What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-14 · 196 added, 280 removed, 146 unchanged (77% of the section changed)

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, including, without limitation, those discussed in Part I, Item 1A

Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on March 31, 2025 (the "2024 Form 10-K"), those

Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the "SEC") on March 31, 2026, as amended on April 30, 2026 (as amended the "2025 Form 10-K"), those

contained in our Quarterly Reports on Form 10-Q (including this one), and such other factors contained in our

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("we," "us," "our," "Fluent," or the "Company") is a commerce media solutions provider connecting top-tier brands with highly engaged consumers.

Leveraging diverse ad inventory, robust first-party data, and proprietary machine learning, Fluent unlocks additional revenue streams for partners and empowers advertisers to acquire their most valuable customers at scale.

We primarily perform customer acquisition services by operating highly scalable digital marketing campaigns, through which we connect our advertiser clients with consumers they are seeking to reach.

We access these consumers through both our commerce media solutions marketplace ("Commerce Media Solutions"), and our owned and operated digital media properties ("O&O Sites").

Since the beginning of 2024, we have delivered data and performance-based customer acquisition services for over 400 consumer brands, direct marketers, and agencies across a wide range of industries, including Media & Entertainment, Financial Products & Services, Health & Life Sciences, Retail & Consumer, and Staffing & Recruitment.

We operate Commerce Media Solutions on partner sites and mobile apps where we embed our proprietary ad-serving technology to identify and acquire consumers for our advertiser clients.

Leveraging diverse ad inventory, robust first-party data, and proprietary machine learning, we unlock additional revenue streams for partners and empower advertisers to acquire their most valuable customers at scale.

We primarily perform customer acquisition services by operating highly scalable digital marketing campaigns, through which we connect our advertiser clients with targeted consumers.

We access these consumers through both our commerce media marketplace ("Commerce Media Solutions"), which delivers targeted advertising within e-commerce and digital media transaction flows on partner sites and mobile apps, and our owned and operated digital media properties ("O&O Sites").

Over the last twelve months, we provided data and performance-based customer acquisition services for over 300 consumer brands, direct marketers, and agencies across a wide range of industries, including Media & Entertainment, Financial Products & Services, Health & Life Sciences, Retail & Consumer, and Staffing & Recruitment.

We operate our Commerce Media Solutions on partner sites and mobile apps where we embed our proprietary ad-serving technology to identify and acquire consumers for our advertiser clients.

Our technology is integrated at key moments in the consumer experience to capitalize on high engagement and improve conversion;

for example, our post-transaction solution connects our advertisers to consumers on e-commerce websites and apps after a purchase or similar transaction.

These syndicated Commerce Media Solutions generate meaningful income for our media partners, while driving high-quality customer acquisition for our advertiser clients.

We sign agreements with our media partners with one to five year terms, typically remunerating them on a revenue share and/or impression basis.

We also attract consumers at scale to our O&O Sites primarily through promotional offers, through which consumers are rewarded for completing activities on our sites.

When registering on our sites, consumers provide their name, contact information, and opt-in permission for telemarketing and email marketing.

Commerce Media Solutions generates meaningful revenue for our media partners, while driving high-quality customer acquisition for our advertiser clients.

We enter into exclusive agreements with our media partners with one to five year terms, typically remunerating them on a revenue share and/or impression basis.

We also attract consumers at scale to our O&O Sites primarily through promotional offerings, through which consumers are rewarded for completing activities on our sites.

Upon registration, consumers provide their name, contact information, and opt-in consent for telemarketing and email marketing.

Over 90% of these users engage with our media on their mobile devices or tablets.

Once users have registered on our sites, we integrate our proprietary direct marketing technologies and analytics to engage them with surveys, polls, and other experiences, through which we learn about their lifestyles, preferences, and purchasing histories, among other matters.

Once users have registered, they are engaged through our proprietary direct marketing technologies and analytics with surveys, polls, and other experiences, through which we capture information about their lifestyles, preferences, and purchasing histories, among other attributes.

Based on these insights, we serve users targeted, relevant offers on behalf of our clients.

As new users register and engage with our sites and existing registrants re-engage, the enrichment of our database expands our addressable advertiser client base and improves the effectiveness of our performance-based campaigns.

As new users register and existing registrants re-engage, our database is enriched and improves the effectiveness of our performance-based campaigns, thus expanding our addressable advertiser client base.

Since our inception, we have amassed a large, proprietary database of first-party, self-declared user information and preferences.

We solicit our users' consent to be contacted by us and/or our advertisers via various contact methods including email, telephone, SMS/text, and push messaging.

We then leverage their self-declared data in our array of performance offerings primarily in two ways:

(1) to serve advertisements that we believe will be relevant to users based on the information they provide when they engage on our O&O Sites or other partner sites through our Commerce Media Solutions and (2) to provide our clients with users' contact information so that such clients may communicate with them directly.

We may also leverage our existing technology and database to drive non-core revenue streams, including utilization-based models ( e.g.

We solicit our users' consent to be contacted by us and/or our advertisers via various channels including email, telephone, SMS/text, and push messaging.

We leverage their self-declared data primarily in two ways:

(1) to serve advertisements we believe will be relevant to users based on the information they provide on our O&O Sites and our Commerce Media Solutions and (2) to provide our clients with users' contact information for direct outreach.

We may also leverage our technology and database to drive non-core revenue streams, including utilization-based models ( e.g.

, programmatic advertising).

Additionally, we operate a call center-supported performance marketplace ("Call Solutions") that provides live, call-based performance campaigns to help clients increase engagement.

The Call Solutions business serves clients across an array of industries but has had a heavy focus on the health insurance sector.

Additionally, we operated a call center-supported performance marketplace ("Call Solutions") that provided live, call-based performance campaigns to help clients increase engagement, which was divested through the sale of Winopoly, LLC on January 31, 2026.

Our Call Solutions business served clients across an array of industries but had a heavy focus on the health insurance sector.

Across our business, we generate revenue by delivering measurable marketing results to our clients.

We differentiate ourselves from other marketing alternatives by our ability to provide clients with a cost-effective and measurable return on advertising spend ("ROAS"), a measure of profitability of sales compared to the money spent on ads, and to manage highly targeted and highly fragmented online media sources.

We are predominantly paid on a negotiated or market-driven "per click," "per lead," or other "per action" basis that aligns with the customer acquisition cost targets of our clients.

For our O&O Sites and Call Solutions business, we bear the responsibility and cost of acquiring consumers from media partners that ultimately generate qualified clicks, leads, calls, app downloads, or customers for our clients.

We are predominantly compensated on a negotiated or market-driven "per click," "per lead," or other "per action" basis that aligns with the customer acquisition cost targets of our clients.

For our O&O Sites and our prior Call Solutions business, we bear the responsibility and cost of acquiring consumers from media partners that ultimately generate qualified clicks, leads, calls, app downloads, or customers for our clients.

Our Commerce Media Solutions business operates under exclusive long-term contracts with media partners that generally remunerate the partner on a revenue share basis.

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Through AdParlor, LLC ("AdParlor"), our wholly owned subsidiary, we conduct our non-core business, which offers advertiser clients a managed service for creator marketing and media buying on different social platforms.

Third Quarter Financial Summary

Three months ended September 30, 2025, compared to three months ended September 30, 2024:

Revenue decreased 27% to $47.0 million, compared to $64.5 million

Net loss was $7.6 million, or $0.27 per share, compared to net loss of $7.9 million or $0.48 per share

Gross profit (exclusive of depreciation and amortization) decreased 31% to $10.9 million, representing 23% of revenue for the three months ended September 30, 2025, from $15.7 million, representing 24% of revenue for the three months ended September 30, 2024

Media margin decreased 30% to $12.8 million, representing 27% of revenue for the three months ended September 30, 2025, from $18.2 million, representing 28% of revenue for the three months ended September 30, 2024

Adjusted EBITDA was negative $3.4 million, compared to negative $0.1 million

Adjusted net loss was $6.5 million, or $0.23 per share, compared to $3.7 million, or $0.22 per share

Nine months ended September 30, 2025, compared to nine months ended September 30, 2024:

Recent Developments

On March 17, 2024, Fluent, LLC, our wholly-owned subsidiary, entered into a junior secured promissory note (the "Note Payable") with Freedom Debt Relief, LLC ("FDR") in the principal amount of $2,000,000 in connection with the Amended Class Action Settlement Agreement dated May 31, 2023 by and between the parties to that certain Telephone Consumer Protection Act class action, Daniel Berman v.

