Q2 2023 Fluent Inc Earnings Call
Good afternoon and welcome. Thank you for joining us to discuss our second quarter 2023 earnings results with me today are fluid CEO , Don Patrick interim CFO , Ryan Perfect and Chief strategy Officer, Ryan Schulke, our call today will begin with <unk>.
<unk> from Dawn and Ryan Perfect followed by 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 our website to access the webcast. Please visit our Investor Relations page on our website www dot fluid co dot com before we begin.
And 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 forward looking statements due to risks and uncertainties associated with the company's business.
Statements, maybe 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 the fluids 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. We will also present certain non-GAAP financial information relating to media margin adjusted EBITDA and adjusted net income.
Management evaluates the financial performance of our business on a variety of indicators, including these non-GAAP metrics. The definitions of these metrics and reconciliation 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 CEO Don Patrick.
Good afternoon, and thank you all for joining our call today.
I'm here together with Ryan Schulke, our Chief strategy Officer, Chairman of the Board and company founder.
And Ryan perfect.
Our interim Chief Financial Officer.
I'll make some brief comments about our second quarter results that continue to reinforce the imperative behind our commitment to enhance the quality of our consumer engagements within our performance marketplace.
I'll also reflecting.
The more volatile macroeconomic and evolving regulatory environment, we're operating with them.
I'll then update you on the meaningful progress, we're making in establishing fluid as the industry leader relating to our previously announced FTC settlement.
After three plus years are cooperating fully with the FTC.
And investing strategically and financially in the process.
We are now establishing leading edge protocols, which we believe will act as best in class model for our entire industry.
This is the imperative we chose.
To improve consumer experience relative to engagement and satisfaction.
Drive higher quality outcomes for advertisers, while ultimately leveling the industry playing field that are less committed competitors have tilted against us.
Okay.
Our Q2 'twenty three results reflect the current strong headwinds we continue to face.
And are consistent with a more cautious near term business roadmap, we laid out in previous earning releases.
Our focus is and sequentially rebuilding our base.
This thing with the strategic pivot we're making.
And the new business ventures that we embarked upon some of which we'll explore with you today.
Okay.
Financial results were as follows.
Revenue of $82 1 million, representing a 6% increase sequentially over Q1.
We continue to see the parallel levels of unpredictability as does the entire digital advertising industry with consumers and clients pausing to assess the current economic uncertainty.
Our media margin of $25 9 million was the 18% sequential increase over Q1.
At 31, 5% of revenue, our media margin percentage to expand quarter over quarter as we saw media costs.
Primarily on the social media platforms.
Turning closer to historical norms.
Adjusted EBITDA of $5 6 billion represents 7% of revenue.
This reflects both our ongoing strategic investments in our growth opportunities as well as the impact of additional quality initiatives, we proactively implemented during the last two quarters.
As we continue to learn and react on the regulatory front.
Relative to the headwinds first our.
Our clients consumer acquisition strategies continued to share from growth in return on AD spend to clear criteria based on return on AD spend due to continued consumer volatility in the market.
In the immediate term.
We continue to leverage fluids performance marketplace to respond to those shifts by managing media margin mix.
Second second quality results were also directly impacted by a conscious strategic and financial decision to forego certain revenue streams in our rewards and job businesses.
That we felt did not meet our evolving quality standards across our performance marketplace.
This decision will continue to impact us over the next several quarters as we reestablish our strategic pace, while setting the course to lean into our growth agenda on a sequential basis in fiscal year 'twenty four.
To be clear.
We look to lead the industry in redefining regulatory standards that exist in the market. Despite the short term impact it will have on growth to include some lingering impact in subsequent quarters.
But our leading edge processes and protocols come with strategic purpose.
And we are sending a resounding assertive message to the industry and the competitive set.
We'll lead in elevating the consumer engagement performance standards that we believe must be manifested more broadly in the marketplace.
And I'll state again.
