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Fluent, Inc. beats earnings expectations. Reported EPS is $-0.31, expectations were $-0.38.

Operator: 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 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 website — 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 speak only 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’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 12,000-plus 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 and account 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 12,000-plus active e-commerce brands. By combining post-transaction ads with Rebuy’s e-commerce solutions for Shopify brands, we’re significantly enhancing revenue precession 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 most huge 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 are 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.

Ryan Perfit : 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 in 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 $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, as well as 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.

Operator: Thank you. [Operator Instructions] Our first question comes from Maria Ripps with Canaccord. You may proceed.

Maria Ripps : 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?

Don Patrick : Thanks for your question, Maria. So obviously, we are thrilled to be partnering with Rebuy. I think it’s a major milestone for our business. But equally, it’s a strategic endorsement of our strategic — and validation on our solution and technology. So from a strategic position, obviously, it allows us to get access to a huge new sales channel in Shopify and partner with Rebuy and not only helping their existing partners that they work with, but more importantly, help drive their business forward and driving more market share for them. From a financial perspective, obviously, this is a different sales channel than the enterprise sales channel that we’ve built the Commerce Media business off. So we’re very disciplined in our approach around the partnership around integrating our sales and our technology offering seamlessly.

Currently, the teams are very culture aligned. They’re working together. We’ve already integrated our tech, although we just announced this last week and have initial Rebuy partners that are live. And unlike traditional product launches on Shopify platform that requires an investment for the merchants, just to sign up for a post transaction through Fluent with Rebuy, obviously, does not cost anything, we bring incremental new revenue stream. So we believe the adoption is going to be significant, but having not been in an indirect sales channel before, Maria, we’re really going to take a look at where we are. We’ll know much more over — when we get back together when we discuss Q2 results. There’s two pieces that I mentioned around the size of this and why we’re so excited.

First, you guys know the addressable market opportunity in Shopify ecosystem is enormous. And then secondly, is that the post-transaction sessions with Rebuy’s current partners are a multiple of what our current sessions are within our own platform. So there’s a huge opportunity for us not only to capture market share with Rebuy’s current partners, but more importantly, help Rebuy grow and us to grow also together across the whole Shopify ecosystem. So we expect it to be a major contributor. We’ll have a lot more visibility at the end of this quarter. But I think it’s very important when we say that we are going to double the business each in the next two years at least within the commerce media. That was without the Rebuy opportunity. So we obviously see that as additional upside in our growth.

Does that answer your question around Rebuy, Maria? Or anything you want to dig into more?

Maria Ripps : 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?

Don Patrick : 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 that we’re — 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 things like work in Rebuy obviously, is going to accelerate that significantly.

Maria Ripps : 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?

Don Patrick : Yeah. Thank you. Good question. So I know you know this, Maria, I’ll just take a step back, that — 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. So our verticals of gaming and subscription services and financial services and et cetera continue to lean in and work with us hand-in-hand to drive better ROAS and better quality. And 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 — makes it difficult for us to buy media on certain channels.

So over the last couple of years, our channel — our media channel has been very concentrated around the biddable platforms, which, as you know, are very variable, right? And when the pricing is down, obviously, we do very well when the pricing increases. Obviously, we pull back and manage the margin. So that variability has — and then that concentrating those supplies obviously has compounded that decline in that business. So around new channels, we’re obviously looking at two things. One is we’re working aggressively with our demand partners to understand where the best consumers are and how do we move that back in a ROAS environment, all the way back to media to determine where can we bid up on the media side. And that’s been a very big, exciting opportunity for us to drive better transparency all the way from our buying the media to connecting the consumers and their best 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 — in our projections and in our financial numbers that we give guidance to, we continue to forecast that the owned and operated business will decline. So it’s not like we look at it to be growing, but we do obviously internally expect to stabilize that in later part of 2025.

Maria Ripps : All right. That’s very helpful. Thank you, Don.

Don Patrick : Thank you, Maria.

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

Patrick Sholl : Hi. Just wanted to see if you could provide a little bit more color on like the O&O trends that you kind of — the real stabilization that you feel you need in order to get to positive EBITDA for the year?

Don Patrick : Yeah. It’s a good question. So a couple of things that I’ll just, again, add on, but I didn’t say. Number one is this business is profitable. The owned and operated business is profitable. It always has been, Pat, and it continues to be. Obviously, the decline in that means there is less cash flow in which to reinvest back into the business or across — to pay for the SG&A line. So that business is profitable. It always has been, and we anticipate it will continue to be. So regarding your question on when to drive — when it will drive consolidated revenue growth. We are continuing to forecast a decline in that business. The key driver to bring us back to top line consolidated revenue growth and profitability is the Commerce Media business.

