Second Full Quarter as a Standalone Public Company Produces $66.5 Million in Revenue,
$4.5 Million in Net Income, Resulting in $0.06 in Basic Earnings Per Share
NEW YORK, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Fluent, Inc. (NASDAQ:FLNT) a leading data-driven performance marketing company,
today announced financial results for the quarter ended September 30, 2018.
“We are happy to report record numbers for our three key operating metrics: revenue, adjusted gross profit, and adjusted
EBITDA,” stated Ryan Schulke, Fluent’s CEO. “The increased adoption of our performance-based marketing services, coupled with
operating efficiencies, has allowed us to deliver a very good quarter for our shareholders.”
Third Quarter Financial Results
For the three months ended September 30, 2018, as compared to the three months ended September 30, 2017:
| • |
Total revenue increased 21% to $66.5 million, from $54.9 million. |
| |
|
| • |
Net income from continuing operations was $4.5 million, compared to net
loss from continuing operations of $10.8 million. |
| |
|
| • |
Results from discontinued operations were $0, compared to net loss from
discontinued operations of $3.3 million. |
| |
|
| • |
Basic earnings per share from continuing operations was $0.06, compared
to a loss of $0.19 per share. |
| |
|
| • |
Adjusted EBITDA grew 56% to $12.4 million, based on net income of $4.5
million, compared to adjusted EBITDA of $7.9 million on net loss of $14.1 million. |
| |
|
| • |
Adjusted gross profit increased 43% to $27.4 million, from $19.2
million. Adjusted gross margin increased 600 basis points to 41%, from 35%. |
Adjusted EBITDA, adjusted gross profit and adjusted gross margin are non-GAAP financial measures. Reconciliation of these
non-GAAP measures are provided in the attached tables.
Third Quarter and Recent Business Highlights
| • |
Surpassed 200 million unique email addresses in the Fluent Identity
Graph. |
| |
|
| • |
Expanded revenue and margins as a result of consumer re-engagement
through lifecycle marketing initiatives. |
| |
|
| • |
Successfully deployed machine learning to enhance audience segmentation
and drive incremental monetization. |
| |
|
| • |
Increased scale and profitability in our UK beta launch. |
| |
|
Conference Call
Fluent, Inc. will host a conference call on Wednesday, November 7, 2018 at 4:30 PM ET to discuss its 2018 third quarter
financial results. To listen to the conference call on your telephone, please dial (888) 339-0797 for domestic callers or (412)
317-5248 for international callers. To access the live audio webcast, visit the Fluent website at www.fluentco.com. Please login at least 15 minutes prior to the start of the call to ensure
adequate time for any downloads that may be required. Following completion of the earnings call, a recorded replay of the webcast
will be available for those unable to participate. To listen to the telephone replay, please dial (877) 344-7529 or (412) 317-0088
with the replay passcode 10123609. The replay will also be available for one week on the Fluent website at www.fluentco.com.
About Fluent, Inc.
Fluent (NASDAQ:FLNT) is the trusted acquisition partner for growing brands. Leveraging our proprietary first party data asset,
Fluent creates marketing programs that deliver better digital advertising experiences for consumers and measurable results for
advertisers. Founded in 2010, the company is headquartered in New York City. For more information, visit www.fluentco.com.
