Fluent Announces Second Quarter 2018 Financial Results
First Full Quarter as a Standalone Public Company Produces
“With our first full quarter as a standalone public company under our belt, we are pleased with our team’s performance,” stated
Second Quarter Financial Results
For the three months ended
- Total revenue increased 12% to
$56.9 million , from$51.0 million . - Net income from continuing operations was
$2.6 million , compared to net loss from continuing operations of$8.3 million . - Net loss from discontinued operations was $0, compared to
$12.1 million . - Basic earnings per share from continuing operations was
$0.04 , compared to a loss of$0.15 per share. - Adjusted EBITDA grew 53% to
$10.9 million , based on net income of$2.6 million , from$7.1 million on$20.4 million of net loss. - Adjusted gross profit increased 42% to
$23.0 million , from$16.3 million . Adjusted gross margin increased 800 basis points to 40%, from 32%.
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.
Second Quarter and Recent Business Highlights
- Continued to expand margins through enhanced ad targeting and distribution
- Surpassed 1 million user registrations in
UK beta launch - Launched first content-based mobile app to expand ad distribution
- Initiated partnership with Live Ramp to make Fluent’s first-party health-interest audiences available programmatically
Conference Call
About
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
| FLUENT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) (unaudited) |
||||||||
| June 30, 2018 | December 31, 2017 | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,068 | $ | 16,564 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $1,475 and $1,624 at June 30, 2018 and December 31, 2017, respectively |
37,978 | 36,278 | ||||||
| Prepaid expenses and other current assets | 1,840 | 1,865 | ||||||
| Current assets of discontinued operations | - | 2,274 | ||||||
| Total current assets | 49,886 | 56,981 | ||||||
| Property and equipment, net | 531 | 687 | ||||||
| Intangible assets, net | 68,728 | 74,354 | ||||||
| Goodwill | 159,791 | 159,791 | ||||||
| Other non-current assets | 556 | 1,097 | ||||||
| Non-current assets of discontinued operations | - | 24,089 | ||||||
| Total assets | $ | 279,492 | $ | 316,999 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 11,994 | $ | 10,666 | ||||
| Accrued expenses and other current liabilities | 7,807 | 11,709 | ||||||
| Deferred revenue | 843 | 265 | ||||||
| Current portion of long-term debt | 6,829 | 2,750 | ||||||
| Current liabilities of discontinued operations | - | 7,389 | ||||||
| Total current liabilities | 27,473 | 32,779 | ||||||
| Promissory notes payable to certain shareholders, net | - | 10,837 | ||||||
| Long-term debt, net | 56,697 | 49,376 | ||||||
| Total liabilities | 84,170 | 92,992 | ||||||
| Shareholders' equity: | ||||||||
| Preferred stock—$0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2018 and December 31, 2017 |
- | - | ||||||
| Common stock—$0.0005 par value, 200,000,000 shares authorized; 76,509,709 and 61,631,573 shares issued at June 30, 2018 and December 31, 2017, respectively; and 75,284,624 and 61,279,050 shares outstanding at June 30, 2018 and December 31, 2017, respectively |
38 | 31 | ||||||
| Treasury stock, at cost, 1,225,085 and 352,523 shares at June 30, 2018 and December 31, 2017, respectively |
(3,253 | ) | (1,274 | ) | ||||
| Additional paid-in capital | 390,011 | 392,687 | ||||||
| Accumulated deficit | (191,474 | ) | (167,437 | ) | ||||
| Total shareholders’ equity | 195,322 | 224,007 | ||||||
| Total liabilities and shareholders’ equity | $ | 279,492 | $ | 316,999 | ||||
| FLUENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share data) (unaudited) |
||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenue | $ | 56,935 | $ | 51,031 | $ | 112,924 | $ | 100,225 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 33,893 | 34,781 | 69,556 | 68,578 | ||||||||||||
| Sales and marketing expenses | 3,678 | 4,678 | 7,684 | 8,373 | ||||||||||||
| General and administrative expenses | 11,448 | 14,169 | 19,893 | 26,645 | ||||||||||||
| Depreciation and amortization | 3,338 | 3,234 | 6,669 | 6,439 | ||||||||||||
| Write-off of long-lived assets | - | - | - | 3,626 | ||||||||||||
| Spin-off transaction costs | - | - | 7,708 | - | ||||||||||||
| Total costs and expenses | 52,357 | 56,862 | 111,510 | 113,661 | ||||||||||||
| Income (loss) from operations | 4,578 | (5,831 | ) | 1,414 | (13,436 | ) | ||||||||||
| Interest expense, net | (1,933 | ) | (2,445 | ) | (4,327 | ) | (4,672 | ) | ||||||||
| Income (loss) before income taxes from continuing operations | 2,645 | (8,276 | ) | (2,913 | ) | (18,108 | ) | |||||||||
| Income taxes | - | - | - | - | ||||||||||||
| Net income (loss) from continuing operations | 2,645 | (8,276 | ) | (2,913 | ) | (18,108 | ) | |||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from operations of discontinued operations, net of $0 income taxes | - | (12,133 | ) | (2,084 | ) | (15,026 | ) | |||||||||
| Loss on disposal of discontinued operations, net of $0 income taxes | - | - | (19,040 | ) | - | |||||||||||
| Net loss from discontinued operations | - | (12,133 | ) | (21,124 | ) | (15,026 | ) | |||||||||
| Net income (loss) | $ | 2,645 | $ | (20,409 | ) | $ | (24,037 | ) | $ | (33,134 | ) | |||||
| Basic earnings (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 0.04 | $ | (0.15 | ) | $ | (0.04 | ) | $ | (0.33 | ) | |||||
| Discontinued operations | $ | - | $ | (0.22 | ) | $ | (0.30 | ) | $ | (0.28 | ) | |||||
| Net income (loss) | $ | 0.04 | $ | (0.37 | ) | $ | (0.34 | ) | $ | (0.61 | ) | |||||
| Diluted earnings (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 0.03 | $ | (0.15 | ) | $ | (0.04 | ) | $ | (0.33 | ) | |||||
| Discontinued operations | $ | - | $ | (0.22 | ) | $ | (0.30 | ) | $ | (0.28 | ) | |||||
| Net income (loss) | $ | 0.03 | $ | (0.37 | ) | $ | (0.34 | ) | $ | (0.61 | ) | |||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 75,282,042 | 54,778,046 | 71,318,930 | 54,297,536 | ||||||||||||
| Diluted | 78,196,959 | 54,778,046 | 71,318,930 | 54,297,536 | ||||||||||||
| FLUENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (unaudited) |
||||||||
| Six Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (24,037 | ) | $ | (33,134 | ) | ||
| Net loss from discontinued operations | 21,124 | 15,026 | ||||||
| Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 6,669 | 6,439 | ||||||
| Non-cash interest expense and related amortization | 1,079 | 1,497 | ||||||
| Share-based compensation expense | 9,262 | 14,948 | ||||||
| Write-off of long-lived assets | - | 3,626 | ||||||
| Provision for bad debts | 93 | 945 | ||||||
| Allocation of expenses to red violet | (325 | ) | (1,888 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (1,793 | ) | (2,187 | ) | ||||
| Prepaid expenses and other current assets | (173 | ) | (860 | ) | ||||
| Other non-current assets | 541 | - | ||||||
| Trade accounts payable | 1,328 | 398 | ||||||
| Accrued expenses and other current liabilities | (3,902 | ) | 953 | |||||
| Deferred revenue | 578 | 820 | ||||||
| Net cash provided by operating activities from continuing operations | 10,444 | 6,583 | ||||||
| Net cash used in operating activities from discontinued operations | (5,835 | ) | (3,836 | ) | ||||
