Fluent, Inc. reported a significant decline in its financial performance for the first quarter of 2023, with revenue decreasing by 13% to $77.3 million compared to $89.1 million in the same period last year. The company also experienced a net loss of $31.9 million, or $0.39 per share, a stark contrast to the net loss of $2.0 million, or $0.02 per share, reported in the first quarter of 2022. The decline in revenue was primarily attributed to reduced client spending in the U.S. Rewards business and the employment opportunities marketplace, compounded by a challenging labor market and increased regulatory scrutiny.
In addition to the revenue drop, Fluent recorded a goodwill impairment charge of $25.7 million, which significantly impacted its overall financial results. The company's total costs and expenses rose to $108.4 million, up from $90.7 million in the prior year, driven by increased operational costs and the aforementioned impairment. Despite a decrease in the cost of revenue, which fell by 14% to $58.3 million, the overall financial picture was negatively affected by higher operating expenses, including a 25% increase in sales and marketing costs.
Operationally, Fluent's customer engagement metrics showed mixed results. The company reported a media margin of $22.0 million, representing 28.4% of revenue, down from 29.1% in the previous year. The decline in media margin reflects the challenges faced in attracting high-quality traffic and the impact of a slowing economy on advertising budgets. The company has been focusing on improving traffic quality and user engagement through strategic initiatives, including partnerships with digital media platforms and influencer marketing.
Fluent's strategic developments included the consolidation of TAPP, LLC, an influencer-based business, which was recognized as a variable interest entity. This acquisition is expected to enhance Fluent's capabilities in connecting advertisers with consumers through influencer marketing. The company also reported a slight increase in its employee headcount, reflecting ongoing investments in its technology and analytics platform, despite recent workforce reductions aimed at streamlining operations.
Looking ahead, Fluent anticipates continued challenges due to macroeconomic conditions, including inflation and rising interest rates, which may impact client spending and advertising budgets. The company is committed to diversifying its client base and enhancing its return on advertising spend initiatives to navigate these headwinds. Fluent believes that its focus on improving traffic quality and user engagement will be crucial for driving future revenue growth and maintaining its competitive position in the digital marketing landscape.