FLNT - Earnings call transcript Q1 2021

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Operator

Good afternoon and welcome to the Fluent Inc' First Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Ryan McCarthy. ahead. go Please

Ryan McCarthy

welcome. our and for us joining Good quarter Thank XXXX discuss first earnings to afternoon you results.

Joining me and Mandel. Schulke, CEO, Fluent's on today's our call CFO, are Ryan Alex

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

Litigation would of to the from Act by under could risks our will the provided forward-looking Any by I those as begin, associated this company we words during by identified of intend, information conference differ results forward-looking materially certain contain listeners Safe discussed Harbor Before call XXXX. during call Reform this The speak could, call. made like only stated Securities expects, statements date company's advise or such be obligation provisions words with no will, update implied due covered to as forward-looking other that believes, similar this plans, of Actual and These of may statements hereof. management Private estimates should, information anticipates, the undertakes meaning. projects, uncertainties business. statements may, the to and statements on the

with encourage and annual Form Fluent's For recent including a to reports we Form company's Commission, associated Securities the the on XX-K business, with the uncertainties of report the company's Exchange XX-Q. on and discussion and risks review you quarterly filings most

including the information Management margin, also media adjusted present the and adjusted performance on of our to EBITDA, During relating business evaluates of adjusted indicators, variety margin, net a we certain non-GAAP media EBITDA will financial income. today. financial With net press to pleased are that, measure most earlier adjusted the release Ryan Fluent's comparable provided CEO, earnings in of reconciliations these and Schulke. to the introduce The metrics GAAP issued income. definitions and directly financial call, I'm

Ryan Schulke

good everyone afternoon. and Thank today. Thanks you, joining us for to Ryan

with that change and shared strategic responding opportunities and evolving consumers, media see we're it higher marketplace increasing will we're thoughtfully as redefine mid-March motivated last which the pillars, though long-term solutions of process, our a call, our even larger, equity on-boarding I revenue consumers, transition our in traffic knowingly is in with strategic clients foundational for media leader, performance higher brand this and an game the the growth experiences value significant quality enhancing made road foregoing as see for industry us for we're further enhance operates against demand in strategic near on Fluent's in today. sustainable committed the further a dynamic fundamentally turn I released our we some and accelerate. in initiatives. relative As to quality more We our to transition form We of our earnings growth business digital has energized marketplace our stakeholders. consumer and on a quality believe for the our ways, quality as properties more with previously effective platform position term, footprint clients our sustainable three us a in principle including higher lens. you clear delivering many rapid as through and is to experiencing the industry backdrop opportunity a to on motivated through experience and long-term quality rapidly experience and our we will to The Fluent we've an sophisticated enterprise scaling and progress our the monetization build end this see and marketers regulatory for contextualize

for numbers of down X% revenue. reflect year-over-year year-over-year representing EBITDA QX being X% margin XX% and media revenue adjusted up Our

significantly of metrics approach further the to we elaborate several based last with programs, Fluent's approach, ranges a with quality products conversion sits our start important initiative. on on volume call, This we back at our our that represents improving for QX. objectives for around did and this flywheel us pricing sources some incremental advertiser from of improvements quality our thereby of QX crux the promotional the accomplish part meet more XXXX. enabling our of which These this consumer believe we media indicated are We're will in consistent shifting with our higher clients, these increased in that of a ultimately monetization our to All objectives. into initiative putting year, traffic driving ROI reinvest revenue time rates in not improving the traffic and further And satisfaction thereby context in Fluent spinning quality the of sourcing. on which cut requirements, reduction latter

the QX transition in I anticipating to monitor similar basis, levels. the prior date the XX% we to who of year-over-year we natural existing And the now as are cuts partners down supply, at strategic media believe known currently partnerships, this committed be actively behind on-boarding industry. partnerships aligned a early and net needed through together. given forge will deeper, to to our these return to to focus a we our are for said vision of to efforts. with and are time QX on the in quality to on it's more in sustainable what cadence develop profitable our steepest to optimizing and businesses relationships, those our media quarters quality we rebuild in outlook, new and both sourcing down call do time that with profile an exciting which working as on ongoing will we're that our adjustments phenomenon shared develop re-establish leaning are partnership footprint that we are us traffic bespoke traffic we we while While redefining our channels, It's call. take called strategic innovate, to base this invest existing anticipate in maintain our and and partnerships we competence, our can be of with new trending while couple anticipate there revenue energy year-over-year, our initiatives, concurrently on activating share and continue to supply an where and We're traffic rebuild XX needed drive who and trending We're time front strategies revenue building new on QX still with campaign expanding last for

we front, well strategies as to seeing this media the belonged and as channels initiative and in new we're On compelling played prompted that us has areas opportunities bet.

