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.

Thank you, Don. And thanks to everyone for joining us today. I'll now provide some additional color on our Q4 and full year results. We generated revenue of $65.4 million in the fourth quarter of 2024, a decrease of 10% from prior year. As Don mentioned in his remarks, we are intently focused on our strategic shift in revenue mix to commerce media. We believe this represents a significant opportunity for Fluent as more and more of our media partners and advertisers are turning to this dynamic advertising medium to maximize customer monetization and return on ad spend. Commerce Media Solutions achieved triple digit year-over-year growth to cap off an exceptional year for this business. In the fourth quarter of 2024, Commerce Media Solutions revenue increased 139% to $17.2 million over fourth quarter of 2023. For the full year, Commerce Media Solutions revenue totaled $41.3 million, an increase of 284% over fiscal 2023. And as Don mentioned, we anticipate triple-digit year-over-year growth rates to continue through 2025. With Commerce Media Solutions serving as a key driver for the year-over-year double-digit company-wide revenue growth, that we expect in the back of the year. As Don mentioned, while owned and operated revenue continues to stabilize, we expect revenue from this business to decrease and commerce media solutions to become a larger portion of the overall revenue mix. We saw a decrease in O&O revenue of 23% in the fourth quarter of 2024 when compared with the prior year period and a decrease in full-year O&O revenue of 29% compared to full year 2023. Media margin in the fourth quarter was $16.5 million, which represents 25.3% of revenue, compared to $24.2 million, or 33.1% of revenue last year. For the full year of 2024, media margin totaled $72.5 million, representing 28.5% of revenues, compared with 91.3 million or 30.6% of revenues in 2023. Media margin was particularly low in the fourth quarter of 2024 due to two unrelated factors. The first being the previously mentioned ACA revenue write-off and the second being a function of increased media costs in our health insurance vertical in the call solutions business. Our Commerce Media Solutions media margin in the fourth quarter of 2024 was $6.8 million, or 39.3% of revenues, compared with $1.3 million, or 18.5% of revenues in the fourth quarter of 2023, demonstrating strong growth in this business. On an annual basis, Commerce Media media margin totaled $14.5 million, or 35.1%, compared with $912,000 or 8.5% of revenues in 2023. On a gap basis, total operating expenses for the fourth quarter of 2024 totaled $16.9 million, a decrease of $2.9 million compared to the fourth quarter of 2023. Full year 2024 total operating expenses totaled $72.3 million, compared with $72.4 million in 2023. We recognized no goodwill and intangible asset impairment charges in the fourth quarter of 2024 or the fourth quarter of 2023. For the full year, we recognized goodwill impairment charges of $1.3 million compared with $55.4 million in 2023. Additionally, we recognized impairment of intangible assets of $980,000 in full year 2024 compared to no impairment of intangible assets in 2023. Adjusted EBITDA in the fourth quarter of 2024 was negative $1.7 million compared with adjusted EBITDA of a positive $2.5 million in the fourth quarter of 2023. As Don stated in his remark, We recorded an ACA-related write-off of accounts receivable and an equal offset of revenue of $2.5 million, which drove adjusted EBITDA into negative territory for the quarter. Adjusted EBITDA for the full year was negative $5.6 million, compared with adjusted EBITDA of $6.8 million in 2023. As we continue to drive our shift in revenue mix to focus on commerce media solutions, we expect adjusted EBITDA margin to improve over time. The company cannot provide a reconciliation to expected net income or net loss as a percentage of revenue for 2025 due to the unknown effect, timing, and potential significance of certain operating costs and expenses, share-based compensation expense, and the provision for or benefit from income taxes. Interest expense in the fourth quarter increased to $1 million. from $784,000, primarily due to a higher average interest rate on our term loan with SLR compared to our term loan with Citizens Bank in the prior year period. For the full year, interest expense was $4.7 million compared with $3.2 million in 2023. We recognized an income tax benefit in the quarter of $1.9 million compared to an income tax benefit of $667,000 in the fourth quarter of 2023. In the full year, we recognized an income tax benefit of $1.8 million and an effective tax rate of 5.8 percent, compared with an income tax benefit of $116,000 and an effective tax rate of 0.2 percent. We reported a net loss of $3.4 million in the fourth quarter compared with the net loss of $1.9 million in the prior year period. An adjusted net loss, a non-GAAP measure of $3.3 million equivalent to a loss of $0.18 per share compared with an adjusted net loss of $386,000 or a loss of $0.03 per share in the fourth quarter of 2023. For the full year, we reported net loss of $29.3 million, compared with a net loss of $63.2 million in the full year of 2023, and an adjusted net loss of $18.5 million, or a loss of $1.14 per share, compared with adjusted net loss of $7.2 million, or a loss of $0.52 per share in 2023. Importantly, the full year of 2023 included goodwill impairment charges of approximately $55 million, which significantly impacted net income in this period.

