FLNT - NASDAQ

Good morning, and welcome. Thank you for joining us to discuss Fluent, Inc.'s fourth quarter and year-end 2024 earnings results. With me today are Fluent, Inc.'s Chief Executive Officer, Don Patrick, Chief Financial Officer, Ryan Perfit, and Chief Strategy Officer, Ryan Schulke. Our call today will begin with comments from Don Patrick 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. Additionally, there is a slide presentation that accompanies today's remarks, which can be accessed via the webcast and is also available on Fluent, Inc.'s website. A replay of the event will also be made available following the call on Fluent, Inc.'s website. To access the webcast and slide presentation, please visit the Investor Relations page at www.fluentco.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements made during this call only speak as of the date hereof. Actual results could differ materially from those stated or implied by such forward-looking statements, due to risks and uncertainties associated with the company's business. These statements may be identified by words such as expects, plans, projects, could, will, estimates, and other words of similar meaning. The company undertakes no obligation to update the information provided on this call. For a discussion of risks and uncertainties associated with Fluent, Inc.'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. Relating to the 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 definition 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, Inc.'s CEO, Don Patrick.

Good morning. 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. Our key focus is to reinforce why we are confident in our strategic commitment to win in the rapidly growing commerce media industry. We achieved 139% growth in Commerce Media Solutions revenue in the fourth quarter compared to Q4 2023 and 284% growth for the full year. As of December 31, 2024, our commerce media solutions business surpassed an annual revenue run rate calculated as explained in our earnings press release, in excess of $60 million, up from $50 million as of September 30, 2024. And we continue to expand our model and grow market share. We are confident that this momentum will continue. We expect strong year-over-year triple-digit revenue growth continuing throughout 2025. The key driver of this growth has been our growing list of major brands that see our value proposition and continue to join our roster of partners and advertisers. In 2024, we announced several key partnerships with leading brands during the fiscal year, with significantly more in the pipeline as we move into fiscal 2025. Our strategic plan is grounded in shifting our business mix to the commerce media solutions. We've invested our financial and human resources to win big. That focus has our post-transaction business building strong brand equity in the marketplace, substantiated by our triple-digit year-over-year revenue growth in every quarter of 2024. Of strategic significance, and a Fluent, Inc. competitive differentiator, we are providing tremendous value to consumers, partners, and advertisers with margins that are accretive to our consolidated business. And while we're confident that we are on a sustainable path, every winning strategy comes with an investment cost, which we've recognized in our financial performance throughout fiscal year 2024. As we invested in growing commerce media solutions, we've also embarked on a parallel path contracting our larger nucleus of owned and operated properties to focus on fewer targeted businesses that we find strategically compelling in the longer term. And as we continue to stabilize and ultimately strengthen our own and operating market-based position against businesses we can grow, Q4 revenue and media margins were negatively impacted by significant increases in media costs on the biddable platforms. The key driver here was the enormous social media advertising spend driven by the US presidential election, which significantly affected our ability to buy media at acceptable margins. So we constantly chose not to chase this volume until media pricing came back to more traditional levels post-election. But make no mistake, we still maintain our leadership position and own and operate a marketplace. It provides us market credibility and unique client access based on those capabilities we bring to market and at a level that is effective, efficient, and higher quality than any of our competitors set. Still, this has cost us profitability in 2024, that we see as a required investment in our future. Furthermore, as part of our broader strategic reposition, we discontinued the ACA portion of our call solutions business. In Q4, adjustments made by insurance companies in response to widespread fraudulent activity in the government ACA marketplace necessitated a $2.5 million nonrecurring write-down of revenue to reflect this change in our estimate of accounts receivable. This write-down caused adjusted