We have the pipeline. We have the new clients coming on. We also have the seasonality coming back in the second half, based on the retail verticals that we’re in. So with — even without owned and operated stabilizing, we will be back to revenue growth and EBITDA positive in the second half of this year, which will drive us to be profitable for the full year.

Patrick Sholl : Okay. And then on the commerce side, I guess, do you have much of a sense of like how that type of media would perform in kind of maybe softer consumer environment? And then just maybe — yeah, go ahead.

Don Patrick : Yeah. No, good question, Pat. And obviously, the big issue, obviously, is tariffs and the fluidity of that situation where we are. So one of the benefits of a marketplace in both of these are — both the owned and operated and the Commerce Media as a marketplace is that we can manage both sides to make it work. On the O&O side, traditionally in economic headwinds, any decrease in demand from our advertisers usually is corresponding by having a decrease in media pricing, which allows us to manage the margin. So over the 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, but the margins and margin dollars tend to stay stable.

On the Commerce Media side, obviously, we’re heavily into retail. And that’s going to come down to the consumers, the consumer behavior, their ability to buy and continue to buy and spend in the levels that they’re currently at. One of the things that we’re seeing here is when we’re talking to our partners, they’re obviously — there’s a very little level of visibility of what economic downturn or tariffs could mean to them. But what we’re seeing is that any — we believe any decline that we see from the consumers with our existing partners will be made up, at least by new partners coming on. So new commerce partners will be looking for revenue and profit. And our post transaction business is a fantastic offer for any new commerce partners to come on and add incremental profit in their downturn.

So we’re going to see if we see any decline on the retail side with our commerce partners with less consumer spending. We’ll see a corresponding increase in conversions of new clients coming on, which we think will be a net positive to us.

Patrick Sholl : Okay, thank you.

Don Patrick : Thanks, Pat.

Operator: Thank you. [Operator Instructions] Our next question comes from Bill Dezellem with Tieton Capital Management. You may proceed.

Bill Dezellem : 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?

Don Patrick : Yeah. Bill, thanks for the question. What we’re seeing is an acceleration of the pipeline through the various stages of our pipeline compared to where we were last year. So 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.

Bill Dezellem : 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?

Don Patrick : Yeah. Thanks, Bill. I’ll start it, and then I’ll let — turn it over to Ryan to give a little bit more detail. But as I mentioned to Maria’s question, we’ve been in the business a little over two years now. The first two years were heavily investment around the technology and building out the sales and client operational teams. And we have efficiently leveraged the tech in the advertisers and the team on the owned and operated side, we believe, in a very efficient way. But at the scale that we’re getting the business to now, we believe there’s very strong operating leverage moving forward in terms of flow-through from new revenue — in new incremental revenue that comes into the platform to driving through to profit to the business.

So fundamentally, we believe that the operating leverage will — you’ll see it in the second half of this year and continue into 2026. And then equally important, as you know, this business, the Commerce Media business is fundamentally different than the owned and operated. It’s on rev share, it’s long-term contracts. It’s much more predictable, which allows us to better operate the business both in terms of investments and also in terms of managing to gross margins and profits. So that’s sort of where we sit, and we’re — we believe we’re at that inflection point. But I know — Ryan, do you have any other thoughts?

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

Bill Dezellem : And relative to that operating leverage, do you have a — 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?

Don Patrick : Yeah. It’s — obviously, Bill, it’s incredibly exciting. The growth of Commerce Media in itself is phenomenal, right? So we have great tailwinds. We believe this is a $1 billion opportunity for us. Post-transaction, the post — that business has — when we say we’re going to two exit each of the next two years, it’s just staying within that solution set. We — there are solutions — Commerce Media Solutions that we have adjacent to that that we have started. We’ve talked a little bit about loyalty and post event and some other things that we’ve actually launched this year that are very early stages, but we believe we’ll continue to have significant growth opportunities for us. And what’s great — what’s best about it is our partners are the ones that are asking us, right?

They’re the ones that are saying, okay, great. Here is what you’re driving for us, you’re driving great results. I need help pushing — how do we — how can you help us in this area or that area to help drive incremental commerce media revenue for them. So from a three to five year time frame, obviously, we think it’s a fantastic $1 billion-dollar opportunity for us. In the short term, which is sort of ’25 to ’26, we see very significant growth before Rebuy, and we’ll be able to know — we believe Rebuy will be an impact for 2025. And definitely for 2026, we’ll have better visibility on that over the next couple of months.

Bill Dezellem : Great. Thank you. So I do have a couple of questions relative to Rebuy. So if there are other questioners in line, feel free to cut me off and move on. But relative to Rebuy, they have something, I think you said like 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?

Don Patrick : Yeah. Good question, Bill. So specific — what’s really great about — and we’ve been working with Rebuy obviously, for a while now. So I think the announcement was when the tech and everything was integrated. So 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 into the flow, and we get to integrate that with them through our — through the integrated technology. So it’s a very low lift. On the enterprise side, obviously, it’s a little bit longer. You have to work through getting on to the commerce media sites, et cetera. Rebuy is already on their sites. They’re already integrated.

