Q4 2021 Leafly Holdings Inc Earnings Call

Good afternoon, and thank you for attending today's leaf Li fourth quarter and full year 2021 earnings call. My name is Sam and I will be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you'd like to ask a question simply press star one on your telephone keypad.

today's leaf-leaf fourth quarter and full year 2021 earnings call. My name is Sam and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, simply press star one on your telephone keeping.

At this time, I'd now like to turn the conference over to our host, Kenan Zoff with the BlueShirt Group. Kenan, please go ahead.

At this time I'd now like to turn the conference over to our host kittens off with the Blue shirt Group Keenan. Please go ahead.

Kenan Zoff: Good afternoon and welcome to Leafley's fourth quarter in fiscal year 2021.

Good afternoon, and welcome to <unk> fourth quarter and fiscal year 2021 earnings call, we'll be discussing the results announced in our press release issued today with me are at least <unk>, CEO , Yocum, Yorkshire, and CFO Suresh Krishna Swamy.

Speaker Change: We will be discussing the results announced in our press release issue today. With me are Leafley's CEO Yoko Miyashita and CFO Thrasch-Krishnaswamy.

Speaker Change: Today's call will contain forward-looking statements which are pursuant to the State Harbor provisions of the Private Security Litigation Reform Act of 1995. Forward-looking statements include statements regarding the services offered by Leafley, the markets in which Leafley operates, business strategies, performance metrics, industry environment, potential growth opportunities, and Leafley's projected future results and financial outlook.

Today's call will contain forward looking statements, which are pursuant to the safe Harbor provisions of the <unk>.

<unk> Securities Litigation Reform Act of 1995 forward looking statements include statements regarding the services offered by leaf Li the markets in which leaves the operator business strategies performance metrics industry environment and potential growth opportunities and lease lease projected future results and financial outlook and can be identified by words such as expect.

Speaker Change: and can be identified by words such as expect, anticipate, intend, plan, believe, seek, or will. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date. And we do not undertake any duty to

Anticipate intend plan believe seek or will these statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date and we do not undertake any duty to update these statements.

Speaker Change: forward-looking statements by their nature address matters that are subject to risk and uncertainties that could talk actual results to different material from expectations.

We're looking statements by their nature address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations for a discussion of the material risks and other important factors that could affect our actual results. Please refer to the rest discussed in today's press release, our proxy statement and prospectus consensual invitation statement widebody lease Li formerly.

Speaker Change: For a discussion of the material risk and other important factors that could affect our actual results, please refer to the risk discussed in today's press release, our proxy statement perspective consent solicitation statement, eye by leafly, formerly known as Merida merger corp 1 with the SEC on December 10th, 2021. Our proxy statement perspective consent solicitation supplement filed with the SEC on December 22nd, 2021.

Merida merger Corp, one with the SEC on December 10, 2021, a proxy statement prospectus content solicitation supplement filed with the SEC on December 22nd 2021, Archrock proxy statement prospectus consent solicitation supplement filed with the SEC on January 18th 2022, and our other periodic filings with the SEC.

Speaker Change: Our proxy statement, prospective consent solicitation supplement filed with the SEC on January 18th, 2022, and our other periodic filings with the SEC.

Speaker Change: During the call, we will also discuss non- GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the gap in the non-gap result is included in our earnings press release, which has been filed with the SEC and is also available on our website at investor.leafley.com. With that, let me turn the call over to Yoko.

During the call. We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and the non-GAAP results is included in our earnings press release, which has been filed with the SEC and is also available on our website at Investor <unk> Dot com with that let me turn the call over to yoga.

Y: Thank you, Kenan. Good afternoon, everyone. Welcome to our first earnings call as a public company. I want to start off by thanking all of you who have supported us over the years, our passionate cannabis community around the world, and most importantly, our entire Leafley team for their hard work and continued dedication to our mission, helping people discover cannabis.

Thank you Tina and good afternoon, everyone welcome to our first earnings call as a public company.

Wanted to start off by thanking all of you who have supported us over the years, our passionate cannabis community around the world and most importantly, our entire lease lead team for their hard work and continued dedication to our mission, helping people discover candidate.

Y: In February , we became a publicly traded company and I want to welcome our new shareholders. We look forward to sharing our journey with all of you as we continue to grow and help others thrive in this unique and special industry.

In February we became a publicly traded company and I want to welcome our new shareholders. We look forward to sharing our journey with all of you as we continue to grow and help others thrive in this unique and special industry.

Y: 2021 was a record year for Leafley and set the foundation for long-term growth and expanded opportunity. We delivered 18% revenue growth over 2020. With an influx of capital, we increased investments in the second half of 2021, which contributed to our record Q4 revenue of $12.1 million or 30% year-over-year growth.

2021 with a record year for leaf Li and set the foundation for long term growth and expanded opportunity we delivered 18% revenue growth over 2020 with an influx of capital we increased investments in the second half of 2021, which contributed to our record Q4 revenue.

<unk> of $12 $1 million or 30% year over year growth.

Y: We added 1,600 retail accounts in 2021, an increase of 44% over 2020.

We added 1600 retail accounts in 2021, an increase of 44% over 2020, we rebuilt our brand subscriptions product from the ground up and launch new advertising products for retailers and brands. We also launched an app ordering capabilities in our iOS App and reached our 10.

Y: We rebuilt our brand subscriptions product from the ground up, and launched new advertising products for retailers.

Y: We also launched in-app ordering capabilities in our iOS app and reached our 10 millionth app download.

Y: To accomplish all this, we invested across the weekly team, growing total headcount by 70% over 2020.

The app download to accomplish all of this we invested across the leaf Li team growing total head count by 70% over 2020.

Y: I want to take you deeper into where we see the larger opportunities for long-term growth at Leafly. But before I do, for those of you who are new to our story, let me quickly spend a few minutes on what we do and what makes us poised to be a leader in this evolving market.

I wanted to take you deeper into where you see the larger opportunities for long term growth that briefly but before I do for those of you who are new to our story, let me quickly spend a few minutes on what we do and what makes us poised to be a leader in this evolving market.

Y: Leafly, put simply, is the informed way to shop for cannabis.

Lastly, put simply is the informed way to shop for cannabis, it's a marketplace that connects consumers with information and to licensed brands and retailers, we generate revenue from cannabis retailers and brands through our subscription based marketplace listings and advertising solutions that allow those customers.

Y: It's a marketplace that connects consumers with information and to licensed brands and retail.

Y: We generate revenue from cannabis retailers and brands through our subscription-based marketplace listings and advertising solutions that allow those customers to reach our consumer audience along every step of their cannabis journey.

To reach our consumer audience, along every step of their candidates journey for consumers they come to our platform for our rich educational and informational content, including our comprehensive strains database thousands of news and information articles over a million products strain in store reviews.

Y: For consumers, they come to our platform for our rich educational and informational content, including our comprehensive strains database, thousands of news and information articles, over a million products, strain and store reviews, retailer menus, and online ordering for delivery or pickup through legal resources.

Retailer menus and online ordering for delivery or pick up through legal retailers.

Y: Lack of education and understanding of the cannabis plant is a barrier to adoption. The plant itself is complicated and social stigma and concerns around product safety also persist as we transition out of a century of prohibition.

Lack of education and understanding of the cannabis plant is a barrier to adoption.

Plant itself is complicated and social stigma and concerns around product safety also persist as we transition out of a century of prohibition.

Y: Our educational and informational content breaks down these barriers for consumers and connects them with products and strains that match their needs from licensed brands and local retailers.

Our educational and informational content breaks down these barriers for consumers and connect them with products and strange that match their needs from licensed brands and local retailers.

Y: Our content-first strategy allows us to attract consumers to our platform even before a market legalizes, a competitive advantage uniquely attributable to our trusted content and cannabis coverage.

Our content first strategy allows us to attract consumers to our platform even before our market legalized is a competitive advantage uniquely attributable to our cut trusted content and candidates coverage. We believe leapley can drive a more reliable shopping experience by helping consumers understand what they're.

Y: We believe Leaflea can drive a more reliable shopping experience by helping consumers understand what they're buying and how to consume it.

Y: As they learn, browse, and shop, we have the opportunity to develop a personalization and curation engine unmatched in the environment.

We're buying and how to consume it.

As they learn browse and shop, we have the opportunity to develop a personalization and curation engine unmatched in the industry.

