Q3 2024 PSQ Holdings Inc Earnings Call - Q&A
Speaker Change: Greetings and welcome to Public Square's 3rd Quarter 2024 Earnings Conference Call and Webcast.
Speaker Change: Before we get started we want to emphasize that the information discussed on this call, including our outlook is based on information as of today contains forward looking statements that involve risks uncertainties and assumptions.
We undertake no duty or obligation to update such statements as a result of new information or future events.
Speaker Change: Please refer to today's earnings press release, and our SEC filings, including our most recent 10-Q and $2023 10-K for factors that may cause actual results to differ materially from our forward looking statements.
Speaker Change: I'd also like to point out that we present non-GAAP measures in addition to and not as a substitute for financial measures calculated in accordance with GAAP.
Speaker Change: I'll now hand, the call over to Michael Michael. Please go ahead.
Michael Michael: Thank you will and welcome everybody to our third quarter 2024 earnings call.
Michael Michael: Third quarter, what they pivotal purion for public square as we shifted resources to prioritize our fintech opportunity.
Michael Michael: Fintech meeting financial technology with the aim of delivering the distinct business services, our merchants have been demanding.
Michael Michael: It'd be more specific over the past two years, we have learned from our tens of thousands of merchants on our public square platform, but they are desperately seeking payment infrastructure that will provide a cancel proof promise and reliable technology.
Michael Michael: When you pair these findings with our desire to own and operate the entirety of the transaction experience. It makes sense that payment would become our primary focus.
Michael Michael: As we enter Q4 'twenty 'twenty four our focus on Fintech is clearer than ever. This refined focus includes shifting our customer acquisition strategy to more of a b to b model and transitioning our marketplace. The more of an affiliate fee based approach simply put the marketplace moving forward exist to drive.
<unk> and merchant acquisition and activation, while our payment stack and buy now pay later technology drive monetization of the ecosystem.
With a fin tech team with decades of industry experience and under seven months, we have truly built a world class payments platform that has already proven its value in the market and we're excited to tell you more about that here today, starting from zero and with less than 120 days of sales we have now signed contract.
Michael Michael: So it had the potential to result in over $1 billion in annualized G M V or gross merchandise value.
Michael Michael: And as we entered Q4 of 2024, we actually activated our first enterprise merchant, who is expected to process more than $100 million annually on our public square payments platform. It's incredible milestone ahead of schedule speaks directly to the demand we are meeting and the strength of our product for businesses of all sizes that resin.
With our cancel proof promise and reliable technology, while the bulk of our contracted volume. Thus far comes largely from the shooting sports industry, which is a largely unaddressed and ignored market. We have a strong representation of merchants in our pipeline from a myriad of different industries, largely due to our public square merchant database.
Michael Michael: But over 80000 businesses that is actually industry agnostic.
Michael Michael: And when we talk about G M V and the billion dollar threshold that we have crossed.
Michael Michael: It is crucial for investors to understand how this potential G. M V or annual processing volume can translate to top line revenue going forward for the over $1 billion. Currently under contract. We expect these merchants in their entirety to be integrated between Q4, 'twenty four and Q1 of 2025 with the full impact of revenue for these margins.
Michael Michael: Being realized at the beginning of Q2 2025.
Michael Michael: We expect our blended take rate for this annual processing volume to be between 1.9 in 2.3%. So practically for every $1 billion of annual volume. We process, we expect to receive approximately $19 million to $23 million in annualized top line revenue.
Michael Michael: One last item on that says that our take rates as we ramp our offering are not consistent across all of our merchant customers. That's the reason for the range as our payments vertically scale, we expect to see upward movement in our take rate as we integrate more small and medium sized businesses from our existing ecosystem.
Michael Michael: Alongside these advancements we've actually optimize our cost structure and sharpened and shaping our strategic direction for future growth.
Michael Michael: In late October we enacted a strategic plan, where we reorganized vital business functions to improve efficiency, reducing our workforce by over 35% in the process. The strategic reorganization of the business is expected to save our company approximately $11 million on an annualized basis and is therefore expected to lower our cash burn.
Michael Michael: <unk> meaningfully while positioning us to reach positive caseloads in 2025, while maintaining strong revenue growth.
Michael Michael: We expect cost savings associated with these changes to be realized beginning this month and for the full year 2025.
Michael Michael: Looking toward 2025, we believe with our refined roadmap and reduced cash burn all three segments, meaning marketplace, fintech and brands, including the public square marketplace will achieve positive cash flows on a standalone basis during 2025, while maintaining strong growth in this solid foundation in our segment per for our performance.
