Leafly Holdings, Inc.

ending today's Leafly 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. At this time, I'd now like to turn the conference over to our host, Kenan Zoff with the Blue Shirt Group. Kenan, please go ahead.

Good afternoon and welcome to Leafly's fourth quarter and fiscal year 2021 earnings call. We will be discussing the results announced in our press release issued today. With me are Leafly CEO Yoko Miyashita and CFO Suresh Krishnaswamy. Today's call will contain forward-looking statements which are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the services offered by Leafly, the markets in which Leafly operates, business strategies, performance metrics, industry environment, potential growth opportunities, and Leafly's projected future results and financial outlook. 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 update these statements. Forward-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 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 and Prospectives Consent Solicitation Statement, filed by Leafly, formerly known as Merida Merger Corp. 1, with the SEC on December 10, 2021. Our Proxy Statement and Prospectives Consent Solicitation Supplement, filed with the SEC on December 22, 2021. Our proxy statement perspectives consent solicitation supplement filed with the SEC on January 18, 2022, and our other periodic filings with the SEC. 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.leafley.com. With that, let me turn the call over to Yoko.

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 Leafly team for their hard work and continued dedication to our mission, helping people discover cannabis. 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. 2021 was a record year for Leafly 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. We added 1,600 retail accounts in 2021, an increase of 44% over 2020. We rebuilt our brand subscriptions product from the ground up and launched new advertising products for retailers and brands. We also launched in-app ordering capabilities in our iOS app and reached our 10 millionth app download. To accomplish all this, we invested across the Leafly team, growing total headcount by 70% over 2020. 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. Leafly, 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 to reach our consumer audience along every step of their cannabis 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 product strain and store reviews, retailer menus, and online ordering for delivery or pickup through legal retailers. 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. 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 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. We believe Leafly can drive a more reliable shopping experience by helping consumers understand what they'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. 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. The legal cannabis industry is estimated to be $40 to $50 billion in sales by 2025, which is double the market size of 2020. By 2030, cannabis is estimated to grow to $70 billion, with some estimates as high as $100 billion in sales. 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. 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. Today, approximately 53% of legal retailers in North America are paying subscribers on the Leafly platform. 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. 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. 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. The investments we've made to date have delivered proven top-line results and expanded our subscriber base of retailers and brands, 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 drives ROI for our retailers and brands. So let's talk about growth in our subscriber base. Cannabis is a local market business that requires local go-to-market teams. 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 legally well to increase monetization from retailers as competition for new customers increases. And we're staffed to execute this acquisition strategy now at a local market level. 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 Leafly marketplace, attracting more customers and realizing greater ROI. 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. 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 improvements to our advertising platform and tools. 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 placements. These performance ad 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 22. 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 capabilities. We're also investing in our B2B services and tools that make engagement with the Leafly platform more efficient and valuable for our retail and brand customers. 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 brands partners to engage with our consumer audience, and we'll continue to invest to reduce friction for our customers. 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. 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 a stickier consumer experience. 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. In 2022, we are poised to deliver a consumer shopping experience that harnesses the breadth of 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 Leafly. We're also focused on delivering richer experience through our native app, where some of our most engaged consumers interact with Leafly. We'll also look to reward our most loyal customers with loyalty programs. We expect to generate increased ROI for retailers and brands through these investments in our consumer experience. 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. In summary, we couldn't be more excited about the prospects for Leasley 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. We're so delighted to have you along with us on this journey as we seek to help millions more discover cannabis. I'll now turn the call over to Suresh to provide you with details on our financial performance.