We are resolute to that degree that we're willing to invest short term revenue and profitability in order to serve our commitment to the ongoing strategy that will begin paying more concrete financial dividends in fiscal year, 'twenty four as well as longer term.
More importantly, we are confident that this path represent the more strategic sustainable growth in future quarters.
So let's speak about our evolving growth agenda.
As we're investing today.
We are bullish regarding our early stage strategic results in three specific business units.
We see more than $150 million of revenue growth potential in the next two years.
Importantly.
These businesses will drive margin accretive to the core overtime.
Essential to our growth agenda is our core performance marketplace.
Our highly differentiated fluid capability.
And the foundation on which we are leveraging and fueling our exciting new strategic investments.
Although we see a core performance marketplace growing more modestly in the future a strong and healthy core will act as a catalyst to drive the significant growth opportunities. We see in the business units, we discussed today Influencer call solutions and add flow.
First we're excited to announce a major launch in the E Commerce market, where 38 billion of U S advertising spend is growing double digits.
Our advo launch represents unique potential for us to expand our roster of major brand partnerships.
High growth vertical by.
By leveraging our core capabilities in the fluid performance marketplace.
Over time, we're confident we can generate consumer and advertiser value that will make us a credible player in the market.
Fluids core business brings consumers to our own digital owned and operated properties.
And through survey in discovery, we curate a more meaningful consumer experience that connects them to world class brands.
With the recent launch of our turnkey ecommerce solution add flow.
Florida is now leveraging our core proprietary performance marketplace technology platform and our robust first party data.
To connect World class brands, where high quality consumers that exist.
This business creates an exciting new and growing market opportunity for fluent.
Open the door to new brand partners, we've yet to do business with.
Add flow delivers incremental profit streams to our E Commerce partners.
While representing a new opportunity for our world class brands to reach consumers at the optimal purchase point.
Appearing between the purchase processing the confirmation page AD flows powerful machine learning.
<unk> Leverages the ecommerce partners first party data to analyze consumer behavior.
Frances and purchase history.
In order to deliver relevant and personalized offers.
Although early stage.
<unk> is already active on more than a dozen ecommerce sites with a strong pipeline of new partners, where we are building a foundation by testing and learning into enhance our differentiated value proposition.
We are quite enthusiastic about this major strategic investment, we're making based on the longer term.
<unk> of this exciting new business.
Okay.
And good progress is being made as we reported last quarter, where we continue to experience significant double digit growth in our influencer and call solution businesses year over year.
Both of these smaller strategic footprints are also high continuing sequential growth opportunities, where we believe fully can differentiate yourselves in the marketplace.
With margin potential that exceeds first quarter.
Importantly, and further validating our strategic veracity around the future of course, all three of these business units add flow Influencer and call solutions enhanced fluids total value proposition for consumers and clients.
And are designed to generate greater long term shareholder value.
We are quite excited by the early stage results.
You can see why we continue to accelerate our strategic agenda and why we're so enthusiastic about our course, yes.
Like so many in our industry, we're facing challenging and evolving regulatory environment, where the rules and consumer engagements are rapidly changing in a meaningful manner and this will be reflected our short term results over the next several quarters as we continue to reestablish our growth agenda.
Last month fluid settled with the Federal Trade Commission.
Resolving the FTC's previously disclosed investigation.
Working tirelessly and collaboratively with the FTC over three years, we're pleased to have reached a resolution.
Our goal is to position fluid at the forefront of our industry and the FTC consent order set a clear new industry compliant standard that we have led.
The fluid way.
Fluid foundational commitment to enhance the quality consumer engagement within our performance marketplace is an investment. We believe is unequivocally worth making that will come at immediate term expense of top and bottom lines.
Yes.
With our commitment to quality consumer engagement at the forefront.
We saw opportunity to improve our go to market capabilities and client deliverable in a differentiated manner.
So we chose to lead.