Michael Michael: Bolsters, our confidence that we can actually become cash flow positive as an ore overall organization by the latter half of 2025.
Michael Michael: We're thrilled to enter this next chapter of our growth and we are encouraged by the enthusiasm throughout our ecosystem from both our customers, meaning shoppers and our merchants.
Michael Michael: Sorry to break this down further for a few key highlights from across our segments that embolden, our view that the business is well positioned for future growth I will start with payments.
Michael Michael: A public square payments, we have developed a fully cancel proof payment stack with advanced coconut station and secure wallet technology to protect customer data. This has been a major selling point as we are serving businesses that are very focused on the security of their customer data.
Michael Michael: We secured contracts that could potentially result in over $1 billion in annualized G. M V, which is ahead of our goal of achieving that $1 billion threshold by the Christmas shopping season.
Michael Michael: We activated our first $100 million plus merchants on the public square payments platform last month, and Additionally, as we look at the pipeline approximately 80% of our company's sales pipeline stemming from existing buy now pay later merchants or public square marketplace merchants, who are values aligned and have actively sought out our payment stack.
Michael Michael: On the credit side of the business. The buy now pay later functionality, we have signed contracts that could potentially result in five $8 billion in annualized G. N V year to date with billions more currently under negotiation.
Year to date, we have facilitated $53 million in consumer financing transactions with an average contract value of $1024.
Michael Michael: The buy now pay later for us generated approximately $3 2 million in net revenue in Q3, 2024 and attracted over 200000 applications.
Michael Michael: In our marketplace segment, we made the choice around the mid year to switch to a C. P. M model for advertising and moved more away from a subscription model, which helps significantly automate the advertising experience for both merchants and our team reducing expenses in the process.
Michael Michael: Also on the marketplace, we saw 13% growth in order volume from Q2 2020 for the Q3 2024 and now that we've invested in the foundation of the marketplace. We were subsequently able to reduce costs and focus on breaking even with the marketplace in the near term.
Michael Michael: Simply put we have built the ecosystem that can now generate customers and merchants for us and it's time to monetize that marketplace engine.
Michael Michael: On the brand Division every life, our premium diaper and wipes brands that celebrates every miracle of life, our revenue grew quarter over quarter, 14% and year over year grew 126%.
Michael Michael: We also experienced significant subscriber growth our active subscriber base grew 18% from Q2 2004 to Q3 'twenty four our repeat customer rate at the end of Q3 was an astonishing 76%.
Michael Michael: Total orders with every life increased 14% from Q2 to Q3, and our nonprofit partnerships, meaning churches pregnancy centers other affiliated pro life and pro family nonprofit organization, our nonprofit partnerships grew 49% quarter over quarter with every law.
Michael Michael: <unk> ending Q3 with 866 verified nonprofit partners.
Michael Michael: Kober as a subsequent event what the first month that we actually eclipsed over a million dollars and every life sales and finally, the number of diapers and wipes donated through our buy for a cause program with the help of our devoted customers inception to date totals over $2 5 million wipes and over.
Michael Michael: 3 million diapers to mothers and fathers in need looking to care for the next generation.
Michael Michael: So we went through payments credit marketplace, and every life and it's safe to say its a truly exciting season for public square, we firmly believe that our fintech positioning will strengthen us long term by allowing us to pursue multiple monetization opportunities coupled with meaningful leverage of our existing merchant base.
Michael Michael: With that said I will now turn the call over to Brad to discuss financial highlights from the quarter Brad over to you.
Brad: Thank you Michael and good afternoon, everybody I'm honored to be with you here today to discuss our third quarter 2024 results I'd like to present, a few items to note from the quarter starting with revenue.
Brad: We increased net revenue by 222% to $6 $5 million compared to the third quarter in 2023.
Brad: Breaking that down a bit $3 2 million of this came from Fintech segment, keeping in mind that this revenue is only from the buy now pay later transactions.
Brad: Payments revenue will not hit our statement of operations or our P&L until Q4.
Brad: Every life generated $2 6 million of net revenue an increase of 126% from Q3 of 2023, which was the quarter in which we launched every life.
Brad: Overall gross margin expanded year over year from 27% to 64% due in large part to the high margin revenue on credit products in the Fintech segment.
Brad: The segments you will notice that we made a change in our segment footnote to split out corporate operating expenses that are not directly attributable to a specific segment.
Brad: These expenses include but are not limited to outside counsel and board fees and public company expenses, such as quarterly and annual report filing fees and insurance for our directors and officers.
