Image source: The Motley Fool.
DATE
Thursday, Nov. 12, 2026
CALL PARTICIPANTS
- Chief Executive Officer – Don Patrick
- Chief Financial Officer – Ryan Perfit
- Chief Strategy Officer – Ryan Schulke
TAKEAWAYS
- Total Revenue — $53.6 million, representing a 14% increase driven by the expansion of the Commerce Media Solutions segment.
- Aggregate Continuing Business Revenue — 29% growth year over year, an acceleration from the 25% growth recorded in the second quarter.
- Commerce Media Solutions Revenue — $37.5 million, doubling from the prior year period and accounting for 70% of total consolidated revenue.
- Owned and Operated Revenue — $13.8 million, a 33% decline from $20.7 million as management shifts resources toward Commerce Media Solutions.
- Gross Profit — $15.3 million, a 41% increase compared to the prior year period.
- Gross Profit Margin — 28%, reflecting a year-over-year expansion of more than 500 basis points.
- Commerce Media Solutions Gross Profit — $11.1 million, an increase of 173% compared to the third quarter of 2025.
- Media Margin — $18.9 million, representing 35.2% of total revenue compared to 27.2% in the prior year period.
- Commerce Media Solutions Media Margin — $13.3 million, or 36% of segment revenue, up from 25% in the third quarter of 2025.
- Adjusted EBITDA — Negative $43,000, representing a $3.3 million improvement from the adjusted EBITDA loss of $3.4 million in the prior year.
- Net Loss — $3.1 million, representing a $0.10 loss per basic share and a 59% reduction in net loss compared to the prior year.
- Operating Expenses — $16.7 million, excluding depreciation and amortization, up from $14.7 million due to performance-related compensation and sales commissions.
- Cash and Cash Equivalents — $11.4 million as of Sept. 30, 2026, compared to $12.9 million at the end of the previous year.
- Accounts Receivable — $41.4 million, a decrease from $46.7 million as of Dec. 31, 2025.
- Positive Operating Cash Flow — $2.8 million year to date, compared to cash used in operating activities of $4.3 million in the same period last year.
- Credit Facility Capacity — $35 million, following an amendment on Sept. 30, 2026, to increase the maximum credit to track with company growth.
- Commerce Media Solutions Annual Revenue Run Rate — Over $145 million, based on active media partner contracts at current monetization levels.
- Partner Ecosystem Scale — Anchored by brands generating a combined annual revenue of over $1.1 trillion.
- 2027 Revenue Guidance — Management indicated expectations for double-digit consolidated growth based on the current trajectory of Commerce Media Solutions.
- Q4 2026 Adjusted EBITDA Guidance — Management expects to achieve positive adjusted EBITDA during the quarter.
Need a quote from a Motley Fool analyst? Email [email protected]
RISKS
- Perfit stated, “the increase this quarter was driven by improved monetization with certain Commerce Media partners and the benefit related to a partner contract negotiation,” acknowledging that elevated Q3 gross margins included non-recurring benefits.
- Perfit warned that the company expects Commerce Media Solutions growth to “step down” in the fourth quarter due to the law of large numbers and the diversification of its partner base.
- Perfit reported a “$504,000 provision for credit losses on the note receivable from our January divestiture,” reflecting risks regarding the collectability of payments from the sold Call Solutions business.
SUMMARY
Fluent, Inc. (FLNT -4.05%) reported third quarter results that demonstrated the ongoing transition of its business model toward the Commerce Media Solutions segment. Management reported that this segment now generates 70% of consolidated revenue and is the primary driver of the company’s margin expansion. The company stated that its strategic focus on building trusted partnerships with large retailers has enabled it to capture demand for nonendemic advertising within captive retail media networks. Management expects that the combination of online and in-store post-transaction solutions will sustain growth as the company scales with new enterprise partners. For 2027, the company indicated that it expects to maintain double-digit consolidated revenue growth while continuing to focus on improving profitability and bottom-line results.
- Patrick noted that captive retail media network growth is slowing, leading these networks to seek nonendemic monetization solutions that Fluent provides at the point of sale.
- The company launched its online post-transaction solution with CVS in the third quarter and plans to scale in-store integrations and testing in 2027.
- Perfit explained that the company is diversifying its partner base with flatter, non-seasonal businesses to reduce the volatility of its quarterly growth curve.
- Schulke stated that the company is focusing on personalized offers and data-driven experiences to differentiate its ecosystem from traditional walled gardens like Google and Meta.
- CEO Patrick stated, “We are already delivering non-endemic demand into one of the world’s largest retail media networks, showing how new revenue pools open up for our partners.”
- Patrick indicated that the company’s partner pipeline is scaling in both quality and size, which he expects will convert in the second half of the year.
