Stock for Leafly Holdings Inc. (Nasdaq: LFLY) was up 6% on Thursday after the bell, when the company reported financial results for the third quarter showing revenue in line with expectations.
Revenues totaled $11.8 million, up 8.1% over the third quarter last year, in line with Yahoo Finance’s average analysts’ estimate of $11.75 million. The company posted net income of $15.5 million, which included $22.3 million of gains on derivative liabilities due to fair value accounting, versus a net loss of $4.5 million in the same quarter last year.
“Leafly is helping brands and retailers reach more consumers at a time when driving business is critically important,” CEO Yoko Miyashita said in a news release.
Management also commented on the company’s move last month to cut 21% of its staff in the quarter, which the company said is part of a broader “realignment” to help cut approximately $16 million worth annual cash operating costs next year.
The decision came after the company warned investors about economic conditions nudging management to consider hiring freezes – and eventually layoffs.
“In October, we right-sized the business through headcount reductions and additional cuts in spending to accelerate our path to profitability,” CFO Suresh Krishnaswamy said. “We are focused on managing our cash while preserving our ability to respond to opportunities in the market.”
Leafly reduced its operating expense by 16.3% over the quarter to $16.3 million, which was up 21% over the $13.5 million reported in the third quarter last year.
Gross margin was 87.1% versus 88.4% the same time last year. Adjusted EBITDA loss was $5.2 million, compared to adjusted EBITDA loss of $3.6 million in the third quarter
The company ended the quarter with $27.8 million of cash after repurchasing over 3 million shares of stock using $31.3 million of restricted cash.
“The cost reductions we implemented were aimed at setting us on a clear path to greater efficiency and monetization as growth in advertising spend returns and the market accelerates,” Miyashita said. “The team is squarely focused on our highest priority initiatives and on optimizing the products we have already developed to maintain our position as a leader in cannabis and build the business for the long term.”
Average monthly users (MAU) rose quarter-over-quarter, “highlighting the strength of news and learn content, technical improvements to SEO and the company’s expertise in the cannabis category.”
Year-over-year, retail accounts grew 18.2%, up 7.4% sequentially, driven by retailers in California, Oregon, and New Mexico, the company said.
Retailer average revenue per account (ARPA) declined 10.5%, which Leafly said is due to the company’s strategy to use promotional pricing to expand retailer accounts in lower penetrated markets.
Leafly has been relatively busy still, inking a deal with Uber Eats to bring third-party delivery platform to cannabis retailers and consumers in the local Toronto market.
The company integrated a delivery software, Onfleet, to make it easier for cannabis retailers to manage delivery fulfillment of online orders placed on the Leafly platform..
Leafly is also altered its annual guidance. The company now expects revenue in the full fiscal 2022 to be between $47 million and $48 million, with adjusted EBITDA loss to be approximately $26 million.