imperative for by Although performance green how experience leading group Fluent. rebuild we and personally our see of to initiative executive in been date. conch, of I'm our Sean media is product. it's quality vice our president early along to demonstrate Matthew two Colin, president our the shoots our strategic key with executives, important innings, energized co-founding base We've

we and our see media opportunities that open supply that our audiences redefining deepen opportunity second significant expand market addressable clearly can will consumer regarding growth can our and overall pillar. As up further strategic product

And volume build benefit in XXXX on the QX last our a back, has win in as a remains XXXX, mentioned can remain we to sustainable more monetization QX. call I saw QX significantly to traffic This strong smaller of have we platform, that approximately increased meaningful they would year that implies monetization as continues winds strong even doubling have from QX. Our that ago. than supply, and a financial in

monopoly relationship spoken is with for our situated to initial platform which our clients provide of uniquely of value. on media initiative key CRM which and telepany Fluent is front I've on enhance beyond aspect consumers our their the in a business, their through efforts has through Another lifetime extended agent A the have experience our activations been our live to expansion capability. this properties investment we

business ahead pillar, that high plan regarding third performance of and and home perform grow with value seeing services senior financial our clients, our strategic including partnerships services care verticals, marketplace. You're

our to the sustainable further be quality highly higher restate that tenet by behind see base quality supply. client strong our demand and them This week. value strength profile strategic massive through. generating validates the to remains current a market. market course while media the like and days to high our efforts seven growth innovative earnings our valued core substantial in the more a continue an brand We available the will the is addresses will we're and Fundamentally, I'd world-class transition Flint achieving to that our from we're provides working enthusiastic are solution a it and demand about forging right with path footprint. that leaning of that redefine supports opportunity, exceeds that our confident model revenue we're we

remains experience our Our our our far well things consumers, shareholders. detailed the confirms equity, And brand clients this as of Alex review. financial turn diligent as confidence enhancing to benefit transition I'll through in standards for our and own our improving that, and thus with for the the mission

Alexander Mandel

Thanks, good afternoon. and Ryan

the a year-over-year, the $XX.X the team our that to the previously in end reflected the of our which of shared of the founding led XX% quarter, on been and into fluids, we've by for strategic business revenue personally context, is to drive known generated investment footprint down media purposeful QX company quality million spoke favorable redefining has In Ryan traffic outlook through initiatives. in our As executives transition leaning our outlook.

but data we strong enhancements reduction, such value that in we've QX sequential continued as the revenue of up our addition higher platform programmatic benefit of incurred We monetization, lifetime our XXXX, Well, progress to of relationships. revenue have rewards increased XX.X% XXXX, in cost which cost media media we CRM of in representing monetization the QX, our by the target to Fulfillment compared cost ahead fulfillment the half improvement was in second a as outlook was GAAP is XX.X% the mentioned moderators QX margin the had increased and continuation noted media tested further the in of that consumer our captured during margin media revenue. costs to costs We of in reflected of $XX.X by of would our million likely XXXX strategies, of provided revenue and by provided, of increased medium design which margin, on our margin we in year's a of XX% as adjusted incremental programs, our is rewards represent in benefited various benefit costs of in to although is in to revenue was percent year-over-year that which fulfillments X% and our fulfilling QX on expense last consumers. supported efficiency, offering not cost EBITDA. outweighed [indiscernible] earned QX.

aggregate in expenses $X.X sales and by grew on $XX.X Our product operating for to a X% and comprising QX development million. basis GAAP million or marketing G&A year-over-year

of costs. basis relating includes put-call accrued G&A monopoly for fully was $X.X to However, non-cash acquisition, a million incremental G&N compensation which expense year-over-year to on the

been accrued previously Excluding has item filings December attorney XXXX Last provided. expenses which of had with current on $X.X X% the million relatively with disclosed XXst. flat $XX Fluent closed year-over-year. has the week, We quarter satisfy general, $X.X million XX XXst this credit Adjusted as operating SEC in nearly executed our previously which K fully outlook overall York no flow. a new month, around impact. putting on of payments with relatively and consistent been P&L therefore finality in revenue New or were It settlement of March the million facility EBITDA the matter, our amount this for the represented agreement beginning future this will settlement