Shifting now to our balance sheet.

We ended the quarter with $10.7 million in cash and cash equivalents, including restricted cash. Total debt, as reflected on the balance sheet as of December 31, 2024, was $31.9 million, 1.4 million higher than the 30.5 million at December 31st, 2023. As of December 31st, 2024, we had an outstanding principal balance of 31.5 million on our credit facility with SLR Credit Solutions. This facility provides us with a $20 million term loan and a revolving credit facility of up to 30 million that matures on April 2nd, 2029. We're very pleased with the growth of our commerce media business in 2024, and our results reflect the ongoing strategic shift that we've been driving for the past several quarters now. Looking ahead to 2025, our focus is on the continued execution of our strategic pivot to grow our commerce media solutions. To do this, we're entering into partnerships with leading advertising brands and media partners, which we detailed earlier in this call, to enhance Fluent's credibility and market recognition as a leading provider of products and services in the commerce media space. We're also bringing on leading industry talent to help us further our goals. Subsequent to the close of the quarter and the fiscal year, we announced the addition of Adrian Stack as our new chief product officer. Adrian has extensive experience in product development leadership and the commerce media space, and we are thrilled to welcome him to the Fluent team. As we execute on this strategy, we believe that we're positioning Fluent to drive revenue growth, margin expansion, and enhance profitability metrics underscored by the growth and success of our commerce media solutions. With that, we'll be happy to take questions at this time.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

One moment for questions. Our first question comes from Maria Rips with Cancord. You may proceed.

Great. Good morning, and thanks for taking my questions. First, so you scaled your CMS revenue pretty nicely last year. So now that it has reached over $60 million run rate, I guess what's the right way to think about sort of the pace of growth going forward? And so you talk about partnerships, but maybe more broadly, what are some of the key drivers or building blocks from here? And do you have the necessary infrastructure in place to scale this business further?

Hi, Maria. Thanks for your question. So I'll hit a couple of different things in your questions around the CMS revenue. So as you know, we started this business in the first quarter of 2023, and we built it off the of the really strong competitive assets that we have within the owned and operated business. So from a data perspective, technology perspective, et cetera, we were building off a foundation that we had built over 14 years. So, you know, our pipeline is growing aggressively. You know, you can see the numbers, and we do see visibility that we can continue to grow at a triple-digit rate in 2025. And we actually see that continuing on in 2026. Two primary drivers, as you know, one, commerce media is one of the most transformational changes to digital advertising in the last 10 years. So there's a lot of greenfield here where partners are coming in and brands are coming in to participate in commerce media. And the second is that we have now been building our brand and building our ability to drive superior results in the competition. based on our competitive advantages and they're starting to get out in the market to accelerate where we are so you know that's part of why we have you know really came out in q3 to start to talk more about the numbers on commerce media because we do see that visibility and we are confident um it does two things into our business model you know the first one is obviously it's more seasonal based on the verticals that we um that we serve within commerce media on the retail side That obviously is changing our business model and how we look at quarter to quarter. But the more important piece is that revenue is more predictable and it's more valuable, right? We're embedding our technology onto our commerce media partners' websites. We're getting all their transactions that they're getting in a post-transaction environment, and it's a very favorable rev share. So compared relative to the legacy and owned and operated business of Fluent is much more predictable So we have great visibility in terms of how to grow that. You asked a question around how the building blocks and infrastructure and partners. So I'll hit the infrastructure. We are leveraging off the core of what Fluent has built, both from a technology and data perspective, but equally important from sort of a cultural perspective. We come at it as a marketing company. We've been marketing to our own consumers and interacting with them. And we have tons of great first-party data to leverage, and we're bringing that to bear for our new partners on the commerce media side. So the infrastructure, you've seen it in our financial numbers the last two years in 23 and 24 with a heavy investment on the technology and the analytics side to build out specifically for commerce media versus our core owned and operated business. And we see that as we grow this business, it's a much more, we'll be able to manage those expenses, those investments much easier. And as the business grows, the revenue comes in. Did I answer all your questions, Maria, or?

Yeah, yeah, thank you. That's very helpful. And then as it relates to your oh no segment, I guess, is there a portion of the $168 million in revenue that you generated last year that's perhaps a little bit more durable? And I guess, what are your thoughts on maybe stabilizing that segment or some parts of that segment and returning it to growth?

Yeah. So, again, as we've talked, it's a huge competitive advantage for us, but it is not a growth engine, and we don't look at it growing again, Maria, and we look at it as really just how do we stabilize that And how do we leverage those assets? So some of it has to do with the regulatory changes that we talked through at length in the past couple of years about the headwinds there. But equally important, it's primarily around where do we allocate our priorities. And we've continued to invest and move capital and move people towards that commerce media side because of the opportunity there. That really has been our context around that business. It's a huge competitive advantage, and if we keep it flat or we keep the decline in a lower percentage, we will win big on the commerce media side.

