Fluent, Inc. Reports 16% Revenue Decline in Q2 2023, Achieves Net Income Turnaround

Fluent, Inc. reported a decrease in revenue for the second quarter of 2023, with total revenue of $82.1 million, down 16% from $98.4 million in the same period last year. For the first half of 2023, revenue also fell by 15% to $159.4 million compared to $187.4 million in the first half of 2022. The decline was attributed primarily to reduced client spending in the U.S. Rewards business and challenges in the employment opportunities marketplace, exacerbated by regulatory changes stemming from a Federal Trade Commission (FTC) consent order. Despite the revenue drop, the company achieved a net income of $4.3 million, or $0.05 per share, a significant turnaround from a net loss of $56.9 million, or $0.70 per share, in the prior year.

Operationally, Fluent's gross profit for the second quarter was $22.6 million, representing 28% of revenue, while the media margin decreased by 20% to $25.9 million, or 31.5% of revenue. Adjusted EBITDA for the quarter was $5.6 million, down from $9.4 million in the previous year. The company reported a notable reduction in general and administrative expenses, which fell by 66% to $3.9 million, largely due to workforce reductions and lower litigation costs. The total employee headcount was reduced as part of a restructuring effort aimed at aligning resources with core business operations.

Fluent's balance sheet showed total assets of $155.1 million as of June 30, 2023, down from $184.0 million at the end of 2022. The company had cash and cash equivalents of $21.0 million, a decrease of $4.5 million from the previous period. Long-term debt stood at $38.8 million, with the company in compliance with its financial covenants under its credit agreement. However, it noted that it was unable to draw on its revolving credit facility due to non-compliance with certain conditions, although management expects to meet covenant requirements moving forward.

Strategically, Fluent has focused on enhancing its media traffic quality and expanding its digital marketing capabilities. The company has implemented a Traffic Quality Initiative to improve user engagement and conversion rates, which it believes will drive revenue growth. Additionally, Fluent has been exploring potential acquisitions to complement its existing business and has made investments in influencer marketing and social media strategies to diversify its revenue streams.

Looking ahead, Fluent anticipates continued challenges due to economic uncertainty and regulatory scrutiny, which may impact its revenue and media margins. The company plans to refocus investments into unaffected business areas and expects to benefit from its compliance measures in the long term. Management remains cautious about the macroeconomic environment but believes it has sufficient cash resources to support operations and capital expenditures in the coming year.