a reflected So revolver. expense it close term is new the with on the million quarter, in consists financing it not sheet, loan, reduces our million a to $XX but meaningful unfunded loan $X.X is facility our to extinguishment to the of capitalized drawn balance availability be recorded of QX, a on transaction, rate $XX P&L This of early XXX,XXX. of going anticipate of prior from of and current quarter write-off loss we in income, to extends financial in taxpayer maturity term $X.X a discount P&L flexibility XXXX. provides for forward. The with of points. interest reduction In the loss we we $X of meaningful a on in the our facility non-GAAP in our non-cash a and measure NLLs. debt continued million adjusted We federal non-cash reported which effective XXX the and also interest And basis our debt costs Fluent million by of due net a and significant QX therefore financing our million connection net GAAP

We appreciate your strategic belief growth model as note XX AdParlor cash customer year-over-year be investment. K cash the at strategically Results financial. earnings find balance clients has quality and on capital his We continue to in metrics payable for higher while this ended XXXX million assets Our acquisition, non-GAAP funded release in acquisition current will of our the our sheet. filings, stakeholders. reconciled solutions are quarter journey at million Xst, current July the we to and on million minus are included quarter and near turning million of and and to $XX.X course working our The XX restricted $XX substantial term transition value value to quarter attend enable support. today's our we with $XX.X and will one million the quarter core up $XX.X which at The with XXst liabilities ended million million charting a term debt X.X connection premise. loan its will sequentially as and sustainable of and $XX for the a reflect build funded enhance gross March remaining total and the

are enhance fluence at earnings and opportunity We generate Well, the the glad profile and equity by questions value by market. that field highly motivated will and time, more valued revenue to be to this proposition a brand

Operator

the And of from now Canaccord. ask and come begin Graham go to session first will ahead. a Instructions] [Operator question We answer question will Please question. Michael our

Michael Graham

quality maybe And reflection had from revenue and much. your initiatives to you're little that even thanks appreciate questions a into down a the the margin, taking Yeah, media a question I deeper and it's so of when impressive able of dive kind traffic couple to I coming guys just know, you grow you is think initiative. that good

us I the said you you think much peak down characterize of a through how little maybe also traffic that sort you color how peak of know, kind the work you to the for initiatives. process You any think able you out? where is longer you you any wonder know, can to know, come one you if and Can put put cuts bottoms you has bit you. know that from that just just you of And might around, be know, is color traffic you levels I much around, from, need behind think

Ryan Schulke

with connect the and to Michael, appreciate on Nice question Yeah, you. quality the traffic initiative. on,

we level. get per couple of know, So we've as, last we'd earning really, did take trend you prior it say and as the been a probably about to talking a calls, to back and, quarters

volume overall in and are anticipating as and there's of that as we out there, half different seeing start sense well of to going respect will something and, year a channels into new partner ways greater and traffic with new bit a we're that do an testing strategies. are stronger on There period that it. at we anticipate couple more traffic that shape really in adhering with So types strategically shape, to But relationships to the we of back progress front new half as on-boarding. standards, to nice quality both look the of investment existing of establishing the and is partners back we're take and partners compliance our a

One of of things we is QX, QX we from the that almost make properties. XXXX the our highlight users we yield drive that per we to visitor doubled that we,

some you actually, pay begin a that and figure revenue making it. they're those clients the even about we're for think but XX% if But some pay through higher the, material number, know, you than, traffic than know, movement back bidding a terms to for it a experiences for, are of that quality, beginning we're time unquote, are up amount in more seeing bit lot conversations seeing we advertisers that. quite down and to having, to to inventory. we're, the So for quality quote, advertisers our to of you take went the, XX% It up active of performance and of with recognize for does up respect

Michael Graham

Thanks as revenue persisting through initiative? even nicely Then know, that you to know with of anticipating the fot clarify, go And down just here we had XX%, positive that remaining in quarters you condition are the you the EBITDA I you, Ryan. quarter.

