Fluent, Inc. (NASDAQ:FLNT) Q2 2024 Earnings Call Transcript

Fluent, Inc. (NASDAQ:FLNT) Q2 2024 Earnings Call Transcript August 19, 2024

Fluent, Inc. misses on earnings expectations. Reported EPS is $-0.75 EPS, expectations were $-0.21.

Operator: Good afternoon and welcome. Thank you for joining us to discuss our Second Quarter 2024 Earnings Results. With me today are Fluent’s CEO, Don Patrick; Interim CFO, Ryan Perfit and Chief Strategy Officer, Ryan Schulke. Our call today will begin with comments from Dan and Ryan Perfit, followed by a question-and-answer session. I would like to remind you that this call is being recorded, live recorded in webcast. A replay of the event will be available following the call on our website. To access the website, please visit our Investor Relations page on our website at www.fluentco.com. Before we begin, I would like to advise the 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 speak only as of the date hereof. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company business. These statements may be identified by words such as expect, plan, project, could, will, estimates, and other words of similar meaning. The company undertakes no obligation to update the information provided on this call. For a discussion of the risks and uncertainties associated with Fluent’s business, we encourage you to review 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 certain non-GAAP financial information relating to media margin, adjusted EBITDA and adjusted net income. Management evaluates the financial performance of our 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 am pleased to introduce Fluent’s CEO, Don Patrick. You may begin.

Don Patrick : Good afternoon. Thank you all for joining our call today. I’m here together with Ryan Schulke, our Chief Strategy Officer and Company Co-Founder, and Ryan Perfit, our Interim Chief Financial Officer. I’ll start today with some brief comments regarding our strategic initiatives and progress in the second quarter. On the strategic front, we are highly energized by the progress we’ve continued to make in our strategic growth plan with the continued stabilization of our own and operated marketplace, and business pivot to our new higher margin syndicated performance marketplaces. We believe we’ve reached an inflection point in our transition, which is exciting as this progress provides a clear strategic and financial validation of our longer-term growth agenda with our early second half performance metrics.

Since the launch of our syndicated performance marketplace in late 2022, our strategy and investments have been focused on shifting our business mix into long-term growth markets, where our differentiated position will allow us to deliver Fluent’s margins that are accretive to the core. And we’ve successfully delivered sequential improvements in both revenue and gross profit in our performance marketplaces each and every quarter since. Our momentum is accelerating, and we remain confident that we’ve reached the real stage of Fluent’s financial rebound. To that end we expect to deliver single-digit consolidated year-over-year growth in Q3 and then accelerate with consolidated double-digit year-over-year growth in Q4. And in 2025, as our business mix continues to shift into the performance marketplaces, the momentum should build and we anticipate a strong year of consolidated year-over-year double-digit growth.

While we see our performance marketplace platform as stickier, it tends to have longer and more sophisticated sales cycle than our owned in our operated marketplace. But once we sign a new partner, there’s a corresponding positive predictability of the business as we can project the impact on our growth agenda and our financials with a higher level of certainty based on the mutually agreed upon execution time lines. We’ll detail this further, next quarter when we’re at liberty to speak more about the specific brand partners. Bottom-line, we have major brands enthusiastically endorsing our performance marketplace strategies, and those new partnerships will go live and hit the stat page in subsequent quarters, Q3, Q4 and into fiscal year 2025, as we align against executional tactics and time lines.

So let’s talk about the tough news regarding our Q2 financial performance. Revenue of $58.7 million represents 11% decline versus Q1 2024. Our media margin of $15.7 million was a decrease of 29.3% versus Q1 2024. And adjusted EBITDA of negative $4.5 million represents a negative 7.7% of revenue. Our lower than expected Q2 quarterly results were primarily driven by two underlying financial trends and an increase in unauthorized third-party activity in our ACA business that necessitated a Q2 adjustment. The results generated from our owned and operated marketplace reflect the lingering impact of our post FTC settlement transition, including our exiting businesses, we felt were no longer strategically relevant. Although Q2 results in our owned and operated marketplaces showed continued revenue and margin declines.

