Delivered Q2 2024 revenue of $8.7 million
Reported net loss of $1.3 million and adjusted
EBITDA1 of $0.5 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
second quarter ended June 30, 2024.
“We remain focused on enhancing operational efficiency and
stabilizing our core business while delivering value to our
partners,” said Yoko Miyashita, CEO of Leafly. “We are living in an
era of liberalized access to cannabis and we believe the demand for
Leafly’s trusted voice and guidance has never been greater. We
remain invigorated by the opportunities to connect retailers and
brands with high-intent consumers.”
Second Quarter Financial Results
- Revenue was $8.7 million, compared to $10.7 million in Q2
2023.
- Retail revenue was $7.3 million, compared to $8.8 million in Q2
2023.
- Brand revenue was $1.4 million, compared to $1.8 million in Q2
2023.
- Gross margin was 89%, an improvement over Q2 2023 gross margin
of 88%.
- Total operating expense was $8.4 million, a 17% reduction from
$10.2 million in Q2 2023, reflecting operational rigor and
continued focus on cost discipline.
- Net loss was $1.3 million, compared to net loss of $1.4 million
for Q2 2023.
- Adjusted EBITDA1, a non-GAAP measure, was $0.5 million compared
to $0.1 million in Q2 2023.
- Ended the quarter with $13.6 million in cash, excluding
restricted cash, a decrease of $0.5 million compared to $14.1
million at the end of Q1 2024.
“Leafly continues to focus on operating efficiently and managing
the business towards profitability,” said Suresh Krishnaswamy, CFO
of Leafly. “We have a number of projects and initiatives underway
to stabilize revenues. We are seeing green shoots associated with
these efforts and will have more confidence as we see the results
of these initiatives over the next few quarters.”
Key Performance Metrics2
Three Months Ended June
30,
2024
2023
Change
Change (%)
Ending retail accounts
3,595
5,261
(1,666
)
-32%
Retailer ARPA
$
684
$
558
$
126
23%
Cash and Liquidity
The Company ended the quarter with $13.6 million in cash,
excluding restricted cash, compared to $14.1 million at the end of
Q1 2024. The Company continues its work with PGP Capital Advisors
and The Benchmark Company as co-advisors to explore financing and
strategic opportunities and other various options to improve its
liquidity and balance sheet.
Financial Outlook
Today, Leafly is issuing guidance for the third quarter of 2024.
Based on current business trends and conditions, we expect third
quarter revenue of around $8.4 million and an adjusted EBITDA3 loss
of less than $1.0 million.
_______________________________________________________
- 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.
- Ending retail accounts and retailer average revenue (or ARPA)
per account are key performance metrics that management uses to
analyze and measure the Company’s financial performance and results
of operations. Please see “Definitions of Key Performance Metrics”
below for a further explanation of the use and how these metrics
are calculated.
- 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, August 8, 2024 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:
#803344. 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. We believe this metric
is helpful for investors because it represents a portion of the
volume element of our revenue and provides an indication of our
market share. Management believes this metric offers useful
information in understanding consumer behavior, trends in our
business, and our overall operating results.
Retailer average revenue per account
(“ARPA”)
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. We believe
this metric is helpful for investors because it represents the
price element of our revenue. Management believes this metric
offers useful information in understanding consumer behavior,
trends in our business, and our overall operating results.
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 press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the services offered by
Leafly and the markets in which Leafly operates, business
strategies, performance metrics, industry environment, potential
growth opportunities, projected future results, financial outlook,
expected results from cost saving measures, management objectives,
and initiatives undertaken to improve our liquidity and
capitalization. These forward-looking statements generally are
identified by the words “believe,” “expect,” “intend,” “future,”
“forecast,” “outlook,” “may,” “will,” "continue,” "potential," 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. All forward-looking statements included
herein are expressly qualified in their entirety by the cautionary
statements contained herein. These cautionary statements are being
made pursuant to federal securities laws with the intention of
obtaining the benefits of the “safe harbor” provisions of such
laws.
There may be events in the future that Leafly is not able to
predict accurately or over which it has no control. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this press release. The risks and
uncertainties described in the “Risk Factors” section of Leafly’s
Annual Report on Form 10-K for the year ended December 31, 2023
filed by Leafly with the SEC on April 1, 2024, and in the other
documents filed by Leafly from time to time with the SEC provide
examples of risks, uncertainties and events that may cause actual
results to differ materially from the expectations described by
Leafly in such forward-looking statements.
These examples include, but are not limited to:
- the substantial doubt regarding our ability to continue as a
going concern because we do not currently have the ability to repay
our convertible notes due in January 2025;
- Leafly’s ability to regain compliance with the Nasdaq Stock
Market LLC’s (“Nasdaq”) continued listing requirements and maintain
the listing of Leafly’s shares of common stock and warrants on the
Nasdaq Capital Market, which will be subject to certain approvals
by Nasdaq, among other contingencies and factors;
- Leafly’s ability to raise sufficient capital or obtain
financing or secure other sources of liquidity in the future to
execute its business plan and pay its debt and other obligations
when due;
- 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 macro-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, services and pricing changes;
- Leafly’s ability to attract and retain customers;
- Leafly’s success in retaining or recruiting officers, key
employees or directors;
- the impact of the regulatory environment and complexities with
compliance related to such environment, including compliance with
restrictions imposed by federal (under which cannabis is illegal)
or applicable state law and slower legalization efforts at the
state level; and
- other factors impacting Leafly’s business, operations and
financial performance.
