Online cannabis advertising platform Leafly Holdings Inc. (Nasdaq: LFLY) continued to suffer downward-trending revenue as it lost hundreds more clients during the quarter that ended Sept. 30, the company reported in its latest financials.
Leafly lost $2.2 million in the third quarter, bringing its losses for the year to just over $9 million.
Overall revenues were down to $10.6 million year-over-year from $11.8 million, and were also down sequentially from the second quarter of the year, when revenue hit $10.7 million.
The company also saw a sharp drop in its overall paying retail clientele with a loss of 795 accounts sequentially, falling to 4,466 from 5,261 in the second quarter, and down from 5,637 from the same quarter a year prior.
But the company noted that the average paying client’s monthly bill has increased year-over-year, to $644 from $556. It attributed that to “the rollout of new rate cards and churn of lower (average revenue per) accounts.”
Leafly has not been immune to the “pain points” the wider cannabis industry has been going through this year, said in a press release.
“Our third quarter results reflect our progress toward building a sustainable business in a challenging market,” Miyashita said. “Cannabis markets continue to experience pain points of various types, but the industry continues to evolve. With a strategic focus on profitability, we are carefully managing expenses which we believe will set us up for growth as the cannabis market matures and recovers.”
The financial hit comes on the heels of several cost-cutting measures Leafly has implemented over the past year, including layoffs and shuttering its marijuana news division. Operating expenses for Q3 this year were down 33% to $10.9 million from $16.3 million a year ago, the company reported, and its gross margin improved by 2% in the same timeframe, to 89% from 87%.
“We continue to focus on operating with efficiency and managing costs,” Suresh Krishnaswamy, CFO of Leafly, said in a release. “Our third quarter results are a reflection of the difficult environment our retail and brand customers are facing, driven by lack of access to banking and capital, license delays, and margin compression.”
Also during the quarter, Leafly implemented even more changes to try and get back into the black:
- Regained Nasdaq compliance with the minimum bid price rule in September, ensuring its shares can continue to trade on the exchange.
- Rolled out “new rate cards and price increases in select markets to select clients to better align pricing” with its services.
- Revamped its API for “order integration,” designed to ease online ordering for its retail partners.
- Rolled out “scheduled delivery” for online customers to “drive customer retention and loyalty.”
Leafly also on Thursday issued financial guidance for the remainder of 2023, and said it expects $9.5 million in revenue for the fourth quarter – yet another decrease – and its adjusted EBITDA loss is projected to be “around $1.3 million.”
At the close of the quarter, Leafly had $23 million in total assets, including $14.4 million in cash, and $36.1 million in total liabilities.