EBITDA to be negative for the quarter. All this being said, the consolidated Q4 performance was a disappointment, particularly the continued industry-wide issues affecting call solutions. However, we see this as having no additional effect on our longer-term strategy to drive value through our strategic pivot to commerce media solutions. We are confident in our ability to return to year-over-year double-digit consolidated revenue growth, profit growth, and enhance our enterprise margins in 2025. As we enter 2025, we are doing so with strategic clarity and momentum that continues to grow alongside a transformative near $50 billion marketplace. It is important to stand back and understand how our pivot significantly expands our addressable market. According to Boston Consulting Group, the commerce media industry is estimated at a total value of over $50 billion and is expected to reach over $100 billion over the next five years, accounting for over 25% of all digital media spending as the market continues to evolve. Importantly, we are now well-grounded as an emerging leader in this explosive high-growth market with significant upside. Over the last two years, we have successfully proven that we can adeptly enable and empower our commerce media partners to participate in this large and rapidly growing market. We are a proud reflection of the brands with whom we partner. Here's a sample of some great companies in our meeting network. Partnerships like these validate Fluent, Inc. products and are driving the growth of our commerce media solutions business. We're honored to be working with such an impressive roster of media partners across diverse verticals, including retail, grocery, ticketing, and quick-serve restaurants. Our line goals are consistent as we aim to maximize revenue opportunities for our partners, increase conversion rate for advertisers, and build more meaningful higher quality experiences for our consumers. To put our ongoing shift in business mix into perspective, in 2023, Commerce Media Solutions accounted for 4% of Fluent, Inc.'s consolidated revenue compared to 16% in 2024. That trend line shift continued in Q4 where Commerce Media Solutions represented 26% of consolidated revenue, its strongest seasonal quarter. And we certainly expect this healthy growth to continue as we've delivered triple-digit year-over-year percentage growth in commerce media segments since its inception. This growth is supported by proprietary first-party data that we collected over fourteen years as a leader in the customer acquisition services via owned and operated marketplace, as well as embedded AI-powered technology that allows us to establish long-term contracts and mutually beneficial revenue share agreements with our commerce media partners. Accordingly, and as we continue to place our financial and human resources against our growth strategy, while owned and operated will continue to play a vital role in our business, revenue will continue to decrease as a percentage of sales as high-margin Commerce Media solution revenue grows, as advertisers lean into our higher quality consumer engagement platform. Before I turn the call over to our Chief Financial Officer, Ryan Perfit, I wanted to provide a brief quarter-by-quarter comparison of the performance of our commerce media solutions dating back to its launch in the first quarter of 2023. As you can see in the graph on slide seven, our Commerce Media Solutions revenue has demonstrated exponential growth with steadily improving gross margins since this segment was launched in the first quarter of 2023. And the business obviously continues to represent a growing share of our consolidated revenue mix. Looking ahead, we expect to see flat year-over-year consolidated revenue in the first half of 2025 primarily due to revenue declines related to the businesses we discontinued or shifted investment away from in 2024 as well as seasonality in the many commerce media verticals that we presently serve. As we progress through the year, we expect the total company revenue growth will accelerate in the second half of 2025 driven by strong performance in our Commerce Media segment. The corresponding impact on the fiscal year will be significant as we expect to deliver double-digit year-over-year growth in Fluent, Inc. consolidated revenue and gross profit. We remain bullish about the momentum we've generated in our strategic pivot as we leverage the competitive advantages of our owned and operated marketplaces and accelerate into exciting and significant high-growth opportunity in the large and growing commerce media industry. Importantly, we are expanding our strategic value proposition to world-class partners beyond customer acquisition, delivering higher quality consumer engagement across the entire marketing funnel. As our strategic trend line continues in 2025, we believe shareholder value will follow. And with that, I'll turn it to Ryan Perfit to provide more detail to our financial results.