Freedom Financial Network, originally filed in the Northern District of California in 2018.

The Note Payable accrued interest equal to one-month CME Term SOFR (defined as the rate published by the CME Group Benchmark Administration Limited) plus 11.0% per annum, compounded quarterly.

The opening interest rate of the Note Payable was 16.32% (SOFR + 11%), which changed and was 14.68% (SOFR + 11%) as of March 31, 2026.

The Note Payable was to mature on March 31, 2026 and interest was payable quarterly.

Scheduled principal amortization of the Note Payable was $250 per quarter.

On April 8, 2026, the final payment was made on the Note Payable.

First Quarter Financial Summary

Three months ended March 31, 2026, compared to three months ended March 31, 2025:

Revenue decreased 19% to $44.9 million, compared to $55.2 million

Net loss was $5.4 million, or $0.17 per share, compared to net loss of $8.3 million or $0.39 per share

Gross profit (exclusive of depreciation and amortization) decreased 31% to $32.6 million, representing 22% of revenue for the nine months ended September 30, 2025, from $46.9 million, representing 25% of revenue for the nine months ended September 30, 2024

Media margin decreased 31% to $38.5 million, representing 26% of revenue for the nine months ended September 30, 2025, from $56.0 million, representing 30% of revenue for the nine months ended September 30, 2024

Gross profit (exclusive of depreciation and amortization) decreased 12% to $10.0 million, representing 22% of revenue for the three months ended March 31, 2026, from $11.4 million, representing 21% of revenue for the three months ended March 31, 2025

Media margin increased 2% to $14.0 million, representing 31.2% of revenue for the three months ended March 31, 2026, from $13.7 million, representing 24.9% of revenue for the three months ended March 31, 2025

Adjusted EBITDA was negative $3.6 million, compared to negative $3.1 million

Adjusted net loss was $5.9 million, or $0.19 per share, compared to $6.7 million, or $0.31 per share

Media margin, adjusted EBITDA, and adjusted net income (loss) are non-GAAP financial measures.

Media margin, adjusted EBITDA, and adjusted net loss are non-GAAP financial measures.

See "Definitions, Reconciliations and Uses of Non-GAAP Financial Measures" below.

Trends Affecting our Business

Development, Acquisition and Retention of High-Quality Targeted Media Traffic

Our legacy O&O Sites business depends on identifying and accessing high quality media sources and on our ability to attract targeted users to our offers.

As our business grew, we attracted larger and more sophisticated advertiser clients to our marketplaces.

To further increase our value proposition to clients and to fortify our leadership position in the evolving regulatory landscape of our industry, we implemented a Traffic Quality Initiative ("TQI") in 2020 and established our Commerce Media Solutions business in 2023 to access more high-value consumers.

Sourcing high quality traffic will remain a focus and part of a broader initiative to improve customer acquisition for our clients.

Additionally, we have pursued strategic initiatives that enable us to grow revenue per consumer with existing user traffic volume by attracting users to our O&O Sites using email and SMS messages.

We have also focused on improved monetization of consumer traffic through improved customer relationship management that allows us to re-engage consumers who have registered on our O&O Sites.

Through these initiatives, our business has become less dependent on the volume of users to generate revenue growth.

We believe that significant value has been, and will continue to be, created by improving the quality of consumers driven to our advertiser clients' offers.

Better quality users lead to increased user participation rates and higher conversion rates for our clients, resulting in increased monetization, and ultimately increased revenue and media margin per consumer.

Media margin, a non-GAAP measure, is the portion of gross profit (exclusive of depreciation and amortization) reflecting variable costs paid for media and related expenses and excluding non-media cost of revenue.

Since 2022, however, we have experienced challenges acquiring and maintaining traffic volume to our O&O Sites, primarily due to the Federal Trade Commission ("FTC") inquiry and resulting Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order") that mandated that we tighten our standards for ad serving media sourcing.

This put us at a competitive disadvantage to our competitors in the performance marketing market.

Other factors that affected our traffic volume have included the volatility and attrition of affiliate supply sources, changes in search engine algorithms, social media pricing and policies, and email and text message blocking algorithms.

In response to these challenges, we have invested in strategic and internal efforts to secure additional traffic from the growing influencer sector and to expand our media network beyond our O&O Sites.

However, these efforts have not fully offset the decrease in revenue to our O&O Sites and increasing costs for acquiring that traffic, and as a result we have seen lower revenue and lower gross profit in our owned and operated business.

In 2023, we launched our Commerce Media Solutions business to access additional high-value consumers for our advertiser clients and help media owners and ecommerce businesses generate additional revenue from their existing consumer traffic.

Fluent’s Commerce Media Solutions embeds proprietary ad-serving technology in the post-action and post-transaction inventory on partner sites and mobile apps across a range of industries, including retail, ticketing, and quick-service restaurants.

In 2024, we served ads to over 100 million consumers in the post-action and post-transaction moment for top-tier publishers and brands.

These consumers are the highest intent consumers and drive significantly higher ROAS for our advertiser clients than those from our O&O Sites.

Because Commerce Media Solutions does not require us to source traffic to partner sites, it is not subject to the sourcing challenges that resulted from the FTC Consent Order.

The commerce media sector has experienced significant growth in recent years, driven by the expansion of e-commerce, increasing demand for privacy-compliant first-party data solutions, and the ability of media owners to generate incremental revenue from their existing consumer traffic.

According to McKinsey & Company, the commerce media market is expected to grow at a CAGR of 21% from 2023 to 2027 and reach a total market value of $100 billion by 2027.

These industry tailwinds, combined with the media supply challenges affecting our owned and operated business were the basis for the strategic shift to Commerce Media.

We launched Commerce Media Solutions in the first quarter of 2023 to access high-value consumers for our advertiser clients and help media owners and e-commerce businesses monetize their existing consumer traffic.

Commerce Media Solutions embeds proprietary ad-serving technology in the post-action and post-transaction inventory on partner sites and mobile apps across a range of industries, including retail, ticketing and quick service restaurants.

In 2025, we served ads to over 200 million consumers in the post-action and post-transaction moment for top-tier media owners and brands.

These consumers are among the highest-intent consumers in digital advertising and have driven significantly higher ROAS for our advertiser clients compared to other channels.

Because Commerce Media Solutions operates on media partner-owned inventory under exclusive long-term contracts, the business typically does not require us to source consumer traffic directly, resulting in a more predictable cost structure and reduced exposure to the media supply challenges that have affected our O&O Sites.

Since its launch, Commerce Media Solutions has delivered year-over-year revenue growth in every quarter.

For the quarter ended March 31, 2026, Commerce Media Solutions represented approximately 58% of consolidated revenue, compared to approximately 23% for the prior year period.

Based on current performance trends, we expect Commerce Media Solutions to represent a majority of consolidated revenue for the remainder of 2026 and continue to grow as we onboard additional media partners and expand into new verticals.

The mix and profitability of Commerce Media Solutions will be influenced by the pace of new partner onboarding, the terms of revenue share arrangements with media partners, and advertiser demand across the verticals we serve.

For the first quarter of 2026, we saw gross margin at a lower level for Commerce Media Solutions as we built up placements with new media partners, however, we expect gross margin to improve the remainder of 2026.

Our primary revenue channel has historically been our O&O Sites.