Y: This provides a compelling reason for licensed retailers and brands to access our platform where they can leverage our traffic, our proprietary insights, and our technology for customer acquisition, e-commerce ordering tools, and our digital advertising solutions to build their business.

This provides a compelling reason for licensed retailers and brands to access our platform, where they can leverage our traffic our proprietary insights and our technology for customer acquisition e-commerce ordering tools and our digital advertising solutions to build their businesses.

Y: The legal cannabis industry is estimated to be $40 to $50 billion in sales by 2025, which is double the market size of 2020.

The legal cannabis industry is estimated to be 40 to 50 billion in sales by 2025, which is double the market size in 2020.

Y: By 2030, cannabis is estimated to grow to 70 billion, with some estimates as high as $100 billion in sales.

By 2030 cannabis is estimated to grow to 70 billion with some estimates as high as $100 billion in sales.

Y: While many look forward to federal legalization as a dependency for growth, our business model allows us to monetize the growing interest in cannabis shopping activity today while looking forward to the acceleration that legalization may provide. Our addressable market expands with each legalization moment and to fully unlock it requires solving several challenges present in the industry today.

While many look forward to federal legalization at the dependency for growth our business model allows us to monetize the growing interest in Canada shopping activity today, while looking forward to the acceleration that legalization may provide our addressable market expands with each legalization moment and to fully unlock it Rick.

<unk> solving several challenges present in the industry today.

Y: First, this is an industry in transition, and the rules vary state by state, which means brands and retailers must build their businesses from scratch in each new state. Second, they lack the power of traditional advertising channels to attract consumers and drive new customer growth.

First this is an industry in transition and the rules vary state by state, which means brands and retailers must build their businesses from scratch in each new state.

They lack the power of traditional advertising channels to attract consumers and drive new customer growth.

Y: Today, approximately 53% of legal retailers in North America are paying subscribers on the Leaflet platform.

Today, approximately 53% of legal retailers in North America are paying subscribers on the leaf Li platform.

Y: This has given us the ability to develop a competitive marketplace in legal markets across North America whereby retailers are paying a subscription fee to be listed on our platform.

This has given us the ability to develop a competitive marketplace and legal markets across North America, whereby retailers are paying a subscription fee to be listed on our platform. Once listed on the platform, we deliver additional value through a suite of advertising products technical tools and technical integrations that support them.

Y: Once listed on the platform, we deliver additional value through a suite of advertising products, technical tools, and technical integrations that support and simplify customer acquisition and online ordering.

Simplified customer acquisition and online ordering.

Y: On the brand side, we are just starting to gain market penetration in a total addressable market that significantly outsizes the current retailer cam in North America, which by our estimates is as large as 18,000 brands.

On the brand side, we are just starting to gain market penetration and a total addressable market that's significantly outsized as the current retailer Cam in North America, which by our estimate is as large as 18000 brands.

Y: The investments we've made to date have delivered proven top-line results and expanded our subscriber base of retailers and brands.

The investments we've made to date have delivered proven topline results and expanded our subscriber base of retailers and brands.

Y: And we'll continue to invest in three key areas. First, continued growth in our subscriber base.

And we'll continue to invest in three key areas first continued growth in our subscriber base second new products and tools for increased monetization and third increased consumer engagement, which in turn drive ROI for our retailers and brands.

Y: Second, new products and tools for increased monetization. And third, increased consumer engagement, which in turn drives ROI for our retailers and brands. So let's talk about

So let's talk about growth in our subscriber base.

Y: Cannabis is a local market business that requires local go-to-market tea.

Cannabis is a local market business that requires local go to market teams, we priced strategically in line with the stage of market development to bring subscribers onto our platform quickly.

Y: We price strategically in line with the stage of market development to bring subscribers onto our platform quickly. As these markets mature and competition increases, these market share gains position LeaflyWell to increase monetization from retailers as competition for new customers increases.

As these markets mature and competition increases these market share gains position leapley well to increased monetization from retailers as competition for new customers increases.

Y: and we're staffed to execute this acquisition strategy now at a local market level.

And we're staffed to execute this acquisition strategy now at a local market level.

Y: Our customer success teams are also now better resourced to drive increased adoption of the platform tools we offer, including order-enabled capabilities and advertising add-ons. This land and expand strategy sets retailers and brands up to achieve the best performance from the Liefli marketplace, attracting more customers and realizing greater ROI.

Customer success teams are also now better resource to drive increased adoption of the platform tools, we offer including order enabled capabilities and advertising add ons. This land and expand strategy sets retailers and brands up to achieve the best performance from the weekly marketplace attracting more.

Customers and realizing greater R O I.

Y: On the brand side, we rebuilt our brand subscription offering from the ground up in June of 2021, allowing us to go after the large, untapped town.

On the brand side, we rebuilt our brand subscription offering from the ground up in June of 2021, allowing us to go after the large untapped Tam.

Y: Our investments in our sales and marketing teams focused at local markets are positioning us well to help us grow our brand and retailer subscriber base. Now on to improving

Our investments in our sales and marketing teams focused at local markets are positioning us well to help us grow our brands and retailer subscriber base.

Now on to improvements to our advertising platform and tools.

Y: We're focused on expanding monetization beyond subscription fees. In H2 of 21, we launched new advertising products for brands and retailers, including menu merchandising, which enables brands to advertise directly on retailer menus, and option-based bidding for retailers for premium ad places.

We're focused on expanding monetization beyond subscription fees in H two of 'twenty, one we launched new advertising products for brands and retailers, including menu merchandising, which enables brands to advertise directly on retailer menus and auction based bidding for retailers for premium AD placements. These performance.

Y: These performance ad products are critical to serve the needs of our brands and retail.

AG products are critical to serve the needs of our brands and retail clients revenue from these additional AD products are expected to be a meaningful driver of revenue growth for us in 'twenty two.

Y: Revenue from these additional ad products are expected to be a meaningful driver of revenue growth for us.

Y: To properly serve the demand from retailers and brands for advertising opportunities, we'll continue to invest in our advertising platform over the course of the year ahead. Investments include improved auction bidding capabilities with self-serve features, more performance retail ad units, and improvements to our promotion capability.

To properly serve the demand from retailers and brands for advertising opportunities. We will continue to invest in our advertising platform or the over the course of the year ahead investments include improved auction bidding capabilities with self serve features more performance retail AD units and improvements to our promotion.

Y: We're also investing in our B2B services and tools that make engagement with the weekly platform more efficient and valuable for our retail and brands cuffing.

Abilities.

We're also investing in our <unk> services and tools that make engagement with belief, we platform more efficient and valuable for our retail and brands customers. This includes shortening the time to value and enabling businesses to acquire consumers at scale.

Y: This includes shortening the time to value and enabling businesses to acquire consumers at scale. Our B2B strategy has been focused on building lightweight tools to make it easier for our retail and brand partners to engage with our consumer audience and will continue to invest to reduce friction for our customers.

Our <unk> strategy has been focused on building a lightweight tools to make it easier for our retail and brand partners to engage with our consumer audience and we will continue to invest to reduce friction for our customers.

Y: Our product Roadmap in 22 includes additional improvements in our POS integrations to automate menus and order management and improvements in our product catalog for greater standardization.

Our product roadmap in 'twenty two includes additional improvements in our P. O S integrations to automate menus in order management and improvements in our product catalog for greater standardization all.

Y: I'll note that we generate rich data on our platform and continue to innovate to help our brand and retail customers make smarter decisions based on that data. Finally, on to building our brand.

Note that we generate rich data on our platform and continue to innovate to help our brand and retail customers make smarter decisions based on that data.

Finally on to building a stickier consumer experience development.

Y: Development of our valuable audience starts with our content-first strategy. We believe that because of the unique attributes and complexity of cannabis, our cultivation of a more educated consumer base will generate outsized returns on investment for our brands and retailer customers over time.

Development of our valuable audience starts with our content first strategy, we believe that because of the unique attributes and complexity of cannabis our cultivation of a more educated consumer base will generate outsized returns on investment for our brands and retailer customers over time.

Y: In 2022, we are poised to deliver a consumer shopping experience that harnesses the premium editorial content we have created over the last 12 years and delivers greater curation and personalization. We are building a more meaningful value proposition for consumers to create an account on Leifle. We're also focused on delivering richer experience through our native app, where some of our most engaged consumers interact with

In 2022, we are poised to deliver a consumer shopping experience that harnesses the breadth the premium editorial content. We have created over the last 12 years and delivers greater curation and personalization, we are building a more meaningful value proposition for consumers to create.

And the count on lately, we're also focused on delivering richer experience through our native App, where some of our most engaged consumers interact with Lee.

Y: We'll also look to reward our most loyal customers with loyalty programs.

We'll also look to reward our most loyal customers with loyalty programs.

Y: We expect to generate increased ROI for retailers and brands through these investments in our consumers.

We expect to generate increased ROI for retailers and brands through these investments and our consumer experience.

Y: The added benefit of our consumer-facing investments is that unlike much of our work on the retailer and brand side, which needs to be done on a hyper-local level, the consumer-side improvements are easily scalable across legal markets, so investments made here will scale and have benefits across the entire Leasley platform.

The added benefit of our consumer facing investments is that unlike much of our work on the retailer and brand side, which needs to be done on a hyper local level. The consumer side improvements are easily scalable across legal markets. So investments made here will scale and have benefits across the entire.

<unk> briefly platform.

Y: In summary, we couldn't be more excited about the prospects for leafy and the prospects ahead of us for cannabis. We are eagerly awaiting recreational sales in sizable East Coast markets and are pleased to see continued discussions around federal legalization.

In summary, we couldn't be more excited about the prospects for weekly and the prospects ahead of us for cannabis. We are eagerly awaiting recreational sales and sizable east coast markets and are pleased to see continued discussions around federal legalization. We're so delighted to her.

Y: We're so delighted to have you along with us on this journey as we seek to help millions more discover Canada.

Have you along with US on this journey as we seek to help millions more discover cannabis.

Y: I'll now turn the call over to Suresh to provide you with details on our financial plan.

I'll now turn the call over to Suresh to provide you with details on our financial performance.

Sresh: Thank you, Yoko, and welcome, everyone. I want to thank all of you for your continued support. This is an exciting time for Leafleaf. Over the years, we've connected millions of consumers with the information they seek and connected them with retailers and brands that meet their needs.

Thank you Yoko and welcome everyone I want to thank all of you for your continued support this is an exciting time for lease fleet over the years, we've connected millions of consumers with the information they seek and connected them with retailers and brands that meet their needs.

Sresh: We've established a playbook in top markets and are now focused on expanding the reach of our marketplace across North America.

We've established a playbook in top markets and are now focused on expanding the reach of our marketplace across North America.

Speaker Change: Yoko just outlined our strategic initiatives and key investment areas for 2022.

Yoko just outlined our strategic initiatives and key investment areas for 2022.

Speaker Change: With this as a backdrop, I'll spend the majority of my comments today focused on the strength of our business model and how we scale over time.

With this as a backdrop I'll spend the majority of my comments today focused on the strength of our business model and how we scale overtime.

Speaker Change: Before I jump into the financials, let me spend a few minutes on our business model.

Before I jump into the financials, let me spend a few minutes on our business model.

Speaker Change: It's important to understand that a large portion of our revenue is subscription-based. The majority of this revenue today comes from retail accounts who pay a monthly subscription to be listed on our platform.

It's important to understand that a large portion of our revenue is subscription based the majority of this revenue today comes from retail accounts.

A monthly subscription to be listed on our platform.

Speaker Change: With newly launched products in 2021, we're scaling a subscription revenue model for brands as well.

With newly launched products in 2021, we're scaling our subscription revenue model for brands as well.

Speaker Change: We have multiple tiers of subscription services for both brands and retailers, and contracts are evergreen with a strong track record of continuous auto renewal.

We have multiple tiers of subscription services for both brands and retailers and contracts are evergreen with a strong track record of continuous auto renewals.

Speaker Change: As Yoko mentioned, investments are already underway to further increase retailer accounts in existing key markets where we can increase penetration and expand our monetization opportunities.

As Yoko mentioned investments are already underway to further increase retailer accounts and existing key markets, where we can increase penetration and expand our monetization opportunities.

Speaker Change: In addition, there is significant opportunity to bring new brands to the Leaflea platform with approximately 18,000 brands that exist today.

In addition, there is significant opportunity to bring new brands to the lease fleet platform with approximately 18000 brands that exist today.

Speaker Change: We further increased monetization from these retail accounts and brands through advertising add-ons, and this revenue is in addition to monthly subscription.

We further increased monetization from these retail accounts and brands through advertising add ons and this revenue is in addition to monthly subscriptions.

Speaker Change: This increased monetization comes from additional value we provide through products like auction-based bidding for advertising, off-site audience extension, and new features and functionality like technology integrations and order enablement.

This increased monetization comes from additional value, we provide through products like auction based bidding for advertising Offsite audience extension and new features and functionality like technology integrations and order enablement.

Speaker Change: Our subscription plus advertising add-on model allows us to scale and monetize these activities today while creating what we believe to be a durable and expandable model as we grow.

Our subscription plus advertising AD on model allows us to scale and monetize these activities today, while creating what we believe to be a durable and expandable model as we grow.

Speaker Change: Today, we break out revenue by retail accounts and brands, which gives transparency into our growth within each addressable market.

Today, we breakout revenue by retail accounts and brands, which gives transparency into our growth within each addressable market.

Speaker Change: In addition, investments are tied to growth in each of these sections.

In addition investments are tied to growth in each of these segments.

Speaker Change: As recently launched products mature over time, we believe our business model can become more predictable.

As recently launched products mature over time, we believe our business model can become more predictable.

Now onto the financials.

Speaker Change: At a high level in 2021, we delivered $43 million of revenue in line with projection.

At a high level in 2021, we delivered $43 million of revenue in line with projections.

Speaker Change: This represented 18 percent year-over-year revenue growth driven by significant investments in the second half of the year.

This represented 18% year over year revenue growth driven by significant investments in the second half of the year.

Speaker Change: In Q4, we saw growth in new subscribers, strong holiday activations, and benefits from products like sponsored ads, which led to year-over-year revenue growth of 30% compared to Q4 of the previous year.

In Q4, we saw growth in new subscribers strong holiday activation and benefits from products like sponsored ads, which led to year over year revenue growth of 30% compared to Q4 of the previous year.

Speaker Change: In the fourth quarter, we delivered revenue of $12.1 million.

In the fourth quarter, we delivered revenue of $12 1 million.

Speaker Change: Revenue from retail was $9.1 million, up 18% year over year, and revenue from brands was $3 million, up 87% year over year.

Revenue from retail was $9 1 million up 18% year over year and revenue from brands was $3 million up 87% year over year.

Speaker Change: Revenue from retail in 2021 was $33.6 million, an increase of 14% over 2020 as we continue to add retail accounts.

Revenue from retail in 2021 was $33 6 million an increase of 14% over 2020, as we continue to add retail accounts.

Speaker Change: We added 1,600 retail accounts in 2021, a year-over-year increase of 44%.

We added 1600 retail accounts in 2021, a year over year increase of 44%.

Speaker Change: Many of these accounts were added in lower population or lower demand markets at a lower price point.

Many of these accounts were added in lower population or lower demand markets at a lower price point.

Speaker Change: strategic decision to more quickly grow the number of subscribers on our platform.

Strategic decision to more quickly grow the number of subscribers on our platform.

Speaker Change: This contributed to a lower average revenue per account, or ARPA, of $636, a decline of $99 from 2020.

This contributed to a lower average revenue per account or ARPA of $636 a decline of $99 from 2020.

Speaker Change: This trade-off is expected to benefit us as our growing base of retailers provide opportunities for greater monetization in the future as they adopt our advertising products and online ordering capabilities.

This tradeoff is expected to benefit us as our growing base of retailers provide opportunities for greater monetization in the future as they adopt our advertising products and online ordering capabilities.

Speaker Change: We also saw strength from brands as we introduced new products.

We also saw strength from brands as we introduce new products.

Speaker Change: Revenue from brands in 2021 was $9.4 million, an increase of 38% over 2020.

Revenue from brands in 2021 was $9 4 million an increase of 38% over 2020.

Speaker Change: Average monthly active users or MAUs in 2021 were 10 million down from 11.5 million in 2020 when we saw a peak in consumer activity on our platform as they were driven to e-commerce solutions as a result of the pandemic's lockdown.

Average monthly active users or may use in 2021 were $10 million down from 11 5 million in 2020, when we saw peak in consumer activity on our platform because they were driven to E. Commerce solutions as a result of the Pandemics lockdowns.

