Fluent(US:FLNT)2025-11-14 14:31Financial Performance - Revenue decreased 27% to $47.0 million for Q3 2025, compared to $64.5 million in Q3 2024[181] - Net loss for Q3 2025 was $7.6 million, or $0.27 per share, compared to a net loss of $7.9 million, or $0.48 per share in Q3 2024[181] - Gross profit for Q3 2025 decreased 31% to $10.9 million, representing 23% of revenue, down from $15.7 million, or 24% of revenue in Q3 2024[181] - Adjusted EBITDA for Q3 2025 was negative $3.4 million, compared to negative $0.1 million in Q3 2024[181] - Revenue for the nine months ended September 30, 2025, decreased 22% to $146.9 million, compared to $189.2 million in the same period of 2024[181] - Adjusted net loss for the three months ended September 30, 2025, was $(6.5) million, compared to $(3.7) million in 2024[200] - The company reported a net loss of $(7.6) million for the three months ended September 30, 2025, compared to $(7.9) million in 2024[200] - Loss before income taxes for the three months ended September 30, 2025 was $7,568,000, a 5% improvement from $7,979,000 in 2024; for the nine months, the loss was $22,934,000, an 11% improvement from $25,749,000 in 2024[239][241] - Net loss for the three months ended September 30, 2025 was $7,556,000, a 5% improvement from $7,944,000 in 2024; for the nine months, the net loss was $23,048,000, an 11% improvement from $25,847,000 in 2024[246][248] Revenue Streams - The Commerce Media Solutions business served ads to over 100 million consumers in 2024, driving significantly higher ROAS compared to O&O Sites[185] - The company launched Commerce Media Solutions in 2023 to access high-value consumers and mitigate sourcing challenges from the FTC Consent Order[185] - The company expects growth in Commerce Media Solutions to partially offset revenue declines from divested subscription business and discontinued Affordable Care Act business[186] - Revenue for the three months ended September 30, 2025, was $47.0 million, a decrease of 27% compared to $64.5 million in the same period of 2024[205] - Revenue for the nine months ended September 30, 2025, was $146.9 million, down 22% from $189.2 million in the same period of 2024[205] - Commerce Media Solutions revenue increased from $10.4 million in 2024 to $18.8 million in 2025, driven by new long-term contracts[206] - For the nine months ended September 30, 2025, revenue was $73.2 million from O&O Sites, $47.5 million from Commerce Media Solutions, and $26.2 million from other streams, compared to $130.2 million, $24.0 million, and $35.0 million in the same period of 2024, indicating a significant decline in O&O Sites revenue due to decreased media supply[207] Cost Management - Cost of revenue (exclusive of depreciation and amortization) for the nine months ended September 30, 2025 was $114.4 million, a decrease of 20% from $142.3 million in 2024, with O&O Sites media costs dropping from $103.2 million to $58.2 million[208][211] - The total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 78% for the nine months ended September 30, 2025, compared to 75% in 2024, driven by shifts in revenue mix and the discontinuation of certain businesses[213] - Sales and marketing expenses for the nine months ended September 30, 2025 were $10.8 million, down 19% from $13.4 million in 2024, primarily due to lower employee-related costs from a decline in headcount[217][219] - Product development expenses for the nine months ended September 30, 2025 were $9.0 million, a decrease of 34% from $13.7 million in 2024, attributed to lower salaries and reduced spending on IT-related vendors[220][222] - General and administrative expenses for the nine months ended September 30, 2025 were $25.9 million, down 8% from $28.3 million in 2024, mainly due to reduced salaries and benefits from a smaller workforce[223][225] - The company reduced its workforce by 20, 19, 29, and 24 employees in the first three quarters of 2024 and the first quarter of 2025, resulting in lower future salary and benefits expenses[226] Challenges and Compliance - The company faced challenges in maintaining consistent volume on social media platforms due to compliance with the FTC Consent Order[206] - The company faced challenges in acquiring media due to compliance with the FTC Consent Order, impacting traffic and ad spend from key clients[209][212] Financing and Cash Flow - Cash used in operating activities for the nine months ended September 30, 2025 was $4,300,000, an improvement from $12,000,000 in 2024; adjustments to reconcile net loss to cash used decreased by $6,400,000[249] - Cash used in investing activities for the nine months ended September 30, 2025 was $4,900,000, compared to $4,700,000 in 2024, primarily due to increased investment in capitalized software[250] - As of September 30, 2025, the company had cash, cash equivalents, and restricted cash of $10,000,000, a decrease of $700,000 from $10,700,000 as of December 31, 2024[251] - The company has noncancelable operating lease commitments of $3,900,000 and long-term debt with a principal balance of $25,700,000 as of September 30, 2025[251] - The company has a $20.0 million term loan and a revolving credit facility of up to $30.0 million under the SLR Credit Agreement[259] - As of September 30, 2025, the outstanding principal balance of the SLR Credit Facility was $22.6 million, maturing on April 2, 2029[259] - The SLR Credit Facility is secured by substantially all of the company's assets and contains restrictive covenants limiting additional debt and certain investments[260] - The company raised gross proceeds of $5.1 million by March 19, 2025, and $10.3 million by August 19, 2025, through securities purchase agreements[262][263] - Future cash requirements will depend on various factors, including cash flows from O&O Sites and costs related to client expansion and product development[258] - The company may seek additional financing through public or private means to support potential acquisitions or investments[258] Accounting and Estimates - The company evaluates critical accounting estimates that affect reported amounts of assets, liabilities, revenues, and expenses[266]