Fluent Announces First Quarter 2018 Financial Results
First Quarter as a Standalone Public Company Produces
Operations, Resulting in
“We have built an incredible company and are excited to present Fluent’s standalone results, which show positive adjusted net income and adjusted earnings per share, after removing transaction costs and discontinued operations,” stated
First Quarter Financial Results
For the three months ended
- Total revenue increased 14% to
$56.0 million . - Net loss from continuing operations was
$5.6 million (inclusive of spin-off transaction costs of$7.7 million ) compared to net loss from continuing operations of$9.8 million . - Net loss from discontinued operations was
$21.1 million compared to$2.9 million . - Adjusted net income was
$2.2 million compared to a loss of$9.8 million . - Adjusted EBITDA grew 42% to
$9.6 million based on net loss of$26.7 million . - Adjusted earnings per share was
$0.03 compared to a loss of$0.18 per share.
Adjusted net income, adjusted earnings per share and adjusted EBITDA are non-GAAP financial measures. Reconciliation of these non-GAAP measures are provided in the attached tables.
First Quarter and Recent Business Highlights
- Successfully completed the spin-off of our risk management business,
Red Violet, Inc. - Changed corporate name to
Fluent, Inc. (NASDAQ:FLNT), to better align our corporate brand with our industry leading data-driven performance marketing company. - Our proprietary self-reported first party data asset, the Fluent Identity Graph now contains over 182 million unique email addresses that represent over 150 million individuals.
- Continued to bolster our strategic and operational talent, all intently focused on delivering increased profitability to our business, with the appointment of key industry leaders, hailing from such companies as Epsilon and Merkle.
- Revenue from advertisers in the financial & professional services category nearly doubled compared to the three months ended
March 31 , 2017.
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) | ||||||||
| March 31, 2018 | December 31, 2017 |
|||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,368 | $ | 16,564 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $1,180 and $1,624 at March 31, 2018 and December 31, 2017, respectively | 34,165 | 36,278 | ||||||
| Prepaid expenses and other current assets | 3,276 | 1,865 | ||||||
| Current assets of discontinued operations | - | 2,274 | ||||||
| Total current assets | 42,809 | 56,981 | ||||||
| Property and equipment, net | 586 | 687 | ||||||
| Intangible assets, net | 71,482 | 74,354 | ||||||
| Goodwill | 159,791 | 159,791 | ||||||
| Other non-current assets | 560 | 1,097 | ||||||
| Non-current assets of discontinued operations | - | 24,089 | ||||||
| Total assets | $ | 275,228 | $ | 316,999 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 11,830 | $ | 10,666 | ||||
| Accrued expenses and other current liabilities | 7,613 | 11,709 | ||||||
| Deferred revenue | 219 | 265 | ||||||
| Current portion of long-term debt | 3,500 | 2,750 | ||||||
| Current liabilities of discontinued operations | - | 7,389 | ||||||
| Total current liabilities | 23,162 | 32,779 | ||||||
| Promissory notes payable to certain shareholders, net | - | 10,837 | ||||||
| Long-term debt, net | 60,546 | 49,376 | ||||||
| Total liabilities | 83,708 | 92,992 | ||||||
| Shareholders' equity: | ||||||||
| Preferred stock—$0.0001 par value, 10,000,000 shares authorized; 0 share issued and outstanding at March 31, 2018 and December 31, 2017 | - | - | ||||||
| Common stock—$0.0005 par value, 200,000,000 shares authorized; 76,437,209 and 61,631,573 shares issued at March 31, 2018 and December 31, 2017, | ||||||||
| respectively; and 75,941,291 and 61,279,050 shares outstanding at March 31, 2018 and December 31, 2017, respectively | 38 | 31 | ||||||
| Treasury stock, at cost, 495,918 and 352,523 shares at March 31, 2018 and December 31, 2017, respectively | (1,672 | ) | (1,274 | ) | ||||
| Additional paid-in capital | 387,273 | 392,687 | ||||||
| Accumulated deficit | (194,119 | ) | (167,437 | ) | ||||
| Total shareholders’ equity | 191,520 | 224,007 | ||||||
| Total liabilities and shareholders’ equity | $ | 275,228 | $ | 316,999 | ||||
| FLUENT, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Amounts in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenue | $ | 55,989 | $ | 49,194 | ||||
| Costs and expenses: | ||||||||
| Cost of revenue (exclusive of depreciation and amortization) | 35,663 | 33,797 | ||||||
| Sales and marketing expenses | 4,006 | 3,695 | ||||||
| General and administrative expenses | 8,445 | 12,476 | ||||||
| Depreciation and amortization | 3,331 | 3,205 | ||||||
| Write-off of long-lived assets | - | 3,626 | ||||||
| Spin-off transaction costs | 7,708 | - | ||||||
| Total costs and expenses | 59,153 | 56,799 | ||||||
| Loss from operations | (3,164 | ) | (7,605 | ) | ||||
| Interest expense, net | (2,394 | ) | (2,227 | ) | ||||
| Loss before income taxes | (5,558 | ) | (9,832 | ) | ||||
| Income taxes | - | - | ||||||
| Net loss from continuing operations | (5,558 | ) | (9,832 | ) | ||||
| Discontinued operations: | ||||||||
| Loss from operations of discontinued operations, net of $0 income taxes | (2,084 | ) | (2,893 | ) | ||||
| Loss on disposal of discontinued operations, net of $0 income taxes | (19,040 | ) | - | |||||
| Net loss from discontinued operations | (21,124 | ) | (2,893 | ) | ||||
