Fluent, Inc. (NASDAQ:FLNT) Q3 2024 Earnings Call Transcript

Fluent, Inc. (NASDAQ:FLNT) Q3 2024 Earnings Call Transcript November 14, 2024

Operator: Good afternoon and welcome. Thank you for joining us to discuss Fluent’s Third Quarter 2024 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. A replay of the event will be available following the call on Fluent’s website. To access the webcast 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 or 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 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 the company’s business on a variety of indicators, including these non-GAAP metrics. The definitions of these metrics and reconciliations to the most directly comparable GAAP financial measure are provided in the earnings press release issued earlier today. With that, I’m pleased to introduce Fluent’s CEO, Don Patrick.

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 Chief Financial Officer. I will start with some brief comments regarding our strategic repositioning of our business and progress against our initiatives in the third quarter. On the strategic front, we’ve been clear regarding the business pivot we are making in our growth strategies that is grounded in leveraging our leadership position and competitive advantage in our owned and operated marketplaces as a springboard into new high-volume, high-growth syndicated performance marketplaces. We are highly energized by the progress we continue to make and we are rebranding our syndicated marketplaces as Commerce Media Solutions to better reflect our broad-based marketplace solutions that represent long-term growth opportunities for Fluent and for the industry as a whole.

As a result of our repositioning, Fluent is organized around three synergistic business solutions that we will use to strategically frame our business moving forward. Our Commerce Media Solutions enables and empowers businesses to monetize consumers on their commerce website and apps by connecting advertisers to their most relevant customers. This includes our post-event and post-transaction offerings, including Fluent’s Ad flows brand. We continue to see strong growth here and margins that are accretive to the core. Owned and operated marketplaces is our performance marketplace focused on customer acquisition for world-class brands. This is our legacy business, where we’ve built valuable consumer acquisition, engagement and monetization expertise along with proprietary first-party data, technology and AI.

Our leadership position in this marketplace provides us a distinct competitive advantage as we continue to pivot into commerce media solutions. Our goal here remains to financially stabilize this business, focused exclusively on the core assets that provide proprietary capabilities and competitive advantage for long-term growth. Additionally, we have our call solutions business and AdParlor agency business that provide performance marketing and agency services for health, retail, and direct-to-consumer verticals. These businesses strategically enhance both our media capabilities and our customer expertise while deepening our relationship with critical industry verticals. Our Commerce Media solutions represents the tip of the spear in our strategic growth agenda as we accelerate Fluent’s brand in 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 and our broader industry.

In the earnings release today, we reported quarterly results that continue to demonstrate the meaningful progress in our new Commerce Media Solutions that has delivered triple-digit year-over-year revenue growth every quarter this year. While also reflecting some cyclical advertising headwinds in our owned and operated marketplace related to the presidential elections that had an effect on our ability to acquire media at acceptable margins. Our third quarter financial results were as follows: as we continued to deliver sequential trend line improvement via our strategic growth agenda. Revenue of $64.5 million representing a 9.9% increase versus Q2 2024. Our media margin of $18.2 million was an increase of 15.9% versus Q2 2024. Adjusted EBITDA negative $0.1 million represents a negative 0.1% of revenue.

Our Q3 quarter results were primarily driven by two major business and industry trends. Our Commerce Media Solutions continues to accelerate, adding 15 new partners in Q3 and in growing revenue aggressively by triple digits year-over-year, while also expanding margins as we scale. This year-over-year growth continues to shift the mix, consistent with our strategic and financial growth agenda, as we continue to establish Fluent’s differentiated market-based position in the market. In Q3 2023, Commerce Media accounted for 3% of our revenue compared to 16% in Q3 2024 and we expect this percent of revenue to continue to increase going forward. Our owned and operated marketplace revenue and media margins were negatively impacted by the enormous social media advertising spend driven by the US Presidential election.

Starting in late August, media costs on the biddable platforms increased significantly, which affected our ability to buy media at acceptable margins. Given our long-term commitment to further establish our equity and more rapidly grow our Commerce Media Solutions business, we consciously chose not to chase this volume at unacceptable margins. Over the past week, we have seen media pricing start to come back to more traditional levels after the election. So, our momentum continues to accelerate. We remain confident that we’ve reached the initial stage of Fluent’s financial rebound given the foundational elements that we’ve established in the consumer media solutions. As a result of the business and industry trends outlined above, we expect continued strong quarter-over-quarter revenue growth in Q4.