Thank you, Don. Thanks to everyone for joining us today. I'll now provide some additional color on our Q4 and full-year results. We generated revenue of $65.4 million in the fourth quarter of 2024, a decrease of 10% from the prior year. As Don mentioned in his remarks, we are intently focused on our strategic shift in revenue mix to commerce media, believing this represents a significant opportunity for Fluent, Inc. as more and more of our media partners and advertisers are turning to this dynamic advertising medium to maximize customer monetization and return on ad spend. Commerce Media Solutions achieved triple-digit year-over-year growth, to cap off an exceptional year for this business. In the fourth quarter of 2024, Commerce Media Solutions revenue increased 139% to $17.2 million over the fourth quarter of 2023. For the full year, Commerce Media Solutions revenue totaled $41.3 million, an increase of 284% over fiscal 2023. And as Don mentioned, we anticipate triple-digit year-over-year growth rates to continue through 2025, with Commerce Media Solutions serving as a key driver for the year-over-year double-digit company-wide revenue growth that we expect in the back of the year. As Don mentioned, while owned and operated revenue continues to stabilize, we expect revenue from this business to decrease and commerce media solution to become a larger portion of the overall revenue mix. We saw a decrease in owned and operated revenue of 23% in the fourth quarter of 2024 when compared with the prior year period, and a decrease in full-year owned and operated revenue of 29% compared to full-year 2023. Media margin in the fourth quarter was $16.5 million, which represents 25.3% of revenue, compared to $24.2 million or 33.1% of revenue last year. For the full year of 2024, media margin totaled $72.5 million representing 28.5% of revenues compared with $91.3 million or 30.6% of revenues in 2023. Media margin was particularly low in the fourth quarter of 2024 due to two unrelated factors. The first being the previously mentioned ACA revenue write-off and the second being a function of increased media costs in our health insurance vertical in the call solutions business. Our Commerce Media Solutions media margin in the fourth quarter of 2024 was $6.8 million or 39.3% of revenues, compared with $1.3 million or 18.5% of revenues in the fourth quarter of 2023, demonstrating strong growth in this business. On an annual basis, commerce media media margin totaled $14.5 million or 35.1% compared with $912,000 or 8.5% of revenues in 2023. On a GAAP basis, total operating expenses for the fourth quarter of 2024 totaled $16.9 million, a decrease of $2.9 million compared to the fourth quarter of 2023. Full-year 2024 total operating expenses totaled $72.3 million compared with $72.4 million in 2023. We recognized no goodwill and intangible asset impairment charges in the fourth quarter of 2024 or the fourth quarter of 2023. For the full year, we recognized goodwill impairment charges of $1.3 million compared with $55.4 million in 2023. Additionally, we recognized impairment of intangible assets of $980,000 in full-year 2024 compared to no impairment of intangible assets in 2023. Adjusted EBITDA in the fourth quarter of 2024 was negative $1.7 million compared with adjusted EBITDA of a positive $2.5 million in the fourth quarter of 2023. As Don stated in his remarks, we recorded an ACA-related write-off of accounts receivable and an equal offset of revenue of $2.5 million which drove adjusted EBITDA into negative territory for the quarter. Adjusted EBITDA for the full year was negative $5.6 million compared with adjusted EBITDA of $6.8 million in 2023. As we continue to drive our shift in revenue mix to focus on commerce media solutions, we expect adjusted EBITDA margin to improve over time. 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 the provision for or benefit from income tax. Interest expense in the fourth quarter increased to $1 million from $784,000 primarily due to a higher average interest rate on our term loan with SLR compared to our term loan with Citizens Bank in the prior year period. For the full year, interest expense was $4.7 million compared with $3.2 million in 2023. We recognized an income tax benefit in the quarter of $1.9 million compared to an income tax benefit of $667,000 in the fourth quarter of 2023. In the full year, we recognized an income tax benefit of $1.8 million and an effective tax rate of 5.8%, compared with an income tax benefit of $116,000 and an effective tax rate of 0.2%. We reported a net loss of $3.4 million in the fourth quarter, compared with a net loss of $1.9 million in the prior year period. An adjusted net loss, a non-GAAP measure, of $3.3 million equivalent to a loss of $0.18 per share, compared with an adjusted net loss of $386,000 or a loss of $0.03 per share in the fourth quarter of 2023. For the full year, we reported a net loss of $29.3 million compared with a net loss of $63.2 million in the full year of 2023. And an adjusted net loss of $18.5 million or a loss of $1.14 per share compared with an adjusted net loss of $7.2 million or a loss of $0.52 per share in 2023. Importantly, the full year of 2023 included goodwill impairment charges of approximately $55 million, which significantly impacted net income in this period. Shifting now to our balance sheet, we ended the quarter with $10.7 million in cash and cash equivalents including restricted cash. Total debt as reflected on the balance sheet as of December 31, 2024, was $31.9 million, $1.4 million higher than the $30.5 million at December 31, 2023. As of December 31, 2024, we had an outstanding principal balance of $31.5 million on our credit facility with SLR Credit Solutions. This facility provides us with a $20 million term loan and a revolving credit facility of up to $30 million, debaters on April 2, 2029. We're very pleased with the growth of our commerce media business in 2024. And our results reflect the ongoing strategic shift that we've been driving for the past several quarters now. Looking ahead to 2025, our focus is on the continued execution of our strategic pivot to grow our commerce media solutions. To do this, we're entering into partnerships with leading advertising brands and media partners, which we detailed earlier in this call to enhance Fluent, Inc.'s credibility and market recognition as a leading provider of products and services in the commerce media space. We're also bringing on leading industry talent to help us further our goals. Subsequent to the close of the quarter and the fiscal year, we announced the addition of Adrian Stack as our new Chief Product Officer. Adrian has extensive experience in product development leadership and the commerce media space, and we are thrilled to welcome him to the Fluent, Inc. team. As we execute on this strategy, we believe that we're positioning Fluent, Inc. to drive revenue growth, margin expansion, and enhanced profitability metrics, underscored by the growth and success of our commerce media solutions. With that, we'll be happy to take questions at this time.

