Q3 2024 Fluent Inc Earnings Call
Speaker Change: With me today are Fluence Chief Executive Officer Don Patrick, Chief Financial Officer Ryan Perfit, and Chief Strategy Officer Ryan Schulke.
Speaker Change: Our call today will begin with comments from Don and Ryan Perfit, followed by a question and answer session.
Speaker Change: 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.
Speaker Change: To access the webcast, please visit the Investor Relations page at www.fluentco.com.
Speaker Change: These statements may be identified by words such as expects, plans, projects, could, will, estimates and other words of similar meaning.
Speaker Change: The company undertakes no obligation to update the information provided on this call.
Speaker Change: for a discussion of the risks and uncertainties associated with fluent business.
Speaker Change: including the company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q.
Speaker Change: During the call, management will also present certain non-GAAP financial information relating to media margin, adjusted EBITDA, and adjusted net income.
Speaker Change: Management evaluates the financial performance of the company's business on a variety of indicators, including these non-GAAP metrics.
Speaker Change: The definitions of these metrics and reconciliations to the most directly comparable gap financial measure are provided in the earnings press release issued earlier today. With that I'm pleased to introduce Fluent CEO Don Patrick
Don Patrick: Good afternoon. Thank you all for joining our call today. I'm here together with Ryan Schuelke, our Chief Strategy Officer and Company Co-Founder, and Ryan Perfit, our Chief Financial Officer.
Don Patrick: I will start with some brief comments regarding our strategic repositioning of our business and progress against our initiatives in the third quarter.
Don Patrick: On the strategic front, we've been clear regarding the business pivot we are making in our growth strategies that is grounded in leveraging our leadership position and competitive advantage in our owned and operated marketplaces as a springboard into new, high-volume, high-growth syndicated performance marketplaces.
Don Patrick: Our commerce media solution enables and empowers businesses to monetize consumers on their commerce website maps by connecting advertisers to their most relevant customers.
Don Patrick: This includes our post-event and post-transaction offerings, including Fluent's AdFlows brand.
Don Patrick: We continue to see strong growth here and margins that are accretive to the core.
Don Patrick: Owned and Operated Marketplaces is a performance marketplace focused on customer acquisition for world-class brands.
Don Patrick: This is our legacy business where we've built valuable consumer acquisition, engagement, and monetization expertise, along with proprietary first-party data, technology, and AI.
Don Patrick: Our goal here remains to financially stabilize this business, focused exclusively on the core assets that provide proprietary capabilities and competitive advantage for long-term growth.
Don Patrick: Additionally, we have our call solutions business and ad parlor agency business that provide performance marketing and agency services for health, retail, and direct-to-consumer verticals.
Don Patrick: These businesses strategically enhance both our media capabilities and our customer expertise while deepening our relationship with critical industry verticals.
Don Patrick: Our Commerce Media Solutions represents the tip of the spear in our strategic growth agenda.
Don Patrick: while also reflecting some cyclical advertising headwinds in our own and operated marketplace related to the presidential elections that had an effect on our ability to acquire media at acceptable margins.
Don Patrick: Our third quarter financial results were as follows, as we continue to deliver sequential trendline improvement via our strategic growth agenda.
Don Patrick: Revenue of $64.5 million, representing a 9.9% increase versus Q2 2024.
Don Patrick: Our median margin of $18.2 million was an increase of 15.9% versus Q2 2024.
Don Patrick: Our Q3 quarterly results were primarily driven by two major business and industry trends.
Don Patrick: Our Commerce Media Solutions continues to accelerate, adding 15 new partners in Q3, and growing revenue aggressively by triple digits year over year, while also expanding margins as we scale.
Don Patrick: In Q3 2023, Commerce Media accounted for 3% of our revenue compared to 16% in Q3 2024.
Don Patrick: Our owned and operated marketplace revenue and media margins were negatively impacted by the enormous social media advertising spend driven by the U.S. presidential election.
As a result of the business and industry trends outlined above we expect continued strong quarter over quarter revenue growth in Q4.
Don Patrick: And in 2025 as our business mix continues to shift into our Commerce media solutions, our momentum will build and we anticipate a strong year over year consolidated double digit revenue growth.
Don Patrick: Let me step back and provide investors with more context around the opportunity in front of us in the Commerce media front.