INDUSTRY GLOSSARY
- Commerce Media Solutions (CMS): A business segment that designs and executes online marketing campaigns to connect advertiser clients with consumers.
- Owned and Operated (O&O): Digital properties and marketplaces that are owned and managed directly by the company.
- Nonendemic: Advertising for products or services that do not belong to the primary product catalog of the retail partner, such as travel offers on a grocery site.
- Post-transaction: The marketing phase that occurs immediately after a customer has completed a purchase.
- Captive Retail Media Network: An internal advertising platform operated by a retailer to monetize its own traffic and data.
- Media Margin: A non-GAAP metric representing revenue minus the variable costs paid for media and related expenses.
Full Conference Call Transcript
Operator: Good afternoon, and welcome. Thank you for joining us to discuss Fluent’s Third Quarter 2026 Earnings Results. With me today are Fluent’s Chief Executive Officer, Don Patrick; Chief Financial Officer, Ryan Perfit; and Chief Strategy Officer, Ryan Schulke. Our call today will begin with comments from Don Patrick and Ryan Perfit, followed by a question-and-answer session. I would now like to remind you that this call is being webcast live and recorded. A replay of the event will be available following the call on Fluent’s website. To access the webcast, please visit the Investor Relations page at www.fluentco.com.
Before we begin, I would like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for the fourth quarter of 2026, the full year 2026 and 2027. Any forward-looking statements made during this call speak only as of the date hereof. Actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the company’s business, including our ability to continue as a going concern.
The statements may be identified by words such as expects, plans, projects, could, will, estimates and other words of similar meaning. The company undertakes no obligation to update the information provided on this call. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s filings with the Securities and Exchange Commission, including the company’s annual report on Form 10-K for the year ended December 31, 2025, and quarterly report on Form 10-Q for the quarter ended September 30, 2026, which are available on our website and at sec.gov. The slides accompanying this call are on our Investor Relations page.
During the call, management will also present certain non-GAAP financial information relating to media margin, adjusted EBITDA and adjusted net loss. Management evaluates the financial performance of the company’s business on a variety of indicators, including these non-GAAP metrics. The definitions of these metrics and reconciliations to the most directly comparable GAAP financial measure are provided in the earnings press release issued earlier today and in the appendix to the earnings presentation, both available on the Investor Relations page on our website. With that, I am pleased to introduce Fluent’s CEO, Don Patrick. You may begin.
Donald Patrick: Good afternoon, and thank you for joining us. I’m here with Ryan Schulke, our Chief Strategy Officer and Company Co-Founder; and Ryan Perfit, our Chief Financial Officer. Q3 results reflect the continued acceleration of our strategy. We are seeing the investments we’ve made over the last three years show up in both our top and bottom lines. Fluent continues to build its standing as an industry leader and a recognized brand, a reflection of the increased number of world-class partners we work with and the superior results we deliver. Our partner portfolio continues to expand and our existing relationships continue to grow. We’ve been steadfast in our strategy since we invested aggressively and pivoted our business in 2023.
In Q3, those investments continue to yield the financial returns that we’ve been projecting since the pivot. And we have been consistently rewarded by the brand partnerships we’ve earned, which are now the driving force behind our 11th consecutive quarter of high double-digit or better year-over-year revenue growth in our Commerce Media business. Our Commerce Media growth in Q3 came from continuing to grow our existing partners’ businesses while winning new partnerships in online post transaction. In turn, Commerce Media Solutions ended the quarter operating at an annual revenue run rate of over $145 million and consolidated gross profit margins expanded as this higher-margin business becomes a greater share of our mix.
Financially, Commerce Media Solutions has scaled to where it is the driving growth across Fluent’s total business. After returning to year-over-year revenue growth on an aggregate continuing businesses in Q2, Fluent grew again in Q3, importantly, while continuing to expand margins year-over-year. Revenue grew 14% over Q3 prior year, which reflects revenue from our divested call solutions business and other runoff revenue. Revenue from aggregate continuing businesses grew 29% year-over-year in the third quarter. Our strategic positioning and the credibility we’ve earned in the rapidly growing Commerce Media industry have accelerated our business momentum, and we are encouraged by the results we are delivering for our partners as well as the shareholder value we are driving for our stakeholders.
Importantly, our momentum continues in Q4. So as we look ahead, we believe that we are well positioned to drive double-digit revenue growth on our aggregate continuing businesses for the full year 2026. With our visibility today, we expect to continue driving double-digit growth in total consolidated revenue in 2027. Let me take you through the quarter, starting with the financial results and then spend time on where we see the industry heading as partner trust and measurable performance becomes the standard for Commerce Media. Q3 2026 results were as follows and exceeded what we advised last quarter. Revenue of $53.6 million. As I mentioned previously, revenue was up 14%, with revenue from our aggregate continuing businesses growing 29%.