Brad: Excluding these corporate operating expenses, our Q3 adjusted EBITDA loss for the three segments was $4 $4 million.
Brad: Please note the P&L includes stock based compensation expense and noncash item of $5 $8 million in Q3.
Brad: As we are very much still a growth company, we expect stock comp to remain a significant a significant expense on our P&L for the foreseeable future.
Brad: Moving on to cash we ended the third quarter 2024, with cash and cash equivalents of five.
Brad: $5 7 million of which $1 million was restricted cash.
Brad: During the quarter, we completed a private placement for $10 million convertible note with a board member and as affiliates and in early Q4, we closed the pipe of five $3 million to $5 million led by a board member as well.
Brad: During the quarter, we had $1 2 million of cash outflow related to the public square business summit, which was booked to prepaid expenses and other assets and thus did not impact the P&L approx.
Brad: Approximately 900000 of the cash outflow was returned to US in October after the cancellation of the summit due to hurricane Milton.
Speaker Change: One significant item I want to reiterate from Michael's previous remarks is that management and the board have enacted a plan to significantly reduce spending on payroll on contractors and on corporate operating expenses. Overall. The plan is expected to save an estimated $11 million annually as we streamline efforts to focus on.
<unk> opportunities in the Fintech segment.
Speaker Change: Lastly in terms of share count as of September 30th 2024.
Speaker Change: 29 million 451684 class a common shares outstanding and $3 million 213678 class C common shares outstanding.
Michael Michael: I will now hand, the call back to Michael for some closing remarks and Q&A.
Michael Michael: Thank you Brad.
Michael Michael: Well to wrap up as we look to the future. We are dedicated to expanding our fintech offerings with our strategic emphasis on sustainable growth customer engagement and values alignment. We have found an unaddressed market that we have a unique opportunity to go and reach and we intend to do so with quality.
Michael Michael: And excellence at the forefront and thankfully in the first few months of our payment bonds. We are already seeing that reflected in the responses. We are receiving from merchants 2025, we will present us with a unique opportunity to bolster our existing business and build upon the solid foundation. We have set this past year, we aimed to increasingly market.
Michael Michael: <unk> buy now pay later and payment processing solution bolstering our canceled for veeco system to meet the demands of values align merchants and consumers. We will also be working to achieve a seamless integration of our fintech suite of solutions across our merchant network to offer this unified cancel proof and largely automated experience.
Michael Michael: Importantly, we will also be working on monetizing our customer lifecycle by optimizing revenue from customer interaction throughout the customer experience from the initial point of purchase with the merchants on the merchant site all the way through repeat transactions within the public square marketplace.
Michael Michael: We will work to expand our BTB centric model, leveraging our merchant partnerships to generate more customers organically, increasing lifetime value, while significantly reducing customer acquisition costs simply put we have built the engine now as we head into 2025, we focus on monetizing it.
Michael Michael: We firmly believe that these key steps will allow us to not only grow our top line in 2025, but also allow us to achieve cash flow positivity across all segments in the combined business in 2025 car journey. Thus far has been a remarkable one as we've had the opportunity to serve millions of consumers and tens of thousands of business owners, who value life family.
Michael Michael: Freedom and patriotism across our great country in just a few short years and we look forward to continuing our success in attaining new milestone along the way with a significant electoral win last week, we have fresh wind in our sales and we're anticipating major moves for our business as we head forward into 2025 or the economy as a whole and for our busy.
Michael Michael: Specifically, we are focused on changing the country through the power of Commerce and we're glad to have you on the journey with us without further Ado.
Michael Michael: Let's now head to question and answers.
Speaker Change: Thank you at this time, if you would like to ask a question. Please press star followed by the number one on your telephone keypad. Once again that is star followed by the number one on your telephone keypad.
Speaker Change: Our first question comes from the line of Darren <unk> with Roth Capital. Your line is opened.
Speaker Change: Hey, guys. Thanks for taking my questions good afternoon.
Speaker Change: If I may.
First one I guess, Michael you kind of teased us at the end of your comments.
Speaker Change: Obviously the.
Speaker Change: Election recently.
Speaker Change: Consummated.
Speaker Change: Any impact on your business.
Speaker Change: Kind of short term longer term as we kind of move into administration.
Speaker Change: Thank you Darren great to hear from you.
Speaker Change: Were obviously thrilled as an economic actor that seek the prosperity of the American economy, and the growth and vitality of American community, we feel a great deal of hope coming out of the election last week for our business specifically, we feel like we have wind in the sales we feel like we have fresh energy as we head into 'twenty.