Don Patrick: According to Boston consulting group.
Commerce media industry is currently estimated at over $50 billion annually.
As expected to reach over 100 billion.
And predicts that will account for over 25% of the digital media spend by 2026 as the market continues to evolve both traditional and digital advertising.
Don Patrick: Fluids Commerce media solutions, both enables and empowers our commerce partners to participate in the large and rapidly growing commerce media market.
Don Patrick: A transformative advertising channel that has exploded over the last three years.
Don Patrick: We continue to align our strategic priorities and tactical execution with a definitive goal to capture and expanding share of this critical and vibrant market.
Don Patrick: So its commerce media solutions are designed to provide advertiser and media partners with high ROI marketing solutions while.
While enhancing the quality of our revenue base.
Don Patrick: Our proprietary first party data and embedded AI powered technology allow us to establish long term contracts and mutually beneficial revenue share agreements with our media partners.
Don Patrick: Our commerce media solutions leverage our established owned and operated marketplaces, where over 14 years of expertise in customer acquisition and performance marketing experience provide us consumer access and insights that gives us a distinct competitive advantage in the market.
Don Patrick: As part of the company's strategic pivot in 2023, the Commerce media solutions business continued to exhibit long term growth potential and generated revenue of $10 4 million in Q3.
Don Patrick: And as I stated earlier represents triple digit growth over the same period last year.
Don Patrick: Importantly, with the partners that we've added throughout the year. We've also surpassed 50 million annual revenue run rate as of September 32024.
More detail on how we calculate the annual revenue run rate operating metric is in today's earnings release.
Don Patrick: And we continue to accelerate our momentum.
With adding additional five new partners being added in Q4.
Don Patrick: It is also important to note that we are seeing higher gross margins and our commerce media business.
With gross margins in Q3 at 33%.
Don Patrick: Consolidated gross margins at 24% in the quarter.
Don Patrick: One of the key reasons, we remain strategically and financially enthusiastic about our ongoing path that we've established beachheads for growth in multiple verticals, including retail.
Don Patrick: Ticketing.
Don Patrick: Quick serve restaurant and grocery to name several.
Don Patrick: And in 2025, our plans are for continued expansion into additional verticals, where we see strategic partnership growth opportunities with our clients.
Don Patrick: Including entertainment.
Don Patrick: Travel.
Don Patrick: And finance.
Don Patrick: As a reminder, and as we've discussed in previous earning releases.
Don Patrick: As we are rapidly growing our commerce media solutions business.
Don Patrick: Fundamental business model includes a longer sales cycle that can affect our quarterly trajectory based on the enterprise sales process.
Don Patrick: Priority of the partners technology integration and seasonality of certain verticals.
Don Patrick: And we're looking forward with the strategic intend to broaden our position in the Commerce media solutions marketplace.
Don Patrick: In 2025, we'll be updating you further regarding our additional growth and expansion plans for our new loyalty solution.
Don Patrick: This is an exciting adjacent marketplace, where we believe we can play a highly differentiated industry, leading role with our clients beyond post transaction that enhances the consumer engagement experience increases retention and builds loyalty across our partners commerce platforms.
Don Patrick: We continue to work with select partners on this innovative loyalty solution to further validate our proof of concept.
Don Patrick: We have leading edge industry capabilities that provide a next generation loyalty solution.
With what we believe is especially compelling economic value proposition to advertisers and partners alike.
Don Patrick: This is a powerful and unique strategic combination.
Don Patrick: Our marriage of our owned and operated leadership position coupled with insights that are proprietary to fluent.
Don Patrick: While leveraging the credibility we are earning.
Don Patrick: With our commerce media platform as a launching point into relevant early stage marketplaces.
Don Patrick: Based on our partner's robust feedback we believe this is another large growth opportunity that is right in our sweet spot.
So stay tuned on this.
Don Patrick: So hopefully you can now better understand why we are energized by the early performance of our Commerce media solutions business and look forward to driving aggressive profitable growth and value for advertisers and for.
Don Patrick: 80, plus media partners as we continue to prioritize and scale. This strategic segment of our business.
Don Patrick: Bottom line.
Don Patrick: We have major brands enthusiastically endorsing our commerce media strategies and those new partnerships will go live and contribute to revenue in subsequent quarters Q4 and into fiscal year 2025, as we align against execution tactics and timelines.
