Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance
marketing company, today reported financial results for
the first quarter ended March 31, 2022.
Don Patrick, Fluent’s Chief Executive Officer,
commented, “Our First Quarter results
represent the continued progress we are making towards our
long-term strategic growth plan - focused on building high quality
digital experiences for consumers while creating more effective,
efficient, and scalable customer acquisition solutions for
marketers. We continue to lean into opportunities where we can
establish and leverage Fluent brand credentials in the
marketplace.
We remain confident that this consumer-centric strategy
represents the winning road forward and enhances our competitive
advantage, and ultimately building enterprise value for our
stakeholders. It is foundational that Fluent
creates meaningful downstream experiences for our consumers
and expanding our relationships with world-class brands in key
industry verticals; while successfully positioning us as
leaders in an industry environment that continues to rapidly
evolve.”
First Quarter Financial Summary
- Q1 2022 revenue of $89.1 million,
up 27% over Q1 2021
- Net loss of $2.0 million or $0.02 per
share, compared to net loss of $6.3 million,
or $0.08 per share, in Q1 2021
- Gross profit (exclusive of depreciation and amortization)
of $21.5 million, an increase of 12% over Q1 2021
and representing 24.1% of revenue for the three
months ended March 31, 2022
- Media margin of $26.0 million, an
increase of 4% over Q1 2021 and representing
29.1% of revenue for the three months ended March 31,
2022
- Adjusted EBITDA of $4.8 million, representing
5.3% of revenue for the three months ended March 31, 2022
- Adjusted net income of $1.1 million, or
$0.01 per share
Media margin, adjusted EBITDA and adjusted net income are
non-GAAP financial measures, as defined and reconciled
below.
Business Outlook
- Strategic client relationships driving strong demand in
the Fluent performance marketplace
- Monetization, as measured by media margin per
registration, is up 50% in
Q1’22 vs. Q1’21 enabled by
improved quality of traffic, enhanced CRM capabilities and
investments in technology and analytics
- Increasing media footprint while extending our reach
into new media channels expansion to provide more relevant content
and offers for consumers and our brands
- Newer revenue streams are generating
incremental growth opportunities and enhancing lifetime value of
consumers on our platform, reducing reliance on traffic volume for
revenue growth
- We anticipate continued growth, with enhanced
consumer experiences and media optimizations yielding margin
expansion over time
Conference Call
Fluent, Inc. will host a conference call on Monday, May 9,
2022, at 4:30 PM ET to discuss its 2022 first
quarter financial results. To listen to the conference call on your
telephone, please dial (844) 200-6205 (US), (226) 828-7575
(Canada), or +1 (929) 526-1599 for international callers,
and use the participant access code 796097. 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 (929) 458-6194 (US),
(226) 828-7578 (Canada) or +44 204-525-0658 with the replay
passcode 911823. 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 data-driven 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;
- The outcome of litigation, regulatory investigations or other
legal proceedings in which we are involved or may become involved;
failure to safeguard the personal information and other data
contained in our database;
- Failure to adequately protect intellectual property rights or
allegations of infringement of intellectual property rights;
- Unfavorable global economic conditions, including as a result
of health and safety concerns around the ongoing COVID-19
pandemic;