Thank you. As a reminder, to ask a question, please press star one one on your telephone. One moment for questions. Our first question comes from Maria Ripps with Canaccord. You may proceed.

Great. Good morning and thanks for taking my questions. First, so you scaled your CMS revenue pretty nicely last year. So now that it has reached over a $60 million run rate, I guess, what's the right way to think about sort of the pace of growth going forward? And, so you talked about partnerships, but maybe more broadly, what are some of the key drivers or building blocks from here? And do you have the necessary infrastructure in place to scale this business further?

Yep. Hi, Maria. Thanks for your question. So I'll hit a couple different things in your questions around the CMS revenue. So as you know, we started this business in the first quarter of 2023. And we built it off the really strong competitive assets that we have within the owned and operated business. So from a data perspective, technology perspective, etcetera, we were building off a foundation that we had built over fourteen years. So, you know, our pipeline is growing aggressively. You know, you can see the numbers and we do see visibility that we can continue to grow at a triple-digit rate in 2025. And we actually see that continuing on in 2026. Two primary drivers. As you know, one, commerce media is one of the most transformational changes to digital advertising in the last ten years. So there's a lot of greenfield here where partners are coming in and brands are coming in to participate in commerce media. And the second is that we have now been building our brand and building our ability to drive superior results in the competition, based on our competitive advantages. And they're starting to get out in the market to accelerate where we are. So, you know, that's part of why we have, you know, really came out in Q3 to start talking more about the numbers on commerce media because we do see that visibility and we are confident. It does two things through our business model. You know, the first one is obviously it's more seasonal based on the verticals that we serve within commerce media on the retail side. That obviously is changing our business model and how we look at quarter to quarter. But the more important piece is that revenue is more predictable and it's more valuable. Right? We are embedding our technology onto our commerce media partners' websites. We're getting all their transactions that they're getting in the post-transaction environment and it's a very favorable rev share. So compared relative to the legacy and own and operate business of Fluent, Inc., it is much more predictable. So we have great visibility in terms of how to grow that. You asked a question around how the building blocks and infrastructure partners. So I'll hit the infrastructure. We are leveraging off the core of what Fluent, Inc. has built both from a technology and data perspective, but equally important from sort of a cultural perspective. We come at it as a marketing company. We've been marketing to our own consumers and interacting with them and we have tons of great first-party data to leverage. And we're bringing that to bear for our new partners on the commerce media side. So the infrastructure you've seen it in our financial numbers the last two years in 2023 and 2024 with a heavy investment on the technology and the analytics side to build out specifically for commerce media versus our core owned and operated business. And we see that as we grow this business, it's a much more it would be able to manage those expenses, those investments much easier. And as the business grows, the revenue comes in. Did I answer all your questions, Maria?

Yeah. Yes. Thank you. That's very helpful. And then this relates to your own segment. I guess, is there a portion of the $168 million in revenue that you generated last year that's perhaps a little bit more durable? And, I guess, what are your thoughts on maybe stabilizing that segment or some parts of that segment and returning it to growth?

Yep. So, again, as we've talked, it's a huge competitive advantage for us, but it is not a growth engine, and we don't look at it growing again, Maria, and we look at it as really just do we how do we stabilize that and how do we leverage those assets. So some of it has to do with the regulatory changes that we talked through at length in the past couple of years about the headwinds there. But equally important, you know, it's primarily around where do we allocate our priorities and we've continued to invest and move capital and move people towards that commerce media side because of the opportunity there. So that really has been our context around that business is a huge competitive advantage. And if we keep it flat or we keep it the decline in a lower percentage, we will win big on the commerce media side.

Got it. Thank you, Don.

Thank you, Maria.

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

Hi. Kind of following up on the owned and operated segment. Or owned and operated business. Do you include the call centers within that? And I guess just on the call center side, you know, if you're stepping away from, like, the ACA marketplace, could you maybe just talk about where else you have kind of scale within that business?