| Net cash provided by operating activities | 4,609 | 2,747 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (92 | ) | (148 | ) | ||||
| Capitalized costs included in intangible assets | (512 | ) | (550 | ) | ||||
| Capital contributed to red violet | (19,728 | ) | - | |||||
| Net cash used in investing activities from continuing operations | (20,332 | ) | (698 | ) | ||||
| Net cash used in investing activities from discontinued operations | (1,386 | ) | (3,570 | ) | ||||
| Net cash used in investing activities | (21,718 | ) | (4,268 | ) | ||||
| 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 | (67,982 | ) | (2,636 | ) | ||||
| Taxes paid related to net share settlement of vesting of restricted stock units | (1,979 | ) | (723 | ) | ||||
| Net cash provided by financing activities from continuing operations | 10,613 | 10,680 | ||||||
| Net (decrease) increase in cash and cash equivalents | $ | (6,496 | ) | $ | 9,159 | |||
| Cash and cash equivalents at beginning of period | 16,564 | 10,089 | ||||||
| Cash and cash equivalents at end of period | $ | 10,068 | $ | 19,248 | ||||
| SUPPLEMENTAL DISCLOSURE INFORMATION | ||||||||
| Cash paid for interest | $ | 3,342 | $ | 3,195 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Share-based compensation capitalized in intangible assets | $ | 283 | $ | 188 | ||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income (loss) | $ | 2,645 | $ | (20,409 | ) | $ | (24,037 | ) | $ | (33,134 | ) | |||||
| Net loss from discontinued operations | - | 12,133 | 21,124 | 15,026 | ||||||||||||
| Interest expense, net | 1,933 | 2,445 | 4,327 | 4,672 | ||||||||||||
| Depreciation and amortization | 3,338 | 3,234 | 6,669 | 6,439 | ||||||||||||
| Share-based compensation expense | 2,614 | 8,094 | 9,262 | 14,948 | ||||||||||||
| Acquisition and restructuring costs | 317 | 1,650 | 3,030 | 2,318 | ||||||||||||
| Write-off of long-lived assets | - | - | - | 3,626 | ||||||||||||
| Litigation and other costs | 92 | - | 164 | - | ||||||||||||
| Adjusted EBITDA | $ | 10,939 | $ | 7,147 | $ | 20,539 | $ | 13,895 | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands, except share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income (loss) from continuing operations | $ | 2,645 | $ | (8,276 | ) | $ | (2,913 | ) | $ | (18,108 | ) | |||||
| Add back: Spin-off transaction costs | - | - | 7,708 | - | ||||||||||||
| Adjusted net income (loss) | $ | 2,645 | $ | (8,276 | ) | $ | 4,795 | $ | (18,108 | ) | ||||||
| Adjusted earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.04 | $ | (0.15 | ) | $ | 0.07 | $ | (0.33 | ) | ||||||
| Diluted | $ | 0.03 | $ | (0.15 | ) | $ | 0.06 | $ | (0.33 | ) | ||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 75,282,042 | 54,778,046 | 71,318,930 | 54,297,536 | ||||||||||||
| Diluted (1) | 78,196,959 | 54,778,046 | 74,233,847 | 54,297,536 | ||||||||||||
- The diluted weighted average number of shares outstanding for the three and six months ended
June 30, 2018 is computed based on the basic weighted average number of shares outstanding plus the dilutive impact of outstanding restricted stock units as ofJune 30, 2018 .
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Revenue | $ | 56,935 | $ | 51,031 | $ | 112,924 | $ | 100,225 | ||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 33,893 | 34,781 | 69,556 | 68,578 | ||||||||||||
| Adjusted gross profit | $ | 23,042 | $ | 16,250 | $ | 43,368 | $ | 31,647 | ||||||||
| Adjusted gross margin | 40 | % | 32 | % | 38 | % | 32 | % | ||||||||
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:
(646)356-8469
JTarazi@fluentco.com
Media:
North 6th
(212)334-9753 ext. 143
fluent@n6a.com
Source: Fluent, Inc.