Got it. Thank you, Don.

Thank you, Maria.

Thank you. Our next question comes from Patrick Scholl with Barrington Research. You may proceed.

Hi. Kind of following up on the O&O segment or O&O business, do you include the call centers within that? And I guess just on the call center side, if you're stepping away from like the ACA marketplace, can you maybe just talk about where else you have kind of scale within that business?

Good. Thanks for the question. So no, we do not include call center in the O&O business. As we've outlined in the last earnings call, we now look at our business as the O&O business, marketplace, commerce media solutions, and then agency services where Call Solutions is under that agency services line. Just to take a step back, Pat, I know you've been with us for a while, but strategically, Call Solutions expands the size of the O&O marketplace because it allows Fluent through live agent capabilities to direct our consumers to higher value higher consideration categories like health and life and home services. So we do continue to grow that business. And historically, it has been a very consistent, steady performer for us. And that's really the same value proposition on the O&O marketplaces where we're bringing quality consumers to health care providers, primarily Medicare and also in ACA in terms of leads that are going to to aggregators that connect to the insurance companies so um you know we you know we have it's been a steady performer there's been two huge you know obviously changing sweeping changes that we are working our way through um and in that happened in 2024 the first one was the fcc and the cms came out with new um new regulations that caused the demand in our market from our from our um from our clients to shift from taking warm transfers to taking inbound calls. So we did make that shift successfully in Q2, and we were able to drive significant margin in the business. But in Q4, the fact that we were buying media to drive those inbound costs, the media cost caused us to have challenges in Q4 in that business. It's continued on in Q1, that elevated level of media costs. We have a very good plan around diversifying that. It's going to take us a couple of quarters to work through, but the high-quality consumer and the demand and the high-quality partners that we work with continue to be in place for us to drive that business forward.

Okay. And then on Commerce Media Solutions, I think you had mentioned that you're able to leverage the data on the O and O side to support that. I'm just kind of curious with the continued softness in O and O, if that kind of limits the ability to have that data, you know, bolster the commerce media side and, you know, just any sort of like, I guess maybe sort of like an inflection where like you have enough scale in commerce media where, you know, weakness in the O and O side wouldn't necessarily be of kind of risk to continuing to grow that business.

Yeah. Yeah. So you're absolutely right. Obviously, as we've really focused and repositioned O&O around the quality side rather than on the growth side, the data that comes in on a daily basis is less than it was in the past. But, you know, we have 14 years of first party data and consumers coming. over 200 million unique email addresses, and that database obviously is incredibly deep and incredibly large breadth in terms of campaigns and things like that. So even with the smaller traffic and consumers coming on our O and O, that data continues to be very relevant and fresh for us for the commerce media. And I think your second question, there's two big business model things that we're seeing. One is in the second half of this year, we get significant seasonality in that commerce media solution. So we see the second half where we will return to growth, double-digit growth that will drive double-digit growth across the consolidated side of Fluent. And I think that is the inflection point that we see based on based on where we are in the growth and the wins that we're getting in that commerce media platform.

Okay. Thank you.

Thanks, Pat.

Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. Our next question comes from Bill DeZellum with Titan Capital Management. You may proceed.

Thank you. Would you please expand further on a comment in your opening remarks relative to the to the pipeline in the commerce media business, both in terms of the size of that pipeline, in terms of number of prospects, but also the size of those prospects relative to the customers that you currently have on board?

Thanks, Bill. Thanks for the question. So, as I was just Talking a little bit again to Maria, our pipeline continues to grow very, very successfully based on the fact that we are obviously building our brand around driving better results, and also by the fact that the industry, we're sitting in the middle of a fantastic transformative industry with a lot of headwinds, with a lot of tailwinds. So the pipeline continues to grow. at a great pace for us to provide that visibility of triple digit growth rate for that business in 2025. And as we continue to land these brands, these new wins in the verticals, we're able, obviously, from a marketing perspective, penetrate that vertical with great case studies and great marketing materials to accelerate the sales side. You know, it is fantastic momentum and the pipeline is significant in size for us to deliver on our commitment that we've made in terms of growth. Regarding size, you know, there's obviously from a – there's different size brands that we work with. You know, there's large ones that will – that can, you know, have hundreds or have, you know, millions of consumers or some that have smaller ones that come in. We manage the pipeline based on the breadth of that and how do we segment that. But there are some very large transformative partners that we're discussing and we're in the midst of a pipeline that could accelerate that growth rate that we've positioned. We don't factor that into our business, Bill. We don't factor that into our forecast. But as we build our brand and we build our results that we've been able to drive for our partners, We're very pleased with some strategic partnerships that would be transformational for us and grow and accelerate that business revenue that we've laid out for you. But we do not plan our business around that, and we do not run our business by those big deals.

