UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (Date of Earliest Event Reported): May 8,
2018
FLUENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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001-37893
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77-0688094
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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33 Whitehall Street
15th Floor
New York, New York
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10004
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (646)
669-7272
Former name or former address, if changed since last
report
_________________________
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
☐
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2 (b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4 (c))
Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934
(17 CFR §240.12b-2). ☐
Emerging growth
company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
Item 2.02.
Results of Operations and Financial Condition.
On May 8, 2018, Fluent, Inc. issued a press release announcing
first quarter 2018 financial results. The press release is
furnished herewith as Exhibit 99.1.
The information included herein and in Exhibit 99.1 shall not
be deemed “filed” for purposes of Section 18 of
the Securities Exchange Act of 1934 (“Exchange Act”) or
otherwise subject to the liabilities of that section, nor shall it
be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Exchange Act, except as expressly set
forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Description
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Press
release, dated May 8, 2018
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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Fluent, Inc.
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May
8, 2018
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By:
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/s/
Ryan
Schulke
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Name:
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Ryan
Schulke
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Title:
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Chief
Executive Officer
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Exhibit 99.1
Fluent Announces First Quarter 2018 Financial Results
First Quarter as a Standalone Public Company Produces $56.0 Million
in Revenue,
$2.2 Million in Adjusted Net Income Based on $5.6 Million in Net
Loss from Continuing
Operations, Resulting in $0.03 in Adjusted Earnings Per
Share
New York, NY – May 8, 2018 – Fluent, Inc.
(NASDAQ: FLNT) a leading
data-driven performance marketing company, today announced
financial results for the quarter ended March 31,
2018.
“We
have built an incredible company and are excited to present
Fluent’s standalone results, which show positive adjusted net
income and adjusted earnings per share, after removing transaction
costs and discontinued operations,” stated Ryan Schulke,
Fluent’s CEO. “We look forward to this team’s
continued success, driving profitability and delivering strong
results for our shareholders.”
First Quarter Financial Results
For the
three months ended March 31, 2018, as compared to the three months
ended March 31, 2017:
●
Total revenue
increased 14% to $56.0 million.
●
Net loss from
continuing operations was $5.6 million (inclusive of spin-off
transaction costs of $7.7 million) compared to net loss from
continuing operations of $9.8 million.
●
Net loss from
discontinued operations was $21.1 million compared to $2.9
million.
●
Adjusted net income
was $2.2 million compared to a loss of $9.8 million.
●
Adjusted EBITDA
grew 42% to $9.6 million based on net loss of $26.7
million.
●
Adjusted earnings
per share was $0.03 compared to a loss of $0.18 per
share.
Adjusted
net income, adjusted earnings per share and adjusted EBITDA are
non-GAAP financial measures. Reconciliation of these non-GAAP
measures are provided in the attached tables.
First Quarter and Recent Business Highlights
●
Successfully completed the spin-off of our risk management
business, Red Violet, Inc.
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Changed corporate name to Fluent, Inc. (NASDAQ: FLNT), to better
align our corporate brand with our industry leading data-driven
performance marketing company.
●
Our proprietary
self-reported first party data asset, the Fluent Identity Graph now
contains over 182 million unique email addresses that represent
over 150 million individuals.
●
Continued to
bolster our strategic and operational talent, all intently focused
on delivering increased profitability to our business, with the
appointment of key industry leaders, hailing from such companies as
Epsilon and Merkle.
●
Revenue from
advertisers in the financial & professional services category
nearly doubled compared to the three months ended March 31,
2017.
Conference Call
Fluent,
Inc. will host a conference call on Tuesday, May 8, 2018 at 4:30 PM
ET to discuss its 2018 first 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 10119708. 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.
