What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-13 · 160 added, 123 removed, 219 unchanged (56% of the section changed)

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Forward-looking statements are those that do not relate strictly to historical or current matters, but instead relate to anticipated or expected events, activities, trends, or results as of the date they are made.

These forward-looking statements can be identified by the use of terminology such as "anticipate," "believe," "estimate," "expect," "intend," "project," "will,"

or the negative thereof or other variations thereon or comparable terminology.

These forward-looking statements can be identified by the use of terminology such as "anticipate," "believe," "estimate," "expect," "intend," "project," "will," or the negative thereof or other variations thereon or comparable terminology.

Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.

Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements

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

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

other filings we make with the SEC.

Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements , including, without limitation, those discussed in Part I, Item 1A of our 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 other filings we make with the SEC.

We do not undertake any obligation to update forward-looking statements, except as required by law and intend that all forward-looking statements be subject to the safe harbor provisions of the PSLRA.

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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, we unlock additional revenue streams for partners and empower advertisers to acquire their most valuable customers at scale.

Leveraging exclusive 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.

Over the last 12 months, we provided data and performance-based customer acquisition services for over 350 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.

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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.

For our O&O Sites, 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.

Notwithstanding occasional minimum guarantees, the business does not take significant media inventory risk.

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.

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:

Through AdParlor, LLC d/b/a Trevant ("Trevant"), 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.

Second Quarter Financial Summary

Three months ended June 30, 2026, compared to three months ended June 30, 2025:

Revenue increased 8% to $48.4 million, compared to $44.7 million

Net loss was $6.2 million, or $0.20 per share, compared to net loss of $7.2 million or $0.30 per share

Gross profit (exclusive of depreciation and amortization) increased 36% to $14.0 million, representing 29% of revenue for the three months ended June 30, 2026, from $10.3 million, representing 23% of revenue for the three months ended June 30, 2025

Media margin increased 46% to $17.5 million, representing 36.1% of revenue for the three months ended June 30, 2026, from $11.9 million, representing 26.7% of revenue for the three months ended June 30, 2025

Adjusted EBITDA was negative $1.8 million, compared to negative $2.8 million

Adjusted net loss was $4.2 million, or $0.13 per share, compared to $5.8 million, or $0.24 per share

Six months ended June 30, 2026, compared to six months ended June 30, 2025:

Revenue decreased 7% to $93.3 million, compared to $99.9 million

Net loss was $11.5 million, or $0.37 per share, compared to net loss of $15.5 million or $0.68 per share

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

Gross profit (exclusive of depreciation and amortization) increased 11% to $24.0 million, representing 26% of revenue for the six months ended June 30, 2026, from $21.7 million, representing 22% of revenue for the six months ended June 30, 2025

Media margin increased 23% to $31.5 million, representing 34% of revenue for the six months ended June 30, 2026, from $25.7 million, representing 26% of revenue for the six months ended June 30, 2025

Adjusted EBITDA was negative $5.4 million, compared to negative $5.9 million

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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.

According to eMarketer, the commerce media market is expected to reach a total market value of more than $140 billion by 2030.

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.

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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.

For the quarter ended June 30, 2026, Commerce Media Solutions represented approximately 63% of consolidated revenue, compared to approximately 36% for the prior year period.

Based on current performance trends, we expect Commerce Media Solutions to represent a majority of consolidated revenue on an ongoing basis and continue to grow as we onboard additional media partners and expand into new verticals and other key moments in the consumer experience.

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.

For the second quarter of 2026, we saw Commerce Media Solutions gross margins improve over the prior quarter and the same quarter of the prior year due to improved monetization on placements with certain media partners.

Our primary revenue channel was historically 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.

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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.

We have since taken steps to diversify our traffic sources and expand our ad network beyond our O&O Sites, including the strategic transition to our Commerce Media Solutions business.

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.

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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.

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

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.

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Business Practices & Compliance

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.

We have continued to be affected by uncertain economic conditions and the impacts of the previously disclosed FTC inquiry and subsequent 2023 Joint Motion for Entry of Proposed Stipulated Order (the "FTC Consent Order").

In response to the FTC Consent Order, 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.

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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.

Below is a reconciliation of media margin from gross profit (exclusive of depreciation and amortization) for the three and six months ended June 30, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except percentages)

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Non-media cost of revenue (1)

One-time item (2)

Media margin % of revenue

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 months ended March 31, 2026 and 2025, which we believe is the most directly comparable U.S.

