Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Thank you for attending today's Leafly First Quarter 2023 Earnings Call. [Operator Instructions]

I'd now like to pass the conference over to your host Keenan Zopf, with The Blueshirt Group.

You may proceed.

Keenan Zopf

to quarter welcome earnings and afternoon, Leafly’s XXXX first call. Good

after are on @investor.leafly.com. prepared Miyashita; recorded our Suresh press the accompanying copy me website with presentation Q&A. CEO, host remarks Yoko live will call been release, Today’s Joining our of Krishnaswamy. can today Yoko be A on and Suresh and have an along which earnings CFO, found

are Litigation made of Today’s Act pursuant the statements, call will provisions Securities contain Safe the XXXX. which Private Reform forward-looking of Harbor to

Forward-looking statements will. expect, markets and potential outlook; future include intend, anticipate, metrics, business regarding statements projected by the seek, financial as environment; Leafly, in strategies; can plan, believe, services be the growth industry operates; Leafly’s and offered opportunities; identified and which or by Leafly results such performance words

these These not views our relied and as representing should of subsequent any views only, undertake we duty upon today date, statements reflect any update at statements. our do not be as to

by their cause actual Forward-looking statements. could are and from on differ materially undue to risks to we reliance that nature expectations, to place that statements such you uncertainties results not and address matters caution subject

the XX, important For and in our results, material a the and that XXXX, periodic Form XX-K risks SEC. risks Report with actual SEC Annual discussion affect March could our today’s the our please other on the of to release, refer factors discussed press with filings filed other

the included on is we earnings and accordance available GAAP A release, our call the in will non-GAAP reconciliation measures, in principles. is filed also website has with non-GAAP been press the During accounting prepared discuss our results @investor.leafly.com. with which and are accepted SEC financial which also generally not of

the turn for over me the operational let Suresh and financial details. that, to With call

Suresh Krishnaswamy

to first the results Keenan, for continues our cannabis macro we In delivered you, and welcome challenging. within be expectations. everyone. The quarter, environment Thank

our While value. platform, is the on engagement by evidenced they're cannabis, consumer in seeking increased remains interested

retailer two, to continuing brand preserving Within being stronger squeezed our marketplace, provide believe continue they're advertising three, priorities. operating areas and result, from tightening the revenue on customers One, a are to efficiency focus three and and a we As a we that budgets. business their our context, margins this a supporting improve will near perspective, and greatest the cash. term return of building

$XX highest We due cash our cash. to QX ended year expenses. far away with loaded million and burn is quarter in front QX

XXXX burn know these of savings $X structure, that incentive For million company burn significantly QX for annual other the cash contributing expected cash costs payments, the quarter. from approximately include QX to level that in remaining annual totaled our the per three D&R below to about X.X with be important It's payments, public insurance is quarters including and monetary million. XXXX

cost. XXX,XXX restructure for approximately paid the QX in We

together, expect burn previously due all Taken modestly on to be XX we I'll to higher rate cash our than that the on top prudently we our with profitability. moment. disclosed XXXX growth, Amidst now our of not capital to which raise line pressure the operating the we needing intent in path managing to a committed remain discuss capital new environment, difficult million to

Now in to down million was Revenue the year-over-year. X% income the first statement. quarter XX.X

million, X% year-over-year. from up Our X.X revenue was retail

of from XX% spending last brand a sequential brands, continue compared On brand last million. further in second and of As half pullback we on mentioned XX% we advertising, to which declined see a see to in reflecting quarter to softness year. year-over-year X.X QX we revenue declined the totaled basis started which revenue

year. typically as is for did play our heavily not advance That in advertise month April at they this strongest brands XXX. out

changes return to a revenue. improve second tight, on spend commercial into Ad will so revenue and we're seeing structure, preparing to moving budgets quarterly for present we opportunities be discuss the basis brands similar XXXX not believe are remain QX. that which our in a levels half to far, We revenue Yoko brands as

our retail accounts of to their grew from to attributed closely retail listings the platform one business. off decline MSO more off a was this Looking what not seeing Their sequentially who results. The in reflect and Ending we're at exit XXXX. QX bulk one declined X% X% decision does pulled across with year-over-year completely. our

our stability. which of Excluding all the and additional as X% markets sequentially. the evaluating accounts, and loss health X% accounts year-over-year would MSO, retail our XXX this have expect the churn this level one amounted year industry of grown the to of We're accounts across seeks

some margins retailers, are softness as and in making stay. markets seen decisions unprofitable markets dispensaries squeezed, are or and certain operators We've for exit to

exit discounted our platform ARPA. we've stores stabilization in As our seen

was first quarter and third we're Our stable X% base forming the the QX quarter-over-quarter. a in retail row gives flat in a year-over-year we can of which quarter $XXX, decline improve. which of a ARPA us that ARPA optimism upon marked

share ARPA of to wallet in our of improvement focused customers the forward, price increasing and second in Going with drive on we're half XXXX. increases

to operating Moving our expenses.