Speaker Change: As the broader economy started to reopen in 2021, we saw a normalization and traffic to leaflet properties.

As the broader economy started to reopen in 2021, we saw a normalization in traffic to lease the properties.

Now turning to gross margin.

Speaker Change: Leafly is asset light with a proven scaling business model and strong gross margin.

Lastly is asset light with a proven scaling business model and strong gross margins.

Speaker Change: Total gross margin in the fourth quarter was 88%, an increase over 85% in Q4 2020, primarily driven by the increase in revenue.

Total gross margin in the fourth quarter was 88% and increased over 85% in Q4 2020, primarily driven by the increase in revenue.

Speaker Change: On a full year basis, total gross margin was 88%, an increase over 86% in 2020.

On a full year basis total gross margin was 88% an increase of over 86% in 2020.

Moving onto operating expenses.

Speaker Change: The business was operating at nearly break-even levels at the end of 2020.

The business was operating at nearly breakeven levels at the end of 2020.

Speaker Change: In 2021, following our convertible note financing at the end of June , we started making investments, primarily in advertising and marketing, and in building out our sales and marketing and senior leadership team.

In 2021, following our convertible note financing at the end of June we started making investments primarily in advertising and marketing and in building out our sales and marketing and senior leadership teams.

Speaker Change: We expect our sales and marketing investments to drive top-line growth in 2022 and beyond as new sales employees complete their ramp and are fully onboarded.

We expect our sales and marketing investments to drive topline growth in 2022 and beyond as new sales employees complete their ramp and are fully on boarded.

Speaker Change: Total operating expenses in the fourth quarter were $15.1 million, an increase from $8.9 million in Q4 2020.

Total operating expenses in the fourth quarter were $15 1 million, an increase from $8 9 million in Q4 2020.

Speaker Change: sales and marketing expenses were up 3.1 million in Q4.

Sales and marketing expenses were up $3 1 million in Q4.

Speaker Change: product and engineering expenses were up $1.1 million and G&A expenses were up $2.1 million.

Product and engineering expenses were up $1 1 million and.

And G&A expenses were up $2 1 million.

Speaker Change: The increase in GNA includes additional expenses for D&O insurance costs for coverage relating to Merida's operations prior to the business company.

The increase in G&A includes additional expenses for D&O insurance costs for coverage relating to Meredith operations prior to the business combination.

Speaker Change: For the full year, total operating expenses were $48.7 million, approximately $4 million less than we originally anticipated spending in 2021.

For the full year total operating expenses were $48 7 million approximately $4 million less than we originally anticipated spending in 2021.

Speaker Change: This compares to $40.7 million in 2020.

This compares to $40 7 million in 2020.

Speaker Change: As investments significantly increased over 2021, GAAP net loss in the fourth quarter was $5.1 million, compared to a net loss of $1 million in the previous year.

As investments significantly increased over 2021, GAAP net loss in the fourth quarter was $5 1 million compared to a net loss of $1 million in the previous year.

Speaker Change: Full-year net loss was $12 million compared to a net loss of $10 million in the previous year and included $1.3 million and $0.6 million, respectively, in interest expense on convertible notes.

Full year net loss was $12 million compared to a net loss of $10 million in the previous year and included $1 3 million and $6 million respectively in interest expense on convertible notes.

Speaker Change: adjusted EBITDA loss in Q4 was 4.1 million, and for the full year, adjusted EBITDA loss was 9.4 million.

Adjusted EBITDA loss in Q4 was $4 1 million and for the full year adjusted EBITDA loss was $9 4 million.

Speaker Change: This is compared to losses of 0.6 million and 7.9 million for the same period in 2020.

This is compared to losses of <unk> 6 million and $7 9 million for the same periods in 2020.

Now turning to the balance sheet.

Speaker Change: We ended the year with $28.6 million in cash.

We ended the year with $28 $6 million in cash.

Speaker Change: We added cash in February 22 through our business combination with Merida and the related issuance of convertible notes.

We added cash in February 'twenty, two through our business combination with merida and the related issuance of convertible notes.

Speaker Change: We're excited about the investments that we're making and are poised to execute well in 22 and beyond.

We're excited about the investments that we're making and are poised to execute well in 'twenty two and beyond.

Speaker Change: And now that we're a NASDAQ-traded public company, we're in a much better position to capitalize on the excitement in the cannabis space.

And now that we're a NASDAQ traded public company, we're in a much better position to capitalize on the excitement in the cannabis space.

And now onto our 'twenty two guidance.

Speaker Change: The cannabis industry remains ripe with opportunity for growth, but it also remains dynamic, both in current legal markets and newer markets as they become legalized.

The cabinets industry remains ripe with opportunity for growth, but it is but it also remains dynamic both in current legal markets and newer markets as they become legalized.

Speaker Change: For example, regulatory hurdles in a few existing markets are impacting our short-term growth outlook as the backlog of prospective retailers awaiting licenses gets cleared.

For example, regulatory hurdles and a few existing markets are impacting our short term growth outlook as the backlog of prospective retailers awaiting licenses gets cleared.

Speaker Change: We're also taking into consideration a slower-than-expected hiring pace for engineering tasks.

We're also taking into consideration a slower than expected hiring pace for engineering talent.

Speaker Change: Our investments in both sales and engineering talent are underway and we expect them to gain traction and drive higher revenue growth in the second half of the year.

Our investments in both sales and engineering talent are underway and we expect them to gain traction and drive higher revenue growth in the second half of the year.

Speaker Change: We anticipate revenue growth from the following areas.

We anticipate revenue growth from the following areas.

Speaker Change: growth in our retail and brand subscription base, driven by our local market strategy and improved B2B tools, and increased monetization driven by investments in our advertising products and ad products.

Growth in our retail and brand subscription base, driven by our local market strategy and improve <unk> tools and increased monetization driven by investments in our advertising products and ad platform.

Speaker Change: For the full year of 2022, we are revising our revenue projections to between $53 million and $58 million, representing 29% growth over 2021 at the midterm.

For the full year 2022, we are revising our revenue projections to between $53 million and $58 million, representing 29% growth over 2021 at the midpoint.

Speaker Change: As a reminder, this guidance does not factor in any new markets that have not begun legalized sales, including the largest East Coast markets like New York and New Jersey that are in the process of setting up their adult use recreational markets.

As a reminder, this guidance does not factor in any new markets that have not begun legalized sales, including the largest east coast markets like New York and New Jersey that are in the process of setting up their adult use recreational markets.

Speaker Change: With the revised revenue projections, we've been very thoughtful about our operating expenses.

With the revised revenue projections, we've been very thoughtful about our operating expenses.

Speaker Change: For the full year, we expect adjusted EBITDA loss to be between $31 million and $26 million.

For the full year, we expect adjusted EBITDA loss to be between 31% and $26 million.

Speaker Change: This includes an estimated eight-and-a-half to nine-and-a-half million dollars in annual public company cars.

This includes an estimated eight and a half to $9 5 million in annual public company costs and.

Speaker Change: and the additional investments in headcount, marketing, and product initiatives that Yoko outlined earlier.

And the additional investments in headcount marketing and product initiatives that Yoko outlined earlier.

Speaker Change: Going forward, our plan is to provide full year guidance along with additional color and transparency throughout the year as to how we're tracking.

Going forward our plan is to provide full year guidance, along with additional color and transparency throughout the year as to how we're tracking.

Speaker Change: Due to the timing of this call, we felt it was appropriate to provide an indication that we're tracking to approximately 11.3 million in revenue for Q122.

Due to the timing of this call. We felt it was appropriate to provide an indication that we are tracking to approximately $11 $3 million in revenue for Q1 'twenty two.

Speaker Change: So in closing, we're very pleased with our performance in 2021 and look forward to expanding our market.

So in closing, we're very pleased with our performance in 2021 and look forward to expanding our marketplace. We remain committed to investing with a disciplined approach and a focus on driving topline growth. We will continue to invest in platform enhancements that serve our <unk>.

Speaker Change: We remain committed to investing with a disciplined approach and a focus on driving top line growth.

Speaker Change: will continue to invest in platform enhancements that serve our consumers, retailers, and brands.

<unk> retailers and brands.

Speaker Change: We see opportunities in existing markets and as more markets become legalized and timetables for sales in newly legalized markets become clear, our TAM expands.

We see opportunities in existing markets and as more markets become legalized and timetables for sales and newly legalized markets become clear our Tam expense, making our planned investments all the more critical for long term growth.