And our forging ahead with us core fibers in place.
Okay.
While it may take a few quarters or more for the industry playing field to finally level.
We will look to leverage our leadership position to grow our market share with our media and client partners.
Importantly, we will monitor the reality that some of our competitors regrettably and sometimes unabashedly operate with less compliant protocols.
They will now be strongly urge to meet our standards.
<unk> takes significant regulatory risk.
Well, we are thoughtfully planned and executed over a couple of years will require our competitors to react more immediately or risk regulatory action.
Our strategic relevance.
And in light of these industry changes.
Who can now leverage our proven track record of pivoting our performance marketplace.
Levered higher quality consumer engagement.
Create competitive differentiation and distance.
Positively impacts our longer term business, while providing us a unique opportunity to develop deeper strategic relationships, both consumers and world class brands.
The successful FTC settlement gives us important clarity on our strategic roadmap.
And we will continue to appropriately invest in our growth agenda quality as our north star.
And with higher quality consumer experience as our scorecard.
And we are excited about the level of competitive playing field that should have some returning to growth at or above industry growth rates with sequential margin improvement.
However in the immediate term as the market reacts to the new industry standard fluent has chosen to lead.
We believe it will take a few quarters or more for our competitors to implement these industry compliance standards and frankly.
We expect some of them to try to take advantage of a financially at their own business and regulatory apparel.
Given the lack of short term clarity on this important industry inflection point, along with our continued investment in our exciting new strategic business ventures.
We say you see it taking time for us to return to sequential growth trajectory in fiscal year 'twenty four.
In closing.
We've invested aggressively and prudently in our forward path and remain confident that the fundamentals. We have continued to put in place over the last fiscal year will pay longer term.
Strategic and financial dividends as we move further into fiscal year 'twenty four.
Ultimately <unk>.
Market and industry conditions will improve and the new consumer norm will prevail.
And our new business units will continue to strengthen our market position given the investments we're making.
In the immediate term, we will continue to implement our strategy, while managing the mix across our different business units as a clear path to deliver our margin expansion goals.
And with that I will.
Ill turn to Brian to provide more detail on our financial results.
Thank you dawn.
And thank you for joining us today everyone.
I'll now delve into our Q2 earnings performance provide a year to date comparisons where applicable.
For the quarter fluid produced $82 $1 million in revenue.
Down 16% from prior year, but up 6% sequentially from Q1.
Year to date, our total revenue stands at $159 4 million, reflecting a 15% decrease from the same period last year.
Sequential growth was driven by the media and entertainment sector, specifically gaming and streaming clients and offset by continued challenges within the financial services and staffing and recruitment sectors.
I'll still hindered by the challenges of the macroeconomic environment we.
We were heartened by year over year, and sequential growth of our strategic Influencer channel and year over year growth of the call solutions business.
As mentioned previously by Don prevailing economic headwinds, primarily stemming from shifts in our clients' consumer acquisition strategy, including pricing pressures from certain sectors, along with our commitment to define and exemplify.
Evolving regulatory standards will continue to cause sequential growth challenges for the remainder of the year.
Our media margin in Q2 up $25 9 million represents a 20% year over year decline and 31, 5% of revenue.
Up from 28, 4% in Q1.
Year to date, our media margin of $47 9 million represents a 18% decline over the same period last year and 30% of revenue.
The decline versus prior year periods were largely a factor of the previously mentioned client spend challenges not being offset by lower cost of media.
The sequential improvement of media margin as a percentage of revenue can be attributed to a market correction in media pricing and efficient sourcing.
On a GAAP basis, our aggregate operating expenses for Q2 were $16 8 million.
Martin a $4 2 million year over year decrease.
The six months ended June 30th our aggregate operating expenses were $38 9 million a $1 $8 million decrease from the same period last year.
Of note our G&A line in Q2 include specific litigation related expenses amounted to 785000, and a $2 $5 million benefit from an over accrual related to the FTC settlement.
