AP NEWS

Fluent Announces Third Quarter 2018 Financial Results

November 7, 2018

Second Full Quarter as a Standalone Public Company Produces $66.5 Million in Revenue,

$4.5 Million in Net Income, Resulting in $0.06 in Basic Earnings Per Share

NEW YORK, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Fluent, Inc. (NASDAQ:FLNT) a leading data-driven performance marketing company, today announced financial results for the quarter ended September 30, 2018.

“We are happy to report record numbers for our three key operating metrics: revenue, adjusted gross profit, and adjusted EBITDA,” stated Ryan Schulke, Fluent’s CEO. “The increased adoption of our performance-based marketing services, coupled with operating efficiencies, has allowed us to deliver a very good quarter for our shareholders.”

Third Quarter Financial Results

For the three months ended September 30, 2018, as compared to the three months ended September 30, 2017:

• Total revenue increased 21% to $66.5 million, from $54.9 million. • Net income from continuing operations was $4.5 million, compared to net loss from continuing operations of $10.8 million. • Results from discontinued operations were $0, compared to net loss from discontinued operations of $3.3 million. • Basic earnings per share from continuing operations was $0.06, compared to a loss of $0.19 per share. • Adjusted EBITDA grew 56% to $12.4 million, based on net income of $4.5 million, compared to adjusted EBITDA of $7.9 million on net loss of $14.1 million. • Adjusted gross profit increased 43% to $27.4 million, from $19.2 million. Adjusted gross margin increased 600 basis points to 41%, from 35%.

Adjusted EBITDA, adjusted gross profit and adjusted gross margin are non-GAAP financial measures. Reconciliation of these non-GAAP measures are provided in the attached tables.

Third Quarter and Recent Business Highlights

• Surpassed 200 million unique email addresses in the Fluent Identity Graph. • Expanded revenue and margins as a result of consumer re-engagement through lifecycle marketing initiatives. • Successfully deployed machine learning to enhance audience segmentation and drive incremental monetization. • Increased scale and profitability in our UK beta launch.

Conference Call

Fluent, Inc. will host a conference call on Wednesday, November 7, 2018 at 4:30 PM ET to discuss its 2018 third quarter financial results. To listen to the conference call on your telephone, please dial (888) 339-0797 for domestic callers or (412) 317-5248 for international callers. To access the live audio webcast, visit the Fluent website at www.fluentco.com. Please login at least 15 minutes prior to the start of the call to ensure adequate time for any downloads that may be required. Following completion of the earnings call, a recorded replay of the webcast will be available for those unable to participate. To listen to the telephone replay, please dial (877) 344-7529 or (412) 317-0088 with the replay passcode 10123609. The replay will also be available for one week on the Fluent website at www.fluentco.com.

About Fluent, Inc.

Fluent (NASDAQ:FLNT) is the trusted acquisition partner for growing brands. Leveraging our proprietary first party data asset, Fluent creates marketing programs that deliver better digital advertising experiences for consumers and measurable results for advertisers. Founded in 2010, the company is headquartered in New York City. For more information, visit www.fluentco.com.

FORWARD-LOOKING STATEMENTS

This press release and the conference call contain “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipate,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning. Such forward looking statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and the conference call and speak only as of the date of this press release and the conference call and are advised to consider the factors under the heading “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q and other SEC filings. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

FLUENT, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands, except share and per share data)(unaudited)

September December 31, 30, 2018 2017 ASSETS: Current assets: Cash and cash equivalents $ 17,361 $ 16,564 Accounts receivable, net of allowance for doubtful accounts of $1,751 and $1,624 39,726 36,278 at September 30, 2018 and December 31, 2017, respectively Prepaid expenses and other current assets 1,779 1,865 Current assets of discontinued operations — 2,274 Total current assets 58,866 56,981 Property and equipment, net 421 687 Intangible assets, net 66,065 74,354 Goodwill 159,791 159,791 Other non-current assets 564 1,097 Non-current assets of discontinued operations — 24,089 Total assets $ 285,707 $ 316,999 -- ------- - LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 7,249 $ 7,408 Accrued expenses and other current liabilities 15,395 14,967 Deferred revenue 714 265 Current portion of long-term debt 7,227 2,750 Current liabilities of discontinued operations — 7,389 Total current liabilities 30,585 32,779 Promissory notes payable to certain shareholders, net — 10,837 Long-term debt, net 52,463 49,376 Total liabilities 83,048 92,992 Shareholders’ equity: Preferred stock - $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and — — outstanding at September 30, 2018 and December 31, 2017 Common stock - $0.0005 par value, 200,000,000 shares authorized; 76,516,415 and 61,631,573 shares issued at September 30, 2018 and December 31, 2017, 38 31 respectively; and 75,291,330 and 61,279,050 shares outstanding at September 30, 2018 and December 31, 2017, respectively Treasury stock, at cost, 1,225,085 and 352,523 shares at September 30, 2018 and (3,253 ) (1,274 ) December 31, 2017, respectively Additional paid-in capital 392,886 392,687 Accumulated deficit (187,012 ) (167,437 ) Total shareholders’ equity 202,659 224,007 Total liabilities and shareholders’ equity $ 285,707 $ 316,999 -- ------- - -- ------- -

