Fluent(FLNT)2024-11-15 21:30Revenue and Profitability - Revenue decreased 3% to 66.2 million in Q3 2023[156] - Revenue decreased 16% to 225.6 million in the same period of 2023[156] - Revenue for the three months ended September 30, 2024 decreased by 3% to 66.2 million in the same period in 2023[181] - Revenue for the nine months ended September 30, 2024 decreased by 16% to 225.6 million in the same period in 2023[181] - Gross profit decreased 3% to 15.7 million, representing 24% of revenue, compared to 46.9 million, representing 25% of revenue, compared to 18.2 million in Q3 2024, representing 28.1% of revenue[156] - Media margin for the three months ended September 30, 2024 was 19.3 million (29.2% of revenue) in the same period in 2023[171] - Media margin for the nine months ended September 30, 2024 was 67.2 million (29.8% of revenue) in the same period in 2023[171] Net Loss and Adjusted EBITDA - Net loss improved to 33.6 million in Q3 2023[156] - Net loss improved to 61.3 million in the same period of 2023[156] - Net loss for the three months ended September 30, 2024 was 33.6 million in the same period in 2023[173] - Net loss for the nine months ended September 30, 2024 was 61.3 million in the same period in 2023[173] - Adjusted EBITDA improved to negative 1.7 million in Q3 2023[156] - Adjusted EBITDA for the three months ended September 30, 2024 was (1.7) million in the same period in 2023[173] - Adjusted EBITDA for the nine months ended September 30, 2024 was 4.3 million in the same period in 2023[173] - Net loss for the three months ended September 30, 2024 was 33.6 million in the prior period[211] - Net loss for the nine months ended September 30, 2024 was 61.3 million in the prior period[211] Cost of Revenue and Expenses - Cost of revenue (exclusive of depreciation and amortization) decreased by 3% to 50.1 million in Q3 2023, driven by lower owned and operated media costs due to FTC compliance changes[184] - Commerce Media Solutions cost of revenue increased to 2.1 million in Q3 2023, driven by new media partnerships[184] - Total cost of revenue as a percentage of revenue remained consistent at 76% for Q3 2024 compared to Q3 2023[185] - Sales and marketing expenses decreased by 10% to 4.4 million in Q3 2023, primarily due to lower employee salaries and benefits[189] - Product development expenses decreased by 9% to 4.5 million in Q3 2023, driven by lower salaries and IT-related vendor spend[191] - General and administrative expenses increased by 4% to 8.7 million in Q3 2023, primarily due to the absence of litigation-related credits[193] - Depreciation and amortization costs decreased by 11% to 2.7 million in Q3 2023, due to the full amortization of certain intangible assets[196] - Goodwill impairment was 29.7 million in Q3 2023, reflecting no impairment in the current period[199] - Interest expense increased by 37% to 0.9 million in Q3 2023, driven by higher average interest rates on the SLR term loan[201] - Workforce reductions in 2024 resulted in 0.7 million settled in Q1 2024 and 2.8 million unrealized loss related to the fair value adjustment of Convertible Notes in the three months ended September 30, 2024, compared to none in the prior period[202][206] - The company reported a 26.9 million in the three months ended September 30, 2024, primarily due to a 1.3 million decline in cost of revenue[206] - Loss before income taxes decreased by 54.1 million decrease in goodwill impairment and a 12.0 million for the nine months ended September 30, 2024, compared to net cash provided by operating activities of 7.8 million as of September 30, 2024, a decrease of 15.8 million as of December 31, 2023[216] - The company entered into the SLR Credit Agreement on April 2, 2024, providing a 30.0 million revolving credit facility[217] - The company raised 7.5 million of additional capital by November 29, 2024, as per the Third Amendment to the SLR Credit Agreement[223] - The company's SLR Credit Facility has an opening interest rate of 10.81%, which increased to 11.03% as of September 30, 2024[224] - The company faces substantial doubt about its ability to continue as a going concern for one year after the date of the Quarterly Report[228] Impairment and Fair Value Adjustments - The company recorded a non-cash impairment charge of 1,261 for goodwill in Q2 2024, with the carrying value exceeding the estimated fair value by 58%[231] - The fair value of the company's convertible notes was determined to be $4,860 as of Q3 2024[232] Strategic Initiatives and Outlook - Approximately 90% of users engage with the company's media on mobile devices or tablets[149] - The company's Commerce Media Solutions platform generates meaningful income for media partners while driving high-quality customer acquisition[151] - The company expects growth in Commerce Media Solutions to offset revenue declines in owned and operated marketplaces in Q4 2024[161] - The company updated its projections for Q4 2024 due to economic downward trends, reflecting continued pressure on operating results[223] - The company expects to be in compliance with new financial covenants for the next 12 months but acknowledges uncertainty due to past failures to meet projections[228] - The company is considering cost reduction measures and has divested non-core business units to meet budget and cash flow requirements[225] - The company may explore acquisitions of complementary businesses, products, or technologies, potentially requiring additional financing[226]