Fluent, Inc. (NASDAQ: FLNT), a leading data-driven performance
marketing company, today reported financial results for
the third quarter ended September 30, 2023.
Don Patrick, Fluent’s Chief Executive Officer,
commented, "Our third quarter results clearly reflect our
post-FTC settlement transition and the subsequent impact on our
financials related to the business segments we have deemed
non-strategic in the future. Our immediate-term focus is to
re-establish our base, and we are confident we will sequentially
rebuild our core, albeit at a more moderate pace. Fluent core
performance marketplaces are highly differentiated within our
industry, and we will leverage their competitive advantages to
ultimately expand our margins. In parallel, we leverage our core to
continue to enthusiastically invest in the new strategic growth
initiatives we have embarked upon, which are grounded in high
quality consumer engagement.
We are positioning Fluent at the forefront of our industry, and
our recent FTC settlement fills a void by providing much needed
clear industry compliance standards that we are pleased to have
led. Our foundational commitment remains to enhance the
quality of consumer engagements within our Performance
Marketplaces. We are navigating the market realities, whereas
our competitors may opportunistically pause at their own risk.
While it could take a few quarters or more for our competitors to
be able to implement the new standards, our leadership course will
provide us long-term, strategic operating leverage in the
market.
We are excited by the progress of our growth initiatives
and the strategic value they are already delivering with consumers,
as validated by our clients. In turn, we’re confident we are well
positioned to earn market share in growing marketplaces we have
only recently entered – and where we are establishing Fluent
credentials that represent an exceptional value proposition and
ROAS for our growing stable of clients."
Third Quarter Financial Highlights
- Revenue decreased 26% to $66.2 million,
from $89.0 million in Q3 2022
- Gross profit (exclusive of depreciation
and amortization) of $16.1 million, a decrease of 32%
over Q3 2022 and representing 24% of
revenue
- Net loss of $33.6 million,
or $0.41 per share, compared to net income of
$3.1 million, or $0.04 per share, for Q3 2022,
primarily reflective of the current period's goodwill
impairment
- Media margin of $19.3 million, a decrease
of 31% over Q3 2022 and
representing 29.2% of revenue
- Adjusted EBITDA of negative $1.7 million, a
decrease of $7.6 million over Q3 2022 and
representing (2.6%) of revenue
- Adjusted net loss of $4.1 million, or
$0.05 per share, compared to adjusted net income
of $5.0 million, or $0.06 per share,
for Q3 2022
Nine Months Ended September 30, 2023 Financial
Highlights
- Revenue decreased 18% to $225.6 million,
from $276.5 million for the nine months ended
September 30, 2022
- Gross profit (exclusive of depreciation
and amortization) of $57.7 million, a decrease
of 22% over the nine months ended September 30,
2022 and representing 26% of revenue
- Net loss of $61.3 million,
or $0.74 per share, compared to net loss of
$55.8 million, or $0.69 per share, for the nine
months ended September 30, 2022, both mainly reflective of goodwill
impairment
- Media margin of $67.2 million, a decrease
of 22% over the nine months ended September 30,
2022 and representing 29.8% of revenue
- Adjusted EBITDA of negative $4.3 million, a
decrease of $15.8 million over the for the nine
months ended September 30, 2022 and representing (1.9%) of
revenue
- Adjusted net loss of $6.8 million, or $0.08 per
share, compared to adjusted net income of $6.6 million,
or $0.08 per share, for the nine months ended
September 30, 2022
Media margin, adjusted EBITDA, and adjusted net income are
non-GAAP financial measures, as defined and reconciled
below.
Business Goals
- Leverage our leadership position with the new compliance
standards we have set to level the industry playing field,
create additional competitive differentiation, and increase market
share.
- Ensure we source customer traffic that meets our internal
quality and regulatory requirements, leading to higher quality
consumer engagement for our advertisers.
- Fortify our Owned and Operated Performance Marketplace and
strategically grow ner marketplaces that leverage our Fluent
assets – Influencer, Call Solutions, and Adflow.
