Good afternoon, and welcome. Thank you for joining us to discuss Fluent's First Quarter 2025 Earnings Results. With me today are Fluent's Chief Executive Officer, Don Patrick, and Chief Financial Officer, Ryan Perfit. Our call will start with remarks from Don and Ryan Perfit, followed by a question-and-answer session. I want to remind you that this call is being webcast live and recorded. A replay will be available after the call on Fluent's website. To access the webcast, please visit the Investor Relations page at www.fluentco.com. Before we begin, I need to inform listeners that some information discussed by management during this conference call may include forward-looking statements protected under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements made during this call are effective only as of today. Actual results may vary significantly from those stated or implied by such forward-looking statements due to risks and uncertainties related to the company's business. These statements may include terms like expects, plans, projects, could, will, estimates, and similar terms. The company has no obligation to update the information provided in this call. For more on the risks and uncertainties related to Fluent's business, we recommend reviewing the company's filings with the Securities and Exchange Commission, including the 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 related to media margin, adjusted EBITDA, and adjusted net income. Management assesses the company's financial performance using various indicators, including these non-GAAP metrics. Definitions of these metrics and reconciliations to the most 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.

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'm going to make some brief comments about our first quarter results that reflects our enthusiasm for the strategic pivot we are successfully orchestrating as we continue to shift our mix and influence long-term, higher gross margin growth strategies. On the strategic front, our pivot to focus on growth opportunities around our Commerce Media Solutions is well underway. By leveraging our leadership position and competitive advantages of our owned and operated marketplaces as a springboard into new, high-volume, high-growth commerce media marketplaces, we are driving strong year-over-year growth in this segment. As of March 31, 2025, our Commerce Media business has surpassed an annual revenue run rate of over $65 million as we continue to expand our model and grow market share. The effectiveness of our Commerce Media Solutions offering is further validated by the major brands that continue to join our roster of partners and advertisers. Last week, we announced a new strategic partnership with Rebuy Engine, a leading e-commerce personalization platform for Shopify brands. Rebuy is growing rapidly and provides unparalleled scale and insights for Shopify merchants, generating over $1 billion in revenue for more than 12,000 active e-commerce brands each year. Their expansive partner network and merchant-first approach aligns seamlessly with Fluent's mission to deliver high-impact commerce media solutions at scale. We view this as a win-win partnership that provides Fluent with access to a large and growing Shopify ecosystem as a new sales channel and represents another big step forward as we continue to lean into our growth strategy. While our foundational owned and operating businesses represent strong brand equity we've built in the marketplace over the last decade, the strategic and financial role of these businesses have meaningfully evolved. Put simply, owned and operated provides the essential operational and capability platform that acts as a springboard for our marketplace expansion, and the cash flow in these businesses fuels our long-term growth strategies. However, our overall revenue mix continues to shift towards our rapidly growing Commerce Media Solutions, where our gross profit margins are accretive to the core. Going forward, our goal is to stabilize our owned and operated business as it becomes a lesser share of the total enterprise. This quarter, owned and operated revenue was impacted by tightened supply in the social media channels, and we're working diligently to counter any longer-term impacts. Importantly, the owned and operated business remains a productive driver for our Commerce Media Solutions growth strategy and is foundationally linked to our momentum. Our owned and operated proprietary first-party data and embedded AI-powered technology is leveraged by our Commerce Media Solutions to create a competitive moat that allows us to establish mutually beneficial revenue share agreements and longer-term contracts with our commerce media partners. As we scale Commerce Media Solutions, we're beginning to see the positive financial impact across the entire Fluent enterprise. And as we continue to enhance our market position and move beyond the seasonality-driven lower volume in the first half, we are confident that Fluent will return to year-over-year consolidated revenue growth and positive adjusted EBITDA. In keeping with our