FLUENT, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in thousands, except share and per share data)(unaudited)

Three Months Ended September Nine Months Ended September 30, 30, 2018 2017 2018 2017 ------------- ----------- --------------- ----------- Revenue $ 66,535 $ 54,942 $ 179,459 $ 155,167 Costs and expenses: Cost of revenue (exclusive of depreciation and 39,090 35,732 108,646 104,310 amortization) Sales and marketing expenses 4,186 5,105 11,870 13,478 General and administrative expenses 13,563 19,143 33,456 45,788 Depreciation and amortization 3,352 3,297 10,021 9,736 Write-off of long-lived assets — — — 3,626 Spin-off transaction costs — — 7,708 — Total costs and expenses 60,191 63,277 171,701 176,938 Income (loss) from operations 6,344 (8,335 ) 7,758 (21,771 ) Interest expense, net (1,882 ) (2,426 ) (6,209 ) (7,098 ) Income (loss) before income taxes from 4,462 (10,761 ) 1,549 (28,869 ) continuing operations Income taxes — — — — Net income (loss) from continuing operations 4,462 (10,761 ) 1,549 (28,869 ) Discontinued operations: Loss from operations of discontinued operations, — (3,334 ) (2,084 ) (18,360 ) net of $0 income taxes Loss on disposal of discontinued operations, net — — (19,040 ) — of $0 income taxes Net loss from discontinued operations — (3,334 ) (21,124 ) (18,360 ) Net income (loss) $ 4,462 $ (14,095 ) $ (19,575 ) $ (47,229 ) Basic and diluted earnings (loss) per share: Continuing operations $ 0.06 $ (0.19 ) $ 0.02 $ (0.53 ) Discontinued operations $ — $ (0.06 ) $ (0.29 ) $ (0.34 ) Net income (loss) $ 0.06 $ (0.25 ) $ (0.26 ) $ (0.86 ) Weighted average number of shares outstanding: Basic and diluted 78,199,579 55,390,247 73,941,595 54,665,776

FLUENT, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(unaudited)

Nine Months Ended September 30, 2018 2017 --------------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (19,575 ) $ (47,229 ) Net loss from discontinued operations 21,124 18,360 Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities: Depreciation and amortization 10,021 9,736 Non-cash interest expense and related amortization 1,491 2,268 Share-based compensation expense 11,855 25,456 Write-off of long-lived assets — 3,626 Provision for bad debts 462 2,175 Allocation of expenses to red violet (325 ) (2,849 ) Changes in assets and liabilities: Accounts receivable (3,910 ) (7,708 ) Prepaid expenses and other current assets (112 ) (528 ) Other non-current assets 533 71 Accounts payable (159 ) (7,464 ) Accrued expenses and other current liabilities 628 8,900 Deferred revenue 449 154 Net cash provided by operating activities from continuing operations 22,482 4,968 Net cash used in operating activities from discontinued operations (5,835 ) (7,902 ) -------------- - ---------- - Net cash provided by (used in) operating activities 16,647 (2,934 ) -------------- - ---------- - CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (107 ) (668 ) Capitalized costs included in intangible assets (995 ) (694 ) Capital contributed to red violet (19,728 ) — -------------- - ---------- - Net cash used in investing activities from continuing operations (20,830 ) (1,362 ) Net cash used in investing activities from discontinued operations (1,386 ) (5,294 ) -------------- - ---------- - Net cash used in investing activities (22,216 ) (6,656 ) -------------- - ---------- - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of shares, net of issuance costs 13,392 — Proceeds from debt obligations, net of debt costs 67,182 14,039 Repayments of long-term debt (72,229 ) (3,472 ) Taxes paid related to net share settlement of vesting of restricted stock (1,979 ) (743 ) units -------------- - ---------- - Net cash provided by financing activities from continuing operations 6,366 9,824 Net increase in cash and cash equivalents $ 797 $ 234 Cash and cash equivalents at beginning of period 16,564 10,089 -------------- - ---------- - Cash and cash equivalents at end of period $ 17,361 $ 10,323 ------ ------- - -- ------- - SUPPLEMENTAL DISCLOSURE INFORMATION Cash paid for interest $ 4,931 $ 4,940 Cash paid for income taxes $ — $ — Share-based compensation capitalized in intangible assets $ 364 $ 373 Reduction in value of puttable common stock classified as liability $ (200 ) $ —

