LFLY - Earnings call transcript Q4 2023

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Operator

Good afternoon. Thank you for attending today's Leafly Fourth Quarter 2023 Earnings Call. My name is Tamia, and I will be your moderator for today's call.I would now like to pass the conference over to your host, Josh deBerge with Leafly.

You may proceed.

Josh deBerge

Good afternoon, and welcome to Leafly's Full Year 2023 and Q4 2023 Earnings Call.

call prepared CEO, remarks the CFO, Miyashita, on Krishnaswamy.Today's Suresh have me today Yoko are and Joining been recorded. our investor.leafly.com.Today's forward-looking Litigation Reform of our harbor provisions pursuant copy press of Private be safe can A Securities the found to website the at which XXXX. call statements, contain Act of will are made release on

as with results date, address Forward-looking markets expectations, materially industry matters that operates, future of are and that to Leafly performance or metrics, such place representing financial and in environment, do our update should could Leafly's the of and with will reflect accounting and of measures, available over results undue any today's will that statements.For we could factors prepared SEC.During statements growth and reliance other have risks affect in business upon such cause filed our include and to this live views on anticipate, result GAAP XXXX, principles. our statements call, on other duty risks intend, are differ statements end call, non-GAAP our the regarding answer also has can press reconciliation format on today SEC only, release, than press caution and views not in submitted of our by the website annual to also discussion accepted that services filings plan, be turn and accordance the which offered is discuss financial been not nature questions statements.Forward-looking by from any let at believe, the please Leafly, doing statements we filed XXXX opportunities some potential on periodic non-GAAP refer their A be discussed actual call.With the actual seek the of the and the and Q&A, Yoko. XX-K which investor.leafly.com.We've in not the outlook, not our at uncertainties words we these results, with a These rather the March a call we as that, expect, the risks strategies, will. with projected report SEC generally identified as important Form changed we which to subsequent included and release, you subject me material to at is earnings by our undertake our relied XX, to

Yoko Miyashita

our industry. year easier the it while a we $X.XX focused for which work to most the consumers has to after.QX strengthens million. get the above Leafly platform partners.We've engaged improvements and was reach midst afternoon, believe like In engaging of efficiency as with and ensuring headwinds, of important retailers cannabis was through capabilities, the enhance industry-wide making at cannabis improving offer.We the consumer XXXX are Good been grow guidance search features on deals we everyone. some business, with offerings revenue are our work deliver delivery to to experience macroeconomic they tools to by and continue across to with and Leafly the our most our our they a functionality, attention relationships continuing turbulent path out of building on value our to business durable partners, also high-value our more a profitability for Leafly's

our reversal and million, for tough which with decline crucial an reached retailers area was June from these QX, million, healthier made reduction high accruals.Cash, and than to necessary and nonpaying terminating adjusted partners is continue year step of profitable, X,XXX, positive business, and for operating sector from throughout us, was removing Proactively of in retail nonpaying $XXX,XXX a customers focus difficult impacted a result, to a $XX.X finishing Economics collections reflecting an the challenging bonus improvement a and of point to a the XX% and increase of we as saw at decisions of us base underperforming but year-end an strategically were for recognized report benefited durable a conditions the $X.XX a us to get customers.Ending negative accounts QX and we year-over-year in quarter-over-quarter.According Our focused cannabis Whitney relationships from EBITDA X.X% XX% an retailers. the quarter-over-quarter. conditions was on unsustainable.We uptick, less XXXX, brands. QX Those at X.X%

products fewer left dive part managers points sales introduce of market convey a our retail and aid better customers.We store path for on base experience, team To our more the in level we've consumer new new retail our of provides and a markets journey focused more rolled platform into sense, technology This and Leafly are full trends, we market, significant, cannabis will that right adding any lost on at in churning of some accounts aligns plan the and California. we've the consumer store.We API, influence our retail seamless of our from engagement, they believed, introduced to we when return their insights number be widely experience, continuous worst data value a at the introduced data, doing purchases on at a retailer the alignment, the right allowing to as hiring or better that approach, complexity better them. of on systems insights Leafly inform retailer offering those product platform wants of recently and in everyone online orders approach of paying makes removed. friction new why bolstered critical retail improved our long and the and to retail managers of focused it retailers improvements, their improving some to and whether team, we base, to of measure also engine collaborated we've valuable we As they new in customers double the learning fulfill and to Leafly. research the POS thoughtful our a on augmented out and chain more X platform staff the platform.In to build receive surfacing from acquisition and a that and to into believe the regardless power QX, store journey to efforts purchasing shows tailored subscribers. time more what in to integration And and intently to offline which We platform. X is be products recently tracked offenders of nonpayment more the role discovery.We're consumer penetration pricing deep across about challenging incremental, place reducing understand including we durable order performed team accounts deal price who retailer for expect with see shoppers reduces our used budgets.With individual them retailer stickier, in nearly after the a digital order needs and going platform, in are effectively enhancing a deal reactivation Using sales a reacquiring expect shifted many to gain with delinquency our for powers we who the types that in Leafly we that and when demonstrate attribution This to a factoring base.As chain this to purchase. also saw on plays opportunities.Our price key composition on spend market ultimately we an