Sure. Hey, Pat. Thanks for the question. So, no, we do not include call center in the owned and operated business. Call, we now look at our business as the owned and operated business marketplace, Commerce Media Solutions, and then agency services where call solutions is under that agency services line. Just to take a step back, Pat, I know you've been with us for a while, but you know, strategically, call solutions expands the size of the owned and operated marketplace because it allows Fluent, Inc. through live agent capabilities to direct our consumers to higher value, higher consideration categories like health and life and home services. So we do continue to grow that business. And historically, it has been a very consistent steady performer for us. And that's really the high same value proposition on the owned and operated marketplaces where we're bringing quality consumers to health care providers, primarily Medicare, and also in ACA in terms of leads that are going to aggregators that connect to the insurance company. So, you know, we have it's been a steady performer. There's been two huge, you know, obviously, changing sweeping changes that we are working our way through. And in that happened in 2024. The first one was the FCC, the CMS came out with new regulations that caused the demand in our market from our clients to shift from taking warm transfers to taking inbound calls. So we did make that shift successfully in Q2. And we did we were able to drive significant margin in the business, but in Q4, the fact that we're buying media to drive those inbound costs, the instant media cost causes to have challenges in Q4 in that business. It's continued on in Q1 that elevated level of media costs. We have a very good plan around diversifying that. It's gonna take us a couple of quarters to work through. But the high-quality consumer and the demand and the high-quality partners that we work continue to continue to be in place for us to drive that business forward.

Okay. And then on Commerce Media Solutions, I think you had mentioned that you're able to leverage data on the owned and operated side to support that. I'm just kind of curious with the continued softness in owned and operated. Is that kind of limits the ability to have that data bolster the commerce media side? And, you know, just any sort of, like, if maybe sort of, like, an inflection where, like, you have enough scale in commerce media where you know, weakness in the owned and operated side, wouldn't necessarily be of kind of risk to continuing to grow that business.

Yep. Yep. So you're absolutely right. Obviously, there's as we've really focused and repositioned owned and operated around the quality side rather than on the growth side. That the data that comes in on a daily basis is less than it was in the past, but you know, we have fourteen years of first-party data and consumers coming. You know, to over two hundred million unique email addresses and that database obviously is incredibly deep and incredibly large breadth in terms of campaigns and things like that. So even with the smaller traffic and consumers coming on our owned and operated, that data continues to be very relevant and fresh for us for the commerce media. And I think your second question there's two big, like, business model things that we're seeing. One is in the second half of this year, we get significant seasonality in that commerce media solutions. So we see the second half where we will return to growth, double-digit growth that will drive double-digit growth across the consolidated side of Fluent, Inc. And I think that is the inflection point that we see based on where we are in the growth and the wins that we're getting in that commerce media platform.

Okay. Thank you.

Thanks, Pat.

Thank you. And as a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Bill Dezellem with Tieton Capital Management. You may proceed.

Thank you. Would you please expand further on the comment in your opening remarks relative to the pipeline in the commerce media business, both in terms of the size of that pipeline in terms of number of prospects but also the size of those prospects relative to the customers that you currently have on board?

Thanks, Bill. Thanks for the question. So as I was just talking with a little bit of the answer, our pipeline continues to grow very, very successfully based on the fact that we are obviously building our brand around driving better results. And also by the fact that, you know, the industry we're sitting in in the middle of a fantastic transformative industry with a lot of tailwinds. So the pipeline continues to grow at a great pace for us to provide that visibility of triple-digit growth rate for that business in 2025. So and as we continue to land these brands, these new wins, in the verticals, we're able, obviously, from a marketing perspective, penetrate that vertical with great case studies and great marketing materials to accelerate the sales side. So it is fantastic momentum and the pipeline is significant in size for us to deliver on our commitment that we made in terms of growth. Regarding size, you know, there's obviously from a we just there's different size brands that we work with. You know, there's large ones that will that can, you know, have hundreds or have, you know, millions of consumers or some that have smaller ones that come in. We manage those the pipeline based on the breadth of that and how do we segment that. But there are some very large transformative partners that we're discussing and we're in the midst of a pipeline that could accelerate that growth rate that we've positioned. We don't factor that into our business, Bill. We don't factor that into our forecast. But as we build our brand and we build our results that we've been able to drive for our partners, we're very pleased with some strategic partnerships that we could that would be transformational for us and grow and accelerate that business revenue that we've laid out for you. But we do not plan our business around that, and we do not run our business by those big deals.

Don, would you please quantify kind of what transformative would be, any way that you can scale that for us. And what's the timeline? Generally speaking, larger is a leads to a longer sales cycle. And so is this something that might happen next year or nearer term?