Don Patrick: Our focus remains on expanding our market share through continued growth in our commerce media solutions business.
Don Patrick: While positioning fluids enterprise to return to consolidated year over year growth.
Don Patrick: That we believe will accelerate sequentially throughout 2025.
Don Patrick: We are quite enthusiastic regarding the strategic and financial roles at our Commerce Media solutions business is playing and we continue to shift our revenue and gross profit mix and delivering our long term growth agenda.
Don Patrick: We continue to expand our platform we are strengthening fluids brand equity with our partners are delivering higher enterprise margins that are owned and operated marketplaces.
Don Patrick: And as the strategic trend line continues in 2025.
Don Patrick: We believe shareholder value will follow.
Don Patrick: And with that I will.
Speaker Change: Turning to Ryan perfect to provide more detail on our financial results.
Speaker Change: Thank you Dan and thanks to everyone, who is joining us today.
Ryan: I'll now provide some additional details on our Q3 earnings.
Ryan: We generated revenue of $64 5 million in the third quarter of 2024.
Ryan: Down two 6% from prior year.
Ryan: Up nine nine sequentially compared with Q2.
Speaker Change: As Don mentioned in his remarks.
Speaker Change: Heavily focused on our strategic shift in revenue mix and higher gross margins related to ecommerce media.
Speaker Change: We believe this represents a significant opportunity for fluent as more media partners and advertisers are turning to this dynamic advertising medium to maximize customer monetization and return on ad spend.
Speaker Change: Since its launch in Q1 2023 Commerce media solutions has demonstrated triple digit year over year growth and driven this business to an increasingly larger part of our revenue and gross profit.
Speaker Change: Our sequential growth in revenue in the quarter was in part driven by Commerce media solutions, which increased to $10 4 million in the third quarter compared with seven three in the second quarter and $2 3 million in the prior year period.
Speaker Change: Thanks to new long term contracts with media partners in the ticketing retail grocery and <unk> sectors.
Speaker Change: Owned and operated revenue was down 18% year over year, but we've begun to see some quarter over quarter stabilization in media supply in this marketplace while.
Speaker Change: While we do expect these year over year declines in our owned and operated marketplace to continue into Q4. We believe this will be offset by the improving performance of our commerce media solutions as this business continues to scale.
Speaker Change: Media margin in the third quarter was $18 2 million, which represents 28, 1% of revenue compared to $19 3 million and 29, 2% of revenue last year and $15 7 million.
Speaker Change: And 26, 7% of revenue last quarter.
Speaker Change: As we have said in previous quarters, we expect media margin as a percentage of revenue to improve over time as we continue to scale Commerce media solutions.
Speaker Change: During the third quarter, our Commerce media solutions business produced media margins of 33, 7% meaningfully higher than our consolidated media margins.
Speaker Change: On a GAAP basis total operating expense in the third quarter of 2024 totaled $17 2 million a decrease of 488000 compared to the third quarter of 2023.
Speaker Change: G&A in the third quarter of the current year with $9 1 million.
Speaker Change: Paired with $8 7 million the prior year.
Speaker Change: The slight increase was due primarily to the absence of a one $6 million credit for certain litigation and related costs due to an insurance reimbursement for previously incurred legal fees.
Speaker Change: And an increase of 205000 in restructuring and other severance costs.
Speaker Change: Additionally, we recognized no goodwill and intangible asset impairment charges in the quarter compared with goodwill and intangible asset impairment charges of $29 7 million in the third quarter of 2023.
Speaker Change: Adjusted EBITDA in the third quarter of 2024 with negative 71.
Third with negative $1 7 million in Q3, 2023, or an increase of approximately 94%.
Speaker Change: As stated in our second quarter call, we expect adjusted EBITDA margin to improve as our revenue mix continues to shift to commerce media selection.
Speaker Change: The company cannot provide a reconciliation to expected net income or net loss as a percentage of revenue for 2024 due to the unknown effect timing and potential significance of certain operating costs and expenses share based compensation expense and the provision for or benefit from income taxes.
Speaker Change: Interest expense in the third quarter increased to $1 $3 million from 936000, primarily due to a higher average interest rates on our term loan with SLR as compared to our term loan with citizens bank in the prior year period.