(Amounts in thousands, except share data)
(unaudited)
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March 31,
2018
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December 31,
2017
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ASSETS:
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Current
assets:
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Cash
and cash equivalents
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$5,368
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$16,564
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Accounts
receivable, net of allowance for doubtful accounts of $1,180 and
$1,624
at
March 31, 2018 and December 31, 2017,
respectively
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34,165
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36,278
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Prepaid
expenses and other current assets
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3,276
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1,865
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Current
assets of discontinued operations
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-
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2,274
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Total
current assets
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42,809
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56,981
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Property
and equipment, net
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586
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687
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Intangible
assets, net
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71,482
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74,354
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Goodwill
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159,791
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159,791
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Other
non-current assets
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560
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1,097
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Non-current
assets of discontinued operations
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-
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24,089
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Total assets
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$275,228
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$316,999
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LIABILITIES AND SHAREHOLDERS’ EQUITY:
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Current
liabilities:
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Trade
accounts payable
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$11,830
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$10,666
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Accrued
expenses and other current liabilities
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7,613
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11,709
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Deferred
revenue
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219
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265
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Current
portion of long-term debt
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3,500
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2,750
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Current
liabilities of discontinued operations
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-
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7,389
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Total
current liabilities
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23,162
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32,779
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Promissory
notes payable to certain shareholders, net
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-
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10,837
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Long-term
debt, net
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60,546
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49,376
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Total liabilities
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83,708
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92,992
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Shareholders'
equity:
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Preferred
stock—$0.0001 par value, 10,000,000 shares
authorized;
0
share issued and outstanding at March 31, 2018 and December 31,
2017
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-
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-
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Common
stock—$0.0005 par value, 200,000,000 shares authorized;
76,437,209
and
61,631,573 shares issued at March 31, 2018 and December 31,
2017,
respectively;
and 75,941,291 and 61,279,050 shares outstanding at
March
31, 2018 and December 31, 2017, respectively
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38
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31
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Treasury
stock, at cost, 495,918 and 352,523 shares at March 31, 2018
and
December
31, 2017, respectively
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(1,672)
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(1,274)
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Additional
paid-in capital
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387,273
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392,687
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Accumulated
deficit
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(194,119)
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(167,437)
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Total shareholders’ equity
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191,520
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224,007
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Total liabilities and shareholders’ equity
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$275,228
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$316,999
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FLUENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(unaudited)
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Three Months Ended
March 31,
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2018
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2017
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Revenue
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$55,989
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$49,194
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Costs and expenses:
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Cost
of revenue (exclusive of depreciation and
amortization)
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35,663
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33,797
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Sales
and marketing expenses
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4,006
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3,695
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General
and administrative expenses
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8,445
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12,476
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Depreciation
and amortization
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3,331
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3,205
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Write-off
of long-lived assets
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-
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3,626
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Spin-off
transaction costs
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7,708
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-
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Total costs and expenses
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59,153
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56,799
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Loss from operations
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(3,164)
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(7,605)
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Interest
expense, net
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(2,394)
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(2,227)
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Loss before income taxes
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(5,558)
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(9,832)
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Income
taxes
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-
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-
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Net loss from continuing operations
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(5,558)
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(9,832)
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Discontinued operations:
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Loss
from operations of discontinued operations, net of $0 income
taxes
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(2,084)
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(2,893)
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Loss
on disposal of discontinued operations, net of $0 income
taxes
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(19,040)
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-
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Net loss from discontinued operations
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(21,124)
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(2,893)
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Net loss
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$(26,682)
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$(12,725)
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Loss per share:
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Basic
and diluted:
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Continuing
operations
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$(0.08)
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$(0.18)
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Discontinued
operations
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$(0.31)
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$(0.05)
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Net
loss
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$(0.40)
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$(0.24)
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Weighted average number of shares outstanding:
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Basic
and diluted
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67,311,784
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53,811,688
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FLUENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
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Three Months Ended
March 31,
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2018
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2017
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$(26,682)
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$(12,725)
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Net
loss from discontinued operations
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21,124
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2,893
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Adjustments
to reconcile net loss from continuing operations to net cash
provided by operating
activities:
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Depreciation
and amortization
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3,331
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3,205
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Non-cash
interest expenses and related amortization
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724
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733
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Share-based
