Fluent Q1 Earnings Call Highlights

Key Points

• Commerce Media Solutions was the standout growth engine, with revenue up 104% year over year to $25.9 million and now making up 58% of Fluent’s total revenue. Management said this marks a strategic transformation as the segment has become the majority of the business.
• Total revenue fell 19% to $44.9 million, mainly because of the January 2026 divestiture of Call Solutions and continued weakness in the Owned and Operated business. Excluding the divestiture, continuing businesses were down about 3% year over year.
• Fluent improved cash flow and reduced debt, generating $5.1 million in operating cash flow and paying down $6.3 million on its revolver, which lowered net debt to $23.5 million. The company reaffirmed its 2026 outlook for double-digit revenue growth on continuing businesses, with stronger margins expected in the second half.

Fluent NASDAQ: FLNT reported a sharp shift in its business mix in the first quarter of 2026, with management pointing to continued rapid growth in Commerce Media Solutions as the company’s central growth driver, even as total revenue declined following the divestiture of its Call Solutions business.

Chief Executive Officer Don Patrick said the quarter provided “proof” that Fluent’s strategy is gaining traction, as the company continues to invest in what it views as a high-growth, high-margin commerce media market. Commerce Media Solutions revenue rose 104% year over year to $25.9 million and represented 58% of total consolidated revenue, compared with 23% in the first quarter of 2025.

“In four quarters, Commerce Media went from less than a quarter of our business to more than half,” Patrick said. “That is not incremental progress. This represents strategic transformation.”

Revenue Declines on Call Solutions Divestiture

Total consolidated revenue was $44.9 million in the first quarter, down 19% from $55.2 million in the prior-year period. Management said the decline primarily reflected the January 2026 divestiture of Call Solutions, which contributed $10.9 million of revenue in the first quarter of 2025. Excluding that impact, revenue from Fluent’s aggregate continuing businesses declined approximately 3% year over year.

Gross profit was $10 million, down 12% from the first quarter of 2025 and equal to 22% of revenue. Fluent said Commerce Media gross profit increased 78% year over year, while gross profit from aggregate continuing businesses declined 7%.

Chief Financial Officer Ryan Perfit said the company’s first-quarter results were in line with expectations and reflected the ongoing transformation of its business mix. He said Commerce Media growth “largely offset” the expected contraction in the Owned and Operated business.

Owned and Operated revenue fell 49% to $15.7 million from $31.1 million in the year-earlier quarter. Patrick said that business continues to face “persistent headwinds” and an “uneven competitive landscape,” but added that Fluent is repositioning it as a core enabler of Commerce Media through first-party consumer data, intent signals and audience relationships.

Commerce Media Becomes Majority of Revenue

Management said Commerce Media has now delivered nine consecutive quarters of strong double- to triple-digit year-over-year revenue growth. Patrick said the company’s post-transaction platform remains central to the segment’s growth, describing the moment immediately after a consumer purchase as “premium real estate for advertisers.”

Fluent said Commerce Media Solutions currently operates at an annual revenue run rate of $110 million. Patrick also cited expectations that the U.S. commerce media market will reach $100 billion by 2027 and grow at a 21% compound annual growth rate from 2023 to 2027.

During the quarter, Fluent added Wyndham Hotels and Squire, a barbershop booking platform, as new commerce partners. Patrick said the additions move Fluent into travel and marketplace-style platforms and validate demand outside traditional retail. Management also said the company is piloting adjacent commerce media opportunities beyond the post-transaction moment, driven by requests from existing partners.

In response to analyst questions, management said Fluent had previously used incentives to win early Commerce Media business but has stopped using those incentives as part of its current sales strategy. Those incentives are expected to roll off during 2026. Management said margins are also being affected by investments in adjacent Commerce Media Solutions that have not yet scaled and by newer partners that have not reached projected yield levels.

Margins, Expenses and Net Loss

Media margin was $14 million in the quarter, representing 31% of total consolidated revenue, compared with $13.7 million, or 25% of revenue, in the prior-year period. Commerce Media Solutions media margin was $7.7 million, or 30% of segment revenue, compared with $3.1 million, or 25% of revenue, in the first quarter of 2025.

Commerce Media Solutions gross profit was $5 million, representing 19% of revenue. Perfit said Fluent expects Commerce Media gross margin to return to the mid-20% range over the course of 2026 as newer partnerships and placements move beyond early-term incentive periods.

Total operating expense was $12.3 million, down from $16.1 million in the first quarter of 2025. The reduction included a $2.4 million non-cash gain on the sale of Call Solutions and $1.4 million of other operating expense reductions, which management attributed to cost discipline.

Interest expense declined 31% to $605,000 from approximately $880,000 a year earlier, reflecting a lower average daily loan balance under the company’s new facility with Bayview.

Fluent reported a net loss of $5.4 million, compared with a net loss of $8.3 million in the first quarter of 2025. Adjusted net loss was $5.9 million, or $0.19 per share, compared with an adjusted net loss of $6.7 million, or $0.31 per share, in the prior-year quarter. Adjusted EBITDA loss was $3.6 million, compared with a loss of $3.1 million a year earlier.

Cash Flow Improves as Debt Falls

Fluent ended the quarter with $10.3 million in cash and cash equivalents, down from $12.9 million at the end of 2025. Accounts receivable declined to $31.8 million from $46.7 million, reflecting normal first-quarter seasonal collections and the Call Solutions divestiture.

Operating cash flow was positive at $5.1 million, compared with $2.1 million in the first quarter of 2025. Perfit said that cash flow funded a net $6.3 million paydown on the company’s revolving facility, reducing net debt to $23.5 million as of March 31 from $30.8 million at year-end.

Company Reaffirms 2026 Outlook

Management said its view of 2026 has not changed. Fluent expects second-quarter revenue to be similar to the first quarter, with improving margins. Patrick said that would represent a return to year-over-year revenue growth from aggregate continuing businesses.

For full-year 2026, Fluent expects double-digit year-over-year consolidated revenue growth on aggregate continuing businesses, driven by Commerce Media acceleration in the second half. The company also expects expanding gross margins and improved adjusted EBITDA as Commerce Media becomes a larger share of the business.

“The strongest seasonal quarters of the year are ahead of us in the second half,” Patrick said, adding that Fluent is planning conservatively around the strategic repositioning of its Owned and Operated Marketplaces while focusing resources on Commerce Media growth.

About Fluent NASDAQ: FLNT

Fluent, Inc is a performance marketing and customer acquisition platform that helps consumer brands drive leads and sales through data-driven digital campaigns. The company specializes in direct-response marketing, executing campaigns across multiple channels including email, display, paid search, social media and native advertising. By focusing on measurable outcomes such as cost per acquisition and return on ad spend, Fluent tailors solutions to meet the specific objectives of its clients.

The company's proprietary technology leverages first-party data sourced from its network of consumer-facing digital properties and programmatic partnerships.

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