Speaker Change: For the quarter, our income tax benefit was 35000 and effective tax rate for.
Speaker Change: 4%, which differs from the statutory federal income tax rate of 21%, primarily due to state and local tax expense losses for which no tax benefit is recognized.
Speaker Change: This is compared to an income tax benefit of $1 2 million and an effective tax rate of 29, 2% in the third quarter of 2023.
Speaker Change: In the quarter, we recognized a fair value adjustment of convertible notes entered into with related parties of $2 8 million.
Speaker Change: We reported a net loss of $7 9 million in the third quarter compared with a net loss of $33 6 billion in the prior year period, and an adjusted net loss a non-GAAP measure of $3 7 million equivalent to a loss of 22 per share in Q3 of 2023 compared with an adjusted net loss.
Speaker Change: Loss of $4 1 million or a loss of <unk> 30 per share in Q3 of 2023, which excludes the previously mentioned impairment charge in the third quarter of 2023.
Speaker Change: Now turning to our balance sheet.
Speaker Change: We ended the quarter with $7 8 million in cash and cash equivalents, including restricted cash.
Speaker Change: Long term debt as reflected on the balance sheet as of September 32024 was $33 1 million an increase of approximately $2 6 million from $30 5 million at December 31, 2023. Additionally.
Speaker Change: Additionally, the balance sheet reflects $2 1 million of convertible notes and related parties Mark to fair value at $4 9 million.
Speaker Change: As of September 32024, we had an outstanding principal balance of $32 $5 million on our credit facility with SLR credit solutions.
This facility provides us with $20 million term loan and a revolving credit facility of up to $30 million that matures on April 2nd.
2020.
Speaker Change: In the third quarter, we invested $1 $2 million into product development Capex largely to support the growth of Commerce media solutions.
Speaker Change: Business continues to scale.
Speaker Change: This compares to $1 7 million invested in Q3 of 2023.
Speaker Change: The decrease was primarily related to lower spend on <unk> related vendors.
Speaker Change: Overall, we are encouraged by the ongoing growth of Commerce media solutions and the opportunities that we're seeing in the market related to this business.
<unk> 14 years of experience in customer acquisition through our owned and operated marketplaces differentiate us from our competitors and we believe we're well positioned to continue capturing market share in this new high growth sector of digital advertising.
Speaker Change: Rapid take questions at this time.
Speaker Change: Thank you as a reminder to ask a question. Please press star one one on your telephone and wait.
Speaker Change: For your name to be announced towards the draw. Your question. Please press star one to one again please.
Speaker Change: Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Maria <unk> from Canaccord.
Great Good afternoon, and thanks for taking my questions.
Speaker Change: You touched on this a little bit in your prepared remarks, instead of recognizing the election headwinds here, but were there any other factors that the.
Speaker Change: Sort of contributed to the softer Q3, and Q4 outlook relative to your expectations last quarter.
Maria: I'm Maria Thanks for the question.
Its impact was the election.
Maria: And the.
Maria: The amount of spend that was on the social media channels.
Maria: Well, obviously, we've been through a bunch of election cycles media tends to go up but in this specific specific time periods beginning in August we saw prices jump at a significant rate.
Speaker Change: Marketer you gave some stats Maria that basically said digital AD spending for political.
Speaker Change: <unk> over 156% compared to 2020, it was over $3 6 billion and it just all came in towards the end it made it hard for us to to buy on those same billable platforms. During that time, so we had the demand.
Speaker Change: We had the demand that we expected was in our owned and operated marketplace.
Speaker Change: Supply was.
Speaker Change: Was there a restriction on growth in <unk>.
Speaker Change: Starting really in mid August and then it started to get better after the election on Tuesday last week.
Got it that's helpful and can you maybe talk about what's embedded in your expectations for double digit revenue growth next year, both from a macro standpoint, but also for your <unk> segment as well as the Commerce media solutions business.
Speaker Change: Yeah, Great Great question Maria So basically from an owned and operated perspective, we're not looking for that to grow.
Speaker Change: And we're actually looking that to be slightly down next year. All the growth is going to come from the commerce media side of our business.
Speaker Change: And we have.