Includes a one-time non-media revenue adjustment of ($156) in connection with a settlement with a media partner.

Below is a reconciliation of adjusted EBITDA from net loss for the three and six months ended June 30, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Restructuring and other severance costs

Certain litigation and other related costs

One-time item (2)

Adjusted EBITDA

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 $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.

Balance also includes a $698 write-off of intangibles and related expenses related to the write-off of TAPP Influencers Corp.

Additionally, the balance 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 $0 and ($9) for the three months ended June 30, 2026 and 2025, respectively, and $0 and ($128) for the six months ended June 30, 2026 and 2025, respectively, while non-compete agreements were in the amount of $0 and $412 for the three months ended June 30, 2026 and 2025, respectively, and $0 and $412 for the six months ended June 30, 2026 and 2025, respectively.

Includes a one-time non-media revenue adjustment of ($156) in connection with a settlement with a media partner.

Below is a reconciliation of adjusted net loss and adjusted net loss per share from net loss for the three and six months ended June 30, 2026 and 2025, which we believe is the most directly comparable U.S.

GAAP measure.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except share and per share data)

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Restructuring and other severance costs

Certain litigation and other related costs

One-time item (2)

Adjusted net loss

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

Balance also includes a $698 write-off of intangibles and related expenses related to the write-off of TAPP Influencers Corp.

Additionally, the balance 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 $0 and ($9) for the three months ended June 30, 2026 and 2025, respectively, and $0 and ($128) for the six months ended June 30, 2026 and 2025 , respectively, while non-compete agreements were in the amount of $0 and $412 for the three months ended June 30, 2026 and 2025, respectively, and $0 and $412 for the six months ended June 30, 2026 and 2025, respectively.

Includes a one-time non-media revenue adjustment of ($156) in connection with a settlement with a media partner.

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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GAAP in particular periods but might be viewed as not necessarily coinciding with the underlying business operations for the periods in which they are so recognized and recorded.

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).

These adjustments include certain litigation and other related costs associated with legal matters outside the ordinary course of business.

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 Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

Comparison of Our Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, revenue was comprised of Commerce Media Solutions of $30.5 million and $16.1 million, owned and operated of $16.3 million and $21.4 million, and other streams of $1.6 million and $7.2 million, respectively.

The increase in our Commerce Media Solutions business reflected both the addition of long-term contracts with new media partners signed since the prior year period and growth from existing media partners which in turn drove revenue from advertiser clients in the Media & Entertainment and Retail & Consumer sectors.

The decrease in our 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 the scaling Commerce Media Solutions.

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

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, revenue was comprised of Commerce Media Solutions of $56.4 million and $28.7 million, owned and operated of $32.0 million and $52.5 million, and other streams of $4.9 million and $18.7 million, respectively.

These changes were attributable to the same factors as discussed above in the three months ended June 30, 2026 comparison.

Cost of revenue (exclusive of depreciation and amortization)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Cost of revenue (exclusive of depreciation and amortization)

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, cost of revenue (exclusive of depreciation and amortization) consisted of Commerce Media Solutions media and related costs of $22.3 million and $13.2 million, owned and operated media and related costs of $11.7 million and $16.7 million, and media enablement and other indirect costs related to our other revenue streams of $0.4 million and $4.5 million, respectively.

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 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 the increased prevalence of consumer incentives to drive engagement.

Cost of revenue (exclusive of depreciation and amortization) for Commerce Media Solutions decreased as a percentage of revenue, due to the improved monetization with certain commerce media partners that do not operate on revenue share agreements.

Our owned and operated 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 web hosting costs.

The decrease in O&O Sites media cost was largely attributable to the decline in the media acquired for the business following the FTC Consent Order.

There was a decrease in cost of revenue as a percentage of revenue driven by increased activity in the related programmatic business that generates revenue without media cost.

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.

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

For the three months ended June 30, 2026, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue decreased to 71% compared to 77% for the three months ended June 30, 2025.

The change was primarily driven by the aforementioned reasons and shifts in revenue mix to Commerce Media Solutions.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, cost of revenue (exclusive of depreciation and amortization) consisted of Commerce Media Solutions media and related costs of $43.2 million and $23.0 million, O&O Sites media and related costs of $24.2 million and $41.5 million, and media enablement and other indirect costs related to our other revenue streams of $1.9 million and $13.7 million, respectively.

