Fluent, Inc.

Good morning and welcome. Thank you for joining us to discuss Fluent's fourth quarter and year-end 2024 earnings results. With me today are Fluent's Chief Executive Officer, Don Patrick, Chief Financial Officer, Ryan Purfitt, and Chief Strategy Officer, Ryan Shulke. Our call today will begin with comments from Don and Ryan Purfitt, followed by a question and answer session. I would like to remind you that this call is being webcast live and recorded. Additionally, there is a slide presentation that accompanies today's remarks, which can be accessed via the webcast and is also available on Fluent's website. A replay of the event will also be made available following the call on Fluent's website. To access the webcast and slide presentation, please visit the investor relations page at 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 only speak as of the date hereof. Actual results could differ materially from those stated or implied by such forward-looking statements due to risk and uncertainties associated with the company's business. These statements may be identified by words such as expects, plans, projects, could, will, estimates, and other words of similar meaning. The company undertakes no obligation to update the information provided on this call for a discussion of risk 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, management will also present certain non-GAAP financial information relating to the media margin, adjusted EBITDA, and adjusted net income. Management evaluates the financial performance of the company's business on a variety of indicators, including these non-GAAP metrics. 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's CEO, Don Patrick.

Good morning.

Thank you all for joining our call today. I'm here together with Ryan Schuelke, our chief strategy officer and company co-founder, and Ryan Perfect, our chief financial officer. Our key focus is to reinforce why we are confident in our strategic commitment to win in the rapidly growing commerce media industry. we achieved 139% growth in Commerce Media Solutions revenue in the fourth quarter compared to Q4 23 and 284% growth for the full year. As of December 31st, 2024, our Commerce Media Solutions business surpassed an annual revenue run rate calculated as explained in our earnings press release in excess of 60 million, up from 50 million as of September 31st, 2024. And we continue to expand our model and grow market share. We are confident that this momentum will continue. We expect strong year-over-year, triple-digit revenue growth continuing throughout 2025. The key driver of this growth has been our growing list of major brands, that see our value proposition and continue to join our roster of partners and advertisers. In 2024, we announced several key partnerships with leading brands during the fiscal year, with significantly more in the pipeline as we move into fiscal 2025. Our strategic plan is grounded in shifting our business mix to the commerce media solutions, where we've invested our financial and human resources to win big. That focus has our post-transaction business building strong brand equity in the marketplace, substantiated by our triple-digit, year-over-year revenue growth in every quarter of 2024. Of strategic significance and a fluent competitive differentiator, we are providing tremendous value to consumers, partners, and advertisers with margins that are accretive to our consolidated business. And while we're confident that we are on a sustainable path, every winning strategy comes with an investment cost, which we've recognized in our financial performance throughout fiscal year 2024. As we invested in growing commerce media solutions, we've also embarked on a parallel path, contracting our larger nucleus of owned and operated properties to focus on fewer targeted businesses that we find strategically compelling in the longer term. And as we continue to stabilize and ultimately strengthen our own and operating marketplace position against businesses we can grow, Q4 revenue and media margins were negatively impacted by significant increases in media costs on the biddable platforms. The key driver here was the enormous social media advertising spend driven by the U.S. presidential election, which significantly affected our ability to buy media at acceptable margins. So we consciously chose not to chase this volume. until media pricing came back to more traditional levels post-election. But make no mistake, we still maintain our leadership position and own an operating marketplace and provides us market credibility and unique client access based on those capabilities we bring to market and at a level that is effective, efficient, and higher quality than any of our competitors set. Still, This has cost us profitability in 2024 that we see as a required investment in our future. Furthermore, as part of our broader strategic repositioning, we discontinued the ACA portion of our call solutions business. In Q4, adjustments made by insurance companies in response to widespread fraudulent activity in the government ACA marketplace necessitated a $2.5 million non-recurring write-down of revenue to reflect this change in our estimate of accounts receivable. This write-down caused adjusted EBITDA to be negative for the quarter. All this being said, the consolidated Q4 performance was a disappointment, particularly the continued industry-wide issues affecting call solutions. However, we see this as having no additional effect on our longer-term strategy to drive value through our strategic pivot to commerce media solutions. We are confident in our ability to return to year-over-year, double-digit consolidated revenue growth, profit growth, and enhance our enterprise margins in 2025. As we enter 2025, we are doing so with strategic clarity and momentum that continues to grow alongside a transformative near $50 billion marketplace. It is important to stand back and understand how our pivot significantly expands our addressable market. According to Boston Consulting Group, the commerce media industry is estimated at a total value of over $50 billion and is expected to reach over $100 billion over the next five years, accounting for over 25% of all digital media spending as the market continues to evolve. Importantly, we are now well grounded as an emerging leader in this explosive high growth market with significant upside. Over the last two years, we have successfully proven that we can adeptly enable and empower our commerce media partners to participate in this large and rapidly growing market. And we are a proud reflection of the brands with whom we partner. Here's a sample of some great companies in our commerce media network. Partnerships like these validate Fluence products and are driving the growth of our commerce media solutions business. We're honored to be working with such an impressive roster of media partners across diverse verticals, including retail, grocery, ticketing, and quick serve restaurants. Our line goals are consistent. as we aim to maximize revenue opportunities for our partners, increase conversion rate for advertisers, and build more meaningful, higher quality experiences for our consumers. To put our ongoing shift in business mix into perspective, in 2023, Commerce Media Solutions accounted for 4% of Fluent's consolidated revenue compared to 16% in 2024. That trend line shift continued in Q4, where Commerce Media Solutions represented 26% of consolidated revenue, its strongest seasonal quarter. And we certainly expect this healthy growth to continue as we've delivered triple-digit, year-over-year percentage growth in commerce media segments since its inception. This growth is supported by our proprietary first-party data that we've collected over 14 years as a leader in the customer acquisition services via our owned and operated marketplace, as well as embedded AI power technology that allows us to establish long-term contracts and mutually beneficial revenue share agreements with our commerce media partners. Accordingly, and as we continue to place our financial and human resources against our growth strategy, while owned and operated will continue to play a vital role in our business, Revenue will continue to decrease as a percentage of sales, as higher margin commerce media solution revenue grows, as advertisers lean into our higher quality consumer engagement platform. Before I turn the call over to our Chief Financial Officer, Ryan Perfect, I wanted to provide a brief quarter-by-quarter comparison of the performance of our commerce media solutions dating back to its launch in the first quarter of 2023. As you can see in the graph on slide seven, our Commerce Media Solutions revenue has demonstrated exponential growth with steadily improving gross margins since this segment was launched in the first quarter of 2023. And the business obviously continues to represent a growing share of our consolidated revenue mix. Looking ahead, we expect to see flat year-over-year consolidated revenue in the first half of 2025, primarily due to revenue declines related to the businesses we discontinued or shifted investment away from in 2024, as well as seasonality in the many commerce media verticals that we presently serve. As we progress through the year, we expect the total company revenue growth will accelerate in the second half of 2025, driven by strong performance in our commerce media segments. The corresponding impact on the fiscal year will be significant, as we expect to deliver double-digit year-over-year growth in fluent consolidated revenue and gross profit. We remain bullish about the momentum we've generated in our strategic pivot, as we leverage the competitive advantages of our owned and operated marketplaces and accelerate into exciting and significant high-growth opportunity in the large and growing commerce media industry. Importantly, we are expanding our strategic value proposition to world-class partners beyond customer acquisition, delivering higher quality consumer engagement across the entire marketing funnel. As our strategic trend line continues in 2025, we believe shareholder value will follow. And with that, I'll turn it to Ryan Perfect to provide more detail to our financial results.