FLNT - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to Fluent, Inc’s.

Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. to Jordyn to Tarazi, like for your now conference, today’s Investor would turn introduce -- host I Relations. Please go ahead.

Jordyn Tarazi

Good joining us XXXX Thank Perfit, Interim you our and Schulke, welcome. me quarter Ryan With earnings afternoon second results. Ryan are CEO; CFO. to and discuss today for

A Schulke live this session. website. of call like I call replay website, Our Ryan to will and call followed www.fluentco.com. be Perfit, remind the Investor webcast, our with begin page Ryan today that Relations is To please would webcast being by recorded. from you will on following event comments and a the the our access question-and-answer visit available our on

stated due with by under management by statements Act business. this are I forward-looking update Actual Safe from Litigation implied Private call the no obligation during we call. listeners provided to Before our begin, discussed would conference results covered the associated uncertainties provisions or like XXXX. and to information Reform statements those Securities information of on forward-looking Harbor the Company of the risks undertakes advise this materially that differ The could Company’s to certain

I uncertainties Exchange with of Company’s encourage discussion Fluent’s Form and most on Company’s XX-K including For a you the recent XX-Qs. the associated the the with review risks Commission, and to and business, filings Securities annual report

to to directly earlier the press adjusted measure GAAP adjusted gross EBITDA adjusted earnings a including of we comparable indicators, pleased call, that, and of performance adjusted introduce variety gross profit, profit, adjusted issued the may earnings. EBITDA is definitions profit, Fluent’s CEO, During provided EBITDA gross and adjusted Schulke. the With key release to Management financial present adjusted Ryan am of non-GAAP on the earnings. and relating reconciliation most adjusted certain business I The in our financial today. and earnings evaluates financial adjusted information

Ryan Schulke

enabling highlighted quarter growth on completed Fluent’s company, enthusiastic as pleased a business focusing good our we’re we’re On revolving our Fluent’s expansion. more on XX% partnerships. Identity call, pillars as core proprietary earnings which And that standalone foundation the growth with we Company’s continue results against sturdy These EBITDA is and profile. sectors. we That a everyone. financial and our upside party as strategies first about share focus spoke model, the future market margin increase strengthen a is and believe of afternoon, our adjusted our growth and confluence XX% opportunities. Jordyn, second Thanks, Graph, performance-based XX% year-over-year while Having there’re quarter we data the profitable a asset digital adjusted execution Fluent’s plan offer progress public about revenue QX will further gross first basis, by in and and profit our organic media profitability strategic marketing the growth opportunities

which as performance growth Importantly, terms, verticals several initiatives. Fluent’s their business and demand partners we be across I to level, given assets, in we on align upon XX% channels; Fluent promotional products connects and strategic portfolio feature to align is deepen and rate where invest a needs. and growth media of interest in and can We effective and how a across providing future industry the lifestyles, million thinking Much paid into currently we’re providing additional and and media factors. survey our On objectives; daily more bets. based orientation investments we key and self-declared partnerships on with with to own variety our X.X this mobile describe targeting expansion and credited with reside apps, centric want services an business ad adjusted The responses, programs. on largely of adjacencies from third our our ability basis, of potential. registrations which delivery advertising which a At strategic and we’re more attract runway expansion and about to two, operate model where platform. is through opportunities do verticals that growing where further we our XXX,XXX compelling margin marketing their represent into broad people One, relationships, primarily high websites scale material. rapidly scorecard advertising EBITDA we consumers advertiser over over fundamental consumer average placing

them relationship across during provided the with last deliver where we over Fluent several database develop channels, our million advertising them. and initial amassed has permission originate marketing for consumers proprietary years, and the operate of programs us digital have communications registration clients survey We multiple a based owned Over U.S. who ongoing actions to In XXX and just on integrations. unique not through capabilities. our strategies are more provide learn the the do and efficient through server deeper to partnership their process. marketing in we become objectives and and and partners with greater strengthens their accordance turn, specific relationship, more our what technical our visibility tracking into server consumers The which effective we completing at Fluent experience

to user we about the outcomes we business to in those trying consumers produce partners. Consequently, our So, revolves have think we our consumer, our managed per marketplace around revenue services service and to are and generate our important and the way the the growth products of new conversions in to our strategy for promote consumers includes for business, advertisers In connect performance are the core a and marketing we engaging content basis. with Graph pay-for-performance number developing us the on business. a Identity our our metrics as

find We apps, innovative content music video. media and games, are platforms, such as of social to and mobile favorite engagement their other approaches consumers effective on immersive cost the to support continuing

immerse execution to ability success. support we performance our partners’ proven critical where Our to experiences and engaging snackable long-term highly develop campaigns ad scalable to marketing content is can our simultaneously

of safe meet self-declared international as launch Next across we brands, our and program to beta party, the QX. in our are and bets, leading including new expansion, more share we results encouraged our our of very privacy as quarter, UK we verticals middle data several will leverage further the products the launched to by of first toward future about which plan services demand