Speaker Change: 25, and I'll give a few practical examples one is you know for the last few years, we've been talking as a company about the beauty of a marketplace that focused on meritocracy excellence innovation, a love of country and community now that we have seen these same values reflected in the election results.
Speaker Change: We feel like we get to be the economic manifestation of the electoral victory that took place last week and we've already seen that drive growth for our business even in the past seven days.
Speaker Change: So number one is we have obviously celebrated this message that I think was reflected very clearly in the election results last week and so we don't feel like a sidebar economic actor, we feel like we really represent the mainstream American viewpoint at this point. The second thing I'd mentioned is that obviously for our business given how much we operate in space.
Speaker Change: Like the firearms and ammunition industry, it's refreshing to know that we have an administration coming into office in 2025 that seems to value that industry with greater affection.
Speaker Change: And so as we look to the regulatory environment. We are excited about the decrease of the administrative state and how that might positively impact our business and ultimately we believe that as we head into 2025 with our emphasis on American small businesses in our community paired with some of the.
Speaker Change: Messages out of the incoming Trump administration that they want to value those same American small businesses as well, we think we can be a great catalyst and a real pioneer of the next chapter of the American economies growth for the small business community in main Street America, specifically, so we're happy over here Darren and we're looking forward.
Speaker Change: Two the hopeful economic growth that we hope to experience over the course of the coming years for our business, but also the broader macro economy in general.
Speaker Change: Okay.
Speaker Change: Great. Thanks for that a couple more if I may so on the Fintech side, you mentioned a few figures on pipeline, one what's kind of the $1 billion.
Speaker Change: Annualized figure then I think you mentioned on payments $5 8 billion.
I'm just kind of curious.
Speaker Change: Collectively.
Speaker Change: What does that represent relative to your existing merchants versus perspective.
Great question Darrin, so on the payment side of the business public square payments.
Speaker Change: The billion dollar threshold of contracted expected G. M. V is actually entirely representative from businesses that are already in our community, meaning these were not cold leads that existed outside of the public square or credo by existing ecosystem. So that speaks to the house.
Speaker Change: Of our pipeline that much of our early traction is actually coming from folks that already trust us whether that's a trusted that they've developed through the onboarding onto the public square marketplace or the utilization of the consumer financing products through the crude over buy now pay later business out of the billion all of those merchants are actually rep.
Speaker Change: Presented from the existing ecosystem, we have already ascertained I would also speak to the near term pipeline, but that is very much. The same in fact, I mentioned a figure here and.
Speaker Change: The earlier earnings call comment about how over 80% of our entire pipeline right now come from existing merchants within the public square or credo about ecosystem.
Speaker Change: We have not had to focus on going out and paying for external leads so when we speak to decreased customer acquisition cost on the merchant side. This is obviously a big win for us and we feel that it's truly a differentiator compared to our competitors in the Fintech ecosystem, we started with the audience and now as we monitor.
Speaker Change: Ties that were not having to go out and find green pastures that we have not yet spoken to we're actually targeting a network of merchants that already trust us for existing services.
Speaker Change: So on that point.
Speaker Change: In order to hit your Fintech schools.
Speaker Change: Let's just say in the next 15 months to the end of 'twenty, five but sort of investments do you need to make if any into that business.
Speaker Change: I will say very little we have actually spent much of the investment capital into developing both the product itself as well as the the sales engine to go and attract the existing merchants within our ecosystem in Q3.
Speaker Change: Our customer acquisition cost on the 80000 businesses now that we have the sales teams spun up is zero, we're not having to spend money to attract the merchants that are already in our ecosystem and much of the early development work on the actual core payments platform has been completed so while we anticipate that we will continue to obviously <unk>.
Speaker Change: In refinements to the platform and in the years to come we never want to stop the continued improvement of our core platform much of the heavy lifting has actually been completed and that's why we feel comfortable processing billions on the platform that we have now invested in to build the other piece that I would mention is that you you gave the 15 month time frame.
Speaker Change: I would tell you that we are actually very comfortable confident and content for the next 15 months solely focusing our sales efforts toward merchants that are already in our ecosystem. So even over the next 15 months to go and achieve our payment goals. We do not anticipate that we will have to go outside of our existing audience to attract the desire to <unk>.
Speaker Change: <unk> and respective revenue associated with those merchants.
Speaker Change: Got it that's helpful. Just one more if I may maybe for Brad.
Speaker Change: On the cost savings side, the annualized 11 million.
Speaker Change: You guys had spent.
Speaker Change: On some professional fees and consulting along the way so.
Speaker Change: I guess I'm, just trying to contextualize the run rate of over $11 million in cost savings I assume sort of starts.
Speaker Change: Fully.
Speaker Change: Jan one of next year, but can you help me understand it's $11 million run rate off of kind of like what what level of cost.
Speaker Change: Yes. Good question Darren This is Brad.
Speaker Change: We're actually starting to see those savings.
Speaker Change: We have been for about a month now so we have this reduction in force.
Speaker Change: Last month, and there's a little bit of severance to pay out as was mentioned in the Q.
Speaker Change: But that's the majority of the cost savings so that's.
Speaker Change: Just over half of those savings are related to personnel as we focus on the <unk> segment or the <unk> to be focus the Fintech segment of course, and like Michael said the customer acquisition cost is virtually zero because we already have these businesses in one of the segments. It's just transitioning them to.
Offer them services that another segment can provide.
Speaker Change: That's a big chunk. Another one like you mentioned as contractors consultants, we're starting to bring a lot in house as we.
Speaker Change: Have more space.
Speaker Change: Based on our plate to take on additional things that we used to outsource or learning we've been a public company for over a year now.
Speaker Change: So we see we're seeing some savings there and then just general.
Speaker Change: Tightening the belt, if you will and looking at every dollar that's being spent in saying is can we get something thats more affordable that has a higher ROI.
Speaker Change: So overall that $11 million is a significant part of our burn if you look at our adjusted EBITDA as.
Speaker Change: As I mentioned of course taken out corporate Opex at $4 4 million. So youre looking at one 5 million Max a month in Q and Q3 of a cash burn of course. This is back in the napkin math, if you take 11 million annualized out Thats a million dollars of spend per month per month, that's no longer there.
Speaker Change: So it's it's taking place right now, but you are correct Darrin and that the forecast will be annualized.
Speaker Change: We'll achieve that in 2025.
Speaker Change: And then I guess this might be in the queue. I know you guys just file it.
Speaker Change: Multi task right now.
Speaker Change: How should we think about gross margins high level on your Fintech product.
Speaker Change: Yeah happy to take that one and then Michael you can fill in after if you'd like for credit. It's the reason that we had the growth in margin from 27% to 64% year over year was mainly due to the Fintech segment. It was purely credit and those are that revenue is pretty much purely margin.
Speaker Change: So when you look at there's three different streams of revenue within credit all of them are 99% plus or some servicing and underwriting costs.
That our cost of revenue on payments on the other hand, it's a little different so payments that take rate as Michael mentioned, one 9% to 3%.
Speaker Change:
Speaker Change: Is anywhere between 10, and 20% and it depends on the size of the merchant so higher merchants generally yield a lower.
Margin and and vice versa as well so.
Speaker Change: That's kind of what we're looking on the Fintech segment on the brand segment remained pretty stagnant from Q2, we expect to see that increased slightly just as we scale over time and get those kind of bulk discounts as you will and then the marketplace segment should remain fairly steady as well those are kind of off.
Michael Michael: Fixed costs and a lot of the 35% head count reduction was cost of sales related to the marketplace. So we should see that improving moving forward Michael anything to add there yeah I would just add that on.
Michael Michael: On the payments margin. So obviously, yes, the take rate 1% to two 3% for this first over 1 billion tranche with a margin of about 10% to 20% we scale into a greater margin over time as we bring more of the services associated with payments in house.
Michael Michael: We're looking forward to that as well as the focus on more SMB style merchants that yield a higher margin for the business. So we are anticipating payments over time becomes a business vertical with virtually no margin cap.
Michael Michael: That's our goal is that as we build over the next two to three to five years, we would see the hallmark of our success as reflected in the greater margin that we're actually taking home on these payments transactions and then I would also mentioned it sort of put a fine point on Brad's comments the margin on the brand segment should increase heading into Q4 with the launch of additional SKU.
Michael Michael: <unk> and bundled products like soaps lotions training pants et cetera for the every life brand.
Speaker Change: That's helpful guys I'll pass it on thanks.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Barry Haimes with Sage asset management. Your line is open.
Speaker Change: Thanks, so much and lots of exciting changes.
Speaker Change: Wanted to be sure I understand him so I totally get the.
Speaker Change: If you are trying to get the merchants onto the payment system.
Speaker Change:
Speaker Change: When when a merchant goes on you're paying payment system is it for what they show on your side or generally everything that they sell wherever else. They may sell that's one question.
Speaker Change: And so for someone who doesn't.