And in 2025, as our business mix continues to shift into our Commerce Media Solutions, our momentum will build and we anticipate a strong year-over-year consolidated double-digit revenue growth. Let me step back and provide investors with more context around the opportunity in front of us in the commerce media front. According to Boston Consulting Group, the commerce media industry is currently estimated at over $50 billion annually is expected to reach over $100 billion and predicts that it will account for over 25% of the digital media spend by 2026 as the market continues to evolve both traditional and digital advertising. Fluent’s Commerce Media Solutions both enables and empowers our commerce partners to participate in the large and rapidly growing commerce media market, a transformative advertising channel that has exploded over the last three years.

We continue to align our strategic priorities and tactical execution with the definitive goal to capture an expanding share of this critical and vibrant market. Fluent’s Commerce Media Solutions are designed to provide advertiser and media partners with high ROI marketing solutions while enhancing the quality of our revenue base. Our proprietary first-party data and embedded AI-powered technology allow us to establish long-term contracts and mutually beneficial revenue share agreements with our media partners. Our Commerce Media Solutions leverage our established owned and operated marketplaces, where over 14 years of expertise in customer acquisition and performance marketing experience, provide us consumer access and insights that give us a distinct competitive advantage in the market.

As part of the company’s strategic pivot in 2023, the Commerce Media Solutions business continued to exhibit long-term growth potential and generated revenue of $10.4 million in Q3 and as I stated earlier, represents triple-digit growth over the same period last year. Importantly, with the partners that we’ve added throughout the year, we’ve also surpassed the $50 million annual revenue run rate as of September 30 2024. More detail on how we calculate the annual revenue run rate operating metric is in today’s earnings release. And we continue to accelerate our momentum with adding additional five new partners being added in Q4. It is also important to note that we’re seeing higher gross margins in our Commerce Media business with gross margins in Q3 at 33% versus consolidated gross margins at 24% in the quarter.

One of the key reasons we remain strategically and financially enthusiastic about our ongoing path is that we’ve established beachheads for growth in multiple verticals including retail, ticketing, quick-serve restaurant and grocery to name several. And in 2025, our plans are for continued expansion into additional verticals where we see strategic partnership growth opportunities with our clients including; entertainment, travel and finance. As a reminder, and as we’ve discussed in previous earning releases, as we are rapidly growing our Commerce Media Solutions business, the fundamental business model includes a longer sales cycle that can affect our quarterly trajectory based on the enterprise sales process, priority of the partners’ technology integration and seasonality of certain verticals.

And we’re looking forward with a strategic intent to broaden our position in the Commerce Media Solutions marketplace. In 2025, we’ll be updating you further regarding our additional growth and expansion plans for a new Loyalty Solution. This is an exciting adjacent marketplace where we believe we can play a highly differentiated industry-leading role with our clients beyond post-transaction that enhances the consumer engagement experience, increases retention and builds loyalty across our partners’ commerce platforms. We continue to work with select partners on this Innovative Loyalty Solution to further validate our proof of concept. We have leading-edge industry capabilities that provide a next-generation loyalty solution, with what we believe is especially compelling economic value proposition to advertisers and partners alike.

This is a powerful and unique strategic combination, a marriage of our owned and operated leadership position, coupled with insights that are proprietary to Fluent. While leveraging the credibility we are earning with our commerce media platform, as a launching point into relevant early-stage marketplaces. Based on our partners’ robust feedback, we believe this is another large growth opportunity that is right in our sweet spot. So stay tuned on this. So hopefully, you can now better understand, why we’re energized by the early performance of our Commerce Media Solutions business, and look forward to driving aggressive, profitable growth and value for our advertisers and for our 80-plus media partners, as we continue to prioritize and scale the strategic segment of our business.

Bottom-line, we have major brands enthusiastically endorsing our Commerce Media strategies and those new partnerships will go live and contribute to revenue in subsequent quarters Q4 and into fiscal year 2025, as we align against executional tactics and timelines. Our focus remains on expanding our market share through continued growth in our Commerce Media Solutions business, while positioning Fluent’s enterprise to return to consolidated year-over-year growth that we believe will accelerate sequentially throughout 2025. We are quite enthusiastic regarding the strategic and financial roles that our Commerce Media Solutions business is playing and we continue to shift our revenue and gross profit mix in delivering our long-term growth agenda.