For the six months ended June 30th specific litigation and related expenses, excluding the benefit from the upper accrual for $2 2 million.
The G&A line also includes accrued compensation expenses linked to the win I believe through more acquisitions.
$562001 2 million for the three and six months ended June 30th respectively.
All of these costs and benefits fall outside of the normal course of business and thus are excluded from adjusted EBITDA.
The company did not bear any impairment expense in Q2, but on a year to date basis, we recognized a noncash impairment charge of $25 7 million for the goodwill associated with the acquisition of the fluid operating business in 2015.
This impairment charge is disregarded in our year to date, adjusted EBITDA calculations and does not impact our operations or liquidity.
Our Q2, adjusted EBITDA totaled $5 6 million, representing six 8% of revenue. This accounts for a year over year decrease of $3 8 million.
And was a consequence of the previously noted decline in revenue coupled with the decrease in media margin as a percentage of revenue offset partially by a decrease in operating expenses.
For the six months ended June 32023, adjusted EBITDA of $6 million represents three 8% of revenue and an $8 1 million decline from the same period last year.
For the remainder of the year as we continue to invest in the growth opportunities like call solutions, Influencer and add to that we have.
Anticipate adjusted EBITDA as a percentage of revenue to remain in the low single digits.
Because I'm pretty cannot provide a reconciliation to expected net income or net loss in Q3, and Q4 due to the unknown effect timing and potential significance of certain operating costs and expenses share based compensation expense and the provision for or benefit from income taxes.
Interest expense in the second quarter increased over prior year by 365000 to 795.
And effective increased interest rates.
For the six months ended June 32023 interest expense increased 670 to $1 5 million also an effect of increased rates.
For the quarter the provision for income taxes amounted to 750000.
For the year to date period, the provision is 851000.
For the second quarter, we reported net income of about $1 2 million and an adjusted net income.
Our non-GAAP measure up 956000 equivalent to <unk> <unk> per share.
Year to date, our net loss stands at $38 million with an adjusted net loss of $1 7 billion equivalent to a loss of <unk> <unk> per share.
Turning to our balance sheet, we ended the quarter with $21 million in cash and cash equivalents.
$4 6 million decrease from the end of 2022.
Working capital defined as current assets minus current liabilities closed at $37 million, a $5 million decline from year end 2022.
Total debt as reflected on the balance sheet as of June 32023 was $38 million, representing a $5 million reduction as compared to the balance at June 32022.
In Q2, we invested $1 $2 million into capitalized product development and technology as compared to $1 1 million in Q2 2022.
Year to date, the company has capitalized $2 4 million in product development and technology versus $2 2 million for the same period last year.
As the management team, our focus remains on sourcing quality traffic and enhancing consumer experiences with the goal of improving our clients' return on ad spend.
We maintained strong confidence that the groundwork we are laying now to rebuild our base will yield substantial and enduring strategic and financial benefits in fiscal year 2024 and beyond.
Finally, I wanted to let our listeners know there will be not filing our Form 10-Q today as we continue to finalize our disclosures and we will be availing ourselves if a permitted extension by timely filing a notice under SEC rule <unk> 25, we appreciate your ongoing support we'll be happy to.
I'll take questions at this time.
Thank you.
Minder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.
Our first question comes from Mario Rips with Canaccord Genuity you May proceed.
Great. Good afternoon, and thanks for taking my questions I hope everyone is doing well.
You mentioned, the lack of predictability sort of across the space can you maybe talk about what youre seeing so far in Q3 relative to your expectations and maybe broadly how should we think about revenue sort of trajectory in the second half given easier comps, but also some of the dynamics of some of the headwinds that you talked about.
Hi, Maria Thank you. Thank you for the question so.
Break it into two pieces one is the macroeconomic headwinds we talked about and then the second is obviously the FTC related headwinds that we talked about it so.