We over have are the than delivering prospects we of test are expansion. hope and million industry the partners. can the remain better the are and the registrations results generated in upon global growth of we advertising Fluent the and for why we our course more see based potential our We bullish already about user earning on optimistic X comprehend credibility we brand

our consistently We continue to be against disciplined operating measuring targets. our current strategy while plan about executing

support. chapter financial is our working thank and driving and to team leadership profitable now our things in this your entire interest We the to report CFO, growth. base create is evolution colleague excited Our results. energized for Fluent’s Interim over value turn hard by shareholder new Ryan on and I’ll and Perfit you by sustainable to

Ryan Perfit

for growth and key good for joining us on call. XX% XX% QX growth of XX% to We delivered all adjusted in Thanks EBITDA. in gross afternoon. three of growth Ryan, earnings Thanks, financial growth, topline everyone operating Compared metrics. adjusted profit, our and quarter drove our second Fluent XXXX double-digit XXXX, revenue

and of expenses our in compensation, share-based taxes that for for to that income debt. XX% represents support distribution XXXX allowance. gross decrease advertiser party Provision expense was decreased through some continuing noted, XXXX. margin data former across to second QX to full XX% of evidence XXXX quarter $XX.X products a maintain quarter up channels. to both portion mainly to a represents the from million an by continue full expenses, representing million accounted by our reversal gross multiple from expenses million same earnings leveraging expenses. administrative the sufficient to there and in operating of of for verticals largely We last an gross dropped to for in P&L of operations, the last Adjusted ad Selling million net million, that’s growth and with increasing to zero better result core to $XX.X until quarter share that $X.X Unless ever continuing a Compensation, QX. second the valuation in XX%, $X.X I’ll more profit from was $X.XX, and selling million is million, second detail. and our general highest driven marketing the valuation against in consistent for be of increase XXX per dig of also operations for was margin basis-point increased decreases General million, administrative deferred including asset. $XX marketing allowance little increase in first and periods a increased million quarter, with Fluent’s expense share and performance-based our in expenses Income provision represented media We and $X.XX was executives; income into to again administrative reported. and expanded by marketing and increased second due year. $X.X quarter to per a gross declined all recorded tax from QX. increased targeting assets our allowance comparing or quarter of Revenue profit We margins I’ll and compensation of expenses adjusted now loss of bad adoption year. intend largely compensation the XX% share-based unique general a in of $X.X a up the $X.X selling over loss core driven $X.X of $XX.X year, otherwise the and in million XX% generated marketing prior

Red the income entity now same zero results are As for discontinued million $XX.X costs you period prior all year. the compared was a know, loss we loss prior total of was spun but in for year. the The in Fluent’s and quarter the to statements in $XX.X of operations. the operations discontinued The Net QX. from quarter consolidated million $X.X Violet million associated for to transactions was net reflected second financial spun-off as off

focuses second year. to margin over management a adjusted Fluent increase XX% the metric to the profitability, EBITDA the quarter adjusted and in principally In million, XXX on adjusted team XXXX, period increased same $XX.X basis-point expanded XX%, EBITDA the EBITDA. For prior

sheet. the were million. to Debt, was as long-term debt and on of current net cash of capitalized XXth. costs million portion $XX.X balance the $XX.X debt equivalents of June including Moving Cash and

of in For $X.X non-cash continuing $XX.X the The $X.X from operating million items in and ended increase June to of million, by from date was cash period provided XXXX. operating the $XX.X result compared million XX, in adjusted loss $XX.X of the Cash million activities months for generated liabilities million an used $X.X the six assets and the for XXXX, June to $XX.X investing primarily million from for year of operations Red activities same common with of operations months XXth, was discontinued ended activities six Violet was continuing of million. into on term the of $XX.X Violet’s to associated result X.X activities the and repayment spin contribution mainly contributed of primarily vested help proceeds the financing take ended of to the provided $X.X Red to and for principal and was XX, RSUs result million issuance cash million to six $XX.X the stock related the used operations. fund net offset Cash months paid shares the June million from of the by Red million shares Violet loan treasury. by

We second financial are on quarter prepared its in we achieve the performance will with XXXX. continue and That QX in results. concludes goals our confident our to financial pleased remarks

line for now will the open operator Our Q&A.