- In the current economic environment, continue to be prudent in
managing growth, margin, and investment initiatives for long-term
success.
Conference Call
Fluent, Inc. will host a conference call on Tuesday,
November 14, 2023, at 4:30 PM ET to discuss its
2023 third quarter financial results. The conference call can
be accessed by phone after registering online
at https://register.vevent.com/register/BI15ef9d7c89504248a2b0efce10bd6728.
The call will also be webcast simultaneously on the Fluent website
at https://investors.fluentco.com/. Following the 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 connect via https://edge.media-server.com/mmc/p/5dftrzyv.
The replay will be available for one year, via the Fluent
website https://investors.fluentco.com/.
About Fluent, Inc.
Fluent, Inc. (NASDAQ: FLNT) is a leader in customer
acquisition, leveraging its direct response expertise to drive
engagement and power discovery for leading brands. Backed by
proprietary data science, Fluent drives opted-in consumers to
targeted offers, allowing them to find new opportunities, content,
and products that enhance their lives. Established in 2010 and
headquartered in New York City, Fluent’s team of experts has
spent over $1B in media across its digital media portfolio to build
a global audience available through 500+ DSPs, DMPs, online
publishers, and programmatic platforms. 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 financial impact of
compliance changes to our business, including changes to our
employment opportunities marketplace and programmatic advertising
businesses, and whether and when our competitors will implement
similar changes; |
|
• |
The outcome of litigation,
regulatory investigations, or other legal proceedings in which we
may become involved in the future; |
|
• |
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 concerns, terrorist
attacks or civil unrest, such as the current conflict between Hamas
and Israel (where a significant portion of our customers in the
Media & Entertainment industry are located); |
|
• |
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; |
|
• |
Competition 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 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; |
|
• |
Dependence on a single
advertiser client; |
|
• |
Failure to meet our clients’
performance metrics or changing needs; |
|
• |
The effect of pricing
pressure by certain clients and the ability of our marketplace to
respond through allocating traffic to higher paying clients; |
|
• |
Compliance with the covenants of
our credit agreement in light of current business conditions;
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, 2022 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, 2023 |
|
|
December 31, 2022 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
20,513 |
|
|
$ |
25,547 |
|
Accounts receivable, net of
allowance for doubtful accounts of $177 and $544, respectively |
|
|
48,515 |
|
|
|
63,164 |
|
Prepaid expenses and other
current assets |
|
|
8,069 |
|
|
|
3,506 |
|
Total current assets |
|
|
77,097 |
|
|
|
92,217 |
|
Property and equipment,
net |
|
|
687 |
|
|
|
964 |
|
Operating lease right-of-use
assets |
|
|
3,833 |
|
|
|
5,202 |
|
Intangible assets, net |
|
|
27,710 |
|
|
|
28,745 |
|
Goodwill |
|
|
1,261 |
|
|
|
55,111 |
|
Other non-current assets |
|
|
1,502 |
|
|
|
1,730 |
|
Total
assets |
|
$ |
112,090 |
|
|
$ |
183,969 |
|
LIABILITIES AND
