Leafly(US:LFLY)2023-03-17 00:49Financial Data and Key Metrics Changes - Revenue in Q4 2022 was $12.1 million, essentially flat year-over-year, with retail revenue at $9.5 million, up 4% year-over-year, and brand revenue at $2.7 million, down 12% year-over-year [2][22] - Full year revenue grew 10% over 2021, driven primarily by retail revenue, which was $36.7 million, up 9.3% year-over-year [22] - Adjusted EBITDA loss for 2022 was negative $23 million, an improvement due to cost-cutting initiatives [24] Business Line Data and Key Metrics Changes - Retail ARPA in Q4 was $554, a decline of 7% year-over-year [3] - Revenue from brands declined 3% sequentially compared to Q3, with brands pulling back on advertising spend [4] - Ending retail accounts grew nearly 10% in 2022, with significant growth in Montana and New Mexico [22][73] Market Data and Key Metrics Changes - Continued softness in markets like Oklahoma and parts of Canada [3] - Cannabis prices are down, impacting retailers and brands using the company's services [28] - Market penetration reached 75% in New Mexico and Montana by the end of 2022, with ARPA increasing by over 50% in both markets [27] Company Strategy and Development Direction - The company is focusing on cost management and aligning its cost structure with the current industry environment, including a 21% reduction in workforce [5][9] - Emphasis on building deeper relationships with customers and increasing customer spend across the full suite of products and services [25] - Plans for 2023 include improving operational efficiency, preserving cash, and targeting resources towards high-value opportunities [70] Management's Comments on Operating Environment and Future Outlook - The company expects continued pressure on ARPA and muted growth in 2023 due to a weak macroeconomic environment [28] - Management is optimistic about consumer interest in cannabis remaining high, despite economic challenges [30] - The operational plan for 2023 aims for considerable improvement in adjusted EBITDA and a path to profitability [29] Other Important Information - The company has diversified its cash balances across several banking relationships to mitigate risk [48] - For Q1 2023, the company expects revenue of $11 million to $11.3 million and an adjusted EBITDA loss of negative $4.3 million to negative $4 million [49] Q&A Session Summary Question: What is the impact of weaker demand on advertising spending? - Management noted that brand advertising spend has seen greater softness, particularly in top-of-funnel spending, as brands pull back due to economic pressures [52] Question: How does the company plan to generate more retail demand? - The company aims to deepen relationships with retailers and show them ROI on the platform, focusing on consultative approaches to drive shopping behavior [56] Question: Is the lack of enforcement around illegal dispensaries impacting the business? - Management acknowledged that structural issues exist, with a significant number of unlicensed dispensaries affecting the market, emphasizing the need for regulatory action [58] Question: Can you provide insights on customer stickiness amid the tough macro environment? - Retail accounts are about 78% of total revenue, with over 80% being subscription-like revenue, indicating strong stickiness despite some churn in specific markets [62]