SpringBig Holdings, Inc.

Good day and thank you for standing by. Welcome to the Spring Big second quarter 2022 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. Please be advised that today's conference is being recorded. I would like to hand the conference over to Spring Big Investor Relations. Please go ahead.

Thank you. Hi, everyone, and thanks for joining our Q2 earnings conference call. Joining me on the call today are Jeff Harris, our CEO, founder, and chairman, and Paul Sykes, our CFO. By now, everyone should have access to our earnings announcement. This announcement is also on our investor relations website. During this call, we'll make forward-looking statements, including statements about our business outlook, strategies, and long-term goals. These comments are based on our plans, predictions, and expectations as of today, which may change over time. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors outlined in our 10-Q that will be filed with the SEC. Also during this call, we will discuss certain non-GAAP financial measures. These non-GAAP measures are not intended to be a substitute for our GAAP results. Please refer to our earnings release on our Investor Relations website for a reconciliation of GAAP and non-GAAP financial measures, as well as additional context on our key operating metrics. And finally, this call in its entirety is being webcast from our investor relations website at www.investors.springbig.com. And an audio replay will be available on our website in a few hours. With that, I'd like to turn the call over to Jeff.

Thanks, everyone, for joining us today on what is Spring Big's first quarterly earnings call as a public company. We're thrilled to have just completed our merger with Tuatar Capital Acquisition Corporation in June. and to be listed on the NASDAQ under the ticker SBIC. We are excited to step on this larger stage and discuss our results for the second quarter and provide guidance for the balance of the year. Before I delve into our results, I wanted to take a moment to acknowledge and thank all of the employees at Spring Big responsible for building, selling, and managing the offerings that have allowed us to be where we are today. We couldn't achieve our results without the collaborative effort and support of the entire Spring Big family. Our teams have been singularly focused on operational execution against our strategic pillars and growth priorities, and we're excited by the opportunity and results we're seeing in our end markets. We had a strong second quarter. Our Q2 revenue came in at $6.6 million, representing growth of 13% year over year. As a bit of context, we are seeing two key themes that are providing headwinds to marketing spend across cannabis. First, Inflation is negatively impacting discretionary spending by consumers in the U.S. and Canada. Second, this lower consumer demand is causing oversupply in many key markets, driving a decrease in retail prices, pressuring margins, and increasing scrutiny around marketing spend. Despite these pressures, our Q2 revenue grew more than 3% sequentially, a positive sign of momentum into the second half of the year. Our growth in Q2 is underpinned by year-over-year subscription revenue growth of 35%, continuing the strong momentum we saw in Q1. As Paul will cover later, we are primarily a subscription-based SaaS business, which provides predictability and increases visibility into results. We also saw continued strength across all of our key operating metrics, with our net revenue retention rate, again, solidly above 110%, and growth in both number of clients, and locations. While our focus is on accelerating top-line growth, we remain committed to driving leverage through a balanced investment approach and plan to achieve EBITDA break-even during 2023 and are fully funded to do so. For many of the investors and analysts dialed in today, we've gotten to know you over the years, but since this is our first call as a public company, I wanted to take some extra time to walk through who we are and what we do. Leveraging my decades of experience in customer relationship marketing, in 2014, I launched Spring Big as an industry-agnostic digitized loyalty platform. Within two years, we had grown to several hundred active and paying customers, but as we analyzed our customer cohort, it became quite evident that cannabis retailers were leveraging our platform much more frequently than other industries. What we discovered was that although a fast-growing market, cannabis retailers and brands face specific challenges to broaden their exposure and had limited avenues to reach their large and growing customer base. Realizing that our platform had the unique ability for retailers to boost foot traffic and drive a material increase in average ticket size, beginning in 2017, we made the decision to go all in on cannabis with an eye towards other industries that face similarly restrictive marketing challenges. Fast forward to today, We have over 1,300 clients in more than 2,800 retail locations, addressing more than $7 billion in GMV and delivering