Commerce Media Shift And First Party Data Will Transform Long Term Earnings Potential

Catalysts

About Fluent

Fluent operates a performance based commerce media platform that connects brands, retailers and advertisers with transacting consumers across owned marketplaces and partner environments.

What are the underlying business or industry changes driving this perspective?

• The shift of Fluent's mix toward Commerce Media Solutions, which contributed 56% of Q4 2025 revenue and is expected to remain the majority of the business, points to a model that is more closely tied to advertiser performance budgets and may support revenue growth and media margin expansion over time.
• Exposure to a U.S. commerce media market that external research sizes at US$100b by 2027, combined with Fluent's annualized Commerce Media Solutions run rate of US$105m at year end 2025, gives the company room to increase share in a growing pool of spend, which can influence top line growth and operating leverage.
• Use of proprietary first party data and embedded AI across workflows and partner offerings, including Rebuy Monetize on Shopify, can improve targeting and return on ad spend for advertisers, which in turn can support higher pricing power, stronger media margin and better adjusted EBITDA.
• Expansion into adjacent use cases such as loyalty and pre checkout, on top of post transaction placements, widens Fluent's role across the customer journey for existing and new partners, which can raise wallet share per client and support higher revenue and gross margin over time.
• Repositioning the owned and operated properties as both a gross profit generator and a test and learn engine creates a feedback loop for product development, which can lower customer acquisition costs, improve campaign efficiency and support higher net margins and earnings quality as Commerce Media Solutions scales.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Fluent compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Fluent's revenue will grow by 12.8% annually over the next 3 years.
• The bullish analysts are not forecasting that Fluent will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Fluent's profit margin will increase from -13.0% to the average US Media industry of 9.9% in 3 years.
• If Fluent's profit margin were to converge on the industry average, you could expect earnings to reach $29.7 million (and earnings per share of $0.81) by about April 2029, up from -$27.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 7.6x on those 2029 earnings, up from -3.5x today. This future PE is lower than the current PE for the US Media industry at 14.0x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.33%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Commerce Media Solutions is becoming the core of the business, but the loss of a media partner that triggered an early contract termination and management comments about margins tightening as newer partnerships move beyond incentive periods highlight that partner churn, pricing pressure and less favorable contract terms could limit revenue growth and keep media margin and gross margin from improving as expected. This would also weigh on adjusted EBITDA and net income.
• The owned and operated segment is described as facing compliance headwinds and is expected by management to continue to decline, yet it remains a key source of gross profit and a data and testing engine for Commerce Media. A faster or more severe decline in this legacy revenue base could reduce gross profit, increase the burden on Commerce Media to fund overhead and delay any improvement in operating margins and earnings.
• Management highlights aggressive investment needs in Commerce Media adjacencies such as loyalty and pre checkout, with comments that these newer areas are a few quarters away and that adjusted EBITDA is not expected to be positive in 2026. If these long term projects take longer to reach scale or fail to gain traction, the company could face a prolonged period of low or negative adjusted EBITDA and continued net losses without a clear path to stronger earnings.
• The company operates in a large commerce media market where at least one established competitor is already serving enterprise clients and where other players are entering via ecosystems like Shopify. Management also points to large ad tech companies pursuing programmatic solutions, so rising competition for retailers, brands and media partners could pressure take rates, limit share gains and ultimately cap revenue growth and margin expansion across Commerce Media Solutions.
• The balance sheet depends on external capital and flexible credit, with US$19 million of equity raised in 2025, total net debt of US$30.8 million and a new facility used to support Commerce Media growth. If growth or margins fall short of management ambitions, the company may need further equity or debt that could dilute shareholders or increase interest expense and that would put additional pressure on future net income and earnings per share.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Fluent is $5.0, which represents up to two standard deviations above the consensus price target of $4.25. This valuation is based on what can be assumed as the expectations of Fluent's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $5.0, and the most bearish reporting a price target of just $3.5.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $299.5 million, earnings will come to $29.7 million, and it would be trading on a PE ratio of 7.6x, assuming you use a discount rate of 7.3%.
• Given the current share price of $3.22, the analyst price target of $5.0 is 35.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.