Delivered full year 2022 revenue of $47.4 million, up 10% over full year 2021
Reported net income of $5.1 million, up from net loss of $12.0 million in 2021; Delivered 2022 adjusted EBITDA loss of $23.2 million, ahead of guidance
Total Ending Retail Accounts grew to 5,806, up 10% over 2021March 16, 2023 04:01 PM Eastern Daylight Time
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 fourth quarter and year ended December 31, 2022.
“Despite a year filled with challenges broadly for the cannabis industry, and the associated impact on our revenue growth, we grew the number of subscribing retailers and brands using our platform by double digits in 2022 and continued to focus on delivering an outstanding consumer experience while driving more value for clients who use Leafly to reach high-intent shoppers. Our recently launched products, combined with our subscriber base, continue to create opportunities for us to increase monetization,” said Yoko Miyashita, CEO of Leafly. “At the same time, we’ve been intently focused on managing our expenses and cash flow. With softer ad spend expected to continue in 2023, we are driving deeper relationships with our customers and optimizing teams for efficiency.”
Full Year 2022 Financial Results
- Revenue was $47.4 million, up 10% over FY 2021
- Gross margin was 88%, consistent with FY 2021
- Total operating expense was $69.5 million, up 43% over $48.7 million in FY 2021, reflecting increased expenses due to new public company costs, and new hires in Q4 2021 through the first half of 2022
- Net income for 2022 was $5.1 million, compared to net loss of $12.0 million in FY 2021 primarily related to $36.8 million of non-cash changes in derivative liabilities and partially offset by the increased operating expenses noted above
- Adjusted EBITDA loss was $23.2 million, compared to adjusted EBITDA loss of $9.4 million in FY 2021
Fourth Quarter 2022 Financial Results
- Total revenue was $12.1 million, in line with Q4 2021
- Gross margin was 88%, consistent with Q4 2021
- Total operating expense was $16.3 million, up 8% over $15.1 million in Q4 2021
- Net loss was $5.8 million, compared to net loss of $5.1 million in Q4 2021
- Adjusted EBITDA loss was $4.2 million, compared to adjusted EBITDA loss of $4.1 million in Q4 2021
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 tables included in this release below.
The company is also further aligning its cost structure to better reflect the current industry and macro-economic environment, allocating resources to the areas the company believes will bring the greatest return to ensure a stronger marketplace, long-term. As a result, the company is announcing a headcount reduction of approximately 40 positions – or 21% of the company’s workforce – through a combination of layoffs and attrition. The company expects a one-time cash restructuring charge for the layoffs of approximately $700,000 in Q1 of 2023. Leafly expects total annual cash savings on an annual basis of approximately $8M, beginning in Q2.
“Given the continued pressure on our topline growth, we made the difficult decision to trim our workforce,” said Suresh Krishnaswamy, CFO of Leafly. “With these reductions, in addition to those we made in 2022, we are emphasizing efforts to align more closely with customers and highlighting the value that Leafly can provide. This realignment of our business priorities also helps extend our cash runway as we stay focused on improving our path to profitability.”
|Key Performance Metrics|
|Three Months Ended December 31,|
|Average MAUs (in thousands)||8,026||8,669||(643||)||-7||%|
|Ending retail accounts||5,806||5,265||541||10||%|
|Year Ended December 31,|
|Average MAUs (in thousands)||7,962||10,005||(2,043||)||-20||%|
|Ending retail accounts||5,806||5,265||541||10||%|
2022 Business Highlights
- On February 4, 2022, Leafly and Merida Merger Corp. I completed their business combination.
- Carlos Pinto, a seasoned sales and marketing executive, joined Leafly as Chief Commercial Officer, overseeing the company’s sales, marketing, and content teams.
- Given the macroeconomic and revenue environment, the company adjusted its expense load through a headcount reduction of 21% in October and improvements to its overall expense and cost structure, with expected savings of $16 million in 2023.
- Leafly ended the year with 5,806 retail accounts, a 10% increase over 2021 as retailers in existing and new recreational markets adopted the Leafly platform. Leafly saw a 33% increase in the number of brands subscribers leveraging Leafly, growing from 655 at the end of 2021 to 868 at the end of 2022.
- Retailer average revenue per account (“ARPA”) was $566, a decline of $70 from 2021, driven by Leafly’s overall strategy to enter markets with competitive pricing to drive increased market penetration in local markets. As market penetration increases so does the company’s ability to drive additional revenue. This strategy drove ARPA up in New Mexico and Montana, where market penetration reached 75% with ARPA increases of 55% and 68% respectively in those markets.
- The number of orders in Q4 was 768,477, just slightly below Q4 2021’s total of 776,098, a year that benefited from COVID-19 induced demand.
- In October, Leafly and Uber Eats announced a first-of-its-kind partnership providing Torontonians the ability to order safe, legal cannabis and get it delivered straight to their homes via the Uber Eats app. The pilot program launched with several stores in the Greater Toronto area.
- 2022 saw the launch of several key products including marquee and strain page feature ads, traffic-driving advertising placements across some of Leafly’s most valuable online real estate; new business reporting tools allowing retailers to better track their performance on Leafly; a fresh delivery-first shopping experience making it easier than ever for consumers to place orders for delivery directly on Leafly.
- Leafly continued to highlight its position as a thought-leader by publishing its annual, informative reports providing the only comprehensive view of cannabis jobs (2022 Jobs Report) and cannabis as a crop (2022 Harvest Report) in the United States. The often-cited reports showed more than 428,000 jobs could be attributed to the cannabis industry and that cannabis had become the 6th largest crop.
Today, Leafly is issuing first quarter 2023 guidance. Based on current business trends and conditions, the financial outlook is expected to be as follows:
- For the first quarter 2023, Leafly expects revenue to be between $11.0 million and $11.3 million and adjusted EBITDA loss to be in the range of $4.3 million to $4.0 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; 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, March 16, 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 (844) 200-6205 toll-free domestically and at (929) 526-1599 internationally. Please reference conference ID: #037566. An archived version of the webcast will be available from the same website after the call.