Weed Discovery Marketplace Leafly Q2 Revenue Drops 18% YoY, Customer Accounts Lower As Average Spend Grows
Leafly Holdings, Inc. (NASDAQ:LFLY) has revealed its quarterly financials for the period ending June 30, 2024, showcasing a notable shift in its business dynamics amid evolving cannabis market landscapes. The specified quarter ended with revenue reaching $8.7 million, a descent from the previous year’s $10.7 million. Leafly’s foothold in the industry, coupled with its recent strategic alignment with Uber Eats, a division of Uber Technologies (NYSE:UBER), aims to rejuvenate its market presence by keying into cannabis home delivery services within Alberta, Canada.
The company’s Chief Executive Officer, Yoko Miyashita, expressed confidence in Leafly’s enduring value to both partners and consumers. “We remain focused on enhancing operational efficiency and stabilizing our core business while delivering value to our partners,” Miyashita articulated. The enduring mission in an era significantly more receptive to cannabis underscores the essential service Leafly provides in connecting discerning consumers with reliable retailers and brands.
Second Quarter Financial Summary
Leafly reported a net loss of $1.3 million for the quarter, a slight improvement over the previous year’s $1.4 million. The gross margin showed a modest increase to 89% from 88% in Q2 2023. Its adjusted EBITDA also saw positive movement, registering a gain of $483,000 compared to $80,000 in the same quarter the previous year. Despite these gains, both retail and brand revenue saw declines, with retail revenue at $7.3 million down from $8.8 million, and brand revenue decreasing to $1.4 million from $1.8 million.
Nevertheless, the company managed to reduce its total operating expenses by 17% to $8.4 million from the second quarter of 2023’s $10.2 million. This reduction is a part of its broader efficiency and profitability drive. However, Leafly ended the quarter with a slightly reduced cash reserve of $13.6 million, excluding restricted cash.
A noteworthy metric from this quarter’s performance was the reduction in the number of retail accounts by 32% year-over-year to 3,595 accounts. Yet, the silver lining comes from the increased average spending per retail account, which grew to $684 from $558, indicating a more valuable, albeit smaller, customer base.
Looking Ahead: Q3 Expectations
For the upcoming third quarter, Leafly anticipates revenues of around $8.4 million and aims to cap its adjusted EBITDA loss to less than $1.0 million. CFO Suresh Krishnaswamy highlighted ongoing initiatives aimed at stabilizing revenue streams. “Leafly continues to focus on operating efficiently and managing the business towards profitability,” he said. Optimism is cautiously maintained as the outcomes of these strategic endeavors are awaited over the forthcoming quarters.
Market Response
Following the announcement, Leafly shares saw an uptick, closing the market session 4.85% higher at $2.16 per share. This positive movement reflects a hopeful market sentiment towards Leafly’s strategic adjustments and future prospects.
In an era where cannabis accessibility and acceptance are surging, Leafly’s pivotal role as a connector between cannabis consumers and the supply chain remains critical. As the company navigates through its restructuring and strategic refinement, the broader market and its stakeholders are keenly watching for signs of sustained recovery and growth.