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 expectation.
LEAFLY HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS - UNAUDITED
(in thousands, except per
share amounts)
June 30, 2024
December 31, 2023
ASSETS
(Audited)
Current assets
Cash and cash equivalents
$
13,573
$
15,293
Accounts receivable, net of allowance for
credit loss of $324 and $1,398, respectively
2,203
2,635
Prepaid expenses and other current
assets
2,014
1,074
Total current assets
17,790
19,002
Property, equipment, and software, net
2,499
2,554
Restricted cash - long-term portion
247
251
Other assets
2
28
Total assets
$
20,538
$
21,835
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities
Convertible promissory notes, net
$
29,080
$
—
Accounts payable
666
813
Accrued expenses and other current
liabilities
3,514
2,503
Deferred revenue
1,852
1,764
Total current liabilities
35,112
5,080
Non-current liabilities
Convertible promissory notes, net
—
29,085
Other long-term liabilities
88
128
Total non-current liabilities
88
29,213
Total liabilities
35,200
34,293
Commitments and contingencies
Stockholders' deficit
Preferred stock
—
—
Common stock
—
—
Treasury stock
(31,663
)
(31,663
)
Additional paid-in capital
94,861
93,403
Accumulated deficit
(77,860
)
(74,198
)
Total stockholders' deficit
(14,662
)
(12,458
)
Total liabilities and stockholders'
deficit
$
20,538
$
21,835
LEAFLY HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS - UNAUDITED
(in thousands, except per
share amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue
$
8,722
$
10,675
$
17,770
$
21,924
Cost of revenue
959
1,238
1,935
2,584
Gross profit
7,763
9,437
15,835
19,340
Operating expenses
Sales and marketing
2,374
2,852
4,994
7,763
Product development
2,377
2,320
4,790
5,600
General and administrative
3,658
5,016
8,445
11,676
Total operating expenses
8,409
10,188
18,229
25,039
Loss from operations
(646
)
(751
)
(2,394
)
(5,699
)
Interest expense, net
(638
)
(724
)
(1,245
)
(1,437
)
Other income (expense), net
9
39
(23
)
303
Net loss
$
(1,275
)
$
(1,436
)
$
(3,662
)
$
(6,833
)
Net loss per share:
Basic
$
(0.55
)
$
(0.73
)
$
(1.62
)
$
(3.49
)
Diluted
$
(0.55
)
$
(0.73
)
$
(1.62
)
$
(3.49
)
Weighted average shares outstanding:
Basic
2,326,821
1,975,472
2,261,491
1,955,471
Diluted
2,326,821
1,975,472
2,261,491
1,955,471
LEAFLY HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
Six Months Ended June
30,
2024
2023
Cash flows from operating activities
Net loss
$
(3,662
)
$
(6,833
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
652
421
Stock-based compensation expense
1,205
1,238
Bad debt expense
425
1,410
Gain on disposition of assets
(2
)
(9
)
Noncash amortization of debt discount
288
273
Noncash change in fair value of
derivatives
(28
)
(281
)
Other
(1
)
1
Changes in operating assets and
liabilities:
Accounts receivable
7
(1,701
)
Prepaid expenses and other current
assets
652
(1,334
)
Accounts payable
(147
)
(663
)
Accrued expenses and other current
liabilities
69
(2,399
)
Deferred revenue
88
59
Net cash used in operating activities
(454
)
(9,818
)
Cash flows from investing activities
Additions of property, equipment, and
software
(597
)
(788
)
Proceeds from sale of property and
equipment
2
11
Net cash used in investing activities
(595
)
(777
)
Cash flows from financing activities
Issuance of common stock under ESPP
16
120
Tax payments related to shares retired for
vested restricted stock units
(55
)
—
Repayments of related party payables
(90
)
2
Repayments of short-term financing
arrangements
(546
)
—
Net cash (used in) provided by financing
activities
(675
)
122
Net decrease in cash, cash equivalents,
and restricted cash
(1,724
)
(10,473
)
Cash, cash equivalents, and restricted
cash, beginning of period
15,544
25,202
Cash, cash equivalents, and restricted
cash, end of period
$
13,820
$
14,729
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
key measures 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
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Net loss
$
(1,275
)
$
(1,436
)
$
(3,662
)
$
(6,833
)
Interest expense, net
638
724
1,245
1,437
Depreciation and amortization expense
323
226
652
421
EBITDA
(314
)
(486
)
(1,765
)
(4,975
)
Stock-based compensation
607
580
1,205
1,238
Transaction related expenses - strategic
alternatives
204
—
204
—
Severance
—
—
—
754
Change in fair value of derivatives
(14
)
(14
)
(28
)
(281
)
Adjusted EBITDA
$
483
$
80
$
(384
)
$
(3,264
)
Source: Leafly Holdings, Inc.
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Media pr@leafly.com
Investors ir@leafly.com
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