This is our second consecutive quarter of double-digit revenue growth on our aggregate continuing businesses. Commerce Media Solutions grew 100%, our 11th consecutive quarter of high double-digit growth or better. Gross profit of $15.3 million, up 41% year-over-year at a 28% margin. Year-over-year gross profit margin grew more than 500 basis points, driven by the continued growth of Commerce Media Solutions, which now represents 70% of our consolidated revenue. Nearly breakeven adjusted EBITDA, a $3.3 million improvement over last year. Two consecutive quarters of revenue growth on our continuing businesses is a start, not a conclusion. Our trend is built one quarter at a time, and our commitment is to string more of them together consistently and durably.
That is what strategic and financial alignment looks like. We pivoted into high-growth, higher-margin Commerce Media industry, built the platform for superior partner performance on the foundation of our owned and operated marketplaces and invested aggressively behind it. And now our thoughtful game plan has consolidated revenue, margin and profitability improving in parallel. Commerce Media Solutions is a highlight and the consistent growth we are seeing in the business is underscoring total consolidated revenue growth and improved adjusted EBITDA in the third quarter.
As you can see, Commerce Media Solutions revenue now represents a large majority of our consolidated revenue at 70% compared to 40% in the third quarter of 2025 and just 16% in the third quarter of 2024, with CMS annual revenue run rate now exceeding $145 million. Growth like this doesn’t happen unless world-class brands choose to partner with you and choose to stay based on Fluent’s building trusted strategic partnerships that deliver them strong financial results. We continue to onboard world-class partners, and our partner ecosystem is now anchored by companies generating over $1.1 trillion in combined annual revenue. These brands are scaling with us because our outcomes are measurable and repeatable.
Last quarter, we told you our partner pipeline had grown in both size and quality and that we expected it to convert in the second half. It is converting and continuing to scale as planned. Last quarter, we also outlined the shift in the industry. Captive retail media network growth is slowing, and they’re turning to non-endemic monetization for their next phase of expansion. Their audiences want products and services outside the core catalog. Our post-transaction platform meets the need at the point of sale, having high-margin incremental revenue for the partner. These networks require more tailored integrations than traditional enterprise deals. That effort also makes the relationships durable and expands the market we can address.
We are already delivering non-endemic demand into one of the world’s largest retail media networks, showing how new revenue pools open up for our partners. But access to demand will not decide who leads. The industry is moving towards platform trust, data integrity and verified performance. Advertisers want measurement that connects online and in-store outcomes. Retail networks want a partner that protects their first-party customer relationships. We have built to that standard for 16 years. That standard is also our path into physical retail. Through in-store and loyalty, we are aggressively validating it, and we are building that opportunity deliberately. We’ll discuss our progress here in future quarters.
Q4 is about scaling new partners on our platform while leaning into retail seasonality and execution. It is the most important quarter of the year for our retail partners, and our job is to deliver for them when it matters the most. We entered Q4 with strong momentum. Based on what we are seeing today, we expect continued double-digit year-over-year revenue growth in the fourth quarter and positive adjusted EBITDA for the quarter. With that, I’ll turn the call over to Ryan Perfit for a deeper look at the financials.
Ryan Perfit: Thank you, Don, and thanks to everyone for joining us today. I’ll now provide a deeper review of our third quarter results with commentary on year-to-date results where relevant. Total consolidated revenue was $53.6 million in the third quarter of 2026 compared with $47 million in the prior year period, an increase of 14%. This marks our second consecutive quarter of year-to-date consolidated revenue growth. Third quarter 2025 includes revenue from our Call Solutions business divested in January and other runoff revenue. Revenue from our aggregate continuing businesses increased 29% compared to the third quarter of 2025, an acceleration from 25% in the second quarter of this year.
Year-to-date, revenue on aggregate continuing businesses has increased 16%, and we remain on track to deliver double-digit growth on that basis for the full year. Additionally, as Don mentioned, based on our visibility today, we believe we are well positioned to continue driving double-digit consolidated revenue growth in 2027. Commerce Media Solutions, now the primary driver of our business, doubled revenue to $37.5 million in the quarter when compared to the third quarter of 2025 and represented 70% of total consolidated revenue compared with 40% in the prior year period. Sequentially, revenue grew 23% from $30.5 million in the second quarter. Commerce Media Solutions is now operating at an annual revenue run rate that exceeds $145 million.
Demand remains strong, and we continue to be encouraged by the interest we are seeing from world-class brands across diverse industries, including some of the largest retailers in the United States. With visibility into our seasonally high fourth quarter, we expect Commerce Media Solutions growth to moderate from the third quarter but remain in the high double digits. Owned and operated revenue decreased 33% to $13.8 million compared to $20.7 million in the third quarter of 2025 as we continue to shift focus towards Commerce Media Solutions.