As we continue to expand our platform we are strengthening Fluent’s brand equity with our partners while delivering higher enterprise margins than our owned and operated marketplaces. And as the strategic trend line continues in 2025, we believe shareholder value will follow. And with that, I’ll turn it to Ryan Perfit, to provide more detail on our financial results.

Ryan Perfit: Thank you, Don and thanks to everyone who’s joining us today. I’ll now provide some additional details on our Q3 earnings. We generated revenue of $64.5 million in the third quarter of 2024, down 2.6% from prior year and up 9.9% sequentially compared with Q2. As Don mentioned in his remarks, we’re intently focused on our strategic shift in revenue mix and higher gross margins related to commerce media. We believe this represents a significant opportunity for Fluent as more media partners and advertisers are turning to this dynamic advertising medium to maximize customer monetization and return on ad spend. Since its launch in Q1 2023, Commerce Media Solutions has demonstrated triple-digit year-over-year growth and driven this business to an increasingly larger part of our revenue and gross profit.

Our sequential growth in revenue in the quarter was in part driven by Commerce Media Solutions which increased to $10.4 million in the third quarter compared with $7.3 million in the second quarter and $2.3 million in the prior-year period. Thanks to new long-term contracts with media partners in the ticketing, retail, grocery and QSR sectors. Owned and operated revenue was down 18% year-over-year, but we’ve begun to see some quarter-over-quarter stabilization in media supply in this marketplace. While we do expect these year-over-year declines in our owned and operated marketplace to continue into Q4, we believe this will be offset by the improving performance of our Commerce Media Solutions as this business continues to scale. Media margin in the third quarter was $18.2 million, which represents 28.1% of revenue compared to $19.3 million, and 29.2% of revenue last year, and $15.7 million, and 26.7% of revenue last quarter.

As we’ve said in previous quarters, we expect media margin as a percentage of revenue to improve over time as we continue to scale Commerce Media Solutions. During the third quarter, our Commerce Media Solutions business produced media margins of 33.7% meaningfully higher than our consolidated media margins. On a GAAP basis, total operating expense in the third quarter of 2024 totaled $17.2 million, a decrease of $488,000 compared to the third quarter of 2023. G&A in the third quarter of the current year was $9.1 million, compared with $8.7 million prior year. The slight increase was due primarily to the absence of a $1.6 million credit for certain litigation and related costs due to an insurance reimbursement for previously incurred legal fees, and an increase of $205,000 in restructuring and other severance costs.

Additionally, we recognized no goodwill and intangible asset impairment charges in the quarter compared with goodwill and intangible asset impairment charges of $29.7 million in the third quarter of 2023. Adjusted EBITDA in the third quarter of 2024 was negative $71,000 compared with negative $1.7 million in Q3 2023, or an increase of approximately 94%. As stated in our second quarter call, we expect adjusted EBITDA margin to improve as our revenue mix continues to shift to Commerce Media Solutions. 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 third quarter increased to $1.3 million from $936,000, primarily due to a higher average interest rate on our term loan with SLR as compared to our term loan with Citizens Bank in the prior year period. For the quarter, our income tax benefit was $35,000, an effective tax rate of 0.4%, 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 benefit of $1.2 million and an effective tax rate of 29.2% in the third quarter of 2023. In the quarter, we recognized a fair value adjustment of convertible notes entered into with related parties of $2.8 million. We reported a net loss of $7.9 million in the third quarter compared with a net loss of $33.6 million in the prior year period and an adjusted net loss, a non-GAAP measure of $3.7 million, equivalent to a loss of $0.22 per share in Q3 of 2023 compared with an adjusted net loss of $4.1 million or a loss of $0.30 per share in Q3 of 2023, which excludes the previously mentioned impairment charge in the third quarter of 2023.