headcount reduction in down this sequentially. QX cutting achieve in OpEx. our improvement million XX.X the OpEx The X% Our us cost efforts year-over-year in to and down and across totaled XX% business allowed

loss compared million As a QX X.X a last 'XX. loss of time took of to reminder, QX in X.X we in Adjusted QX a for was of our restructure charge for call. million, the a discussed of XXX,XXX approximately one on EBITDA

rest report as guidance to improvement in our factors, XXXX. account expect adjusted into EBITDA follows. each QX for these quarter We of Taking is through the

We to improve and expect million. around be X.X be and to million XX.X continue around negative revenue adjusted to EBITDA

added in cost business. we're and As efforts operating the a result of March, reductions efficiency October the seeing improved containment headcount and in

executing on are the disclosed. by achieve of practice as profitability, XXXX are previously our this and end focused against plans We our to

and consumers. improved. structure fee foundation hard platform when a team customers Leafly groups sales team content Our at our and now in is at for is work, enhancing success are our our and place The and engineering for laying markets product

Yoko details. for more to over call the turn now I'll

Yoko Miyashita

you, good Thank And everyone. afternoon Suresh.

and cash sales dictated conditions what's local the market burn. managing better industry of to within around prioritize with of this, budgets undertook in optimization To we The in tighten, As control. teams sizing we cannabis our organization. to to the started levers challenges to March, to environment. strategy drive do to business a our continue to additional customers' our and is our align right we efforts continue and continue and by our we to our current operate flexibility markets, the approach prudent In happening go align current take macro

focused increasing on share are clients existing growing wallet. from our We of sales and

more macro retain for and value Our to an experience. proposition omni-channel rely to Leafly it's value important environment, retailers for Retailers that high relationships ever strengthen. technology In platform on a attract soft and a consumer than retailers shoppers. continues facilitates to

receptivity early select increases markets, we advertising our subscription a in retail which We've using We to in are conservative rolled this been Leafly XXXX. as plan in days time. corresponding value the many expectations of increase price. the of a pricing order lever markets, these to over This experienced rollout in certain positive. in is the and proposition has increase increases have on continuous impact It's out the a without ARPA part session high optimize and growth key in of our remain for in

and resources needs. ensuring We're the onto of new midstream model, proven new record to the clients, in platform. value to our retailers transition bringing while our track market highest to approach local This allocation a maintaining of in customers go allowing approach customer our tailored goal ground market to across build and on of suite individual dynamics full face, has leading relationships increasing services of deeper spend the market products with to to face us customer the Leafly and

processes. operational In and addition, leadership has our focused sales scalable more on rigor

of client has During the introductions, and April, been focused month account data on initial our team training meeting. cleansing,

of mid to able engagement. This latter of the training sell lower to in early fully combinations all and sales the of to and staff reap for already half to solve organization to are includes to brand reorg at needs expectations opportunities products. of Leafly with the products, shift with top retail more uncovering these funnel flexibly allows match the drive brand We days cross platform funnel, different year. our the promotion which the sales in efficient efforts a benefits us consumer customer products It's of

in best consumers, helping particularly experience source educating to with that's new strategy, them real consumer building value inflationary our On the includes content shopping consumers to insights front, in products through on best the environment delivering focus we the continue wallets. This cannabis. and their from consumer this on experts our tough

a prominently mobile and orders continues are critical in available The to of features growth number interfaces. deal enabled more that to cannabis one deal seen consumers also with have on it of on the web Our as highest grow, functionality effects of pages, with have remain oriented. string and our new platform. retailers these for a the and carousels strategy deal with deal we in greater types encyclopedia We've deals both part discovery this traffic shopping launched made consumers shop based sections our and of world's value easier

is and April, key in participate the Canada. pilot stores consumers in the can XXX many making and gain Eats three retailers to initially We Leafly ensuring launched trusted of over cannabis. the during more XXXX, partnership consumer expanded available access powerful Uber legal to with shopping to also October In as cannabis Uber the province. in Columbia, Eats Delivery in in we safe experience. expanded program just XXX British We program, more Ontario component the with consumers in of Today, Uber Eats the legal our a millions in platform retailers of week that partnership to Ontario. leverage that and

helping consumers to how we to These opportunities are retailers omni-channel new grow are legal welcome and vital cannabis. help

creation and units. tools, launched new tips aid powerful engaging to also help We the guidelines ad incorporating ad creation and of

workflows There opportunity For we're local that Leafly what and and in from market to unlock ahead Leafly looking in variation through states to like rec legal value trusted the seeing encouraged soon small offer in that continues this existing expertise on And markets. go Vermont that the momentum them the many we as summer. Missouri local platform. helps enterprises, guidance are as are to they be are as retailers Maryland by wide provides

legalization front. On the

We the bill banking support of recently Congress. are that reintroduced safe was chambers bipartisan both of in in full

to level recreational cannabis. XXth also is legalize to the state movement see state continue We to at become as poised the Minnesota

pain focus and time. mix our combined points, remain forward, different points we growth we and pain spoke performance updating opportunities changes will consumers, of for quarters. about that reflects on our that the moving intentional to drive varying what We will to brands are A us and serve. I us some Those depending QX the conclusion, forward continue experiencing look retailers for coming with the in allow on you the innovation In progress our operator right all But confident market. and cannabis. of in

Operator? We will the question. now up open for call

Operator

Absolutely.