Media margin, a non-GAAP measure, was $18.9 million in the third quarter, an increase of 48% and representing 35% of total consolidated revenue compared with $12.8 million or 27% of revenue in the prior year period. Commerce Media Solutions Media margin in the third quarter of 2026 increased 189% to $13.3 million or 36% of Commerce Media Solutions revenue compared with $4.6 million or 25% of revenue in the third quarter of 2025. Consolidated gross profit, exclusive of depreciation and amortization, increased 41% to $15.3 million, representing 28% of revenue.
Commerce Media Solutions gross profit was $11.1 million in the third quarter of 2026, an increase of 173% compared to the third quarter of 2025 and representing 30% of revenue, up from 27% in the second quarter. While Commerce Media Solutions gross margins exceeded our stated expectations for margins to return to the mid- to high 20s range over the course of 2026, the increase this quarter was driven by improved monetization with certain Commerce Media partners and the benefit related to a partner contract negotiation.
Driver of our consolidated margin growth over the long term will be the continued scaling of Commerce Media Solutions and its increase as a percentage of total revenue as we move beyond early incentive periods. Operating expenses, excluding depreciation and amortization, were $16.7 million in the third quarter of 2026 compared with $14.7 million in the third quarter of 2025. The increase primarily reflects performance-related compensation and sales commissions that scale with our results, higher share-based compensation and a $504,000 provision for credit losses on the note receivable from our January divestiture. Cost management continues to be a focus as we drive towards profitability.
Interest expense in the third quarter was $712,000, essentially flat with $711,000 in the third quarter of 2025. Income tax expense was $6,000 in the third quarter of 2026 compared with a benefit of $12,000 in the prior year period. We reported a net loss of $3.1 million or $0.10 per basic share and $0.12 per diluted share in the third quarter of 2026 compared with a net loss of $7.6 million or $0.27 per share in the prior year period, a 59% reduction in net loss.
Adjusted net loss, a non-GAAP measure, was $2.5 million or a loss of $0.08 per share compared with an adjusted net loss of $6.5 million or a loss of $0.23 per share in the third quarter of 2025, a 62% reduction in adjusted net loss. Importantly, we delivered near breakeven adjusted EBITDA, a non-GAAP measure, of negative $43,000 compared with an adjusted EBITDA loss of $3.4 million in the third quarter of 2025. On a year-to-date basis, adjusted EBITDA loss narrowed to $5 million from $9.2 million in the prior year period, reflecting our ongoing commitment to improved profitability throughout 2026. Reconciliations of our non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release.
Shifting now to our balance sheet and cash flow. We had $11.4 million in cash and cash equivalents at September 30, 2026, compared with $12.9 million at December 31, 2025. Accounts receivable were $41.4 million compared with $46.7 million at year-end 2025. On a year-to-date basis, we generated positive operating cash flow of $2.8 million compared with cash used in operating activities of $4.3 million in the first nine months of 2025, driven primarily by a smaller net loss with changes in working capital continuing to provide cash. Short-term debt, net of unamortized discount fees was $31.5 million as of September 30, 2026, compared with $30.8 million at year-end 2025.
On September 30, we amended our facility with Bay View to increase the maximum credit to $35 million to track with our growth. We appreciate their support. Overall, we’re extremely pleased with our results this quarter and the progress that we’ve made year-to-date. Commerce Media Solutions is up 98% year-to-date and now represents over 70% of our revenue. We have returned the consolidated business to year-over-year growth in the second and third quarters, and we delivered near breakeven adjusted EBITDA in the quarter while continuing to build the Fluent brand with world-class media partners across diverse market verticals. Our execution has been strong.
And with our visibility today, we continue to expect to deliver double-digit consolidated revenue growth on aggregate continuing businesses and improved full year adjusted EBITDA in 2026, supported by the continued growth in Commerce Media Solutions. With that, I’ll turn it back over to Don.
Donald Patrick: Thanks, Ryan. We are pleased with our third quarter performance and ability to deliver double-digit revenue growth with improved gross profit margin and nearly breakeven adjusted EBITDA. Commerce Media doubled for the 11th consecutive quarter of high double-digit growth or better and world-class brands are choosing Fluent as their leading-edge partner. This quarter’s performance reflects the strategic commitment we made to accelerate our business throughout 2026. With strategy and financial results now structurally aligned, our focus shifts entirely to disciplined execution as we scale this framework and work to deliver consistent growth.
Operator: [Operator Instructions] One moment for our first question that comes from Patrick Sholl with Barrington Research.
