管理層發言
Good afternoon, and welcome. Thank you for joining us to discuss Fluent's Fourth Quarter and Year-End 2025 earnings results. With me today are Fluent's Chief Executive Officer; Don Patrick, Chief Financial Officer; Ryan Perfit; and Chief Strategy Officer, Ryan Schulke. Our call today will begin with comments from Don and Ryan Perfit, followed by a question-and-answer session. I would like to remind you that this call is being webcast live and recorded. Additionally, there is a slide presentation that accompanies today's remarks, which can be accessed via the webcast and is also available on Fluent's website. A replay of the event will also be made available following the call on Fluent's website. To access the webcast and slide presentation, please visit the Investor Relations page at www.fluentco.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any forward-looking statements made during this call only speak as of the date hereof. Actual results could differ materially from those stated and implied by such forward-looking statements due to risks and uncertainties associated with the company's business. These statements may be identified by words such as expects, plans, projects, could, will, estimates and other words of similar meaning. The company takes no obligation to update information provided on this call. For a discussion of the risks and uncertainties associated with Fluent's business, we encourage you to view the company's filings with the Securities and Exchange Commission, including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q. During the call, management will also present non-GAAP financial information relating to media margin, adjusted EBITDA and adjusted net income. Management evaluates the financial performance of the company's business on a variety of indicators, including these non-GAAP metrics.
The definition of these metrics and reconciliations to the most directly comparable GAAP financial measures are provided in the earnings press release issued earlier today. With that, I'm pleased to introduce Fluent's CEO, Don Patrick.
Good afternoon, and thank you all for joining us today. I'm here with Ryan Schulke, our Chief Strategy Officer and Company Co-Founder; and Ryan Perfit, our Chief Financial Officer. Three years ago, we made a deliberate and decisive strategic choice to aggressively invest in pivoting our business into the high-growth commerce media industry, leveraging the competitive advantages of our owned and operated marketplaces as our foundation. We've made significant progress on this strategic pivot over the last 12 months, capped off by key milestones for this business. Commerce Media Solutions contributed 56% of total Q4 revenue, more than doubling from 26% in Q4 2024. Building on this success, we entered 2026 with strong momentum that is accelerating. We have built a highly differentiated Fluent brand with a clear and compelling purpose delivering superior, measurable performance outcomes for our commerce partners and advertisers.
And in the process, we are being recognized as the market leader in our industry. We are no longer a company in transition. We are a company that has reached a transformative inflection point, and we are confident our best days are ahead of us. In today's earnings release, we reported Q4 and full year 2025 results that reflect significant progress in our Commerce Media transformation. Commerce Media Solutions delivered nearly 2x revenue growth over 2024, a powerful demonstration of our market validation and competitive differentiation. A recap on Q4 2025 consolidated financial results were as follows: revenue of $61.8 million, an increase of 31% versus Q3 2025, media margin of $19.1 million, an increase of 49% versus Q3 2025 and adjusted EBITDA of $0.2 million an increase of $3.6 million from Q3 2025 and representing 0.3% of Q4 revenue. Our Q4 performance achieved the road map we laid out in previous earnings releases.
Commerce Media Solutions continued to accelerate, adding new commerce partners in the quarter and more than doubling revenue year-over-year, while also expanding our media margin on a sequential basis. That marks strong double- to triple-digit year-over-year revenue growth for Commerce Media Solutions for 8 consecutive quarters. That trend represents our strategic and financial trajectory, and we expect strong double-digit year-over-year growth to continue throughout 2026. Full year 2025 financial results were as follows: Revenue of $208.8 million, reflecting a top line decline of 18% versus 2024, consistent with our deliberate managed transition away from our legacy revenue streams. Gross profit of $51.2 million, a decrease of 15.8% versus 2024, an adjusted EBITDA loss of $9 million, representing negative 4.3% of revenue. The most powerful validation of the strategy is in the numbers. As I mentioned before, in Q4 2025, Commerce Media Solutions contributed 56% to total consolidated revenue, representing more than 50% of total company revenue for the first time since the launch of this business in the first quarter of 2023 compared to 26% in Q4 2024 and 10% in Q4 2023.