long-term strategic growth plan, we expect this accelerating mix shift in our business will begin expanding our margins across the entire Fluent enterprise. Let me crystallize this for you. We are approaching 2025 with strategic clarity and momentum that is building in a transformative commerce media marketplace. We are confident that Fluent is well positioned with our Commerce Media Solutions strategy, where over the last two years, we have successfully proven that we can indefinitely enable and empower our commerce brand partners to participate in this large and rapidly growing marketplace that is still in its embryonic stage as the advertising channel. According to Boston Consulting Group, the commerce media market is expected to grow to $100 billion in total size over the next five years, accounting for more than 25% of digital media spend by 2026. This is a very encouraging projection for the commerce media industry. And with our annual run rate currently exceeding $65 million, we are poised for significant additional growth. As I mentioned earlier, following the close of the first quarter, we announced a strategic partnership with Rebuy Engine to launch Rebuy Ads powered by Fluent to offer post-purchase ads to merchants on the Shopify platform. To reiterate, Rebuy Engine generated $1 billion in revenue in 2024 for more than 12,000 active e-commerce brands. By combining post-transaction ads with Rebuy's e-commerce solutions for Shopify brands, we're significantly enhancing revenue precision for merchants on the Rebuy platform and gaining access to new audiences to Rebuy's extensive merchant network. Rebuy Ads powered by Fluent will leverage Fluent's AI-powered advertising marketplace, extensive industry experience, and first-party customer database built over 14 years as the leader in customer acquisition to serve highly targeted ads to these merchant customers at the optimal post-purchase moment, creating additional buying opportunities and revenue. This partnership is a big step forward in our growth strategy as we prioritize commerce media in the Fluent ecosystem. Shopify is the largest e-commerce platform in the United States, and thousands of merchants and brands are currently leveraging Rebuy Engine to optimize their revenue and operations. With the combined expertise of both companies, Rebuy Ads powered by Fluent is set to redefine how Shopify merchants engage with performance-driven advertising. Overall, we're pleased with the progress that we have achieved in Q1. As you can see, Commerce Media Solutions revenue continues to become a larger portion of our overall revenue mix, growing to 23% of consolidated revenue in the first quarter of 2025 from 10% just a year ago. With our visibility today, we anticipate consolidated second quarter revenue will be consistent with first quarter of 2025, mainly due to reductions in owned and operated revenue related to reduced supply from the social media channels. Additionally, we're currently navigating a market that's absorbing new cost pressure from international tariffs and broader retail inflation. These dynamics are creating industry uncertainty for many of our brand and retail partnerships. That said, we expect accelerated growth in the back half of the year, supported by triple-digit growth in Commerce Media Solutions. Fortunately, our owned and operated and commerce media marketplaces are built to drive results for partners and advertisers in these challenging macroeconomic environments. Historically, our owned and operating marketplaces tend to improve margin and economic headwinds, as any potential pullback in advertisers' return on ad spend is usually more than offset by lower media costs, and our commerce media platform delivers attributable revenue in a margin-conscious environment. For many partners, we're the only upside revenue layer after the checkout. We believe any decline in consumer behavior driven by tariffs and corresponding price increases will be offset by sales acceleration in the onboarding of new commerce partners trying to mitigate the impact of a down market. Put simply, when the market contracts related to reduced spending, this increases interest from commerce partners, therefore offsetting the potential loss in spending from advertisers. While there is still little visibility on the potential impact on the consumer and the economy, we believe we're in a strong position to deliver on our growth. We remain bullish on our agenda and excited about the momentum we've generated as we continue to lean into the exciting and significant mega growth opportunity in the large and growing commerce media industry, where we can uniquely leverage the competitive advantages of our owned and operated marketplace. Importantly, we are expanding our strategic value proposition to world-class partners beyond customer acquisition and delivering higher-quality consumer engagements across the entire marketing funnel. And as our strategic trend line continues throughout 2025, we believe shareholder value will follow. And with that, I'll turn the call over to Ryan Perfit to provide more detail on our financial results.

