Fluent, Inc.

Fluent, Inc. is a commerce media solutions provider that connects brands with consumers through scalable digital marketing campaigns ¹. The company operates primarily through its Commerce Media Solutions marketplace and its owned and operated digital media properties (O&O Sites) ¹. In 2025, Fluent delivered customer acquisition services for approximately 400 consumer brands, direct marketers, and agencies across various industries including Media & Entertainment, Financial Products & Services, Health & Life Sciences, Retail & Consumer, and Staffing & Recruitment ¹. The company's core business model revolves around performance-based compensation, typically on a "per click," "per lead," or "per action" basis, aligned with client customer acquisition cost targets ¹. For its O&O Sites, Fluent bears the cost of acquiring consumers from media partners, while its Commerce Media Solutions business operates under exclusive long-term contracts with media partners, generally remunerating them on a revenue share basis and not bearing significant media inventory risk ¹.

Fluent's Commerce Media Solutions business embeds proprietary ad-serving technology within e-commerce and digital media transaction flows on partner sites and mobile apps, capitalizing on high engagement moments like post-purchase pages to improve conversion ¹. These exclusive agreements with media partners typically have one-to-five year terms ¹. The O&O Sites attract consumers through promotional offerings, rewarding them for completing activities on the sites ¹. Upon registration, consumers provide personal information and opt-in consent for telemarketing and email marketing, with over 90% of these users engaging via mobile devices or tablets ¹. This first-party, self-declared user information is then leveraged to serve targeted advertisements and provide clients with contact information for direct outreach ¹. Additionally, Fluent operates AdParlor, LLC, a wholly-owned subsidiary that offers managed creator marketing and media buying services across social media platforms as a non-core business ¹.

For the fiscal year ended December 31, 2025, Fluent reported total revenue of $208.764 million ¹. This represents an 18% decrease compared to $254.623 million in 2024 ¹. The company recorded a net loss of $27.167 million ¹, an improvement from a net loss of $29.277 million in 2024 ¹. Diluted EPS for 2025 was $(1.05) ¹, compared to $(1.80) in 2024 ¹. Gross profit (exclusive of depreciation and amortization) decreased by 16% to $51.241 million ¹ in 2025, representing 25% of revenue ¹, up from $60.802 million ¹ and 24% of revenue ¹ in 2024. Media margin decreased by 21% to $57.595 million ¹, representing 27.6% of revenue ¹, down from $72.512 million ¹ and 28.5% of revenue ¹ in 2024. Adjusted EBITDA was negative $9.022 million ¹ in 2025, compared to negative $5.619 million ¹ in 2024. Adjusted net loss was $21.846 million ¹, or $(0.84) per share ¹, compared to $18.483 million ¹, or $(1.14) per share ¹, in 2024.

The decrease in revenue for 2025 was primarily driven by a decline in owned and operated marketplaces revenue, which fell from $168.411 million ¹ in 2024 to $94.509 million ¹ in 2025, mainly due to reduced media supply from changes in business practices to comply with the FTC Consent Order ¹. This decline was partially offset by significant growth in the Commerce Media Solutions business, which saw its revenue increase from $41.267 million ¹ in 2024 to $82.268 million ¹ in 2025 ¹. Other revenue streams decreased from $44.9 million ¹ in 2024 to $32.0 million ¹ in 2025, primarily due to lower fourth-quarter results in the Call Solutions business ¹. Cost of revenue (exclusive of depreciation and amortization) decreased by 19% to $157.523 million ¹ in 2025 from $193.821 million ¹ in 2024, with the overall percentage of revenue decreasing to 75.5% ¹ from 76.1% ¹.

Sales and marketing expenses decreased by 16% to $14.492 million ¹ in 2025 from $17.317 million ¹ in 2024, mainly due to lower employee-related costs from headcount reductions, partially offset by increased advertising costs ¹. Product development expenses decreased by 31% to $11.843 million ¹ in 2025 from $17.281 million ¹ in 2024, driven by lower headcount and reduced IT vendor spend ¹. General and administrative expenses decreased by 8% to $34.702 million ¹ in 2025 from $37.697 million ¹ in 2024, also primarily due to lower headcount and a decrease in acquisition-related costs, partially offset by increased professional fees and restructuring costs ¹. The company incurred $1.3 million ¹ in exit-related restructuring costs in Q1 2025 and $0.1 million ¹ in Q4 2025 due to workforce reductions ¹.