And we expect that share to continue to grow in 2026. In full year 2025, Commerce Media Solutions delivered revenue growth of 99% year-over-year and media margin growth of 48% year-over-year. These results confirm 3 things: first, we are establishing our brand equity and operating in a large, long-term growth market. Second, our differentiated approach is resonating with our commerce partners and advertisers who continue to join our proven business model. And third, the strong performance we deliver is real and repeatable as we continue to establish leadership credentials in our segment. Industry growth projections position us favorably for growth in the U.S. market. According to a recent McKinsey study, the U.S. commerce media market is expected to grow a compounded average growth rate of 21% from 2023 to 2027 and reached a total market value of $100 billion by 2027. As of December 31, 2025, Commerce Media Solutions is operating at an annual run rate of $105 million.
And as you can see, we believe there is significant opportunity to increase our market share as this high-growth industry continues to evolve, and we expand our geographical presence. Putting it simply, media partners and advertisers want to work at Fluent, because Fluent delivers the best results. This is demonstrated by the impressive network of partners and advertisers that leverage our offerings. We continue to expand our relationships with leading names across diverse industries and market verticals. We delivered strategic validation by way of our financial performance, and we continue to look and plan forward as we do so. We are investing with discipline in Commerce Media strategic adjacencies that will further differentiate the Fluent brand, elevate our industry leadership position, earn us more partnerships, all while providing long-term margin accretion. We've discussed on previous earning calls that we have existing partners who have a need to expand into loyalty and pre checkout.
Although it is early stage, these adjacent solutions open additional large market opportunities to not only strengthen our existing relationships but meaningfully raises the bar for new partners evaluating who in the commerce media truly understands the full customer journey and where the market is headed. In turn, we are making targeted purposeful investments designed to extend our competitive moat in Commerce Media for years to come. We are very excited about these opportunities on our road map. They represent significant upside to Fluent's strategic and financial growth plan, more to follow here in future investor updates. On our owned and operated businesses, we are clear-eyed and deliberate. Given our commitment to play an industry leadership role in traffic quality, coupled with the inherent compliance headwinds in that segment, we are repositioning owned and operated with a focused 2-part mandate.
Number one, gross profit generator, maintaining a profitable capital-efficient contribution to the enterprise and number two, a test-and-learn engine, a real-time proving ground that sharpens and feeds our Commerce Media strategy and product development. Narrowing our focus reflects our conviction that the commerce media market represents an enormous multiyear strategic opportunity that concentrating our resources in our highest conviction business is the right decision for our shareholders. In doing so, we are also quite excited in validating that our owned and operated business is not only a core asset, but a competitive advantage in fueling our Commerce Media growth. Our Commerce Media growth continues to be validated by the strength of our partnerships with premier brands and companies and the addition of key talent that has helped us to maximize performance and efficiency as we continue to scale.
During 2025, we added several new partners across a variety of exciting verticals. Among the highlights, we partnered with a number of world-class brands, including Authentic Brands Group, DICK's Sporting Goods and Michaels. We also launched Rebuy Monetize powered by Fluent which brings Fluent's AI-powered advertiser marketplace and demand generation expertise to merchants on the Shopify platform. And our new business pipeline remains strong and growing. We look forward to announcing additional partnerships throughout 2026. On the talent side, we have built a world-class product and tech team focused on accelerating AI innovation for our Commerce Media offerings. Adrian Stack, our Chief Product Officer, and his team bring years of experience as strategic product management to the Fluent team and are driving Fluent's investments in data infrastructure and product innovation. Virginia Marc joined Fluent in Q2 in conjunction with our partnership with Databricks to expand and enhance our data collaboration capabilities coming on as Head of Data and agencies to scale our data monetization and further support our overall growth.
These partnerships and additions to our team reflect our commitment to earning an industry-leading position with Commerce Media and allowed us to nearly double revenue and scale from $60 million annual run rate to $105 million annual run rate at year-end. A commitment that required significant investments to build something durable and sustainable in a high-growth marketplace. The 2026 outlook we're sharing today is a direct payoff of that discipline and our strategic and financial results. With that, I'll turn it over to Ryan Perfit for a deeper look at our financials.