Thank you, Don, and thanks, everyone, for joining us today. I'll now provide a review of our first quarter results. We generated total revenue of $55.2 million in the first quarter of 2025, a decrease of 16% from the prior year. 7% of that decrease, or $5.2 million, was due to businesses we exited in 2024. Commerce Media Solutions built on 2024 momentum and achieved impressive growth in the first quarter of 2025. Revenue from this business increased 99% to $12.7 million, and we anticipate strong growth in this segment to continue through the balance of 2025. Commerce Media is at the core of our evolving model, and we expect Commerce Media Solutions to be a key driver of consolidated revenue growth and the incremental margin enhancement going forward. Owned and operated revenue decreased 30% year-over-year to $31.1 million. As Don mentioned, this decrease is primarily related to ongoing challenges in acquiring media for the O&O sites, specifically from social media channels. This trend has continued into the second quarter, and given the revenue mix shift and strong growth in Commerce Media, we expect second quarter consolidated revenue to be relatively consistent with Q1. We are working to broaden our supply channels to counter long-term impacts on the owned and operated business. Gross margins in the first quarter of 2025 decreased when compared to the prior year period related to continued media cost pressure on our Call Solutions business, the growth of certain lower-margin commerce media placements and the shift in revenue mix related to the strategic discontinuation of certain businesses in 2024. While these discontinued businesses contributed to the higher margin in Q1 of last year, they challenged operating cash flow, and their discontinuation is part of our focus on more sustainable, high-growth long-term opportunities for the business. We expect margins to improve over time as our Commerce Media Solutions business continues to scale. On a sequential basis, gross margin, excluding depreciation and amortization, remained at 21%. Media margin in the first quarter was $13.7 million, which represents 24.9% of revenue compared to $22.1 million or 33.6% of revenue last year. Media margin decreased slightly sequentially from 25.3% in Q4 of last year. Our Commerce Media gross margin in the first quarter of 2025 was $3.1 million, or 24.6% of revenues, compared with $2 million, or 31.3% of revenues in the first quarter of 2024, demonstrating strong growth in this business. On a GAAP basis, total operating expense in the first quarter of 2025 totaled $16.1 million compared with $20 million in the first quarter of 2024. The decrease reflects reductions in headcount made over the prior 12 months to align the business with the transition to Commerce Media and reduced costs associated with the businesses we exited. Adjusted EBITDA in the first quarter of 2025 was a loss of $3.1 million compared with adjusted EBITDA of $700,000 in the first quarter of 2024. As we continue to drive our shift in revenue mix to focus more on Commerce Media Solutions, we expect adjusted EBITDA margin to improve over time. The loss is a function of the decline in our owned and operated business, coupled with the low seasonality related to Commerce Media Solutions. We anticipate that adjusted EBITDA will remain negative in the second quarter, with projected revenue growth supporting a return to positive levels on a full year basis. The company cannot provide a reconciliation to expected net income or net loss as a percentage of revenue for 2025 due to the unknown effect, timing and potential significance of certain operating costs and expenses, share-based compensation expense and for the provision or benefit from income taxes. Interest expense in the first quarter decreased to $880,000 from $1.4 million, reflecting the significant reduction of debt that I'll discuss in a moment. We reported a net loss of $8.3 million in the first quarter compared with a net loss of $6.3 million in the prior year, and adjusted net loss, a non-GAAP measure, of $6.7 million, equivalent to a loss of $0.31 per share compared with an adjusted net loss of $4.2 million or a loss of $0.30 per share in the first quarter of 2024. Shifting now to our balance sheet. We ended the quarter with $6.1 million in cash and cash equivalents, including restricted cash. We significantly reduced our total debt in the quarter to $25.6 million at March 31 compared with $35.6 million at December 31, 2024. We will continue to strategically utilize debt as a source of capital as our business scales. As of March 31, 2025, we had an outstanding principal balance of $21.7 million on our credit facility with SLR Credit Solutions. This facility provides us with a $20 million term loan and a revolving credit facility of up to $30 million that all matures on April 2, 2029. To conclude, we have a long-term view of our business and remain confident in our strategy and outlook for 2025 and beyond. We're successfully executing on our strategic pivot into commerce media and continue to drive considerable year-over-year revenue growth in Commerce Media Solutions. This growth is supported by our deep industry experience and background, which allows us to differentiate ourselves in a competitive market environment and win partnerships with leading brands, media partners, and channel partners. As Don mentioned in his remarks, the most recent example of this is our partnership with Rebuy Engine to launch Rebuy Ads powered by Fluent on the Shopify platform. This new offering allows Shopify merchants to seamlessly leverage Fluent's extensive expertise, first-party data, and AI-powered advertiser marketplace to significantly enhance customer engagement and unlock additional revenue streams, as well as giving Fluent immediate access to hundreds of millions of post-purchase e-commerce transactions. With our visibility today, we're confident that Fluent is positioned for long-term revenue growth, margin expansion and enhanced profitability as we continue to grow our Commerce Media business. With that, we'll be happy to take questions at this time.

