PSQ Holdings - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue grew 95% year over year to $6.75M, gross margin expanded to 58% (from 43% a year ago), and operating expenses (G&A + S&M + R&D) fell 10% YoY; net loss narrowed to $4.45M ($0.10 per share) aided by a $7.38M non‑cash gain from warrant liability revaluation.
• Mix: Financial Technology $3.05M, Brands $3.27M, Marketplace $0.43M; management highlighted lower customer acquisition costs and early traction in Payments and BNPL, while Marketplace revenue was intentionally lower in Q1 ahead of a Made‑in‑America repositioning.
• Guidance reaffirmed: FY25 revenue >100% YoY (>$46M) and FY25 operating expenses lower than 2024; management also reiterated a plan to turn operating cash flow positive by year‑end 2025.
• Stock catalysts: conversion of a $2.5–$3.0B GMV onboarding cohort in 2025, Shopify Payments integration enabling conversion of tens of thousands of marketplace merchants, a new credit facility expected to reduce cost of capital ~50% by end of Q3, and a $2M EveryLife bulk order paid up‑front with revenue recognized over coming months.

What Went Well and What Went Wrong

• What Went Well

  • Revenue +95% YoY to $6.75M; gross margin 58% (vs 43% LY) as FinTech and Brands scaled; operating expenses down 10% YoY, driven by a 48% cut in sales & marketing spend.
  • Payments and BNPL traction: FinTech revenue reached $3.05M; Payments GMV of $36.0M launched in October 2024; management onboarding from a backlog/waitlist; “demand has been overwhelming” and a backlog exists, with focus on the first $2.5–$3.0B GMV in 2025.
  • Brands momentum and recurring profile: EveryLife grew >40% YoY; ~68% (≈$2.2M) of Brands Q1 revenue came from subscriptions; largest‑ever $2M bulk order from a pregnancy resource center coalition (cash received; revenue recognized as shipped).

• What Went Wrong

  • Marketplace revenue decreased to $0.43M as the team intentionally pulled back marketing to prepare the Made‑in‑America relaunch; sequential gross margin declined from 61% in Q4 to 58% in Q1 with mix effects.
  • BNPL Credit GMV fell 33% YoY (to $11.4M) amid industry softness in firearms retail and tightened AI‑driven underwriting; management noted headwinds in consumer credit trends and seasonality post‑holiday.
  • Operating cash flow remained negative ($6.43M used), partly due to retaining select receivables/leases ($1.1M) on balance sheet to enhance medium‑term revenue; warrant/earn‑out fair‑value gains aided net loss optics but are non‑cash.

Transcript

Operator (participant)

Thank you for standing by. My name is Gail, and I'll be the operator for today's call. At this time, I would like to welcome each and every one of you to the PublicSquare First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, kindly press star one again. It is now my pleasure to turn today's call over to William Kent. Please go ahead.

William Kent (Head of Investor Relations)

Thank you, Gil. Good afternoon, everyone, and welcome to PublicSquare's First Quarter 2025 conference call. Joining me today is Michael Seifert, Chairman and Chief Executive Officer; Brad Searle, Chief Financial Officer; and Dusty Wunderlich, Chief Strategy Officer. Before we get started, we want to emphasize that the information discussed on this call, including our outlook, is based on information as of today and contains forward-looking statements that involve risks, uncertainties, and assumptions. We undertake no duty or obligation to update such statements as a result of new information or future events. Please refer to today's earnings press release and our SEC filings, including our 2024 10-K, for factors that may cause actual results to differ materially from our forward-looking statements. We'd also like to point out that we present non-GAAP measures in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP.

I'll now hand the call to Michael. Michael, please go ahead.

Michael Seifert (Chairman and CEO)

Thank you, Will, and welcome, everyone, to our First Quarter 2025 earnings call. I would like to take our time together today to cover our accomplishments from the quarter and express how they provide a strong foundation for the remainder of the year and beyond. First, I will start at the overall company level. Our revenue in the quarter grew by 95% year over year to $6.75 million, compared to $3.47 million in the first quarter of 2024. Our fintech division, consisting of our payment processing stack and our buy now, pay later services, contributed $3.05 million. The PublicSquare Marketplace added just over $0.4 million, and our brand segment, consisting of our EveryLife brand, contributed $3.27 million.