Speaker Change: making our planned investments all the more critical for long-term growth.

Speaker Change: With that, I'll turn the call over to the operator and open it up for questions. Thank you.

With that I'll turn the call over to the operator and open it up for questions. Thank you.

Speaker Change: Thank you, Suresh. We will now begin the Q&A session. If you'd like to ask a question, please press star 1 on your telephone keypad, and if you'd like to remove that question, please press star 2. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question.

Thank you Suresh we will now begin the Q&A session, if you'd like to ask a question. Please press star one on your telephone keypad and if you'd like to remove that question. Please press star two.

As a reminder, if you are using a speakerphone. Please remember to pick up your handset before asking your question.

Speaker Change: My first question comes from the line of Jason Heifstein of Oppenheimer. Jason, you may pursue your question.

First question comes from the line of Jason <unk> Stein of Oppenheimer Chase.

Jason You May proceed with your question.

Jason Heldstein: Thanks. Maybe talk about the factor that you have in your control, the impediments to growth. So you did talk about R&D spending maybe a little less because it's harder to hire people. However, you know, you could deploy that money on the sales side.

Thanks, maybe talking about the factor that you have in your control.

The impediments to growth. So you did talk about R&D spending maybe a little less because it's harder to hire people. However.

You could deploy that money on the sales side, but.

Jason Heldstein: you know just talk about unit you know how much of this putting more bodies on the street relative to other factors uh... you know that uh...

Can you just talk about you know how much of this putting more bodies on the street relative to other factors.

Jason Heldstein: that impede the customer from getting online and then for the customers who are online

You know that that impedes the customer from getting online and then for the customers who are online you know how are you kind of separating the.

Jason Heldstein: you know how are you kind of separating the you know that the news new customers verses boosting revenue from exist

The the new.

New customers versus boosting revenue from existing customers. Thank you.

Speaker Change: Sure, I'll answer that question from the financial lens, and then I'll let Yoko chime in on some of the impacts we're seeing in the industry as it relates to.

Sure.

Answer that question from a financial lens, and then I'll, let <unk> chime in on some of the impacts we're seeing.

In the industry as it relates to.

Yoko Miyashita: So, to be clear, nothing has changed about our long-term growth outlook and our opportunities as a company. We see this as more of a delay in the implementation of our plan, so as we look ahead to this year and some of the things that you raised, Jason, here are some of the key factors that impact our current expectations for this year.

To our forecast.

So so to be clear nothing has changed about our long term growth outlook.

And our opportunities as a company.

We see this as more of a delay in the implementation of our plan. So as we look ahead to this year and some of the things that you raised Jason Here's some of the key factors that impact our current expectations for this year.

Yoko Miyashita: We added key roles to our senior leadership team late in 2021 and into the first quarter of 2020.

We added key roles to our senior leadership team late in 2021 and into the first quarter of 'twenty two.

Yoko Miyashita: So at this point, we have better visibility into the year. We've taken another look at the business, and one of the things we've done is reorganized across both sales and product to position for growth this year and over the long term.

So at this point, we have better visibility into the year, we've taken another look at the business.

And one of the things we've done is reorganized across both sales and product to position for growth this year and over the long term.

Yoko Miyashita: And we've also tied revenue to specific growth initiatives that we've modeled from the ground up.

And we've also tied revenue to specific growth initiatives that we have modeled from the ground up.

Yoko Miyashita: So, on the revenue side, there's buckets that include monetization of existing customers as well as new products on our roadmap, and we're investing in both of these areas. On the hiring side, it's a tough labor market, and the pace of hiring is slower than we anticipated six months ago.

So on the revenue side, there's three buckets.

Bucket that include monetization of existing customers as well as new products on our roadmap and we're investing in in both of these areas on the hiring side, it's a tough labor market and the pace of hiring is slower than we anticipated six months ago.

Especially for technical roles.

Yoko Miyashita: So many of the hires that we've made in sales still on quarter ramp and in PDE still ramping up to full contribution. So that's another factor that we see. So this has delayed the launch and scaling of many of the new products on our road.

For many of the hires that we've made in sales still on quarter ramp.

And in PV is still ramping up to full contribution. So that's another factor that we see so this is delayed the launch and scaling of many of the new products on our road map, but.

Yoko Miyashita: But we continue to make good progress, and we feel good about the investments we're making in these revives.

But we continue to make good progress and we feel good about the investments we're making in these revised estimates.

Yoko Miyashita: That's a really fulsome response, nothing to add there, Suresh.

They're really fulsome response, nothing to add there suraj.

Okay.

Thank you.

Speaker Change: Our next question is from Gerald Pascarelli of Cowan. Gerald, please proceed.

Thank you Jason.

Our next question is from Gerald Pascarelli with Cowen Gerald. Please proceed.

Gerald Pasali: Hi, good evening, and thank you very much for the question.

Yeah.

Hi, good evening.

And thank you very much for the questions.

Gerald Pasali: Just on the on the top line guide.

Just on the on the top line guide.

Gerald Pasali: I think it's clear and you laid it out pretty clearly that you expect it to be a back halfway to year, given the $11.3 million kind of run rate that you're doing in one cue. But when you look at the range between $53 and $58 million, are there any...

I think it's clear.

And you laid it out pretty clearly that you expect it to be a back half weighted year, given the $11 $3 million kind of run rate that youre doing in <unk>, but when you look at the range between 53 and <unk>.

$68 million.

Gerald Pasali: I guess, like, what's driving the low end versus the high end? Is it going to be, like, a combination of increased subscription or increased subscription fees and retail accounts or increased advertising, maybe a combination of both? I'm just trying to understand what's embedded into the low end and the high end of your guide. Any color you could provide there would be helpful. Thanks.

Are there any.

I guess like what's driving the low end versus the high end is it going to be like a combination of increased subscription.

Increased subscription fees in retail accounts or increased advertising, maybe a combination of both I'm just trying to understand what's embedded in the low end or the high end of your guide I think any color you could provide there would be helpful. Thanks.

Gerald Pasali: You know, we feel quite good about the guidance we're putting out today. It's really all about execution on the initiatives we've talked about.

Yeah sure Gerald.

We feel quite good about the guidance, we're putting out today, it's really all about execution on the initiatives we've talked about right.

Speaker Change: And just going back to Q4, we had good success with launches in Q4 around new products like menu merchandising, and we look forward to building on those. And now in Q1, we've launched new products like Delivery Gateway and Bidding Portal, and we're very positive about those initiatives adding to revenues this year.

And just going back to Q4, we had good success with launches in Q4 around new products like menu merchandising and we look forward to building on those and now in Q1, we've launched.

New products like delivery gateway and bidding portal and we're very positive about those initiatives, adding to revenues this year.

Speaker Change: So we have a lot of new products planned, and we have a product roadmap, and we need to execute. We talked about the timing of hiring talent, and that's something that we're very focused on, in addition to once we get them in, how long they take to get up to ramp.

So we have a lot of new product planned and we have a product roadmap and we need to execute.

We talked about the timing of hiring talent.

That's something that we're very focused on.

In addition to once we get the NIM, how long they take to get up to ramp.

Speaker Change: And the other factor is regulation. That could be a big swing factor in the near to medium term. That's a bit tough to predict. But I'd say overall, we're very confident that, you know, we.

And the other factors regulation that could be a big swing factor in the near to medium term.

That's a bit tough to predict but I'd say overall, we're very confident.

Yeah.

We have.

Speaker Change: visibility into the guidance that we're providing today.

Visibility into into the guidance that we're providing today.

Speaker Change: Let me just add a little bit of color on the regulation. Sorry, Gerald, go ahead. Sure thing. No, no, no, please, Yoko, go ahead.

Let me just add a little bit of color around the regulation E.

Sorry, Darryl go ahead sure thing than it up please Yoko go ahead.

Speaker Change: No, I just wanted to just layer on a bit on the regulation headwinds and tailwinds, right, that can cause these swings so quickly. We've talked about in our risk factors and openly about our challenges in states like Florida where we've challenged the Department of Health position on online ordering through marketplaces, right? That is a significantly large medical market and the ability to turn on ordering for our customers has the ability to swing us in the positive.

No I just wanted to just layer on a bit on the regulation headwinds and tailwind right that causes that can cause. These swings. So quickly we've talked about in our risk factors and openly about our challenges in states like Florida, where we've challenged the department of health position on online ordering through marketplaces right. So it is a.