Ryan Schulke

know, I it. in time sacrifice sustain footing scale media lot a to that, get margin have say are over willing really you the going we're behind to strategic a right places would to of and that dollars

through will disciplined that a flowing to respect of though fairly operating come overall is ensure the toward maintain So we approach margin, media to aggressive take that of do we to if amount we bit there's expenses attitude below that margin EBITDA. what doing more have the and an revenue of will the a media line to with securing continuity that, at inventory to expense even

Operator

you. Thank

from Next go Please Associates. question - James Goss comes ahead. Research Barrington

James Goss

you new the other the Ryan, a talk about like maybe Thanks. block point could and quality business to cloud of are in has looks traffic cut this areas initiative? been still and little on aftermath the what the what mix

Ryan Schulke

Yeah. of around were falls a or I you Nice either big run know, hear of lack content being creative working creative being supply controls type that would that or were their, ad conversation. way buckets. into the featured you, it say we we part within would was publishers sort they of And, two the partners, ad to and Jim. from One their of the with side

and going concerns really of months. with second, were well as willing with would not are forging partners to And what, on-boarding I actively to to adhere say. privacy data, we're, the that to in just around data privacy There's, consumer had to be we that still adhering partners eager maybe path we few we cuts. things those guidelines not market us, more and is new outlayed. partners consumer we respect last forward So that, the believe the general. were been like with as who certain I'm importantly you sharpest any And there's the aware that then cut. ones we've consumer we're where the over quite Those haven't were, that the policies nothing know,

James Goss

home media the, you're you're, didn't the things those promote? it or the involve avenues to services of or services, rather to So choosing promote using which that serving mentioned, the verticals involved are you're you as sort

Ryan Schulke

property. publishers, to to ads It of specific front ways drive general even get channels in our and to our Right. go the, the represented public out traffic

to than for it So vertical another at more a been there's that core. would instance, our than, specific wasn't, impacted not have that to point that

James Goss

Can about as been able that talk you implications of markets European move to area any are Okay. certain into whether there particular? global it gone you've [inaudible] be Is the to in

Ryan Schulke

English scale. doing That We're speaking we've The talked haven't for the job something speaking? something certainly that is markets will we we on continued that a and EU a focus in is about. solid be focused English

Western You things European know, we especially approach bit and, though, beyond don't in quite to at point. announce are, market how the as that we APAC. I would, and anything re-examining such a may I this potentially have

to speaking the enter how continuing thinking rejigger English strong to new We very European. better need perform around are Western markets. in do we to some some, However,

James Goss

Okay. half, And better. bit maybe lastly a half a I better think he little the about looking comment made second

scars, think couple the will So said? of you are sort of months take you Several as run to its initiative thinking only of which the quarters of ago? kind optimistic what entire was a

Ryan Schulke

us, you has believe we especially been a of do the toward know, designed extremely this the company Yeah. QX, momentum, we, that is QX get good in have culture we agile. that believe as we, we behind we lot

is now. extremely client right demand Our strong

and really some changed new has ability with our, that go on onboarding. and be and at higher higher for demand clients we're to and, And materially of consumers deploying to So our lean conversations happening these partners quality, scale our able quality to the we're in these we that traffic strategies terms we'll the is. rates and of more our for anticipate around the into that end, as and, outputs product pay products. suppliers sources are rapidly out engage we product It different our channels nothing

be the what you we're, You to be longterm. know, the the first a make And many, about backwards steps really will believe we able if that this. of thinking many to stronger forward that's how than couple over it, back half. steps And think about half we're

Operator

from please. comes Dezellem Bill Capital question Next Management Go ahead. Tieton , of

Bill Dezellem

with you. any it contact I'd initiative? ties the in the exceeding to with way traffic Would quality discuss you start Thank expectations. in center, that? if your please like And

Ryan Schulke

good things Bill, are we And had execution. to certainly Fluent terms and hear we, excellent have Yeah. that transaction from excited gone. in historically based been monopoly at where you. web about of of,

So and really we've products on promoting in and if the you at consumer it media strong always of think terms business we're services clients how behalf in of the about our as said that advertising looks really, we're entertainment.

services, are consideration into commerce driving So lot subscription and like a therefore consumer things the paid those a it where streaming consumer commerce, direct converting cost gaming, and trials lower is Also for that. of that we're to trials.

like more Our complex there's advertising senior clients home information. ton products. it are services We, down financial funnel really therefore more without to for real in professional the live some agent verticals, there types services, complex that care can demand of far the Consumers or weren't like as decisions. of looking take the other These time. services, of agent capability near And things are consumers more capability. there we pre see or, legal able in live having

based we of with probably had agent lead that to we're with or end offering data sort capability us. purchase that system major players So home or, may to whatever have consumers that sale with, in in and a going are even further flowing verticals funnel or we're to drive them. traveling a capability, some them an They're motivated the time something actually in, be them like we'd qualified, whether see hooked these and security the and to the before now actually start product Also consumer or the into which it's set. down to us at working that partnering of real with would more appointment work or some able with enabled We results CRM sort service we they're we which and, budgets. Whereas live cat journey. that, be in qualified

which actually know on types offers and value products converting So consumers we services. on, of and are these higher

outputs from in of so boost it's the standpoint really our terms So, been a commercial