These changes were attributable to the same factors as discussed above in the three months ended June 30, 2026 comparison.

For the six months ended June 30, 2026, the total cost of revenue (exclusive of depreciation and amortization) as a percentage of revenue decreased to 74% compared to 78% for the six months ended June 30, 2025.

These changes were attributable to the same factors as discussed above in the three months ended June 30, 2026 comparison.

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.

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Sales and marketing

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Sales and marketing

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, sales and marketing expenses consisted mainly of employee salaries and benefits of $3.7 million and $3.1 million, advertising costs of $0.4 million and $0.3 million, and professional fees of $0.2 million and $0.1 million, respectively.

The increase was primarily due to higher salaries and other variable employee-related costs driven by improved results during the current quarter related to the CMS business and an increase in advertising costs driven by conferences and seminars expenses to promote Commerce Media Solutions.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, sales and marketing expenses consisted mainly of employee salaries and benefits of $6.9 million and $6.5 million, advertising costs of $0.9 million and $0.6 million, professional fees of $0.5 million and $0.3 million, travel and entertainment costs of $0.3 million and $0.2 million, shared based compensation expense of $0.2 million and $0.1 million, and severance costs of $0.1 million and $0.4 million, respectively.

The increase was primarily due to an increase in salaries and benefits driven by variable compensation related to the improved results and higher sales and marketing costs associated with the fees to attend conferences and seminars to promote Commerce Media Solutions, partly offset by a decline in restructuring and severance costs in the current year period.

Product development

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Product development

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, product development expenses consisted mainly of salaries and benefits of $2.1 million and $1.6 million, software license and maintenance costs of $0.3 million and $0.2 million, professional fees of $0.3 million and $0.3 million, and shared-based compensation expense of $0.1 million and $0.0 million, respectively.

The increase was primarily due to an increase in salaries due to an overall increase in headcount, along with higher variable compensation due to the improved results and increased share-based compensation as a result of the new plans.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, product development expenses consisted mainly of salaries and benefits of $3.9 million and $3.4 million, software license and maintenance costs of $0.6 million and $0.5 million, professional fees of $0.4 million and $0.6 million, and shared-based compensation expense of $0.3 million and $0.1 million, respectively.

The increase was primarily attributable to the factors discussed above, partly offset by lower spend on IT-related vendors.

General and administrative

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

General and administrative

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.

General and administrative (including $168 to a related party for the three and six months ended June 30, 2026)

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, general and administrative expenses consisted mainly of employee salaries and benefits of $4.2 million and $3.6 million, non-cash share-based compensation expense of $1.3 million and $0.3 million, professional fees of $1.1 million and $1.2 million, software license and maintenance costs of $1.0 million and $0.8 million, office overhead of $0.8 million and $1.2 million, provision for credit losses of $0.5 million and $0.0 million, certain legal costs of ($0.3) million and $0.3 million, and acquisition-related costs of $0.0 million and $1.2 million, respectively.

General and administrative expenses increased primarily due to an increase in salaries and benefits due to the re-allocation of higher salary personnel and an increase in variable compensation related to improved results, even as headcount declined, along with an increase in share-based compensation expense due to the entry into a new plans, and an increase in the provision for credit losses related to the Note (as described in Note 1(e)).

These increases were partially offset by the decline in rent expense as a result of the new lease entered into in the prior year period along with the prior year acquisition related costs related to the TAPP write-off.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, general and administrative expenses consisted mainly of employee salaries and benefits of $7.5 million and $7.1 million, professional fees of $2.4 million and $2.9 million, software license and maintenance costs of $1.8 million and $1.7 million, office overhead of $1.6 million and $2.2 million, non-cash share-based compensation expense of $1.8 million and $0.5 million, provision for credit losses of $0.5 million and $0.0 million, restructuring and severance costs of $0.2 million and $0.8 million, and acquisition-related costs of ($2.4) million and $1.1 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 compared to the write off of TAPP in the prior year period, along with lower overhead fees related to the new lease entered into during the second quarter of 2025 and lower restructuring fees.

These declines were partially offset by the factors discussed above.

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.

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Depreciation and amortization

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Depreciation and amortization

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)

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.

Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025

The decrease in depreciation and amortization costs during the three and six months ended June 30, 2026 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.

Interest expense, net

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Interest expense, net

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).

Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025

The decrease in interest expense during the three and six months ended June 30, 2026 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Fair value adjustment of Convertible Notes with related parties

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.

Three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025

The change in the fair value adjustment of Convertible Notes with related parties during the three and six months ended June 30, 2026 was driven by the fair value calculation inputs, including discount rate and stock price.

Loss before income taxes

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Loss before income taxes

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

The decrease in loss before income taxes of $1.2 million was a result of the factors discussed above.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

The decrease in loss before income taxes of $3.8 million was a result of the factors discussed above.

Income tax benefit (expense)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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.

Income tax (expense) benefit

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026, the effective income tax rate of 0.1% 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 June 30, 2025, the Company's effective income tax rate of 1.4% 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.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026, the effective income tax rate of 0.1% 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 six months ended June 30, 2025, the Company's effective income tax rate of 0.8% 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 June 30, 2026 and 2025, we recorded full valuation allowances against our U.S.

net deferred tax assets.

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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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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.

Three months ended June 30, 2026 compared to the three months ended June 30, 2025

For the three months ended June 30, 2026 and 2025, net loss was $6.2 million and $7.2 million, respectively, as a result of the factors discussed above.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

For the six months ended June 30, 2026 and 2025, net loss was $11.5 million and $15.5 million, respectively, as a result of the factors discussed above.

Liquidity and Capital Resources

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.

For the six months ended June 30, 2026, net cash provided by operating activities was $0.3 million, compared to net cash provided by operating activities of $3.0 million for the six months ended June 30, 2025.

Net loss in the current year period of $11.5 million represents an improvement of $4.0 million, compared with net loss of $15.5 million in the prior period.

Adjustments to reconcile net loss to net cash provided by operating activities of $5.9 million in the current year period decreased by $0.4 million, compared with net cash provided by operating activities of $6.3 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.

The decrease was primarily due to a $2.4 million non-cash gain on divestiture in the current year, lower depreciation and amortization and prior year non-cash loss on an asset write-off where there were none this year, partly offset by the increased share-based compensation expense and change in fair value adjustment of Convertible Notes with related parties of $1.8 million.

Changes in assets and liabilities generated cash of $5.9 million in the current year period, compared with generated cash of $12.3 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 three months ended March 31, 2026 and 2025, net cash used in investing activities was $1.5 million and $1.6 million, respectively.

For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $3.0 million and $3.2 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.

For the six months ended June 30, 2026, net cash used in financing activities was $3.4 million, compared to $3.2 million for the six months ended June 30, 2025.

This was mainly due to the net repayments of $3.4 million on the Financing Agreement in the current year, compared to the net repayments of $12.0 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 and common stock warrants.

As of June 30, 2026, we had noncancelable operating lease commitments of $3.1 million and debt with a $30.1 million principal balance.

As of June 30, 2026, we had cash, cash equivalents, and restricted cash of $7.6 million, a decrease of $6.0 million from $13.6 million as of December 31, 2025.

Going concern

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.

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

Commerce Media Solutions has demonstrated growth and operates under a different economic model that reduces exposure to certain media sourcing risks.

However, it continues to represent an evolving component of our business and the continued 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, of which there can be no assurance.

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

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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.

Based on our forecast, management expects to have sufficient liquidity over the next 12 months from the date of filing.

Although, we have achieved or overperformed against our forecasts over the trailing three quarters, we did not meet our forecasts, at times, over the prior three years 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.

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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.

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

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.

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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").

d/b/a Bay View Funding ("Bay View"), a portion of the proceeds of which were used to repay and terminate the Company's prior credit facility.

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.

1 unchanged sentence

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.

As of June 30, 2026, the Financing Agreement had a balance of $27.5 million, 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 $0.2 million in its reserve accounts with Bay View as of June 30, 2026, which was recorded within prepaids and other current assets.

The net unused advance as of June 30, 2026 was $2.6 million.

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.

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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.

As of June 30, 2026, the finance charge rate was 11.75%.

The total cost of the Financing Agreement for the six months ended June 30, 2026 was $1.3 million, and was included in interest expense on the consolidated statements of operations.

In addition, amortization of the debt discount for the six months ended June 30, 2026 was $0.2 million, 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis