Online cannabis discovery marketplace Leafly Holdings (NASDAQ:LFLY) announced its financial results Thursday for the third quarter ended Sept. 30, 2024, with revenue of $8.4 million down from $10.6 million in the Q3 2023. Leafly attributes the year-over-year revenue decline to fewer retail accounts and reduced spending by customers due to budget constraints.

“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."

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Third Quarter Financial Highlights

• Gross margin was 89%, consistent with gross margin reported in Q3 2023.
• Total operating expenses was $8.0 million, a 27% reduction from $10.9 million in Q3 2023, reflecting operational rigor and a continued focus on cost discipline.
• Net loss was $1.1 million, compared to net loss of $2.2 million for Q3 2023.
• Adjusted EBITDA was $378,000 compared to an adjusted EBITDA loss of $176,000 in Q3 2023.

During the quarter, the number of retail accounts dropped 20% year-over-year to 3,554 and 1% sequentially from Q2 2024. The declines are primarily due to customers' budget constraints and Leafly's removal of non-paying customers from the platform over the last twelve months.

At the same time, the average retail accounts spending grew 8% to $695 primarily due to the removal of lower ARPA accounts from the platform, coupled with targeted price increases on Leafly products over the last 12 months.

"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 Leafly CFO Suresh Krishnaswamy.

Price Action

Leafly shares traded 5.37% lower at $1.41 after hours on Thursday.

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