Large medical market and the ability to turn on ordering for our customers has the ability to swing us and the positive.

Speaker Change: You know, we also know about challenges in Illinois, where you've got about 185 licenses tied up in litigation. We're ready. We've got a strong foothold in that market, and our platform is set up to onboard these partners as soon as those licenses get issued and become available.

We also know about challenges in Illinois, where you've got about 185 licenses tied up in litigation, we're ready we've got a strong foothold in that market and our platform is set up to onboard these partners as soon as they as those licenses get issued and become available. So I think it's those things here.

Speaker Change: So I think it's those things here that have this ability to move things pretty quickly, and we are prepped and ready to execute on our playbook as those licenses.

Or that have this ability to move things pretty quickly and we are prepped and ready to execute on our playbook as those licenses get issued.

Speaker Change: got it. Thank you, Suresh and Yonka. That's a super helpful color there. If I could squeeze another one in, would love to get your thoughts just on your outlook for consumer traffic to the platform in particular.

Got it thank.

Thank you.

The Russian yoga, that's super helpful color, there if I could squeeze another one in would love to get your thoughts just on your outlook.

For consumer traffic to the platform in particular.

Speaker Change: you know, knock on wood, but it seems like consumer mobility is continuing to pick up certainly from four key levels. So as you look out like over the course of 2022, how do you think about that relationship between

As you know knock on wood, but it seems like consumer mobility is continuing to pick up certainly from <unk> levels. So as you look out over the course of 2022.

How do you think about that relationship between you know more more consumer mobility versus.

Speaker Change: you know, more consumer mobility versus...

Speaker Change: traffic to your specific platform. Any color there would be great. Thank you.

Traffic to your specific platforms any color there would be great. Thank you.

Speaker Change: Yeah, no, we really look at this in sort of two vectors, right? We saw an unusual amount of traffic with at the peaks of COVID, you know, the reasons why people were locked in their homes, you know, some markets, you could only online order, and we saw a natural spike come with that. We've also seen with those post COVID peaks, traffic's normalized, and people wanting to go back into stores for shopping. But you know, for

Yeah, No I mean, we really look at this in sort of two vectors right. We saw an unusual amount of traffic with at the peaks of Covid you know the reasons why people were locked in their homes.

Some markets you could only.

<unk> order and we saw a natural site come with that we've also seen with those post COVID-19 peaks Traffics normalize and people wanting to go back into stores for shopping, but you know for us traffic and the consumer need has not changed which is that ability to match them to the products and strains that are right for them.

Speaker Change: Traffic and the consumer need have not changed, which is that ability to match them to the products and streams that are right for their needs.

Speaker Change: So I think as we think about traffic, we're focused really on building and really getting better at answering that question for consumers.

Our needs. So I think as we think about traffic, we're focused really on building and really getting better at answering that question for consumers.

Speaker Change: So, you know, historically, very SEO-focused business, very top of funnel, but we're continuing to refine the kind of content that really powers and answers that underlying consumers.

So historically very CEO focused business business very top of funnel, but we're continuing to refine the kind of content that really powers and answers that underlying consumer need.

Speaker Change: Perfect. Thank you very much for the color. I will hop back into the queue.

Perfect. Thank you very much for the color I will hop back into the queue.

Speaker Change: As a reminder, to ask a question, it is star one on your telephone keypad. Again, to ask a question, it is star one on your telephone keypad. Our next question is from Eric DeLaurier of Craig Hall and Capital Group. Eric, please proceed.

Thank you Gerald.

As a reminder to ask a question. It is star one on your telephone keypad again to ask a question. It is star one on your telephone keypad.

Our next question is from Eric Dey Laurier of Craig Hallum Capital Group.

Eric Please proceed.

Eric: Thank you for taking my questions.

Great. Thank you for taking my questions.

So as we look out.

Eric: clearly have a lot of white space to increase the number of retail accounts.

You clearly have a lot of white space to increase the number of retail accounts.

Eric: And at the same time we are seeing competition within markets pretty steadily increasing which as you guys have pointed out leads to increased customer acquisition spend.

At the same time.

We are seeing competition within markets pretty steadily increasing which is you guys had pointed out.

Leads to increased customer acquisition spend so long term that sort of increase in both accounts and ARPA is pretty.

Eric: So, you know, long-term, that sort of increase in both accounts and ARPA is, you know, pretty clear. Just wondering if you could provide a bit more color on how you expect that growth between accounts versus ARPA to shake out in the near-term and, you know, maybe how some of those challenges, like you mentioned in Florida or Illinois, might impact that. Thank you.

Pretty clear I'm, just wondering if you could provide a bit more color on how you expect that growth between accounts versus ARPA to.

To shake out in the near term and maybe how some of those.

Challenges like you mentioned in Florida, Illinois.

My might impact that thank you.

Speaker Change: Yeah, sure. So, we came off a very good Q4 in terms of adding retail accounts when we look at that, you know, continuing. As we look at the market and the ARPA that we're releasing, really, it's an average of what we're seeing at the local market level.

Yeah sure. So we came off a very good Q4 in terms of adding retail accounts when you look at that.

Continuing as we as we look at the market and.

And the ARPA that we're releasing really it's an average of what we're seeing at the local market level and so it's important to understand that our playbook and what we've had success that is really looking at markets at the local market level and.

Speaker Change: And so it's important to understand that, you know, our playbook and what we've had success at is really.

Speaker Change: looking at markets at the local market level and

Speaker Change: seeing the level of penetration that they're at, where they are along the curve, and we made a strategic decision last year to go after the accounts and sign them up. And we're certainly expecting with our

Seeing the level of penetration that theyre at where they are along the curve and we made a strategic decision.

Last year to to go after the accounts and.

Sign them up and we're certainly expecting with our with our product roadmap and invest.

Speaker Change: with our product roadmap and investments this year.

Speaker Change: that we're going to start seeing in the markets that we target.

Investments this year that we're going to start seeing.

Speaker Change: the ARPA going up. So I think, you know, it's, Eric, it's growth on both fronts. We're certainly going and looking to add retail accounts. I mean, we've more than doubled the size of our sales team. Just since August , we've hired over 20 customer support managers to

In the markets that we target the ARPA going up so I think.

Eric it's growth on both fronts, we're certainly going and looking to add retail accounts I mean, we've more than doubled the size of our sales team.

Just since August we've hired over 20 customer support managers to.

Speaker Change: support that the local market strategy and i think we're going to be as we roll out uh...

Support that the local market strategy and I think we're going to see as we rollout.

Speaker Change: you know, our strategy, which really has been to land and expand, this year we're going to see the expand phase and we're going to basically see opportunities for monetization in a lot of the new products in our roadmap.

<unk>.

Our strategy, which really has been to land and expand this year, we're going to see the expand phase and we're going to basically see.

Opportunities for monetization and a lot of the new products in our in our roadmap.

Speaker Change: Let me just pull on a couple of threads to illustrate this point. You know, we mentioned that we launched bidding, and we launched bidding in some of our strongest markets. And what we're seeing are, as a result of that, we are able to move upwards in those targeted markets.

Just pull a couple on a couple of threads to illustrate this point.

We mentioned that we launched bidding and we launched bidding in some of our strongest markets and what we're seeing are as a result of that we are able to move upwards in those targeted markets now back to marketplace and establishing it you've got to have the right market context, I E. There's gotta be sufficient competition for the marketplace model to work.

Speaker Change: Now, back to marketplace and establishing it, you've got to have the right market context, i.e. there's got to be sufficient competition for the marketplace model to work, and we have to get a sufficient concentration of both retailers and consumers on the platform to derive that kind of dynamic. But we see it happening, which is why we're investing in tools to augment and make it, you know, make us go faster on the bidding.

Work and we have to get a sufficient concentration of both retailers and consumers on our platform to drive that kind of dynamic, but we see it happening which is why we're investing in tools to augment and make it doesn't make us go faster on the bidding piece. The other thing you asked specifically about Florida and Illinois.

Speaker Change: The other thing, you asked specifically about Florida and Illinois, those are strong markets. We've got great footholds in each, and we would see regulation tailwinds help us drive that forward.

Those are strong markets, we've got great footholds in each and we would see regulatory regulation tailwind helped us drive that forward, Illinois in particular very excited about the work we were able to do over 2021 to start increasing that and not let me give you a little color on what that took from our local.