Importantly, we saw marketplace stabilization by the end of the second quarter that has continued into Q3. We indicated we are beginning to fully cycle the businesses we’ve exited and should have finalized this transition in the second half. Owned and operated marketplace revenue and media margin declines were partially offset by the continued acceleration of our new syndicated performance marketplaces. Performance marketplace growth year-over-year continues to shift the mix into our strategic growth agenda and establish a differentiated market position. Our results were exasperated by unauthorized third-party activity impacting our ACA vertical in our call solutions business. Recently, unauthorized switching of the agency of record AOR, our insurance policies dramatically increased adversely affecting the entire ACA industry.

Once the Centers for Medicare and Medicaid Services, CMS, became aware they change their system for switching AORs, largely eliminating the practice. However, the new system did not penalize the prior unauthorized activity hampering our ability to recover our losses or cost effectively operate the business in the short-term. This also necessitated a $3.1 million write-down of accounts receivable with an equal offset to revenue, media margin and adjusted EBITDA in Q2. While this non-recurring write-down had negatively impacted our Q2 results, we see this as having no additional negative impact to our financials or our future growth agenda. Absent the write-down, our overall financial performance remain consistent with the road map we’ve laid out in previous calls.

However, somewhat masked in our financials is that we are on plan in growing our performance marketplaces. That momentum combined with the stabilization of our owned and operated marketplaces, is a reflection of our evolving market mix. We remain confident in our ability to accelerate revenue and profit growth in the second half of 2024 when compared to last year’s numbers. I would like to now take the time to provide some deeper insight into our growth agenda, so you can get a clear picture on why we are so excited by the differentiated market position we are creating. Our syndicated performance marketplaces represent the tip of the spear in our strategic growth agenda. As we accelerate the fluid brand into very large, high growth dynamic markets where we can unleash our core owned and operated grounded capabilities, providing us with a unique competitive advantage in the marketplace.

Our Performance Marketplaces revenue growth is on plan. And as we continue to build on that momentum, we anticipate accelerating year-over-year growth through the end of 2024 and beyond. Equally exciting is that our gross margin in that business is growing faster than revenue with ample room for additional improvement. So you can see why we’re so enthusiastic about our Performance Marketplace growth strategy as we lean into this opportunity and drive enhanced operating efficiencies across the Fluent Enterprise. In Q3 our focus is on expanding our market share through continued growth in our syndicated performance marketplaces, while positioning the Fluent Enterprise to return consolidated year-over-year growth that we believe will accelerate sequentially through the back half of the year.

Now some additional insight regarding our Adflow business, the anchors are syndicated performance marketplace platform, where proof-of-concept result leaves us with even more strategic optimism. Adflow is our media solution we launched in the large and rapidly growing commerce media market. The market is currently valued at over $50 billion, and expected to reach $150 billion by 2030. Presently, 43% of US brands have commerce media budgets, and that’s expected to increase to 5% by 2025. Our foundational Adflow strategies continue to show year-over-year revenue growth as planned, driven by new partner wins, which are enabled by our leveraging our proprietary technology, machine learning and data platform capabilities that have yielded excellent results.

Furthermore, since May, we’ve added new brand partners that will increase our growth trend line markedly as we’re expanding into very attractive grocery, quick-serve restaurant and travel verticals. We are excited by these results, along with the increasing momentum as the Adflow platform represents a new growth opportunity for world-class brands to reach consumers seeking high quality engagements at the optimal purchase moment. We will speak more to this in future quarters, but we also see a significant leading-edge loyalty-based opportunity to expand and enhance Adflow strategic impact in adjacent marketplaces that we believe will further differentiate Fluent from our competitive set. And our partners are already validating our unique market position based on their enthusiastic feedback.

Headlining, we are now working with commerce partners beyond post-transaction to enhance consumer engagement, retention and loyalty across our partners’ commerce platforms. In Q2, we launched our innovative loyalty solution with select partners, leveraging our deep knowledge of our owned and operated marketplaces and Adflow’s Commerce Media, in order to provide next-generation loyalty solution within comparable economic value proposition to advertisers and partners alike. This is a powerful and unique strategic combination, a marriage of our owned and operated leader position coupled with insights that are proprietary to Fluent, while leveraging our credibility we are earning with our Adflow platform, as a launching point into a relevant early-stage marketplace.

Based on what our partners are sharing with us and as they aggressively lean in, we believe this is another large growth opportunity that is right in our sweet spot. Both Adflow and loyalty and retention solutions provides Fluent a unique brand position and a significant growth opportunity in the large and growing commerce media industry. More importantly, it expands our strategic value proposition to world-class partners, beyond customer acquisition as we expand quality consumer engagement across the entire marketing funnel. We are excited by our progress here, and we’ll provide more detail in future earnings releases. In our call solutions business, after consistent historical growth, our Q2 revenue declined year-over-year due mostly to current and future regulatory changes.