Now, regarding expenses, while we've nearly doubled our revenue year over year, our operating expenses have actually decreased 10% year over year, from $16 million in Q1 of 2024 to $14 million in Q1 of 2025. Through our team's hard work and strategic creativity, our leveraging of AI tools for an increasing number of functions within the business, our exercising of synergies between our business lines, and our continually decreasing customer acquisition costs, we are truly accomplishing more with less, helping us drive closer and closer to operating cash flow positivity, even while remaining in hyper-growth mode. Actually, to elaborate further on our decreasing customer acquisition costs, as I mentioned on our last earnings call nearly two months ago, we anticipate that customer acquisition costs, especially in our fintech division, will remain near zero for at least the next two years.

This was also exemplified by the fact that our sales and marketing expenses in Q1 decreased 48% year over year. We are able to achieve organic growth at our core business without having to pay an arm and a leg for a new customer because of the community that we've worked so hard to build over the past three years, paired with the viral nature of our products and our brand. Finally, a word on margin. Our margin across the entire business expanded to 58% in Q1 of 2025, compared to 43% in Q1 of 2024. Now we're going to dive a little deeper into each business segment, and first we will get started with payments. In Q1, we made significant progress integrating and onboarding a large number of the material backlog of merchants we have built up on our waiting list.

These merchants have sought us out either because we were already serving them on the marketplace or through our buy now, pay later services, or they heard about us because of the positive feedback we've received from one of our payment processing launch partners currently using our services, or they were introduced to us by one of our board members, or they inquired about our services after the enormous viral traction we've received in the market because of the unique product differentiators we offer and the cancel-proof promise we make to our merchants. We anticipate that much of the revenue from these onboarding and integration activities will begin to be realized in Q2 and especially in the latter half of the year. In Q1, PSQ Payments came to the rescue for a number of merchants who had recently and abruptly experienced economic cancel culture.

For one major example, after Guns.com, one of the largest and most trusted digital marketplaces in the shooting sports industry, was abruptly canceled by their ACH provider, which was one of the largest ACH providers in the market, by the way. Guns.com reached out to us in hopes that we could fill the void in a trusted, cancel-proof manner. We immediately jumped on the opportunity to protect Guns.com, as this is a perfect example of a merchant that we feel a great deal of responsibility to serve, and we launched our ACH processing product in February with Guns as our launch partner. We have since scaled that product, and we are excited about the trajectory as we move forward. For Guns.com, we now have the privilege of serving them with our full suite of fintech products.

We handle their buy now, pay later transactions through our Credova business, which actually ups conversion rates at checkout for that merchant. We also serve them with our credit and debit card transactions and B2B and C2B ACH processing through our PSQ Payments products. This is what we're looking to replicate for many more merchants in our pipeline as we move forward. For another example of a business we assisted with our fintech products after they recently faced cancellation, I'll reference Tenacity Arms. When Tenacity Arms, an American manufacturer and online retailer of firearms, received a sudden notice from their payment processor threatening to freeze their funds and terminate service, their business was at risk of grinding to a halt.

Within hours, PublicSquare's fintech division stepped in with a new PSQ Payments product and a direct Shopify integration, migrating Tenacity Arms to the cancel-proof payment platform that is purpose-built for resilience, speed, and the functionality needed to operate a growing American-made firearms business. We're proud to support liberty-minded business owners like this as they exercise their God-given rights to grow their business and protect the Second Amendment. As I just alluded to when referencing Shopify, another event we announced recently was the launch of our Shopify integration to PSQ Payments. This is a powerful move that catapults our business's ability to serve our tens of thousands of marketplace e-commerce merchants at PublicSquare.com, 80%+ of whom host their digital storefront on Shopify.

We utilize this integration with Yonder, one of our top-performing PublicSquare marketplace merchants and the first marketplace merchant that we have onboarded fully to our payment processing stack. Now moving over to the buy now, pay later business. We saw a slight dip in the originations volume due to the normal seasonal shift coming out of the Christmas shopping season. In addition, our proprietary economic forecast model indicates that we're in a transitional period with consumer credit and credit scores shifting downward as consumers continue to experience the effects of the inflation that plagued household finances over the past few years. In response, we've tightened our AI-driven underwriting models and reduced both approval amounts and monthly payments while also helping consumers manage their credit in the process. These adjustments are designed to mitigate credit risk while supporting consumers with responsible access to credit during a challenging economic environment.