Speaker Change: Illinois in particular, very excited about the work we were able to do over 2021 to start increasing that. And that's, you know, let me give you a little color on what that took from a local market framework. That was calling every single retailer to understand what their impediments were for coming onto the weekly platform and order enabling.

Framework that was calling every single retailer to understand what their impediments were for coming onto the <unk> platform in order, enabling in many cases those were hey, we don't like the friction of having to maintain our menu through our Jane menu and also having to upload on lately what did we do in that instance, we integrate.

Speaker Change: In many cases, those were, hey, we don't like the friction of having to maintain a menu through our Jane menu and also having to upload on Leafly. What did we do in that instance? We integrated Jane as a menu part.

Speaker Change: It's that kind of tactical hand-to-hand combat at the local market level that allows us to execute win-market-share and then increase spend.

And Jane is our menu partner, it's that kind of tactical hand to hand combat at the local market level that allows us to execute when market share and then increase spend through overtime.

Speaker Change: Okay, great. That's very helpful, and I think that makes a lot of sense. Basically, increasing the number of accounts that you have, increasing that penetration, and then that sort of ARPA will follow. Can you just, I guess, just more high-level, just along those lines?

Okay, Great. That's that's very helpful and I think that makes a lot of sense.

Increasing the number of accounts that you have increasing that penetration and that sort of ARPA will follow up.

Can you just I guess just more high level.

Speaker Change: How should we think of the operating leverage that you see within specific markets when that ARPA really increases and then just kind of taking a step back, you know, given these investments that you're making in sales and marketing and such today, you know, the overall operating leverage that you see, sort of that maturity here, thank you.

Just along those lines, how should we think of the operating leverage that you see with.

Within specific markets.

When that ARPA really increases and then just kind of taking a step back given these investments that you're making.

Sales and marketing and such today.

The overall operating leverage that you see.

Sort of that maturity here. Thank you.

Speaker Change: You know, we've been very disciplined in thinking through sort of what are the investments we need and the timing in

Yes sure.

<unk>.

We've been very disciplined in thinking through sort of what are the investments we need in the timing in <unk>.

Speaker Change: by local market. And part of the sales reward that we're going through is really to be able to make those decisions and target local markets depending on the stage they're at. So certainly in markets where we have high penetration, we're seeing high ARPA, we are seeing better leverage on the pricing side.

By local market and part of the sales re org that we're going through is really to be able to make those decisions and target local markets depending on the stage, they're at so certainly and in markets, where we have high penetration, we're seeing high ARPA.

We are seeing better leverage on our on the pricing side.

Speaker Change: And, you know, when you roll all of that up, you know, I can give you a few data points, just looking at OPEX, sort of X stock-based comp. I mean, for 22, we're looking at about 61% OPEX growth at the midpoint, and sales and marketing was about 40% of total OPEX in 21. And we see that share growing this year. So, that's about it.

And when you when you roll all of that up I can give you a few data points just looking at Opex sort of ex stock based comp I mean for 'twenty. Two we're looking at about 61% opex growth at the midpoint.

And sales and marketing was about 40% of total opex in 'twenty, one and we see that share growing this year.

Speaker Change: You know, there is going to be more investment, I think, as we start seeing in the second half of the year, revenue from these initiatives pick up.

So.

There is going to be more investment I think as we start seeing in the second half of the year revenue from these initiatives pick up were forecasting better leverage.

Speaker Change: we're forecasting better leverage in terms of margins.

Speaker Change: And I think we're going to lead in the markets that we have higher penetration with and our plan is definitely to increase penetration and get the market to be more competitive through a combination of just adding more retailers on our platform and just driving more value to them.

In terms of margins.

And I think we're going to we're going to lead in the markets that we have higher penetration with and our plan is definitely to increase penetration and get the market to be more competitive through.

A combination of just adding more retailers on our platform and driving more value to them.

Speaker Change: through products and realizing that value through services like delivery and bidding.

Through products and <unk>.

Realizing that value through services like delivery and bidding.

Okay, Great. That's very helpful color. Thank you very much.

Sure. Thanks, Thank you.

Speaker Change: We'll now take our last question from Pablo Zuinich of Cancer Fitzgerald. Pablo, please proceed.

Thank you Eric.

We will now take our last question from Pablo <unk> of Cantor Fitzgerald Pablo. Please proceed.

Pablo Zanick: Thank you. So look, it's a very simplistic question, but you know, you are guiding for a decline in sequential sales at 1Q, right, 11.0 something compared to 12.1 in the fourth quarter. So if you can explain that, and as you do that.

Yes. Thank you so look at it very simplistic question, but you know you are guiding for a decline in sequential sales <unk> already 11 point something comparable to what we want in the fourth quarter. So if you can explain that.

Pablo Zanick: Maybe talk about, you know, customer stickiness, especially on the retailer side in terms of subscriptions, but also whether you're having to adjust prices for the subscriptions in a per-market basis, right? I understand you talked about to enter new markets, you may offer a lower subscription package, but I'm wondering in existing state, whether there's been any adjustments to subscription pricing on the retailer side. I'll have a follow-up, but if you can answer that first. Thank you.

As you do that maybe talk about you know customer stickiness, especially on the retailer side industrial subscriptions.

But also whether you are having to adjust prices for the subscriptions in a per market basis right. I understand you talked about to enter new markets. You mean, you offered a lower subscription package, but I'm wondering in existing states.

Adjustments to subscription pricing on the retailer side, well have a follow up but if you can answer that first.

Yes sure absolutely.

Pablo Zanick: So, you know, just a big picture here. We anticipate growth throughout the year, right? Particularly in the second half of the year. When you look at Q4, you know, we had the benefit of increased holiday inventory targeted to brands.

Just big picture here, we anticipate growth throughout the year, particularly in the second half of the year. When you look at Q4, we had the benefit of increased holiday inventory targeted to brands.

Pablo Zanick: And Q1 just doesn't have that. So we have seen a modestly lower growth rate year-over-year, and based on our product roadmap and as our investments take hold, we do expect growth to pick up in the second half of the year.

In Q1, just doesn't have that great. So we have seen a modestly lower growth rate year over year.

And based on our product roadmap and as our investments take hold we do expect growth to pick up in the second half of the year. We also had success in Q4 launching.

Pablo Zanick: You know, we also had success in Q4, launching new products like menu merchandising. That's something that we're going to continue to build this year, right? And in Q1, as I just mentioned, we rolled out, you know, a delivery gateway and bidding portal as well. So, we have a product roadmap. We're very confident that as we progress through the year, you know, we're going to roll new products out and that's going to increase.

New products like menu merchandising, that's something that we're going to continue to build this year and in Q1 as I just mentioned we rolled out.

You know our delivery gateway and bidding portal as well. So we have a product roadmap. We are very confident that as we progress through the year, we're going to enroll new products out and that's going to increase.

Pablo Zanick: the leverage we have and increase monetization.

The leverage we have an increase monetization.

Pablo Zanick: In terms of stickiness and, you know, revenue mix, you know, I can say that, you know, most of our revenues come from existing customers, that's the subscription model. And it's fair to say that the acceleration is going to be driven by increased monetization of new product, new increased monetization from that existing customer base as well as newer product.

In terms of <unk>.

Stickiness and revenue mix I can say that most of our revenues come from existing customers. That's the subscription model and it's fair to say that the acceleration is going to be driven by increased monetization of new products, new increased monetization from that existing customer.

As well as newer products.

Pablo Zanick: So we feel like we have reasonable visibility into the quarter.

So we feel like we have reasonable visibility.

Speaker Change: I just want to layer on a couple of comments there. You talked about stickiness, and in our top markets, stickiness and pricing, there is a correlation. So first and foremost, the subscription prices we have are very market-driven. They're not just market-driven, they're driven at the zone level, and we are talking 3,000 plus pricing zones on our platform.

Into the quarter.

I just want to layer on a couple of comments there you talked about stickiness and in <unk>.

Our top market stickiness in pricing there is a correlation so first and foremost the subscription prices. We have are very market driven theyre not just market driven they are driven at the zone level and we are talking 3000, plus pricing zones on our platform, but in our top markets.

Speaker Change: But in our top markets, and this is publicly disclosed, Arizona is a great market for us, we see not just the kind of stickiness, the retention levels you would want to see, but it becomes a situation where if you are a retailer in Arizona, you cannot afford to not be on the Leafleaf platform. And that's what we look to when we're looking for that ability, and that is reflected in our pricing power that we have in markets like that.