Don, would you please quantify kind of what – transformative would be um any way that you can can scale that for us and um and what's the timeline this is generally speaking larger is uh leads to a longer a longer sales cycle and so is this something that might happen next year or nearer term yep okay great questions so

If you look at an average, it depends a lot on the verticals we're in, but I'll just take retail vertical because that's our largest vertical. A average size partner that we work with might have 10 million post-transaction sessions a year. But that could mean we have very valuable partners that are doing a million. We have very valuable partners that are doing 30 million or 50 million. So that's the range in which you kind of see. in the mix of our portfolio and in the mix of our current clients also. The transformative deals that we're talking about will be a multiple of the high end of that range. So we're talking about things that could literally significantly change the growth projector that we have. Regarding timing, you know, They do take a little bit longer at times, but I'm going to tell you, you guys will be the first to hear when we close one of these deals. So there's things in the pipeline that we think can happen, obviously, in 2025. Great. Thank you.

And would you please talk about what your conversion is? So once you've won a customer and their customer has purchased a product and you're presenting the post-sale ad. What's your conversion rate versus, uh, the, uh, the competition, the rest of the industry?

Yeah. Um, we don't just, well, we do have, we do have some case studies bill that we've given that we made public around, um, around the conversions and revenue. Um, in our investor deck. Obviously, some of this is competitive that we don't want to disclose, but there's two important pieces of this, right? One is the size of the – how the quality of the consumer that we're connecting to our brands, our world-class brands like a Disney or an Apple, et cetera, and we've seen compared to head-to-head competition that the consumer is up over 25% more valuable than the ones that the consumers or the app brands we're connecting the consumers to with our competitors. So that's a significant value proposition for us as higher quality consumers based on our technology and our data and our ability to identify and serve the right ad. On the partner side, we also have a very similar increase uptick in the revenue that we provide our e-commerce partners, up over 20%. So significant uplift in the competitive advantage that we have head-to-head against our competition.

And so when you think about these large prospects, or frankly, the rest of the pipeline that's maybe not necessarily transformative, but all part of the pipeline, is there anything about that pipeline that is different so that you would not be able to generate for them that 25% more value? Because where my mind is going is it seems like your probability of winning, if they're basing their decision on the financial aspect of the transaction, it really increases your chance of winning those deals. Right.

Yep. So the answer is we believe that we are heavily, as we've talked about, we're not in all the verticals, Bill. And obviously, even within the verticals, if you take retail example, there are different audience segments and different things that we've got to work through in terms of getting that same sort of return. But again, that sort of fits to where our value proposition and how we go to market. We're a marketing company that we've been doing it for owned and operated properties for 14 years, and we know how to drive consumer engagement and we know how to drive results. So we're confident that that DNA and that expertise in owned and operated will translate into the different verticals that we enter into. We've laid out in the presentation we are not in some of the verticals that we believe we are going to get into and grow. It's going to take a little bit of time to work through that if we get into, for example, travel. We're not into travel right now, but we're confident that marketing DNA and our first-party data will drive those results across every vertical and across different types of partners within those verticals.

That is helpful. And thank you for all the color. One additional question. Your gross profit dollars, approximately half came from the commerce media business. And you all have been very clear about seasonality within your business. The question is, as you look over the course of the next four quarters, do you see the gross profit dollars coming from commerce media holding and or growing, particularly in Q1 and Q2, or due to the seasonality that those would be under pressure as a percentage of the total gross profit?

Bill, I think I understand your question. I'll answer it two different ways. First, the business mix, right, we're very transparent on the business mix that's been happening around that commerce media. So we see that business mix continuing to increase as a percentage of the total value of the fluent business. So that business mix will continue to drive The margin itself in that commerce media business is relatively consistent and predictable based on that revenue share that we have. So we'll see the margin percent be consistent, but we'll see the mix of that business continue to drive and be more significant part of Fluent overall.

And in Q1 specifically, do you anticipate commerce media percentage of the business To increase or decrease and that really trying to get my head wrapped around the seasonality from that perspective.

Yep. Yeah, so So it will increase as a percentage of the overall fluent business. Yes in q1 We we do we do go down Sequentially from q4 to q1 the business the commerce media business will continue to grow at the rates that we've talked about it's just the seasonality from q4 to q1 and the revenue will decline based on that seasonality.

Great. Thank you, and good luck closing some of these large prospects. Thank you, Bill.

Thank you. I would now like to turn the call back over to Don Patrick for any closing remarks.

Thank you for joining our call today. The key headline is reinforcing why we're you know, so confident about our strategic commitment to win in the rapidly growing commerce media industry. And it leaves us poised for growth through execution to deliver breakout performance in the second half of this year. Thank you for your continued support, and we look forward to giving you an update after Q1.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.