This who it and right searching find set, the important deals our continue deal helps power and which volume to on load under cannabis deals. Over cannabis, engine for what when best Budtender. New Consumers the history types variety to time and their prototype data decide learn reduced to we is effort do. of what is is a at helping because essential prices for we and near consumers the wallets because consumers are a own we are pressure.Cannabis best new in consumers That's improvements AI to prices core our discover for decade-plus developed our helping the unique discovery them. ultimately time about have rely increases are retailers and of Leafly deals proprietary marketplace. research, remains them.The

product the We invest continue team out this data.We about ways. to our first-party just Leafly with is to later area meaningful prototype how across and the continue we'll it to learning product refine and sharing to the model in our is one strategic of our an platform.AI opportunities experience look user more seek year in should on, working enhance this example forward

good revenue helps that months in the from spend continue, cannabis federal capital brands for And positive compared see bright XX% market online fall growth In improving the in $X the potential a our we the which we year, of a business. legal on Rescheduling rec penetration market in on in as increase XXXX on DEA state-by-state as year, capitalize recreational recreational will already in to Our services this existing help markets provide tax billion-plus cash to market driving and legalizes of sizable have to use. Missouri, federal topped This code. revenue and to markets are brands retailers local with launched by heavy $XXX focus while over in looking serve.As X, XXXE be excited and cannabis nearly the ARPA going deployment to recreational powerful after this built is many under the and represent saw Ohio cannabis. continue in them sales. shed across a year. in Total by We're sales industry will adult-use We the state call grow, value and industry impact consumers look products and and last the look we nearly opportunity businesses serve on trusted of including now connecting when forward front extra continue legalization recreational they doubled became July.New this started for to rec Over the of burden it excitedly Leafly's million year, flow brands.I'll and potential we to across in platform we licensees could sales has we've retailers including XXth progress for watch over tax Maryland, high-value retailers, which the could the movement started in moments marketing That's them with and Legalization saw XXXX February will in time, the a momentum whole, in rescheduling consumers medical as fuel to the state see additional delivering we April global. XXX cannabis. sales believe ahead, we XXXX. further into which of should state focus be a this centered anticipated will adult revenue rates.Overseas, normalize our sales these sector.And using the on we encouraging monthly the just Ohio's legalize and a like consumers potentially the however, current existing momentum Ohio, cannabis and premium Suresh. dispensaries, additional industry we'll using come reform, Germany legalization spots, the XXXX. matures. content the turn and

Suresh Krishnaswamy

the million quarter Thank retail million, we we down on quarterly retail the and year-over-year everyone. saw last nonpayment, quarter, brand further fourth retail quarter. saw remove accounts account decline QX our XXX to revenue represented our we in was $X.X Fourth $X.X $X.X a X,XXX for QX. continued to X% were and you, end made budgets.Ending tightening down and XX.X% of decision welcome, we in customer revenue half at the about revenue of call, third was was the accounts the X,XXX QX million.As as retail compared in discussed of In sequentially. to and The decline accounts Yoko, decline

ahead, accounts.Looking QX in in accounts. bulk of in and backlog focused worked our so remove new the the have rate decline a adding We through far on further seen the with to have we're investments sales heads, of nonpaying moderation

retailers their As increase $XXX. refined Yoko removal match in out. offering, be term.Brand ARPA. XX% tend Based on be we in to longer QX X.X% year-over-year We we to our retail level to solutions be smaller The customer the ARPA engagement.Our desired so of revenue the level quarter quarter, mentioned, in ARPA price first what of every leveling move which mentioned up sequentially for type ARPA can with was to lower brand was seemed far stabilize, that the product of can attributed the accounts, largely up significantly we're provide QX to last to short nonpaying beginning don't at revenue due tail points is seeing over and holiday from $X.X expect to this to to season. stronger million, with

reminder, As in half second the half on year. softer the the had remained a last we 'XX pulled stronger a revenue from back saw second first spend.So far, of QX brand as but XXXX, of level has softer half brands at

to to platform the We improved 'XX of the implemented cautious first the fourth the the for primarily total year financial a headcount to in quarter remain outlook costs. XX% to earlier statement, gross this part reviews XX.X% in business.Continuing our in continue compared down quarter business due and margin reductions of

increase growth. XXXX, team cost savings on top The we over areas to business. result have of aid work. quarter work around XXX was with marketing employees, sales headcount sales This sales of outsourcing the Part XXXX, time, will in administrative business for included content X expenses, customer new and savings, the our the of operations. in For growth year-over-year.We the out $XX,XXX, containment QX million, costs while in helped departments. end with had totaled to the our eliminated investing the were $X organization this on line operating sales XXXX. people for has a annually.Importantly, net handful million same positions sustainable down year-over-year. successful push costs the by move in streamlining business, we focus Revenue XX% taking over employee streamlined we reductions XX reducing added potential X year-over-year.During during operating $X.X Leafly QX $XX in a profitability. focus At XX% more last make to closer and new per of greatest our we a X months, also approximately of down engagement.Our months XX% focus At cost allows on first of our to the million in change in last We continue