Operator

question Instructions] William from Partners. first ahead. Gibson Please of go [Operator Roth Capital The comes

William Gibson

on is metrics. question operating First

quarter, we lines Specifically, is marketing of to is G&A, going the margin, see second it in a and forward? good gross off base the model sales

Ryan Perfit

take backs. Those add EBITDA in question. bases. there nothing you’re than There is are in seeing extraneous good this what Yes. the I’ll other

William Gibson

was a it guidance, then, given should you. that in in little running February, we’re that. good Thank adjusted? guidance guidance the a seems full-year year terms that be still behind for that of And Is like or the

Ryan Schulke

by guidance, team, out the previous management you the has management with this In team. construct Board respect to as business and terms know, of little was this bit shuffled around the put and

foundation healthy the for are and the on against sure working continue have business hard make We we full-year, to what are to going track to bullish we just organically here. growing a still

pretty there. So, out good what’s still about feeling we are

William Gibson

And then, question. just one last

up I are to a it on think, you targeted What with would quarter to business other I that? the call. healthcare say But, Audience sector. third verticals heard Now I be you’ve opened going you new the address know

Ryan Schulke

Yes.

So, business. we launch just actually that did

in look positive feedback will it. And additional actually on getting the been at. terms that have market are verticals right We now we making the from of assessment we

programmatic right As you audiences. there’s data number of imagine investing in targeting the can heavily are a strategies, verticals on ecosystem the into that

the spending in programmatic, to for on is $XX spent in billion be of status and year targeting. XXXX. e-marketer in XX% of calendar in data there the about think, about I purposes will XX% that And

at sizable a market it’s large. So,

a making assessments vertical are on We basis.

of the imagine, important of first health verticals. itself can providers can That health other example, data consumer quite you should is are products. new But we’re making to and into lot a there brands lend interesting where verticals goods really be those of As because us. for self-declared focused that package launching, few one few a we’re on interest. Take going are assessments, on party still for well healthy be

Operator

next comes Please Jim from Research. The question of ahead. Barrington Goss go

Jim Goss

else, the their cast? might you who be be? that in are vertical something providing of how lives be available, might do how And terms how sort complicated interrelate to others in business net healthcare the as aspects should with verticals long might and individuals another, where wonder of for approaches, one of As information much I and about does that suitable get talking be some the of be wide some one the

Ryan Schulke

to lot So, users behavioral are really collecting of real-time more And moment of market that’s are line. what’s might to types that Can their with way themselves. first they’re higher the be other your self-declared behaving question, Now think standard being roadmap quality in I those user against against data a insights data typically this you dealing the of where data at where different great asset Fluent’s insights and and capability really that on real-time that of from sets discover product resources is those more it’s a in the not Fluent’s of short data, us steer we gave how and and the attitudinal off Jim. because our going party Audience get able data about

of has which have their is necessarily it’s And what’s out a lot a and play these actual made driving you into a they’re a driving those in that more condition, vertical, Again, factors, decisions. life are with or health health of facets intent and focused consumer’s conscious more specific trends cycle sense where really in But, the of from definitely in we them or an as much because is gates. is than doesn’t health the most that of that their maybe going. just somebody and decisions consumers thinking their decisions. for, don’t that bunch through other interest So, certain being understand that interested the do preclude life services, verticals more a health even what of really market financial have to

on have really deep best our and most in the -- we’re So, out to and we quality and respect profitably with to high go where products. audience scale chance and deliver most understanding that the

Jim Goss

mean, you into should how you be and using current priorities, should terms Could may better operating of to it? Graph. for you little on? talk a focusing be would that think are what in getting what this you And be ties And we a take about Fluent feel more Identity the you

Ryan Schulke

different a how the it other in of own terms Identity is and our assets. than their describing bit space Graph companies are data In

themselves, inputting fluently contact a again is and provided first information self-declared data Ours them by consumer party us as surveying we with set we’re they’re them interact and their them with again. and see time over the

have So, very refresh we rate. high

really and that the by consumers lie. entire are many service our our on our asset about collecting the we inputting pivot data to the site. that able When collect about really categories fueling are where of performance product decisions all make and the we’re different it’s And marketing interests consumer from insights talk to information we fueled that suite, We’re our business.

business, our huge performance a us. deliver daily, marketing Americans real-time for loyalty us may great we on abundance is which a analytics, we and products think of that organic gives it services such do still around and We focus a quarterly insights products to upside on and runway those and retention market insights additional of them. also there’s even market wide basis as and and ton within around have but research a see monthly as on that So, U.S.