Interest expense, net, decreased by 35% to $3.074 million ¹ in 2025 from $4.749 million ¹ in 2024, attributed to lower average outstanding debt balances and interest rates on the SLR Credit Agreement, as well as lower amortization of debt costs ¹. A loss on early extinguishment of debt of $3.759 million ¹ was recorded in 2025, up from $1.009 million ¹ in 2024, due to the repayment of the SLR Credit Facility ¹. The fair value adjustment of Convertible Notes with related parties decreased by 99% to $14 thousand ¹ in 2025 from $1.670 million ¹ in 2024 ¹.

As of December 31, 2025, Fluent had cash, cash equivalents, and restricted cash of approximately $13.7 million ¹, an increase of $3.0 million ¹ from $10.7 million ¹ as of December 31, 2024 ¹. Net cash used in operating activities was $1.5 million ¹ in 2025, a significant improvement from $14.1 million ¹ in 2024 ¹. Net cash used in investing activities slightly increased to $6.4 million ¹ in 2025 from $6.2 million ¹ in 2024, mainly due to increased investment in capitalized software ¹. Net cash provided by financing activities decreased to $10.8 million ¹ in 2025 from $15.2 million ¹ in 2024, primarily due to a net reduction of short and long-term debt and lower net proceeds from equity sales ¹. The company had noncancelable operating lease commitments of $3.6 million ¹ and a total debt principal balance of $31.8 million ¹ as of December 31, 2025.

A significant operational development was the sale of the Call Solutions business, through the sale of all membership interests of Winopoly, LLC, an indirect subsidiary, on January 31, 2026 ¹. This divestiture is expected to improve cash flow by ceasing ongoing losses from that business and generating monthly seller note payments of $0.1 million ¹ for 36 months ¹. Additionally, Fluent entered into an Accounts Receivable Finance Agreement with Bay View Funding in November 2025, replacing the SLR Credit Agreement, which provides up to $30.0 million ¹, net, in advances on eligible accounts receivables and has no financial covenants that could cause non-compliance ¹. The company also entered into an At-the-Market Issuance Sales Agreement for up to $11.2 million ¹ to offer and sell shares of its common stock ¹.

Management has explicitly stated that it expects year-over-year declines in the owned and operated marketplace to continue, but anticipates these declines will be more than offset by the continued growth of Commerce Media Solutions ¹. Based on current performance trends, Commerce Media Solutions is expected to represent a majority of consolidated revenue in 2026 and continue to grow as the company onboards additional media partners and expands into new verticals ¹. The mix and profitability of Commerce Media Solutions will be influenced by the pace of new partner onboarding, the terms of revenue share arrangements with media partners, and advertiser demand across the verticals served ¹.

A major growth area for Fluent is the expansion of its Commerce Media Solutions network through continued investment in sales efforts and product development ¹. This includes extending its post-transaction media footprint through new partner integrations and surface areas, enhancing creative formats and consumer-facing experiences to drive engagement and advertiser performance, and expanding reach across mobile app environments beyond its existing mobile web presence ¹. The company's proprietary identity graph, enriched through partnerships with third-party data providers and privacy-centric data architecture, is central to the platform's effectiveness, powering machine learning-driven ranking and bidding systems to optimize ad placement and predict conversion outcomes ¹.

Another growth vector involves increasing the monetization of its media network by presenting consumers with a broad array of offers curated to their preferences, informed by first-party data and ad-serving logic ¹. This strategy aims to strengthen relationships with existing advertisers and build new ones, with continuous enhancement of product offerings and targeting capabilities to optimize network value and achieve higher per-unit profitability ¹. The company is also focusing on higher quality traffic to its O&O Sites by implementing initiatives to remove lower quality consumer traffic, including traffic that did not consistently meet self-imposed regulatory standards, which has increased user participation and conversion rates, leading to higher payouts from "name brand" advertiser clients ¹.

Regarding operational outlook, Fluent is investing in modernizing its legacy consumer platforms to improve domain reputation, streamline site experiences, and ensure operational continuity as workloads migrate toward more scalable, cloud-native infrastructure ¹. These efforts are designed to protect and extend the value of existing media properties while aligning them with the technology standards and compliance posture of the commerce media business ¹. The company has also streamlined its organization through targeted workforce reductions, incurring $1.3 million ¹ in exit-related restructuring costs in Q1 2025 and $0.1 million ¹ in Q4 2025 ¹.