Patrick Sholl: On Commerce Media and the outlook for Q4 and 2027, I guess thank you for providing that explanation of like the bump in Commerce Media margins. But over time, as you get past some of the initial I guess, better revenue share with partners at the earlier parts of the contract, I guess how do you see that margin going over time? And with the kind of slowdown — the step down in growth at Commerce Media in Q4, I guess how much of that is just the timing of partner additions? And how do you — like it seems like it’s a pretty significant step down just to be for your current run rate of growth.
So I was just kind of curious a little bit more detail on how you see the fourth quarter and the timing of additions helping to — how that trends to growth.
Ryan Perfit: Pat, this is Ryan Perfit. Thanks for the question. I’ll address the margin first. We were very pleased with the Commerce Media Solutions gross margin in Q3. That said, it did have a benefit from a partner renegotiation that would not affect us in future periods. So we’re still guiding towards high 20s for gross margin on the Commerce Media business as we move forward. 2026 is kind of the end of the partner incentives rolling off. So from Q4 going forward, we shouldn’t have that affecting us any further. In terms of the growth rate, it’s actually a good story there. The growth rate, we’ve seen an elevated growth rate Q1 through Q3.
I think it’s 98% Commerce Media Solutions growth year-to-date over prior year through the first nine months. We do expect to step down. Part of that is a law of large numbers. But largely, what’s happening there is we’re diversifying our partner base. So when we add partners like CVS and Wyndham this year, they don’t have the same retail seasonality that you see in our partner base prior to this year, where Q4 isn’t going to have the same sort of growth rate, but we do — it does help us in other periods because they’re a flatter business. So we’re kind of flattening our seasonality curve, which is good for us.
But you won’t see the same sort of elevated growth rates in Q4 as we diversify our partner base.
Donald Patrick: And Pat, this is Don. I know you know this, but the growth dollars will still be increasing, but obviously, the growth percentage is what Ryan was referring to. So as we get larger, the growth will continue.
Patrick Sholl: Okay. And on in-store integrations, I guess, are you at a point where you have like any sort of like early learnings on how that business can develop and the type of offers and type of advertising clients that are more effective there?
Donald Patrick: Yes, Pat, this is Don. Thanks for the question. We’re consistent with what we said in Q2. We’re being very deliberate in trying not to get out of ahead of our partners on announcements. We are live with key partners on both these solutions in Q4, and 2027 will be the right time for a more substantial conversation on this topic. But strategically, it’s a huge market. We have clients that are now — that are live in Q4. We have more coming on in 2027. And we are very excited about the combination of online and in-store post-transaction solutions, connecting through loyalty in which they transact.
It really makes the marketplace much more viable to both the shopper and the retail partners. So we will be deliberate about this, Pat, but we said we were going to test and learn in Q4, and we are live in Q4, and we will be exactly on track for that.
Operator: Our next question comes from the line of Maria Ripps with Canaccord.
Maria Ripps: Can you maybe just go a little bit deeper into what drove sort of accelerating growth within your CMS segment in Q3? I guess what are some things that sort of played out ahead of your expectations? And sort of understanding that you are sort of looking at some deceleration here in Q4. But given all the momentum, how are you sort of — can you talk about sort of the segment heading into a seasonally stronger quarter here?
Donald Patrick: Maria, it’s Don. So two specific things that we — the one we talked about and is publicly disclosed is CVS. CVS went live in Q3 and is scaling and is growing aggressively. So that plays a big part. And it’s a very large client. So obviously, bringing a client — bringing a partner on like that for that type of supply obviously drives significant growth for us. We have talked about the second major growth, which is really getting into what I’ll call captive retail media networks. These are the very large networks like Amazon, Walmart, Kroger, et cetera. That’s where 80% of the commerce market is today.
Traditionally, we looked at our core target as what I’ll call the enterprise clients that are just below that, that are not building their own retail media networks. But we now are working with one of the top captive retail media networks. We are growing with them. And it really comes down to the fact that they want to expand beyond the endemic demand that they currently have, which is obviously selling products that they that they have like detergent ad on a grocer’s checkout and they’re now getting into non-endemic, which is obviously what Fluent has been doing for 16 years, which is connecting a high-quality consumer to the category outside of that partner.
So like travel or insurance on the same sort of grocer checkout. So those two trends, bigger, larger deals coming online and getting access to those captive retail media. We have a number that we have — we’re one of the largest. We see it as a growth opportunity to continue to grow into 2027.
Maria Ripps: Got it. That’s very helpful. And then as you think about sort of double-digit revenue growth next year, how should we think about sort of the level of profitability and cash flow-through? I guess are there any investments that you feel like you need to implement as sort of this double-digit growth continues next year?