more than 2 billion messages annually. We have expanded into other areas, including analytics, and released modules for our retail clients to easily collect consumer feedback and a suite of automation and trigger tools to drive a true one-to-one communication experience between the retailer and their customer base. with many of our clients utilizing our platform as their primary customer CRM. Further, we expect significant TAM expansion as new states continue to issue licenses with material runway for market share gains through our land and expand strategy. Lastly, tailwinds from legislative change are suggestive that we are in the early innings of cannabis retail market expansion. We have two primary segments in our business, a retailer platform and a brands platform. A retailer platform provides retailers the tools that they need to create and manage a successful loyalty program, along with instituting a data-driven approach to how they connect and engage with their customers. Utilizing a sophisticated data insights dashboard, the platform allows retailers to access campaign data and leverage robust analytics. From a customer standpoint, We offer a suite of integrated consumer-facing products, including program enrollment to ensure compliance, a rewards wallet, and customer feedback portal, all centered around the retail brand through an intuitive UI. We launched our brands platform in 2020 to help cannabis brands more easily connect with their consumers. We're uniquely suited for the selling motion by allowing brands to connect directly with customers through our retailer platforms. benefiting both the retailer by driving traffic to their locations and for the brand, increasing brand awareness and influence. To date, we have more than 100 brand customers on our platform with ROI on these campaigns averaging above 90%. NetNet, we're proud to be the largest loyalty platform in all of cannabis and see an incredible opportunity ahead to increase our wallet share and ROI for retailers and brands. Against this backdrop, I would now like to discuss three areas that we view as key pillars of future growth. First, a network effect that we feel is materially underappreciated. Second, a high growth subscription revenue component that will increase predictability in our revenue stream. And third, an emerging opportunity to monetize the troves of data we have captured. Starting with the network effect, which has become a powerful flywheel between our retail and brands platforms, As mentioned, the ability of cannabis brands to connect directly with consumers has faced challenges due to the retailer distribution model and restrictive marketing guidelines in the industry, until now. In 2019, we began development of a purpose-built co-marketing platform that brands can use to target customers who are shopping at retailers who are selling their products through the SpringVic platform. This co-marketing platform is a unique differentiator in the cannabis industry. providing brands the ability to deliver messaging content to consumers and simultaneously incentivizing retailers to use the provided content. This marketing channel offers a powerful and measurable method of connecting brands with consumers and ensuring that they are seeing the market content. Since we rolled out this co-marketing platform in the middle of last year, we have over 100 brands leveraging this platform as one of the most effective uses of their marketing spend, allowing them to touch the consumer in ways that were not previously possible. The network effect is the true definition of a win-win for both our retailer and brand clients, leveraging consumers who already signed up for their favorite retailer's loyalty programs and driving incremental spend. As a result, brands do not need to worry about building their own database and can capture immediate ROI. Importantly, this form of marketing also provides our retailers with co-op marketing dollars for their campaigns, subsidizing retailer marketing budgets. With a directly marketable database that has grown to over 35 million consumers, this virtuous cycle is playing out each and every day in real time, and one that we think is still in the very early stages. The rapid growth of our flywheel has enabled us to capture meaningful data that is unique to our industry, providing our clients with the insights that they need to be smarter about how they market to their targeted constituency groups and drive their desired results. Moving on to the core component of our revenue, high growth subscriptions. Our retail clients enter into subscription contracts at one year or longer, largely tied to messaging volumes. Superior results from campaigns are driving excess use, often leading to expansion in contract size well before renewal. This clear pattern of increased subscription contract size is creating a more predictable revenue stream, and we expect visibility into results to continue and increase over the long term. Third, I'd like to discuss the data opportunity. Although it's somewhat cliche, it has been said that data is the new