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Fluent, Inc. (FLNT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $65.4M (-10% YoY) with GAAP EPS of -$0.19; consolidated gross margin compressed to 21% as an ACA-related $2.5M A/R write-down hit revenue, gross profit, and net loss equally, pushing adjusted EBITDA to -$1.7M (-2.6% margin) .
  • Commerce Media Solutions (CMS) remained the bright spot: Q4 CMS revenue grew 139% YoY to $17.2M (26% mix) with 39% gross profit margin and 39.3% media margin; CMS annualized revenue run rate surpassed $60M, +20% q/q .
  • Management guided to flat YoY consolidated revenue in 1H25 and acceleration in 2H25, targeting double‑digit FY25 revenue growth and positive FY25 adjusted EBITDA, with triple‑digit CMS growth continuing in 2025 .
  • Liquidity/covenants are the key risk: company obtained a short extension from SLR to March 4, 2025, does not expect to be in compliance with existing covenants over the next 12 months, and expects to raise additional capital; going‑concern assessment to be reevaluated at 10‑K issuance. Subsequent to Q4, Fluent raised ~$5.0M via a private offering of pre‑funded warrants (Mar 24) .

What Went Well and What Went Wrong

  • What Went Well
    • CMS scaled rapidly with structurally higher margins: Q4 CMS revenue +139% YoY to $17.2M (26% mix), gross profit margin 39% vs 21% consolidated; media margin 39.3% vs 25.3% consolidated .
    • Clear momentum and visibility: CMS run‑rate >$60M (+20% q/q), management expects triple‑digit CMS growth through 2025 and double‑digit consolidated revenue growth in FY25 .
    • Strategic clarity and partner pipeline: expanding across retail, grocery, ticketing, QSR with long‑term contracts and revenue‑share economics; management highlighted strong case studies and pipeline depth .
  • What Went Wrong
    • ACA-related A/R write‑down: Discontinued ACA business led to a $2.5M write‑down in Q4, reducing revenue, gross profit and net income dollar‑for‑dollar and turning adjusted EBITDA negative for the quarter .
    • Media cost spike: O&O and Call Solutions margins were pressured by election‑driven social media ad inflation; management elected not to chase volume at poor margins, weighing Q4 results .
    • Liquidity/covenant risk: SLR compliance extension to Mar 4, 2025; expectation of non‑compliance with covenants during the next twelve months and need to raise capital; going‑concern risk flagged in prior filings and to be reevaluated at 10‑K .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$58.7 $64.5 $65.4
Gross Profit excl. D&A ($M)$12.6 $15.7 $13.9
Gross Profit Margin (%)21% 24% 21%
Media Margin ($M)$15.7 $18.2 $16.5
Media Margin (%)26.7% 28.1% 25.3%
Net Loss ($M)$(11.6) $(7.9) $(3.4)
GAAP Diluted EPS ($)$(0.75) $(0.48) $(0.19)
Adjusted EBITDA ($M)$(4.5) $(0.07) $(1.7)
Adjusted Net Income (Loss) ($M)$(7.3) $(3.7) $(3.3)
Adjusted EPS ($)$(0.47) $(0.22) $(0.18)

Segment mix and margins:

Segment/KPIQ2 2024Q3 2024Q4 2024
Owned & Operated Revenue ($M)N/A (not disclosed)$43.5 $38.2
Commerce Media Solutions (CMS) Revenue ($M)N/A (not disclosed)$10.4 $17.2
CMS % of Consolidated RevenueN/A16% 26%
CMS Gross Profit Margin (%)N/A33% 39%
CMS Media Margin (%)N/A33.7% 39.3%

Balance sheet/KPIs:

KPIQ2 2024Q3 2024Q4 2024
Cash & Restricted Cash ($M)$6.44 $7.84 $10.69
Credit Facility Principal Outstanding ($M)$32.3 (6/30) $32.5 (9/30) $31.5 (12/31)
Shareholders’ Equity ($M)$27.45 $19.98 $24.96
CMS Annualized Revenue Run‑Rate ($M)N/A>$50 >$60 (+20% q/q)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Consolidated Revenue GrowthFY2025“Double‑digit” targeted (Nov) “Drive double‑digit revenue growth” (Feb) Maintained
Adjusted EBITDA (full year)FY2025“Improved vs 2024” (Nov) “Positive adjusted EBITDA for full‑year 2025” (Feb) Clarified upward
Revenue trajectory1H 2025N/AFlat YoY; acceleration in 2H25 (call) Introduced
Adjusted EBITDA MarginQ4 2024“Low‑single digit” expected (Nov) Actual: -2.6% (ACA write‑down) Missed
CMS growth cadenceFY2025Triple‑digit YoY expected (Q3 call) Triple‑digit YoY expected (Q4 call) Maintained
Liquidity/covenantsNear termGoing‑concern risks flagged (Nov) -SLR extension to Mar 4, 2025; expect non‑compliance and need to raise capital; going‑concern to be reevaluated at 10‑K (Feb) Risk elevated/updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
CMS scale and marginsAdFlow/CMS growing triple‑digit; ARR >$50M by 9/30; CMS gross margin ~33%, media margin 33.7% (Q3) Q4 CMS rev +139% YoY to $17.2M; 39% gross margin; ARR >$60M (+20% q/q); triple‑digit growth expected in 2025 Improving
O&O trajectoryStabilization into 2H; still -18% YoY in Q3; expected to be flat/down and smaller mix over time O&O -23% YoY in Q4; will decline as % as CMS scales Declining mix
Election/media costsPolitical ad surge spiked biddable media costs starting Aug; margin headwind Q3 Elevated costs weighed on Q4 O&O and Call Solutions; easing post‑election; persisted into Q1 Easing post‑election
ACA/call solutionsQ2: $3.1M ACA A/R write‑down; regulatory shifts (CMS—government) ACA discontinued; Q4 $2.5M write‑down; call center demand shifting/inbound mix and media cost pressures Repositioning
Liquidity/covenantsFacility with SLR; leverage for growth (Q2) -Extension to Mar 4; expect non‑compliance next 12 months; capital raise expected; going‑concern reevaluation Elevated risk
AI/dataML and first‑party data underpin targeting and monetization (Q2/Q3) Continued emphasis on AI‑powered platform and quality of consumer/partner outcomes Ongoing