This business depends on our ability to identify and access high-quality media sources and attract targeted users to our offers.

As the business grew, we attracted larger and more sophisticated advertiser clients to our marketplaces.

In response to evolving client expectations, to increase our value proposition, and strengthen our compliance posture within the evolving regulatory landscape, we implemented various initiatives to improve traffic quality.

In recent years, however, we experienced challenges maintaining traffic volume to our O&O Sites due to changes in our ad serving and media sourcing standards following the Federal Trade Commission ("FTC") inquiry and subsequent Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order") filed by the FTC and the Company in the United States District Court for the Southern District of Florida on July 17, 2023, .

In response, we have taken steps to diversify our traffic sources and expand our ad network beyond our O&O Sites.

In addition, we have made a strategic transition to our Commerce Media Solutions business, which has not yet fully offset the decrease in revenue to our O&O Sites.

The mix and profitability of our media channels, strategies, and partners is likely to continue to be dynamic and reflect evolving market trends and the regulatory environment.

Trends & Seasonality

We deliver data and performance-based marketing executions to our clients across a wide range of industries, including Media & Entertainment, Financial Products & Services, Health & Life Sciences, Retail & Consumer, and Staffing & Recruitment.

In 2024 and the first nine months of 2025, both data and performance-based spend were challenged by general economic uncertainty, but revenue declined largely due to media supply challenges in our O&O Sites, an ongoing effect of the FTC Consent Order on our owned and operated business, and declines related to the divestiture of the Company's subscription business in May 2024 and the discontinuation of our Affordable Care Act business in September 2024.

For the full year ending December 31, 2025, we expect that the growth of our Commerce Media Solutions business will partially offset the aforementioned year-over-year revenue decline in our O&O Sites divested subscription business and discontinued Affordable Care Act business.

We continue to work with advertiser clients to define high performing consumer segments on both our O&O Sites and Commerce Media Solutions and strategically price paid conversions accordingly.

This initiative has helped clients drive higher ROAS and has driven increased spend from clients across the Media & Entertainment industry, which represents a large component of our revenue mix.

Our performance is subject to fluctuations related to seasonality and cyclicality in our clients' businesses and in media sources.

Specifically, our retail-specific media partners in our Commerce Media Solutions experience high seasonality based on fourth quarter consumer spending and our Call Solutions business benefits from Medicare open enrollment periods in the first and fourth quarters.

Other factors affecting our business may include macroeconomic conditions that impact the digital advertising industry, the various client verticals we serve, and general market conditions.

While we were not directly impacted by the changes to U.S.

tariff and trade policies, the third quarter of 2025 was characterized by continued media supply uncertainty in the O&O Sites marketplaces that has depressed gross profit in recent quarters.

To confront these headwinds, we have made continued progress in driving the adoption of Commerce Media Solutions among enterprise media partners during the current quarter and anticipate securing additional long-term contracts as the market continues to expand.

We observed an expansion in gross margin for Commerce Media Solutions in the third quarter of 2025 after experiencing contractions in each of the first and second quarters of 2025 as we ventured into placements beyond post-transaction and offered early-term contract incentives on some longer-term contracts.

The expansion of margin was driven by improved monetization of newer placements, and we expect that as we continue to move beyond early-term incentives, gross margin will improve in Commerce Media Solutions and lift consolidated gross margin over time.

We also continue to develop our ROAS program across additional segments of advertisers in an effort to gain additional allocations and pricing increases to help further improve our user monetization.

While we do believe that a prolonged period of economic downturn could negatively influence both our advertiser spend and our commerce media traffic volumes, conversely, we believe it would drive accelerated media partner adoption of our Commerce Media Solutions.

Revenue from our owned and operated business declined on a year-over-year basis and the Company continues to shift its focus toward scaling Commerce Media Solutions.

Consistent with this strategic transition, we are reallocating our resources to support the growth of Commerce Media Solutions and this long-term growth opportunity.

Our performance is subject to fluctuations related to seasonality and cyclicality in our clients' businesses and fluctuations in media sources.

Specifically, our retail specific media partners in our Commerce Media Solutions marketplace are highly seasonal based on fourth quarter consumer spending which can affect advertiser demand and campaign performance.

In addition, advertiser marketing budgets may fluctuate throughout the year based on seasonal spending patterns, economic conditions, and other factors, which can impact the timing and volume of advertising spend across our platform.

Other factors affecting our business may include macroeconomic conditions that impact the digital advertising industry, the various advertiser client verticals we serve, and general market conditions.

Business Practices & Compliance

We have continued to be affected by uncertain economic conditions and the impacts of the FTC Consent Order (as described in Note 10, Contingencies , in the notes to the consolidated financial statements) on our O&O Sites and programmatic advertising business.

The industry-leading compliance measures we implemented on our O&O Sites in response to such FTC Consent Order continue to negatively impact our revenues and gross profit.

We have continued to be affected by uncertain economic conditions and the impacts of the FTC Consent Order, as previously disclosed.

In response to the FTC Consent Order in 2023, we enhanced our compliance standards and processes across our O&O Sites and programmatic advertising business.

These changes have affected our ability to source traffic at historical levels and have contributed to declines in revenue and gross profit in these channels.

Current Economic Conditions

We are subject to risks and uncertainties caused by events with significant macroeconomic impacts.

Inflation, rising interest rates, the U.S.

government shutdown, recently imposed tariffs, and reduced consumer confidence have caused our clients and their customers to be cautious in their spending.

Inflation, rising interest rates, uncertainty regarding tariff policy, global hostilities, and reduced consumer confidence have caused our clients and their customers to be cautious in their spending.

The full impact of these macroeconomic events and the extent to which these macro factors may impact our business, financial condition, and results of operations in the future remains uncertain.

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Please see Item 1A.

Risk Factors in the 2024 Form 10-K —"Economic or political instability could adversely affect our business, financial condition, and results of operations," and "We are exposed to credit risks from our clients, and we may not be able to collect on amounts owed to us" for further discussion of the possible impact of unfavorable conditions on our business.

Risk Factors in the 2025 Form 10-K —"Economic or political instability could adversely affect our business, financial condition, and results of operations," and "We are exposed to credit risk from our clients, and we may not be able to collect on amounts owed to us" for further discussion of the possible impact of unfavorable conditions on our business.

Definitions, Reconciliations and Uses of Non-GAAP Financial Measures

We report the following non-GAAP measures:

Media margin is defined as that portion of gross profit (exclusive of depreciation and amortization) reflecting variable costs paid for media and related expenses and excluding non-media cost of revenue.

Gross profit (exclusive of depreciation and amortization) represents revenue minus cost of revenue (exclusive of depreciation and amortization).

Media margin is also presented as a percentage of revenue.

Adjusted EBITDA is defined as net income (loss), excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) share-based compensation expense, (5) loss on early extinguishment of debt, (6) goodwill impairment, (7) impairment of intangible assets, (8) fair value adjustment of Convertible Notes with related parties (see Note 4, Long-term debt, net ), (9) acquisition-related costs, (10) restructuring and other severance costs, and (11) certain litigation and other related costs.

Adjusted net income (loss) is defined as net income (loss), excluding (1) share-based compensation expense, (2) loss on early extinguishment of debt, (3) goodwill impairment, (4) impairment of intangible assets, (5) fair value adjustment of Convertible Notes with related parties, (6) acquisition-related costs, (7) restructuring and other severance costs, and (8) certain litigation and other related costs.

Adjusted EBITDA is defined as net income (loss), excluding (1) income taxes, (2) interest expense, net, (3) depreciation and amortization, (4) share-based compensation expense, (5) loss on early extinguishment of debt, (6) loss on disposal of assets, (7) goodwill impairment, (8) impairment of intangible assets, (9) fair value adjustment of Convertible Notes with related parties (see Note 4, Debt, net ), (10) acquisition-related costs, (11) restructuring and other severance costs, (12) certain litigation and other related costs, and (13) other one-time items.