As a positive note, we had tremendous traction in onboarding new merchants to our buy now, pay later services, and we actually grew our database of pre-qualified applicants by 198,196 in Q1, which reaffirms our position as one of the fastest-growing consumer databases in the shooting sports industry. These positive enhancements set us up for a powerful remainder of 2025 in our buy now, pay later segment. We also made significant progress in the continued development of what we are calling Credit 2.0, an initiative we introduced on our last earnings call that we believe will drive repeat customer growth, easier onboarding for merchants, and a gamified experience for the consumer. Stay tuned for more there in the coming months.

I spoke last quarter about how we were beginning to strategically deploy capital to expand margins, enhance cash flow efficiency, and build a robust consumer lending portfolio on our balance sheet, which will have a materially positive effect on revenue over time. During the first quarter, we used approximately $1.1 million in cash to retain certain consumer receivables, which include loans and leases that we deemed high quality utilizing our AI-driven underwriting tools. We continue to expand the use of AI throughout the business, and AI is a critical component of our future credit strategy. We leverage AI to enhance underwriting, mitigate risk, and drive smarter lending decisions. Investors can expect us to continue to share progress here in the coming months, and this is an important point that we'll seek to drive home continually.

AI will be an increasingly essential component of our ability to create and maintain an industry-competitive cost structure with margin expansion opportunities across the business moving forward. Finally, a quick update on our new line of credit, which I highlighted during our last call. As I mentioned, we expect this line of credit to reduce our cost of capital by approximately 50%, and we expect this new line of credit to be in place and active by no later than the end of the third quarter. This is an important new banking relationship for PublicSquare and even more impactful as we continue to scale the business, and we're grateful for this partnership. Now, moving on to the marketplace.

On our last call, I presented a sneak peek at our vision for the marketplace as we move through 2025, which included the leveraging of synergies between our payments and marketplace business segments, accelerating the growth of our ambassador program, and elevating our Made in America focus. I am very pleased to say that we have made significant progress on all fronts. As I mentioned earlier, we recently announced the first marketplace merchant to onboard to PSQ Payments, and we anticipate the exercising of this important synergy between payments and marketplace will continually and materially ramp up as we move through the year. This strategy is one of the major differentiators that sets us apart from not just other payment companies, but also other marketplaces.

No other payment company or marketplace can secure a merchant's economic liberty through a cancel-proof checkout while also driving new customers to them through a consumer-facing marketplace. In Q1, we also made strides to improve our ambassador program and the related technical functionality that is needed to launch our new and improved ambassador program in late Q2. As a reminder, organic grassroots marketing is the key to low-cost growth for us, and the strong ambassador network we've accumulated over the last few years is the primary driver of those marketing efforts. Finally, in Q1, our primary focus was building the foundation for the evolution of the marketplace that will launch in late Q2. This evolution will include our marketplace becoming primarily known, above all else, for its Made in America product assortment. We've been looking forward to taking this crucial step, honestly, since the beginning of our marketplace journey.

Starting in late Q2, you'll see an aggressive and grassroots push to promote our mission. What is that mission? The mission of the marketplace is to champion Made in America products from businesses that uphold life, liberty, and family. To us, this is more than a branding statement. It's a modern embodiment of what the founders hoped America would become in an age where so much is outsourced: products, values, even identity. PublicSquare, our marketplace, stands as a reminder that America works best when Americans invest in one another.

This move will satiate the desires of our customers looking to purchase Made in America goods, support the small business owners who are putting in the hard work to manufacture their products in America, and set ourselves up with a significant competitive advantage in an American economy that is increasingly embracing economic nationalism, which we as a team are highly in support of. While our best-selling products have always been resoundingly Made in America, we're excited to extend the same spirit and requirement to the merchants across our entire platform. Stay tuned over the remainder of Q2 for more progress updates on this front. As we focused our marketplace efforts singularly on prepping for this material next step, we significantly reduced our marketing efforts in Q1, which was responsible for the drop in marketplace revenue.

This was fully anticipated, and we look forward to intentionally putting our growth foot on the gas for the marketplace in the second half of the year through the initiatives I have just mentioned. One more important note here. There has been a lot of talk recently about tariffs. Tariffs have obviously been on people's minds the last few months. While it may seem self-evident, it is worth reiterating. Our position is simple. We believe as a company that we are exceptionally positioned to benefit from the growing focus on American manufacturing, specifically with our marketplace's increasing Made in America focus. Finally, over to the brands division. We saw year-over-year revenue growth in the EveryLife business greater than 40%, and we saw 68% or $2.2 million of our Q1 revenue come from subscription orders, which is a fantastic sign of the strength of our repeat customer.

Also, and this is big news, we just recently received our largest ever bulk order from a pregnancy resource center coalition for $2 million paid in full earlier this week, which amounts to an immediate increase in cash, with the revenue recognized as the components of this order are shipped throughout the coming months. This bulk order will be used to support their network's efforts for the next year, and we anticipate that this bulk order will recur annually. We also see this expansion as a crucial component of our EveryLife growth story moving forward. There are thousands of similar pregnancy centers and nonprofit coalitions across the country, and we're increasingly presenting them with opportunities to stock their shelves with our consumer products. This is a liberating and lucrative opportunity for our brands division, and we're excited to create more partnerships like this as we move forward.

In closing, our fintech division is uniquely positioned to deliver strong revenue and cash flow growth as the core business segment for our company moving forward. Q1 was the onboarding and integrating quarter. The focus of Q2 is on ramping up GMV, and Q3 and Q4 are positioned perfectly for tremendous revenue growth from these efforts. The marketplace is hitting its stride with our core customers and is on track for a breakout second half of 2025 and beyond, particularly as we lean into our Made in America product lineup. Meanwhile, our brands division is driving momentum for the business through strong repeat purchasing, an increased product assortment, and monumental bulk order partnerships, like I've previously stated. We are exactly where we want to be as a business right now. It's clear that there's never been a greater need for the services we're providing.

Given our performance in Q1 and our roadmap for the remainder of the year, we want to reaffirm our previously stated guidance of total year-over-year revenue growth of greater than 100%, or said differently, greater than $46 million, and our operating expense, defined as general administrative, sales and marketing, and research and development, to actually decrease in 2025 from 2024. I will now turn the call over to Brad to discuss some important financial highlights. Here we go, Brad.

Brad Searle (CFO)

Thank you, Michael, and good afternoon, everyone. I'm honored to be here with you today to discuss our first quarter 2025 results. I'd like to present a few financial items to note. First, we increased Q1 net revenue by 95% to $6.7 million compared to the first quarter 2024. With that, our overall gross margin was 58% in Q1 2025 compared to 43% in Q1 2024.

Moving on to cash and other items, we ended Q1 with cash and cash equivalents of $28.0 million and $0.2 million in restricted cash. As Michael mentioned, we made the strategic decision to put our cash to work and to purchase leases in Q1 and put them on our balance sheet, which totaled $1.1 million in cash outflows. In terms of share count, as of March 31, 2025, we had 39,959,012 Class A common shares outstanding and 3,213,678 Class C common shares outstanding. As of March 31, we had an outstanding principal balance of $3.7 million on our $10 million revolving line of credit. Lastly, as Michael said, and I want to reiterate, we are tracking ahead of pace regarding our previously issued guidance of reducing operating expenses as outlined in our earnings release.

Our operating expense decreased from $16.1 million in Q1 2024 to $14.4 million in Q1 2025, a 10% decrease year-over-year. Now let's move on to Q&A.

Operator (participant)

Thank you. At this time, I would like to remind everyone that in order to ask a question, press star then the number one on your telephone keypad. Okay, your first question comes from the line of Thomas Swartz with Maxim Group. Please go ahead.

Great. So Michael, Brad, Dusty, Will, congrats on the quarter. One question and one follow-up from me. It sounds like the payments rollout, for the most part, is going as planned. I appreciate the callouts on taking advantage of opportunities where other companies had been dropped by their payments provider. Can you talk, Michael, about the surprises, both favorable and unfavorable, on your payments rollout?

Michael Seifert (Chairman and CEO)

Yeah, great question, Tom. Good to hear from you.

Thanks for joining us today. As expected, it's about the best way that I would articulate Q1 of 2025 for us, especially related to the payments rollout. I can certainly give you highs and lows. I will share on the high side, we have been thrilled at the demand. The demand has been overwhelming. Ultimately, for us, that's been driven by a lot of the factors I mentioned in this call. Some of that demand is reactive, so merchants getting dropped by their other payments providers that deem them, you know, including reputational risk. They don't want to work with the gun industry, and these merchants are coming to us because we love the Second Amendment community in the shooting sports industry, and we're proud to serve these merchants. A lot of the demand is also proactive.