Instructions] [Operator from the with first session. Q&A the Oppenheimer. begin The question now Jason will Helfstein We line of is

proceed. may You

Unidentified Analyst

Hey, Jason. is Chad for thanks. This on

So and major brand it and you the else sounds like performing XQ advertisers was you? maybe there you're is stabilizing with a for trends little reporting other verses anything worse seeing worse brands share ad what around Thanks. why can of a lot

Yoko Miyashita

what's and specific brands happening for about and talk Leafly cannabis the Let's sector. in

macro to a cannabis. But certainly spots, think we're the outside on bright things Leafly impacting I us, some specific slower brands. it's advertising, a there cannabis, the are as of pressure come For of couple little that on are specifically seeing to

of got last the is to cannabinoids. brands for a we've have that novel revenue. to of seen And set. range seen impacted you've regulations campaigns X we've our portion customer meaningful a advertising that full of months, national products Over available that that And suite impact XX

impact we've seen our brands revenue that piece. So

to is there's at integrated look to and operators those keep retail us the for who as where's top the them for space, our the retail maintain brand in platform, vertically when well, you products the a to platform a nice on be most As brand of operations squeeze margins. funnel thing important as tend a subscriber the on both have

let of we're to sort we're answer be going me brands to spend of manual well come continue think our brand's And funnel recover funnel trend. want squeeze so top slower recovery but you you of last of that will we've until our brand Anything then back come can back Suresh? overall merchandising, expecting. got the to be I It on to products products in that to out to clear, bottom that bottom and cannabis see that expect as and of revenue expect starts the funnel

Suresh Krishnaswamy

think I that's good. No,

for preparing to for we I all of flat Just in mean, this of that forecasting, reiterate, year. given the revenues brand are balance

Operator

Vivien you. Instructions] next is Thank from The Cowen. line TD [Operator question the Azer of with

You proceed. may

Unidentified Analyst

the Hi, And on this Vivien is [indiscernible] question. Azer. thanks for for

particularly prices, in on seen more as we've challenged, remains willing bit. being a wholesale West curious in if seen and market platform partners any stabilization through to guys overall your some flow retail the stabilized those things regions while recent from you Coast So flower the weekly maybe I'm have markets. have spend

Yoko Miyashita

certainly appreciate of in your I that on identified coverage, some market and really the question tracking [indiscernible] and trends wholesale and the recovery. you've

of numbers that share to that I that am I that worst not the Oregon. in macro and a really to it we've California is as ready We relates are see of seen some think in I aligned churn starting to we're terms quite think of impact. But

the And with really again, out really restructure sales And us survived and each the and have spend. go that to and around decline see power back to that and them is starting growth what those share take cyclical one every of operators as ready bring as excited that we're how as the bear to of coming of clients as deeper to that allows about emerges. drive platform those well for can out coming of full this market they're decline, we back engage wallet

Unidentified Analyst

helpful. XQ. then one That's just Thank the for you, on your and guidance maybe

brands ARPA around grows sort also ARPA new XQ your have retailers, color that as then of little sort lower for are you dynamics in competing provide bit penetrating did of through this as could maybe you and between flat, you markets these quarter. just more churning Assuming new and a account assumptions

Suresh Krishnaswamy

sure. Yes,

We're and follow to our some calls of we looking in looking that in on the So as cleanup. churn accounts QX We're in some working the as to at you seen mentioned, said across certainly on we side QX. our as that account restructuring market. we've sales a for up are continue

where side APRA certain is challenged we're combination of lower accounts the to the is and prices markets do that, lower structurally come And that well. this, ARPA this come flip raising seen of off ARPA a And the our platform, expect out of business delinquency the platform. on we've focused off top improve. of with in we the customers as as deepening value relationships on higher markets But

of couple stabilize last combination to first, that of sort the we the of ARPA seen seeing, lead we're we've in So and quarters. what mentioned the from should in that upside in that

churn, So as to are in far impacts as these same retail accounts lead going QX ending go, decline a and in to accounts. retail

And sequential year, place looking build for for past to second focus the of much on for in base. on at our least projecting really account a we're we're once see, teams we're half to the from going However, that, a to growth we're basis. to continuing stronger the retail improve

Unidentified Analyst

hop perfect. That's I the in Thanks. queue. will back

Operator

first no Thank XXXX you Thank will remaining no Instructions] queue. today's queue. you. in Leafly [Operator There that There questions are we your are further questions quarter call. for conclude With participation. earnings in

now may your You disconnect lines.

Keenan Zopf	Investor Relations, The Blueshirt Group
Yoko Miyashita	Chief Executive Officer
Suresh Krishnaswamy	Chief Financial Officer

Leafly (LFLY) 11 May 232023 Q1 Earnings call transcript