Speaker Change: Take your payments as they are experienced with you the same as it has been and as the consumer experience on our marketplace. The same as it has been so this is my first question I have one one quick follow up.
Speaker Change: Great. Thank you Barry great to hear from you all.
Speaker Change: I'll I'll start with the question around.
Speaker Change: He is payment when we onboard a merchant purely for their representation on our marketplace or for their own site.
Speaker Change: This is actually their own website. So when we have a merchant join US for example last month, we sent our first major enterprise merchants lives and we expect that they will process over $100 million annually with us that is processing, that's actually taking place on their checkout on their website, but that's not referring.
Speaker Change: Through their experience on the public square marketplace. This is very advantageous for us obviously, because we have the opportunity to process the payments on the merchants' own website, where they conduct to the vast majority of their own transaction.
Speaker Change: And it also allows for a unique marketing opportunities, where we can actually help a business is that having a presence on our own website, but have their own website also we can actually monetize transactions and bring awareness to those business vendors both on our site as well as off our site as.
Speaker Change: A more holistic partner, so we no longer see a merchant Jeff that they're represented on public square or utilizing the Cordova buy now pay later technologies. We actually also get to have a major part in the merchant journey on their own website as they conduct the growth of their own business. That's number one so when we say over 1 billion and expected contract.
Speaker Change: The G M V volume.
Speaker Change: What we mean is that that's a $1 billion of sales annualize that are taking place on these businesses on websites.
Speaker Change: To address your second question the consumer experience on the marketplace that you won't notice any changes we still have our one cart checkout and consumers are still able to transact through that checkout system merchants are also able to link their products to our checkout system, where we take a blended take rate of about 8% on those transactions that consumers.
Take part in with our merchants that are listed with our public square technology on the marketplace.
Speaker Change: And the final thing that I would mention is that while you won't notice any changes that we have planned for that consumer experience. The merchant experience, we plan to evolve as we head into 2025, one challenge we've had on the public square marketplace to date is that we make our money on the marketplace side of.
Speaker Change: Things, we generate revenue from either advertising or from the take rate at the point of sale checkout and public square dotcom, but what happens is that there are a large quantity of businesses on our platforms that have a listing but do not have their products linked to our checkouts. So historically, we've had a hard time monetizing those folks because you can have.
Speaker Change: A free lifting that doesn't necessarily mean, you're advertising it doesn't necessarily mean that you are linked to our one card checkout. So in my remarks earlier in the earnings call when I talked about us trying to create.
Speaker Change: Our real priority here in the next two quarters for developing an affiliate fee based approach that's really targeted toward the merchants that have a presence on our site, but don't have products linked to our checkout. Our goal as we move forward with the marketplace is that we would be able to create an affiliate system where merchants live.
Speaker Change: Their company on our public square Dot com marketplace consumers can see that lifting and even if the consumers go off to the merchant own website, we are still monetizing that transaction by essentially acting as an affiliate of the merchant.
Speaker Change: So in recap obviously the payments technology is actually primarily utilized for the merchants on website. The consumer experience at checkout, you will not notice any changes and the merchant experience won't notice any changes on the public square marketplace, but we are developing new ways that we can actually attract affiliate fee revenue.
Speaker Change: The merchants that may not be selling on our own sites, but have a lifting on our site that we are generating traffic for I hope that's helpful clarity.
Speaker Change: Is there much one one quick follow up in the main.
Speaker Change: What's the the the main selling point, because presumably a merchant isn't someone else for payments. So to switch to you guys. What's what's your main selling point, what's resonating and then finally just wanted to double check.
Speaker Change: The brand strategy is that unchanged through all this thanks.
Speaker Change: Thank you Barry Yeah, so on the on.
Speaker Change: On the.
Speaker Change: I'll start with the brand strategy that might need you to remind me of the first question brand strategy is unchanged.
Speaker Change: We are continuing to grow every life, we're grateful for the performance over the past few months as we look at not just Q3, but also the month of October as we actually eclipsed our first month.
Speaker Change: Months of over $1 billion in sales.
Speaker Change: And we're looking forward to the way in which that the data from our marketplace customers continues to inform how we access the brand division moving forward as a reminder, we launched every life because we were made clear from our consumers on the public square marketplace that they were seeking a LIFO.
Speaker Change: Firming diaper and widespread we have many moms in our audience that were specifically requesting this we created the brand to be able to meet their needs, which allowed for us to deploy this brand to market without overwhelming.
Speaker Change: The customer acquisition costs and the first question you asked related to the main selling points of payments that are actually giving merchants a lot of confidence as they leave their existing provider and joined us in this endeavor.