By the end of Q2, we adjusted to the upcoming regulatory changes by proactively building the compliance solution that we believe offers better quality for our partners. We believe we’re now positioned well for our partners second half call solutions demand and future growth remains on the horizon. In our ACA business, although it is a high sequential growth opportunity, we are closely evaluating the ongoing changes to the centers of Medicaid and Medicare services, in pausing this initiative to ensure that Fluent can continue to differentiate ourselves within a highly fragmented market, more so given all the growth opportunities available to us. Despite headwinds in call solutions business during the quarter, our performance marketplaces had a solid first half 2024, evidenced by Adflow strategic and financial market acceptation and execution, and we anticipate revenue growth in this market and accelerating momentum heading into the later half of this year.

By the end of Q2, we achieved two critically important milestones in our strategic pivot. First, we stabilized our owned and operated marketplace. Second, stability in our owned and operated marketplace provides a springboard into higher quality consumer engagement, syndicated performance marketplaces, where we are building our competitive advantages and where we continue to accelerate based on the very positive results in these parts of the business. We are quite enthusiastic regarding the strategic and financial roles that our performance marketplaces are playing in our long-term growth agenda as they already are delivering higher margin than our owned and operating marketplaces. Moving forward, we’re confident that we will continue to accelerate revenue growth from our performance marketplaces.

We believe the corresponding impact should have Fluent achieving year-over-year consolidated single-digit growth in Q3, and double-digit growth in Q4. Importantly, and in parallel, as we enhance our market position, we are confident that we’ll be being growing our total gross profit more rapidly than our revenue over time. And with the strategic and financial year-end momentum, we believe Fluent is well on course to deliver consolidated double-digit revenue and gross profit growth in fiscal year 2025. And with that, I’ll turn to Ryan Perfit to provide more detail on our financial results.

Ryan Perfit: Thank you, Don and thanks to everyone for joining us today. I’ll now provide some additional color on our Q2 earnings. We generated revenue of $58.7 million in the second quarter of 2024, down 28.5% from prior year and down 11.1% sequentially from Q1. While we had success driving key long-term strategic initiatives during the quarter, macro headwinds and competitive challenges related to the FTC order continued to impact our performance of our owned and operated marketplaces, contributing to decreased margin performance overall. Moreover, we chose to exit a non-strategic business during the quarter, and our call solutions business was faced with regulatory changes in Medicare and ACA marketplaces, and we took an accounts receivable write-down of ACA policies in the quarter totaling approximately $3.1 million with an equal offset to Q2 revenue, which equally affected media margin and adjusted EBITDA.

Absent this write-down, our overall financial performance for the quarter was largely consistent with the road map we had laid out last quarter. We are optimistic about the growth of our syndicated marketplaces and coupled with our continued expense discipline, we anticipate revenue growth and improved adjusted EBITDA performance in the back half of 2024 compared with the comparable quarters of 2023. Media margin in the second quarter was $15.7 million which represented 26.7% of revenue compared with $25.9 million or 31.5% of revenue last year. As we continue to scale our performance marketplaces, we expect media margin as a percentage of revenue to improve over time. On a GAAP basis, total operating expense in the second quarter of 2024 totaled $18.2 million, an increase of $5.4 million compared to the second quarter of 2023.

But of note, G&A during the quarter was $8.9 million which was down sequentially from the first quarter G&A of $10.4 million. G&A in the second quarter of last year was only $3.9 million, due primarily to net credits totaling $5.7 million related to the FTC settlement, including insurance reimbursements for previously incurred legal fees and a lower than expected regulatory settlement. Excluding these credits last year, G&A decreased by approximately 8% compared to Q2 2023. Also during the quarter, we realized goodwill and intangible asset impairment of $2.2 million related to customer relationships in the AdParlor reporting unit and internally developed software related to a business unit that was exited subsequent to the close of the quarter.