- Dependence on our key personnel;
- Dependence on third-party service providers;
- Management of the growth of our operations, including
international expansion and the integration of acquired business
units or personnel;
- The impact of the Traffic Quality Initiative, including our
ability to replace lower quality consumer traffic with traffic that
meets our quality requirements;
- Ability to compete and manage media costs in an industry
characterized by rapidly-changing internet media and advertising
technology, evolving industry standards;
- Regulatory uncertainty, and changing user and client demands;
management of unfavorable publicity and negative public perception
about our industry;
- Failure to compete effectively against other online marketing
and advertising companies;
- The competition we face for web traffic;
- Dependence on third-party publishers, internet search providers
and social media platforms for a significant portion of visitors to
our websites;
- Dependence on emails, text messages and telephone calls, among
other channels, to reach users for marketing purposes;
- Liability related to actions of third-party publishers;
- Limitations on our or our third-party publishers’ ability to
collect and use data derived from user activities;
- Ability to remain competitive with the shift to mobile
applications;
- Failure to detect click-through or other fraud on
advertisements;
- The impact of increased fulfillment costs;
- Failure to meet our clients’ performance metrics or changing
needs;
- 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, 2021 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) |
|
|
|
March 31,2022 |
|
|
December 31,2021 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
28,944 |
|
|
$ |
34,467 |
|
Accounts receivable, net of
allowance for doubtful accounts of $368 and $313, respectively |
|
|
65,023 |
|
|
|
70,228 |
|
Prepaid expenses and other
current assets |
|
|
2,138 |
|
|
|
2,505 |
|
Total current assets |
|
|
96,105 |
|
|
|
107,200 |
|
Property and equipment,
net |
|
|
1,298 |
|
|
|
1,457 |
|
Operating lease right-of-use
assets |
|
|
6,369 |
|
|
|
6,805 |
|
Intangible assets, net |
|
|
34,938 |
|
|
|
35,747 |
|
Goodwill |
|
|
166,180 |
|
|
|
165,088 |
|
Other non-current assets |
|
|
1,905 |
|
|
|
1,885 |
|
Total
assets |
|
$ |
306,795 |
|
|
$ |
318,182 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
12,782 |
|
|
$ |
16,130 |
|
Accrued expenses and other
current liabilities |
|
|
28,823 |
|
|
|
33,932 |
|
Deferred revenue |
|
|
701 |
|
|
|
651 |
|
Current portion of long-term
debt |
|
|
5,000 |
|
|
|
5,000 |
|
Current portion of operating
lease liability |
|
|
2,228 |
|
|
|
2,227 |
|
Total current liabilities |
|
|
49,534 |
|
|
|
57,940 |
|
Long-term debt, net |
|
|
39,147 |
|
|
|
40,329 |
|
Operating lease liability |
|
|
5,213 |
|
|
|
5,692 |
|
Other non-current
liabilities |
|
|
726 |
|
|
|
811 |
|
Total
liabilities |
|
|
94,620 |
|
|
|
104,772 |
|
Contingencies (Note 10) |
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock — $0.0001 par
value, 10,000,000 Shares authorized; Shares outstanding — 0 shares
for both periods |
|
|
— |
|
|
|
— |
|
Common stock — $0.0005 par
value, 200,000,000 Shares authorized; Shares issued — 83,983,587
and 83,057,083, respectively; and Shares outstanding — 79,683,435
and 78,965,260, respectively (Note 7) |
|
|
42 |
|
|
|
42 |
|
Treasury stock, at cost —
4,300,152 and 4,091,823 Shares, respectively (Note 7) |
|
|
(11,171 |
) |
|
|
(10,723 |
) |
Additional paid-in
capital |
|
|
420,285 |
|
|
|
419,059 |
|
Accumulated deficit |
|
|
(196,981 |
) |
|
|
(194,968 |
) |
Total shareholders'
equity |
|
|
212,175 |
|
|
|
213,410 |
|
Total liabilities and
shareholders' equity |
|
$ |
306,795 |
|
|
$ |
318,182 |
|
FLUENT, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except share and