Speaker Change: Given some numbers earlier, we continue to accelerate the number of partners, we're bringing on and we've actually brought five on in Q4, which is historically slow month, because retailers tend to put their tech.
Speaker Change: Yes.
Speaker Change: Any changes on frozen during that time period, but we are really excited about the opportunity that we are bringing we have growth already embedded based on the ones that we brought on throughout the year that will be with us the full part of next year.
Speaker Change: We have real line of sight in terms of how that can grow for us. So that's the biggest piece of where we are we started commerce medias business, we are calling it adds slow.
Speaker Change: Basically beginning part of 2023, and we now have a clear line of sight and how to continue to aggressively grow that business and we're winning in the marketplace.
Speaker Change: We're in a significant way and the results, we're driving for our partners and the advertisers.
Speaker Change: Certainly involving us to.
Speaker Change: To continue to lean in and invest into that business.
Speaker Change: Got it that's helpful and if I could maybe squeeze in one more please here.
Speaker Change: Can you maybe refresh us on why media margins and you're growing E. Commerce Media solutions segment are higher I guess, what are some sort of structural reasons behind that and where do you see media margins expanding two once that segment is sort of at scale.
Speaker Change: Yes, so good question Mary and we've talked about before.
Speaker Change: Legacy owned and operated business marketplaces, and we've been in for 14 years. The media margin has always.
Speaker Change: And between <unk> 28 to the early <unk> and we obviously bring that up and down based on media costs.
Speaker Change: Things like we had it with the election.
And we will scale down to manage the margin to that numbers.
Speaker Change: A key part of the Commerce media business model is that.
We are getting we are being basically paid on a revenue share. So we.
Speaker Change: We get.
Speaker Change: We split the revenue share thats, what the advertisers are paying us between us and the digital media property that we're working with so.
Speaker Change: So as a Rev share we have a much more consistent.
Speaker Change: Margin.
Speaker Change: And embedded in that margin tends to be in right now is in the <unk> and I think as we scale, we will get some economies.
Driven by our machine learning models and also some of the more targeting that we're doing as we grow into certain verticals. So we see that margin going from that early 30 number we gave earlier and disclosed.
Late <unk> early <unk>.
Speaker Change: Great. Thank you so much for the color.
Speaker Change: Thanks Maria.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of James Goss from Barrington Research.
Speaker Change: Okay.
James Goss from Barrington Research. Your line is now open.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Bill does alone from Titan Capital management.
Speaker Change: Thank you.
Speaker Change: John would you please step back and just walk us through how the third quarter unfolded relative to what you had originally planned.
Speaker Change: <unk>.
When we held our last conference call.
Speaker Change: Sure Hey, Bill Thanks for the question.
So I'll break it into the two businesses on the Commerce media side.
We talked about.
Speaker Change: At the end of Q2 about us accelerating the growth and bringing new clients on those clients that did come on we added 15, new partners into the Commerce media side. So the volume did come as we anticipated.
Speaker Change: So from a commerce media side basically it played out the way we expected it to and we continue to actually accelerate our momentum going into Q4.
On the owned and operated marketplace side.
Speaker Change: We were having a.
Speaker Change: We were targeting towards a good close in sort of July in halfway through August.
Speaker Change: And in the later part of August is when we saw the medium of challenges in terms of getting supply on those billable channels based on the pricing going up and Thats getting squeezed out from our ability to buy it at the right margin. So towards the end of the quarter is when we saw the hit come from.
Speaker Change: What we are primarily a U S presidential election, and they are spending on those channels.
Speaker Change: Continued on until November seven Theyre actually November six.
Speaker Change: Started seeing margin the pricing come back down.
Speaker Change: In that owned and operated business.
Speaker Change: And did.
Speaker Change: Did we just hear you save that you added 15, new Commerce media customers in Q3.
Speaker Change: Yes, we added the additional 15 in Q3 and we've added over.
Speaker Change: Five to date, so far in Q4.
Speaker Change: Thank you and the five here in the fourth quarter given that so many of these businesses tend to be pretty active in Q4, I guess, a surprise positive surprise for us.
Speaker Change: You anticipate bringing more on before the end of the quarter or at this point or are your prospective customers really unlocked LSA approach Black Friday, and the Christmas selling season.
Speaker Change: It's mostly going to be a lockdown bill we did add one officially today.