Yep. Okay. Great question. So, you know, if you look at an average, it depends a lot on the verticals we're in, but I'll just take retail vertical as an example because that's our largest vertical. You know, an average size partner that we work with might have ten million post-transaction sessions a year. Right? But that could mean, you know, we have very valuable partners that are doing a million. We have very valuable partners that are doing thirty million or fifty million. Right? So that's the range in which you kind of see in the mix of our portfolio and in the mix of our current clients also. The transformative deals that we're talking about would be a multiple of the high end of that range. So if we're talking about things that could literally, you know, significantly change the growth trajectory that we have. Regarding timing, you know, they do take a little bit longer, at times, but I'm gonna tell you you guys will be the first to hear when we close one deal. So there are things in the pipeline that we think can happen, obviously, in 2025.

Great. Thank you. And would you please talk about what your conversion is? So once you've won a customer, and their customer has purchased a product and you're presenting the post-sale ad, what's your conversion rate versus the competition, the rest of the industry?

Yeah. We don't just well, we do have we do have some case studies, Bill, that we've given that we made public around the conversions and revenue. Our investor deck. Obviously, some of this is competitive that we don't want to disclose, but there's two important pieces of this. Right? One is the size of the like, how the quality of the consumer that we're connecting to our brands, our world-class brands like a Disney or an Apple, etcetera. And we've seen compared to head-to-head competition, that the consumers are up over 25% more valuable than the ones that the consumers are were connected or the brands were connected to with our competitors. So that's a significant value proposition for us as higher quality consumers based on our technology and our data and our ability to identify and serve the right ad. On the partner side, we also have a very similar increase in an uptick in the revenue that we provide our e-commerce partners up in the over 20%. So significant uplift in the competitive advantage that we have head-to-head against our competition.

And so when you think about these large prospects or frankly, the rest of the pipeline is maybe not necessarily transformative. But all part of the pipeline. Is there anything about that pipeline that would is different so that you would not be able to generate for them that 25% more value? Because where my mind is going is it seems like your probability of winning if they're basing their decision on the financial aspect of the transaction, it really increases your chance of winning those deals.

Right. Yep. So the answer is we believe that, you know, we are heavily as we've talked about and we're not in all the verticals, Bill. And obviously, even within the verticals, maybe take retail example, there are different audience segments and different things that we've got to work through in terms of getting that same sort of return. But again, that sort of fits to where our value proposition and how we go to market. We're a marketing company that we've been doing it for our own for owned and operated properties for fourteen years, and we know how to drive consumer engagement and we know how to drive results. So we're confident that that DNA and that expertise, owned and operated, will translate into the different verticals that we enter into. So there are we've laid out in the presentation. We are not in some of the verticals that we believe we are going to get into and grow. It's gonna take a little bit of time to work through that if we get into, for example, travel. We're not into travel right now. But we're confident that that marketing DNA and our first-party data drive those results across every vertical and across different types of partners within those verticals.

That is helpful. And thank you for all the color. One additional question. Your gross profit dollars, approximately half came from the commerce media business. And you all have been very clear about seasonality within your business. The question is, as you look over the course of the next four quarters, do you see the gross profit dollars coming from commerce media holding and or growing and particularly in Q1 and Q2, or due to the seasonality that those would be under pressure as a percentage of the total gross profit?

Bill, if it there's I think I understand your question. I'll answer it two different ways. First, the business mix. Right? We are very transparent on the business mix that's been happening around that commerce media. So we see that business mix continuing to increase as a percentage of the total value of the Fluent, Inc. business. So that business mix will continue to drive. The margin itself in that commerce media business is relatively consistent and predictable based on the revenue share that we have. So we'll see the margin percent be consistent, but we'll see the mix of that business continue to drive and be a more significant part of Fluent, Inc. overall.

And in Q1, specifically, do you anticipate commerce media percentage of the business to increase or decrease, and it's really trying to get my head wrapped around the seasonality from that perspective.

Yep. Yeah. So it will increase as a percentage of the overall Fluent, Inc. business. Yes. In Q1. We do go down sequentially from Q4 to Q1. The commerce media business will continue to grow at the rates that we've talked about. It's just the seasonality from Q4 to Q1 the revenue will decline based on that seasonality.

Great. Thank you, and good luck closing some of these large prospects.

Thank you, Bill.

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

Thank you for joining our call today. The key headline is reinforcing why we're so confident about our strategic commitment to win in the rapidly growing commerce media industry. And it leaves us poised for growth through execution to deliver breakout performance in the second half of this year. Thank you for your continued support. And we look forward to giving you an update after Q1.