FORWARD-LOOKING STATEMENTS
This press release and the conference call contain "forward-looking statements," as that term is defined under the Private
Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as "expects," "plans,"
"projects," "will," "may," "anticipate," "believes," "should," "intends," "estimates," and other words of similar meaning. Such
forward looking statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and
which may cause results to differ materially from expectations. Readers are cautioned not to place undue reliance on these
forward-looking statements, which are based on our expectations as of the date of this press release and the conference call and
speak only as of the date of this press release and the conference call and are advised to consider the factors under the heading
"Forward-Looking Statements" and "Risk Factors" in the Company's Annual Report on Form 10-K, as may be supplemented or amended by
the Company's Quarterly Reports on Form 10-Q and other SEC filings. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
FLUENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
(unaudited)
| |
|
|
|
|
| |
|
September 30, 2018 |
|
December 31, 2017 |
| ASSETS: |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
17,361 |
|
|
$ |
16,564 |
|
Accounts receivable, net of allowance for doubtful accounts of $1,751 and $1,624
at September 30, 2018 and December 31, 2017, respectively |
|
39,726 |
|
|
36,278 |
|
| Prepaid expenses and other current assets |
|
1,779 |
|
|
1,865 |
|
| Current assets of discontinued operations |
|
— |
|
|
2,274 |
|
| Total current assets |
|
58,866 |
|
|
56,981 |
|
| Property and equipment, net |
|
421 |
|
|
687 |
|
| Intangible assets, net |
|
66,065 |
|
|
74,354 |
|
| Goodwill |
|
159,791 |
|
|
159,791 |
|
| Other non-current assets |
|
564 |
|
|
1,097 |
|
| Non-current assets of discontinued operations |
|
— |
|
|
24,089 |
|
| Total assets |
|
$ |
285,707 |
|
|
$ |
316,999 |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY: |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ |
7,249 |
|
|
$ |
7,408 |
|
| Accrued expenses and other current liabilities |
|
15,395 |
|
|
14,967 |
|
| Deferred revenue |
|
714 |
|
|
265 |
|
| Current portion of long-term debt |
|
7,227 |
|
|
2,750 |
|
| Current liabilities of discontinued operations |
|
— |
|
|
7,389 |
|
| Total current liabilities |
|
30,585 |
|
|
32,779 |
|
| Promissory notes payable to certain shareholders, net |
|
— |
|
|
10,837 |
|
| Long-term debt, net |
|
52,463 |
|
|
49,376 |
|
| Total liabilities |
|
83,048 |
|
|
92,992 |
|
| Shareholders' equity: |
|
|
|
|
Preferred stock - $0.0001 par value, 10,000,000 shares authorized; 0 shares issued
and
outstanding at September 30, 2018 and December 31, 2017 |
|
— |
|
|
— |
|
Common stock - $0.0005 par value, 200,000,000 shares authorized; 76,516,415
and 61,631,573 shares issued at September 30, 2018 and December 31, 2017,
respectively; and 75,291,330 and 61,279,050 shares outstanding at
September 30, 2018 and December 31, 2017, respectively |
|
38 |
|
|
31 |
|
Treasury stock, at cost, 1,225,085 and 352,523 shares at September 30, 2018 and
December 31, 2017, respectively |
|
(3,253 |
) |
|
(1,274 |
) |
| Additional paid-in capital |
|
392,886 |
|
|
392,687 |
|
| Accumulated deficit |
|
(187,012 |
) |
|
(167,437 |
) |
| Total shareholders' equity |
|
202,659 |
|
|
224,007 |
|
| Total liabilities and shareholders' equity |
|
$ |
285,707 |
|
|
$ |
316,999 |
|
| |
| |
FLUENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
(unaudited)
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
| |
| |
2018 |
|
2017 |
|
2018 |
|
2017 |
| Revenue |
| |
$ |
66,535 |
|
$ |
54,942 |
|
$ |
179,459 |
|
$ |
155,167 |
| Costs and expenses: |
|
|
|
|
|
|
|
|
| Cost of revenue (exclusive of depreciation and amortization) |
|
39,090 |
|
|
35,732 |
|
|
108,646 |
|
|
104,310 |
|
| Sales and marketing expenses |
|
4,186 |
|
|
5,105 |
|
|
11,870 |
|
|
13,478 |
|
| General and administrative expenses |
|
13,563 |
|
|
19,143 |
|
|
33,456 |
|
|
45,788 |
|
| Depreciation and amortization |
|
3,352 |
|
|
3,297 |
|
|
10,021 |
|
|
9,736 |
|
| Write-off of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
3,626 |
|
| Spin-off transaction costs |
|
— |
|
|
— |
|
|
7,708 |
|
|
— |
|
| Total costs and expenses |
|
60,191 |
|
|
63,277 |
|
|
171,701 |
|
|
176,938 |
|
| Income (loss) from operations |
|
6,344 |
|
|
(8,335 |
) |
|
7,758 |
|
|
(21,771 |
) |
| Interest expense, net |
|
(1,882 |
) |
|
(2,426 |
) |
|
(6,209 |
) |
|
(7,098 |
) |
| Income (loss) before income taxes from continuing operations |
|
4,462 |
|
|
(10,761 |
) |
|
1,549 |
|
|
(28,869 |
) |
| Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Net income (loss) from continuing operations |
|
4,462 |
|
|
(10,761 |
) |
|
1,549 |
|
|
(28,869 |
) |
| Discontinued operations: |
|
|
|
|
|
|
|
|
| Loss from operations of discontinued operations, net of $0 income taxes |