Thank you, Don, and thanks to everyone for joining us today. I'll now provide a review of our fourth quarter results, with some context on full year trends where relevant. Total consolidated revenue was $61.8 million in the fourth quarter of 2025, compared with $65.4 million in the prior year period. Commerce Media Solutions delivered strong results. Revenue of $34.7 million represents 101% growth when compared with the fourth quarter of 2024, driven by continued strategic investments in the business and the industry expansion. The 85% sequential growth from the third quarter was heavily influenced by a seasonal increase related to consumer spending around the holidays. CMS revenue contributed 56% of total consolidated revenue in the quarter, representing more than half of total consolidated revenue for the first time. In the fourth quarters of 2024 and 2023, Commerce Media Solutions represented 26% and 10% of total consolidated revenue, respectively.
For the full year, Commerce Media Solutions revenue totaled $82.3 million, 99% growth over 2024 and as of year-end 2025 Commerce Media Solutions annual revenue run rate now exceeds $105 million, up from $85 million as of the end of the third quarter. Looking ahead, we expect Q4 to be a tipping point as we anticipate Commerce Media Solutions will represent a majority of the consolidated revenue on a go-forward basis. As expected, revenue from our owned and operated business declined on a year-over-year basis as we continue to shift our focus towards scaling commerce media solutions. Media margin in the fourth quarter was $19.1 million, representing 31% of total consolidated revenue, compared with $16.5 million or 25% of revenue in the prior year period. Commerce Media & Solutions media margin in the fourth quarter of 2025 was $10.4 million or 30% of Commerce Media Solutions revenue compared with $6.8 million or 39% of revenue in the fourth quarter of 2024, but up sequentially from 25% in the third quarter of 2025.
Commerce Media Solutions gross profit margin of 33% was up from 22% in the third quarter and 18% in the second quarter of 2025, but included a $4.3 million one-time benefit related to an early termination settlement with a media partner. Of note, that benefit is excluded from media margin, so that non-GAAP measure is a more useful alternative for comparing operations in prior and future periods. We expect gross margin on Commerce Media Solutions to normalize in subsequent quarters and ultimately return to the mid-20s over the course of 2026 as our newer partnerships move beyond early term incentive periods. On a GAAP basis, total operating expense in the fourth quarter of 2025 totaled $15.4 million compared with $16.9 million in the fourth quarter of 2024. For the full year, operating expense totaled $61 million compared with $72.3 million in 2024, a decrease of 16% year-over-year. Interest expense in the fourth quarter decreased to $781,000 from $1 million in the prior year period, reflecting a lower daily average outstanding loan balance.
We reported a net loss of $4.1 million in the fourth quarter of 2025 compared with a net loss of $3.4 million in the fourth quarter of 2024. Adjusted net loss, a non-GAAP measure was $2.8 million, equivalent to a loss of $0.09 per share compared with an adjusted net loss of $3.3 million or a loss of $0.18 per share in the fourth quarter of 2024. We achieved adjusted EBITDA of approximately $200,000 in the quarter compared with a loss of $1.7 million in the fourth quarter of 2024. This is consistent with our outlook of positive adjusted EBITDA in the quarter and reflects the progress of our strategic shift towards Commerce Media Solutions and continued focus on expense discipline. As Don stated earlier on the call, with our current visibility, we believe that we are well positioned to deliver double-digit consolidated revenue growth on aggregate continuing businesses. And improved full year adjusted EBITDA in 2026, supported by the continued growth of our Commerce Media business.
Shifting now to our balance sheet. We ended 2025 with $12.9 million in cash and cash equivalents compared with $9.4 million at the year-end 2024, and total net debt of $30.8 million at year-end compared with $31.9 million at the end of 2024. Throughout 2025 and into 2026, we've made significant progress on strengthening our balance sheet and enhancing our liquidity. We've also taken a hard look at our portfolio to ensure we're allocating resources towards our strongest growth opportunities. During 2025, we raised over $19 million in equity capital, including a $10.3 million placement in August that introduced several new institutional investors into our shareholder base. This capital supported our continued investment in the growth of our Commerce Media business. In November, we entered into a new financing agreement that replaced our previous credit agreement. The new facility carries no financial covenants and provides expanded borrowing availability, which both significantly improved our financial flexibility.
