Fluent, Inc.

The conference will begin shortly. To raise your hand during Q&A, you can dial star 1 1. Okay, good day, and thank you for standing by. Welcome to the Fluent, Inc. Third Quarter 2022 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I WOULD NOW LIKE TO HAND THE CONFERENCE OVER TO YOUR SPEAKER TODAY, DAN BARSKY, GENERAL COUNSEL. PLEASE GO AHEAD.

GOOD AFTERNOON AND WELCOME. THANK YOU FOR JOINING US TO DISCUSS OUR THIRD QUARTER 2022 EARNINGS RESULTS. JOINING ME ON TODAY'S CALL ARE FLUENCE CEO, DON PATRICK, OUR CFO, SAGUNDA KANDAHWAL, AND RYAN SCHULKE, OUR COFOUNDER AND CHIEF STRATEGY OFFICER. Our call will begin with comments from Don and Sagunda, followed by a question and answer session. I'd 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 the investor relations page of our website, www.fluentco.com. Before we begin, I'd like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements which are 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, MAY, AND OTHER WORDS OF SIMILAR MEANING. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THE INFORMATION PROVIDED ON THIS CALL. FOR A DISCUSSION OF THE RISK AND UNCERTAINTIES ASSOCIATED WITH FLUENCE 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 metrics relating to media margin, adjusted EBITDA, and adjusted net income. Management evaluates the financial performance of our business on a variety of indicators, including these financial metrics. The definition of these metrics and reconciliations to the most directly comparable GAAP financial measures are provided in the earnings press release issued later today. With that, I'm pleased to introduce Fluent CEO, Don Patrick.

