v3.26.1
Note 9 - Segment Information
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

 

9. Segment information

 

The Company identifies operating segments as components of an entity for which discrete financial information is available and are regularly reviewed by the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker ("CODM"), who has final authority in making decisions regarding resource allocation and performance assessment. The profitability measure employed by CODM is earnings before interest, taxes, depreciation and amortization ("EBITDA"). The use of EBITDA as a financial metric provides management and investors with a clearer view of the core business performance and profitability, excluding the effects of financing and other non-operational expenses.

 

As of  March 31, 2026, the Company had two continuing operating segments: a) "Fluent", which is Owned and Operated and Commerce Media Solutions revenue, and b) "AdParlor". The Company determined that it has one reportable segment, "Fluent," for the purposes of segment reporting. The Fluent reporting segment combines Fluent with the Call Solutions operating segment.  The Company noted that as of January 31, 2026, Call Solutions was divested (refer to Note 12, Divestiture, below for details), however, did not trigger a re-assessment under ASC 280. This reporting unit works with advertisers to then bring consumers to their products through multiple media channels and earn revenue when a consumer completes an action as agreed upon with the advertisers. The remaining activity represents the operating results of AdParlor, LLC, which mainly performs media buying, and those businesses sold or in run-off, which are included for purposes of reconciliation of the respective balances below to the consolidated financial statements and included within "Unallocated" below. 

 

The Company determined its segments based on revenue sources and its agreements with advertisers. In addition, certain advertisers overlap within the different operating segments and they are managed consistently with shared management. Further, the Company considered other qualitative factors, such as the environment operated in, and quantitative factors to determine its reportable segment.

 

The significant expense categories and amounts align with the segment-level information that is regularly provided to and used by the CODM in evaluating performance and EBITDA profitability and were identified as a) cost of revenue b) salaries and benefits, c) professional fees, and d) IT and software.

 

The Company does not allocate certain shared expenses such as interest expense and other non-recurring items. The allocation methodology is regularly assessed, evaluated and subject to future changes.

 

Summarized financial information concerning the Company's segments for the three months ended March 31, 2026 and 2025 are shown in the following tables below, noting prior period amounts have been recast to conform to the Company's current period segment presentation:

 

  

Three Months Ended March 31,

  

Three Months Ended March 31,

 
  

2026

  

2025

 
  

Fluent

  

Total

  

Fluent

  

Total

 

Revenue(1):

                

United States

 $25,884      $35,905     

International

  16,941       17,916     

Total segment revenue

 $42,825      $53,821     
                 

Reconciliation of revenue

                

Other revenue

      2,027       1,389 

Total revenue

     $44,852      $55,210 
                 

Costs of revenue

                

Cost of revenue (exclusive of depreciation and amortization)

  34,464       43,732     
                 

Costs and expenses:

                

Salaries and benefits

  7,566       7,689     

Professional fees

  1,545       2,159     

IT and software

  1,056       1,186     

Other segment items(2)

  451       3,333     

Segment EBITDA

 $(2,257)     $(4,278)    
                 
                 

Reconciliation of Segment EBITDA to loss before income taxes

                

Segment EBITDA (from above)

     $(2,257)     $(4,278)

Plus: Unallocated revenue

      2,027       1,389 

Less:

                

Unallocated cost of revenue (exclusive of depreciation and amortization)

      349       43 

Unallocated salaries and benefits

      1,062       1,117 

Unallocated professional fees

      183       82 

Unallocated IT and software

      57       92 

Unallocated other operating items(2)

      347       392 

Depreciation and amortization

      1,681       2,461 

Interest expense, net

      605       880 

Fair value adjustment of Convertible Notes, with related parties

      837       80 

Loss before income taxes

     $(5,351)     $(8,036)

 

(1) Revenue aggregation is based upon location of the customer.

(2) Balance includes sales and marketing expense, travel and entertainment expense, office overhead, restructuring and severance, impairment of intangible assets, and other operating costs.

 

 

  

March 31,

  

December 31,

 
  

2026

  

2025

 

Total assets:

        

Fluent

 $63,471  $79,570 

All Other

  8,800   9,563 

Total assets

 $72,271  $89,133 

 

As of March 31, 2026, long-lived assets are all located in the United States.

 

For the three months ended  March 31, 2026, 27.3% of the Company's consolidated revenue was earned from customers located in Israel. In addition, the Company identified an international customer within the Fluent segment that represented 13.1% of the Company’s consolidated revenue.