per share data)(unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue |
|
$ |
89,063 |
|
|
$ |
70,170 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
|
|
67,562 |
|
|
|
50,990 |
|
Sales and marketing |
|
|
3,852 |
|
|
|
2,961 |
|
Product development |
|
|
4,556 |
|
|
|
3,434 |
|
General and administrative |
|
|
11,287 |
|
|
|
11,699 |
|
Depreciation and amortization |
|
|
3,307 |
|
|
|
3,373 |
|
Write-off of intangible assets |
|
|
128 |
|
|
|
— |
|
Total costs and
expenses |
|
|
90,692 |
|
|
|
72,457 |
|
Loss from
operations |
|
|
(1,629 |
) |
|
|
(2,287 |
) |
Interest expense, net |
|
|
(384 |
) |
|
|
(1,008 |
) |
Loss on early extinguishment of debt |
|
|
— |
|
|
|
(2,964 |
) |
Loss before income
taxes |
|
|
(2,013 |
) |
|
|
(6,259 |
) |
Income tax benefit |
|
|
— |
|
|
|
1 |
|
Net loss |
|
$ |
(2,013 |
) |
|
$ |
(6,258 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
Diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
80,889,052 |
|
|
|
81,892,593 |
|
Diluted |
|
|
80,889,052 |
|
|
|
81,892,593 |
|
FLUENT, INC.CONSOLIDATED STATEMENTS OF
CASH FLOWS(Amounts in
thousands)(unaudited) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,013 |
) |
|
$ |
(6,258 |
) |
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
3,307 |
|
|
|
3,373 |
|
Non-cash loan amortization
expense |
|
|
68 |
|
|
|
202 |
|
Share-based compensation
expense |
|
|
988 |
|
|
|
1,231 |
|
Non-cash loss on early
extinguishment of debt |
|
|
— |
|
|
|
2,198 |
|
Non-cash accrued compensation
expense for Put/Call Consideration |
|
|
— |
|
|
|
1,746 |
|
Write-off of intangible
assets |
|
|
128 |
|
|
|
— |
|
Provision for bad debt |
|
|
81 |
|
|
|
(99 |
) |
Changes in assets and
liabilities, net of business acquisition: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
5,127 |
|
|
|
4,764 |
|
Prepaid expenses and other
current assets |
|
|
451 |
|
|
|
(868 |
) |
Other non-current assets |
|
|
(13 |
) |
|
|
(196 |
) |
Operating lease assets and
liabilities, net |
|
|
(42 |
) |
|
|
(45 |
) |
Accounts payable |
|
|
(3,348 |
) |
|
|
5,792 |
|
Accrued expenses and other
current liabilities |
|
|
(6,251 |
) |
|
|
(7,393 |
) |
Deferred revenue |
|
|
(174 |
) |
|
|
562 |
|
Other |
|
|
(85 |
) |
|
|
(32 |
) |
Net cash (used in)
provided by operating activities |
|
|
(1,776 |
) |
|
|
4,977 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capitalized costs included in
intangible assets |
|
|
(1,071 |
) |
|
|
(816 |
) |
Business acquisition, net of
cash acquired |
|
|
(971 |
) |
|
|
— |
|
Acquisition of property and
equipment |
|
|
(7 |
) |
|
|
(20 |
) |
Net cash used in
investing activities |
|
|
(2,049 |
) |
|
|
(836 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from issuance of
long-term debt, net of debt financing costs |
|
|
— |
|
|
|
49,624 |
|
Repayments of long-term
debt |
|
|
(1,250 |
) |
|
|
(41,736 |
) |
Exercise of stock options |
|
|
— |
|
|
|
934 |
|
Prepayment penalty on debt
extinguishment |
|
|
— |
|
|
|
(766 |
) |
Taxes paid related to net
share settlement of vesting of restricted stock units |
|
|
(448 |
) |
|
|
(624 |
) |
Net cash (used in)
provided by financing activities |
|
|
(1,698 |
) |
|
|
7,432 |
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash |
|
|
(5,523 |
) |
|
|
11,573 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
|
34,467 |
|
|
|
22,567 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
28,944 |
|
|
$ |
34,140 |
|
|
|
|
|
|
|
|
|
|
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 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
(loss) income 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) write-off of intangible assets, (9)
acquisition-related costs, (10) restructuring and other
severance costs, and (11) certain litigation and other related
costs.