Now turning to our balance sheet. We ended the quarter with $7.8 million in cash and cash equivalents, including restricted cash. Long-term debt, as reflected on the balance sheet as of September 30, 2024, was $33.1 million, an increase of approximately $2.6 million from $30.5 million at December 31, 2023. Additionally, the balance sheet reflects $2.1 million of convertible notes with related parties marked to fair value at $4.9 million. As of September 30, 2024, we had an outstanding principal balance of $32.5 million on our credit facility with SLR Credit Solutions. This facility provides us with $20 million term loan and a revolving credit facility of up to $30 million that matures on April 2, 2029. In the third quarter, we invested $1.2 million into product development CapEx, largely to support the growth of Commerce Media Solutions as this business continues to scale.

This compares to $1.7 million invested in Q3 of 2023. The decrease is primarily related to lower spend on IT-related vendors. Overall, we’re encouraged by the ongoing growth of Commerce Media Solutions and the opportunities that we’re seeing in the market related to this business. Our 14 years of experience in customer acquisition through our owned and operated marketplaces differentiates us from our competitors, and we believe we’re well positioned to continue capturing market share in this new high-growth sector of digital advertising. We’re 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 from Canaccord.

Maria Ripps: Great. Good afternoon. Thanks for taking my questions. So you touched on this a little bit in your prepared remarks and sort of recognizing the election headwinds here. But were there any other factors that sort of contributed to the softer Q3 and Q4 outlook relative to your expectations last quarter?

Don Patrick: Hi, Maria. Thanks for the question. The biggest impact was the election and the amount of spend that was on the social media channels. Obviously we’ve been through a bunch of election cycles. Media tends to go up. But in this specific time period beginning in August, we saw prices jump at a significant rate. eMarketer gave some stats ,Maria that basically said, digital ad spending for political increased over 156% compared to 2020 and was over $3.6 billion. And that just all came in towards the end and made it hard for us to buy on those same biddable platforms during that time. So we had the demand. So we had the demand – the demand that we expected was there in our owned and operated marketplace. The supply was a restriction on growth in – starting really in mid-August and then it started to get better after the election on Tuesday last week.

Maria Ripps: Got it. That’s helpful. And can you maybe talk about what’s embedded in your expectations for double-digit revenue growth next year both from the sort of macro standpoint but also for your O&O segment as well as the Commerce Media Solutions business?

Don Patrick: Yes. Great question, Maria. So basically from an owned and operated perspective we’re not looking for that to grow and we’re actually looking that to be slightly down next year. All the growth is going to come from the commerce media side of our business. And we have – as we’ve given some numbers earlier, we continue to accelerate the number of partners we’re bringing on. We’ve actually brought five on in Q4, which is a historically slow month because retailers tend to put their tech on any changes on – and frozen during that time period. But we are really excited about the opportunity that we’re bringing. We have growth already embedded based on the ones that we brought on throughout the year that will be with us the full part of next year and we have real line of sight in terms of how that can grow for us.

So that’s the biggest piece of where we are. We started commerce media business. We were calling it AdFlow basically beginning part of 2023. And we now have clear line of sight on how to continue to aggressively grow that business. And we’re winning in the marketplace in a significant way. And the results we’re driving for our partners and the advertisers are certainly emboldening us to continue to lean in and invest into that business.

Maria Ripps: Got it. That’s helpful. And if I could maybe squeeze in one more please here. Can you maybe refresh us on why media margins in your growing Commerce Media Solutions segment are higher? I guess what are some sort of structural reasons behind that? And where do you see media margins expanding to once that segment is sort of at scale?

Don Patrick: Yes. So good question Maria. And we’ve talked about before our legacy owned and operated business marketplaces that we’ve been in for 14 years, the media margin has always been between sort of 28% to early 30s. And we obviously bring that up and down based on media costs and things like we had with the election and we will scale down to manage the margin to that numbers. The key part of the commerce media business model is that it’s – we are getting – we are being basically paid on a revenue share. So we get – we split the revenue share of what the advertiser is paying us between us and the digital media property that we’re working with. So as a rev share we have a much more consistent margin and embedded in that margin tends to be in the right now is in the 30s.

And I think as we scale we’ll get some economies driven by our machine learning models and also some of the more targeting that we’re doing as we grow into certain verticals. So we see that margin going in from that early 30 number we gave earlier and disclosed to sort of the late 30s early 40s.

Maria Ripps: Great. Thank you so much for the color.

Operator: Thank you. One moment for our next question. Our next question comes from the line of James Goss from Barrington Research. Your line is now open. One moment for our next question. Our next question comes from the line of Bill Dezellem from Tieton Capital Management.