Thank you. Our first question comes from Maria Ripps with Canaccord. You may proceed.

Great. Good afternoon. And thanks for taking my questions. Can you maybe share a little bit more color on your Rebuy Engine partnership? When do you expect it maybe to start contributing to your financials? And then more broadly, how should we think about sort of key contributors to your CMS revenue growth sort of accelerating back to the triple-digit range?

Thanks for your question, Maria. We are excited to be partnering with Rebuy, which we see as a significant milestone for our business. This partnership validates our approach and technology. Strategically, it opens up a large sales channel through Shopify, allowing us to support Rebuy and their partners while helping them gain more market share. Financially, this new sales channel differs from our existing enterprise sales channel, and we're carefully managing the integration of our sales and technology offerings. The teams are currently aligned and collaborating. Though we announced this partnership last week, we've already integrated our technology and have initial Rebuy partners live. Unlike typical product launches on the Shopify platform that require merchant investment, signing up for a post-transaction with Fluent through Rebuy incurs no cost and generates new revenue streams. We anticipate significant adoption, but since we haven't been in an indirect sales channel before, we'll have a clearer picture when we review our Q2 results. I mentioned two reasons why we're excited about this opportunity: the vast addressable market in the Shopify ecosystem and the fact that post-transaction sessions with Rebuy's current partners far exceed our existing sessions. There’s a tremendous opportunity to capture market share with Rebuy's partners and grow alongside them within the Shopify ecosystem. We expect this to be a major contributor, and we’ll have more visibility at the end of this quarter. Importantly, we aim to double our business in the commerce media sector over the next two years, independent of the Rebuy opportunity, which we view as a potential growth boost. Does that address your question about Rebuy, Maria? Is there anything else you'd like to discuss?

No, that's very helpful. And then just in terms of growth acceleration in the second half, I guess, back to the triple-digit range?

Sure. It really comes down to acquiring new partners, commerce partners and adding them on the technology. As you know, we've been investing aggressively in the last two years in building out that platform. We're at the point now where we believe we have significant operating leverage in which to drive that business going forward based on the critical mass that we're in. So it's really about driving and getting more commerce partners onto our platform. Our pipeline has grown significantly, and initiatives like working with Rebuy obviously are going to accelerate that significantly.

Got it. That's very helpful, Don. And then on the O&O side, can you maybe talk a little bit about your efforts to expand your supply channels there? I guess, what are some of the newer channels, if you can share that? And when do you anticipate these efforts to sort of start impacting or contributing to your O&O segment stabilization?

Yeah. Thank you. Good question. So I know you know this, Maria, I'll just take a step back. It's a performance marketplace with both supply and demand. The important thing to know is that within the owned and operated, our demand has always been strong and continues to be strong. Our verticals of gaming, subscription services, financial services, etc., continue to lean in and work with us hand-in-hand to drive better return on ad spend and quality. Our quality is unmatched by our competitors. Our O&O is really around the supply issue, and it was greatly affected by the FTC settlement and the requirements that they made us take that our competitors do not have. So it makes it difficult to buy media on certain channels. Over the last couple of years, our media channel has been very concentrated around the biddable platforms, which, as you know, are very variable, right? When pricing is down, we do very well; when pricing increases, we obviously pull back and manage the margin. This variability and concentrating those supplies has compounded that decline in that business. So regarding new channels, we're working aggressively with our demand partners to understand where the best consumers are and how do we move that back in a return on ad spend environment, all the way back to media to determine where we can bid up on the media side. That has been a very exciting opportunity for us to drive better transparency all the way from our buying the media to connecting with consumers. The second is that we have been looking at other nontraditional platforms around DSP and other biddable areas that can grow the business. We don't expect the owned and operated business to grow in our projections and financial numbers that we give guidance to, but we do expect to stabilize that in the later part of 2025.