Adjusted net income is defined
as net (loss) income 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) write-off of intangible assets, (6)
acquisition-related costs, (7) restructuring and other
severance costs, and (8) certain litigation and other related
costs. Adjusted net income is also presented on a per share
(basic and diluted) basis.
Below is a reconciliation of media margin from net loss, which
we believe is the most directly comparable GAAP measure.
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Revenue |
|
$ |
89,063 |
|
|
$ |
70,170 |
|
Less: Cost of revenue (exclusive of depreciation and
amortization) |
|
|
67,562 |
|
|
|
50,990 |
|
Gross profit
(exclusive of depreciation and amortization) |
|
$ |
21,501 |
|
|
$ |
19,180 |
|
Gross profit
(exclusive of depreciation and amortization) % of
revenue |
|
|
24 |
% |
|
|
27 |
% |
Non-media cost of revenue (1) |
|
|
4,449 |
|
|
|
5,690 |
|
Media
margin |
|
$ |
25,950 |
|
|
$ |
24,870 |
|
Media margin % of
revenue |
|
|
29.1 |
% |
|
|
35.4 |
% |
(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 loss,
which we believe is the most directly comparable GAAP measure.
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(2,013 |
) |
|
$ |
(6,258 |
) |
Income tax expense
(benefit) |
|
|
— |
|
|
|
(1 |
) |
Interest expense, net |
|
|
384 |
|
|
|
1,008 |
|
Depreciation and
amortization |
|
|
3,307 |
|
|
|
3,373 |
|
Share-based compensation
expense |
|
|
988 |
|
|
|
1,231 |
|
Loss on early extinguishment
of debt |
|
|
— |
|
|
|
2,964 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
— |
|
|
|
1,746 |
|
Write-off of intangible
assets |
|
|
128 |
|
|
|
— |
|
Acquisition-related
costs (1) |
|
|
558 |
|
|
|
— |
|
Certain litigation and other
related costs |
|
|
1,402 |
|
|
|
668 |
|
Adjusted
EBITDA |
|
$ |
4,754 |
|
|
$ |
4,731 |
|
(1) Includes compensation expense related to the
non-competition agreements entered into as a result of an
acquisition.
Below is a reconciliation of adjusted net income and adjusted
net income per share from net (loss) income, which we
believe is the most directly comparable GAAP measure.
|
|
Three Months Ended March 31, |
|
(In thousands, except
share data) |
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(2,013 |
) |
|
$ |
(6,258 |
) |
Share-based compensation
expense |
|
|
988 |
|
|
|
1,231 |
|
Loss on early extinguishment
of debt |
|
|
— |
|
|
|
2,964 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
— |
|
|
|
1,746 |
|
Write-off of intangible
assets |
|
|
128 |
|
|
|
— |
|
Acquisition-related
costs (1) |
|
|
558 |
|
|
|
— |
|
Certain litigation and other
related costs |
|
|
1,402 |
|
|
|
668 |
|
Adjusted net
income |
|
$ |
1,063 |
|
|
$ |
351 |
|
Adjusted net income
per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
Diluted |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
80,889,052 |
|
|
|
81,892,593 |
|
Diluted |
|
|
80,889,052 |
|
|
|
84,144,209 |
|
(1) Includes compensation expense related to the
non-competition agreements entered into as a result of an
acquisition.
We present media margin, as a percentage of revenue, adjusted
EBITDA, adjusted net income and adjusted net income 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
litigation and other related costs associated with legal matters
outside the ordinary course of business, including costs and
accruals related to the Tax Department, NY AG and FTC matters.
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. There were no adjustments for one-time items in the
periods presented.
Adjusted net income, as defined
above, and the related measure of adjusted net income 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. 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 (loss) income.
Media margin, adjusted EBITDA, adjusted net income and adjusted
net income per share are non-GAAP financial measures with
certain limitations regarding their usefulness. They
do not reflect our financial results in accordance with 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 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.(212)
785-0431InvestorRelations@fluentco.com
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