Delivered Q3 2023 revenue of $10.6 million
Reported Q3 2023 net loss of $2.2 million and
adjusted EBITDA1 loss of $0.2 million
Leafly Holdings, Inc. (“Leafly” or “the Company”) (NASDAQ:
LFLY), a leading online cannabis discovery marketplace and resource
for cannabis consumers, today announced financial results for its
third quarter ended September 30, 2023.
“Our third quarter results reflect our progress toward building
a sustainable business in a challenging market," said Yoko
Miyashita, CEO of Leafly. “Cannabis markets continue to experience
pain points of various types, but the industry continues to evolve.
The Leafly platform plays an important role, providing the
technology retailers need to drive consumer sales and e-commerce
shopping experiences. With a strategic focus on profitability, we
are carefully managing expenses which we believe will set us up for
growth as the cannabis market matures and recovers."
Third Quarter Financial Results
- Revenue was $10.6 million, compared to $11.8 million in Q3
2022.
- Gross margin was 89%, an improvement over Q3 2022 gross margin
of 87%.
- Total operating expense was $10.9 million, a 33% reduction from
$16.3 million in Q3 2022, reflecting operational rigor and
continued focus on cost discipline.
- Net loss for Q3 2023 was $2.2 million, compared to net income
of $15.5 million for Q3 2022, which included a $22.3 million
non-cash benefit from change in fair value derivative
liabilities.
- Adjusted EBITDA1, a non-GAAP measure, was a loss of $0.2
million compared to adjusted EBITDA loss of $5.2 million in Q3
2022.
- Ended the quarter with $14.5 million, excluding restricted
cash, essentially flat compared to Q2 2023.
1 The non-GAAP financial measures EBITDA and adjusted EBITDA are
presented in this release. See the reconciliations of such non-GAAP
financial measures to their most comparable GAAP measures in the
table included in this release below.
“We continue to focus on operating with efficiency and managing
costs," said Suresh Krishnaswamy, CFO of Leafly. "Our third quarter
results are a reflection of the difficult environment our retail
and brand customers are facing, driven by lack of access to banking
and capital, license delays, and margin compression. We are
supporting our customers to provide value aligned with their needs,
while also right-sizing their services for maximum impact given
their budget constraints."
Key Performance Metrics
Three Months Ended September
30,
2023
2022
Change
Change (%)
Ending retail accounts
4,466
5,637
(1,171
)
-21
%
Retailer ARPA
$
644
$
556
$
88
16
%
Third Quarter Business Highlights
- On September 29, 2023, the Company received formal notice from
The Nasdaq Stock Market LLC that it regained compliance with the
minimum bid price rule.
- Retailer average revenue per account (“ARPA”) was $644, an
increase of $88 from Q3 2022, and also increased over Q2 2023. The
increase was largely driven by the roll-out of new rate cards and
churn of lower ARPA accounts.
- The Company completed rolling out new rate cards and price
increases in select markets to select clients to better align
pricing with the value the Company delivers to its various
partners.
- Leafly introduced a new API for order integration, which
provides seamless integration between cannabis point of sale
systems and Leafly, leading to less friction for retailers.
- The Company introduced scheduled delivery to enhance the
ordering experience and drive customer retention and loyalty.
- The Company introduced new, consumer life-cycle management to
improve the consumer shopping experience and help generate sales
for retailers.
Financial Outlook
Today, Leafly is issuing fourth quarter 2023 guidance. Based on
current business trends and conditions, the financial outlook is
expected to be around $9.5 million in revenue and adjusted EBITDA
loss is expected to be around $1.3 million.
Leafly has not provided a quantitative reconciliation of
forecasted GAAP net income (loss) to forecasted total adjusted
EBITDA within this communication because the Company is unable,
without making unreasonable efforts, to calculate certain
reconciling items with confidence. These items include, but are not
limited to: depreciation and amortization expense from new assets;
impairments of assets; changes in the valuation of any derivatives;
the valuation of, and changes in, grants of equity-based
compensation; and gains or losses on modification or extinguishment
of debt. These items, which could materially affect the computation
of forward-looking GAAP net income (loss), are inherently uncertain
and depend on various factors, many of which are outside of
Leafly’s control. For more information regarding the non-GAAP
financial measures discussed in this communication, please see
“Non-GAAP Financial Measures” below.
Webcast and Conference Call Information
Leafly will host a conference call and webcast to discuss the
results today, Thursday, November 9, 2023 at 1:30 p.m. Pacific Time
(4:30 p.m. Eastern Time). A live webcast of the call can be
accessed from Leafly’s Investor Relations website at
https://investor.leafly.com.
The live call may also be accessed via telephone at (833)
470-1428 toll-free domestically. Please reference conference ID:
#065993. An archived version of the webcast will be available from
the same website after the call.
About Leafly
Leafly helps millions of people discover cannabis each year.