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
11,841 |
|
|
$ |
6,190 |
|
Accrued expenses and other
current liabilities |
|
|
25,746 |
|
|
|
35,626 |
|
Deferred revenue |
|
|
492 |
|
|
|
1,014 |
|
Current portion of long-term
debt |
|
|
31,799 |
|
|
|
5,000 |
|
Current portion of operating
lease liability |
|
|
2,295 |
|
|
|
2,389 |
|
Total current liabilities |
|
|
72,173 |
|
|
|
50,219 |
|
Long-term debt, net |
|
|
— |
|
|
|
35,594 |
|
Operating lease liability |
|
|
2,220 |
|
|
|
3,743 |
|
Other non-current
liabilities |
|
|
2,207 |
|
|
|
458 |
|
Total
liabilities |
|
|
76,600 |
|
|
|
90,014 |
|
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 — 85,803,727
and 84,385,458, respectively; and Shares outstanding — 81,192,158
and 80,085,306, respectively (Note 7) |
|
|
43 |
|
|
|
42 |
|
Treasury stock, at cost —
4,611,569 and 4,300,152 Shares, respectively (Note 7) |
|
|
(11,407 |
) |
|
|
(11,171 |
) |
Additional paid-in
capital |
|
|
426,473 |
|
|
|
423,384 |
|
Accumulated deficit |
|
|
(379,619 |
) |
|
|
(318,300 |
) |
Total shareholders'
equity |
|
|
35,490 |
|
|
|
93,955 |
|
Total liabilities and
shareholders' equity |
|
$ |
112,090 |
|
|
$ |
183,969 |
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
66,239 |
|
|
$ |
89,046 |
|
|
$ |
225,638 |
|
|
$ |
276,470 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue (exclusive of depreciation and amortization) |
|
|
50,148 |
|
|
|
65,270 |
|
|
|
167,960 |
|
|
|
202,859 |
|
Sales and marketing |
|
|
4,426 |
|
|
|
4,254 |
|
|
|
13,454 |
|
|
|
12,590 |
|
Product development |
|
|
4,511 |
|
|
|
4,622 |
|
|
|
14,064 |
|
|
|
13,979 |
|
General and administrative |
|
|
8,725 |
|
|
|
10,877 |
|
|
|
24,991 |
|
|
|
33,852 |
|
Depreciation and amortization |
|
|
2,658 |
|
|
|
3,398 |
|
|
|
8,112 |
|
|
|
10,037 |
|
Goodwill impairment and write-off of intangible assets |
|
|
29,705 |
|
|
|
— |
|
|
|
55,405 |
|
|
|
55,528 |
|
Loss (gain) on disposal of property and equipment |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
19 |
|
Total costs and
expenses |
|
|
100,173 |
|
|
|
88,419 |
|
|
|
283,986 |
|
|
|
328,864 |
|
Income (loss) from
operations |
|
|
(33,934 |
) |
|
|
627 |
|
|
|
(58,348 |
) |
|
|
(52,394 |
) |
Interest expense, net |
|
|
(936 |
) |
|
|
(517 |
) |
|
|
(2,420 |
) |
|
|
(1,331 |
) |
Income (loss) before
income taxes |
|
|
(34,870 |
) |
|
|
110 |
|
|
|
(60,768 |
) |
|
|
(53,725 |
) |
Income tax (expense) benefit |
|
|
1,243 |
|
|
|
3,003 |
|
|
|
(551 |
) |
|
|
(2,119 |
) |
Net income
(loss) |
|
|
(33,627 |
) |
|
|
3,113 |
|
|
|
(61,319 |
) |
|
|
(55,844 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.41 |
) |
|
$ |
0.04 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.69 |
) |
Diluted |
|
$ |
(0.41 |
) |
|
$ |
0.04 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.69 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
82,880,536 |
|
|
|
81,592,316 |
|
|
|
82,511,454 |
|
|
|
81,327,639 |
|
Diluted |
|
|
82,880,536 |
|
|
|
81,699,966 |
|
|
|
82,511,454 |
|
|
|
81,327,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(Amounts in
thousands)(unaudited)
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61,319 |
) |
|
$ |
(55,844 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
8,112 |
|
|
|
10,037 |
|
Non-cash loan amortization
expense |
|
|
330 |
|
|
|
201 |
|
Share-based compensation
expense |
|
|
2,958 |
|
|
|
2,652 |
|
Goodwill impairment |
|
|
55,405 |
|
|
|
55,400 |
|
Write-off of intangible