Thank you, Dan, and good afternoon. Thanks to all of you for joining our call today. I'm here together with Ryan Schuelke, our Chief Strategy Officer, Chairman of the Board and Company Founder, and Zagunda Kondiwal, our Chief Financial Officer. I'll make some brief comments about our third quarter results. which really reinforce the imperative behind our commitment to enhance the quality of our consumer engagements within our performance marketplace. I'll then update you on the discipline progress we're making against our strategic priorities. While our industry continues to experience dynamic change and where consumers are reacting to substantial inflationary headwinds. Our Q3 2022 results came in as planned off a very strong Q2. and consistent with our strategic course. Financial results were as follows. Revenue of $89 million represents 4% year-over-year growth and is in line with what we advised in our last earnings release as we opportunistically accelerated our Q3 initiatives forward into Q2 in anticipation of marketplace uncertainties. In turn, Revenue growth for Q2 and Q3 combined was up 18% versus 2021 and is a positive reflection of our long-term growth strategies. Our median margin of $28.1 million is up 16% year-over-year at 31.5% of revenue. Expanding our media footprint and strengthening our performance marketplace continue to drive margin improvement year-over-year consistent with our strategy. Adjusted EBITDA of $5.9 million represents 6.6% of revenue, down $0.4 million year-over-year. This reflects our ongoing strategic investments focused on enhancing our platform while expanding the quality-grounded consumer experiences within our performance marketplace. As I discussed in the last earnings release, A strong Q2 revenue and median margin growth reflected the effects of our Q3 2022 strategic initiatives that hit earlier than our original plan, the result of our consciously leaning into momentum. In turn, Q2 and Q3 results landed where we had planned. Given the more volatile macroeconomic environment in the second half and the required strategic and economic adjustment, we are seeing a parallel in our Q2, Q3 results for the full year. our strong first half performance landing us where we planned for the full year of 2022. In the process, we continue to test and learn to ensure all growth initiatives are aligned against our strategic course. This is a fundamental practice in our evolving business model. In Q3, we are encouraged by our double-digit revenue growth of our core rewards business. directly resulting from the momentum of our consumer engagement and CRM strategic initiatives, where we are committed to winning in the long term. Rewards revenue growth was primarily offset by our jobs business due to challenges we faced with our technology platform migration, coupled with difficult year-over-year industry comps. Of strategic relevance, is how we proactively manage the mix across our initiatives to prudently expand our business unit margins where market opportunities exist. And we are pleased that the majority of our businesses show double digit year over year margin improvement. Our ability to remain strategic yet nimble is important given the current market realities. It enables us to invest with purpose when growth opportunities present themselves. Our third quarter operating results exhibit the continued progress we're making on our long-term strategic growth plan. We are focused squarely on the consumer engagement, along with enhancing the quality experience within our performance marketplace. While the entire industry is responding to a turbulent economic environment, we remain excited for 2023, as we believe the fundamentals that we put in place today will pay longer-term strategic and financial dividends. Creating more effective, long-term customer acquisition solutions for our clients while successfully positioning Fluent as a market leader is a winning road forward, and it represents a more sustainable Fluent business for our stakeholders. Our everyday mission remains strengthening and expanding our Fluent's three strategic growth pillars, our media footprint, our platform, and our performance marketplace. Fluent's ultimate competitive advantage is enhancing our go-to-market capabilities within the logical points of intersection across each pillar. We call this our flywheel, and it represents the differentiated position in the marketplace, our sweet spot, if you will. As I mentioned, given the market dynamics will remain, our intent is to invest strategically and then rapidly test and learn. We're not afraid of making a strategic bet, as our model is designed to validate, or eradicate, pivoting fluidly into long-term strategic growth opportunities where we believe we can win based on fluent competencies. We continue to make meaningful progress here, and we expect to see more strategic and financial dividends in 2023 and beyond. We highlighted the initiatives within our pillars in the past earning releases. So I want to simplify by providing executive summary and how these strategic growth pillars interplay across one another in our quality flywheel. Again, our goal is to deliver higher quality consumer engagement, which we believe is required path to consumer satisfaction and higher lifetime value. Winning here represents a significant long-term strategic and financial opportunities for Fluent. Number one, we are aggressively investing in quality at the conscious expense of our bottom line, and we are convinced it will pay long-term strategic and financial dividends. Our traffic quality initiative has strategically evolved our media footprint by delivering a more highly engaged and motivated consumer to our digital media properties. In logical sequence, we continue to grow our media footprint through channeled partnerships and geographic expansion so that we can meet and exceed consumer expectations And those consumers in turn look forward to future engagements. Number two, consumer engagement is an unquestioned strategic priority, as is increased audience personalization of our marketing campaigns. When a high quality driven consumer visits our property with influence digital media portfolio, the integrity of our first party data is pivotal to identifying the consumer's intent, need or desire. Combined with our ability to gather and enable real-time insights via our analytics and technology platform, this Fluent capability allows us in real time to present relevant offers to each segmented audience from our world-class clients. We then evolve our campaigns based on consumer learning, and the insights gleaned represent an inherent competitive advantage for Fluent. Critical in building Fluent brand equity is that when the consumer wins, so does our roster of clients. Number three, CRM leverages the capabilities of all three strategic growth pillars to drive increasing consumer lifetime value along with enterprise value for our shareholders. Our CRM technology and capabilities engage with consumers who willingly return to our media properties. Here, we leverage their prior survey responses and performance marketplace experiences, allowing us to utilize their personal insights as a strategy to strengthen the relevancy and improve consumer engagement. This is the path to increasing consumer lifetime value, a significant revenue and margin strategy. As you can see, our quality flywheel enhances our go-to-market capabilities across our media footprint, our performance marketplace, and our platform. This provides a significant market play in attracting, engaging, and creating meaningful long-term relationships with consumers, while also strengthening our relationship with world-class clients and key industry verticals. Regarding Q4, given the unpredictable macro and geopolitical economic outlook, we are certainly seeing a parallel level of unpredictability in the digital advertising industry. where consumers and our clients pause to assess the road ahead. The ramifications for Fluent are difficult to gauge and remain fluid, but we obviously expect to see growth continuing to moderate compared to the first half, with consumers spending less and the clients operating more cautiously while tightening their budget. Adding to this market-wide complexity, is that we are also seeing certain media costs increase above historical Q4 seasonal norms based on widely reported industry headwinds facing social media platforms. As a result, we are leaning into industry verticals and client partnerships, like health insurance, that have strong seasonal demand for our audiences while also managing media mix in the immediate term. We do believe media costs will return to more historic norms after the holiday spending season, and at that point will positively impact spending across our media footprint. We maintain our belief that on a fiscal year basis, our annual 2022 financial results will continue to show revenue growth at or above industry growth rates as we look to earn market share in key strategic growth areas. In closing, We anticipate the economic environment will remain volatile for some time, and we will strategically and financially adapt to the economic realities by balancing our investments and managing our business mix without compromising our key long-term strategic bets. We remain focused on our well-defined growth pillars and will continue leaning into strategically compelling revenue opportunities where we believe we have a different position and a significant consumer runway for margin expansion over time. This is the decided path to winning more quality-driven consumers and establish competitive advantage in the marketplace, while also creating shareholder value for investors. And with that, I'll turn to Sugandha to provide more detail on our financial results.