|
— |
|
|
(3,334 |
) |
|
(2,084 |
) |
|
(18,360 |
) |
| Loss on disposal of discontinued operations, net of $0 income taxes |
|
— |
|
|
— |
|
|
(19,040 |
) |
|
— |
|
| Net loss from discontinued operations |
|
— |
|
|
(3,334 |
) |
|
(21,124 |
) |
|
(18,360 |
) |
| Net income (loss) |
|
$ |
4,462 |
|
|
$ |
(14,095 |
) |
|
$ |
(19,575 |
) |
|
$ |
(47,229 |
) |
| Basic and diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
| Continuing operations |
|
$ |
0.06 |
|
|
$ |
(0.19 |
) |
|
$ |
0.02 |
|
|
$ |
(0.53 |
) |
| Discontinued operations |
|
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.34 |
) |
| Net income (loss) |
|
$ |
0.06 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.86 |
) |
| Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
| Basic and diluted |
|
78,199,579 |
|
|
55,390,247 |
|
|
73,941,595 |
|
|
54,665,776 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
FLUENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
| |
|
Nine Months Ended
September 30, |
| |
| |
2018 |
|
2017 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
|
|
| Net loss |
|
$ |
(19,575 |
) |
|
$ |
(47,229 |
) |
| Net loss from discontinued operations |
|
21,124 |
|
|
18,360 |
|
| Adjustments to reconcile net loss from continuing operations to net cash provided
by operating activities: |
|
|
|
|
| Depreciation and amortization |
|
10,021 |
|
|
9,736 |
|
| Non-cash interest expense and related amortization |
|
1,491 |
|
|
2,268 |
|
| Share-based compensation expense |
|
11,855 |
|
|
25,456 |
|
| Write-off of long-lived assets |
|
— |
|
|
3,626 |
|
| Provision for bad debts |
|
462 |
|
|
2,175 |
|
| Allocation of expenses to red violet |
|
(325 |
) |
|
(2,849 |
) |
| Changes in assets and liabilities: |
|
|
|
|
| Accounts receivable |
|
(3,910 |
) |
|
(7,708 |
) |
| Prepaid expenses and other current assets |
|
(112 |
) |
|
(528 |
) |
| Other non-current assets |
|
533 |
|
|
71 |
|
| Accounts payable |
|
(159 |
) |
|
(7,464 |
) |
| Accrued expenses and other current liabilities |
|
628 |
|
|
8,900 |
|
| Deferred revenue |
|
449 |
|
|
154 |
|
| Net cash provided by operating activities from continuing operations |
|
22,482 |
|
|
4,968 |
|
| Net cash used in operating activities from discontinued operations |
|
(5,835 |
) |
|
(7,902 |
) |
| Net cash provided by (used in) operating activities |
|
16,647 |
|
|
(2,934 |
) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
| Purchase of property and equipment |
|
(107 |
) |
|
(668 |
) |
| Capitalized costs included in intangible assets |
|
(995 |
) |
|
(694 |
) |
| Capital contributed to red violet |
|
(19,728 |
) |
|
— |
|
| Net cash used in investing activities from continuing operations |
|
(20,830 |
) |
|
(1,362 |
) |
| Net cash used in investing activities from discontinued operations |
|
(1,386 |
) |
|
(5,294 |
) |
| Net cash used in investing activities |
|
(22,216 |
) |
|
(6,656 |
) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
| Proceeds from issuance of shares, net of issuance costs |
|
13,392 |
|
|
— |
|
| Proceeds from debt obligations, net of debt costs |
|
67,182 |
|
|
14,039 |
|
| Repayments of long-term debt |
|
(72,229 |
) |
|
(3,472 |
) |
| Taxes paid related to net share settlement of vesting of restricted stock
units |
|
(1,979 |
) |
|
(743 |
) |
| Net cash provided by financing activities from continuing operations |
|
6,366 |
|
|
9,824 |
|
| Net increase in cash and cash equivalents |
|
$ |
797 |
|
|
$ |
234 |
|
| Cash and cash equivalents at beginning of period |
|
16,564 |
|
|
10,089 |
|
| Cash and cash equivalents at end of period |
|
$ |
17,361 |
|
|
$ |
10,323 |
|
| SUPPLEMENTAL DISCLOSURE INFORMATION |
|
|
|
|
| Cash paid for interest |
|
$ |
4,931 |
|
|
$ |
4,940 |
|
| Cash paid for income taxes |
|
$ |
— |
|
|
$ |
— |
|
| Share-based compensation capitalized in intangible assets |
|
$ |
364 |
|
|
$ |
373 |
|
| Reduction in value of puttable common stock classified as liability |
|
$ |
(200 |
) |
|
$ |
— |
|
Use and Reconciliation of Non-GAAP Financial Measures
Management evaluates the financial performance of our business on a variety of key indicators, including adjusted EBITDA,
adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin. Adjusted EBITDA is
a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, adding
back net loss from discontinued operations, interest expense, depreciation and amortization, share-based compensation expense,
acquisition and restructuring costs, write-off of long-lived assets, and certain litigation and other costs, as noted in the tables
below. Adjusted net income (loss) and the related basic and diluted per share amounts are non-GAAP measures equal to net income
(loss) from continuing operations, the most directly comparable financial measure based on US GAAP, adding back the effect of
spin-off transaction costs. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and
amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue.
