Leafly Holdings, Inc. (NASDAQ: LFLY) announced financial results for its second quarter ending June 30, 2022. with revenue rising 13.8% to $12.1 million over last year’s $10.5 million for the same time period. Leafly attributed the increase to growth in retailer and brand revenues. The company reported a net income of $14.8 million, which included $24.4 million of gains on derivative liabilities, compared to a net loss of $1.3 million for the same quarter last year.
“Revenue in the quarter was $12.1 million, up 13.8% over Q2 last year, and up 5.5% over Q1 as we continue to build on the investments we’ve made in the first half of this year. We released several new enhancements that drive consumer engagement and differentiation. In addition, we’re also bringing more tools, greater flexibility, and reduced friction to retailers and brands, creating a seamless experience between consumers and our supply partners,” said Yoko Miyashita, CEO of Leafly. “Our investments to date have positioned us for long-term growth as the industry continues to evolve at a rapid pace, leaving significant opportunity in our path. Despite the uncertainties of the current macro-economic environment, we remain committed to maximizing efficiencies and prioritizing projects that will result in the highest returns.”
During the quarter, all licensed dispensaries in New Jersey subscribed to the Leafly platform and published their menus, giving residents a single platform to shop the menus of every legal dispensary in the state. In many cases, residents can place an online order for in-store pickup. New Jersey began legal adult-use sales in April.
“We made progress in the quarter on our long-term objectives. Concurrently, we have encountered challenges in our less mature markets and seen signs that customers are more cautious with their ad budgets,” said Suresh Krishnaswamy, CFO of Leafly. “We remain focused on our execution and managing our expenses carefully.”
Year over year, ending retail accounts grew, and ARPA (average revenue per account) declined, as a result of Leafly’s strategy to lower entry point subscription fees in order to rapidly expand in lower penetrated markets. Monthly average users or MAUs increased quarter over quarter, highlighting the strength of news and learn content, technical improvements to SEO and the Company’s expertise in the cannabis category. In Q2 2021, MAUs reflected an increase in user traffic primarily as a result of the pandemic.
Leafly noted that during the second quarter, it began to see some macro-economic impacts on the business, with signals from retailers and multi-state operators that their advertising budgets are under scrutiny. The company said, “In light of the current macroeconomic environment, we are taking a more conservative view of the second half of the year and are taking steps to manage the business accordingly. We are implementing plans to reduce operating expenses and have implemented a hiring freeze.”
For the full year of 2022, Leafly said it expects revenue to be in the range of $48.0 million to $51.0 million, representing 15% growth over 2021 at the midpoint. “We expect Adjusted EBITDA loss to be in the range of $28.5 million – $26.0 million.”