Donald Patrick: Yes. I’ll take the investment side, and then we’ll let Ryan kind of give you all the details on the financial side. So we invested very heavily into our platform in the early years, right? And you saw those in our financials, right? So you saw that in the growth of Commerce Media, but the Commerce Media business wasn’t large enough to carry the whole consolidated company. And that changed in Q2 where Commerce Media now is the largest piece of our business, and that growth is large enough and significant enough to carry the whole company to a double-digit growth rate.
So I think we built significant operating leverage into that business, and we feel very good about being able to scale that. When you look at in-store and you look at loyalty, that’s probably the areas that we’ll be investing in, which is add-ons and adjacent add-ons into our platform. But the good news is that it’s a very — this is a much predictable model. It’s very deliberate. We know how to integrate. So it’s going to be timed and we can do much — we can do a very good job tying it to revenue and tying it to profit.
But that’s the sort of investment side other than as we continue to scale, we add new partners, we’ll have to bring on more support and operations, et cetera.
Ryan Perfit: And following up on this, this is Ryan Perfit. As you probably saw, we were essentially breakeven in Q3 of this year. And one of our stated goals has been to improve adjusted EBITDA. We expect to continue to do that in 2027, but we are not giving any specific guidance at this point. But we are going to balance our investment opportunities with our profitability because that is important to us at this point, given our history and where we’ve been, it’s important that we continue to move towards profitability and drive dollars to the bottom line.
Operator: Our next question comes from Eric Martinuzzi with Lake Street Capital Markets.
Eric Martinuzzi: Congratulations on the CMS doubling. That’s a terrific bar that you’ve achieved. I wanted to focus on the expectations, I guess, kind of at the pipeline. You’ve delivered a lot, but we’re always looking for more. So how would you characterize the pipeline of media partners now versus, say, 90 days ago or maybe a year ago? Give us some insight on the pipeline.
Donald Patrick: Eric, it’s Don. Thanks for the question. So I touched on it in my earnings script. We don’t give out numbers on our pipeline, but it is scaling significantly in both quality and size. So we’re not only seeing it scale on the total number in terms of our ability to continue to drive that growth rate, but we also are seeing large — like the CDS is the larger players coming on that could significantly add supply to us at various points in time. So we do measure our pipeline in stages and how it moves through the stages.
And in order for us to do what we’re saying around our double-digit growth revenue, we just have to continue to execute at what we’ve currently been running at. We’re not looking for new better conversion on the pipeline or bigger pipelines have to grow. It is sitting out there. Commerce Media is, as you know, there’s great tailwinds in it. And we also have a great differentiated position. So our pipeline continues to grow accordingly to hit those numbers.
Eric Martinuzzi: Okay. And then as far as working that pipeline, I know for a lot of folks who are new to Commerce Media, they’re looking to talk with somebody who’s already using you guys. Have you been able — maybe it’s more of a marketing question. Do you have a growing list of reference customers or with somebody like a Wyndham or a DICK’S or a CBS, are they not quite willing to share their experiences with other folks?
Donald Patrick: No. That is the best sales tool and sales relationship that we have, Eric, in terms of — it’s hard to get a partner to do a press release with us, which is why we often don’t talk about names on this call or with you. But in order to talk to their colleagues about how they’ve made decisions, who they’ve been with, why they chose Fluent, it is one of the main reasons why we’re winning. And we deliver superior results for them. We match up well to them. We build strategic joint business plans with them, and we measure our strength of that relationship in a very disciplined way across the entire company.
Eric Martinuzzi: Okay. And then you work with kind of the larger players in the industry, but in a given quarter, is anybody — is there a 10% revenue customer that you’ll have to disclose? I’m trying to get into what drove the outperformance here. Would it need to be a 10% of total revenue customer or 10% of CMS revenue customer?
Ryan Perfit: Eric, this is Ryan Perfit. We would have to disclose a customer of over 10% or a partner over 10% of the entire business, not just CMS. At this point, there is nothing to report. And as we grow, it becomes less and less likely that any of those partners that we would add would hit that threshold. So we do not have concentration issues on the partner side, and there may be one customer on the advertiser side that was over 10%, but just barely so. I believe it was in Q2. I’m not sure about Q3.
Operator: Our next question comes from Frank DiLorenzo with Singular Research.
Frank DiLorenzo: Another nice quarter. Can you give us a little more granularity on the Commerce Media Solutions strength, where that’s coming from as far as potentially wins versus the competition, where your strongest verticals are right now and the potential you see amongst the verticals and just general economic strength relative to maybe the secular trend you’re in within your addressable market?
Donald Patrick: Thanks, Frank. I appreciate the question. So we have traditionally been very heavily focused on our strategy around retail partners. And in 2023, that was really our main focus was to build our ability to deliver superior results and quite honestly, the hardest vertical in order to go after. So retail continues to be a high majority of our overall partnership verticals. Frank, we have, as you can see from Wyndham and you can see from CVS and public storage, things like that, we have started not only to get from ticketing and into grocery, we’re starting to get into the other channels.