Bill Dezellem

when That business expectations? helpful. And, what think your that's exceeding you monopoly that and driving do is

Ryan Schulke

been I know, one able converting being uncapped of lead We Whereas, a all combination down generated. media we're go the a And in customer, would stage, driving properties described that of once being see in was funnel. subscription best our the we of we prior a funnel was these to just that, think it's and was further click demand, our at a didn't you you if seeing out streaming actually of as getting the really at down that drive time. were like the commerce, things to, to and I who business we're real know core where services, on offers. look our of

CRM in. about it's we, that being and, to ingest really we in meet the top needed brought operators that really do hooked of strong that we data the on of JB. the business that and lot it's And able optimizations a So through that, have

know, playing, playing coming strongly those you are really of So, for us. together things all

Bill Dezellem

and, have be we helpful. characterization about that the that of to really as will quality bottom and That's at think this it week And sequential looking on now. Ryan. traffic a sounds volumes basis. week so week, assuming then jump accurate initiatives like, too is really should It I Thanks, have, to I

Ryan Schulke

that anything we've, point never at can better view mean, you And from, we've with certainty, know, you we're, say. would really looking of were, Yeah. to Anything completed the they our with, say looking but away through we move that. as initiative. we're worked XXX% rebuilding we've quality traffic I from we're

So, you an official call. make know, I an, can't

the say good and at can we future we sourcing are on I where the types things traffic However, and about moment of have partnerships our we're the feel through gone side establishing

Bill Dezellem

or was, you and That's ask know a what to from? it you weeks when bit pinpoint time, helpful. going anyhow, little was to to but the the move And week all traffic bottom a cleared hard I'm specific away out I it's of wanted reached

Ryan Schulke

we, this something life know, two, last you fairly late know, Yeah, know, the as, have would week we're at. I this, does own, we in, mentioned couldn't of were, initiative in I or time, with it's, know, been very I'd but as we've say say and believe as say, a you where its pop you type of is robust, review you up, Not you upon terms satisfied of to get but about from potential behind there's false how need know, things we this. doing gone some is we that where some positives a sources to we've but you we, new standpoint, a believe the we address great, think consumer beginning consumer right establish momentum satisfaction but Will and things now of experience on some, a right some potentially, lot really do we're it. to working real and,

Bill Dezellem

helpful. really That's Yeah.

decline the of week you first quarter a given uptrend. went that in week guidance, you're XX XX% that kind but in through be out week to revenues in second the bit going a the of you've same to quarter a to implies to the of that that the downtrend, given week So provided a, of coming

tunnel, looking now the light, the at we're w end of at the of kind we're at so the, And

Ryan Schulke

Correct? an That, Yeah, that's yeah. accurate summation.

Bill Dezellem

allow I'm going their have similar quality you. me, who And talk if that one this. their if what of about and Are done Thank you for outcome on Great. to business? And there their ask ultimately would more there are traffic you'll other meant question initiatives? examples companies longer-term

Ryan Schulke

went former the that have being tree through types some is I've our directly love know, lending share There a it you is, that who happens I who with the of through types of of little initiatives, our these CFO more is here. but got competitors space gone that gone of I something of you companies former through Alex again. these in to his a for couple of him played And less maybe like I'd speak with to bit space. initiatives. Yes. in aware detail initiatives companies are I have know these

correct. You're

lead vertical, know similar bank addressed to initiatives include company you Quinstreet and of quality going a historical ever XXXX. quote also client companies with quality they and specific back in traffic as had insurance. know, leads would examples, education like Some to related you improved experience through another also rate a then which XXXX in respect worked that its

that So this Ryan's you statement. go and, companies other we have earlier seen know, supports through

I about set to industry, were companies meaningful circumstances, successful tick those different in this and of take that they initiatives. the gains being have from in and phenomenon recorded their following a a and able different XX in our initiatives, remarks corner make companies those within of amount uptakes and each on during but time, both those stock case, various were known gone think up months those the prices operationally the turn to have

Bill Dezellem

And Great. Thank congratulations refinancing. you the both. on

Operator

session. our and has today's concludes attending and disconnect. may presentation The question concluded. you you for now conference also This Thank answer

Fluent (FLNT) 11 May 212021 Q1 Earnings call transcript