SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of Earliest Event Reported): August 7,
2018
FLUENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-37893
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77-0688094
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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33 Whitehall Street
15th Floor
New York, New York
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10004
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (646)
669-7272
Former name or former address, if changed since last
report
_________________________
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐ Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2
(b))
☐ Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4
(c))
Indicate by check mark whether the registrant is
an emerging growth company as defined in Rule 405 of the Securities
Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities
Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth
company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Item 2.02. Results of Operations and Financial
Condition.
On August 7, 2018, Fluent, Inc. issued a press release announcing
second quarter 2018 financial results. The press release is
furnished herewith as Exhibit 99.1.
The information included herein and in Exhibit 99.1 shall not
be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934 (“Exchange Act”) or
otherwise subject to the liabilities of that section, nor shall it
be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act, except as expressly set
forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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Press release, dated August 7, 2018
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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Fluent, Inc.
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August 7, 2018
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By:
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/s/ Ryan Schulke
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Name:
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Ryan Schulke
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Title:
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Chief Executive Officer
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Exhibit 99.1
Fluent Announces Second Quarter 2018 Financial Results
First Full Quarter as a Standalone Public Company Produces $56.9
Million in Revenue,
$2.6 Million in Net Income, Resulting in $0.04 in Basic Earnings
Per Share
New York, NY – August 7, 2018 – Fluent, Inc. (NASDAQ: FLNT) a leading
data-driven performance marketing company, today announced
financial results for the quarter ended June 30,
2018.
“With our first full quarter as a standalone public company
under our belt, we are pleased with our team’s
performance,” stated Ryan Schulke, Fluent’s CEO.
“Our data-driven, consumer-based approach propelled our
margin expansion and continued double-digit year over year
growth.”
Second Quarter Financial Results
For the three months ended June 30, 2018, as compared to the three
months ended June 30, 2017:
●
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
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Continued to expand
margins through enhanced ad targeting and distribution
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Surpassed 1 million
user registrations in UK beta launch
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Launched first
content-based mobile app to expand ad distribution
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Initiated
partnership with Live Ramp to make Fluent’s first-party
health-interest audiences available programmatically
Conference Call
Fluent, Inc. will host a conference call on Tuesday, August 7, 2018
at 4:30 PM ET to discuss its 2018 second 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 10122670. 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 data)
(unaudited)
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June 30,
2018
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December 31,
2017
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ASSETS:
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Current
assets:
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Cash
and cash equivalents
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$10,068
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$16,564
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Accounts
receivable, net of allowance for doubtful accounts of $1,475 and
$1,624
at
June 30, 2018 and December 31, 2017, respectively
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37,978
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36,278
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Prepaid
expenses and other current assets
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1,840
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1,865
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Current
assets of discontinued operations
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-
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2,274
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Total
current assets
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49,886
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56,981
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Property
and equipment, net
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531
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687
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Intangible
assets, net
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68,728
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74,354
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Goodwill
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159,791
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159,791
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Other
non-current assets
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556
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1,097
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Non-current
assets of discontinued operations
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-
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24,089
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Total assets
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$279,492
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$316,999
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LIABILITIES AND SHAREHOLDERS’ EQUITY:
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Current
liabilities:
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Trade
accounts payable
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$11,994
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$10,666
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Accrued
expenses and other current liabilities
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7,807
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11,709
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Deferred
revenue
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843
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265
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Current
portion of long-term debt
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6,829
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2,750
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Current
liabilities of discontinued operations
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-
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7,389
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Total
current liabilities
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27,473
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32,779
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Promissory
notes payable to certain shareholders, net
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-
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10,837
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Long-term
debt, net
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56,697
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49,376
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Total liabilities
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84,170
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92,992
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Shareholders'
equity:
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Preferred
stock—$0.0001 par value, 10,000,000 shares
authorized;
0
shares issued and outstanding at June 30, 2018 and December 31,
2017
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-
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-
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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
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38
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31
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Treasury
stock, at cost, 1,225,085 and 352,523 shares at June 30, 2018
and
December
31, 2017, respectively
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(3,253)
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(1,274)
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Additional
paid-in capital
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390,011
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392,687
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Accumulated
deficit
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(191,474)
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(167,437)
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Total shareholders’ equity
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195,322
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224,007
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Total liabilities and shareholders’ equity
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$279,492
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$316,999
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FLUENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2018
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2017
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2018
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2017
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Revenue
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$56,935
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$51,031
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$112,924
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$100,225
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Costs and expenses:
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Cost
of revenue (exclusive of depreciation and
amortization)
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33,893
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34,781
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69,556
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68,578
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Sales
and marketing expenses
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3,678
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4,678
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7,684
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8,373
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General
and administrative expenses
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11,448
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14,169
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19,893
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26,645