And most recently, in January 2026, we completed the sale of our Call Solutions business, a noncore subsidiary, which allows us to more effectively allocate our resources and invest further into the growth of Commerce Media Solutions. As noted previously, we are providing outlook on 2026 revenue from continuing businesses, which do not include the Call Solutions business. As we move through 2026, we remain focused on maintaining financial flexibility and liquidity to support the continued growth of Commerce Media Solutions as we work towards improved profitability. With that, I'll turn it back over to Don.
We believe 2026 marks the year over financial trend line will begin to shift, marked by double-digit growth on an aggregate continuing businesses. Our 2026 outlook reflects: one, return to year-over-year revenue growth driven by a strategic transition, validating our partners are recognizing our value and ending a multiyear period of managed top line decline. And two, we'll maintain gross margins in comparable periods increasing to the mid-20s over the course of 2026. We believe these are financial signatures of a business that has fundamentally repositioned itself for durable, profitable growth as a lead brand in a high-growth, high-margin marketplace. Taking into account the divestiture of our Call Solutions unit, we expect relatively flat year-over-year total company revenue in Q1. From there, revenue will accelerate to double-digit year-over-year growth in the second half with aggregate revenue from continuing businesses achieving double-digit revenue growth for the full year 2026.
Concerning profitability, we made the strategic decision to focus on investing more capital into our growth in the near term. As such, we are revising our adjusted EBITDA target for the full year and while we no longer expect to be adjusted EBITDA positive in 2026, we do expect improved adjusted EBITDA when compared to 2025. To summarize, we achieved a key milestone and surpassed the significant inflection point in 2025 for the growth of our Commerce Media Solutions business. We've built a highly differentiated brand and a platform that will deliver sustainable and measurable performance for our partners and for Fluent. And in 2026, with the continued strategic shift of our mix into Commerce Media, our financial results are beginning to reflect the potential of the strategy that we have been executing. The trend line has shifted. The momentum is real. We are energized by what lies ahead. We can now open the call for questions.
分析師問答
Our first question of the day will be coming from the line of Maria Ripps of Canaccord.
You talked about sort of adding AI-based functionality to your Rebuy partnership. Can you talk a little bit about that? And will that be rolled out by default to all the merchants that you work with currently? Or what will the rollout process look like? And how incremental can this be over time? And then maybe more broadly, can you talk about this partnership for you and how productive and successful it has been for you since you started working together?
Great. Thanks for the question, Maria. Regarding AI, we have had AI embedded into our solutions at Fluent for a long time in terms of how it continues to drive better performance for us. Underlying all those AI models has been our proprietary first-party data asset. That is our secret sauce to driving superior results. The AI models, combined with that first-party data, is what we believe is our competitive advantage and why we drive superior results. What we rolled out to Rebuy is standard across all of our enterprise clients and also the Rebuy clients. Whatever we work on across the platform goes across all of our partners that we're working with. The one area that we have been working more diligently on is embedding AI into all our workflows to create a competitive moat and drive more efficiency. It is dramatic how fast things are changing and how quickly you can make huge productivity improvements and speed to market on new capabilities.
With that has been our focus on agentic AI with fast ROI, making sure that's embedded into our processes so we can move faster, accelerate, and also drive better operating leverage across our platform. On Rebuy specifically, Rebuy was our first strategic partnership that got us into the Shopify ecosystem. Our traditional sales and focus had been on enterprise partners, things like direct big brands such as DICK'S Sporting Goods and Bath & Body Works. Rebuy was our way to go indirect into their clients that are on the Shopify platform. We've integrated our technology and worked really well together from a marketing perspective, and I think there's lots of opportunities to continue to grow that partnership. We're very pleased with the success we've had there, and Rebuy has been a fantastic partner to work with in terms of both product and technology, and in terms of evolving the strategic ability to drive better results for both our clients.
Got it. That's very helpful. And then, Don, I also wanted to follow up on your point about convergence between your O&O and Commerce Media capabilities. Can you maybe talk about that a little bit? What are some capability functionalities that would enable that? Is that client driven? How are you thinking about that? And also how incremental can this be over time for you?