Adjusted net income (loss) is defined as net income (loss), excluding (1) share-based compensation expense, (2) loss on early extinguishment of debt, (3) loss on disposal of assets, (4) goodwill impairment, (5) impairment of intangible assets, (6) fair value adjustment of Convertible Notes with related parties (see Note 4, Debt, net ), (7) acquisition-related costs, (8) restructuring and other severance costs, (9) certain litigation and other related costs, and (10) other one-time items.

Adjusted net income (loss) is also presented on a per share (basic and diluted) basis.

Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization) for the three and nine months ended September 30, 2025 and 2024, which we believe is the most directly comparable U.S.

We consider items one-time in nature if they are non-recurring, infrequent or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules.

Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization) for the three months ended March 31, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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Represents the portion of cost of revenue (exclusive of depreciation and amortization) not attributable to variable costs paid for media and related expenses.

Below is a reconciliation of adjusted EBITDA from net loss for the three and nine months ended September 30, 2025 and 2024, which we believe is the most directly comparable U.S.

Below is a reconciliation of adjusted EBITDA from net loss for the three months ended March 31, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Income tax (benefit) expense

Income tax expense

Interest expense, net

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Share-based compensation expense

Loss on early extinguishment of debt

Goodwill impairment

Impairment of intangible assets

Loss (gain) on disposal of property and equipment

Loss on disposal of assets

Fair value adjustment of Convertible Notes with related parties

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Restructuring and other severance costs

Certain litigation and other related costs

Adjusted EBITDA

Balance includes write-off of intangibles and prepaid expense related to the write-off of TAPP Influencers Corp.

("TAPP") in May 2025 (refer to Note 11, Variable interest entity in the notes to our consolidated financial statements included in this Form 10-Q) in the amount of $698 for the nine months ended September 30, 2025.

Balance includes gain on the conveyance of the membership interest of Winopoly in January 2026 of $2,352 (refer to Note 12, Divestiture in the notes to our consolidated financial statements included in this Form 10-Q).

Balance also includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations;

earn-out expenses were in the amount of ($20) and $30 for the three months ended September 30, 2025 and 2024, respectively, and ($148) and $167 for the nine months ended September 30, 2025 and 2024, respectively, while non-compete agreements were in the amount of $0 and $413 for the three months ended September 30, 2025 and 2024, respectively, and $412 and $1,238 for the nine months ended September 30, 2025 and 2024, respectively;

there were other amounts of acquisition-related costs of $112 and ($155) for the nine months ended September 30, 2025 and 2024, respectively.

Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the three and nine months ended September 30, 2025 and 2024, which we believe is the most directly comparable U.S.

earn-out expenses were in the amount of $0 and ($119) for the three months ended March 31, 2026 and 2025, respectively, while non-compete agreements were in the amount of $0 and $0 for the three months ended March 31, 2026 and 2025, respectively.

Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the three months ended March 31, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except share and per share data)

Share-based compensation expense

Loss on early extinguishment of debt

Goodwill impairment

Impairment of intangible assets

Loss on disposal of assets

Fair value adjustment of Convertible Notes with related parties

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Restructuring and other severance costs

Certain litigation and other related costs

Adjusted net loss

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Weighted average number of shares outstanding:

Balance includes write-off of intangibles and prepaid expense related to the write-off of TAPP Influencers Corp.

Balance also includes compensation expense related to non-compete agreements and earn-out expense incurred as a result of business combinations;

there were other amounts of acquisition-related costs of $112 and ($155) for the nine months ended September 30, 2025 and 2024, respectively.

We present media margin, media margin as a percentage of revenue, adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per share as supplemental measures of our financial and operating performance because we believe they provide useful information to investors.

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These adjustments include certain litigation and other related costs associated with legal matters outside the ordinary course of business, including costs and accruals related to matters as described below (see Note 10, Contingencies , in the notes to the consolidated financial statements).

We consider items one-time in nature if they are non-recurring, infrequent, or unusual and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules.

Adjusted net income (loss), as defined above, and the related measure of adjusted net income (loss) per share exclude certain items that are recognized and recorded under U.S.

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The way we measure media margin, adjusted EBITDA, and adjusted net income (loss) may not be comparable to similarly titled measures presented by other companies and may not be identical to corresponding measures used in our various agreements.

Comparison of Our Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

Nine Months Ended September 30,

Comparison of Our Results of Operations for the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

(In thousands)

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, revenue was comprised of O&O Sites of $20.7 million and $43.5 million, Commerce Media Solutions of $18.8 million and $10.4 million, and other streams of $7.5 million and $10.6 million, respectively.

The decrease in O&O Sites revenue was primarily attributable to a decrease in media supply resulting from business practices enacted to comply with the FTC Consent Order that challenge our ability to maintain consistent volume on social media platforms.

The decline in traffic drove a reduction in ad spend from key clients in the Media & Entertainment and Staffing & Recruitment sectors.

Partially offsetting that decline, our Commerce Media Solutions business continued to add long-term contracts with new media partners which increased revenue from advertiser clients in the Media & Entertainment and Financial Products & Services sectors.

Within our other streams, we experienced a decrease related to the Call Solutions business primarily due to shift in the business’s supply sourcing strategy and the cessation of our Affordable Care Act ("ACA") business in the third quarter of 2024.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, revenue was comprised of O&O Sites of $73.2 million and $130.2 million, Commerce Media Solutions of $47.5 million and $24.0 million, and other streams of $26.2 million and $35.0 million, respectively.

The decline in traffic drove a reduction in ad spend from key clients in the Media & Entertainment and Staffing & Recruitment sectors.

Within our other streams, we experienced a decrease related to the True North business we exited in the second quarter of 2024, the cessation of our ACA business in the third quarter of 2024 and the loss of a key retail customer of the AdParlor business in the third quarter of 2024.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, revenue was comprised of owned and operated of $15.7 million and $31.1 million, Commerce Media Solutions of $25.9 million and $12.7 million, and other streams of $3.3 million and $11.4 million, respectively.

The decrease in owned and operated marketplaces revenue was primarily driven by the ongoing strategic transition of our business, as we continue to reallocate resources and advertiser demand to scaling Commerce Media Solutions.

Consistent with this transition, our Commerce Media Solutions business added long-term contracts with new media partners which drove up revenue from advertiser clients in the Media & Entertainment and Retail & Consumer sectors aligned with our continued focus on growing this revenue stream.

Within our other streams, the decrease was related to the divestiture of our Call Solutions business as of January 31, 2026.

Cost of revenue (exclusive of depreciation and amortization)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Cost of revenue (exclusive of depreciation and amortization)

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, cost of revenue (exclusive of depreciation and amortization) consisted mainly of O&O Sites media and related fulfillment costs of $16.7 million and $34.7 million, Commerce Media Solutions media and related costs of $14.7 million and $7.1 million, and media enablement and other indirect costs related to our other revenue streams of $4.8 million and $7.1 million, respectively.

Our O&O Sites cost of revenue (exclusive of depreciation and amortization) primarily consists of media and related costs associated with acquiring traffic from third-party publishers, digital media platforms, and influencers for our O&O Sites, fulfillment costs related to rewards earned by consumers, and associated hosting costs.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media related to business practices enacted to comply with the FTC Consent Order.

Such costs increased as a percentage of revenue.

Commerce Media Solutions cost of revenue consists of fees and revenue share payments made to media partners for ad inventory on their digital properties and associated hosting costs.

Commerce Media Solutions media partners are generally remunerated on a per impression or revenue share basis, leading to higher and more predictable profitability.

The increase in cost of revenue (exclusive of depreciation and amortization) in Commerce Media Solutions was driven by increased revenue share payments generated from impressions from new media partners added over the period.