oil. Similar to oil, data is dirty, and we have been hard at work organizing the vast amounts that we have captured for immediate and actionable use. We currently have nearly 900 million records, which we believe to be among the most complete data sets in the industry. We leverage it every day to help our clients be smarter about who they're talking to, what they should say, and when they should be saying it in order to generate the most profitable results for their campaigns. Further, the post campaign data analytics that we're able to share provides meaningful insights on how our clients should be thinking about future campaigns in order to drive even higher ROI. Looking ahead, we intend to market our data to third party companies in order to make data driven decisions. Although currently benefiting cannabis brands and retailers, we see a growing opportunity to leverage our data for cannabis investors CPG companies and cannabis adjacent industries that want to better understand the cannabis consumer and how they can most effectively market to them when ready further by reaching beyond the marketing departments of our clients and into other areas of their businesses our offering becomes less discretionary and stickier with our clients our focus over the last several months has been on executing against these strategic priorities and we had several notable client and product wins that I wanted to touch upon first a vertically integrated operator that initially onboarded with two states in 2018. It's now leveraging our platform in over 100 locations across 10 states. Our engagement with this client spans both their retail and wholesale operations, with their custom loyalty apps seeing a very high adoption rate, reaching the top 20 globally for medical apps in the Apple Store. Utilizing our brand's platform, this client has leveraged our platform since early Q1 of this year to connect with consumers in multiple states where their retail partners have a wholesale presence, resulting in increasing brand recognition and engagement for both parties, providing a great example of our flywheel in motion. As our customers and partners begin to realize the value proposition inherent in our platforms, expansion and upsells becomes a natural part of the selling motion. A client in the Midwest operating more than 30 retail stores has leveraged SpringFix platform to amass several hundreds of thousands of customers, driven in part by our capabilities running referral networks. We note loyalty program penetration of over 94% of this client, well above the average of 75% in the state, with average spend and store visits both double the state average. Reflecting the ROI of our offering, earlier this year, this client extended its contract for another year in a six-figure ARR deal, nearly eight times its prior year level. Lastly, a nine-store vertically integrated operator in Washington chose Spring Big in a competitive displacement worth approximately $100,000 in ARR. Due to its sizable textable database, this client was facing persistent challenges around text deliverability and customer service and made the decision to seek a new platform. Our capabilities and infrastructure for supporting large-scale clients offered a clear advantage supported by brand awareness and cross-team relationships that helped influence their decision to switch. This customer plan to utilize our complete loyalty program offering, including a custom native app, omnichannel messaging, our brand's marketplace to run co-marketing campaigns, and our data products to gain insights into performance and program results. They will also be signing up brands under their umbrella to reach customer shopping at other stores in the Spring Big Network. As we have seen across our client base, we anticipate this network effect to generate higher revenue campaigns across their network of stores. Our business model has proven out what we have set out to accomplish years ago, delivering category-leading customer loyalty and marketing automation solutions and tools for the cannabis and markets. Today, we offer what we believe to be the preeminent technology platform for cannabis in a highly fragmented ecosystem, driving amazing value to our retail and brand clients as they scale their businesses. Looking ahead, we see a tremendous growth trajectory as we continue to leverage the network effect flywheel between retailers and brands with additional targeted opportunities to monetize our troves of data collection. So in summary, we have made our debut onto the public markets. with an incredible group of investors supporting us. Regulatory changes at the state and federal levels are working in our favor, and we think there is a tremendous greenfield opportunity across our end markets. These opportunities are incredibly exciting to us as a company, personally invigorating, and increases my confidence in our ability to realize our growth priorities. With that, I'd like to turn things over to Paul, who will walk through our financial results for the second quarter and discuss our outlook. Paul, take it away.