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| (In thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| Net income (loss) |
|
$ |
4,462 |
|
|
$ |
(14,095 |
) |
|
$ |
(19,575 |
) |
|
$ |
(47,229) |
| Net loss from discontinued operations |
|
— |
|
|
3,334 |
|
|
21,124 |
|
|
18,360 |
| Interest expense, net |
|
1,882 |
|
|
2,426 |
|
|
6,209 |
|
|
7,098 |
| Depreciation and amortization |
|
3,352 |
|
|
3,297 |
|
|
10,021 |
|
|
9,736 |
| Share-based compensation expense |
|
2,593 |
|
|
10,508 |
|
|
11,855 |
|
|
25,456 |
| Acquisition and restructuring costs |
|
119 |
|
|
2,474 |
|
|
3,149 |
|
|
4,792 |
| Write-off of long-lived assets |
|
— |
|
|
— |
|
|
— |
|
|
3,626 |
| Litigation and other costs |
|
— |
|
|
3 |
|
|
185 |
|
|
3 |
| Adjusted EBITDA |
|
$ |
12,408 |
|
|
$ |
7,947 |
|
|
$ |
32,968 |
|
|
$ |
21,842 |
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| (In thousands, except share data) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| Net income (loss) from continuing operations |
|
$ |
4,462 |
|
|
$ |
(10,761 |
) |
|
$ |
1,549 |
|
|
$ |
(28,869 |
) |
| Add back: Spin-off transaction costs |
|
— |
|
|
— |
|
|
7,708 |
|
|
— |
|
| Adjusted net income (loss) |
|
$ |
4,462 |
|
|
$ |
(10,761 |
) |
|
$ |
9,257 |
|
|
$ |
(28,869 |
) |
| Adjusted earnings (loss) per share: |
|
|
|
|
|
|
|
|
| Basic and diluted |
|
$ |
0.06 |
|
|
$ |
(0.19 |
) |
|
$ |
0.13 |
|
|
$ |
(0.53 |
) |
| Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
| Basic and diluted |
|
78,199,579 |
|
|
55,390,247 |
|
|
73,941,595 |
|
|
54,665,776 |
|
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| (In thousands) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| Revenue |
|
$ |
66,535 |
|
|
$ |
54,942 |
|
|
$ |
179,459 |
|
|
$ |
155,167 |
|
| Cost of revenue (exclusive of depreciation and amortization) |
|
39,090 |
|
|
35,732 |
|
|
108,646 |
|
|
104,310 |
|
| Adjusted gross profit |
|
$ |
27,445 |
|
|
$ |
19,210 |
|
|
$ |
70,813 |
|
|
$ |
50,857 |
|
| Adjusted gross margin |
|
41 |
% |
|
35 |
% |
|
39 |
% |
|
33 |
% |
We present adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross
profit and adjusted gross margin as supplemental measures of our operating performance because we believe they provide useful
information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash
operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure our
performance, evaluate the performance of our senior management and measure the operating strength of our business.
Adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin
are measures frequently used by securities analysts, investors and other interested parties in their evaluation of the operating
performance of companies similar to ours and is an indicator of the operational strength of our business. Adjusted EBITDA
eliminates the uneven effect of considerable amounts of discontinued operations, interest expense, non-cash depreciation and
amortization, share-based compensation expense, acquisition and restructuring costs, write-off of long-lived assets, and certain
litigation and other costs. Adjusted net income (loss) and adjusted earnings (loss) per share eliminate the effect of the spin-off
transaction costs. Adjusted gross profit and adjusted gross margin are calculated by using cost of revenue (exclusive of
depreciation and amortization).
Adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin
are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either operating
income (loss) or net income (loss) as indicators of operating performance or to cash flows from operating activities as a measure
of liquidity. The way we measure adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross
profit and adjusted gross margin may not be comparable to similarly titled measures presented by other companies, and may not be
identical to corresponding measures used in our various agreements.
Contact Information:
Investors:
Jordyn Tarazi
Fluent, Inc.
(646)356-8469
JTarazi@fluentco.com
Media:
North 6th Agency, Inc.
(212)334-9753 ext. 143
fluent@n6a.com
