Fluent loses $13.58-million (U.S.) in Q3 2025

Executive Summary

• Fluent Corp. reported financial and operating results for the third quarter ended September 30, 2025, showing consistent revenue but significant pressure on gross margins and profitability compared to the prior year.
• The company highlighted operational improvements, including the operationalization of the Rosa indoor cultivation facility in Florida and the Buffalo facility in New York, aiming to enhance premium flower capacity and yield.
• Management anticipates regulatory tailwinds from the U.S. federal government's plan to close the hemp-derived THC loophole, which is expected to reduce illicit competition and support margin recovery in key markets like Florida and Texas.

Key Details

• Revenue: $26 million for Q3 2025, compared to $26.1 million in Q3 2024.
• Florida Revenue: $21.6 million in Q3 2025, down from $22 million in Q3 2024, reflecting pricing pressures.
• Gross Profit: $8 million (31% of revenue) in Q3 2025, compared to $14.3 million (54.6% of revenue) in Q3 2024.
• Adjusted EBITDA: $2.8 million in Q3 2025, down from $7.5 million in Q3 2024, primarily due to lower revenue and reduced margins.
• Cash Flow from Operations: Cash used in operations of $800,000 in Q3 2025, compared to cash provided by operations of $9.5 million in Q3 2024.
• Balance Sheet (Sept. 30, 2025):
  • Cash and cash equivalents: ~$15.1 million (up from $8.9 million in Q3 2024).
  • Total debt outstanding: $72.2 million (up from $71.4 million in Q3 2024).
  • Common shares outstanding (as-converted): ~714 million (up from 342 million in Q3 2024).
• Operational Updates:
  • Florida: Closed five lowest-performing dispensaries; opened new location in Brandon (total active stores: 31). New dispensaries in Orlando Sand Lake (Q4 2025) and Palm Bay (Q1 2026) planned. Rosa indoor facility operationalized in November, ramping up premium flower capacity. Launched Bag-O seven-gram ground flower.
  • New York: Buffalo production facility nearing full operational status. Initial retail/wholesale launch of Connected and Alien Labs SKUs expected in December 2025. Rebranding completed for Manhattan, White Plains, and Kingston dispensaries. Closed Syracuse medical-only dispensary; new location planned for 2026.
  • Texas: Houston education and pickup centre expected to open in December 2025. Production underway for new Rick Simpson Oil (RSO) and distillate syringe products.
  • Pennsylvania: Operates three dispensaries in south-central PA; evaluating regulatory developments for future growth.
• Regulatory Context: Management views the U.S. federal government's plan to close the hemp-derived THC loophole as a meaningful tailwind.
  • Florida Impact: Unregulated hemp retailers (~9,500) significantly outnumber licensed dispensaries (734). Crackdown expected to reduce illicit competition.
  • Texas Impact: Over 8,000 hemp resale licenses exist. Regulatory changes expected to rebalance the competitive landscape and enhance long-term economics for compliant operators.
• Conference Call: The company will not host an earnings call for the quarter.

Notable Quotes

• "During the third quarter, we continued to execute on our strategic priorities with a clear focus on reversing the declining margin profile and enhancing operational efficiency across our footprint ahead of our new indoor capacity hitting retail shelves in the fourth quarter," said Dave Vautrin, interim chief executive officer of Fluent.
• "We have also made disciplined investments during the current quarter in markets where we expect meaningful margin contribution. In Florida, we operationalized our large-scale Rosa indoor cultivation facility in November, nearly doubling our premium flower capacity."
• "Management views this as a potentially meaningful tailwind for regulated operators that is expected to curb the widespread availability of intoxicating hemp products that currently operate outside the licensed cannabis framework."