All right. That's very helpful. Thank you, Don.

Thank you, Maria.

Thank you. Our next question comes from Patrick Sholl with Barrington Research. You may proceed.

Hi. Could you please provide more details on the owned and operated trends and what kind of stabilization is needed to achieve positive EBITDA for the year?

It's a good question. I want to emphasize that our owned and operated business is profitable and has always been. However, the decline in that area means we have less cash flow to reinvest in the business or cover SG&A costs. We expect this segment to remain profitable. As for driving consolidated revenue growth, we anticipate a decline in that business. Our focus on the Commerce Media business will be crucial for returning to consolidated revenue growth and profitability. We have a strong pipeline with new clients and expect seasonality to improve in the second half of the year, especially in retail. Even without the stabilization of our owned and operated business, we expect to see revenue growth and positive EBITDA in the latter half of this year, enabling us to be profitable for the entire year.

Okay. On the commerce side, do you have an idea of how that type of media might perform in a softer consumer environment? Please go ahead.

Yeah. No, good question, Pat. The big issue, obviously, is tariffs and the fluidity of that situation. One of the benefits of a marketplace in both owned and operated and Commerce Media is that we can manage both sides effectively. Traditionally, in economic headwinds on the O&O side, any decrease in demand from our advertisers usually corresponds with a decrease in media pricing, which allows us to manage the margin. Over the past 12-15 years we've been in business, we've been able to manage downturns successfully. We will decrease in revenue in the owned and operated side, but the margins and margin dollars tend to stay stable. On the Commerce Media side, we're heavily in retail, which depends on consumer behavior and spending levels. When talking to our partners, there's a very little level of visibility about what economic downturn or tariffs could mean to them. We believe any decline seen from consumers with existing partners will be made up by new partners coming on, which will be a net positive for us.

Okay, thank you.

Thanks, Pat.

Thank you. Our next question comes from Bill Dezellem with Tieton Capital Management. You may proceed.

Hi, thank you. I have a group of questions here. So continuing on that last question. Does economic uncertainty slow or accelerate the Commerce Media signage?

Yeah. Bill, thanks for the question. We're seeing acceleration of the pipeline through the various stages compared to where we were last year. This is a traditional enterprise sale in terms of bringing somebody on through the pipeline to close sale. We're seeing acceleration through those traditional sales phases. So in this time of economic uncertainty, given the value proposition of our post-transaction business, we're seeing things move faster through the pipeline and faster to conversion.

Congratulations. That's fascinating. And so in the Commerce Media, a couple of years that you have been in this business now, you've probably learned enough to have an idea how the business model ultimately looks. So how do you see the business model playing out for this business?

Thanks, Bill. I'll start and then let Ryan provide more details. We have been in business for just over two years, primarily focusing on technology investment and building our sales and client operational teams. We have effectively utilized technology with advertisers and our internal team, and as we reach this new scale, we anticipate significant operating leverage from new revenue that will enhance our profits. We expect this operating leverage to become evident in the latter half of this year and to continue into 2026. It's important to note that the Commerce Media business differs from our owned and operated segment, as it relies on revenue sharing and long-term contracts, making it more predictable and enabling better management of investments and gross margins. That's our current position, and we believe we're at a crucial turning point. Ryan, do you have any additional insights?

Yeah, Bill, this is Ryan Perfit. I'll just reiterate that we measure our profitability by contribution margin on the business unit level. Obviously, there’s seasonality to that, especially in the Commerce Media business, which makes quarterly measurement less meaningful. But on an annual basis, we have been investing into Commerce Media Solutions to date, and we expect that to shift in 2025, as Don said, where we will be contribution margin positive. We expect further expansion in 2026 as we tap into the operating leverage.

And relative to that operating leverage, do you have an end target to share? I'm thinking maybe, let's say, three or five years from now, longer term, how you're thinking about that business?

