Sign in

You're signed outSign in or to get full access.

LH

Leafly Holdings, Inc. /DE (LFLY)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue of $8.4 million with 89% gross margin; adjusted EBITDA was positive $0.4 million, marking a second consecutive quarter of positive adjusted EBITDA amid continued cost discipline . Net loss improved to $1.1 million versus $2.2 million in Q3 2023 .
  • Retail revenue stabilized sequentially, supported by targeted price increases and lower churn; brand revenue was seasonally subdued ahead of typical Q4 strength, per management .
  • Management did not provide Q4 or FY24 guidance and disclosed ongoing substantial doubt about going concern while prioritizing restructuring of convertible notes due January 31, 2025, and addressing Nasdaq listing compliance .
  • No Q3 earnings call was held; notable catalysts include sequential stabilization in retail ARPA/accounts, an adjusted EBITDA beat versus prior Q3 guidance, and balance sheet/liquidity actions through ATM proceeds and interest payments .

What Went Well and What Went Wrong

What Went Well

  • Two consecutive quarters of positive adjusted EBITDA driven by operating cost rigor and collections recovery; Q3 adjusted EBITDA of $0.4 million vs $(0.2) million in Q3 2023 . CEO: “We’re poised to capitalize on the growth opportunities ahead” as retail stabilizes .
  • Sequential stabilization in retail revenue and flattening declines in ending retail accounts, aided by targeted price increases and reduced churn . CFO: “With the business on a firmer footing, we are targeting growth next year” .
  • Gross margin sustained at 89% year-over-year, reflecting asset-light operations and disciplined execution .

What Went Wrong

  • Revenue declined 20% year-over-year to $8.4 million, led by a 20% YoY drop in ending retail accounts and budget-constrained customers; retail revenue fell to $7.4 million from $9.3 million .
  • Continued going concern disclosure due to inability to repay January 2025 convertible notes; company engaged advisors to explore financing/strategic options and raised $1.1 million via ATM while paying $1.2 million cash interest in Q3 .
  • Nasdaq listing non-compliance persisted with a delisting appeal hearing scheduled for early December; uncertainty remains pending final decision .

Financial Results

Consolidated Results vs Prior Quarters

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$9.048 $8.722 $8.353
Gross Profit ($USD Millions)$8.072 $7.763 $7.449
Gross Margin (%)89.2% 89% 89%
Total Operating Expenses ($USD Millions)$9.820 $8.409 $7.996
Net Loss ($USD Millions)$(2.387) $(1.275) $(1.139)
Diluted EPS ($USD)$(1.09) $(0.55) $(0.46)
Adjusted EBITDA ($USD Millions)$(0.867) $0.483 $0.378

Non-GAAP adjustments include stock-based comp, transaction-related expenses, changes in fair value of derivatives, and depreciation/amortization excluded from EBITDA .

Segment Revenue Breakdown

SegmentQ1 2024Q2 2024Q3 2024
Retail Revenue ($USD Millions)$7.9 $7.3 $7.4
Brand Revenue ($USD Millions)$1.2 $1.4 $1.0

KPIs and Liquidity

KPI / MetricQ1 2024Q2 2024Q3 2024
Ending Retail Accounts3,840 3,595 3,554
Retailer ARPA ($/Month)$677 $684 $695
Cash and Cash Equivalents ($USD Millions)$14.100 $13.573 $13.567

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ActualChange
RevenueQ3 2024~$8.4M $8.353M actual Maintained (inline)
Adjusted EBITDAQ3 2024Loss < $1.0M $0.378M actual Bold Beat vs guidance (better than guided loss)
RevenueQ4 2024None provided None provided Maintained (no guidance)
RevenueFY 2024None provided None provided Maintained (no guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2024)Trend
Operational efficiency & cost disciplineOpEx reduced YoY; adjusted EBITDA turned positive in Q2; collections recovery improved bad debt metrics Continued cost rigor and collections recovery drove positive adjusted EBITDA; second consecutive quarter Improving
Retail stabilization & churnEnding accounts declined but pace moderating; ARPA up due to removal of lower-ARPA accounts and price actions Retail revenue essentially flat sequentially; ending account declines flattened; targeted price increases and lower churn Stabilizing
Brand monetization & seasonalityRevamped brand subscriptions with tiering; 420 drove seasonal Q2 uplift Seasonal softness in Q3; typically stronger in Q4 due to holiday marketing Seasonal/neutral
Liquidity & convertible notes (Jan 2025)Convertible notes moved to current; ongoing lender/advisor dialogue Highest priority to address maturity; paid $1.2M interest; raised $1.1M via ATM Ongoing risk
Nasdaq listing compliancePlan to regain compliance; extension process underway Delisting appeal hearing scheduled; listing action stayed pending decision Uncertain
Regulatory/macro catalystsDEA rescheduling optimism; Florida ballot; Ohio adult-use launch; Uber Eats Canada partnership No Q3 call; continued commentary on operating environment; NYCRA partnership in NY market Mixed tailwinds
Product/tech initiativesPromo codes, live chat, SEO improvements, deals engine revamp No new Q3-specific product detail disclosed in release Neutral

Management Commentary

  • CEO: “With two consecutive quarters of positive adjusted EBITDA and a retail business that has largely reached a point of stabilization, we’re poised to capitalize on the growth opportunities ahead” .
  • CFO: “Our highest priority is addressing the maturity of our convertible notes, which are due in January 2025… With the business on a firmer footing, we are targeting growth next year” .
  • Business mix: “Retail revenue benefited from targeted price increases… Brand revenue is typically stronger in the fourth quarter due to holiday-related marketing spend” .

Q&A Highlights

  • No Q3 call or Q&A was held .
  • Prior call themes (Q1): Rescheduling’s 280E tax relief potential ($1–$2B industry savings) could unlock marketing spend and demand tailwinds for the platform . Stabilization strategies for accounts via broadened product tiers and retention/ win-back initiatives .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable at the time of request due to provider limits; therefore, estimate comparisons to consensus could not be made. The company’s prior guidance called for Q3 revenue around $8.4 million and an adjusted EBITDA loss of less than $1.0 million; actual revenue was $8.353 million and adjusted EBITDA was positive $0.378 million, a material beat vs company guidance .

Key Takeaways for Investors

  • Bold operational execution: Two straight quarters of positive adjusted EBITDA on sustained 89% gross margins signal improved cost structure and collections discipline; this underpins near-term resilience despite top-line pressure .
  • Retail stabilization: Sequentially flat retail revenue and flattened account declines, alongside rising ARPA, indicate a healthier mix and pricing power; watch for Q4 holiday uplift in brand revenue .
  • Balance sheet risk remains the swing factor: January 2025 convertible notes maturity and Nasdaq listing appeal are core overhangs; liquidity actions (ATM proceeds, interest servicing) help but resolution is the key catalyst .
  • Guidance discipline: No Q4 or FY24 guidance; however, Q3 outperformed company’s EBITDA expectations—focus on whether stabilization enables 2025 growth as management targets .
  • Regulatory and market initiatives: Partnership with NYCRA supports legal retail ecosystem in NY; broader regulatory shifts (DEA rescheduling, state openings) are medium-term tailwinds for platform engagement and monetization .
  • Trading setup: Near-term stock narrative likely driven by liability restructuring outcomes and listing status; operational beats may be discounted until balance sheet uncertainty is resolved. Monitor December Nasdaq hearing outcomes and any note restructuring updates .
  • Medium-term thesis: If liquidity and listing issues are resolved, the combination of high gross margins, improved ARPA, and product/brand monetization initiatives could support a return to top-line growth with operating leverage in 2025 .