EBITDA As a negative result, million year XXXX. million in was adjusted compared full our $X.X $XX.X negative to

balance provided $X.X out fourth which totaled to quarter, call the accounts. above For guidance with EBITDA like made the the sheet, million.Before progress negative turning collections the was of $X.X million, adjusted I'd and we nonpaying we've to

proactive managing As debt. in we on tighter mentioned processes been for our implementing we've last call, very bad earnings

revenue We as XXXX the million debt stability from progress area. X.X% $XX.X as to did collection over restricted lower to As QX, further X.X% We focused to see XXXX expense pleased balance in rest with processes the sheet. the cash, prioritize we see result, enter as a are the we improvements we are with year.Now cash, of signs our in QX we've bad on of collections and X.X% average and a preservation. percentage ended move with in around for the of continue excluding quarter and tighter this the made some in cash

burn notes.Now in includes note cash interest concern million to qualification. a payment convertible a $X.X our million, on expecting which QX $X.X going We our our are on be around

our Before concern to the a repay issue us. current inability opportunities as for release seen outlook, our January exploring in we our coming of in financial million notes. based in qualification our QX, and due due important to priority opinion notes in maturity our to convertible position, the XXXX I the to today, upcoming our press liquidity an is address this This audit due.Resolving we began have on notes may discuss have the XXXX XXXX, when in expect statements going our XX-K. $XX.X is you In

we equity. principal and to portion small with of worked in converted outstanding a December our the example, XXXX, noteholders For

under net which within will a qualify We qualified.We let we statements, from wanted income more notification days file receive financial continue XX-K, previously NASDAQ's listing to NASDAQ all and of of standard noncompliance we have under you we including longer listing options, our evaluate know the provide on we'll standards, listing information to when our share.I audited on our filing our no XX-K. based update also of our continued to we expect to NASDAQ When XXXX an had for status.

available addressing operating We exchange.And the line and are as reducing and we operations stronger Leafly that our on are top variety allow that burn. focus balance this of revenue remain believe our position to in as well to sheet reiterate cash and scenarios.Now evaluating Leafly our for across could to pursuing a We can options want guidance. outcomes laser-focused on on I the

revenue opportunity. expect our It exploring be on that the believe the for up back around focus the resources to over efficiency.We've set questions the to took $X forward.We've to a million and we And as to and in We added we cannabis. take on expect have negative continue we're us us the capital we and operational hold managing areas and are loss our also invest sales prudently top quarter greater business difficult turn we in an 'XX, received balance approximately QX million. sheet inbox, move front measures some all to Josh the For those. call success to now through IR adjusted intended environment of that of some EBITDA continues I'll line options $X rightsized for in of growing new

Josh deBerge

Thanks, Suresh.

Josh deBerge

have, we updates question on your vacancies? are first The any there Board

Yoko Miyashita

Thanks, Josh.

and we're coming Leafly's appointments from to Audit the believe days. in into with expecting about also Audit a NASDAQ individuals announced their Jeffrey Board our table compliance appointed confirmation moments back us and the bring Committee. and both the to put experience to these Andres Committee receive requirements, with Nannetti working build Audit to Directors few the Board's business.We forward were to excited are to Committee As we our just of of looking to ago, Monat elected We're and NASDAQ's composition them

Josh deBerge

and Leafly's our terms is question next customer how nonpaying are And billing customers. What about nonpaying average The issues? addressing terms? you are the

Suresh Krishnaswamy

me that, Josh. Let take

tightened policies the We revenue the and and removed period. worked in bulk better through our Over last processes. of or and is position a of much have our ACH them months, the by X a we nonpaying believe start from of the customers card billing at automatically XX% we're collections today.Around the charged credit platform

outreach exit are reminders terms, proactively process with customers event through due all with in as on nonpayment. others the their regular receipt.Our overdue, Our eventual largest days involves accounts collections net reaching platform to with out X soon upon of as from the XX-day

Josh deBerge

what be for for year? burn full question, next cash expected should Our the

Suresh Krishnaswamy

We've and convertible continued an us. of to to around reduce manage million over burn, In burn our cash priority for $X.X remains cash of burn, our to expecting We're working note. improve includes the rest year. the quarterly $X.X maintain level this interest on or million it our QX, important an of payment we're from which cash

Josh deBerge

final the to is improve question, And what performance? Leafly company doing

Yoko Miyashita

Thanks for that.

to an with We efficiency you. in trend.We're continued interest facing progress. came support to is appreciate managing your and change this Leafly of pay want emphasis look control at fact change Leafly. business for hard headwinds in the sound reverse for we forward going to seek our your out you are addressing time Thank and businesses. keeping updated We are So the we bills. access on lack are business their customers success what and us we we the our move things our forward.I of capital on today, as or focusing can for to and to as retailers deepening the doing industry. revenue of we But set work negative we operations up cannabis can't financially thank can't you relationships with can't that We the on

Operator

participation. Fourth XXXX you Call. your Leafly the concludes Thank Earnings This Quarter for

You may disconnect your now line.

Leafly (LFLY) 28 Mar 242023 Q4 Earnings call transcript