |
292 |
|
|
$ |
659 |
|
|
$ |
821 |
|
Product development |
|
|
291 |
|
|
|
278 |
|
|
|
814 |
|
|
|
800 |
|
General and administrative |
|
|
707 |
|
|
|
2,220 |
|
|
|
3,375 |
|
|
|
6,398 |
|
Share-based compensation |
|
$ |
1,170 |
|
|
$ |
2,790 |
|
|
$ |
4,848 |
|
|
$ |
8,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Amounts in
thousands)(unaudited)
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
2,029 |
|
|
$ |
(2,703 |
) |
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,492 |
|
|
|
10,265 |
|
Non-cash interest expense |
|
|
1,092 |
|
|
|
1,016 |
|
Share-based compensation expense |
|
|
4,848 |
|
|
|
8,019 |
|
Goodwill impairment |
|
|
817 |
|
|
|
— |
|
Write-off of long-lived assets |
|
|
— |
|
|
|
280 |
|
Non-cash accrued compensation expense for Put/Call
Consideration |
|
|
1,184 |
|
|
|
— |
|
Provision for bad debt |
|
|
174 |
|
|
|
2,082 |
|
Provision for (benefit from) income taxes |
|
|
65 |
|
|
|
(35 |
) |
Changes in assets and liabilities, net of business
acquisition: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,363 |
|
|
|
8,660 |
|
Prepaid expenses and other current assets |
|
|
(957 |
) |
|
|
10 |
|
Other non-current assets |
|
|
(859 |
) |
|
|
(137 |
) |
Operating lease assets and liabilities, net |
|
|
(119 |
) |
|
|
1,517 |
|
Accounts payable |
|
|
(14,096 |
) |
|
|
1,850 |
|
Accrued expenses and other current liabilities |
|
|
4,622 |
|
|
|
(4,915 |
) |
Deferred revenue |
|
|
1,300 |
|
|
|
701 |
|
Other |
|
|
(94 |
) |
|
|
5 |
|
Net cash provided by operating activities |
|
|
12,861 |
|
|
|
26,615 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Business acquisition, net of cash acquired |
|
|
(1,426 |
) |
|
|
(7,246 |
) |
Capitalized costs included in intangible assets |
|
|
(1,943 |
) |
|
|
(1,887 |
) |
Acquisition of property and equipment |
|
|
(62 |
) |
|
|
(2,076 |
) |
Net cash used in investing activities |
|
|
(3,431 |
) |
|
|
(11,209 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayments of long-term debt |
|
|
(10,925 |
) |
|
|
(5,851 |
) |
Repurchase of treasury stock |
|
|
(1,300 |
) |
|
|
— |
|
Taxes paid related to net share settlement of vesting of restricted
stock units |
|
|
(490 |
) |
|
|
(3,096 |
) |
Net cash used in financing activities |
|
|
(12,715 |
) |
|
|
(8,947 |
) |
Net (decrease) increase in
cash, cash equivalents and restricted cash |
|
|
(3,285 |
) |
|
|
6,459 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
|
20,159 |
|
|
|
19,249 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
16,874 |
|
|
$ |
25,708 |
|
|
|
|
|
|
|
|
|
|
Definitions, Reconciliations and Uses of Non-GAAP
Financial Measures
The following non-GAAP measures are used in this release:
Media margin is defined as revenue minus cost of revenue
(exclusive of depreciation and amortization) attributable to
variable costs paid for media and related expenses. 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) goodwill impairment, (5) write-off of
long-lived assets, (6) accrued compensation expense for Put/Call
Consideration, (7) share-based compensation expense, (8)
acquisition-related costs, (9) restructuring and certain severance
costs, (10) certain litigation and other related costs, and (11)
one-time items.
Adjusted net income (loss) is defined as net income (loss)
excluding (1) goodwill impairment, (2) write-off of long-lived
assets, (3) accrued compensation expense for Put/Call
Consideration, (4) share-based compensation expense, (5)
acquisition-related costs, (6) restructuring and certain severance
costs, (7) certain litigation and other related costs, and (8)
one-time items. Adjusted net income (loss) is also presented on a
per share (basic and diluted) basis.