Leafly's powerful tools help shoppers make informed purchasing
decisions and empower cannabis businesses to attract and retain
loyal customers through advertising and technology services. Learn
more at Leafly.com or download the Leafly mobile app through
Apple’s App Store or Google Play.
Definitions of Key Performance Metrics
Ending retail accounts Ending
retail accounts is the number of paying retailer accounts with
Leafly as of the last month of the respective period. Retail
accounts can include more than one retailer.
Retailer average revenue per
account Retailer ARPA is calculated as monthly retail
revenue, on an account basis, divided by the number of retail
accounts that were active during that same month. An active account
is one that had an active paying subscription with Leafly in the
month. Leafly does not provide retailers with an ongoing free
subscription offering but may offer a free introductory period with
certain subscriptions.
Given that each of ending retail accounts and retailer ARPA are
operational measures and that the Company’s methodology for
calculating these measures does not meet the definition of a
non-GAAP measure, as that term is defined by the U.S. Securities
and Exchange Commission (the "SEC"), a quantitative reconciliation
for each is not required or provided.
Cautionary Statement Regarding Forward Looking
Statements
This document contains certain forward-looking statements within
the meaning of the federal securities laws, including statements
regarding the services offered by Leafly and the markets in which
Leafly operates, business strategies, performance metrics, industry
environment, potential growth opportunities, Leafly’s projected
future results and financial outlook, and expected savings from
cost-cutting measures. These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “future,”
“forecast,” “opportunity,” “outlook,” “plan,” “may,” “should,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions (including the negative versions of such
words or expressions).
Forward-looking statements are predictions, projections and
other statements about future events that are based on current
expectations and assumptions as of the date of this release and, as
a result, are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in such
forward-looking statements.
Many factors could cause actual future events to differ
materially from the forward-looking statements in this press
release, including but not limited to, Leafly’s inability to raise
sufficient capital to execute its business plan; inability to
continue to meet the continued listing requirements applicable to
companies listed on the Nasdaq Capital Market; the size, demands
and growth potential of the markets for Leafly’s products and
services and Leafly’s ability to serve those markets; the impact of
worldwide economic conditions, including the resulting effect on
consumer spending at local cannabis retailers and the level of
advertising spending by such retailers; the degree of market
acceptance and adoption of Leafly’s products and services; and the
other risks and uncertainties described in the “Risk Factors”
section of the Annual Report on Form 10-K filed by Leafly with the
SEC on March 29, 2023, and in Leafly’s Quarterly Reports on Form
10-Q for the quarters ended March 31, 2023 and June 30, 2023, and
in the other documents filed by Leafly from time to time with the
SEC.
These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and Leafly assumes no obligation and, except as
required by law, does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. Leafly does not give any assurance
that it will achieve its expectations.
LEAFLY HOLDINGS, INC
CONDENSED CONSOLIDATED BALANCE
SHEETS - UNAUDITED
(in thousands, except per
share amounts)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
14,469
$
24,594
Accounts receivable, net of allowance for
doubtful accounts of $1,400 and $908, respectively
3,409
3,298
Prepaid expenses and other current
assets
2,339
1,792
Restricted cash
—
360
Total current assets
20,217
30,044
Property, equipment, and software, net
2,541
2,285
Restricted cash - long-term portion
249
248
Other assets
55
135
Total assets
$
23,062
$
32,712
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities
Accounts payable
$
1,609
$
1,625
Accrued expenses and other current
liabilities
2,990
6,235
Deferred revenue
2,095
1,958
Total current liabilities
6,694
9,818
Non-current liabilities
Non-current portion of convertible
promissory notes, net
29,272
28,863
Private warrants derivative liability
113
182
Escrow shares derivative liability
5
52
Stockholder earn-out rights derivative
liability
25
204
Total non-current liabilities
29,415
29,301
Total liabilities
36,109
39,119
Commitments and contingencies
Stockholders' deficit
Preferred stock
—
—
Common stock
—
—
Treasury stock
(31,663
)
(31,663
)
Additional paid-in capital
92,359
89,956
Accumulated deficit
(73,743
)
(64,700
)
Total stockholders' deficit
(13,047
)
(6,407
)
Total liabilities and stockholders'
deficit
$
23,062
$
32,712
LEAFLY HOLDINGS, INC
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS - UNAUDITED
(in thousands, except per
share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Revenue
$
10,583
$
11,781
$
32,507
$
35,251
Cost of revenue
