Fluent, Inc. Reports 26% Revenue Decline and $33.6 Million Net Loss in Q3 2023

Fluent, Inc. reported a significant decline in its financial performance for the third quarter of 2023, with revenues falling 26% to $66.2 million compared to $89.0 million in the same period last year. For the nine months ended September 30, 2023, revenue decreased 18% to $225.6 million from $276.5 million in the prior year. The company attributed these declines primarily to reduced client spending in its U.S. Rewards business and a downturn in its employment opportunities marketplace, which was influenced by new regulatory requirements stemming from a Federal Trade Commission (FTC) consent order.

The company's net loss for the third quarter was $33.6 million, or $0.41 per share, a stark contrast to a net income of $3.1 million, or $0.04 per share, reported in the same quarter of 2022. For the nine-month period, the net loss widened to $61.3 million, or $0.74 per share, compared to a loss of $55.8 million, or $0.69 per share, in the previous year. The losses were exacerbated by a goodwill impairment charge of $29.7 million in the third quarter, contributing to a total impairment of $55.4 million for the nine months.

Operationally, Fluent's total assets decreased to $112.1 million as of September 30, 2023, down from $184.0 million at the end of 2022. The company reported a cash and cash equivalents balance of $20.5 million, a decline from $25.5 million at the end of the previous fiscal year. The total liabilities also saw a reduction, amounting to $76.6 million, compared to $90.0 million at the end of 2022. The company’s employee headcount was reduced as part of a strategic decision to streamline operations, resulting in a decrease in general and administrative expenses.

Fluent has been actively pursuing strategic initiatives to enhance its market position, including a focus on improving traffic quality and expanding its digital media capabilities. The company has also engaged in cost-reduction measures and is exploring new growth opportunities to mitigate the impact of the economic slowdown and regulatory challenges. Looking ahead, Fluent has entered into a temporary waiver agreement with its lenders to address covenant compliance issues under its credit agreement, which is set to expire on January 15, 2024. The company plans to provide a revised budget to its lenders, which will inform future financial covenant levels.

Despite the current challenges, Fluent remains committed to its long-term growth strategy, emphasizing the importance of compliance and quality in its operations. The company is optimistic that its focus on high-quality traffic and strategic partnerships will enable it to recover market share and improve financial performance in the future. However, management has acknowledged substantial doubt about the company's ability to continue as a going concern if it fails to meet its financial obligations and covenants in the coming year.