Cost of revenue (exclusive of depreciation and amortization) for Commerce Media Solutions increased as a percentage of revenue, due to the growth of certain lower margin commerce media placements and renegotiation of a key media partner agreement.

The decrease in cost of revenue (exclusive of depreciation and amortization) for other revenue streams, including media costs, enablement costs and tracking costs related to our consumer data associated with our call centers, was attributable to a decreased cost of media related to the modified supply strategy for our Call Solutions business and the cessation of our ACA business in the third quarter of 2024.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams decreased materially as a percentage of revenue largely related to the aforementioned exit from the ACA business.

For the three months ended September 30, 2025, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 77% compared to 76% for the three months ended September 30, 2024.

The increase was primarily driven by the aforementioned reasons and shifts in revenue mix related to the discontinuation of certain businesses in 2024.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, cost of revenue (exclusive of depreciation and amortization) consisted mainly of O&O Sites media and related fulfillment costs of $58.2 million and $103.2 million, Commerce Media Solutions media and related costs of $37.8 million and $17.0 million, and media enablement and other indirect costs related to our other revenue streams of $18.4 million and $22.1 million, respectively.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media related to business practices enacted to comply with the FTC Consent Order.

Such costs increased as a percentage of revenue.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, cost of revenue (exclusive of depreciation and amortization) consisted mainly of O&O Sites media and related costs of $12.5 million and $24.8 million, Commerce Media Solutions media and related costs of $20.9 million and $9.8 million, and media enablement and other indirect costs related to our other revenue streams of $1.4 million and $9.2 million, respectively.

Our O&O Sites cost of revenue (exclusive of depreciation and amortization) primarily consists of media and related costs associated with acquiring traffic from third-party publishers, digital media platforms, influencers for our O&O Sites, fulfillment costs related to rewards earned by consumers, and web hosting costs.

The decrease in O&O Sites media cost was largely attributable to the challenges in acquiring media related to business practices following the FTC Consent Order.

Such costs remained consistent as a percentage of revenue.

Commerce Media Solutions cost of revenue consists of fees and revenue share payments made to media partners for ad inventory on their digital properties, web hosting costs, and fulfillment costs related to incentives earned by consumers.

The decrease in cost of revenue (exclusive of depreciation and amortization) for other revenue streams, including media costs, enablement costs, and tracking costs related to our consumer data associated with our call centers, was attributable to our exit from the True North business in the second quarter of 2024 and cessation of our ACA business in the third quarter of 2024, partly offset by an increase in the cost of acquiring media for our Call Solutions business in the first quarter of 2025 due to increased market demand in anticipation of regulations that were expected to go into effect during the quarter.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams increased materially as a percentage of revenue.

For the nine months ended September 30, 2025, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue increased to 78% compared to 75% for the nine months ended September 30, 2024.

The increase was primarily driven by the aforementioned reasons and shifts in revenue mix related to the discontinuation of certain businesses in 2024.

The decrease in cost of revenue (exclusive of depreciation and amortization) for other revenue streams, which includes media costs, enablement costs and tracking costs related to our consumer data associated with our call centers, was attributable to the decreased cost of media related to the Call Solutions that was divested on January 31, 2026.

Cost of revenue (exclusive of depreciation and amortization) for other revenue streams decreased materially as a percentage of revenue largely related to the divestiture of Call Solutions.

For the three months ended March 31, 2026, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue decreased to 78% compared to 79% for the three months ended March 31, 2025.

The change was primarily driven by the aforementioned reasons and shifts in revenue mix.

In the normal course of executing paid media campaigns to source consumer traffic for our O&O Sites, we regularly evaluate new channels, strategies, and partners.

For the nine months ended September 30, 2025, O&O Sites digital media spend continued to be a mix of affiliate traffic, paid media from major digital platforms, influencer activations, and inventory from strategic media partners.

Traffic acquisition costs incurred with the major digital media platforms have historically been higher than affiliate traffic sources and the mix and profitability of our media channels, strategies, and partners reflect evolving market dynamics and the increased compliance obligations from the FTC Consent Order.

As we evaluate and scale new media channels, strategies, and partners, we may determine that certain sources initially able to provide us profitable quality traffic may not be able to maintain our quality standards over time, and we may need to discontinue, or modify the practices of, such sources, which could reduce profitability further.

Although past levels of cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue are not indicative of future percentages in the O&O Sites and Call Solutions businesses, we expect revenue share agreements in Commerce Media Solutions to create more gross margin stability in the long-term.

As we perform that evaluation, we may determine that certain sources initially able to provide us profitable quality traffic may not be able to maintain our quality standards over time, and we may need to discontinue, or modify the practices of, such sources, which could reduce profitability further.

Sales and marketing

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Sales and marketing

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, sales and marketing expenses consisted mainly of employee salaries and benefits of $2.7 million and $3.3 million, restructuring and severance costs of $0.1 million and $0.2 million, advertising costs of $0.3 million and $0.2 million, and professional fees of $0.2 million and $0.1 million, respectively.

The decrease was primarily due to lower salaries and other employee-related costs driven by a decline in headcount, along with the decrease in restructuring and severance costs in the current year period.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, sales and marketing expenses consisted mainly of employee salaries and benefits of $8.4 million and $11.3 million, restructuring and severance costs of $0.5 million and $0.6 million, advertising costs of $0.8 million and $0.4 million, and professional fees of $0.4 million and $0.4 million, respectively.

The decrease was primarily due to lower salaries and other employee-related costs driven by a decline in headcount, partly offset by an increase in advertising costs due to increased spend on conferences as the Company further invests in the growth of Commerce Media Solutions.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, sales and marketing expenses consisted mainly of employee salaries and benefits of $2.6 million and $3.1 million, advertising costs of $0.5 million and $0.3 million, professional fees of $0.2 million and $0.1 million, and severance costs of $0.1 million and $0.4 million, respectively.

The decrease was primarily due to lower salaries and other employee-related costs driven by a decline in headcount and a decline in restructuring and severance costs in the current year period, partly offset by the increase in advertising costs driven by the increase in fees to attend conferences and seminars to grow Commerce Media Solutions.

Product development

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Product development

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, product development expenses consisted mainly of salaries and benefits of $1.9 million and $3.1 million, professional fees of $0.1 million and $0.4 million, software license and maintenance costs of $0.4 million and $0.3 million, and restructuring and severance costs of $0.1 million and $0.1 million, respectively.

The decrease was primarily due to a decline in salaries driven by lower headcount and lower spend on IT-related vendors, along with the decrease in restructuring and severance costs in the current year period due to the timing of the reductions in product development workforce.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, product development expenses consisted mainly of salaries and benefits of $6.2 million and $9.8 million, professional fees of $1.0 million and $1.4 million, software license and maintenance costs of $1.1 million and $1.2 million, and restructuring and severance costs of $0.2 million and $0.7 million, respectively.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, product development expenses consisted mainly of salaries and benefits of $1.9 million and $2.3 million, software license and maintenance costs of $0.3 million and $0.4 million, and professional fees of $0.2 million and $0.5 million, respectively.

The decrease was primarily due to a decline in salaries driven by lower headcount and lower spend on IT-related vendors.

General and administrative

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

General and administrative

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, general and administrative expenses consisted mainly of employee salaries and benefits of $3.6 million and $3.9 million, professional fees of $2.2 million and $1.5 million, office overhead of $0.7 million and $1.1 million, software license and maintenance costs of $0.8 million and $0.8 million, restructuring and severance costs of $0.5 million and $0.2 million, non-cash share-based compensation expense of $0.3 million and $0.4 million, provision for bad debt of $0.0 million and $0.3 million, and acquisition-related costs of $0.0 million and $0.4 million, respectively.