People are actually assessing what tools they want to build their business around for the coming years. They want to know with true assurance that their checkout technology is secured by Liberty. The beautiful thing about our payment stack is that we do not view our payment processing capabilities in a vacuum. In many cases, we are actually bundling this product with our buy now, pay later technology. A lot of the proactive demand where merchants might not be at risk of cancellation from their other providers, but they actually want to combine their checkout into one seamless solution, those merchants are driving to us in droves, which is pretty cool to see.

For a merchant, they don't want to deal with two different providers, one for debit credit card ACH processing and then another for buy now, pay later, because in the merchant side, both of those tools are specifically related to the checkout. They want one team to be able to control the checkout and provide value at that point of sale in the digital environment, and that's where we come in with a powerful differentiator. I'd say the high has been the demand. It's been overwhelming. Ultimately, at this point, we actually have a waitlist, a backlog of merchants that are ready to work with us. The only downside, I would say, or speed bump we've encountered over the course of Q1 has ultimately just been that businesses right now, it's actually alluding to a little bit of what I just mentioned.

They are assessing all of their tooling across their entire business right now, which means that replacing their payment processing technology is one of many tools they're looking to replace right now. For many of these businesses, they have limited bandwidth, and so they're having to rank order their priorities in scope throughout the year. The big thing for us is working with these merchants to ensure that the payment processing technology and the buy now, pay later services that we can offer is the first feature change that they want to input into their website as they're looking at replacing many of their services. I think a lot of merchants right now are looking to streamline costs, improve efficiencies, and we can certainly help there.

Making sure that we rank order at the top of their priority list as they're replacing these tools throughout 2025 is something that we've been in conversations with these merchants and has definitely taken, you know, more conversation out of our sales team. That's how I'd answer that there. It certainly has not been a distraction or any material blocker from our progress on the payment stack, because I'll allude back to what I said at the beginning of my comments. This quarter for us has been as expected. Q1 is integration. Q2 is ramping up GMV. Q3 and 4 is experiencing the revenue benefits that come with that GMV.

Great. Thank you for that, Michael. For my follow-up, on the brands division, how should we think about your product pipeline and plans to move beyond baby and feminine hygiene?

Great question.

On the brands division, I would say that we have had a tremendous amount of traction with our customers actually sharing with us what they want to see next. Thankfully, we're not having to undergo a significant amount of deep analysis of market research, understanding where the holes are. Our customers are actually telling us. That's the beauty of creating this community, especially driven by an ambassador program, because these ambassadors are essentially super consumers. It's not enough for them just to purchase and have these products in their home. They actually want to help our business expand. That's the first point I'd note is that much of our future product development is actually directly informed by what our existing customers are hoping to see more of. You obviously mentioned our baby care products that we currently have in market today.

You also addressed our fem care products. I would say that our expanding priorities in the brands division really are focused on the home. Home essentials, real quality, clean products that are essential for your family to live a happy and healthy and whole life. That started with baby care, moving to fem care. We're going to be looking at household cleaning products and different services we can provide within the home that are essential components of your life. There's one other reason that we love these product lines. It is because they are essential. These are not products that are wants. These are actually needs. When we can present these products in front of our customers that have demanded them, have asked for them, we can actually fill out the full suite of their essential services that are less seasonal in need.

They're not based necessarily as much on consumer purchasing cycles. If you have a baby, you need diapers. If you are a woman, you need fem care. If you have a home that you'd like to keep clean, you need these essential cleaning products. We're really excited about our expansion within the home, and that's how I would directly answer that question in terms of priorities.

Great. Thanks, Michael. Thanks for taking my questions.

Thank you.

Operator (participant)

Your next question comes from the line of Darren Asahi with Ross Capital. Please go ahead.

Hey, this is Dylan on for Darren. Thanks for taking my questions. First, could you talk about some of the cross-selling you've been working on, whether that be from the payments platform onto some of the other marketplace platform or even just within payments, whether that be buy now, pay later or credit?

Michael Seifert (Chairman and CEO)

How are those trends going, or is that more of a second half year focus? Great question, and good to hear from you. I would say that today, between the synergies that we exercise between buy now, pay later and payments, and then the synergies we exercise between marketplace and payments, I would say that about 90% of those synergies currently are coming from the buy now, pay later business. That was our V1. When we're looking to onboard new payments merchants that were already in our community, first, we're looking at our buy now, pay later merchants. That's the priority currently. The reason for that is because they already have a very instrumental piece of checkout technology integrated onto their website. To add our payment capabilities is a very quick and seamless transaction, and they're already familiar with working with us related to their point of sale.

10%, I'd say right now, is marketplace focus, converting marketplace merchants into becoming payments merchants. You'll see that shift pretty quickly over time. In fact, I'd say over the second half of the year, you'll see that scale tilt a little bit to even out between buy now, pay later and marketplace. There's a big key component that makes that so. I mentioned today in our original comments that we recently completed our Shopify integration. Over 80% of our marketplace e-commerce merchants, of which there are tens of thousands, over 80% are utilizing Shopify for their storefront technology. The fact that we got that integration done, and if anybody knows the payment space as it relates to Shopify, that's not an easy feat to become one of their approved payment services.

When we got that done, it unlocks the door to being able to serve the vast majority of our marketplace e-commerce merchants. So 90% today of the synergies we exercise between divisions is mostly buy now, pay later to payments and about 10% from marketplace to payments, but those scales will tilt quite a bit over the course of the next 6-18 months.

Great. Thank you. And on your GMV, the payments GMV, you talked about in Q4 for Q1, where it was like $2.5 billion year to date. Where do you stand in terms of that, I guess, $10 billion pipeline sort of target?

Yeah, great question. So we have inched higher than the $2.5 billion we recently announced a little less than eight weeks ago. But right now, we're intentionally moving through the pipeline in more of a waitlist fashion.

The pipeline remains significantly above $10 billion, but we are focusing very strongly on the first $2.5 billion-$3 billion this year from an onboarding and integrations perspective. Really, as we head into 2026, that is when we will expand from that $3 billion to $10 billion of interested merchant GMV that is within our community and has expressed desire for our payment stack. The right way to think about this year is in that onboarding focus for that $2.5 billion-$3 billion in GMV, and we will really expand beyond that as we head into early 2026.

Great. Thank you. If I ask one more, maybe this one closer to Brad. With the changes you are making in your AI credit tools or, I guess, risk management, does that change your mix within payments at all or fintech revenue at all?

Not really.

No, I'd say that it's within expectation. The beauty of my comments earlier in credit is that it's a very intentional act, and we don't believe that much will ultimately change in terms of how we respond to the economic environment as we look at the remainder of 2025, but we certainly anticipate our revenue to grow fairly significantly in the credit business. We anticipate healthier margins, and we are excited to continue to leverage the tooling that we've really battle tested in Q1 to expand our ability to achieve originations and revenue throughout the remainder of 2025. We don't believe that the scale in terms of revenue mix between payments and credit is all that much changed as we look at 2025. We would reaffirm previously stated guidance related to the revenue mix between those two products. Dusty, is there anything else you'd mention there too?

Dusty Wunderlich (CSO)

I think you did a great job, Michael. I'd just add that, I mean, the beauty of the credit business is that we get to use different liquidity sources, either off balance sheet or on balance sheet, and combine that with underwriting models to really thread the needle. You know, as Michael said, a lot of our balance sheet strategy was informed by knowing we needed to tighten credit, which might reduce GMV, but with the ability to balance sheet more and lower cost of capital, we're not going to take a hit there. A lot of our, as Michael said, our guidance was based on that assumption, and credit gives us a lot of levers, and especially the power of these new AI models to really fine-tune these models even during economic downtimes.

Great. Thank you.

Michael Seifert (Chairman and CEO)

Thank you.

Operator (participant)

Thank you for sharing with us the pre-submitted questions.

I would like to turn the call over back to William Kent. Please go ahead.

William Kent (Head of Investor Relations)

Thank you, Gail. We'll now address some questions that we received through the Say Technologies platform before Michael and Brad close up the call. Our first question is, it seems that after purchasing items on the marketplace, I receive a number of marketing emails from your vendors directing me to their own site for purchases and discounts. What is PublicSquare doing to combat this and retain customers within the marketplace ecosystem?

Michael Seifert (Chairman and CEO)

That's a great question. Thank you so much for submitting, and I really appreciate it. I just want to make a note here to say I really appreciate the shareholders that submit those questions through the Say Technologies platform. I think that's a wonderful innovation, and we love the opportunity to connect directly with you and hear what's of greatest interest to you.

To address this question, you're exactly right. The way that purchasing happens on the marketplace today, when you submit your email, for example, at checkout, that email is both an email that the marketplace team has to be able to communicate with, as well as the vendor individually. That's the reason why you'll receive marketing emails from both PublicSquare and these vendors. That's actually coming to an end in the very near future. In tandem with this Made in America launch, one of our priorities is actually to do a comms consolidation to where when you check out as a customer, your email is only accessible and marketable by the PublicSquare team. This will drastically reduce the amount of individual emails that you receive from these vendors, and it'll also drive increased purchasing traffic back to the marketplace.

This is a note that we've taken very seriously. We're excited about streamlining this process for our customers and cleaning up the inbox and the process.

William Kent (Head of Investor Relations)

Excellent. Thank you, Michael. Next question. What specific milestones or developments does PublicSquare anticipate could drive profitability and shareable value over the next 12 to 18 months? Can you share any projections or timelines for when the company expects to achieve profitability or positive free cash flow?

Michael Seifert (Chairman and CEO)

I'll address the second half of that question right out the bat here. I would say that we are proud to reaffirm the guidance we have previously presented related to turning operating cash flow positive by the end of the year in tandem with that doubling of revenue from 2024 to 2025 and the reduction of operating expenses year over year.

We reaffirm that guidance and believe that we have all the tools necessary to go and execute toward that aim. On the first part of your question, some of the milestones that I'd love for shareholders to look out for. Obviously, I mentioned some of these in reference to Dylan's question earlier, but the onboarding of that signed GMV will significantly drive revenue for the company, and our buy now, pay later business performing as expected will certainly drive cash flow for the business. That's the beauty of that bundled fintech offering, is that payments has the ability to really drive top-line revenue, and credit has the ability to really provide healthy margins that ultimately fall to the bottom line. I would look for signed GMV continuing to convert to integrated, onboarded, and live GMV as a major milestone over the course of the next 12 to 18 months.

I would also say that the organic grassroots growth of the PublicSquare marketplace we believe will significantly contribute to the company's growth story at both the top and bottom line moving forward. Finally, I would say, you know, we're excited about the continued margin expansion in the brand division as we achieve economies of scale. That's something that we've had our eye on for a number of months now, and we're really looking forward to that. Finally, I would say that you can look for us as a team to continue to streamline our efficiencies in the business, doing more with less. It's really a theme I've tried to drive home on today's call. We're excited that our operating expenses are actually decreasing year over year.

We're excited about the heavier utilization of AI, and we have the best team of people on the planet to be able to execute the tasks ahead of us on our product roadmap. They're really jack-of-all-trades, Swiss army knife type of folks that can do the work of five people in one person. It's really what sets us apart and allows for us to build in a lean and efficient fashion, even while in hyper-growth mode over the course of the next 12 to 18 months.

William Kent (Head of Investor Relations)

Our next question. Around the middle of last year, you're not seeing any advertising. Is there any plan to aggressively bring back advertising for new customers using social media or other platforms?

Michael Seifert (Chairman and CEO)

Certainly using social media.

You know, as I mentioned earlier in the call, we halted a lot of paid marketing efforts on the marketplace, for example, over the past six to nine months, largely in part because we were working hard behind the scenes to conduct this brand evolution to this Made in America presentation that we will be launching in the next two months. We will be turning that back on, but not as much from a paid perspective, more focused on organic grassroots growth, virality on social media through a few very targeted campaigns that perfectly address the desires of the consumers in the broader economic zeitgeist at the moment, and our leveraging of really intentional content and large-scale brand partnerships with a multitude of our vendors to drive visibility to the marketplace.

You will certainly be seeing far more of the PublicSquare Marketplace presentation out in the ether as we move to the second half of this year, especially in prep for the shopping season. That's something we're very much looking forward to. The final thing that I'll mention is that we are going to really focus on the marketplace over the latter half of 2025 on telling the stories of these American manufacturers. We believe that ultimately these American manufacturers that are selling these great quality products on our platform, whether they're selling home goods or from the farm essentials or apparel or outdoor gear, healthcare products, no matter what they're selling, each of these businesses have quality products to sell and an impactful story to tell.

We believe that a lot of traffic to our site in the second half of this year and beyond is going to be inspired and created by those intentional storytelling efforts through multiple different content mediums. I will pivot a little bit to the market away from the marketplace here, and I will talk about fintech. As I mentioned, you will not see a ton of advertising necessarily and of any sort of paid sense for our fintech services, largely because the backlog is full. We have two years of merchant onboarding to conduct with the audience as it exists today. This goes back to our low-cost customer acquisition strategies. Finally, in the brands division, we do a very good job strategically with placing marketing initiatives on social media through a few select TV ads at different stages of our journey as we look at the past.

More than anything, we're really excited about the earned media opportunities we have in the brands division. You know, you'll see our Co-founder and President, Sarah Gabel Seifert, on Fox & Friends very frequently. You'll see us out on different podcasts and news stations talking about the impact that the EveryLife brand is having for tens of thousands of parents across this country. We certainly anticipate that those earned media efforts and broad, widespread PR initiatives will continue to increase as we head into the second half of this year across all business lines.

William Kent (Head of Investor Relations)

Excellent. Next question. Donald Trump Jr. is a well-known figure associated with the board and a board member. Could you outline what specific role he plays in terms of strategic partnerships, marketing, or overall influence on the company's growth trajectory?

Michael Seifert (Chairman and CEO)

Yeah, I love this question. Donald Trump Jr.

has been an incredible supporter of not just this company, but also the mission we represent that I articulated early in this call from the early days of this company. Don Jr. was obviously an early investor into PublicSquare well before we went public on the New York Stock Exchange. He's been a longtime supporter of the services that we're providing to the market. To have him on the board with all of the strategic guidance and marketing wisdom that he brings to the table, it's truly invaluable. You mentioned strategic partnerships, marketing, or overall influence on the company's growth trajectory. I'll kind of break down each of those individually. Strategic partnerships, you know, Don is one of the most well-connected and well-trusted people in our country. He carries a great deal of influence, not just in the political space. He carries that influence in the economic sector.

He carries that influence in the shooting sports industry, in outdoor entertainment. He's really passionate about the types of consumers and merchants that we love to serve. For him to be able to bring these partnerships to the table, whether that's to serve the fintech division or the brands division or the marketplace, has truly been a game changer for us. In marketing, obviously, Don is the master of virality. He's helped inform a lot of our social media strategies that have catapulted us into the cultural zeitgeist and has grown our business tremendously. Finally, influence on the company's growth trajectory. You know, I think that Don is a great example of what all of our board members, frankly, represent, which is they are fully committed to helping this business achieve the vision we've set out.

We believe that we will be a company that has a lasting impact on the American household, that truly becomes a household name. So much of that happens by inspiring millions of Americans to put their dollars into the type of America they want to create. Obviously, Don is a great spokesman for that cause.

William Kent (Head of Investor Relations)

Thank you, Michael. Last question here. We're going to end on a bit of a different topic. Will you ever accept Bitcoin as a form of payment on your platform with the real-time conversion to U.S. dollars?

Michael Seifert (Chairman and CEO)

I love this. This is awesome. I personally am a big fan of Bitcoin, as are many members of our team. I'll say this. We believe non-traditional payment methods are going to take market share away from the payment rails over the course of the coming years.

We are positioning ourselves intentionally very well for that future. We are also rapidly exploring the utilization of stablecoins within our ecosystem, which we believe, by the way, is the most effective cryptocurrency strategy that will disrupt payment rails, add customer engagement within our network, and overall juice our fintech product offerings. We are big fans of decentralized finance. We are big fans of the world of crypto gaining only more traction. Actually, we at PublicSquare believe that we can be a major force in the space to drive consumer adoption. I have always said that cryptocurrency will really be presented as not just an asset, but also a currency when you can get the mass audience of Americans integrating these alternative currencies into their purchasing decisions in a user-friendly manner. Ultimately, I really personally believe that starts with the mom.

I think that if you can get the moms that are making over 70% of daily household purchasing decisions for the household to adopt these alternative forms of payments in a user-friendly manner, you will actually catapult the trajectory of cryptocurrency, obviously including Bitcoin. We are excited about the space. We are pursuing it intentionally, but very strategically. For example, we know that eventually we will hold Bitcoin on our balance sheet. For us, it is not a matter of if, it is a matter of when. It is a matter of strategic timing as we intentionally position the best usage of our cash going forward as we are still in hyper-growth mode related to the different divisions within the company. Thanks for your question.

William Kent (Head of Investor Relations)

Thanks, Michael. That concludes our SAFEC questions. I'll hand it back over to you to finish up.

Michael Seifert (Chairman and CEO)

Awesome.

Everyone, thank you so much for joining us this afternoon. We have greatly appreciated the opportunity to speak with you about where we have been over the last quarter and ultimately how we plan to accomplish our mission moving forward of building commerce for a better America. We look forward to speaking with you all again soon, and thank you for being on the journey with us.

Operator (participant)

Thank you, everyone. That concludes today's call. Thank you all for joining me now. Disconnect. Have a nice day.