compensation expense
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6,648
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6,854
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Write-off
of long-lived assets
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-
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3,626
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Recoveries
of bad debts
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(14)
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(45)
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Allocation
of expenses to red violet
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(325)
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(840)
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Changes
in assets and liabilities:
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Accounts
receivable
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2,127
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3,248
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Prepaid
expenses and other current assets
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(1,609)
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(324)
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Other
non-current assets
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537
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46
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Trade
accounts payable
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1,164
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(3,197)
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Accrued
expenses and other current liabilities
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(4,096)
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(500)
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Deferred
revenue
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(46)
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780
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Net
cash provided by operating activities from continuing
operations
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2,883
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3,754
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Net
cash used in operating activities from discontinued
operations
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(5,835)
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(1,562)
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Net
cash (used in) provided by operating activities
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(2,952)
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2,192
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Purchase
of property and equipment
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(22)
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(37)
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Capitalized
costs included in intangible assets
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(177)
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(376)
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Capital
contributed to red violet
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(19,728)
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-
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Net
cash used in investing activities from continuing
operations
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(19,927)
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(413)
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Net
cash used in investing activities from discontinued
operations
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(1,386)
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(1,927)
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Net
cash used in investing activities
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(21,313)
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(2,340)
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CASH
FLOWS FROM FINANCING ACTIVITIES:
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Proceeds
from issuance of shares, net of issuance costs
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13,392
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-
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Proceeds
from debt obligations, net of debt costs
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67,182
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14,039
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Repayments
of long-term debt
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(67,107)
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(1,798)
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Taxes
paid related to net share settlement of vesting of restricted stock
units
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(398)
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(168)
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Net
cash provided by financing activities from continuing
operations
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13,069
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12,073
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Net
increase (decrease) in cash and cash equivalents
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$(11,196)
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$11,925
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Cash
and cash equivalents at beginning of period
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16,564
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10,089
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Cash
and cash equivalents at end of period
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$5,368
|
$22,014
|
|
SUPPLEMENTAL
DISCLOSURE INFORMATION
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|
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Cash
paid for interest
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$1,678
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$1,276
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Cash
paid for income taxes
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$-
|
$-
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|
Share-based
compensation capitalized in intangible assets
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$159
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$55
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Use and Reconciliation of Non-GAAP Financial Measures
Management
evaluates the financial performance of our business on a variety of
key indicators, including adjusted EBITDA, adjusted net income
(loss) and related adjusted earnings (loss) per share. Adjusted
EBITDA is a non-GAAP financial measure equal to net loss, the most
directly comparable financial measure based on US GAAP, adding back
net loss from discontinued operations, interest expense,
depreciation and amortization, share-based compensation expense,
acquisition and restructuring costs, write-off of long-lived
assets, and litigation costs, as noted in the tables below.
Adjusted net income (loss) from continuing operations and the
related basic and diluted per share amounts is a non-GAAP measure
equal to net loss from continuing operations, the most directly
comparable financial measure based on US GAAP, adding back the
effect of spin-off transaction costs.
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Three Months Ended
March 31,
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(In thousands)
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2018
|
2017
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Net loss
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$(26,682)
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$(12,725)
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Net
loss from discontinued operations
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21,124
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2,893
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Interest
expense, net
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2,394
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2,227
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Depreciation
and amortization
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3,331
|
3,205
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Share-based
compensation expense
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6,648
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6,854
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Acquisition
and restructuring costs
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2,713
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668
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Write-off
of long-lived assets
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-
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3,626
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Litigation
costs
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72
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-
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Adjusted EBITDA
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$9,600
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$6,748
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Three Months Ended
March 31,
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(In thousands, except share data)
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2018
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2017
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Net loss from continuing operations
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$(5,558)
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$(9,832)
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Add
back: Spin-off transaction costs
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7,708
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-
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Adjusted net income (loss) from continuing operations
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$2,150
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$(9,832)
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Adjusted earnings (loss) per share from continuing
operations:
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Basic
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$0.03
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$(0.18)
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Diluted
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$0.03
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$(0.18)
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Weighted
average number of shares outstanding:
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|
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Basic
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67,311,784
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53,811,688
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Diluted (1)
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70,226,701
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53,811,688
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(1)
The diluted
weighted average number of shares outstanding for the quarter ended
March 31, 2018 is computed based on the basic weighted average
number of shares outstanding plus the dilutive impact of
outstanding restricted stock units as of March 31,
2018.
We
present adjusted EBITDA, adjusted net income (loss) and adjusted
earnings (loss) per share 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) and adjusted earnings (loss) per
share 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
non-cash depreciation and amortization, share-based compensation
expense and write-off of long-lived assets. Adjusted net income
(loss) and adjusted earnings (loss) per share eliminate the effect
of the spin-off transaction costs.
Adjusted
EBITDA, adjusted net income (loss) and adjusted earnings (loss) per
share are not intended to be performance measures that should be
regarded as an alternative to, or more meaningful than, either
operating income or net income 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) and adjusted earnings (loss) per share 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
Tarazi
Fluent,
Inc.
(646)356-8469
JTarazi@fluentco.com
Media:
North
6th Agency, Inc.
(212)334-9753
ext. 143
fluent@n6a.com