General and administrative expenses decreased primarily due to lower provision for bad debt, lower office overhead and lower acquisition related costs, partially offset by higher professional fees due to higher restructuring and severance costs.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, general and administrative expenses consisted mainly of employee salaries and benefits of $10.6 million and $12.8 million, professional fees of $4.9 million and $4.9 million, office overhead of $2.9 million and $3.1 million, software license and maintenance costs of $2.4 million and $2.3 million, restructuring and severance costs of $1.3 million and $0.6 million, non-cash share-based compensation expense of $0.8 million and $1.1 million, acquisition-related costs of $1.1 million and $1.2 million, provision for bad debt of $0.0 and $0.4 million, and certain litigation and related costs of $0.3 million and $0.0 million, respectively.

General and administrative expenses decreased primarily due to lower salary and benefits from reduced headcount, lower provision for bad debt, and decreased share-based compensation from fewer grants.

This was partially offset by higher restructuring and severance costs due to timing of the reduction in workforce, as described below, and higher litigation and related costs incurred in the current period.

In each of the first three quarters of 2024 and the first quarter of 2025, we reduced our workforce by 20, 19, 29, and 24 employees, respectively, to better align resources with our strategic initiatives.

In connection with the first quarter 2024 reductions, we incurred $0.7 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, fully settled in cash by September 30, 2024.

In connection with the second quarter 2024 reductions, we incurred $0.6 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, fully settled in cash by December 31, 2024.

In connection with the third quarter 2024 reductions, we incurred $0.5 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, fully settled in cash by March 15, 2025.

In connection with the first quarter of 2025 reductions, we incurred $1.3 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, to be fully settled in cash by March 31, 2026.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, general and administrative expenses consisted mainly of employee salaries and benefits of $3.8 million and $3.5 million, professional fees of $1.3 million and $1.6 million, office overhead of $0.8 million and $1.0 million, software license and maintenance costs of $0.8 million and $0.9 million, restructuring and severance costs of $0.1 million and $0.8 million, non-cash share-based compensation expense of $0.5 million and $0.3 million, and acquisition-related costs of ($2.4) million and ($0.1) million, respectively.

General and administrative expenses decreased primarily due to the non-cash gain on the divestiture of Call Solutions in the current year period, along with lower professional fees and restructuring and severance costs, partially offset by an increase in headcount and related share-based compensation expense.

In each of the first and fourth quarters of 2025, we reduced our workforce by 24 and 9 employees, respectively, to better align resources with our strategic initiatives.

In connection with the reductions in the first quarter of 2025, we incurred $1.3 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs, which were fully settled in cash by March 31, 2026.

In connection with the reductions in the fourth quarter of 2025, we incurred $0.1 million in exit-related restructuring costs, consisting primarily of one-time termination benefits and associated costs which were fully settled in cash by December 31, 2025.

Apart from these exit-related restructuring costs, these reductions in workforce have resulted in corresponding reductions in future salary and benefits within sales and marketing, product development, and general and administrative expenses.

Depreciation and amortization

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Depreciation and amortization

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

Depreciation and amortization costs were relatively consistent compared to the prior period.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

Depreciation and amortization costs were relatively consistent compared to the prior period.

Goodwill impairment and write-off of intangible assets

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

The decrease in depreciation and amortization costs was due to the overall decline in intangibles due to cessation or sales of businesses, along with full amortization on certain intangibles since the prior period.

Loss on disposal of assets

Three Months Ended March 31,

(In thousands)

Goodwill impairment and impairment of intangible assets

During the nine months ended September 30, 2024, we recognized a $1.3 million goodwill impairment related to the All Other reporting unit and a $1.0 million impairment of our software developed for internal use related to the Fluent reporting unit and customer relationships related to the All Other reporting unit, compared to no impairment in the 2025 periods.

Loss on disposal of assets

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

The change in the loss of disposal of assets was due to minimal activity in the current year, with no activity in the prior year.

Interest expense, net

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Interest expense, net

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

The decrease in interest expense was driven by lower average outstanding balances and lower interest rates on the SLR Credit Facility.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

The decrease in interest expense was driven by lower average outstanding balances and lower interest rates on the SLR Credit Facility.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

The decrease in interest expense was driven by lower average outstanding balances in our debt as well as lower amortization fees associated with the Financing Agreement (as defined herein).

Fair value adjustment of Convertible Notes with related parties

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Fair value adjustment of Convertible Notes with related parties

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

The Company recognized $ (554) and $ (2,810) for the three months ended September 30, 2025 and 2024, respectively, of an unrealized loss related to the fair value of Convertible Notes entered into in the prior period.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

The Company recognized $ (156) and $ (2,810) for the nine months ended September 30, 2025 and 2024, respectively, of an unrealized loss related to the fair value of Convertible Notes entered into in the prior period.

Loss on early extinguishment of debt

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

Loss on early extinguishment of debt

In the nine months ended September 30, 2024, we recognized a $1.0 million loss on early extinguishment of debt related to the Citizens Bank credit agreement in the 2024 period, compared to no loss on debt extinguishment in the 2025 periods.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

The change in the fair value adjustment of Convertible Notes with related parties was driven by the fair value calculation inputs, including discount rate and stock price.

Loss before income taxes

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Loss before income taxes

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

The decrease in loss before income taxes of $0.4 million was primarily driven by the decrease in revenue of $17.5 million over the prior year period, offset by a decline in cost of revenue of $12.7 million, a decrease in operating expenses of $2.5 million, a decrease of $2.3 million unrealized loss for the fair value adjustment of the convertible notes and the decrease in interest expense of $0.6 million.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

The decrease in loss before income taxes of $2.8 million was primarily due to a decrease in revenue of $42.3 million over the prior year period offset by a decline in cost of revenue of $28.0 million, a decline in operating expenses of $9.9 million, along with a $2.6 million decline related to the unrealized loss for the fair value adjustment of the convertible notes, $2.2 million decline in impairment loss, $1.4 million decline in interest expense and a $1.0 million decline on the early extinguishment of debt.

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

The decrease in loss before income taxes of $2.7 million was a result of the foregoing.

Income tax benefit (expense)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Income tax benefit (expense)

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025, the effective income tax rate of 0.2% differed from the statutory federal income tax rate of 21%, primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

For the three months ended September 30, 2024, the Company's effective income tax rate of 0.4% differed from the statutory federal income tax rate of 21% primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, the effective income tax rate of 0.5% and 0.4%, respectively, differed from the statutory federal income tax rate of 21%, primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

As of September 30, 2025 and 2024, the Company recorded full valuation allowances against its net deferred tax assets.

The Company intends to maintain full valuation allowances against the net deferred tax assets until there is sufficient evidence to support the release of all or some portion of such valuation allowances.

Income tax expense

Three months ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026, the effective income tax rate of 0.0% differed from the statutory federal income tax rate of 21%, primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

For the three months ended March 31, 2025, the Company's effective income tax rate of 2.9% differed from the statutory federal income tax rate of 21% primarily due to state and local tax expense and losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

As of March 31, 2026 and 2025, we recorded full valuation allowances against our U.S.

net deferred tax assets.

We intend to continue maintaining a full valuation allowance on our U.S.

net deferred tax assets until there is sufficient evidence to support the release of all or some portion of the allowance.

Release of some or all of the valuation allowance would result in the recognition of certain deferred tax assets and an increase in deferred tax benefit for any period in which such a release may be recorded;

however, the exact timing and amount of any valuation allowance release are subject to change depending upon the level of profitability that the Company is able to achieve and the net deferred tax assets available.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

T hree m onths ended September 30, 2025 compared to the three months ended September 30, 2024

For the three months ended September 30, 2025 and 2024, net loss was $7.6 million and $7.9 million, respectively, as a result of the foregoing.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

For the nine months ended September 30, 2025 and 2024, net loss was $23.0 million and $25.8 million, respectively, as a result of the foregoing.

T hree m onths ended March 31, 2026 compared to the three months ended March 31, 2025

For the three months ended March 31, 2026 and 2025, net loss was $5.4 million and $8.3 million, respectively, as a result of the foregoing.