Speaker Change: Break it down into two categories number one I would talk about our cancel proof promise.
Speaker Change: So the reason that the firearms industry. For example is so unaddressed and ignored and because many financial institutions are timid or afraid or completely opposed to working with the firearms and shooting sports industry. So we have great companies on our platform great companies that are currently utilizing cordoba that had been canceled it.
Speaker Change: By over three payment processors, it's a story, we hear way too often and so when we're able to come to a merchant and say we have a cancel proof promise. Once you are in the family you're not leaving we're not canceling U and we actually have multiple points of redundancy to ensure that that would never happen for many of our partners.
Speaker Change: We can attract a merchant through the promise of feeling like they have a real sense of peace of mind. They can sleep easier at night, knowing that their experience at the checkout is protected by a merchant that shares the same love for their business that they do the second thing that I would address is actually that our technology.
Speaker Change: Especially given the way that we handle consumer data and allow for the merchants actually independently store at through a token is encrypted vault is the main major differentiator many.
Speaker Change: Small businesses are generally faced with one of two options as it relates to customer data. They can either allow the processor to storage or they can store it independently on their own the problem with storing it on their own and they're having to handle all the compliance burden of doing so so it sometimes gets easier to just trust the processor to store. It just becomes a major problem, though when you want to.
Speaker Change: Leave your processor or you no longer feel like the process or has your best interests in mind.
Speaker Change: And so what we've allowed for the merchant to actually do is utilize a vault that stores the customer information and merchant data independently, that's actually not held by us and it gives the merchant more autonomy to be able to trust that their consumer data is safe and secure and fully encrypted without.
Speaker Change: Having to handle the compliance burden.
Speaker Change: This is a major win and has attracted many merchants to come and join our payments platform I'd kind of add on one more piece here and that's that many businesses because they operate in spaces that are deemed more reputation only risky. So again I'll use firearms as an example, given that in the shooting sports industry is a large chunk of our early volume.
Speaker Change: Here, what financial institutions will do that are willing to work with the merchants as they will charge them serious premiums in terms of the take rates because of the reputation of risk that they associate with firearms for us we don't see any reputation a rescan firearms, where red blooded Americans the value of the second amendment and because of that we do not.
Speaker Change: Charge, a premium for merchants that are wanting to exercise their second amendment rights and help their customers do the same that's been a major selling point because it's allowed for us to not only provide the cancel proof promise and reliable technology with multiple points of redundancy and has also allowed for us to say lets save you money in the process because we're not going to charge you a premium just because you happen to sell firearms. This sales.
Speaker Change: Patch has worked incredibly well as we've attracted these merchants, especially when you build upon the fact that we already had existing trust developed with them because they were either a buy now pay later merchant with us already or a public square merchant with us already.
Speaker Change: Great. Thanks, so much for all the insight I appreciate it.
Barry Haimes: Of course, thank you Barry.
Barry Haimes: Okay.
Speaker Change: And we don't have any questions on the conference side for now I'd like to hand things back over to William Kent. Thank you.
Speaker Change: Thank you Ian will now address a couple of questions that we received through the technology platform before closing up the call.
Speaker Change: Our first question is.
Speaker Change: Prior to your purchase of <unk>, we were told that public square would reach cash flow positivity within the next quarter.
Speaker Change: After the purchase of Qdoba. This milestone is expectedly moved where do you place it now and just growth limited prior to hitting this milestone.
Speaker Change: Great question, I Love to say technology platform by the way, it's a great opportunity to interact with all of you. So as we look to forward quarters, we would encourage everybody to use that type technologies platform, we value at quite a bit and it's great to hear from our shareholders.
Speaker Change: This question is exactly correct before the acquisition of <unk>, we had anticipated cash flow positivity actually this year.
Speaker Change: And that was due to the asset light nature of the marketplace and the ability that we had the ability to generate a profit from the marketplace.
Speaker Change: We say profits, obviously, we mean cash flow positivity.
Speaker Change: Without an increasing level of spend.
Speaker Change: Post the acquisition of Cordova and truly the refinement of our vision to be able to capitalize on the payments opportunity and own the entire checkout stack either through processing or through buy now pay later technology. We discovered that we were onto something special here and so we decided over the last six months to invest in the development of what.
Speaker Change: Become a major revenue and profit driver for us in the months and years to come so over the last six months, we made a strategic decision to push out our cash flow positivity milestone to 2025 in order that we could actually experience exponentially more growth than we would have been able to with just the market.