Below is a reconciliation of media margin from net income
(loss), which we believe is the most directly comparable GAAP
measure.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net income (loss) |
|
$ |
1,169 |
|
|
$ |
(4,463 |
) |
|
$ |
2,029 |
|
|
$ |
(2,703 |
) |
Income tax expense
(benefit) |
|
|
65 |
|
|
|
— |
|
|
|
65 |
|
|
|
(35 |
) |
Interest expense, net |
|
|
1,317 |
|
|
|
1,719 |
|
|
|
4,182 |
|
|
|
5,264 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
817 |
|
|
|
— |
|
Write-off of long-lived
assets |
|
|
— |
|
|
|
280 |
|
|
|
— |
|
|
|
280 |
|
Depreciation and
amortization |
|
|
3,906 |
|
|
|
3,642 |
|
|
|
11,492 |
|
|
|
10,265 |
|
General and
administrative |
|
|
12,772 |
|
|
|
14,049 |
|
|
|
33,892 |
|
|
|
34,378 |
|
Product development |
|
|
3,355 |
|
|
|
2,040 |
|
|
|
9,201 |
|
|
|
6,485 |
|
Sales and marketing |
|
|
2,925 |
|
|
|
2,717 |
|
|
|
8,643 |
|
|
|
9,209 |
|
Non-media cost of revenue
(1) |
|
|
4,173 |
|
|
|
1,323 |
|
|
|
8,088 |
|
|
|
4,159 |
|
Media
margin |
|
$ |
29,682 |
|
|
$ |
21,307 |
|
|
$ |
78,409 |
|
|
$ |
67,302 |
|
Revenue |
|
$ |
78,280 |
|
|
$ |
64,552 |
|
|
$ |
228,723 |
|
|
$ |
201,673 |
|
Media margin % of revenue |
|
|
37.9 |
% |
|
|
33.0 |
% |
|
|
34.3 |
% |
|
|
33.4 |
% |
(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 income
(loss), which we believe is the most directly comparable GAAP
measure.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net income (loss) |
|
$ |
1,169 |
|
|
$ |
(4,463 |
) |
|
$ |
2,029 |
|
|
$ |
(2,703 |
) |
Income tax expense
(benefit) |
|
|
65 |
|
|
|
— |
|
|
|
65 |
|
|
|
(35 |
) |
Interest expense, net |
|
|
1,317 |
|
|
|
1,719 |
|
|
|
4,182 |
|
|
|
5,264 |
|
Depreciation and
amortization |
|
|
3,906 |
|
|
|
3,642 |
|
|
|
11,492 |
|
|
|
10,265 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
817 |
|
|
|
— |
|
Write-off of long-lived
assets |
|
|
— |
|
|
|
280 |
|
|
|
— |
|
|
|
280 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
654 |
|
|
|
— |
|
|
|
1,184 |
|
|
|
— |
|
Share-based compensation
expense |
|
|
1,170 |
|
|
|
2,790 |
|
|
|
4,848 |
|
|
|
8,019 |
|
Acquisition-related costs |
|
|
89 |
|
|
|
— |
|
|
|
151 |
|
|
|
448 |
|
Restructuring and certain
severance costs |
|
|
565 |
|
|
|
— |
|
|
|
565 |
|
|
|
360 |
|
Certain litigation and other
related costs |
|
|
2,671 |
|
|
|
375 |
|
|
|
4,693 |
|
|
|
1,091 |
|
One-time items |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
168 |
|
Adjusted
EBITDA |
|
$ |
11,606 |
|
|
$ |
4,343 |
|
|
$ |
30,026 |
|
|
$ |
23,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below is a reconciliation of adjusted net income (loss) and
adjusted net income (loss) per share from net income
(loss), which we believe is the most directly comparable GAAP
measure.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(In thousands, except
share data) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net income (loss) |
|
$ |
1,169 |
|
|
$ |
(4,463 |
) |
|
$ |
2,029 |
|
|
$ |
(2,703 |
) |
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
817 |
|
|
|
— |
|
Write-off of long-lived
assets |
|
|
— |
|
|
|
280 |
|
|
|
— |
|
|
|
280 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
654 |
|
|
|
— |
|
|
|
1,184 |
|
|
|
— |
|
Share-based compensation
expense |
|
|
1,170 |
|
|
|
2,790 |
|
|
|
4,848 |
|
|
|
8,019 |
|
Acquisition-related costs |
|
|
89 |
|
|
|
— |
|
|
|
151 |
|
|
|
448 |
|
Restructuring and certain
severance costs |
|
|
565 |
|
|
|
— |
|
|
|
565 |
|
|
|
360 |
|
Certain litigation and other
related costs |
|
|
2,671 |
|
|
|
375 |
|
|
|
4,693 |
|
|
|
1,091 |
|
One-time items |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
168 |
|
Adjusted net income
(loss) |
|
$ |
6,318 |
|
|
$ |
(1,018 |
) |
|
$ |
14,287 |
|
|
$ |
7,663 |
|
Adjusted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
|
$ |
(0.01 |
) |
|
$ |
0.18 |
|
|
$ |
0.10 |
|
Diluted |
|
$ |
0.08 |
|
|
$ |
(0.01 |
) |
|
$ |
0.18 |
|
|
$ |
0.10 |
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
78,577,974 |
|
|
|
79,569,210 |
|
|
|
78,564,262 |
|
|
|
79,389,131 |
|
Diluted |
|
|
79,172,578 |
|
|
|
79,569,210 |
|
|
|
79,214,619 |
|
|
|
79,389,131 |
|
We present media margin, 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 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 severance costs associated with department-specific
reorganizations and certain litigation and other related costs
associated with legal matters outside the ordinary course of
business. Items are considered 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. Adjusted EBITDA for the nine months
ended September 30, 2019 excluded as one-time items $0.2
million of costs associated with the move of our corporate
headquarters. There were no other adjustments for one-time items in
the current period presented.
Adjusted net income (loss), as defined above, and the related
measure of adjusted net income (loss) per share exclude certain
items that are recognized and recorded under 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. Adjusted net income for the nine months
ended September 30, 2019 excluded as one-time items $0.2 million of
costs associated with the move of our corporate headquarters. There
were no other adjustments for one-time items in the current
period presented. We believe adjusted net income affords
investors a different view of the overall financial performance of
the Company than adjusted EBITDA and the GAAP measure of
net income.
Media margin, adjusted EBITDA, adjusted net income (loss) and
adjusted net income (loss) per share are not intended to be
performance measures that should be regarded as an alternative to,
or more meaningful than, net income (loss) as indicators of
operating performance. None of these metrics are presented as
measures of liquidity. 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
RelationsFluent, Inc.(917)
310-2070InvestorRelations@fluentco.com
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