Fluent, Inc.

First quarter 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 telephone keypad. 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 first quarter 2021 earnings results. Joining me on today's call are Fluent CEO, Ryan Schilke, and CFO, Alex Mandel. Our call will begin with comments from Ryan Schilke 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.fluenceco.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 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 median margin, adjusted EBITDA, and adjusted net income. Management evaluates the financial performance of our business on a variety of indicators, including media margin, adjusted EBITDA, and adjusted net income. The definition 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. Thanks to everyone for joining us today. As I shared with you on our last call, mid-March Fluent operates in a dynamic and rapidly evolving marketplace. And we see a clear long-term strategic opportunity and further responding to the demand for higher quality digital experiences for consumers and more effective and sustainable solutions for marketers. In turn, we're motivated and energized as we thoughtfully accelerate the strategic transition of our business with quality as a foundational principle. Through this process, we're committed to enhancing our media properties and consumer experience against an industry backdrop that is experiencing rapid change in many ways, including through a regulatory lens. We see the end game as delivering a fundamentally higher quality experience for consumers, which will enhance fluent brand equity with our clients and build enterprise value for our stakeholders. I previously contextualized this transition relative to our three strategic growth pillars. The significant progress we've made onboarding and scaling larger, more sophisticated clients on our performance marketplace and increasing the monetization on our platform has motivated us to further redefine our media footprint in the form of our traffic quality initiative. We see higher quality as the road to sustainable long-term growth and believe it will position us as an industry leader, even though in the near term, we're knowingly foregoing some revenue opportunities. In our earnings released today, our numbers for Q1 reflect revenue being down 11% year over year, media margin up 4% year over year, and adjusted EBITDA representing 7% of revenue. All of these metrics are consistent with the ranges we indicated on our last call. To further elaborate on our traffic quality initiative, we're shifting from a higher volume approach to a quality-based approach, which we believe will accomplish several important objectives. These objectives start with improving consumer satisfaction with fluent promotional programs, thereby improving conversion rates and ROI for our advertiser clients, thereby driving increased pricing for fluent products and ultimately enabling us to reinvest that incremental monetization into further improvements in our media sourcing. This represents the spinning of our flywheel. Putting some time context around this initiative, in the latter part of 2020 and in Q1 of this year, we cut back more significantly on traffic sources that did not meet our quality requirements, which sits at the crux of the reduction of our revenue in Q1. While we actively monitor traffic on an ongoing basis, we believe the steepest of cuts needed at this time are behind us. That said, given the traffic adjustments to date and the time needed to develop partnerships with those who are as committed to quality as we are, While concurrently onboarding and optimizing new supply, we do anticipate revenue in Q2 to be down year over year. While it's still early to call, we're currently anticipating revenue in Q2 trending similar to what we called for Q1, down 11% to 13% year over year. I shared on our last call that we anticipate this strategic transition will take a couple of quarters to reestablish prior trends, and we continue to maintain that outlook. The natural cadence of these traffic initiatives, which are a known phenomenon in our industry, is to now net rebuild our supply base through both expanding existing partnerships and activating new partnerships, channels, and strategies. To drive our rebuild on this partnership front, we're leaning in with existing and new media partners who are aligned with our focus on quality and share our vision for building sustainable and profitable businesses together. We're working to forge deeper, more strategic sourcing relationships where we can innovate, develop bespoke campaigns, and invest our time and energy in redefining our media footprint with confidence it will be an exciting return profile on our outreach. On the media front, we're seeing compelling opportunities in areas we've long played in, as well as new channels and strategies that this initiative has prompted us to bet. Although it's early innings, we see green shoots in our rebuild base. to demonstrate how important the strategic imperative is for Fluent. I'm personally leading our quality initiative, along with two key co-founding executives, Matthew Kantz, president of our performance media group, and Sean Cullen, our executive vice president of product. We've been energized by our experience to date, as we can clearly see that redefining our media supply will open up significant strategic product opportunities that can further expand and deepen our addressable consumer audiences and overall market opportunity. Regarding our second growth pillar, our platform, I mentioned on the last call that monetization had increased significantly in 2020, approximately doubling from Q1 to Q4. We saw that as a sustainable win. Monetization remains strong in Q1 of 2021 and continues to remain strong in Q2. This implies that as we build back our traffic supply, even smaller volume wins can have a more meaningful financial benefit than they would have a year ago. Another aspect of our platform I've spoken to is the expansion of our CRM efforts, through which we have extended our relationship with consumers beyond their initial experience on our media properties and enhanced their lifetime value. The key initiative on this front has been our investment in the monopoly business, which is uniquely situated to provide telephony activations for fluent clients through a live agent capability. We are seeing that business perform ahead of plan and grow strategic partnerships with clients in high-value verticals, including senior care, financial services, and home services. Regarding our third pillar, our performance marketplace, we continue to see world-class brands leaning in with strong demand that well exceeds our available supply. This strength further supports our efforts to redefine our media footprint. Fluent provides an innovative, high-value solution that addresses a massive market opportunity. The quality of our client base and demand from them validates this seven days a week. I'd like to restate that we're enthusiastic about our strategic course and it remains our core tenant behind the current transition we're working through. Fundamentally, we're confident that the higher quality model we are forging is the right path to achieving substantial and sustainable growth while generating a revenue and earnings profile that will be more highly valued by the market. Our experience through this transition thus far confirms our confidence in the mission, 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. And with that, I'll turn things to Alex for the detailed financial review.