Fluent, Inc. (NASDAQ:FLNT) Q2 2023 Earnings Call Transcript

James Goss: Okay. Well, and you were also talking about getting others to adapt to your strategy or risk some potential regulatory risks. And I assume this all relates to the telemarketing consent practices, the stipulated order you were outlining on July 17. So is that the case? You’re expecting that whatever you were negotiating with them is going to apply to others and they have to take notice? And which types of competitors did you have in mind as potentially being commanded by these same issues?

Don Patrick: Yes. Good question, Jim. So our consent order, and as I said, we had implemented 95% of these things beforehand, before the beginning of Q2 and mostly over the last couple of years, right? And what we – much of what the FTC incorporated into their consent order were policies and procedures that we had developed. So specifically, then the consent order coming out on the FTC is not – it’s specific to Fluent, but it’s also specific to the industry. So anyone who is buying media or interacting with the consumer or getting consent. They’ve clearly set out the standards that we currently have in our marketplace, and it’s not debatable that they should use it. They have clearly said this is a way we’re going to interpret the law, and this is the requirements that we’re going to ask everybody in the industry to go up against.

So the enforcement of that is really sort of 3 ways for us. One, is we’ve been very vocal in the marketplace and the compliance groups and committees and things that are in the market in terms of how do we make it very clear about where we’re going and where we’re heading and how others should follow with us. The second one is obviously working with our brands and brand partners that we are in compliance. We have higher quality, and you should definitely make sure that the other partners that you have to have the same level of compliance, same level of quality as we do. And the third is that the FTC themselves have said that this is just the beginning, not the end, and we’ll be looking at others in our industry. So that’s how we kind of look at it.

We compete, Jim, as you know, for our media from all sorts of different sources. We compete with our advertisers, obviously, specifically against a lot of different companies. But this is – this order and the compliance standards that we call the Fluent way, really are across multiple industries and across different type of competitors.

James Goss: Okay. One last one, if I could. The gross profit was below expectations, but operating profit was actually a little better than expected. It seems like the accounts between the two are sales and marketing and G&A, and I was just wondering which – or if – or both are you pushing on?

Don Patrick: Yes. We are obviously pushing on everything around that part of the mix you don’t see, Jim, is just the mix between the different businesses. So as we talked about, we’re investing aggressively into AdFlow, into Call Solutions and Influencer business. The other businesses were obviously we’re obviously getting more into a – we have operating leverage, and we can achieve that leverage. So it’s really the mix between the different business units. Some are at critical mass and we’re getting operating leverage out of it significantly. Some are investment, and we’re actually investing into that and some of the operating expenses are going up. So it’s really the mix of those – of the maturity of those different businesses.

James Goss: Okay. Thank you very much. Appreciate it.

Don Patrick: Thanks, Jim.

Operator: Thank you [Operator Instructions] Our next question comes from Bill Dezellem with Tieton Capital Management. You may proceed.

Bill Dezellem: Thank you. A couple of questions here relative to the $150 million of growth potential that you referenced in your opening remarks. Would you please restate what the time frame was for that? I missed it.