From a macroeconomic perspective, our advertisers are certainly more bullish on budgets and spending in the second half.
And into 'twenty going forward, but we've not seen any specific change in sort of their spending it sounds like you're talking about spending more in the second half, but we haven't seen any real major change and actions.
We have seen some things not moved between the verticals, we talked Ryan talked about the media side of it going and even on the streaming side, although we're watching that extremely close based on sort of the Hollywood strikes and.
Which might reduce spend it also might might provide.
Some consumer pullback based on the based on the lack of inventory.
So relatively speaking we're hearing more positivity than we than we saw in the first half, but we've not seen that across our entire network.
Regarding the FTC.
And this is a little less clarity, where we have we have great clarity in the medium term, but we have a little bit less clarity on the short term Maria so.
We're pleased to have this behind us after three and half years, 95% of the settlement was already implemented by fluent prior to the start of Q2 and we've implemented the remaining part.
Before we sign the settlement and the end of May.
In the medium term this is a significant advantage to us.
With our new compliance standards, the new Street and others has to follow.
And we work on what we've worked on over three plus years to put into place and drive the quality of the consumer side of it our competitors theyre going to have to put in place in a relatively very short time framework our face some risks.
And in the FTC announcement, they talked about this being the beginning of.
Of how they were looking at the industry and change not at the end of an investigation. So medium term we have great.
Significant advantage to us and we will look to gain market share and grow.
In the immediate term, though the impact actually has some headwinds that that don't have a ton of clarity to us at the highest level.
Our business model as you know is based on its buying media for our own account.
Consumers to our website, providing meaningful experiences and connecting them to the brands the difference between what the brand's paths for the connection to that consumer and our media is what we call. Our yield is just the difference in profit in the immediate term our competitors that do not have to that will not enforce the new FTC compliance staff.
<unk> or.
Or the discipline on the media or the media partners that they work with we will have a short term advantage over fluid and buying media.
And there'll be able to produce a higher yield and also have less restrictions with less restrictions where their medium part so.
In the key the key pieces, they do not have a quality advantage of affluent our quality is outstanding and they will not catch up to us, but they do have a volume advantage to us that means fluid either has to biolife media.
Slow down revenue or has managed by the same media have lower margins and that's the balance that we're working through as we as we work through the FTC headwinds.
We're confident that as a short term dislocation and as the playing field levels up over the few quarters, we will be able to.
I'll be able to significantly grow market share so short term that sort of that.
The two headwinds that we see.
Got it that's very helpful. And then just following up on the FTC stipulation order I guess from the Companys perspective, why does it makes sense to enter into this arrangement instead of sort of continuing to litigate and then you touched on this a little bit but.
To what extent does this impact and yoga specific advertising verticals, which verticals are being impacted.
Maybe which properties impacted the most.
Yes, yes.
I'm, probably not allowed to say why are we why.
Because.
You read a lot about the FTC in the paper and you talked about a lot of things about how they move things beyond the latter of the current law.
Obviously after three and a half years.
And evolving our business and our performance marketplace that knowing what we can do in terms of creating a competitive advantage against our competitors and really driving better quality for the client.
Obviously thought that it would be.
Better for us to resolve it move forward and drive the business forward. The way, we know how to build the business rather than playing defense around how we power in court with the FTC. So that was a it was a very it was obviously it was a very tough decision that was made over over a long period of time, but.
We feel good about that and how we move forward.
We've been very vocal about how.
Our our jobs business.
We talked about that in the last couple of quarters about how the jazz business was affected and how we pivoted that business towards a different business model that is the one that probably that was the most impacted.
Directionally from a percentage perspective based on the FTC and then.
Jeff the call.
For rewards business around just.
More around certain.
Certain consent from certain disclosures, obviously that business has been.
And then change, but most of that has been over the last couple of years couple of years in terms of how we can solve that business.
Got it. Thank you so much for all the color Don.