Notably, our operating expenses in Q2 of 2024 and Q2 of 2023 include restructuring and other severance costs of $661,000 and 0, respectively. For Q2 2024, this includes severance related to a reduction in force during the quarter to better align our cost structure. G&A in the quarter also includes accrued compensation expenses related to the Winopoly, True North and TAP acquisitions of $25,000 for the three months ended June 30, 2024, and $562,000 for the three months ended June 30, 2023. Q2 2023 also included the previously mentioned credit of $5.7 million of litigation and other related costs. All of these costs fall outside of the normal course of business and are thus excluded from our adjusted EBITDA calculation. Adjusted EBITDA in the second quarter of 2024 was negative $4.5 million, largely in effect of the previously mentioned $3.1 million write-down of ACA policies.

As stated on our first quarter call, we expect revenue and media margin growth in the second half driven by our new performance marketplaces to drive adjusted EBITDA as a percentage of revenue into low-single digits in Q3 and high-single digits in Q4. The company cannot provide a reconciliation to expected net income or net loss as a percentage of revenue for 2024, due to the unknown effect, timing and potential significance of certain operating costs and expenses, share-based compensation expense and the provision for or benefit from income taxes. Interest expense in the second quarter increased to $1 million from $795,000 due to higher average interest rates on our SLR facility and as an effect of increased amortization of debt financing costs related to the SLR facility.

For the quarter, our income tax benefit was $775,000 and an effective tax rate of 6.5% which differed from the statutory federal income tax rate of 21%, primarily due to state and local tax expense and losses for which no tax benefit is recognized. This is compared to an income tax expense of $1.7 million and an effective tax rate of 29.2% in the second quarter of 2023. We reported a net loss of $11.6 million and an adjusted net loss, a non-GAAP measure of $7.3 million, equivalent to a loss of $0.47 per share. Shifting now to our balance sheet. We ended the quarter with $6.4 million in cash and cash equivalents, including restricted cash. Total debt as reflected on the balance sheet as of June 30, 2024, was $33.3 million an increase of approximately [$28] (ph) million from $30.5 million at December 31, 2023.

As of June 30, 2024, we had an outstanding balance of $32.3 million on our credit facility with SLR credit solutions. This facility provides us with a $20 million term loan and the revolving credit facility of up to $30 million that matures on April 2, 2029. In Q2, we invested $1.7 million in the capitalized product development and technology, largely disappoint the growth of our performance marketplaces. This compares to $1.2 million invested in Q2 2023. Now halfway through the third quarter of 2024, we believe that the company is well-positioned for year-over-year and quarter-over-quarter revenue growth, as well as a return to positive adjusted EBITDA in the back half of the year. We remain focused on both the fortification of our legacy owned and operated products growth of our new syndicated performance marketplaces, which we expect will drive strength and margin profile as they scale.

We would like to thank everyone for their continued support and look forward to driving enhanced results through the balance of 2024. We’ll be happy to take questions at this time.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Maria Ripps with Canaccord. Your line is open.

Maria Ripps: Great. Good afternoon, and thanks for taking my questions. First, can you maybe talk a little bit more about the unauthorized activity for the ACA policies this quarter so that impacted you? Was there something that sort of impacted the industry more broadly or sort of your platform more so? And I guess, what are some measures or initiatives that you may have added to prevent maybe limit this going forward?

Don Patrick: Hi Maria, thanks for the question. I’ll give a little bit of detail. But the short answer to you is it affected the entire industry. In fact everyone who is involved with ACA. So it wasn’t specific to Fluent’s industry-wide. But if you remember, in Q4 ’23, our call solutions business started the ACA Agency, where Fluent license agents sells ACA policies and the behalf of top health insurance companies. We were already in that business of providing quality ACA consumer prospects to partners. And we built the ACA agency as a natural performance market extension into that business with the ability to bring the consumer further down the funnel. So the economics of that business is when we sell an ACA policy to a qualified consumer, we become the agency of record and all relevant policy information, including agency of record is maintained in a government database that is run and controlled by the centers for Medicare and Medicaid Services, CMS.

So each ACA policy is in the name of consumer with the designated health care. And as AOR, Fluent gets paid a monthly commission for each policy, we are AOR for, for as long as that consumer has that policy. And the typical time frame for that policy and the commission is averages somewhere between 17 months and 24 months where we’d be getting those commissions. But during Q2 2024, it became apparent that there was a lack in controls in the CMS’ ACA database which allowed other licensed agents to access the database and the ability to illegally change the AOR without any consumer approval. So Fluent could sell the ACA policy to a consumer an unauthorized agent would come into the government database, change the AOR from Fluent to them. And with the [illegal AOR] (ph) switches, the health care insurance companies would then pay the illegal AOR on the ongoing commissions instead of Fluent getting it.

