Good afternoon everyone, and welcome to Fluent, Inc. Q4 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note that today’s event is being recorded. At this time I’d like to turn conference call over to Mr. Ryan McCarthy. Mr. McCarthy, please go ahead.

Good afternoon and welcome. Thank you for joining us to discuss our fourth quarter and full year 2018 earnings results. With me today are Ryan Schulke, CEO; and Alex Mandel, CFO. Our call today will begin with comments from Ryan Schulke and Alex Mandel, followed by a question-and-answer session. I would 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 our website. To access the webcast, please visit our Investor Relations page on our website, investors.fluentco.com. Before we begin, I would like to advise listeners that certain information discussed by management during this conference call will contain forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements made during this call speak only as of the date here of. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the Company’s business. The Company undertakes no obligation to update the information provided on this call. For a discussion of the risks and uncertainties associated with Fluent’s business, I encourage you to review the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and the quarterly reports on Form 10-Q. During the call, we will also present certain non-GAAP financial information relating to media margin, adjusted EBITDA and adjusted net income. Management evaluates the financial performance of our business on a variety of key indicators, including media margin, adjusted EBITDA and adjusted net income. The definitions of these metrics and the reconciliation to most directly comparable GAAP financial measure are provided in the earnings press release issued earlier today. With that, I am pleased to introduce Fluent’s CEO, Ryan Schulke.

Thanks, Ryan, and good afternoon, everyone. Thank you, for joining as we announce our fourth quarter and full year 2018 results. We’re again pleased with the progress Fluent has been making with our fourth quarter producing $70.8 million, $25.1 million and $11.1 million in revenue, media margin and adjusted EBITDA respectively. Media margin is a new non-GAAP metric that’s detailed in our earnings release. For the fourth quarter this represented 25% growth in revenue year-over-year, 27% growth in media margin, and 4% growth in adjusted EBITDA. For the full year, we saw 18% growth in revenue, 34% growth in media margin, and 35% growth in adjusted EBITDA. Much of the top line growth we saw in Q4 was directly on the back of Fluent’s core business. We made a decision to test the throttle on our traffic acquisition efforts with the goal of scaling key client campaigns and driving them more customers. This was largely successful, though it slightly compressed margins against the backdrop of seasonal media pricing. It was an important opportunity for Fluent to demonstrate our unique value proposition to clients by meeting, and in many instances, exceeding their customer acquisition goals with predictable return on investment. 2018 was somewhat of a landmark year for Fluent. And I’d like to take a moment to highlight some of what we accomplished. First, on March 27, we completed the spin-off of our former sister company, IDI, and are now refocused as a pure-play digital marketing company. Second, we’ve onboarded a significant number of new leaders to enable a more scalable infrastructure for growth, including our COO, Don Patrick; our CFO, Alex Mandel; and our SVP of Sales, Andrea Haldeman. Talent acquisition was a large focus for us throughout 2018 across the organization. Third, we announced the launch of Fluent Health,…

Thanks, Ryan. It’s great to join you today on the call and to be part of the Fluent team. And hello and good afternoon to those on the conference line. As Ryan mentioned, from my prior experiences leading the finance functions at two consumer-facing digital media companies, I’ve seen a number of relevant business models that had a common framework. On the one hand, attracting consumers on digital platforms, primarily through paid marketing and offering them engaging and valuable experiences, which engendered trust and loyalty with brands. On the other hand, delivering the advertisers the benefits of Performance Marketing services in the form of targeted customer acquisition programs add scale and with more predictable outcomes in terms of cost and ROI and traditional forms of advertising. And I can see the ways in which Fluent is executing on these market opportunities today and the opportunities ahead to further scale and optimize. My impression early on was that Fluent’s core competitive strengths included the ingenuity and entrepreneurial DNA of its team, a deep understanding of promotional media, and unique approach to data-driven performance marketing. These core strengths suggest that there was a meaningful opportunity to build value and drive growth. I learn more about the company’s history and the corporate transitions that have navigated, which necessitated considerable management bandwidth. This further suggested to me that following the spinoff, there would be an opportunity for the company to increase its focus on its core business strengths and to leverage its cash flow for future growth, specifically of the Fluent business. The company’s results in Q4 and for the full year 2018 are reflective of capitalizing on these strengths and opportunities. In discussing these results, I’d like to provide some context. We’ve made several changes to the company’s financial presentation that can be…

[Operator Instructions] Our first question today comes from James Goss from Barrington Research. Please go ahead with your question.

Hi, this is Pat on for Jim. I was wondering if you could provide a little bit more detail on kind of the key drivers on the low – the lower media margin that you guys expect in 2019?

Yes. Hey Pat, good to hear from you. And really as – we’re always taking a long view in terms of our investments into media and partnerships to go out and access supply and this is a range of different types of media initiatives that we have in place from new social channels, technologies that we’re utilizing to interact with consumers, you’ve got a lot going on within messaging apps and things like that. So it’s pretty spread across all addressable channels, we’re able to access the right audiences. There is not any one particular, but thematically certainly thinking about the newer technologies that we’re seeing consumers adopting at more rapid pace.

Okay. And with regard to the UK business, how much of a impact is that on the overall company at this point?

At this point, it’s still relatively immaterial given the size of the U.S. business, though it is growing at a decent clip. Right now, it just hasn’t been a huge focus due to some of the traction that we’ve been getting in the U.S. We do believe there is more to talk about there. It could be something that we look at a lot closer in the back half of the year.

Okay. Thank you.

Thank you.

Our next question comes from Bill Gibson from ROTH Capital Partners. Please go ahead with your question.

Thank you. My main question revolves and you answered it in part around what Pat was talking about. And if it’s going to be, what’s the timeframe for the added cost to accelerate the growth rate? Does there come a point and I think you might have said 2020, where we start to reap the benefit of the investment on the media spend side improved margins?

Yes. Absolutely and really, it’s a lot of our core strategy, Bill, and our culture is around test and learn. Rapidly, we’re incredibly data driven. So, we’ll accelerate as quickly as we’re able from a margin expansion by developing some of these new channels is really important to us. It’s critical to be able to go out and create a mode, so to speak, in our understanding on how to access them and go out and engage audiences across these channels as they’re adopting. So, we do think there will be much greater operating leverage against both our media spend and our SG&A and personnel cost in 2020.

Okay, that’s good. What I’d like to do is, possibly follow-up in a little bit after I’ve had a chance to get the new numbers from last year.

Sure thing.

Thanks.

And ladies and gentlemen, with that, we’re going to conclude today’s question-and-answer session. I’d like to turn the conference call back over to management for any closing remarks.

Yes. thank you and thanks for everybody joining today. We’re really eager to continue to progress across 2019 and beyond, and update you as we go. We’re feeling really optimistic about Fluent’s future and I think some of the 2018 highlights here are really just a starting point for us. So again, thanks for joining, and we’ll look forward to updating soon.

Ladies and gentlemen, that does conclude today’s conference call. We do thank you for attending. You may now disconnect your lines.