Jim Goss

stock-based But, And think we might I we calculating And for thing. about the comp quite bit were thinking reflect that which change is in last or do you quarters? how how quarter and maybe is one lower than management. latest about about go guess a figure, a the rate next the The of should run sort that? relevant

Ryan Perfit

So, based were the or Obviously, when run probably and it and for for they’re But, vesting And is normalized for life rate shares the better. will then next quarters. calculation. the couple of the will a issued, the that the future. in the run valued when near RSUs should issued normal rate it change you January were on see over all change it

Jim Goss

loss or going And get were any EBITDA another? between to some other I there of calculation difference taken litigation of know that be these one elements other repeatable? and to to income or from variance the net figure these acquisition Are out things. and like costs

Ryan Perfit

not I I’m your understand sure question.

Jim Goss

this had of that net Well, just which EBITDA. other comp of income one, the stock-based litigation number assume I calculation costs, you The was quarters. like items the subsequent but there and be smaller the getting quarter at were the would EBITDA from to elements some

Ryan Perfit

But, if that’s as add don’t we budgeted going additional Obviously, any forward. expect haven’t will up, We backs add they things the additional any be for Yes. come question. added. backs,

would to tax recognized would be spin-out ops point. related be costs this at been forward going the have to related of All related. disc the Anything

Operator

from Please comes ahead. next Analysis. The Larry question First go Berlin of

Larry Berlin

but stand you if that. could than expect remarks first them were In about like go to detail was things. important they little user per metrics bit gone Schulke. your or the some give more up, Ryan Ryans, you revenue the talking they curious of have now other One I you and of where and future? in Obviously where a idea where right us

Ryan Schulke

from absolutely. to Larry. you, good And Yes, hear

implications So, so revenue per gets business. we new those line channels full-year dig to in, we of were we user. remarket $X.XX some on we on a can transactional XXXX, And core tie more on full-year products and to continue our we to the a is new we outcomes what we full-year behalf them do partners. interesting and as grow of on expect across that additional we drive Where on interact can that audience to table. as of audit, services our really in with think and overall it components means layer really the that we down top that our terms of that really and back And per bring user the number

and detail, clients’ So, certainly without And we more demands that’s that our working much to with we to anticipate make growing hard we’re with as sure more deliver increase and the we intelligent really outcomes going and Graph itself. into it consequently also in too what Identity get conversions driving lockstep increase.

But, happening are towards good We clip ‘XX will in tandem, have a look and against a we in as modest than beyond. place both you it it more those at grow really we revenue if things will grow.

Larry Berlin

good ready there products all per to you can will in out revenue deeds increase see said, moment, are market and have that like now pay come you -- or I course you offer? the what seeing Of demand new user. back, for this you’re in What suppose products, are at right, because just your

Ryan Schulke

segments starting to own in we understand time. a have of customer with segments specific many more very and them are more knowledge we in instances and audience as their clients over work that Our depth

leading more at and how them greater this to planning that table So, their how earlier get of customer around around work, greater with acquisition in insights we new enhance we’re stage rollout, are create an cycle, strategies. strategy product we and the for the efficiency at do bringing do to types point discussions the involved

strategies we’re So, more it’s verticals in experts folks as us verticals with higher some fields the drive we’re analytics into us we tandem can seeing things to of constitute that certain understand us deeply and to then and allow in and in data in behind work operating our and that around help in go to the them, given partners many nature. trends the different personalization of that it more data in, the science design to help runway industry data

a nature customer core personal strategy been that custom can really insights which the to revenue campaigns, acquisition leading we Fluent’s what of overall table as So, and lot traditionally more are just around stream. has to opposed conversation bring to

Operator

would This like for concludes turn over Ryan our remarks. question-and-answer I the back to to session. Schulke conference any closing

Ryan Schulke

call get we on advance the in to in joining certainly delivering today. everybody give are our roadmap. front brand we’re future progress partners for Fluent and for you the very what shareholders and of again and on our as eager and we’re And Thanks calls to updates bullish

Operator

now has The today’s conference attending for concluded. Thank you presentation.

You disconnect. may now

Fluent (FLNT) 7 Aug 182018 Q2 Earnings call transcript