Thanks Maria.
Thank you.
One moment for questions.
Our next question comes from James Goss with Barrington Research you May proceed.
Thank you.
Well over the past several years, we've talked about this.
Quality initiative.
Appears that it overlaps.
Yes.
Okay.
Dialogue with the FTC. So is what is the strategy under development.
For this took place or were you just communicating that you had intended to do these things as you're negotiating with the FTC.
And they were sort of moving along at pace.
Yes, Hi, Jim. Thank you for thanks for the question.
Ultimately this is something which we're most proud of and <unk> been part of our ride for a long time, Jim is we started winning world class brands.
Into our marketplace and sort of 2017 and 18 and <unk>.
Like any great company.
Great brands push you in a different direction and the brands were asking us for higher quality, saying they'd be willing to pay for more.
The offering to show more data back to us in terms of being able to form our marketplace in terms of better better purchasing so for the most part the main initiative was around US winning these brands and then these brands.
Quite honestly, pushing us to level up our business and level up the way, we could we could we could work with them and how we could work broader with them across our entire suite of solutions. So that was really the initiatives then started everything off.
And obviously with an exciting piece of the business at the same time, the regulatory things regulatory environment changed.
And we saw that happening in 19 and 20.
And obviously the quality initiatives and the things that we kicked off.
We're part of that but for the most part it was driven by our by our clients and our World class brands that we work with.
Sure.
Okay, well and you were also talking about getting others to adapt your strategy or risk some potential regulatory risks.
And I assume this all relates to the.
Yes.
Telemarketing consent practices stipulated order.
We're outlining.
July 17.
So.
Is that the case youre expecting that whatever you are negotiating with them thats going to apply to others and they are taking notice.
And rich rich types of competitors that you have in mind.
Potentially.
Yes.
Sort of.
Commanded by these same issues.
Yes, good question Jim So.
Our consent order and as I said, we had implemented 95% of these things beforehand.
At the beginning of Q2 and mostly over the last couple of years and.
And much of what the FTC incorporated into their consent order with policies and procedures that we had developed so.
So specifically in the consent order coming off and the FTC is not specific to fluid, but it's also specific to the industry. So anyone who is buying media or interacting with the consumer or getting consent.
Clearly set out the standards that we currently have in our marketplace.
And it's not it's not debatable that they should use it. They have clearly said this is a this is the way we're going to interpret the law and this is the requirements that were going to ask everybody in the industry to.
Go up against.
The enforcement of that is really sort of three ways for us one is we've been very vocal in the marketplace.
The compliance groups and committees and things that are in the market in terms of how do we.
How do we make it very clear about where we're going and where we're heading and how others should follow with us.
Second one is obviously working with our brands and brand partners.
We are in compliance we have higher quality and you should definitely.
Make sure that the other partners that you have had the same level of.
At the same level of compliance same level of quality as we do.
And the third is that the FTC themselves.
This is just the beginning not the end.
And we'll be looking at others in our industry. So.
So that's how we kind of look at it we compete Jim as you know for our media from all sorts of different sources, we compete with our advertisers obviously.
Specifically against a lot of different a lot of different companies. But this is this is this order and the compliance standards or we call. The fluid way really are across multiple industries and across different type of competitors.
Okay, and one last one if I could.
Gross profit was below expectations, but operating profit was actually a little better than expected.
It seems like the comps between the two our sales and marketing and G&A and I was just wondering.
Which.
Or if or both are you pushing on.
Yes.
Obviously, pushing on everything around that part of the part of the mix you don't see.
Jim is just the mix between the different businesses so as.
As we talked about we're investing aggressively to add flow into call solutions and influence our business.
The other businesses, where obviously, we're obviously getting more into a <unk>.
Operating leverage we can achieve that leverage so it's really the mix between the different business units. Some are at critical mass and we're getting operating leverage out of its significantly some of our investment and we're actually investing into into that and some of the some of the operating expenses are going up so it's really the mix of those of the maturity of those different businesses.