| Net loss | $ | (26,682 | ) | $ | (12,725 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted: | ||||||||
| Continuing operations | $ | (0.08 | ) | $ | (0.18 | ) | ||
| Discontinued operations | $ | (0.31 | ) | $ | (0.05 | ) | ||
| Net loss | $ | (0.40 | ) | $ | (0.24 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic and diluted | 67,311,784 | 53,811,688 | ||||||
| FLUENT, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Amounts in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (26,682 | ) | $ | (12,725 | ) | ||
| Net loss from discontinued operations | 21,124 | 2,893 | ||||||
| Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 3,331 | 3,205 | ||||||
| Non-cash interest expenses and related amortization | 724 | 733 | ||||||
| Share-based compensation expense | 6,648 | 6,854 | ||||||
| Write-off of long-lived assets | - | 3,626 | ||||||
| Recoveries of bad debts | (14 | ) | (45 | ) | ||||
| Allocation of expenses to red violet | (325 | ) | (840 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 2,127 | 3,248 | ||||||
| Prepaid expenses and other current assets | (1,609 | ) | (324 | ) | ||||
| Other non-current assets | 537 | 46 | ||||||
| Trade accounts payable | 1,164 | (3,197 | ) | |||||
| Accrued expenses and other current liabilities | (4,096 | ) | (500 | ) | ||||
| Deferred revenue | (46 | ) | 780 | |||||
| Net cash provided by operating activities from continuing operations | 2,883 | 3,754 | ||||||
| Net cash used in operating activities from discontinued operations | (5,835 | ) | (1,562 | ) | ||||
| Net cash (used in) provided by operating activities | (2,952 | ) | 2,192 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (22 | ) | (37 | ) | ||||
| Capitalized costs included in intangible assets | (177 | ) | (376 | ) | ||||
| Capital contributed to red violet | (19,728 | ) | - | |||||
| Net cash used in investing activities from continuing operations | (19,927 | ) | (413 | ) | ||||
| Net cash used in investing activities from discontinued operations | (1,386 | ) | (1,927 | ) | ||||
| Net cash used in investing activities | (21,313 | ) | (2,340 | ) | ||||
| 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 | (67,107 | ) | (1,798 | ) | ||||
| Taxes paid related to net share settlement of vesting of restricted stock units | (398 | ) | (168 | ) | ||||
| Net cash provided by financing activities from continuing operations | 13,069 | 12,073 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | (11,196 | ) | $ | 11,925 | |||
| Cash and cash equivalents at beginning of period | 16,564 | 10,089 | ||||||
| Cash and cash equivalents at end of period | $ | 5,368 | $ | 22,014 | ||||
| SUPPLEMENTAL DISCLOSURE INFORMATION | ||||||||
| Cash paid for interest | $ | 1,678 | $ | 1,276 | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Share-based compensation capitalized in intangible assets | $ | 159 | $ | 55 | ||||
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) and related adjusted earnings (loss) per share. Adjusted EBITDA is a non-GAAP financial measure equal to net 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 litigation costs, as noted in the tables below. Adjusted net income (loss) from continuing operations and the related basic and diluted per share amounts is a non-GAAP measure equal to net loss from continuing operations, the most directly comparable financial measure based on US GAAP, adding back the effect of spin-off transaction costs.
| Three Months Ended March 31, | ||||||||
| (In thousands) | 2018 | 2017 | ||||||
| Net loss | $ | (26,682 | ) | $ | (12,725 | ) | ||
| Net loss from discontinued operations | 21,124 | 2,893 | ||||||
| Interest expense, net | 2,394 | 2,227 | ||||||
| Depreciation and amortization | 3,331 | 3,205 | ||||||
| Share-based compensation expense | 6,648 | 6,854 | ||||||
| Acquisition and restructuring costs | 2,713 | 668 | ||||||
| Write-off of long-lived assets | - | 3,626 | ||||||
| Litigation costs | 72 | - | ||||||
| Adjusted EBITDA | $ | 9,600 | $ | 6,748 | ||||
| Three Months Ended March 31, | ||||||||
| (In thousands, except share data) | 2018 | 2017 | ||||||
| Net loss from continuing operations | $ | (5,558 | ) | $ | (9,832 | ) | ||
| Add back: Spin-off transaction costs | 7,708 | - | ||||||
| Adjusted net income (loss) from continuing operations | $ | 2,150 | $ | (9,832 | ) | |||
| Adjusted earnings (loss) per share from continuing operations: | ||||||||
| Basic | $ | 0.03 | $ | (0.18 | ) | |||
| Diluted | $ | 0.03 | $ | (0.18 | ) | |||
| Weighted average number of shares outstanding: | ||||||||
| Basic | 67,311,784 | 53,811,688 | ||||||
| Diluted (1) | 70,226,701 | 53,811,688 | ||||||
(1) The diluted weighted average number of shares outstanding for the quarter ended
We present adjusted EBITDA, adjusted net income (loss) and adjusted earnings (loss) per share 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) and adjusted earnings (loss) per share 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 non-cash depreciation and amortization, share-based compensation expense and write-off of long-lived assets. Adjusted net income (loss) and adjusted earnings (loss) per share eliminate the effect of the spin-off transaction costs.
Adjusted EBITDA, adjusted net income (loss) and adjusted earnings (loss) per share are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either operating income or net income 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) and adjusted earnings (loss) per share 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.