Yes, it's a great question, Maria, and it's one that we are very excited about. Our legacy business, the owned and operated, has been interacting with consumers and connecting world-class brands for 15 years. The amount of data that we have, both first-party self-declared data and second-party campaign data—what happens after we connect a world-class brand, how those audiences react, and how they are best used—enables our ability to drive unique, very valuable audience sets across different types of media partners. For example, a DICK'S Sporting Goods customer who buys on the website is a very different audience segment. That skill set we've honed over 15 years in owned and operated allows us to move quickly to understand audiences, work with advertisers to bid so they get the right return on ad spend, and then drive the health of that marketplace for both our partners and our advertisers. It has become a huge competitive advantage as we scale our platform and get new advertisers into our network. That capability has been an absolute advantage this past year.
Our next question is coming from the line of Patrick Sholl of Banca Research.
Just maybe a clarification on your expectations for 2026 on the Commerce Media side. With the early contract termination that you called out in the release, can you provide a little bit more color on expectations around churn and retention and maintaining margins on the Commerce Media side, for the next few years?
Thanks, Pat. We've been consistent that from a consolidated revenue perspective Fluent will return to double-digit growth on aggregate continuing businesses, meaning without Call Solutions. With that early termination, growth in commerce media is still expected to be significant and strong double-digit growth, but we originally said we were going to double that and we brought that down because of that early termination. We have a very strong pipeline that's growing aggressively and we feel good that we can overdeliver on that, but given current visibility, our expectation is very strong double-digit growth year-over-year for Commerce Media. On margins, we have discussed adjacencies such as loyalty and pre-checkout. These are significant opportunities that existing and new partners are asking us to pursue. We're investing in those areas; they'll bring meaningful growth and margin expansion, but much of that benefit will show up in 2027. Commerce Media is evolving quickly and there are many strategic and financial opportunities ahead. We're focused on post-transaction leadership and leveraging adjacencies to continue aggressive growth. We think the opportunity to build a significantly larger company is greater than we thought a year ago.
Okay. And then maybe just on the macro environment, can you talk about how that's impacting the ability to bring in additional advertisers and any issues around diversity of advertisers and consumer behavior?
It's a good question, Pat. Given global events and changes, there is a lot of movement across markets. Last year we dealt with tariffs and geopolitical issues, and those dynamics can influence partner behavior. On the partner side, the incremental benefit our solution brings to media partners remains a top priority—retailers and strong verticals like ticketing or groceries are looking for incremental revenue, and we believe post-transaction growth will continue to accelerate. On the advertiser side, we haven't seen pushback on pricing. Return on ad spend varies across partners, and some sectors experience timing-related changes, but we haven't seen any material pullback from advertisers due to geopolitical or macro factors compared to 2025.
Our next question is coming from the line of David Marsh of Single Research.
Congrats on the quarter. Good job here. Just wanted to start — great job on the SG&A side. Is this a good run rate going forward that we could rely on what you were able to print this year?
David, we did a lot of work on reducing costs and being efficient in 2025. I think we'll maintain that outlook and try to minimize costs as much as possible. That said, as we expand Commerce Media Solutions, we'll need to invest into development of new products that Don discussed and into management of that business. We expect costs to step up, but we've taken steps such as divesting the Call Solutions business that will help us maintain relatively low operating expense over the year.
All right. That's good to hear. On the gross margin side, really great job in the quarter — this is the highest gross margin you guys had in quite some time. When you look at where the business is now on the run rate and as it grows, what do you think is a realistic longer-term goal for gross margins for the business overall and for Commerce Media in particular?
I'll take this question, Dave. I want to point out that in Q4, per ASC 705, we booked the net settlement as a benefit to cost of revenue, so the gross margins are not necessarily representative of prior or future quarters. Media margin, which excludes one-time items, is a useful non-GAAP alternative for comparing operations. Media margin was up and adjusted EBITDA improved. We do expect some normalization as we expand into different touch points in Commerce Media. We expect gross margin to return to the mid-20s toward the back half of the year and then further expansion in 2027.
Got it. And then on the competitive landscape, you mentioned not seeing a ton of major players in the space. Do you have a sense that others want to try to get into this space? How heavy of a lift is it to compete with you?