Thank you, Jeff, and thanks again to everyone for joining us. I will start by providing a brief overview of our financial model, and then I'll go through our second quarter results before moving on to our guidance for 2022. We provide best-in-class customer loyalty and marketing automation solutions for the cannabis end market. Retail clients enter into loyalty and messaging subscriptions with the scale being determined through a combination of database size and messaging volumes. Many clients also incur excess use charges when exceeding the predetermined messaging volumes in a month. And Spring Big has an exceptional track record of retaining and upgrading clients due to the high ROI through use of our platform and our superior client service. In fact, clients often upgrade within a few months of initially subscribing to our services. Spring Big is a fast technology business with 74% of our revenue in the first half of 2022 being derived from 12 month auto renewing contracts. Over time, we expect this to increase as excess use revenue is replaced with larger subscription contracts that are more predictable and higher quality. But note, in a near-term impact from lower excess spend given the macro backdrop. Now on to details of the quarter. Our Q2 revenue came in at $6.6 million, representing growth of 13% year-over-year, underpinned by year-over-year subscription revenue growth of 35%. continuing the strong start to the year following the 35% year-over-year growth in Q1. At the end of Q2 2022, our monthly subscription run rate has increased by 50% year-over-year. We note a 32% year-over-year decline in excess use revenue due to a tough prior year comparison on significant excess volumes from a large customer. We expect a similar decline in Q3 on continued impact from the same customer, followed by improvement as this one-time event anniversaries. Topline growth was driven by strong customer demand, both in terms of new customer acquisition and growth within the installed base. We ended the second quarter with 1,464 paid customers, up 44% year over year, and we added 509 new locations during the second quarter. End of period customer count has consistently grown quarter over quarter for more than 12 quarters, reflecting the continued growing market demand for our platform. Our Q2 net revenue retention rate was 114% versus 93% in the year-ago period and 110% exiting 2021. Dollar-based net revenue retention measures our ability to retain and expand revenue from existing customers in the prior period. Our measurement is calculated as the average recurring monthly subscription revenue adjusted for losses, increases, and decreases in monthly subscriptions during the prior 12 months divided by the average recurring monthly subscription revenue over the same prior 12-month period. We continue to see solid customer retention with the opportunity to try to improve the expansion in the medium to longer term. As we add more products and functionality to the platform, we see opportunities to drive upsell as customers leverage both our retail and brands platforms, as well as the emerging data offerings. Turning to operating expenses, we remain focused on improving the leverage in our business while balancing our investments for growth. Our total operating expenses, excluding merger-related costs, grew 15% sequentially and 56% year over year to $8.4 million. We ended the quarter with total headcount of approximately 170 employees. Sales, servicing, and marketing expenses were 3.1 million for the quarter, representing 47% of total revenue. Sales and marketing expenses increased 6% sequentially, and 27% year over year. While we expect to realize leverage in sales and marketing over the longer term, we continue to add sales capacity to drive growth and capture the large TAM that is in front of us. Technology and software development expenses were $2.9 million in the quarter, representing 44% of total revenue. Expenses increased 10% sequentially and 61% year over year. The growth in this line item is largely due to our continued investment in platform capabilities and new product offerings. G&A expense, excluding merger related expenses, was 2.3 million for the quarter, representing 35% of total revenue and 105% growth year over year. The growth in G&A includes investments in headcount, infrastructure, and other expenses that we have made to prepare for being a public company. Our adjusted EBITDA loss in the quarter was 3.6 million, representing an EBITDA margin of negative 55%. Free cash flow was negative 2.5 million in Q2, compared to a negative 1.3 million last year. And lastly, turning to our balance sheet, we ended the third quarter with 14 million in cash, cash equivalents, and marketable securities. We raised $18 million net of fees and expenses in our business combination with Tuatara on June the 15th of this year. I will now turn to our guidance for the balance of the year. While there is renewed optimism around federal legalization efforts and new states continue to open and issue licenses, uncertainty in the broader macro environment remains. Further, as Jeff highlighted in his comments, cannabis end markets are experiencing industry-specific headwinds, where in various markets across the country, a glut of product is having a negative impact on retail pricing, coupled with a material slowdown in discretionary spending by consumers. We view both these issues as transitory and think that current trends do not reflect the intrinsic growth rate of the industry. However, they are noteworthy relative to a year ago when our original projections were laid out. With that said, We expect to achieve total revenue in the range of 26 million to 29 million for the full year. We expect the continuing growth in subscription revenue, increasing brands adoption and early data sales to drive top line acceleration next year and we anticipate reaching the milestone of positive EBITDA during 2023 and without requiring financing beyond our current cash resources. We plan to offer formal guidance for 2023 when we report our full year results. Speaking qualitatively, Q3 is off to a very nice start with messaging volumes, a metric that is closely related to revenue, reaching record highs in July. In closing, we had a strong execution during our first quarter as a public company, And I would like to take this opportunity to thank the entire Spring Break team for their hard work. We remain excited about the opportunity in front of us. With that, I'd like to open up for Q&A. Operator, please poll for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone. Once again, that's star 1-1. Please stand by. We compile the Q&A roster. And our first question comes from Owen Bennett from Jefferies. Your line is open.