Use and Reconciliation of Non-GAAP Financial Measures

Management evaluates the financial performance of our business on a variety of key indicators, including adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin. Adjusted EBITDA is a non-GAAP financial measure equal to net income (loss), the most directly comparable financial measure based on US GAAP, adding back net loss from discontinued operations, interest expense, depreciation and amortization, share-based compensation expense, acquisition and restructuring costs, write-off of long-lived assets, and certain litigation and other costs, as noted in the tables below. Adjusted net income (loss) and the related basic and diluted per share amounts are non-GAAP measures equal to net income (loss) from continuing operations, the most directly comparable financial measure based on US GAAP, adding back the effect of spin-off transaction costs. We define adjusted gross profit as revenue less cost of revenue (exclusive of depreciation and amortization), and adjusted gross margin as adjusted gross profit as a percentage of revenue.

Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2018 2017 2018 2017 --------- ----------- ----------- ---------- Net income (loss) $ 4,462 $ (14,095 ) $ (19,575 ) $ (47,229) Net loss from discontinued operations — 3,334 21,124 18,360 Interest expense, net 1,882 2,426 6,209 7,098 Depreciation and amortization 3,352 3,297 10,021 9,736 Share-based compensation expense 2,593 10,508 11,855 25,456 Acquisition and restructuring costs 119 2,474 3,149 4,792 Write-off of long-lived assets — — — 3,626 Litigation and other costs — 3 185 3 -------- --------- - --------- - ---------- Adjusted EBITDA $ 12,408 $ 7,947 $ 32,968 $ 21,842 - ------ - ------- - - ------- - - --------

Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except share data) 2018 2017 2018 2017 -------- ----------- -------- ----------- Net income (loss) from continuing operations $ 4,462 $ (10,761 ) $ 1,549 $ (28,869 ) Add back: Spin-off transaction costs — — 7,708 — ------- --------- - ------- --------- - Adjusted net income (loss) $ 4,462 $ (10,761 ) $ 9,257 $ (28,869 ) - ----- - ------- - - ----- - ------- - Adjusted earnings (loss) per share: Basic and diluted $ 0.06 $ (0.19 ) $ 0.13 $ (0.53 ) - ----- - ------- - - ----- - ------- - Weighted average number of shares outstanding: 78,199,5 55,390,247 73,941,5 54,665,776 Basic and diluted 79 95 ------- --------- - ------- --------- -

Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2018 2017 2018 2017 ---------- ---------- ----------- ----------- Revenue $ 66,535 $ 54,942 $ 179,459 $ 155,167 Cost of revenue (exclusive of depreciation and amortization) 39,090 35,732 108,646 104,310 -------- - -------- - --------- - --------- - Adjusted gross profit $ 27,445 $ 19,210 $ 70,813 $ 50,857 - ------ - - ------ - - ------- - - ------- - Adjusted gross margin 41 % 35 % 39 % 33 % -------- - -------- - --------- - --------- -

We present adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin as supplemental measures of our operating performance because we believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure our performance, evaluate the performance of our senior management and measure the operating strength of our business.

Adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin are measures frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and is an indicator of the operational strength of our business. Adjusted EBITDA eliminates the uneven effect of considerable amounts of discontinued operations, interest expense, non-cash depreciation and amortization, share-based compensation expense, acquisition and restructuring costs, write-off of long-lived assets, and certain litigation and other costs. Adjusted net income (loss) and adjusted earnings (loss) per share eliminate the effect of the spin-off transaction costs. Adjusted gross profit and adjusted gross margin are calculated by using cost of revenue (exclusive of depreciation and amortization).

Adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either operating income (loss) or net income (loss) as indicators of operating performance or to cash flows from operating activities as a measure of liquidity. The way we measure adjusted EBITDA, adjusted net income (loss), adjusted earnings (loss) per share, adjusted gross profit and adjusted gross margin may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in our various agreements.

Contact Information:

Investors:Jordyn TaraziFluent, Inc.(646)356-8469 JTarazi@fluentco.com

Media:North 6th Agency, Inc.(212)334-9753 ext. 143 fluent@n6a.com

AP RADIO
Update hourly