So it’s a much easier operational risk. Our big play with them, quite honestly, is going to be around — it’s going to be around the relationship, right? So how do we understand what’s driving their success? This is a first — this is an important step, and it’s a great partnership. But like any partnership, we have to make sure that we’re driving results for them. And we continue to integrate our — or iterate our solutions in order to help them move their business forward. We see a great short-term opportunity of helping their clients, their partners be successful. But obviously, the bigger play for them is how does Fluent and Rebuy combined go after that larger Shopify opportunity, right? So that’s how it’s going to sort of play out. It’s going to be a relationship play, how do our teams integrate together, how do we make it easy to work with and then make sure how do we continue to make sure our results are superior than anyone else in the market.

Bill Dezellem : Don, did I understand you to say that there is no work — like Fluent employees, there’s — there are no buttons for them to click, no anything to be done, that’s all done, already taken care of in terms of the integration that you did? It sounds like prior to the announcement with Rebuy so it is simply an icon that Rebuy’s customers click and everything else takes care of itself?

Don Patrick : Yes. It’s a very easy lift because Rebuy has done all those integrations already through Shopify and through their partners. So our solution integrates through Rebuy.

Bill Dezellem : Congratulations. That’s fascinating. And relative to this relationship, the Rebuy relationship, what does it mean to you all financially? I mean, how do you think about the contribution that could come about from this — I’ll call it, this single press release, which I know is a lot more than that?

Don Patrick : Yeah. Again, we’re — Bill, we’re specifically not trying to put a number on it yet because, again, it’s an indirect sales channel which we are working through. If this is a direct sales channel where we’re working directly with the clients, we’d be able to be very, very specific to you. But obviously, there’s — I’ll just tell you, we had the launch on Thursday. We have clients, Rebuy clients already live on our platform and working. And that’s before any major push with Rebuy on the launch. So we’ve been told by Shopify that the — if you add a new solution to your Shopify existing solution, that tends to be a 10% adoption rate. We look at that as a very low bar because most — as we talked about, most things that if you’re adding on a new solution within Shopify, you have to pay for it and get the return on it.

When you buy Rebuy Ads by Fluent, obviously, there is no additional outpour money. We’re actually giving you money in terms of making sure that we — the post transaction and the revenue share. So we think that there’s significant upside to that number. The one thing — we will see growth on the revenue side accelerate faster than margin because we believe that the margin deal that we have with Rebuy, obviously, is not as lucrative as we have directly with our enterprise clients. So we’ll have strong growth. Our margins will be slightly lower than what they are now, for that channel only.

Bill Dezellem : Okay. And I know you’re not wanting to give specific guidance, but didn’t you say in your opening remarks that this ecosystem is either as large or larger than your entire Commerce Media Business?

Don Patrick : Yes. Well, the Rebuy current partners are larger than the current ecosystem of our Commerce Media marketplace influence, yes.

Bill Dezellem : Okay. So I guess I’ll have to leave that there. Was this included — the Rebuy relationship included in your initial guidance?

Don Patrick : No, no. When we say we’re doubling each of the next two years, Bill that was without consideration around Rebuy. Rebuy is upside.

Bill Dezellem : Okay. Great. Well, that’s fantastic. All right. A couple of 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?

Don Patrick : Sure. I would say the pipeline, there’s two major changes in the pipeline. Obviously, the size of it is a lot larger. We’ve 2x the business, and our pipeline has obviously been corresponding the same size. The second piece is that we’re seeing larger opportunities than we saw last year. And I think that has to do specifically with the brand that we’re building and the results that we’re driving for our partners and our partners being great references to us. So the pipeline has grown as a — the pipeline is growing correspondingly along with the growth of the business. And the quality of that pipeline is higher.

Bill Dezellem : Great. And let me talk financials for a moment here. You’ve raised money in the past from some very deep-pocketed investors while you’re going through this transition. Is that process near done now?

Ryan Perfit : Yeah, Bill, this is Ryan. We continue to focus on driving the business to positive free cash flow, and we believe we’re on the trajectory to get there. The Board is sensitive to protecting the capital structure and minimizing dilution. So we’ll continue to prioritize that throughout the year. That said, as you mentioned, our current shareholders have been very supportive of the business as we continue to progress through the pivot because they recognize the enterprise value of Commerce Media Solutions. Notably, similar companies, including our competitors, have raised capital at 3x to 7x multiples of revenue. So we will raise capital as needed, and we have that support.

Bill Dezellem : Great. Thank you for taking all the questions.

Don Patrick : Thank you, Bill.

Operator: Thank you. I would now like to turn the call back over to Don Patrick for any closing remarks.

Don Patrick : 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.

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