Great question, Dave. There are a handful of players targeting enterprise clients. For enterprise customers you need an enterprise-grade platform with SOC 2, ISO compliance, and significant platform investment. The entrants we've seen tend to target the Shopify and D2C end, which is a different segment. The large ad tech companies often pursue programmatic approaches, buying advertisers on demand platforms, whereas our model is direct—we work hand-in-hand with advertisers. Advertisers pay a premium for the high-value consumers we deliver because of the ROAS we provide. Proving out ROAS and audience targeting is our core competency and explains why we are gaining market share.
And our next question will be coming from the line of Bill Dezellem with Tieton Capital Market.
Well, operator, I'll help you out here. That's Bill Dezellem with Tieton Capital Management. My first question, Don and Ryan, is tied to the Commerce Media business. As you look out in 2026 versus 2025, what sort of revenue growth range are you thinking is reasonable at this point?
From a Commerce Media perspective, we doubled the business from 2024 to 2025 and are now saying we will grow strong double digits from 2025 to 2026 for Commerce Media. The primary difference between doubling again and our current outlook is the early termination with one media partner, which had the biggest impact on near-term growth. We're also making investments in adjacencies that will create longer-term opportunities, which moderates 2026 growth but positions us for larger opportunities beyond 2026.
Strong double digits — would you bracket that with some numbers?
Greater than 50%, lower than 100%.
All right. That's fair. How would you characterize the pipeline of future opportunities versus a year ago?
We have a differentiated brand and competitive advantage around driving better results. The other large company in the space has a strong tech/SaaS play, and there's room for growth for both of us. Our differentiated positioning means that when we enter conversations, prospects understand how we can drive performance and extend beyond post-transaction. Many of our partners are asking for broader solutions to grow beyond post-transaction, and that strategic relevance is driving more opportunities for Fluent.
You said the market potential looks significantly greater today than a year ago. Is that specifically tied to adjacencies you referenced, or is there something else?
It's a combination of adjacencies and how quickly Commerce Media is evolving. The market is still relatively low-penetrated, so we have tailwinds from increasing penetration plus adjacencies to sell alongside post-transaction. That expands our market opportunity materially.
Would you talk in more detail about those adjacent opportunities and which ones are larger than others and why?
I'd love to, Bill, but we're being deliberate and quiet on the details for competitive reasons and because these initiatives are a couple of quarters away. We'll test and learn and then scale, which is Fluent's approach. We'll provide more detail after Q2 as we validate the models and opportunities.
When you think about the revenue potential from some of these different areas, individually, do you see any of them being larger than post-sale as we know it today?
Yes. Some of the adjacencies we are pursuing have total addressable markets in the U.S. equal to post-transaction, and a couple are an order of magnitude larger. A couple may be slightly smaller, but together they significantly expand our strategic and financial upside.
Does that imply each opportunity is at least as large as post-transaction today?
Generally yes, with maybe one that's a bit smaller. We're pursuing these from a strategic perspective focused on consumer moments that matter and where we can deliver meaningful partner value and growth for Fluent.
When you look at the sales cycle for these adjacencies, do you anticipate it will be similar to post-sale, longer, or faster due to existing relationships?
For existing partners, cross-selling adjacencies should have a much shorter sales cycle because we already have trusted relationships and proven post-transaction results. For new partners, the conversation involves broader vision and where to start, so it may take longer. In many cases, when we win a post-transaction client, we secure a large share of their market; with adjacencies, we expect to provide significant additional growth to those same partners.
Relative to owned and operated revenues being flat to slightly up this quarter versus the third quarter, what does that signal?
Owned and operated is a core competitive advantage for us; it helps us win and drive better performance. We're bringing those assets into Commerce Media as a differentiator. We don't intend to grow the owned and operated business aggressively; we expect it to decline as a standalone revenue source, but its value as a strategic asset to power Commerce Media is immense.
Great. Congratulations on a solid quarter and for allowing all the questions.
Thank you. And this does conclude the Q&A session. I would like to turn the call over to Don Patrick for closing remarks. Please go ahead.
Okay. Thank you for joining the call today. As we discussed, we achieved a key milestone and surpassed a significant inflection point in 2025 with the growth of the Commerce Media Solutions being greater than 50%. In three short years, we built a highly differentiated brand and a platform that delivers sustainable and measurable performance for our partners and Fluent. We're very excited for 2026 and look forward to updating everyone after Q1. Thank you for joining.
This concludes today's program. Thank you all for joining. You may now disconnect.