Speaker Change: But in the retail.
Speaker Change: Certain verticals that we're in for the most part they do a code fees, starting usually around the middle of October and once they do that code freeze, it's hard to get there.
Speaker Change: They're just not going to.
Speaker Change: Due to integrate our AD tech platform into their into their <unk>.
Speaker Change: Our site until after the end of the year.
Speaker Change: Great. Thank you and then relative to the Commerce media.
Speaker Change: Business again.
Speaker Change: Do you see that.
Speaker Change: On.
Speaker Change: That revenue growth slowing from the triple digit growth.
The let's say next four quarters or do you believe you can continue and it will continue to grow at a triple digit rate for for that window.
Speaker Change: We see the continued acceleration bill we've got.
Speaker Change: We've got as you can see great partners coming on.
Speaker Change: We also can expand with some of those partners are part of our growth will be expanding with them. So some like if we add a certain retailer they might have another brand that we can bring on or we've mentioned in the past that we brought on a grocery store chain.
Speaker Change: Our first entry into that market you may have additional change. So we will we will continue to grow with both expanding our current partners and bringing new parent, bringing new partners on.
Speaker Change: Okay, I'm not I'm not quick enough with a calculator to do the math here, but if the owned and operated is.
Speaker Change: <unk> to down slightly next year.
Speaker Change: And the Commerce business is up triple digits next year.
Speaker Change: Yes.
Speaker Change: And a pretty decent growth rate.
Speaker Change: Yes, so we the way they will do the math for you Bill.
Speaker Change: Because you are smart enough to figure out the math.
We're saying about 2025 is that we will return to year over year double digit growth for the year.
Speaker Change: The difference in what I'll call the new business to Commerce media business is there is seasonality to that.
Speaker Change: So obviously when we depending on what partner, we bring on and what vertical it might be heavy in certain it certainly most of them are heavy in Q3 and Q4. So we feel good about returning to that double digit number for the entire year.
Speaker Change: On a quarter by quarter basis, it's going to.
Speaker Change: <unk> move up and down based on.
Speaker Change: Based on the verticals that we bring on and the seasonality that they have.
Speaker Change: Not to belabor this but does that imply that the rate of growth would then.
Speaker Change: Celebrate.
Speaker Change: Double digits over the course of the year, but each quarter has a higher growth rate as you go through 25.
Speaker Change: You'll you'll typically see that rate, but again just to give you a bill something we've talked about before Q1, the retailers, obviously go down right because there.
Speaker Change: Theres less holiday season, less sales things like that so we will have the Q1 number sequentially will be down from Q4, and then we will continue to see acceleration beyond Q1.
Speaker Change: I'm, sorry, Dan I was looking at it on a year over year comparison, so meaning the entity.
Speaker Change: Fourth quarter would have a higher growth rate versus Q4 than the Q1 would have versus Q1.
Yes, that's right that's absolutely right Paul.
Okay. Thank you and I'm going to ask for.
Speaker Change: Your Grace to get one more question in here the loyalty business you.
Speaker Change: You commented on in your opening remarks with would you dive into more detail as to.
Really what that business is and how your solutions are different or into innovative.
Speaker Change: Relative to competitors.
Speaker Change: Sure so.
Speaker Change: Right now our core Commerce <unk> solutions is in the post the vast majority is in what we call. The post transaction. So when you go onto our website and you purchase something you've put your credit card in your press.
Speaker Change: Press submit and before you get the confirmation page and overlay add will come on and say congratulations you are yes, we have one three months free of Hulu.
Speaker Change: Subscription services that add module in that post transaction space.
Speaker Change: That is our business Thats, our commerce solution business.
Speaker Change: So that.
Speaker Change: <unk> is the most lucrative part.
Speaker Change: Our partners.
Commerce flow right because the consumer has already purchased and is in the purchase moment and obviously they are likely to purchase again. So that's why we started off in that area with ecommerce.
Speaker Change: As a as a consumer goes through our partners commerce sites. There are other areas for ways for us to interact with them in other areas for us to drive the consumer experience to two.
Speaker Change: To increase to increase both revenue for the partner and also the consumer experience for the consumer so on the loyalty side I'll give you example of one that were really.
Speaker Change: Launching now in that example, where you get.