This is publicly disclosed Arizona is a great market for us we see not just the kind of stickiness. The retention levels, you would want to see but it becomes a situation where if you are a retailer in Arizona you cannot afford to not be unbelievably platform and that's what we look to when were looking for.

That ability and that that is reflected in our pricing power that we have in markets like that.

Speaker Change: The flip side of that is in a nascent emerging market or a market with low concentration of retailers, you can't price at that same price.

Flip side of that is in a nascent emerging market or a market with low concentration of retailers you can't price at that same price point. So how do you price for the market conditions and that is what our local market strategy is all about understanding the unique attributes of each market and designing our go to market.

Speaker Change: So how do you price for the market conditions? And that is what our local market strategy is all about, understanding those unique attributes of each market and designing our go-to-market accordions.

Accordingly.

Speaker Change: All right, thank you. And then maybe just to follow up, and this is more maybe a background question, but I know you've talked about your exposure to the Eastern US, but you know, when you talk about 5,200 plus accounts, right? You know, 20 plus accounts in New Jersey, 100 in Pennsylvania. I mean, if I start doing the numbers, I suppose a lot of those accounts have to be coming from Oklahoma, Michigan, California, right? So I'm just trying to understand if you can give more color into your revenue exposure by...

Alright. Thank you and then maybe just a follow up on juices motor maybe if I could one question, but I know you've talked about your exposure to the eastern U S. But.

When you talk about 5200 plus accounts right.

You know 20, plus like I was in New Jersey, 100 in Pennsylvania, I mean, if I start doing the numbers.

Those are those are going to have to be coming from Oklahoma, Michigan, and California, right. So I'm just trying to understand if you can give more color in terms of your revenue exposure by region.

Speaker Change: And if you can't, at least, you know, talk about the dynamics that those customers are facing, right? I mean, if I'm in Massachusetts and I'm a retailer and I'm facing more competition, am I spending more on your platform or are there more alternatives also that are coming to me? I'm just trying to get a better sense of regional mix for the company if you can share that and then just the dynamics you are facing there. Because again, I mean, 5,000 to 100 sounds like a great number, right? But that means that California and Oklahoma have to be a big chunk also in terms of revenue.

You can't at least you know talk about the dynamics of those customers are facing right I mean, he finally in Massachusetts, and I'm every dealer facing more competition on why you're spending more on on your platform. What are there are more alternatives is offshore that are coming to me I'm just trying to get a better sense. So of regional mix for the company. If you can share that and then just the dynamics you referred.

Patient there because again I mean, it's like something 200 sounds like a great number right, but that means little euphoria in Oklahoma I hope to be a big chunk also our industrial revenues.

Speaker Change: Yeah, and you know, if you read our disclosures, you'll see our top three revenue markets, California, Oregon, and Arizona disclosed, but you know, like those are revenue figures and that does not necessarily reflect our TAM penetration.

Yeah, and if you read our disclosures, you'll see our top III revenue markets, California.

Oregon, and Arizona disclose but.

Like those are revenue figures and that does not necessarily reflect our Tam penetration. So I think you picked up in a really interesting nuance within this business and the states, yes, you've got significant representation in Oklahoma, but as you know huge massive number of retailers in that market, serving a much smaller medical population what.

Speaker Change: So I think you've picked up on a really interesting nuance within this business.

Speaker Change: And on the states, yes, you've got significant representation in Oklahoma, but as you know, huge, massive number of retailers in that market serving a much smaller medical population. What kind of dynamics does that drive on our marketplace? And frankly, we could actually get specific and show you, and there are dynamics that are unique to pricing zones within Oklahoma. So again, it goes back to understanding what's happening in a particular market and serving those needs.

Kind of dynamics does that drive on our marketplace and frankly, we could actually get specific and show you and like there are dynamics that are unique to pricing zones within Oklahoma. So again it goes back to understanding what's happening in a particular market in serving those needs. You mentioned, Michigan. You mentioned, you mentioned, California still some structural challenges with bringing.

Speaker Change: You mentioned Michigan, you mentioned California. Still some structural challenges, right, with bringing a lot of that legacy spend into the licensed market. Those are, you know, California is a great one. Frankly, underpenetrated for us. So that does give us opportunity. And there is, you know, from our perspective, it's making sure we have the right product set.

A lot of that legacy spend into the license market. Those are California is a great. One frankly underpenetrated for us so that does give us opportunity and there is from us for our from our perspective, it's making sure we have the right product set two.

Speaker Change: to implement our land and expand strategy. And I think that's one of the nuances that we haven't even gotten to talk about today, which is, hey, California, delivery market. How are you gonna go after that? Need a really strong delivery product. Something that we'll be rolling out.

To implement our land and expand strategy and I think that's one of the nuances that we haven't even gotten to talk about today, which is hey, California delivery market. How are you going to go after that need a really strong delivery product something that will be rolling out in 'twenty two.

Speaker Change: What else can I say? East Coast, New Jersey, as you mentioned, all but two stores in New Jersey in the medical space already on platform today. How do we go after them? We make sure we have the right product set, including dual menus for all those med providers who will be the first to sell and rec, and make sure they're on platform with the tools they need to reach our consumers.

What else can I say east Coast, New Jersey, as you mentioned, all but two stores in New Jersey in the medical space already on platform today, how do we go after them, we make sure we have the right product set including dual menus for all of those.

Med providers, who will be the first to sell and rack and make sure their own platform with the tools they need to reach our consumer audience.

Speaker Change: And one last one, if I may, just so that on the 18,000 brands, that sounds, of course, like a big number, can you talk about, you know, what type of penetration do you have there to go 200 brands in your platform or, you know, close to 18,000, just some color?

Got it thank you and one last one if I may just on.

The 18000 brands that sounds so fortunately the big number can you talk about you know.

What type of penetration do you have there.

100 brands on your platform or close to 18000, just some color to that if again.

Speaker Change: Yeah, and just to break that brand number down to you, remember we serve both the THC infused as well as the non-infused brands, which is how we get to a significant number. And frankly, it could be higher than that based on some of the reporting we see. We are in early days, but why we get excited about this new brand subscription product is because the challenges they face are very similar to retailers. They're trying to reach that engaged audience. They are trying to find advertising channels to connect.

Yeah, and just to break that brand's number down to you know remember we serve both the THC infused as well as the non non infused brown, which is how we get to a significant number and frankly it could be higher than that based on some of the reporting we see we are in early days, but why we get excited about this new brand.

<unk> product is because the challenges they face are very similar to retailers. They are trying to reach that engaged audience. They are trying to find advertising channels to connect with consumers and by really providing this low entry point subscription and then again there are different pricing points, depending on size and scale and where you are and what market what that does give.

Speaker Change: consumer.

Speaker Change: And by really providing this low entry point subscription, and again there are different pricing points depending on size and scale and where you are and what market, what that does give brands is that ability to build that presence and profile and then leverage all of the advertising products that we have been adding to get in front of the consumer.

Brands is that ability to build that presence and profile and then leverage all of the advertising products that we have been adding to get in front of that retail customer that consumer.

Speaker Change: And that, you know, you hear us talking about menu merchandising. I want to be super clear about the language we use here. Those are sponsored ads. Those are sponsored ads on retailer menus. And that kind of bottom-of-funnel engagement with a high-intent shopper is incredibly valuable for that brand's audience.

And that you hear us talking about menu merchandising I want to be Super clear about the language. We use here. Those are sponsored ads those are sponsored ads on retailer menus and that kind of bottom of funnel engagement with a high intent shopper is incredibly valuable for that for an audience.

Thank you.

Thanks, Pablo Thank you Pablo.

Speaker Change: At this time, I'll now hand the conference back over to Yoko for any closing remarks.

At this time I'll now hand, the conference back over to Yoko for any closing remarks.

Yo: Thank you, Sam, and thank you everyone for joining us for our first earnings call. We look forward to speaking with you again for our Q1 earnings.

Thank you Sam and thank you everyone for joining us for our first earnings call. We look forward to speaking with you again for our Q1 earnings.

Yo: That concludes the Leaf Leaf fourth quarter and full year 2021 earnings call. Thank you all for your participation. You may now disconnect your lines.

That concludes the lease <unk> fourth quarter and full year 2021 earnings call. Thank you all for your participation you may now disconnect your lines.

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Yes.