And our strategy has been to get an anchor client in that vertical prove that we can deliver superior results compared to the competition from both a revenue perspective for the partner, but equally important, the quality of that consumer that we connect to the advertiser. And then we use those case studies in our sales to dive deep and dive into those channels. So still heavily winning — we’re winning in retail, but you’re seeing us start to break out into the other channels. When we look at growth for 2027, there are stated channels that we’re going out and trying to really expand out into it.
But retail continues to be a large piece of this and a large piece of the supply that’s there.
Frank DiLorenzo: Okay. And maybe a little broader than pharmacy, the pharmacy space, things like wellness and along those lines, is that something you’re thinking about or something you think even has potential to put a focus on into the future?
Donald Patrick: Yes, absolutely. I think when you start to look at our solutions together between not only online post transaction, but in-store and you also talked about loyalty, it opens up a competitive advantage against in those type of verticals also, especially with repeat — a large number of repeat consumers and how we can best interact with that consumer experience to drive better results for the partners.
Frank DiLorenzo: Just one other quick question, revolve around AI. Is AI helping you to drive any growth, any wins, add-ons, anything along those lines? Have you been discussing that internally or with your clients? And I’m just wondering your thoughts on the AI drivers.
Donald Patrick: Yes, AI from a channel perspective, Frank, in terms of shopping and the GenX shopping or more from a sort of a technology or a little bit of —
Frank DiLorenzo: Your own technology and use of it, if that’s helping with the business at all.
Donald Patrick: Yes, absolutely. I mean we’ve — AI is a critical part of the platform that we built starting in 2023, both from a product perspective and a tech perspective, and honestly, how we best use our first-party data asset in order to identify that best — the individual the best and what their purchasing behavior is and how we connect it. So from a product and a technology perspective, AI is a deep integrated piece of our solution and why we drive better results.
Frank DiLorenzo: Okay. Great. And I don’t know if you could give us a little more detail on CVS. You talked about it having a bigger impact obviously, in 2027. Maybe it’s too early to discuss it, but is that something that might be a ramp that has a larger impact in the second half as opposed to the first half? Or is that something you would like to wait and maybe take a wait and see attitude on where that’s going?
Donald Patrick: Yes. It’s a great question. You give me it out already. But I’ll talk about what we disclosed last quarter. CVS was an important milestone for us because it was — we sold both an online post transaction with an in-store post transaction, right? And the road map was to go — to get online in Q3, which we did and start to scale with them in the various verticals that they have from pharmacy to online to web, et cetera. And then we have a full testing and integration plan on in-store also in 2027. So that is a very large opportunity that we could continue to penetrate.
And then as we take the learnings from the in-stores that we have live now and CBS and a couple of others that we signed up, obviously, we believe that will be a big accelerated and a big growth opportunity from our existing client base.
Operator: [Operator Instructions] Our next question comes from the line of Bill Dezellem with Tieton Capital Management.
William Dezellem: I do have a group of questions. And the first one is just for clarification relative to ’27 in your guidance about double-digit revenue growth. Presumably, that would mean that each and every quarter that you would see double-digit revenue growth for the total company versus the corresponding 2026 quarter. Is that what we’re hearing you say?
Ryan Perfit: Bill, this is Ryan Perfit. We did not say that specifically, but yes, I think that’s a fair assumption. This is a continued trend here.
William Dezellem: Great. And then I don’t think in your opening remarks or to any of the questions you have talked about either the number or the size of the new Commerce Media customers that you added in Q3. So it’s our understanding or impression that from a selling standpoint, Q3 is the most important quarter of the year for that selling process. Would you please walk through, both the number of wins that you had here in Q3 and the size of that new business?
Donald Patrick: Great question, Bill. We don’t disclose that. Traditionally, we basically have said that you’re absolutely right, Q3 is a critical time period for closing, especially retail partners because of their cycle and now they have code freeze in Q4. But the numbers that we are expecting to close and the size of those clients that we’re expecting to close came in as we expected.
Ryan Perfit: And I’ll layer on top of that. Our annual revenue run rate that we give is a good indication of that. So we moved from $125 million to $145 million within the quarter. What we measure in that is partners that went live in that quarter. So we do have a close period in Q3. Some of those partners don’t go live until Q4. So although Q4 is not a selling period, the step-up that you see from Q2 through Q4 really indicates the number of partners that we closed in that period and is something that we expect to see additional significant step-up on from Q3 to Q4.
William Dezellem: And that’s exactly what I was trying to get a handle on is those customers that we didn’t have full quarters of revenue here in Q3 and that turn on in Q4, the impact that those could have. So maybe I’ll pause there and see what additional color that you can give on that.
