10-K: Fluent, Inc. Faces Going Concern Doubt Amid Revenue Decline

Fluent, Inc. reports an 18% revenue drop and worsening Adjusted EBITDA in 2025, prompting an auditor's 'going concern' warning despite a strategic pivot to Commerce Media Solutions.

Summary

• Revenue decreased 18% to $208.8 million in 2025, down from $254.6 million in 2024.
• Net loss was $27.2 million in 2025, a slight improvement from $29.3 million in 2024, partly due to a one-time $4.3 million non-media revenue adjustment.
• Adjusted EBITDA worsened to negative $9.0 million in 2025, compared to negative $5.6 million in 2024.
• The independent registered public accounting firm included an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern.
• The company is strategically shifting its focus towards scaling its Commerce Media Solutions business, which grew to 39% of consolidated revenue in 2025 from 16% in 2024.
• Revenue from Owned and Operated (O&O) Sites significantly declined from $168.4 million in 2024 to $94.5 million in 2025, primarily due to changes in business practices to comply with the FTC Consent Order and media supply challenges.
• The Call Solutions business was sold on January 31, 2026, a move expected to improve cash flow by ceasing ongoing losses and providing monthly seller note payments of $0.1 million for 36 months.
• Workforce reductions occurred in the first and fourth quarters of 2025, with 24 and 9 employees, respectively, to align resources with strategic initiatives.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period for Fluent, Inc., marked by significant revenue decline and a going concern warning, despite strategic shifts and some positive growth in its new Commerce Media Solutions segment.

Positives

• Commerce Media Solutions revenue grew year-over-year in every quarter since its launch in Q1 2023, representing 39% of consolidated revenue in 2025 (up from 16% in 2024).
• The sale of the Call Solutions business on January 31, 2026, is expected to improve cash flow by eliminating ongoing losses and providing a steady stream of seller note payments.
• Secured a new Accounts Receivable Finance Agreement with Bay View Funding in November 2025 for up to $30.0 million, replacing the SLR Credit Agreement and removing prior financial covenants that caused non-compliance risks.
• Met revenue and net income forecasts for the fourth quarter of 2025.
• Maintains a robust cybersecurity risk management program, informed by NIST frameworks, with quarterly updates provided to the Audit Committee.
• Possesses a large, proprietary database of first-party, self-declared user information, which is considered a competitive advantage.
• Demonstrates significant experience in media purchasing and content creation, having deployed over $2 billion in media spend since inception.

Negatives

• Overall revenue decreased by 18% from $254.6 million in 2024 to $208.8 million in 2025.
• Adjusted EBITDA worsened from negative $5.6 million in 2024 to negative $9.0 million in 2025.
• The independent auditor expressed 'substantial doubt about the Company's ability to continue as a going concern' due to historical losses and dependence on discretionary financing.
• The core Owned and Operated (O&O) Sites business experienced a significant revenue decline and is not expected to return to prior levels.
• The company has a history of not meeting its financial forecasts, which could adversely affect liquidity and access to future financing.
• Gross margin in Commerce Media Solutions declined in the first half of 2025 due to expansion into new placements and early-term contract incentives.
• The Call Solutions business faced lower fourth-quarter results and rising media costs due to competitive pressure and regulatory changes, leading to its divestiture.
• Workforce reductions in 2024 and 2025 indicate ongoing cost-cutting measures and a shrinking employee base (13% decrease in 2025).
• Incurred a significant loss on early extinguishment of debt, increasing from $1.0 million in 2024 to $3.8 million in 2025.
• The company does not intend to pay cash dividends for the foreseeable future.