1,163
1,515
3,747
4,411
Gross profit
9,420
10,266
28,760
30,840
Operating expenses
Sales and marketing
2,563
6,403
10,326
21,529
Product development
2,533
3,406
8,133
10,927
General and administrative
5,799
6,489
17,475
20,730
Total operating expenses
10,895
16,298
35,934
53,186
Loss from operations
(1,475
)
(6,032
)
(7,174
)
(22,346
)
Interest expense, net
(720
)
(705
)
(2,157
)
(2,119
)
Change in fair value of derivatives
14
22,264
295
36,264
Other income (expense), net
(29
)
(73
)
(7
)
(962
)
Net (loss) income
$
(2,210
)
$
15,454
$
(9,043
)
$
10,837
Net (loss) income per share:
Basic
$
(1.10
)
$
8.69
$
(4.58
)
$
6.15
Diluted
$
(1.10
)
$
5.64
$
(4.58
)
$
5.45
Weighted average shares outstanding:
Basic
2,011
1,779
1,974
1,763
Diluted
2,011
2,149
1,974
1,924
LEAFLY HOLDINGS, INC
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities
Net (loss) income
$
(9,043
)
$
10,837
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
697
276
Stock-based compensation expense
2,235
3,159
Bad debt expense
2,350
1,023
Loss on disposition of assets
63
—
Noncash amortization of debt discount
409
369
Noncash interest expense associated with
convertible debt
—
243
Noncash change in fair value of
derivatives
(295
)
(36,264
)
Other
(1
)
15
Changes in operating assets and
liabilities:
Accounts receivable
(2,461
)
(675
)
Prepaid expenses and other current
assets
(467
)
(2,222
)
Accounts payable
(16
)
173
Accrued expenses and other current
liabilities
(3,246
)
(2,141
)
Deferred revenue
137
77
Net cash used in operating activities
(9,638
)
(25,130
)
Cash flows from investing activities
Additions of property, equipment, and
software
(1,042
)
(2,194
)
Proceeds from sale of property and
equipment
27
—
Net cash used in investing activities
(1,015
)
(2,194
)
Cash flows from financing activities
Proceeds from exercise of stock
options
—
158
Proceeds from convertible promissory
notes
—
29,374
Proceeds from business combination placed
in escrow and restricted
—
39,032
Trust proceeds received from
recapitalization at closing
—
582
Issuance of common stock under ESPP
168
—
Repurchase of common stock and settlement
of forward purchase agreements
—
(31,303
)
Transaction costs associated with
recapitalization
—
(10,761
)
Advances (repayments) of related party
payables
1
(17
)
Net cash provided by financing
activities
169
27,065
Net decrease in cash, cash equivalents,
and restricted cash
(10,484
)
(259
)
Cash, cash equivalents, and restricted
cash, beginning of period
25,202
28,695
Cash, cash equivalents, and restricted
cash, end of period
$
14,718
$
28,436
LEAFLY HOLDINGS, INC NON-GAAP
FINANCIAL MEASURES - UNAUDITED (in thousands)
Earnings Before Interest, Taxes and
Depreciation and Amortization (EBITDA) and Adjusted EBITDA
To provide investors with additional information regarding our
financial results, we have disclosed EBITDA and Adjusted EBITDA,
both of which are non-GAAP financial measures that we calculate as
net loss before interest, taxes and depreciation and amortization
expense in the case of EBITDA and further adjusted to exclude
non-cash, unusual and/or infrequent costs in the case of Adjusted
EBITDA. Below we have provided a reconciliation of net (loss)
income (the most directly comparable GAAP financial measure) to
EBITDA and from EBITDA to Adjusted EBITDA.
We present EBITDA and Adjusted EBITDA because these metrics are
a key measure used by our management to evaluate our operating
performance, generate future operating plans, and make strategic
decisions regarding the allocation of investment capacity.
Accordingly, we believe that EBITDA and Adjusted EBITDA provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management.
EBITDA and Adjusted EBITDA have limitations as analytical tools,
and you should not consider either in isolation or as a substitute
for analysis of our results as reported under GAAP. Some of these
limitations are as follows:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and both EBITDA and Adjusted EBITDA do not reflect
cash capital expenditure requirements for such replacements or for
new capital expenditure requirements;
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs; and
- EBITDA and Adjusted EBITDA do not reflect interest or tax
payments that may represent a reduction in cash available to
us.
Because of these limitations, you should consider EBITDA and
Adjusted EBITDA alongside other financial performance measures,
including net (loss) income and our other GAAP results.
A reconciliation of net (loss) income to non-GAAP EBITDA and
Adjusted EBITDA is as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net (loss) income
$
(2,210
)
$
15,454
$
(9,043
)
$
10,837
Interest expense, net
720
705
2,157
2,119
Depreciation and amortization expense
276
127
697
276
EBITDA
(1,214
)
16,286
(6,189
)
13,232
Stock-based compensation
997
771
2,235
3,159
Transaction expenses allocated to
derivatives
55
—
55
874
Severance
—
—
754
—
Change in fair value of derivatives
(14
)
(22,264
)
(295
)
(36,264
)
Adjusted EBITDA
$
(176
)
$
(5,207
)
$
(3,440
)
$
(18,999
)
Source: Leafly Holdings, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109375813/en/
Media Josh deBerge josh.deberge@leafly.com
206-445-9387
Investors Stacie Clements IR@leafly.com
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