Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance
marketing company, today reported financial results for
the second quarter ended June 30, 2022.
Don Patrick, Fluent’s Chief Executive Officer,
commented, “Our Second Quarter results
represent both the continued progress we are making towards,
and further validation of, our strategic growth plan - creating
more effective and sustainable customer acquisition solutions for
our clients, while successfully positioning Fluent as a market
leader in a rapidly evolving industry environment.
We remain fixated on exceeding our clients'
performance expectations by way of delivering a higher quality,
more targeted and engaged consumer audience. This is essential as
we build Fluent brand equity while also affirming our credibility
with clients by increasing their ROI.”
Second Quarter Financial Summary
- Q2 2022 revenue of $98.4 million,
up 34% over Q2 2021
- Gross profit (exclusive of
depreciation and amortization) of $28.3 million, an increase of 69%
as compared to the three months ended June 30, 2021 and
representing 29% of revenue for the three months ended June 30,
2022
- Net loss of $56.9 million or $0.70
per share, compared to net loss of $5.2 million, or $0.06 per
share, in Q2 2021
- Media margin of $32.3 million, an
increase of 60% over Q2 2021 and representing 32.8% of revenue for
the three months ended June 30, 2022
- Adjusted EBITDA of $9.4 million,
representing 9.6% of revenue for the three months ended June 30,
2022
- Adjusted net income of $0.6
million, or $0.01 per share
Media margin, adjusted EBITDA and adjusted
net income are non-GAAP financial measures, as defined and
reconciled below.
The Company determined that a triggering event
had occurred on June 30, 2022 as a result of the decline in its
stock price and conducted impairment testing and a valuation
analysis of its intangible assets and goodwill. Based on this
analysis, the Company took a non-cash impairment charge of $55.4
million to goodwill. The non-cash impairment charge reduces
the carrying value of the goodwill associated with the acquisition
of the Fluent operating business in 2015.
Business Outlook
- Strategic client relationships
driving strong demand in the Fluent performance marketplace.
- Monetization, as measured by media
margin per registration, is up 88% in Q2’22 vs. Q2’21 enabled by
improved quality of traffic, enhanced customer relationship
management 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
Tuesday, August 9, 2022, at 4:30 PM ET to discuss its
2022 second quarter financial results. To listen to the
conference call on your telephone, dial toll-free 1 (888) 660-6196
or toll dial-in number 1 (929) 203-1824, and use the participant
access code 6292663. 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 toll free 1 (800) 770-2030 or toll 1(647) 362-9199 with
the replay passcode 6292663. The replay will also be available
for one week on the Fluent website at
investors.fluentco.com.
About Fluent, Inc.
Fluent, Inc. (NASDAQ: FLNT) is a global data-driven performance
marketing company and trusted growth partner for leading brands.
Experts in creating value for consumers, Fluent leverages its
consumer database, digital media portfolio, and proprietary data
science and technology to deliver outcome-based solutions for
marketers. 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 and 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)
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,396 |
|
|
$ |
34,467 |
|
Accounts receivable, net of
allowance for doubtful accounts of $373 and $313, respectively |
|
|
77,986 |
|
|
|
70,228 |
|
Prepaid expenses and other
current assets |
|
|
2,101 |
|
|
|
2,505 |
|
Total current assets |
|
|
106,483 |
|
|
|
107,200 |
|
Property and equipment,
net |
|
|
1,162 |
|
|
|
1,457 |
|
Operating lease right-of-use
assets |
|
|
5,926 |
|
|
|
6,805 |
|
Intangible assets, net |
|
|
32,872 |
|
|
|
35,747 |
|
Goodwill |
|
|
110,780 |
|
|
|
165,088 |
|
Other non-current assets |
|
|
1,917 |
|
|
|
1,885 |
|
Total
assets |
|
$ |
259,140 |
|
|
$ |
318,182 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
17,043 |
|
|
$ |
16,130 |
|
Accrued expenses and other
current liabilities |
|
|
34,623 |
|
|
|
33,932 |
|
Deferred revenue |
|
|
698 |
|
|
|
651 |
|
Current portion of long-term
debt |
|
|
5,000 |
|
|
|
5,000 |
|
Current portion of operating
lease liability |
|
|
2,227 |
|
|
|
2,227 |
|
Total current liabilities |
|
|
59,591 |
|
|
|
57,940 |
|
Long-term debt, net |
|
|
37,964 |
|
|
|
40,329 |
|
Operating lease liability |
|
|
4,728 |
|
|
|
5,692 |
|
Other non-current
liabilities |
|
|
739 |
|
|
|
811 |
|
Total
liabilities |
|
|
103,022 |
|
|
|
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 — 84,146,082
and 83,057,083, respectively; and Shares outstanding — 79,845,930
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 |
|
|
421,172 |
|
|
|
419,059 |
|
Accumulated deficit |
|
|
(253,925 |
) |
|
|
(194,968 |
) |
Total shareholders'
equity |
|
|
156,118 |
|
|
|
213,410 |
|
Total liabilities and
shareholders' equity |
|
$ |
259,140 |
|
|
$ |
318,182 |
|
|
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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
2021 |
|
Revenue |
|
$ |
98,361 |
|
|
$ |
73,378 |
|
|
$ |
187,424 |
|
|
$ |
143,548 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
|
|
70,026 |
|
|
|
56,605 |
|
|
|
137,589 |
|
|
|
107,595 |
|
Sales and marketing |
|
|
4,484 |
|
|
|
3,000 |
|
|
|
8,336 |
|
|
|
5,961 |
|
Product development |
|
|
4,802 |
|
|
|
3,433 |
|
|
|
9,357 |
|
|
|
6,867 |
|
General and administrative |
|
|
11,688 |
|
|
|
11,527 |
|
|
|
22,975 |
|
|
|
23,226 |
|
Depreciation and amortization |
|
|
3,332 |
|
|
|
3,366 |
|
|
|
6,639 |
|
|
|
6,739 |
|
Goodwill impairment and write-off of intangible assets |
|
|
55,400 |
|
|
|
199 |
|
|
|
55,528 |
|
|
|
199 |
|
Loss on disposal of property and equipment |
|
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
Total costs and
expenses |
|
|
149,753 |
|
|
|
78,130 |
|
|
|
240,445 |
|
|
|
150,587 |
|
Loss from
operations |
|
|
(51,392 |
) |
|
|
(4,752 |
) |
|
|
(53,021 |
) |
|
|
(7,039 |
) |
Interest expense, net |
|
|
(430 |
) |
|
|
(427 |
) |
|
|
(814 |
) |
|
|
(1,435 |
) |
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,964 |
) |
Loss before income
taxes |
|
|
(51,822 |
) |
|
|
(5,179 |
) |
|
|
(53,835 |
) |
|
|
(11,438 |
) |
Income tax (expense) benefit |
|
|
(5,122 |
) |
|
|
— |
|
|
|
(5,122 |
) |
|
|
1 |
|
Net loss |
|
$ |
(56,944 |
) |
|
$ |
(5,179 |
) |
|
$ |
(58,957 |
|
|
$ |
(11,437 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.70 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.73 |
) |
|
$ |
(0.14 |
) |
Diluted |
|
$ |
(0.70 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.73 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
81,493,821 |
|
|
|
79,962,275 |
|
|
|
81,193,107 |
|
|
|
79,560,643 |
|
Diluted |
|
|
81,493,821 |
|
|
|
79,962,275 |
|
|
|
81,193,107 |
|
|
|
79,560,643 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Amounts in
thousands)(unaudited)
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(58,957 |
) |
|
$ |
(11,437 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
6,639 |
|
|
|
6,739 |
|
Non-cash loan amortization
expense |
|
|
135 |
|
|
|
287 |
|
Share-based compensation
expense |
|
|
1,851 |
|
|
|
2,432 |
|
Non-cash loss on early
extinguishment of debt |
|
|
— |
|
|
|
2,198 |
|
Non-cash accrued compensation
expense for Put/Call Consideration |
|
|
— |
|
|
|
2,627 |
|
Goodwill impairment |
|
|
55,400 |
|
|
|
— |
|
Write-off of intangible
assets |
|
|
128 |
|
|
|
199 |
|
Loss on disposal of property
and equipment |
|
|
21 |
|
|
|
— |
|
Provision for bad debt |
|
|
158 |
|
|
|
98 |
|
Provision for income
taxes |
|
|
5,122 |
|
|
|
— |
|
Changes in assets and
liabilities, net of business acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(7,913 |
) |
|
|
(3,334 |
) |
Prepaid expenses and other
current assets |
|
|
488 |
|
|
|
763 |
|
Other non-current assets |
|
|
(25 |
) |
|
|
(258 |
) |
Operating lease assets and
liabilities, net |
|
|
(85 |
) |
|
|
(91 |
) |
Accounts payable |
|
|
913 |
|
|
|
8,672 |
|
Accrued expenses and other
current liabilities |
|
|
(5,573 |
) |
|
|
(9,345 |
) |
Deferred revenue |
|
|
(177 |
) |
|
|
(151 |
) |
Other |
|
|
(72 |
) |
|
|
(64 |
) |
Net cash used in
operating activities |
|
|
(1,947 |
) |
|
|
(665 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capitalized costs included in
intangible assets |
|
|
(2,199 |
) |
|
|
(1,535 |
) |
Business acquisitions, net of
cash acquired |
|
|
(971 |
) |
|
|
— |
|
Acquisition of property and
equipment |
|
|
(6 |
) |
|
|
(23 |
) |
Net cash used in
investing activities |
|
|
(3,176 |
) |
|
|
(1,558 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from issuance of
long-term debt, net of debt financing costs |
|
|
— |
|
|
|
49,624 |
|
Repayments of long-term
debt |
|
|
(2,500 |
) |
|
|
(42,986 |
) |
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 |
) |
|
|
(667 |
) |
Proceeds from the issuance of
stock |
|
|
— |
|
|
|
136 |
|
Net cash (used in)
provided by financing activities |
|
|
(2,948 |
) |
|
|
6,275 |
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash |
|
|
(8,071 |
) |
|
|
4,052 |
|
Cash, cash equivalents and
restricted cash at beginning of period |
|
|
34,467 |
|
|
|
22,567 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
26,396 |
|
|
$ |
26,619 |
|
|
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 the 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 (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
the 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 (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, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
|
$ |
98,361 |
|
|
$ |
73,378 |
|
|
$ |
187,424 |
|
|
$ |
143,548 |
|
Less: Cost of revenue (exclusive of depreciation and
amortization) |
|
|
70,026 |
|
|
|
56,605 |
|
|
|
137,589 |
|
|
|
107,595 |
|
Gross profit
(exclusive of depreciation and amortization) |
|
$ |
28,335 |
|
|
$ |
16,773 |
|
|
$ |
49,835 |
|
|
$ |
35,953 |
|
Gross profit
(exclusive of depreciation and amortization) % of
revenue |
|
|
29 |
% |
|
|
23 |
% |
|
|
27 |
% |
|
|
25 |
% |
Non-media cost of revenue (1) |
|
|
3,974 |
|
|
|
3,363 |
|
|
|
8,423 |
|
|
|
9,053 |
|
Media
margin |
|
$ |
32,309 |
|
|
$ |
20,136 |
|
|
$ |
58,258 |
|
|
$ |
45,006 |
|
Media margin % of
revenue |
|
|
32.8 |
% |
|
|
27.4 |
% |
|
|
31.1 |
% |
|
|
31.4 |
% |
(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 for the three and six months ended June 30, 2022 and
2021, respectively, which we believe is the most directly
comparable GAAP measure.
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(56,944 |
) |
|
$ |
(5,179 |
) |
|
$ |
(58,957 |
) |
|
$ |
(11,437 |
) |
Income tax expense
(benefit) |
|
|
5,122 |
|
|
|
— |
|
|
|
5,122 |
|
|
|
(1 |
) |
Interest expense, net |
|
|
430 |
|
|
|
427 |
|
|
|
814 |
|
|
|
1,435 |
|
Depreciation and
amortization |
|
|
3,332 |
|
|
|
3,366 |
|
|
|
6,639 |
|
|
|
6,739 |
|
Share-based compensation
expense |
|
|
863 |
|
|
|
1,201 |
|
|
|
1,851 |
|
|
|
2,432 |
|
Loss on early extinguishment
of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,964 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
— |
|
|
|
881 |
|
|
|
— |
|
|
|
2,627 |
|
Goodwill impairment |
|
|
55,400 |
|
|
|
— |
|
|
|
55,400 |
|
|
|
— |
|
Write-off of intangible
assets |
|
|
— |
|
|
|
199 |
|
|
|
128 |
|
|
|
199 |
|
Loss on disposal of property
and equipment |
|
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
Acquisition-related
costs(1) |
|
|
579 |
|
|
|
500 |
|
|
|
1,137 |
|
|
|
500 |
|
Restructuring and other
severance costs |
|
|
38 |
|
|
|
97 |
|
|
|
38 |
|
|
|
97 |
|
Certain litigation and other
related costs |
|
|
596 |
|
|
|
359 |
|
|
|
1,998 |
|
|
|
1,027 |
|
Adjusted
EBITDA |
|
$ |
9,437 |
|
|
$ |
1,851 |
|
|
$ |
14,191 |
|
|
$ |
6,582 |
|
(1) |
|
Includes compensation expense
related to non-competition agreements entered into as a result
of acquisitions (See Note 11, Business acquisition, in
the Notes to Consolidated Financial Statements.) |
Below is a reconciliation of adjusted net income
(loss) and adjusted net income (loss) per share from net loss
for the three and six months ended June 30, 2022 and 2021,
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 data) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net loss |
|
$ |
(56,944 |
) |
|
$ |
(5,179 |
) |
|
$ |
(58,957 |
) |
|
$ |
(11,437 |
) |
Share-based compensation
expense |
|
|
863 |
|
|
|
1,201 |
|
|
|
1,851 |
|
|
|
2,432 |
|
Loss on early extinguishment
of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,964 |
|
Accrued compensation expense
for Put/Call Consideration |
|
|
— |
|
|
|
881 |
|
|
|
— |
|
|
|
2,627 |
|
Goodwill impairment |
|
|
55,400 |
|
|
|
— |
|
|
|
55,400 |
|
|
|
— |
|
Write-off of intangible
assets |
|
|
— |
|
|
|
199 |
|
|
|
128 |
|
|
|
199 |
|
Loss on disposal of property
and equipment |
|
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
Acquisition-related
costs(1) |
|
|
579 |
|
|
|
500 |
|
|
|
1,137 |
|
|
|
500 |
|
Restructuring and other
severance costs |
|
|
38 |
|
|
|
97 |
|
|
|
38 |
|
|
|
97 |
|
Certain litigation and other
related costs |
|
|
596 |
|
|
|
359 |
|
|
|
1,998 |
|
|
|
1,027 |
|
Adjusted net income
(loss) |
|
$ |
553 |
|
|
$ |
(1,942 |
) |
|
$ |
1,616 |
|
|
$ |
(1,591 |
) |
Adjusted net
income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
Diluted |
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
0.02 |
|
|
$ |
(0.02 |
) |
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
81,493,821 |
|
|
|
79,962,275 |
|
|
|
81,193,107 |
|
|
|
79,560,643 |
|
Diluted |
|
|
81,493,821 |
|
|
|
79,962,275 |
|
|
|
81,193,107 |
|
|
|
79,560,643 |
|
(1) |
|
Includes compensation expense related to non-competition agreements
entered into as a result of an acquisitions (See Note 11,
Business acquisition, in the Notes to Consolidated Financial
Statements.) |
We present 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 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 New York State Tax Department, New York
Attorney General and Federal Trade Commission matters. 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 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 (loss) affords
investors a different view of our overall financial performance as
compared to adjusted EBITDA and the 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 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
RelationsFluent, Inc.(212)
785-0431InvestorRelations@fluentco.com
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