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Depreciation
and amortization
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3,338
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3,234
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6,669
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6,439
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Write-off
of long-lived assets
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-
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-
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-
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3,626
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Spin-off
transaction costs
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-
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-
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7,708
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-
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Total costs and expenses
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52,357
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56,862
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111,510
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113,661
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Income (loss) from operations
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4,578
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(5,831)
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1,414
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(13,436)
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Interest
expense, net
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(1,933)
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(2,445)
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(4,327)
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(4,672)
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Income (loss) before income taxes from continuing
operations
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2,645
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(8,276)
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(2,913)
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(18,108)
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Income
taxes
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-
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-
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-
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-
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Net income (loss) from continuing operations
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2,645
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(8,276)
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(2,913)
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(18,108)
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Discontinued operations:
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Loss
from operations of discontinued operations, net of $0 income
taxes
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-
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(12,133)
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(2,084)
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(15,026)
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Loss
on disposal of discontinued operations, net of $0 income
taxes
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-
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-
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(19,040)
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-
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Net loss from discontinued operations
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-
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(12,133)
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(21,124)
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(15,026)
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Net income (loss)
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$2,645
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$(20,409)
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$(24,037)
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$(33,134)
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Basic earnings (loss) per share:
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Continuing
operations
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$0.04
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$(0.15)
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$(0.04)
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$(0.33)
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Discontinued
operations
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$-
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$(0.22)
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$(0.30)
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$(0.28)
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Net
income (loss)
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$0.04
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$(0.37)
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$(0.34)
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$(0.61)
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Diluted earnings (loss) per share:
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Continuing
operations
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$0.03
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$(0.15)
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$(0.04)
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$(0.33)
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Discontinued
operations
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$-
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$(0.22)
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$(0.30)
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$(0.28)
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Net
income (loss)
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$0.03
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$(0.37)
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$(0.34)
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$(0.61)
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Weighted average number of shares outstanding:
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Basic
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75,282,042
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54,778,046
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71,318,930
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54,297,536
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Diluted
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78,196,959
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54,778,046
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71,318,930
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54,297,536
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FLUENT, INC.
(Amounts in thousands)
(unaudited)
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Six Months Ended
June 30,
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2018
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2017
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$(24,037)
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$(33,134)
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Net
loss from discontinued operations
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21,124
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15,026
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Adjustments
to reconcile net loss from continuing operations to net cash
provided by operating activities:
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Depreciation
and amortization
|
6,669
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6,439
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|
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
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93
|
945
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|
Allocation
of expenses to red violet
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(325)
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(1,888)
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Changes
in assets and liabilities:
|
|
|
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Accounts
receivable
|
(1,793)
|
(2,187)
|
|
Prepaid
expenses and other current assets
|
(173)
|
(860)
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|
Other
non-current assets
|
541
|
-
|
|
Trade
accounts payable
|
1,328
|
398
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|
Accrued
expenses and other current liabilities
|
(3,902)
|
953
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|
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
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(5,835)
|
(3,836)
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Net
cash provided by operating activities
|
4,609
|
2,747
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|
CASH
FLOWS FROM INVESTING ACTIVITIES:
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|
|
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Purchase
of property and equipment
|
(92)
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(148)
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Capitalized
costs included in intangible assets
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(512)
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(550)
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Capital
contributed to red violet
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(19,728)
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-
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Net
cash used in investing activities from continuing
operations
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(20,332)
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(698)
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|
Net
cash used in investing activities from discontinued
operations
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(1,386)
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(3,570)
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Net
cash used in investing activities
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(21,718)
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(4,268)
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|
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)
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(723)
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|
Net
cash provided by financing activities from continuing
operations
|
10,613
|
10,680
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|
Net
(decrease) increase in cash and cash equivalents
|
$(6,496)
|
$9,159
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|
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
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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.
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Three Months Ended June 30,
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Six Months Ended June 30,
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||
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(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
|
(1)
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 of June 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:
Jordyn Tarazi
Fluent, Inc.
(646)356-8469
JTarazi@fluentco.com
Media:
North 6th Agency, Inc.
(212)334-9753 ext. 143
fluent@n6a.com