Speaker Change: And brands alone, so and recap our when we initially anticipated the castle of positivity in 2024 that was before the Fintech focus post the Fintech focus we have made the strategic decision as management and our board of directors to say, let's have that milestone take place in 2025, which to answer the latter part of your question.
Speaker Change: Allows for us to actually ride the balance of seeking profit while maintaining in a state of hyper growth. So as we look to 2025, we do not believe that our approach handicaps growth at all we actually believe that our approach will allow for us to find the sweet spot of generating profits while refusing.
Speaker Change: To handicap growth. We're excited about the next few quarters and to be very specific we would anticipate that each of the segments on a stand alone basis would achieved cash flow positivity in 2025 with cash flow positivity across the entire operating company in the latter half of 2025.
Speaker Change: Thank you. Michael next question, we have is about merchant feedback as it relates to our new payment system. I know you just answered some of that but if there's anything more you want to add on that level.
Speaker Change: We're really grateful for the feedback we've received thus far.
Speaker Change: Tell you that the the folks that we work with as merchants are the best of America. These are people that love their business. They want to operate with excellence and integrity and I hope that they feel the same about how we conduct our business practices as we've grown and relationship with them. The feedback has largely been centered around the intentionality of our engineering team.
Speaker Change: <unk> the excellence of our sales force the values alignment of our platform and ultimately the cancel proof promise. We can provide our merchants have communicated that they feel a great deal of comfort knowing they're operating with an entity that is not ignoring them that is not abusing them and does not see them as a high reputational risk actor, but instead.
Speaker Change: Sees them as businesses that are fundamental to the American way of life because that is how we feel it has the benefit of being true and so when we're able to actually put action behind our words and showcase to them with a reliable technology multiple redundancies and focus on security and privacy.
They have communicated a level of confidence that they feel going forward that they have not had previously with their existing service providers in the financial technology ecosystem.
Speaker Change: Again, we're grateful for this feedback and we're excited for much more of it to come in as we head forward into 2025.
Speaker Change: Thank you Michael and our last question from say Tech that will take it.
Is around obviously the election and how.
Speaker Change: How do we feel about that impact on our business going forward.
Speaker Change: That means two values alignment et cetera.
Speaker Change: Yeah I Love. This question, obviously this mirrors a little bit of what Darrin asked earlier, so I won't elaborate too much I'll, just say that I feel a great deal of hope.
Speaker Change: I think that as we head into 2025, the United States' population both through the electoral college and the popular votes have made it clear that the incoming administration has a mandate a mandate to embrace freedom to embrace prosperity for the American business community and to prioritize in America first agenda given that.
Speaker Change: We as a business prioritize those same thing.
We feel like we're going to have a movement at our backs and wind in our sales as we look forward to future growth. So I feel a great deal of confidence coming out of the election.
Speaker Change: I'm going to feel an even greater level of confidence after January 20th and so far in the first week as we have seen growth to our own company just through the excitement of the American people looking to vote with their dollars and engage in companies that are prioritizing the same sort of values that they actually voted at the ballot box.
Speaker Change: It gives me a great bellwether for what we can hopefully anticipate over the course of the coming years. So I think America is at the dawn of what could potentially be a very special and unique Golden age and I don't think it's any coincidence that America will be celebrating its 250 S birthday over the course of the next four years and we look forward to hosting a little bit of a party of our.
Speaker Change: So we're excited about the wins in the political environment more importantly, we're even excited about the win for our small businesses in our ecosystem. They feel a great deal of hope as they look forward and hopefully the economic pressure on their shoulder eases with the incoming administration.
Michael Michael: Thank you Michael I will hand, it back to you for any closing comments.
Michael Michael: Thank you well, thank you Brad and thank you to all shareholders and interested parties that we're tuning into the call. Today. It is an honor to speak with you. All we are focused on are embracing the values that have made our country's strong and ultimately growing the American economy through the power of patriotic commerce that embraces meritocracy.
Michael Michael: <unk> Excellence innovation I'd love for our country and our love for community. We believe we are serving an unaddressed market that is enormous and thankfully due to the caliber of our team and the investment in support from shareholders and interested community members, we feel a great deal of confidence as we look forward into 2025, we look forward to.
Michael Michael: Most.
Michael Michael: Pressing our Q4 results we cannot wait to report those to you all in 2025, and we hope you have a fantastic remainder of the year. Thank you all for joining.
Michael Michael: Yeah.
Michael Michael: [music].
Michael Michael: Yeah.
Michael Michael: [music].
Michael Michael: Okay.
Michael Michael: Okay.
Michael Michael: Yes.