Liquidity and Capital Resources

Cash used in operating activities .

For the nine months ended September 30, 2025, net cash used in operating activities was $4.3 million, compared to net cash used in operating activities of $12.0 million for the nine months ended September 30, 2024.

Cash provided by operating activities .

For the three months ended March 31, 2026, net cash provided by operating activities was $5.1 million, compared to net cash provided by operating activities of $2.1 million for the three months ended March 31, 2025.

Net loss in the current year period of $5.4 million represents an improvement of $2.9 million, compared with net loss of $8.3 million in the prior period.

Adjustments to reconcile net loss to net cash used in operating activities of $10.0 million in the current year period decreased by $6.4 million, compared with net cash used in operating activities of $16.4 million in the prior period, primarily due to a goodwill impairment of $1.3 million, impairment of intangible assets of $1.0 million, and a loss on early extinguishment of debt of $1.0 million in the prior period that did not occur in the current year period, a change in fair value adjustment of Convertible Notes with related parties of $2.7 million compared to the prior year period, and lower amortization of debt and share-based compensation expense in the current year period compared to prior year period, partially offset by a non-cash loss on asset write-off of $0.7 million in the current year period.

Changes in assets and liabilities generated cash of $8.8 million in the current year period, compared with consuming cash of $2.5 million in the prior period, primarily due to ordinary-course changes in working capital, largely involving the timing of receipt of amounts owing from clients and disbursements of amounts payable to vendors.

Adjustments to reconcile net loss to net cash provided by operating activities of $1.2 million in the current year period decreased by $1.8 million, compared with net cash provided by operating activities of $3.0 million in the prior period.

The decrease was primarily due to a $2.4 million non-cash gain on divestiture and lower depreciation and amortization, partly offset by the change in fair value adjustment of Convertible Notes with related parties of $0.8 million and increased share-based compensation expense.

Changes in assets and liabilities generated cash of $9.3 million in the current year period, compared with generated cash of $7.3 million in the prior period, primarily due to ordinary-course changes in working capital, largely involving the timing of receipt of amounts owing from clients and disbursements of amounts payable to vendors.

Cash used in investing activities .

For the nine months ended September 30, 2025 and 2024, net cash used in investing activities was $4.9 million and $4.7 million, respectively.

The increase was primarily due to an increase in investment in capitalized software in the current year period.

Cash provided by financing activities.

For the nine months ended September 30, 2025, net cash provided by financing activities was $8.4 million, compared to $8.7 million for the nine months ended September 30, 2024.

As of September 30, 2025, we had noncancelable operating lease commitments of $3.9 million and long-term debt with a $25.7 million principal balance.

As of September 30, 2025, we had cash, cash equivalents, and restricted cash of $10.0 million, a decrease of $0.7 million from $10.7 million as of December 31, 2024.

For the three months ended March 31, 2026 and 2025, net cash used in investing activities was $1.5 million and $1.6 million, respectively.

The change was primarily due to payments received on the note receivable related to the Winopoly divestiture in the current year period.

Cash used in financing activities.

For the three months ended March 31, 2026, net cash used in financing activities was $6.3 million, compared to $5.2 million for the three months ended March 31, 2025.

This was mainly due to the net repayments of $6.3 million on the Financing Agreement in the current year, compared to the net repayments of $10.0 million on the term loan and revolving credit facility entered into on April 2, 2024 with Crystal Financial LLC d/b/a SLR Credit Solutions, as administrative agent (the "SLR Credit Facility"), partly offset by proceeds received in the prior year period from the issuance of pre-funded warrants.

As of March 31, 2026, we had noncancelable operating lease commitments of $3.4 million and debt with a $26.8 million principal balance.

As of March 31, 2026, we had cash, cash equivalents, and restricted cash of $11.0 million, a decrease of $2.6 million from $13.6 million as of December 31, 2025.

Going concern

As of September 30, 2025, the Company was in compliance with its financial covenants under the SLR Credit Agreement.

Although the financial covenants under the SLR Credit Agreement were reset in the third quarter of 2025 based on the Company’s twelve month projections, the Company has not met its projection for certain recent quarters.

If during any future quarter the Company does not comply with any of its financial covenants, such non-compliance would result in default and therefore give SLR the right to accelerate maturities.

In such case, the Company would not have sufficient funds to repay the borrowings under the SLR Credit Agreement.

As a result of the foregoing, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern for one year after the date of issuance of this Quarterly Report on Form 10-Q.

Workforce reductions and divestitures

Given the continued challenges we have faced achieving profitability, we have made reductions in workforce, including during the first quarter of 2025 and will continue to further consider cost reduction measures and focus resources on opportunities that will enable us to meet our projected budget and cash flow requirements.

Additionally, we have restructured certain long-term contracts to better align with our results and needs.

We will continue to review additional other business units to determine the impact of potential divestments.

With the continuing difficulties in sourcing traffic for our O&O Sites, we have shifted our strategic focus toward scaling our Commerce Media Solutions business.

While Commerce Media Solutions has demonstrated growth and operates under a different economic model that reduces exposure to certain media sourcing risks, it represents a relatively new and evolving component of our business.

Further, the success of the Commerce Media Solutions transition depends on our ability to continue to onboard and retain media partners, achieve favorable economics under long-term agreements, and maintain advertiser demand, and there can be no assurance that this strategy will be successful.

Since entering into the Financing Agreement (as defined and discussed below), we have continued to receive advances, as needed, on our eligible account receivables.

However, the facility remains uncommitted, with the advances typically due within 120-days, leading to its classification as short-term.

Although Bay View (as defined herein) has indicated in writing its intention, absent an event of default, to continue purchasing eligible receivables in the ordinary course, and has made advances since the facility was entered into, such funding remains subject to the discretion of Bay View and the terms and conditions of the Financing Agreement.

If availability under the facility were reduced or if Bay View were to cease advances, we could have insufficient funds to support our operations and meet our obligations as they come due unless we found another lender or purchaser of our receivables.

Based upon the foregoing, management concluded that there is substantial doubt about our ability to continue as a going concern.

Based on our forecast, management expects to have sufficient liquidity over the next twelve months from the date of filing.

However, we have a history of not meeting our forecast and any substantial deviations from such forecasts could adversely affect our liquidity and ability to access funding.

In addition, we completed our procedures as it relates to the At-The-Market Issuance Sales Agreement (the “ATM Agreement”), which will allow us to offer and sell up to $11.2 million shares of our common stock.

Our ability to raise capital under this program, or through other financing sources, is subject to market conditions and other factors and may be limited or unavailable at acceptable terms, if at all.

Although management believes its current plans will be sufficient and we will maintain access to the Bay View facility, there is no guarantee such plans will be successful or have the expected benefit.

As such, management has concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date of issuance of this Quarterly Report on Form 10-Q.

Capital resources and cash requirements

Our sources of capital include cash on hand, cash from operations to the extent available and borrowings from the SLR Credit Facility (as defined below) to the extent available.

Our sources of capital include cash on hand, cash from operations to the extent available and borrowings from the Financing Agreement (as defined below) to the extent available.

We have no other committed sources of capital.

Our material cash requirements from known contractual and other obligations consist of our term loan and obligations under operating leases for office space.

For more information regarding our SLR Credit Facility, refer to Note 4, Long-term debt, net , in the notes to our consolidated financial statements included in this Form 10-Q.

Our future cash requirements will depend on many factors, including changes in cash flows from our O&O Sites, employee-related expenditures, costs to support the growth in our client and partner accounts and continued client expansion of the Commerce Media Solutions business, and the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions, features, and functionality.

For more information regarding our Financing Agreement, refer to Note 4, Debt, net , in the notes to our consolidated financial statements included in this Form 10-Q.

Our future cash requirements will depend on many factors, including employee-related expenditures from expansion of our headcount, costs to support the growth in our client and partner accounts and continued client expansion, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced solutions, features, and functionality, and litigation.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights.

