## Leafly Reports Q3 Revenue Decline But Sees Positive Signs in Stabilizing Retail Business
Leafly Holdings (LFLY), the popular online cannabis discovery marketplace, announced its financial results for the third quarter ended September 30, 2024, revealing a revenue decline compared to the previous year. Revenue for Q3 2024 reached $8.4 million, a decrease from $10.6 million in Q3 2023.
Leafly attributed the year-over-year revenue dip to two primary factors: a reduction in retail accounts and a decrease in customer spending due to budget constraints. Despite the revenue decline, Leafly emphasized its positive trajectory, highlighting two consecutive quarters of positive adjusted EBITDA and a retail business that has largely stabilized.
“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,” stated Leafly CEO Yoko Miyashita. “We’ll continue our laser focus on building a lean and efficient business operation to capitalize on the stabilizing revenue trajectory of the retail business.”
### Key Financial Highlights:
*
Gross Margin:
89%, consistent with Q3 2023.*
Total Operating Expenses:
$8.0 million, a 27% reduction from Q3 2023, demonstrating Leafly’s operational rigor and cost discipline.*
Net Loss:
$1.1 million, compared to $2.2 million in Q3 2023.*
Adjusted EBITDA:
$378,000, a significant improvement from an adjusted EBITDA loss of $176,000 in Q3 2023.### Addressing Challenges:
The decline in retail accounts, dropping 20% year-over-year to 3,554 and 1% sequentially from Q2 2024, is primarily attributed to customer budget constraints and Leafly’s removal of non-paying customers from the platform over the past twelve months. However, the average retail account spending increased by 8% to $695, primarily due to the removal of lower-spending accounts and targeted price increases on Leafly products over the last year.
Leafly’s CFO, Suresh Krishnaswamy, highlighted the company’s focus on addressing the maturity of its convertible notes, which are due in January 2025. “Our highest priority is addressing the maturity of our convertible notes, which are due in January 2025. We are actively working on resolving this issue, and remain focused on reducing cash burn and running the business efficiently. With the business on a firmer footing, we are targeting growth next year,” said Krishnaswamy.
### Looking Ahead:
While Leafly faces challenges related to customer spending and convertible notes, the company’s efforts to stabilize its retail business and achieve positive adjusted EBITDA suggest a path towards future growth. The focus on cost efficiency and the resolution of its debt obligations will be crucial in realizing these growth opportunities.