Okay. Thank you very much appreciate it.
Thanks, Tim.
Thank you and as a reminder to ask a question you will need to press star one on your telephone one moment for questions.
Our next question comes from Bill <unk> with Titan Capital Management you May proceed.
Thank you a couple of questions here relative to the $150 million of growth potential.
That you referenced in your opening remarks would you please.
Restate, what the timeframe wise for that I missed it.
Yes, Hi, Bill Thanks for the question.
We believe there is a $150 million of incremental revenue.
Available to us in those three businesses over the next two years.
So calendar year 'twenty four in calendar year 'twenty.
And that would be.
Market and then you have your market share on top of that you are not forecasting to garner additional 150 deal and net for yourself.
Yes, I'm sorry, Jim.
I'm not sure I understood. Your question, we believe that we'll be able to capture another $150 million of revenue across our three businesses.
Over the next.
At the end of two years from now.
It'll be incremental to what we have today.
Alright, my sincere policy, so that is specific to the fluent fluent potential.
Yes.
And so that would be on top let's say $80 million a quarter of revenues and additional $35 million or so.
Of of revenue per quarter.
That's the way you are looking at yes.
Okay, Great that is helpful and then with those.
With those buckets of business, what's the margins.
The margin.
Can show that you see relative to <unk> historical margins.
Yeah, Great question at.
At scale these will be.
They will have larger margins gross profit margins than what our traditional business has obviously in the earlier stages as we grow it they have less but as we get to scale they have.
They run at a gross profit margins that are higher than the traditional core affluent.
And $150 million that would be at scale.
At the very beginning you would not be how much how much revenue.
Brings you to a level of scale, where you see the margins being above.
Right around that level.
Bill.
The three opportunities that we outlined there has significant growth opportunities to us and we are looking to scale those aggressively to take market share.
So in that environment, where we're looking aggressively go market share, we're going to be obviously spending more and more heavily when we get to that $150 million of incremental will start. We believe we will have will hit above the <unk>.
Margins that we currently have for our business.
Alright, and then.
And then once those businesses are mature.
What.
How much higher margin do you anticipate relative to the to the current current.
Business.
Yes, our current as you guys know our current where as you know to help build our.
Media margin, which is a core metric in our core business generally tends.
<unk> tends to fluctuate between 28, and 32% depending on traffic and depending on where we are in different investment scenarios, we see those three businesses being at being at the 35 to the high 30 percents as a percentage.
Congratulations.
Good luck footing.
And all of that together and then relative to seasonality.
Of the existing business the call center business is stronger in the second half does that strength begin in Q3 or is that primarily a Q4 phenomenon.
Yes, it tends to hit very early in Q4 for the call solutions business, mostly around the health verticals.
And Medicare and things like that.
Okay.
Excellent.
And would you like to give some commentary about how you how you see the third quarter revenue playing out given that we're halfway through the quarter and years you've kind of.
<unk> highlighted that you see opportunity.
And challenges with the FTC settlement.
Yes.
We've outlined that bill and the earnings.
I think the key.
Larry that we currently have now we believe that we will.
We will be sequentially down in Q3 based on those headwinds.
And we look to get back to growth.
In the early we think it can take a couple of quarters to work through the FTC headwinds and then we'll see the growth returning.
The FTC.
The advantage that we have starts to kick in and also as these three growth significant growth opportunities start to scale and sort of in Q in 2024.
Great. Thank you for taking all my questions.
Okay. Thank you Bill.
Thank you I'd now like to turn the call back over to Don Patrick for any closing remarks.
Thank you.
Thanks for your time today, we've invested aggressively and prudently on our path forward, we feel great about the FTC settlement and the strategic clarity that it gives our business and clearly establishes itself as a leader in the business.
Thank you for joining us today and thank you all for your continued support.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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