In order to finance such acquisitions or investments, it may be necessary for us to raise additional funds through public or private financings or draw upon our revolving facility.

If we do not meet the conditions to draw, or additional financing is not accessible from outside sources, we may not be able to raise additional capital on terms acceptable to us, or at all.

In order to finance such acquisitions or investments, it may be necessary for us to raise additional funds through public or private financings or draw upon our facility.

In the past, we have been able to secure funding from our officers, directors and the largest stockholder of our Company and have entered into an At-the-Market Issuance Sales Agreement to offer and sell our shares of common stock.

However, if we do not meet the conditions to draw on the facility, or additional financing is not accessible from outside sources, we may not be able to raise additional capital on terms acceptable to us, or at all.

If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected.

SLR Credit Agreement

On April 2, 2024, Fluent, LLC, as Borrower, entered into a credit agreement (as amended, the "SLR Credit Agreement") with the Company and certain subsidiaries of the Borrower as guarantors, Crystal Financial LLC d/b/a SLR Credit Solutions, as administrative agent, lead arranger and bookrunner ("SLR"), and the lenders from time to time party thereto.

The SLR Credit Agreement provides for a $20.0 million term loan (the "SLR Term Loan") and a revolving credit facility of up to $30.0 million (the "SLR Revolver" and, together with the SLR Term Loan, the "SLR Credit Facility").

We used a portion of the net proceeds of the SLR Credit Facility to repay our then-outstanding obligations under the Citizens Credit Agreement dated March 31, 2021, prior to its maturity.

As of September 30, 2025, the SLR Credit Facility had an outstanding principal balance of $22.6 million (none of which related to the SLR Revolver) and matures on April 2, 2029 (the "Maturity Date").

The SLR Credit Facility is secured by substantially all of our assets and those of certain of our direct and indirect subsidiaries, including Fluent, LLC.

The SLR Credit Agreement contains restrictive covenants which impose limitations on the way we conduct our business, including, limitations on the amount of additional debt we are able to incur and on our ability to make certain investments or to pay dividends or other restricted payments.

The SLR Credit Agreement also contains certain affirmative covenants and customary events of default provisions, including, subject to grace periods, payment default, covenant default and judgment default.

We may voluntarily prepay the SLR Term Loan, in whole or in part, at any time, subject to a premium payable on the aggregate principal amount of any such voluntary prepayments within the first three years following the closing date.

There is no principal amortization prior to maturity under the SLR Credit Agreement, except for certain mandatory prepayments to be made with the net cash proceeds of certain asset sales, casualty events, and other extraordinary receipts and upon the occurrence of certain other events, in each case, subject to certain reinvestment rights, thresholds and other exceptions.

Unfunded commitments under the SLR Revolver will be subject to an unused facility fee, which will be payable monthly in arrears, as of the month following the closing, at a rate of 0.50% per annum.

All amounts owed under the SLR Credit Facility will be due and payable on the Maturity Date or earlier following a change in control or other event of default, unless otherwise extended in accordance with the terms of the SLR Credit Agreement.

Borrowings under the SLR Credit Agreement currently bear interest at a rate per annum equal to a 3-month term SOFR plus 0.26161%, subject to a 1.50% floor, plus 5.75% (the "Applicable Margin").

The Applicable Margin will be reduced to 5.0% when our fixed charge coverage ratio is greater than 1.10 to 1.

The opening interest rate of the SLR Credit Facility was 10.81% (SOFR + CSA + 5.25%), which changed to 10.18% (SOFR + CSA + 5.75%) as of September 30, 2025.

On March 10, 2025, we entered into the Fourth Amendment to the SLR Credit Agreement, which, among other things, required that we raise at least $5.0 million of additional capital by March 20, 2025.

On March 19, 2025, we entered into securities purchase agreements with certain officers and/or directors and other existing stockholders of the Company, including our largest stockholder and an institutional investor, pursuant to which we raised gross proceeds of $5.1 million, before deducting offering expenses payable by us of $0.1 million.

In addition, the Fourth Amendment waived non-compliance with the financial covenants as of December 31, 2024, extended the duration of the call protection applicable to the loans, and modified the financial covenants, among other things.

On August 15, 2025, we entered into the Fifth Amendment to the SLR Credit Agreement, which, among other things, required that we raise at least $8.5 million of additional capital by August 19, 2025.

On August 19, 2025, we entered into securities purchase agreements for approximately $10.3 million in equity capital (see Note 7, Equity, in the notes to the consolidated financial statements).

In addition, the Fifth Amendment waived non-compliance with the financial covenants as of June 30, 2025 and modified the financial covenants for the periods through August 31, 2026 (see Note 4 , Long-term debt, net, in the notes to the consolidated financial statements).

As of September 30, 2025, we were in compliance with the financial covenants under the SLR Credit Agreement, as discussed above.

Sales of securities

On August 19, 2025, the Company issued (i) 3,542,856 shares of common stock, (ii) pre-funded warrants to purchase up to 2,328,571 shares of the Company’s common stock, and (iii) common stock warrants to purchase up to 5,871,427 shares of the Company’s common stock.

The aggregate gross proceeds totaled $10.3 million before deducting offering expenses payable by the Company.

See Note 7, Equity, in the notes to the consolidated financial statements.

Financing Agreement

On November 25, 2025, the Company, and its affiliates Fluent, LLC, Fluent Media Labs, LLC and AdParlor, LLC, each a wholly owned subsidiary of the Company (together with the Company, the "Borrower"), entered into an Accounts Receivable Finance Agreement (the "Financing Agreement") with CSNK Working Capital Finance Corp.

d/b/a Bay View Funding ("Bay View").

Under the Financing Agreement, Bay View may extend financing to the Company based on eligible domestic and foreign accounts receivable, provided that the amount of advances thereon shall not exceed the lesser of a maximum credit of $30 Million (the “Maximum Credit”) or an amount equal to the sum of all advances less any funds received by Bay View pursuant to the Financing Agreement over the collection amounts adjusted for fees that is maintained in a reserve account.

All collections of the financed receivables go directly to Bay View and are applied to the Company’s obligations.

The transfer of the receivables was recorded as secured borrowings in accordance with ASC 860, Transfers and Servicing (“ASC 860”), with the receivables remaining on the balance sheet as a current asset.

As of March 31, 2026, the Financing Agreement had a balance of $24,053, which was recorded within current liabilities as the underlying receivables are typically due within 120-days and Bay View may require repayment of amounts outstanding beyond that period.

In addition, the Company had $506 in its reserve accounts with Bay View as of March 31, 2026, which was recorded within prepaids and other current assets.

The net unused advance as of March 31, 2026 was $6,453.

The Financing Agreement has an initial term of 36 months (the "Initial Term") and renews automatically for additional 12-month periods unless terminated in accordance with its terms.

The Company is required to pay a facility fee in the amount of 0.50% of the Maximum Credit as of November 25, 2025 and then annually a 0.33% of the Maximum Credit as well as a finance charge based on prime plus 2.0% based on the average balance outstanding during the month.

In addition, the Company will be required to pay certain administrative fees.

The finance rate shall increase or decrease monthly but not be less than 8.75% for the first year from the initial funding date, 8.50% for the second year of the Initial Term and 8.25% for the third year of the Initial Term.

As of March 31, 2026, the finance charge rate was 9.0%.

The total cost of the Financing Agreement for the three months ended March 31, 2026 was $604, and was included in interest expense on the consolidated statements of operations.

In addition, amortization of the debt discount for the year ended March 31, 2026 was $79, and was included in interest expense on the consolidated statements of operations.

The Company’s obligations under the Financing Agreement are secured by a security interest in substantially all of the Company’s assets.

The Financing Agreement contains customary representations, warranties, covenants and events of default, including repurchase obligations with respect to certain receivables.

Critical Accounting Estimates

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Item 2. Management’s Discussion and Analysis