Risks

• There is substantial doubt about the company's ability to continue as a going concern.
• Dependence on the uncommitted and discretionary Accounts Receivable Finance Agreement with Bay View Funding, with potential for reduced availability or cessation of advances.
• The success of the strategic shift to Commerce Media Solutions is uncertain and depends on onboarding media partners, achieving favorable economics, and maintaining advertiser demand.
• Operating in a highly competitive and rapidly changing digital marketing industry dominated by larger, well-capitalized competitors.
• A material percentage of consolidated revenue (38% in 2025) is derived from gaming advertisers, exposing the company to risks associated with the gaming industry.
• Unfavorable publicity and negative public perception about the industry or the company could damage its reputation.
• Sudden reductions in online marketing spend by clients, loss of clients, or lower advertising yields could seriously harm the business.
• Exposure to credit risk from clients, with potential difficulties in collecting amounts owed.
• The Owned and Operated (O&O) Sites are at a competitive disadvantage due to more selective traffic sources and regulatory constraints (FTC Consent Order), leading to declining user traffic.
• A decline in the supply of third-party media or an increase in its price would increase consumer acquisition costs and reduce profitability.
• High dependence on mobile platforms and operating system providers (Apple iOS, Google Android) as most users access media through mobile devices.
• Use of Customer Relationship Management (CRM) may be hindered by new or restrictive email/content delivery policies or consumer screening/blocking.
• Difficulty in effectively managing future growth and scaling infrastructure and products quickly enough while maintaining profitability.
• Reliance on AI and machine learning, which may contain design or performance defects, fail to scale effectively, or become less competitive.
• Economic or political instability (e.g., war, inflation, interest rates) could adversely affect business, financial condition, and results of operations.
• International operations subject the company to increased challenges and risks, including cross-border data transfers and compliance with local laws.
• Evaluation of strategic alternatives (acquisitions, divestitures) could complicate operations or result in other harmful consequences.
• Failure to recruit or the loss of management and highly trained and qualified personnel could adversely affect the business.
• Dependence on third-party service providers, with risks of platform malfunctions.
• The evolving and complex regulatory landscape (data privacy, consumer protection, advertising, telemarketing, AI) could lead to costly compliance or liability.
• Use of email marketing and other direct marketing channels is subject to various laws (e.g., CAN-SPAM, TCPA) and the FTC Consent Order.
• The outcome of litigation, inquiries, investigations, or other legal proceedings could distract management, increase expenses, or restrict business operations.
• The business may be subject to sales and use taxes and other taxes, with complex and evolving application.
• Actual or perceived failure to safeguard personal information or user privacy could damage reputation and results of operations.
• Inadequate protection of intellectual property rights could harm the company's competitive position and business.
• As a creator and distributor of digital media content, the company faces liability and expenses for legal claims based on content nature and accuracy.
• Requirement for additional capital in the future, which may not be available on acceptable terms or at all.
• Potential for significant charges to intangible assets in the future.
• Risk of delisting from The Nasdaq Capital Market if minimum listing requirements are not maintained.
• The company's stock price has been and may be volatile, potentially leading to substantial losses for investors.
• Concentration of stock ownership (approximately 60.5% by executive officers, directors, and 10%+ holders) presents risks, including lack of liquidity and limited influence for other stockholders.
• Future issuances of common stock could have a dilutive effect on existing investments.
• Benefits from reduced governance and disclosure requirements as a smaller reporting company and non-accelerated filer may make common stock less attractive to investors.

Future Outlook

The company anticipates continued year-over-year declines in its owned and operated marketplace, but expects these declines to be more than offset by the sustained growth of Commerce Media Solutions, which is projected to become the majority of consolidated revenue in 2026. Gross margin in Commerce Media Solutions is expected to improve as early-term incentives conclude and placements mature. Following the sale of the Call Solutions business, the cost of revenue for other business streams is expected to decrease significantly in 2026, leading to higher margins. Management expects to meet its forecasts over the next twelve months, which is crucial for maintaining access to the Bay View facility and ensuring adequate liquidity, though there is a history of not meeting forecasts.

Management Comments

• "Management has concluded that there exists a substantial doubt about our ability to continue as a going concern."
• "Management expects to continue to meet its forecast over the next twelve months from the date of filing, which will improve the likelihood of continued access to the Bay View facility and adequate liquidity to fund operations."
• "We have shifted our strategic focus toward scaling our Commerce Media Solutions business."
• "We do not expect registration volume [on O&O Sites] to return to prior levels."
• "We continue to prioritize strategic investments that have near-term benefits to revenue while also streamlining our organization through targeted workforce reductions."

Industry Context

StockSavvy.ai notes that Fluent's strategic shift towards Commerce Media Solutions aligns with broader industry trends, as eMarketer projects retail media to grow at a 13.6% CAGR through 2029, reaching nearly $117 billion by 2029 in the U.S. This reflects advertisers' increasing demand for measurable outcomes and first-party data in a fragmented, privacy-constrained ecosystem. The company's challenges in its O&O Sites due to regulatory changes and media supply issues are indicative of the evolving and tightening regulatory landscape impacting digital marketing.

Comparison to Industry Standards

• eMarketer's September 2025 forecast projects U.S. digital advertising spend to reach approximately $381.99 billion in 2026, representing 10.6% year-over-year growth, with a projected four-year compound annual growth rate of approximately 9% through 2029.
• eMarketer projects that retail media will grow at a 13.6% CAGR through 2029, the highest among major digital channels.
• U.S. commerce media advertising spend is projected to increase from approximately $68 billion in 2025 to nearly $117 billion by 2029, underscoring advertisers' continued migration toward commerce-oriented environments.
• 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.
• Fluent's Commerce Media Solutions served ads to over 200 million consumers in 2025, indicating a significant presence in this growing market segment.
• Fluent's Owned and Operated (O&O) Sites are at a competitive disadvantage compared to other rewards site operators with more lenient standards, which have seen increased traffic from former publishers.