Bill Dezellem: Thank you Don, would you please step back and just walk us through how the third quarter unfolded relative to what you had originally planned on — when we held the last conference call?

Don Patrick: Sure. Hey Bill, thanks for the question. So I’ll break it into the two businesses. On the commerce media side, we talked about at the end of Q2 about us accelerating the growth and bringing new clients on. Those clients did come on. We added 15 new partners into the commerce media side. So the volume did come as we anticipated. So from a commerce media side, it basically played out the way we expected it to and we continue to actually accelerate our momentum going into Q4. On the owned and operated marketplace side, we’re having a — we were targeting towards a good close in sort of July and halfway through August. And in the later part August is when we saw the media challenges in terms of getting supply on those biddable channels based on the pricing going up and us getting squeezed out from an ability to buy it at the right margin.

So, towards the end of the quarter is when we saw the hit come from primarily US presidential election and their spending on those channels. That continued on until November 7 or actually November 6 and then we started seeing margin — the pricing come back down in that owned and operated business.

Bill Dezellem: And did we just hear you say that you added 15 new commerce media customers in Q3?

Don Patrick: Yes. We added an additional 15 in Q3 and we’ve added over — we’ve added five to date so far in Q4.

Bill Dezellem: Thank you. And the five here in the fourth quarter given that so many of these businesses tend to be pretty active in Q4 I guess was a surprise — a positive surprise for us. Would you anticipate bringing more on before the end of the quarter? Or at this point are your prospective customers really in lockdown as they approach Black Friday and this Christmas selling season?

Don Patrick: It’s mostly going to be a lockdown, Bill. We did add one officially today. But in the retail verticals that we’re in for the most part they do a code freeze starting usually around the middle of October. And once they do that code freeze, it’s hard to get — they’re just not going to do — integrate our ad tech platform into their commerce site until after the end of the year.

Bill Dezellem: Great. Thank you. And then relative to the commerce media business again, do you see that revenue growth slowing from the triple-digit growth in the let’s say next four quarters? Or do you believe you can continue and it will continue to grow at a triple-digit rate for that window?

Don Patrick: We see the continued acceleration Bill. We’ve got as you can see great partners coming on. We also can expand with some of those partners. So part of our growth will be expanding with them. So some — like if we add a certain retailer they might have another brand that we can bring on, or we’ve mentioned in the past that we brought on a grocery store chain as our first entry into that market and they have additional chains. So we’ll continue to grow with both expanding our current partners and bringing new partners on.

Bill Dezellem: Okay. I’m not quick enough with the calculator to do the math here. But if the owned and operated is flat to down slightly next year, and the commerce business is up triple digits next year that puts us up in a pretty decent growth rate.

Don Patrick: Yeah. So we — the way — I’ll do the math for you Bill, because you are smart enough to figure out the math. But what we’re saying about 2025 is that we’ll return to year-over-year double-digit growth for the year. The difference in what I’ll call the new business, the commerce media business is there is seasonality to that. So obviously when we — depending on what partner we bring on and what vertical it might be heavy in certain — certainly most of them are heavy in Q3 and Q4. So we feel good about returning to that double-digit number for the entire year. On a quarter-by-quarter basis, it might move up and down based on the verticals that we bring on and the seasonality that they have.

Bill Dezellem: Not to belabor this, but does that imply that the rate of growth would then accelerate double digits over the course of the year but each quarter has a higher growth rate as you go through 2025?

Don Patrick: You’ll typically see that. But again just to give you Bill something we’ve talked about before Q1, the retailers obviously go down, because there’s less holiday season, less sales things like that. So we’ll have the Q1 number sequentially will be down from Q4 and then we’ll continue to see acceleration beyond Q1.

Bill Dezellem: Right. I’m sorry Don, I was looking at it on a year-over-year comparison. So meaning that the fourth quarter would have a higher growth rate versus Q4 than the Q1 would have versus Q1?

Don Patrick: Yes that’s right. That’s absolutely right, Bill.

Bill Dezellem: Okay. Thank you. And I’m going to ask for your grace to get one more question in here. The loyalty business you commented on in your opening remarks would you dive into more detail as to really what that business is and how your solutions are different or innovative relative to competitors?

Don Patrick: Sure. So right now our core commerce media solutions is in the post — vast majority is in what we call the post transaction. So when you go on to a website and you purchase something, you put your credit card in, you press submit. And before you get the confirmation page, an overlay ad will come on and say congratulations you’ve just won three months free of Hulu subscription services. That ad module in that post-transaction space is what — that is our business, that’s our commerce solution business. So that inventory is the most lucrative part across our partners’ commerce flow, right because the consumer has already purchased and is in the purchase moment. And obviously they are — it’s likely to purchase again.

So that’s why we started off in that area with the commerce flow. But as a consumer goes through our partners’ commerce sites, there are other areas for which — for us to interact with them and other areas for us to drive the consumer experience to increase both revenue for the partner and also the consumer experience for the consumer. So, on the loyalty side, I’ll give you an example of one that we’re launching now. In that example, where you get Hulu for three months free, we can also work with our partners to say, you get x number of loyalty points, right? Those loyalty points allowed then encourage that consumer on the partner site to come back and build up more — obviously more loyalty for the partner but also more spending on their site.

So we’re able to integrate those two pieces across it. Loyalty, overall, tends to be a loss leader for a commerce partner. You tend to — they tend to look at it as, I’m going to spend x amount of money and I’m not sure how I get exactly the performance out of it. This is an example where we can add incremental revenue from the post-transaction business to drive loyalty and make it a profit center for them. Does that make sense, Bill?

Bill Dezellem: It does, Don. But what I didn’t hear is how what you just described is different from the typical loyalty program? So there was — that sounds pretty normal to me. I think that’s where I’m missing what you’re doing versus a normal loyalty program.

Don Patrick: Yes. A typical loyalty program will not offer ad serving for ads that are outside the company’s business, Bill. So what we’re doing is we’re serving non-endemic ads in order to bring revenue into it and then allowing the partner to decide how they spend — how they use that revenue either for themselves or how they can then bring that back and use that to incent the loyalty consumer. So it tends to be a revenue generator for them rather than a loss leader.

Bill Dezellem: Excellent. That’s great differentiation. Thank you, and congratulations on starting to see the inflection point in the business turn.

Don Patrick: Thank you, Bill.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of James Goss from Barrington Research.

James Goss: Hi. I’m sorry that my call dropped before. I might just ask a couple of other things. One is you did talk about year-over-year declines continuing into Q4. With the slower growth in development in the Commerce Media Solutions does that imply Q1 and Q2 cadence wise will sort of level off in Q1 and begin to rise in Q2? Or will it take until the third quarter before you see gains? And then separately, I was wondering in terms of the election do you think — how do you view the shift in the regime in Washington in terms of a framework for your business?

Don Patrick: Hey, Goss, thank you for the question. The — I’ll answer it in a couple of different pieces for you. So the year-over-year decline in Q4 is primarily related to what we talked about in the owned and operated business and the challenges we had with the US election. In Q1 and Q2 we see year-over-year growth, but obviously in the low single-digits and that’s accelerating throughout the year. And it’s mostly based on the fact that we — around the scaling and continuing to build out that Commerce Media wins that we haven’t currently have onboarded in Q3 and Q4 this year.

James Goss: Okay. All right. And the other just related to the change in the presidency and how does that affect your business? Do you think that creates more of a tailwind than you had before? Or will it be not really a significant event?

Don Patrick: It’s a great question Jim. I think we look upon it as more of a tailwind, but there is a lot of variability right now in terms of what could happen. So we’re looking at it as obviously — we’re obviously looking at things on a day-by-day basis and make sure we move it forward. The one big issue obviously out there is in the prior administration there was a lot of pressure around TikTok and what they were going to do with that. That has not really been cleared up yet. But there’s certainly indications that there’ll be less pressure on getting rid of that and forcing some sort of sale or some sort of divestiture or blockage of that channel. So in that case it will be positive for us.

James Goss: All right. Thank you very much.

Don Patrick: Thanks, Jim.

Operator: Thank you. At this time I would now like to turn the conference back to Don Patrick for closing remarks.

Don Patrick: Thank you for joining our call today. Fluent’s focus remains on strategic and financial path forward which is to extend our equity and rapidly build the growing Commerce Media Solutions business, while leveraging the foundational strength in our owned and operated marketplaces. We look forward to giving you an update in Q4 and thank you for your continued support.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.