Speaker Change: Hulu Hulu for three months free we can also work with our partners to say, you'll get X number of loyalty points.
Speaker Change: And that was always loyalty points low then encourage that consumer on the partner side to come back and build up more.
Obviously more loyalty for the partner, but also more spending.
Speaker Change: We're up to the site. So we're able to integrate those two pieces across it loyalty overall tends to be a loss leader for for a commerce partner you tend to.
Speaker Change: They tend to look at it is I'm going to spend X amount of money and I'm not sure how I get exactly the performance out of it. This is an example, where we can add incremental revenue from the post transaction business to drive loyalty and make it a profit.
Speaker Change: Center for them.
Does that makes sense.
Speaker Change: It does.
Speaker Change: But what I didn't hear is how how what you. Just described is different from the typical loyalty program. So there was that sounds pretty normal to me either I think that that's where I'm missing what youre doing versus versus a normal loyalty program.
Speaker Change: Yes, typical loyalty program will not offer AD serving for ads that are outside the company's business fell. So what we're doing is we're serving non endemic add in order to bring revenue into it and then allowing the partner decides how they spent how they use that revenue either for themselves or how they can then.
Speaker Change: Bring that back and use that to incent the loyalty the loyalty consumer so it tends to be a revenue generator for them rather than a loss leader.
Speaker Change: Excellent that's great differentiation, thank you and congratulations I am starting to see the inflection point in the business turn.
Bill: Thank you Bill.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced towards the draw. Your question. Please press star one one again.
Speaker Change: Our next question comes from the line of James Goss from Barrington Research.
Speaker Change: Hi, sorry that my call dropped before if I may.
Speaker Change: Just a couple of other things one is you did.
Speaker Change: Can you talk about a year year over year declines continuing into Q4.
Speaker Change: With the.
The slower growth.
Speaker Change: On development in our Commerce media solutions does that imply Q1, and Q2 cadence wise will sort of level off in Q1 and will begin to rise in Q2 or will it take until the third quarter before you see gains and then separately.
Speaker Change: I was wondering in terms of the election do you think how do you view the shift in the regime in Washington in terms of a framework for your business.
Speaker Change: Okay.
Speaker Change: Hey, Bill Thank you for the question.
Speaker Change: The.
Speaker Change: Answered a couple of different pieces for you so.
Speaker Change: <unk>.
Speaker Change: Year over year decline in Q4 is primarily related to what we talked about in the owned and operated business.
And the challenges we had with the U S election in Q1 and Q2, we see.
Year over year growth, but obviously in the low single digits and that's accelerating throughout the year.
And.
Yes, it's mostly based on the fact that around.
Speaker Change: Scaling and continuing to build out that commerce media wins that we haven't currently.
Speaker Change: Onboard it in Q3 and Q4 this year.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: Just related to the <unk>.
Speaker Change: The change in the.
Speaker Change: The presidency and.
Speaker Change: And how does that affect your business.
Speaker Change: That creates more of a tailwind than you had before or will it be not really.
Speaker Change: Kind of.
Speaker Change: It's a great question, Jim I think we look upon it as more of a.
Speaker Change: Tailwind, but.
Speaker Change: Yes.
Speaker Change: There is a lot of variability right now in terms of what could happen. So so we're looking at it is obviously.
Speaker Change: Yes.
Speaker Change: Looking at things that are on a day by day basis and make sure. We're moving forward. The one big issue obviously out there is in the prior administration there was a lot of.
Speaker Change: Pressure around Tictoc, and what theyre going to do with that.
That has not really been cleared up yet, but theres certainly indications that there'll be less pressure on on getting rid of that.
Speaker Change: And for seeing some sort of sale or some sort of divestiture or blockage of that channel. So.
Speaker Change: So in that case, it will be positive for us.
Speaker Change: Alright, Thank you very much.
Jim: Thanks, Jim.
Jim: Thank you.
Speaker Change: At this time I would now like to turn the conference back to Dan.
Dan: For closing remarks.
Hey, Thank you for joining our call today.
Dan: Fluids focus remains on strategic and financial path forward, which is to extend our equity and rapidly build a growing commerce media solutions business, while leveraging the foundational strength of our owned and operated marketplaces.
Dan: We look forward to giving you an update in Q4 and thank you for your continued support.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Okay.