Management Commentary

  • “We achieved 139% growth in Commerce Media Solutions revenue in the fourth quarter... As of December 31, 2024, our Commerce Media Solutions business surpassed an annual revenue run rate... in excess of $60 million... We expect strong year-over-year triple-digit revenue growth continuing throughout 2025.” — CEO Don Patrick .
  • “We recorded a write-down of accounts receivables and an equal offset of revenue of $2.5 million in Q4... This write‑down caused adjusted EBITDA to be negative for the quarter.” — CEO Don Patrick .
  • “Media margin in the fourth quarter was $16.5 million... particularly low... due to [the] ACA revenue write‑off and increased media costs in our health insurance vertical in the Call Solutions business.” — CFO Ryan Perfit .
  • “Looking ahead to 2025... flat year-over-year consolidated revenue in the first half of 2025... [then] double‑digit year‑over‑year growth.” — CEO Don Patrick .
  • “Our Commerce Media Solutions media margin in the fourth quarter of 2024 was $6.8 million or 39.3% of revenues compared with $1.3 million or 18.5%... in 2023, demonstrating strong growth.” — CFO Ryan Perfit .

Q&A Highlights

  • CMS growth durability and infrastructure: Management reiterated triple‑digit CMS growth for 2025 and cited deep first‑party data, ML infrastructure, and partner pipeline; sees continued margin expansion into late‑30s/low‑40s as it scales .
  • O&O outlook: O&O is a competitive advantage but not a growth engine; focus is stabilization while shifting capital and people to CMS .
  • Pipeline and “transformative” deals: Pipeline breadth is growing; some opportunities could be multiples of current large partners (timing uncertain) .
  • Competitive performance: Management asserted >25% higher consumer value vs competitors and >20% uplift for e‑commerce partners in head‑to‑head comps (case studies) .
  • Seasonality and mix: CMS will be a higher percentage in Q1 despite seasonal sequential revenue declines; second half remains stronger .
  • Call Solutions and regulation: Shift from warm transfers to inbound due to FCC/CMS changes; Q4 media costs elevated; plan to diversify supply over several quarters .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS could not be retrieved at this time due to data access limits; as a result, we cannot quantify beat/miss versus consensus. We will update estimate comparisons when S&P Global data becomes available.

Key Takeaways for Investors

  • The investment case hinges on CMS execution: triple‑digit growth, structurally higher margins (39% gross/39.3% media in Q4), and rising run‑rate (> $60M) support the pivot and a mix shift toward a more predictable, higher‑quality revenue base .
  • Near‑term prints will reflect seasonality and legacy headwinds: management expects flat H1 2025 revenue and acceleration in H2; O&O will remain a declining mix as CMS scales .
  • Liquidity/covenants are the swing factor: covenant non‑compliance expected over the next 12 months and need for additional capital; watch for SLR amendment and further financing (a $5.0M private offering closed in March) .
  • Q4 quality was impacted by non‑core items: $2.5M ACA write‑down depressed profitability; excluding these, CMS margin trajectory is intact, but call solutions remains pressured by media costs and regulatory shifts .
  • Guideposts for 2025: double‑digit consolidated revenue growth and positive adjusted EBITDA (vs 2024 negative) are reiterated/clarified; delivery likely back‑half weighted with CMS as the driver .
  • Watch pipeline conversion: potential “transformative” CMS deals could accelerate growth; evidence of conversion and expansion within existing partners would be a positive stock catalyst .
  • Risk/reward: upside from CMS scale/margin expansion and AI‑driven targeting; downside from financing/going‑concern risks, O&O declines, and regulatory/media cost volatility - .

Appendix: Other Relevant Q4‑period Press Releases

  • “Fluent, Inc. Announces $5.0 Million Private Offering” (Mar 24, 2025): Pre‑funded warrants for net proceeds of ~$5.0M for general corporate purposes .
  • Q4 earnings press release (Feb 28, 2025): detailed financials, non‑GAAP reconciliations, and SLR facility update (extension to Mar 4, 2025; capital needs; going‑concern note) - .