Fluent, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights:

• Strategic momentum in commerce media continues to accelerate, with commerce media solutions now a larger portion of consolidated revenue.
• Announced new and expanding partnerships with Databricks, Authentic Brands Group, and Rebuy Engine. Partnership with Rebuy Engine opens access to over 12,000 Shopify merchants.
• Completed a $10.3 million equity raise, strengthening the balance sheet and providing capital for commerce media growth.
• Commerce media solutions are expected to overtake owned and operated as the main driver of consolidated revenue in 2025, with gross profit margins for commerce media solutions increasing sequentially.
• Convergence of owned and operated and commerce media capabilities is creating differentiated opportunities, with over 40% of Q3 monetization tied to new proprietary advertisers brought onto the network.

Segment Performance:

• Commerce Media Solutions: Revenue grew over 80% year over year to $18.8 million in Q3 2025, contributing 40% of consolidated revenue. Annual revenue run rate surpassed $85 million. Media margin was $4.6 million, 25% of Commerce Media Solutions revenue.
• Owned and Operated Marketplaces: Revenue decreased 52% year over year, with a near 50% year-over-year decline expected to continue into Q4 as focus shifts to commerce media growth.

Guidance:

• Expect gross profit to grow by double digits quarter over quarter in Q4 2025, resulting in positive adjusted EBITDA.
• Second half of 2025 is expected to deliver triple-digit revenue growth.
• Commerce media solutions is anticipated to overtake owned and operated marketplaces as the main driver of consolidated revenue in 2025.
• Expect adjusted EBITDA profitability in Q4 2025 and full-year adjusted EBITDA profitability in 2026, driven by triple-digit growth in commerce media solutions.

Risks:

• Timing delays in onboarding new partners, affecting revenue and gross profit in the quarter.
• Advertiser pricing and budget pullback in specific industries in the later part of Q3 and early Q4, tied to advertiser-specific issues.
• Strong advertising and regulatory headwinds continuing to impact owned and operated marketplaces, leading to significant year-over-year declines.

Q: Could you expand on the Rebuy partnership trends and ad load expansion on post-transaction pages?

A: Rebuy partnership is very early but expanding rapidly, opening access to over 12,000 Shopify merchants. Ad load on post-transaction pages is partner-specific, focusing on consumer experience; if consumers are already served other content, ad impressions in post-transaction spots are lowered. Expansion of ad serving is outside post-transaction, with new solutions in pre-checkout areas.

Q: Talk about ad pullbacks and their impact on commerce media.

A: Ad pullbacks were specific to certain industries and advertisers' businesses. Some traditional advertisers pulled back budgets or lowered pricing in late Q3 and early Q4. However, owned and operated advertisers not previously in commerce media are being brought in, with over 40% of Q3 monetization tied to these new proprietary advertisers.

Q: Outlook for 2026 and O&O segment.

A: Owned and operated business is expected to continue declining, but convergence of owned and operated and commerce media capabilities is providing stabilization. Commerce media is expected to double again in 2026, driving consolidated revenue growth and adjusted EBITDA profitability.

Q: DICK'S Sporting Goods partnership details.

A: DICK'S Sporting Goods is a client that came on board in September, but its timing affected Q3 results. It will be a top five partner going forward, with its volume expected to be a significant portion of commerce media solutions business in the future.

Q: Adjusted EBITDA guidance.

A: Full-year 2026 adjusted EBITDA is expected to be positive, driven by triple-digit growth in commerce media solutions and the shift in revenue mix towards commerce media.