assets |
|
|
— |
|
|
|
128 |
|
Loss on disposal of property
and equipment |
|
|
— |
|
|
|
19 |
|
Provision for bad debt |
|
|
(51 |
) |
|
|
275 |
|
Changes in assets and
liabilities, net of business acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
14,700 |
|
|
|
2,406 |
|
Prepaid expenses and other
current assets |
|
|
(4,563 |
) |
|
|
277 |
|
Other non-current assets |
|
|
228 |
|
|
|
52 |
|
Operating lease assets and
liabilities, net |
|
|
(248 |
) |
|
|
(127 |
) |
Accounts payable |
|
|
5,651 |
|
|
|
(1,212 |
) |
Accrued expenses and other
current liabilities |
|
|
(10,869 |
) |
|
|
(7,497 |
) |
Deferred revenue |
|
|
(522 |
) |
|
|
456 |
|
Other |
|
|
(117 |
) |
|
|
(89 |
) |
Net cash provided by
operating activities |
|
|
9,695 |
|
|
|
7,134 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capitalized costs included in
intangible assets |
|
|
(4,093 |
) |
|
|
(3,316 |
) |
Business acquisitions, net of
cash acquired |
|
|
(1,250 |
) |
|
|
(971 |
) |
Acquisition of property and
equipment |
|
|
(25 |
) |
|
|
(10 |
) |
Net cash used in
investing activities |
|
|
(5,368 |
) |
|
|
(4,297 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repayments of long-term
debt |
|
|
(8,750 |
) |
|
|
(3,750 |
) |
Debt financing costs |
|
|
(375 |
) |
|
|
— |
|
Taxes paid related to net
share settlement of vesting of restricted stock units |
|
|
(236 |
) |
|
|
(448 |
) |
Net cash used in
financing activities |
|
|
(9,361 |
) |
|
|
(4,198 |
) |
Net decrease in cash
and cash equivalents |
|
|
(5,034 |
) |
|
|
(1,361 |
) |
Cash and cash equivalents at
beginning of period |
|
|
25,547 |
|
|
|
34,467 |
|
Cash and cash equivalents at
end of period |
|
$ |
20,513 |
|
|
$ |
33,106 |
|
|
|
|
|
|
|
|
|
|
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) goodwill impairment, (6) write-off
of intangible assets, (7) loss (gain) on disposal of property and
equipment, (8) acquisition-related costs, (9) restructuring
and other severance costs, and (10) certain litigation and other
related costs.
Adjusted net income (loss) is
defined as net income (loss) excluding (1) share-based compensation
expense, (2) goodwill impairment, (3) write-off of intangible
assets, (4) loss (gain) on disposal of property and equipment, (5)
acquisition-related costs, (6) restructuring and other
severance costs, and (7) 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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
66,239 |
|
|
$ |
89,046 |
|
|
$ |
225,638 |
|
|
$ |
276,470 |
|
Less: Cost of revenue (exclusive of depreciation and
amortization) |
|
|
50,148 |
|
|
|
65,270 |
|
|
|
167,960 |
|
|
|
202,859 |
|
Gross profit
(exclusive of depreciation and amortization) |
|
$ |
16,091 |
|
|
$ |
23,776 |
|
|
$ |
57,678 |
|
|
$ |
73,611 |
|
Gross profit (exclusive of
depreciation and amortization) % of revenue |
|
|
24 |
% |
|
|
27 |
% |
|
|
26 |
% |
|
|
27 |
% |
Non-media cost of revenue (1) |
|
|
3,229 |
|
|
|
4,290 |
|
|
|
9,510 |
|
|
|
12,713 |
|
Media
margin |
|
$ |
19,320 |
|
|
$ |
28,066 |
|
|
$ |
67,188 |
|
|
$ |
86,324 |
|
Media margin % of revenue |
|
|
29.2 |
% |
|
|
31.5 |
% |
|
|
29.8 |
% |
|
|
31.2 |
% |
(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) for the three and nine months ended September 30, 2023
and 2022, respectively, which we believe is the most directly
comparable GAAP measure.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
(33,627 |
) |
|
$ |
3,113 |
|
|
$ |
(61,319 |
) |
|