It's incredibly exciting. The growth of Commerce Media is phenomenal, and we believe it represents a $1 billion opportunity for us. When we say we plan to double our business over the next two years, we're focusing on that specific solution set. We have related solutions in commerce media, including loyalty and post-event initiatives that we launched this year, which are still in their early stages but have the potential for significant growth. Our partners are actively asking us how to increase their commerce media revenue. Thus, we see this as a fantastic opportunity worth $1 billion over the next three to five years. In the short term, during 2025 and 2026, we anticipate considerable growth before Rebuy, and we will better understand Rebuy's impact in 2025. By 2026, we expect to have clearer insights in the coming months.

Great. Thank you. So I do have a couple of questions relative to Rebuy. They have something, I think you said, around 12,000 customers that they work with. With that in mind, what's needed by Fluent employees to turn Rebuy customers onto the Rebuy powered by Fluent?

Good question, Bill. What's really great is that we've obviously been working with Rebuy for a while now. The announcement was made when the tech was integrated. From an operational perspective, it's very seamless. If you're a partner with Rebuy, you will see basically the ability to click on an icon that says I want to put post-transaction into our flow, and we get to integrate that with them through our technology. It's a very low lift. On the enterprise side, the process can be longer as you have to navigate the commerce media sites. Rebuy is already on their sites, allowing for much easier operational integration. Our key focus will be on the relationship and understanding what drives their success, ensuring we drive results for them. We see a strong short-term opportunity in helping their clients succeed and together pursuing the larger Shopify opportunity.

Don, did I understand you correctly that there is no work required from Fluent employees? There are no actions for them to take; everything regarding the integration is already handled? It seems that prior to the announcement with Rebuy, it is just an icon that Rebuy's customers click, and everything else is automated?

Yes, it's a very easy lift because Rebuy has done all those integrations already through Shopify and their partners. Our solution integrates through Rebuy.

Congratulations, that's interesting. Regarding the Rebuy relationship, what does it mean for you financially? How do you view the potential contributions that could arise from this press release, which I know is more significant than just that?

We're specifically not trying to put a number on it yet because it's an indirect sales channel, which we're working through. If this was a direct sales channel where we were dealing directly with clients, we'd be able to give you very specific details. However, we've had the launch on Thursday, and we already have clients, Rebuy clients, live on our platform and engaged, even before any major push. Shopify indicated that if you add a new solution to your existing Shopify offerings, it generally achieves a 10% adoption rate. We consider that figure to be very conservative, especially given that with Rebuy Ads powered by Fluent, there's no additional cost to merchants; we're actually providing them with a revenue source. We believe that there is significant upside. The one thing to note is that while growth on the revenue side will be strong, margins will be slightly lower than what we achieve with our enterprise clients.

Okay. So I guess I'll have to leave that there. Was the Rebuy relationship included in your initial guidance?

No, when we say we're doubling each of the next two years; that did not factor in Rebuy. Rebuy represents additional upside.

Great. Well, that's fantastic. All right. A couple more questions, please. So the pipeline, maybe I should say, the enterprise pipeline in Commerce Media, what does that look like today? And would you frame up the size relative to where it's been in the past so we can have some kind of visual graphic in our mind at what's happening with that pipeline?

Sure. I would say the pipeline has seen two major changes. The size of it is a lot larger, we've doubled the business, and our pipeline has obviously grown correspondingly. The second piece is that we're seeing larger opportunities compared to last year. This is due to the brand we're building and the positive results we're delivering for our partners. So the pipeline has grown in size along with the growth of the business, and the quality of that pipeline is higher.

Great. Let me talk financials for a moment here. You've raised money in the past from some very deep-pocketed investors while going through this transition. Is that process near done now?

Yeah, Bill, this is Ryan. We remain committed to driving the business towards positive free cash flow, and we believe we're on the right trajectory to achieve that. The Board is mindful of maintaining a healthy capital structure and minimizing dilution. We'll prioritize this throughout the year. That said, our current shareholders have been very supportive of the business as we navigate this pivot because they recognize the enterprise value of Commerce Media Solutions. Notably, similar companies, including our competitors, have raised capital at multiples of 3x to 7x revenues. We will raise capital as needed, and we have that support.

Great. Thank you for taking all the questions.

Thank you for joining our call today. We're excited by our momentum in our strategic pivot into the Commerce Media, where we can leverage the competitive advantage of our owned and operated marketplaces. Thank you for your continued support, and we look forward to updating you on our progress after Q2.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.