A class action suit was filed in Q2 with a long list of companies around the illegal and unauthorized switching, Fluent was at [many involved] (ph) in this nor did we work any of those parties. But it really highlights the extent dramatic increase of this unauthorized and illegal activity to happen and accelerate in 2024. Once CMS became aware of this unauthorized behavior in July, they changed the system and their process for AOR switching, and they largely eliminated the practice. So the practice to answer direct question, Maria. The government fixed it. The CMS fixed it by putting in strict rules. The challenge was that they basically did not penalize any prior unauthorized activity. So they lockdown all the illegal unauthorized changes and hampered Fluent’s ability to recover our losses for those policies that were illegally switched.

So — and that was what netted the three point $1 million write-down of receivables and the things that were illegally changed. So the process is now in place for the government in the monitoring that we have after July ’19, when they put the new rigs in place, the switching is all authorized and the illegal activity has dramatically gone down. However, as we outlined in the earnings script, we are pausing this in a year of making sure that we have the right internal processes, processes with externally with the various vendors and the government to make sure that this is a business that we can not only differentiate ourselves with, but also make sure that we don’t have this issue again. It is probably more detail in you want him here, hopefully I answered your question.

Maria Ripps: No, that’s great. Thank you so much for the color. And then maybe secondly, could you maybe talk about sort of any potential liquidity needs and maybe just how should investors think about some of the options that are available to you on that front?

Don Patrick: Yes. Yes. From liquidity, we have a very favorable credit facility with SLR. As you know, it’s a receivables based facility, and it continues to — as we grow, continue to provide the liquidity, we need to move forward. We have put some — recently put a small amount of money in roughly $2 million to continue to provide enough liquidity for the company. But we feel with the SLR facility and the acceleration of the revenue that we talked about in our performance marketplaces that we have enough liquidity to not only execute on our business plan, but over deliver.

Maria Ripps: Got it. That’s very helpful. Thank you so much.

Don Patrick: Thanks Maria.

Operator: Our next question comes from the line of James Goss with Barrington Research. Your line is open.

Jim Goss: Okay, First — and maybe this follows up a little on the liquidity issue. You’ve had a couple of quarters now where there have been a couple of — I think they were mostly financially related issues, although perhaps this one was more with ACA that have delayed your reporting. And I was wondering if there are any other specific issues you are aware of that we should be aware of to be — or be concerned of going into the next couple of quarters?

Don Patrick: Hi Jim, thanks for the question. We do not have anything that we’re aware of around our ability to execute on our plan and to grow. As I said, we have a very favorable facility with our debt partner that allows us to continue to access cash as we grow and against receivables. And I think that was put in place, as you know, back in April and is going to serve us well in the back half of ’24 and into 2025.

Jim Goss: Okay. Another question. You mentioned the syndicated access performance marketplaces, we are the tip of the spear and that Adflow platform was the — your way to enable access. I wonder if you could talk a little more about exactly how that works? And also, if you could talk about the mix of the syndicated platforms versus your owned and operated places?

Don Patrick: Right. Good. So I’ll touch specifically on Adflow about the syndicated marketplaces are basically post event monetization in the commerce media spot. But Adflow is a model, our own proprietary platform that sits in between a post-transaction environment. So if you’re purchasing something on the ticketing site before you get the confirmation page. There is an additional ad that is served up based on who you are, what your purchase behavior is what your interests are, which again are things that we access both with our partners approved data. But more importantly, the Fluent data and the first party data that we’ve built over the years. And then we’ll serve you a relevant ad that’s most in the purchase moment allows us to monetize you and improve the consumer engagement.

So that money is a revenue share between us and the commerce partner. It’s a very strategic business for us, both from the standpoint of increasing monetization for our Commerce Media but equally important, it also allows us to continue to help with consumer engagement with them. We’ve shown very significant growth and acceleration in that business, Jim, in Q2. We don’t break that out from a segment perspective, but we talked about the new verticals we got into grocery quick-serve restaurants. We were in ticketing, but we also now in travel. And that growth, what is unique about it compared to the core owned and operated marketplace business is that we — it’s very predictable. It might take a while for it to come from a technical standpoint and an ability to onboard it.

But once it’s on, we are getting predictable sessions, predictable revenue. We have a lot more ability to forecast what we see in Q3 and Q4. And a significant number of partners are coming on — have come on since June. They’re going to come on through September, October, that puts us in a position to be able to say that we’re going to return to single digits in Q3 and show double-digit total consolidated growth in Q4 and — into 2025.

Jim Goss: Okay. And one last thing. I believe media and entertainment was, say, a primary vertical in the own-operated area not mistaken. And has that been minimized at all? Or is that being supplemented by the Adflow incursion into retail and ticketing verticals and travel some of the other things you mentioned.

Don Patrick: It is being supplemented, Jim. It’s always been a strong vertical for us and it remains a very strong vertical in the owned and operated. Obviously, we are looking to grow that media and entertainment, and grow it consistently, but we are also bringing on other verticals with the new solutions that we have and our ability to drive more solutions for our partners.

Jim Goss: So would you try to find owned and operated platforms to serve the new verticals you are serving through the syndicated access right now?

Don Patrick: No. I mean the way we’ve described in the past Jim, is the owned and operated marketplaces are a real competitive advantage to us. As you know, it is the one that has the most challenges over the last couple of years as we’ve shifted to quality and really enhancing the quality of those sites along with the settlement FTC. But their advantages around our ability to buy media, knowing consumer engagement and being able to interact with consumers in a lifetime value in that performance marketing pedigree. Really allows us to launch and do things like Adflow and syndicated marketplaces with that expertise and our proprietary third-party data to really provide a competitive advantage against the competition in that market.

So we look to keep that business stable. We look to continue to keep it healthy and — the big news lost in the financial numbers here, clearly that we achieve we believe we’ve achieved stability in the later part of Q2 and continued in Q3 in that business and keeping that stable and leveraging those assets into the higher growth businesses with higher margins is going to be — continue to be our strategy. So we will not look to continue to grow at the owned and operated in different verticals.

Jim Goss : All right. Thanks very much.

Don Patrick : Thanks Jim.

Operator: [Operator Instructions] Our next question comes from the line of Bill Dezellem with Tieton Capital Management. Your line is open.

Bill Dezellem: Thank you. Relative to Adflow and the addition of grocery, QSR travel, these businesses sound less cyclical to us. So is that the correct way to look at this and that strong cyclicality that this business has had should be mitigated to some degree with some of these new partners coming on?

Don Patrick: Yes, hi Bill, thanks for the question. Absolutely. We launched Adflow. We got heavily into retail and ticketing, especially around sports and some things that were more seasonal. These the QSR, the grocery, the travel tend to have different cycles themselves. And we’ll help — will help bring more balance to the course of the year. We still will be very — we still will be Q4 heavy. But based on us adding these verticals, it will be less so than we were last quarter when we were talking to you.

Bill Dezellem: That’s helpful. And then would you anticipate that the absolute rate of growth in Q1 will be greater than Q4 and the rate of growth in Q2 then greater than Q1. So basically, we now have four quarters coming where the rate of growth will be accelerating?

Don Patrick: Yes, it’s a great question. There is still some falloff from Q4 in our core business, our owned and operated business and in Adflow, Bill. So we will continue to see double digits. There might be a slight dip in Q1, but we will be able to continue to show sequential growth after that.

Bill Dezellem: Yes. I’m sorry, Don, I wasn’t actually thinking about the absolute revenue number as much as I was, the percentage rate of growth and whether in Q1, that rate of growth would end up being higher than a double-digit rate of growth that you guided for — guided

Don Patrick: Yes, we will see a small drop in percentage, but we’ll continue to see double digit in Q1.

Bill Dezellem : Okay. That’s helpful. Thank you.

Don Patrick : Thank you Bill.

Operator: Ladies and gentlemen, I’m showing no further questions in the queue. I would now like to turn the call back over to Don for closing remarks.

Don Patrick: Thank you for joining our Q2 2024 earnings. We believe we’ve reached an inflection point on our strategic pivot, which is exciting, and this progress provides clear strategic and financial validation of our long-term growth agenda with our early second half performance metrics. We are very focused on returning to consolidated growth in Q3 and accelerating in Q4 and into 2025 in delivering on our numbers. Thank you for your continued support. We look forward to updating you on our progress after Q3.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.