Fluent, Inc.

Good day and welcome to the Fluent, Inc. Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ryan McCarthy. Please go ahead.

Good afternoon and welcome. Thank you for joining us to discuss our third quarter 2020 earnings results. Joining me on today's call are Fluent CEO, Ryan Schuelke, and CFO, Alex Mandel. Our call will begin with comments from Ryan Schuelke and Alex Mandel, followed by a question and answer session. I would like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on our website. To access the webcast, please visit our investor relations page on our website, www.fluentco.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements made during this call speak only as of the date hereof. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These statements may be identified by words such as expects, plans, projects, could, will, may, anticipates, believes, should, intends, estimates, and other words of similar meaning. The company undertakes no obligation to update the information provided on this call. For a discussion of the risks and uncertainties associated with Fluent's business, we encourage you to review the company's filings with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. During the call, we will also present certain non-GAAP financial information relating to media margin, adjusted EBITDA, and adjusted net incomes. Management evaluates the financial performance of our business on a variety of indicators, including median margin, adjusted EBITDA, and adjusted net income. The definitions of these metrics and reconciliations to the most directly comparable GAAP financial measure are provided in the earnings press release issued earlier today. With that, I'm pleased to introduce Fluent CEO, Ryan Schulte.

Thanks, Ryan, and good afternoon, and thanks to everyone for joining us today. As we continue to navigate this challenging environment, I couldn't be more proud of our entire colleague base. As a leadership team, we're grateful for our team's resilience and perseverance now eight months into this remote work environment. The strength of Fluent is our culture, as once again, we were recognized as one of New York's best places to work. Such acknowledgement is a great source of pride, even more so during these difficult times. We also recently announced the launch of our business empowerment program, which will support minority and women-owned businesses with their direct-to-consumer digital marketing efforts. And as we continue to traverse a challenging regulatory environment with the heightened scrutiny by regulators and elected officials of some of the major players in the technology industry, Fluent remains diligent in enhancing our brand equity, improving our own standards for the benefit of our clients and consumers, as well as our shareholders. Today, we're pleased to share strong results for the third quarter, with year-over-year revenue growth of 21%, media margin growth of 39%, and adjusted EBITDA growth of 167%. We believe this performance is significant in that it reflects innovation and growth during this challenging macro environment, as well as the successful lapping of last year's challenging third quarter. For context, in thinking about the potential for Fluent's market opportunity, I've spoken about the notion of our flywheel. To the extent we can generate higher monetization or returns on media spend through leverage such as product innovation, analytics, and technology, we can then reinvest some of that upside into tapping incremental media supply and accessing new markets. This in turn can yield further growth, incremental profits, and additional investment capacity. During this quarter, through effective product innovation and advances in our analytics-driven ad serving, we were able to advance our flywheel. And now, as I've done in the past several calls, I'll further contextualize our results and forward-looking priorities around three strategic growth pillars. First, our performance marketplace. This refers to the demand or interactions between our advertising clients and consumers on our platform. Fluent advertiser solutions enable our clients to bid on down funnel outcomes rather than impressions or clicks at predictable pricing and scale. We continue to serve a vertically diversified client base, the benefit of which has been particularly evident during the pandemic in terms of providing continuity of demand on our marketplace. In addition, the breadth of offers from such a diversified client base enables us to profitably monetize a larger and broader audience on a daily basis, more than most companies in the performance marketing business. During the third quarter, we continued to see strong demand from our media and entertainment vertical, including gaming apps and streaming services. We also saw a lift from our financial products and services vertical, which earlier in the pandemic had seen softness. While these industries represent two of our largest verticals, I'll point out that Fluent continues to operate in a variety of additional verticals, such as health, recruitment, CPG, and retail. We diversify in this manner due to our consumer-first orientation, aligned against the fundamental thesis that our platform affords us the ability to engage consumers and extract practical insights about their needs and preferences with the goal of helping them discover new products and services that are right for them. Today, we work with hundreds of advertising partners that represent dozens of product or service categories. We're committed to expanding those relationships and into new industries and product categories in order to grow our marketplace. Second, fueling our marketplace growth is Fluent's media footprint. This pillar is backed by our portfolio of digital media properties and our ability to attract millions of engaged consumers to those properties every day. During the quarter, we were able to scale up several new promotions, which resonated well with consumers and yielded strong monetization on our marketplace. We were able to leverage these outcomes to go deeper in the major digital media platforms for additional supply and incremental audiences, both in the US and UK. This is, in essence, an example of the flywheel notion I noted earlier. Looking ahead, we anticipate these outcomes will support our efforts to further expand geographically with Canada already in testing and several other markets in our planning. Third, our platform represents the technology, analytics, and product innovation that wire the first two pillars together. I've spoken previously about our investments over the past year into our analytics capabilities and technology infrastructure. During the quarter, advances in our matching or ad-serving logic yielded improved monetization, which carries high incremental margins. In addition, we announced the launch of our enhanced performance marketing platform powered by AWS, upgrading our technology stack to drive value for clients, support market expansion, and enable the agility we desire in the quickly evolving digital landscape. Looking ahead, we continue to prioritize expanding the lifetime value of consumer relationships we establish on our platform. We're investing into additional CRM channels to reengage consumers with activation costs that are substantially lower than the initial paid media activation. There are several channels that we are building out that are on our roadmap for 2021. In closing, we're pleased with the third quarter results and the strategic value of the operational initiatives underpinning these results. We also recognize it was important to reestablish confidence in our ability to deliver a seasonal lift in the third quarter, as we did in 2017 and 2018. And all of this was achievable, of course, due to the value our clients place on the performance marketing services we provide. We believe the fundamental alignment of our clients' needs and objectives with our core competencies and providing them clarity on ROI and predictability that optimizes their marketing budgets continues to validate our market opportunity. Thanks for your support. Now Alex will review the numbers in further detail, and I'll return for Q&A afterwards.