Fluent(FLNT)2025-05-16 21:00Financial Performance - Revenue decreased 16% to $55.2 million, compared to $66.0 million in the same period last year[156]. - Net loss was $8.3 million, or $0.39 per share, compared to a net loss of $6.3 million, or $0.45 per share[156]. - Gross profit decreased 39% to $11.4 million, representing 21% of revenue, down from $18.6 million, or 28% of revenue[156]. - Adjusted EBITDA was negative $3.1 million, compared to positive $0.7 million in the prior year[156]. - Adjusted net loss for the three months ended March 31, 2025, was $(6.7) million, compared to $(4.2) million in the same period of 2024, with adjusted net loss per share of $(0.31) for both basic and diluted[175]. - The net loss for Q1 2025 was $8.3 million, a 32% increase from the $6.3 million loss in Q1 2024[204][205]. Revenue Breakdown - Owned and operated marketplaces revenue decreased from $44.7 million in Q1 2024 to $31.1 million in Q1 2025, primarily due to reduced media supply[181]. - Commerce Media Solutions revenue increased from $6.4 million in Q1 2024 to $12.7 million in Q1 2025, driven by new long-term contracts with media partners[181]. - Revenue for the three months ended March 31, 2025, was $55.2 million, a decrease of 16% compared to $65.983 million in the same period of 2024[180]. Cost and Expenses - Media margin decreased 38% to $13.7 million, representing 24.9% of revenue, compared to $22.1 million, or 33.6% of revenue[156]. - Cost of revenue (exclusive of depreciation and amortization) for the three months ended March 31, 2025, was $43.8 million, an 8% decrease from $47.3 million in 2024[182]. - Total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 79% in Q1 2025 from 72% in Q1 2024[184]. - Sales and marketing expenses for the three months ended March 31, 2025, were $4.1 million, a decrease of 15% from $4.8 million in the same period of 2024[187]. - Product development expenses for the three months ended March 31, 2025, were $4.8 million, an increase of 30% from $3.4 million in 2024[189]. - General and administrative expenses fell by 17% from $10.4 million in Q1 2024 to $8.6 million in Q1 2025, driven by lower salaries and reduced acquisition-related costs[191][192]. Operational Challenges - The company has faced challenges in acquiring and maintaining traffic volume due to the FTC Consent Order, impacting revenue and gross profit[159]. - Current economic conditions, including inflation and rising interest rates, have led to cautious spending from clients and their customers[167]. - Workforce reductions included the termination of 24 employees in Q1 2025, part of a strategy to align resources with strategic initiatives[193]. Cash Flow and Financing - Net cash provided by operating activities increased to $2.1 million in Q1 2025 from a cash used of $0.1 million in Q1 2024, despite a net loss increase to $8.3 million[206]. - Cash used in financing activities rose to $5.2 million in Q1 2025 from $2.2 million in Q1 2024, mainly due to net repayments on the SLR debt revolver[208]. - As of March 31, 2025, the company had cash, cash equivalents, and restricted cash of $6.1 million, down from $10.7 million at the end of 2024[209]. Debt and Compliance - The company faces substantial doubt about its ability to continue as a going concern, indicating potential risks in meeting financial covenants in the next twelve months[210][211]. - As of March 31, 2025, the company was in compliance with the financial covenants under the SLR Credit Agreement[222]. - The company entered into the Fourth Amendment to the SLR Credit Agreement, requiring the raising of at least $5.0 million of additional capital by March 20, 2025[221]. - The current interest rate on borrowings under the SLR Credit Agreement is 10.33%, which is subject to a 1.50% floor plus an Applicable Margin of 5.75%[220]. - The Applicable Margin will be reduced to 5.0% when the fixed charge coverage ratio exceeds 1.10 to 1[220]. Capital Raising - The company raised gross proceeds of $5.1 million from the issuance of pre-funded warrants to purchase up to 2,332,104 shares at a price of $2.174 per warrant on March 20, 2025[223]. - The company raised $5.1 million in gross proceeds before deducting offering expenses of $0.1 million[221].