Planned capital allocation includes continued investment in technology for the Commerce Media Solutions business to maintain and grow its competitive position ¹. The company also entered into an At-the-Market Issuance Sales Agreement for up to $11.2 million ¹ to offer and sell shares of its common stock, with net proceeds intended for general corporate purposes, including capital expenditures, working capital, and general and administrative expenses ¹. Fluent does not intend to pay cash dividends for the foreseeable future ¹.

Management explicitly flagged structural headwinds and execution risks, including the continued decline in user registrations on O&O Sites due to changes in traffic sourcing practices, regulatory constraints, and broader media supply challenges ¹. The success of the strategic shift to Commerce Media Solutions depends on the company's ability to onboard and retain media partners, achieve favorable economics under long-term agreements, and maintain advertiser demand, with no assurance that this strategy will be successful ¹. The company also has a history of not meeting its forecasts, and any significant deviations could adversely affect liquidity and ability to access financing ¹. Geographic, regulatory, and macro factors identified as constraints include the evolving regulatory landscape for digital advertising, telemarketing, and data privacy, which may impose additional restrictions and costs ¹. The company's international operations in the U.S., UK, Canada, and Australia subject it to increased challenges and risks related to cross-border data transfers, compliance with anti-bribery laws, and economic and political instability ¹.

Fluent faces substantial doubt about its ability to continue as a going concern due to historical losses, including a net loss of $27.2 million ¹ in 2025, and its dependence on the uncommitted Accounts Receivable Finance Agreement with Bay View Funding, which provides up to $30.0 million ¹ in advances on eligible receivables but is subject to Bay View's discretion and various eligibility criteria ¹. The company operates in a competitive, rapidly changing digital marketing industry, making it difficult to evaluate its business and prospects, and is exposed to credit risk from clients, some of whom are thinly capitalized ¹. A material percentage of consolidated revenue, approximately 38% ¹ in 2025, is derived from gaming (apps) advertisers, exposing the company to risks associated with that industry, including changes in consumer tastes, regulatory restrictions, and platform policies ¹. The regulatory landscape is constantly evolving, with federal and state laws like the TCPA and CAN-SPAM, and comprehensive consumer privacy laws such as the CCPA, imposing significant compliance costs and potential liabilities, including statutory penalties of $500 to $1,500 per call or text in violation of TCPA ¹. Cybersecurity risks are increasing due to new technologies and sophisticated attacks, and while the company maintains a risk management program, a material incident could adversely affect its business ¹. The company may require additional capital in the future, and equity or debt financings could have a dilutive effect on existing stockholders ¹. The concentration of stock ownership, with executive officers, directors, and 10% or more holders beneficially owning approximately 60.5% ¹ of outstanding common stock as of December 31, 2025, presents risks related to liquidity and influence over corporate matters ¹.

Management's message to shareholders conveys a tone of strategic transition and cautious optimism, acknowledging past challenges while emphasizing future growth opportunities. They explicitly state that the company has experienced a continued decline in user registrations on O&O Sites due to changes in traffic sourcing practices, regulatory constraints, and broader media supply challenges, which have reduced revenue and profitability, and do not expect registration volume to return to prior levels ¹. In response, management has shifted its strategic focus toward scaling the Commerce Media Solutions business, which has demonstrated growth and operates under a different economic model that reduces exposure to certain media sourcing risks ¹. A key strategic priority is to continue to meet its forecast for revenue and net income over the next twelve months from the date of filing, which is expected to improve the likelihood of continued access to the Bay View facility and adequate liquidity ¹. Another strategic priority is the reallocation of resources to Commerce Media Solutions, which is forecasted to improve results of operations and support liquidity, following the sale of the Call Solutions business on January 31, 2026, which is expected to improve cash flow by ceasing ongoing losses and generating monthly seller note payments of $0.1 million ¹ for 36 months ¹. Finally, management is emphasizing product development efforts centered on scaling and advancing the commerce media platform, including expanding its post-transaction media footprint, enhancing creative formats, and extending reach across mobile app environments, while also investing in modernizing legacy consumer platforms ¹.