Management Changes

Corporate Governance

Legal Proceedings

• Settled a Civil Investigative Demand from the Federal Trade Commission (FTC) with a Consent Order entered on August 11, 2023, which required changes to business practices that adversely affected results in 2025 and 2024.
• Settled a Telephone Consumer Protection Act (TCPA) class action, Daniel Berman v. Freedom Financial Network, with final approval on February 23, 2024, involving a $1.1 million cash payment and a $2.0 million junior secured promissory note.

Related Party Transactions

• The company's primary source of working capital has historically been through the sale of equity and subordinated convertible notes to officers, directors, and the largest stockholder.
• Purchasers in the May 2024 Private Placement included three officers and/or directors and the largest stockholder of the company.
• Purchasers in the December 2024 Private Placement consisted of three officers and/or directors and the largest stockholder of the company.
• Purchasers in the March 2025 Private Placement included three officers and/or directors of the company, the company's largest stockholder, and an institutional investor.
• Purchasers in the May 2025 Private Placement consisted of four officers and/or directors, the company's largest stockholder, and institutional investors or others for whom they have or share beneficial ownership.
• Purchasers in the August 2025 Private Placement included certain officers and/or directors, the largest stockholder of the company, and other accredited investors.
• Convertible Notes in an aggregate principal amount of $2.05 million were sold to certain officers and directors and the largest stockholder on August 19, 2024.
• As of December 31, 2025, executive officers, directors, and holders of 10% or more of outstanding common stock beneficially owned approximately 60.5% of the company's outstanding shares.
• Dr. Phillip Frost, the largest stockholder, owned approximately 25.3% of the company's outstanding common stock as of December 31, 2025.

Stakeholder Impact

• Shareholders face potential for substantial losses due to stock price volatility, dilution from future equity issuances, and the absence of cash dividends in the foreseeable future. The high concentration of insider ownership may limit the influence of other stockholders.
• Employees have experienced workforce reductions (13% decrease in 2025) as the company streamlines operations. However, the company continues to offer competitive compensation, 401(k) matching, health benefits, and professional development opportunities.
• Customers and advertisers face risks of reduced online marketing spend, loss of clients, or lower advertising yields if performance expectations are not consistently met. The company is also exposed to credit risk from its clients.
• Media partners in the Commerce Media Solutions segment stand to gain additional revenue streams, while those associated with Owned and Operated (O&O) Sites may face challenges related to media supply and increased costs.
• Creditors are impacted by the 'going concern' warning from the independent auditor, indicating significant financial risk. The company's dependence on the discretionary Bay View Funding facility also presents a risk to creditors.

Next Steps

• Continue to invest in sales efforts and product development to expand the Commerce Media Solutions network and product offerings.
• Implement continuous enhancements to product offerings and targeting capabilities to optimize network value and per-unit profitability.
• Modernize legacy consumer platforms to improve domain reputation, streamline site experiences, and migrate workloads to cloud-native infrastructure.
• Obtain stockholder approval for the exercise of May 2025 PFWs and August 2025 PFWs by officers and/or directors no later than the 2026 annual meeting of stockholders.
• Reallocate resources to Commerce Media Solutions following the divestiture of the Call Solutions business.
• Consider other strategic alternatives, such as seeking additional equity or debt financing, reducing or delaying business activities, or selling assets, if liquidity becomes limited or business performance deviates from expectations.

Key Dates

Recommendation

The filing presents a highly concerning financial picture, with significant revenue decline, worsening Adjusted EBITDA, and an explicit 'going concern' warning from the independent auditor. While the strategic shift to Commerce Media Solutions shows some promise, it is still an evolving part of the business and faces strong competition. The continued decline in the core O&O Sites business, coupled with a history of not meeting forecasts and reliance on discretionary financing, indicates substantial operational and financial instability. The high concentration of insider ownership and lack of dividends further reduce appeal for external investors. These factors collectively suggest a high-risk investment with significant downside potential.

Keywords

Digital Marketing, Commerce Media, Performance Marketing, SEC Filing, 10-K, Fluent Inc, FLNT, Advertising, Customer Acquisition, Data Privacy, Cybersecurity, Going Concern, Nasdaq, Stock Volatility, Regulatory Compliance, AI, Machine Learning, Financial Results, Risk Factors, Equity Financing, Debt Financing, Owned and Operated Sites, Call Solutions