$ |
(55,844 |
) |
Income tax expense |
|
|
(1,243 |
) |
|
|
(3,003 |
) |
|
|
551 |
|
|
|
2,119 |
|
Interest expense, net |
|
|
936 |
|
|
|
517 |
|
|
|
2,420 |
|
|
|
1,331 |
|
Depreciation and
amortization |
|
|
2,658 |
|
|
|
3,398 |
|
|
|
8,112 |
|
|
|
10,037 |
|
Share-based compensation
expense |
|
|
961 |
|
|
|
801 |
|
|
|
2,958 |
|
|
|
2,652 |
|
Goodwill impairment |
|
|
29,705 |
|
|
|
— |
|
|
|
55,405 |
|
|
|
55,400 |
|
Write-off of intangible
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
128 |
|
Loss (gain) on disposal of
property and equipment |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
19 |
|
Acquisition-related
costs(1)(2) |
|
|
516 |
|
|
|
536 |
|
|
|
1,701 |
|
|
|
1,673 |
|
Restructuring and other
severance costs |
|
|
(24 |
) |
|
|
— |
|
|
|
456 |
|
|
|
38 |
|
Certain litigation and other
related costs |
|
|
(1,624 |
) |
|
|
504 |
|
|
|
(5,982 |
) |
|
|
2,502 |
|
Adjusted
EBITDA |
|
$ |
(1,742 |
) |
|
$ |
5,864 |
|
|
$ |
4,302 |
|
|
$ |
20,055 |
|
(1 |
) |
Balance includes compensation
expense related to non-competition agreements entered into as a
result of certain acquisitions. |
(2 |
) |
Balance includes earn-out
expense of ($21) and $89 for the three and nine
months ended September 30, 2023, respectively, as a result of
certain acquisitions. |
Below is a reconciliation of adjusted net income (loss) and
adjusted net income (loss) per share from net income (loss)
for the three and nine months ended September 30, 2023 and
2022, respectively, which we believe is the most directly
comparable GAAP measure.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(In thousands, except
share and per share data) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
(33,627 |
) |
|
$ |
3,113 |
|
|
$ |
(61,319 |
) |
|
$ |
(55,844 |
) |
Share-based compensation
expense |
|
|
961 |
|
|
|
801 |
|
|
|
2,958 |
|
|
|
2,652 |
|
Goodwill impairment |
|
|
29,705 |
|
|
|
— |
|
|
|
55,405 |
|
|
|
55,400 |
|
Write-off of intangible
assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
128 |
|
Loss (gain) on disposal of
property and equipment |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
19 |
|
Acquisition-related
costs(1)(2) |
|
|
516 |
|
|
|
536 |
|
|
|
1,701 |
|
|
|
1,673 |
|
Restructuring and other
severance costs |
|
|
(24 |
) |
|
|
— |
|
|
|
456 |
|
|
|
38 |
|
Certain litigation and other
related costs |
|
|
(1,624 |
) |
|
|
504 |
|
|
|
(5,982 |
) |
|
|
2,502 |
|
Adjusted net income
(loss) |
|
$ |
(4,093 |
) |
|
$ |
4,952 |
|
|
$ |
(6,781 |
) |
|
$ |
6,568 |
|
Adjusted net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.05 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
$ |
0.08 |
|
Diluted |
|
$ |
(0.05 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
$ |
0.08 |
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
82,880,536 |
|
|
|
81,592,316 |
|
|
|
82,511,454 |
|
|
|
81,327,639 |
|
Diluted |
|
|
82,880,536 |
|
|
|
81,699,966 |
|
|
|
82,511,454 |
|
|
|
81,379,159 |
|
(1 |
) |
Balance includes compensation
expense related to non-competition agreements entered into as a
result of certain acquisitions. |
(2 |
) |
Balance includes earn-out
expense of ($21) and $89 for the three and nine
months ended September 30, 2023, respectively, as a result of
certain acquisitions. |
We present media margin, 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. 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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