Donald Patrick: I think you’re absolutely right, Bill. Most of our clients in Q3 came in towards the latter half of the quarter. And then as Ryan said, there’s a number of contracts that we signed with new partners that came on early in October. So that does tend to be the seasonality, especially in the retail vertical. So you can’t take that — the $125 million, it does count in every single one that came in, in Q3 and would be there for the full year. So what’s not capturing is the ones that signed in Q3 that will go live in Q4.
William Dezellem: And to just maybe give a bit of scale, and I’m going to try one more angle with the same question before I move on is, how would you characterize the number and/or size of the aggregate wins in Q3 of this year versus Q3 of ’25?
Donald Patrick: Yes, I don’t have — it’s a good question, so I don’t have it at my fingerprints tips so at exactly where — how many do we go online in Q3 versus Q3 this year and also the size of it. But as I said to you, our pipeline has gotten larger. The size of the average supply has got larger by those partners. And we talked about this a little bit with Frank’s question.
We have a very disciplined approach to the stages in the pipeline and how they go and they — and what converts and how they convert and they are converting as we expected compared to last year, and we’re not projecting anything different or any other improvement around that when we give the revenue guidance in 2027.
William Dezellem: Great. And then I don’t want Ryan Schulke to feel left out. So Ryan, would you please discuss your vision for the business from this point forward now that the Commerce Media business is not only spun up, but actually is truly meaningful. Walk us through your vision with where this goes forward? And maybe how that relates to where you’re spending and focusing most of your time right now?
Ryan Schulke: Yes. Thanks, Bill. I was feeling kind of left out. So I appreciate the question. I think we’ve laid the groundwork in terms of where the business is heading. Obviously, we’re partnering with some of the world’s largest and most iconic retailers. We’re using our performance marketing heritage to really introduce advertisers and new verticals into these ecosystems and also coach these retailers on how we can really expand beyond just that post-transaction moment that we’re known for so much into loyalty, into in-store. So whereas in previous years, access to incremental supply has always been a pain point for performance marketers across many different verticals. That’s not going to be the problem anymore.
It’s really going to be how do we curate personalized offers, more personalization towards the shopper themselves, create stronger value for these retail partners and their shoppers, but also the brands that we work with on the other side so that they can see the value in this and scaling against it so that they have more alternatives as opposed to the traditional walled gardens where they’ve been spending the vast majority of their marketing budgets. So that’s really where we see things going. The opportunity is massive as Don and Ryan have really articulated here on the call today. And that’s where we see this going.
We’ll continue partnering, but we’ll really focus on more personalization, using data in a smart way, privacy safe, of course, but creating better experiences for shoppers, better outcomes for these brands, and that leads to better unit economics across the board for our partners as well as our advertising customers.
William Dezellem: And Ryan, with all of that in mind, where in that process do you see the — I mean, ultimately, where you’re spending the most time. And I’d like to ask where the most, the biggest pressure point or pain point is and presumably, that is going to match where you’re spending your time, but maybe there’s a better way to ask the question. So now that you get the concept, I’ll let you take it from there.
Ryan Schulke: Absolutely. I’d say the biggest pain point is Facebook, Google, these are businesses designed to sell ads. It’s literally — they’ll coach you how to come in and play the game, whereas when you’re dealing with retail partners in Commerce Media, different retailers have different sensitivities. They don’t all act exactly the same way. There’s different rules of the game to work with a DICK’S Sporting Goods, for instance, versus the CBS. So our job, a big part of our job at this point is not to necessarily make it a uniform ecosystem, but to just understand those sensitivities as well as the opportunities.
Different retailers are going to have different types of sale events going on, things like that and how do we talk to their shopper, how do we personalize and make this work better? Because whereas you get coached on that with Meta, with Google and the like, this is a different ecosystem with different types of sensitivities. So the bulk of the legwork at this point now that our reputation has grown so much that our pipeline, as Don earlier stated, is very sturdy and growing on the supply side of things.
It’s really about coaching advertisers how to buy this inventory, how to think about it and how to look at their down funnel metrics in terms of quality and how they price it long term. I hope that answers your question.
Operator: And this will conclude our Q&A session. And I will turn the call back to Don Patrick for closing remarks.
Donald Patrick: Thank you all for joining us today. Q3 was our second consecutive quarter of revenue growth on continuing businesses and our 11th consecutive quarter of high double-digit or better growth in Commerce Media. Our financial results are now reflecting in the strategy that we set out to execute. And we are winning top of the market brands, and we’re seeing a large opportunity ahead of us as non-endemic becomes more strategic to our partners and quite honestly, a space that Fluent has exceeded at for the last 16 years. So we look forward to updating you on our Q4 and our full year results.
Operator: This concludes our conference, and you may now disconnect.