Evening, Jen. Hope all well. Hey, Owen. First question for me, just on the sales guidance. So obviously, originally, we're looking for 38 million. The bottom end of your guidance now would suggest kind of second half flat with the first half. I'm just wondering, kind of, well, Will we get a bit more color on the drivers within that? Is it lower expectations for excess usage in brands? Yes, I just wanted to get more details in terms of what is driving the difference there and is it more to do with kind of excess usage in brands and the subscription revenues by all accounts seem to be trending in the right direction. You're adding more clients and you're adding more stores. Sure.

So I'll start off at a high level, then I'll turn over to Paul who can give you a little bit more color on the details. If you think about the midpoint, so the midpoint of our guidance is tracking about 27 and a half. So we definitely see some uptick that we expect in the second half of the year as compared to the first half of the year. The dynamic that we saw in the first half of the year, we saw our retail clients in particular being more careful about their spend as they were trying to, I think, understand this new world trend. that we're living in and some of the changes that occurred in the first quarter and the second quarter, both in terms of consumer inflation and some of the specific issues that we were seeing in certain cannabis markets. One of the interesting things to note, for the last three months, we've actually seen, as I think our retail clients in particular start better understanding and getting their footing underneath them, we've definitely seen an increase not only in retail spend, but which is driven by message volume, starting in May. So we've been seeing some uptick in May. We saw more in June and even more in July. So we are actually starting to see retailers get comfortable with what I'll call the current normal and starting to spend more aggressively again. Although we wanted to be conservative just because there's so many changes going on to the economy and those projections that we laid out were laid out over a year ago when the world was a very different place, we are seeing some positive momentum going into the third quarter. And let me turn over to Paul to see if there's any more detail that he'd like to add.

Great, thanks. And thanks, Owen. Thanks for joining the call. Yeah, I'd just reiterate what Jeff says, that we're seeing a lot of momentum uh picking up uh subscription growth was 35 in in both q1 and q2 so that's encouraging and as you say that's uh that's pretty much on on track uh we're seeing you know a little bit of softer momentum in excess use particularly in the first half of the year we're seeing that improve slightly uh as we said, messaging volumes were at record levels in July. And while they're not an exact proxy for revenue, they're a pretty good proxy for revenue. So that's encouraging. And I think what that is showing is that the value of our platform actually increases as the economy gets tougher and as our clients look to retain customers what are arguably the most valuable customers, which are repeat customers. So I think we're seeing it starting to play through as we'd expect, but the first half of the year has been relatively quiet due to the economy and the particular impacts on the cannabis sector. If you take the midpoint of our range, then growth in the second half would be about same level as as growth in the first half in in the mid mid teens and obviously we'd uh we'd hope to uh to at least achieve that and and be closer to the top end of the range well thanks guys and just one follow-up there so you mentioned obviously less marketing spend in the current environment makes sense with some of the smaller clients i'm just curious what sort of

trends are you seeing with your larger operators, and most notably the MSOs? Are they also pulling back on spend, or are they leaning into it a bit more now that they obviously realize the ROI on this sort of spend?

They are now. So they're leaning into it now. I think what we were seeing was in the first half of the year, I think everybody, larger clients as well as smaller clients, were trying to understand the dynamics of this new normal and what the impact is that they were going to have on them based on some of the changes in the economy with inflation. But as I mentioned, starting in May and June, we have definitely started to see an uptick again. And as Paul mentioned, July was a record month for us for messaging volume, and we're tracking very well in August as well. So therefore, we're continuing to see that momentum. So I feel like what happened was everyone kind of just wanted to get their footing underneath them, understand what the situation was and what the new normal was. And now that they understand that, we're starting to see a pickup in spend, primarily with the MSOs. So we are now seeing an uptick in spend from those types of customers.

Okay, great. Thanks, guys. I'll see you back in the case.

Thank you. Thank you. One moment for our next question.

Our next question comes from Harrison Vivas from Callen.

Your line is open.

Great. Thanks so much for taking the questions. Just kind of wanted to follow up on churn and maybe hear a little bit more about what you're seeing from your accounts. You know, you've kind of spoken to a recent pickup in May and August. But, you know, some of your competitors have been seeing churn related to out-of-business, you know, clients running out-of-business. So I guess, you know, two-parter, can you kind of quantify how many accounts closed during the quarter? If not, maybe dimensionalize it relative to your new account ads. And maybe, you know, if not, can you just offer a little bit more perspective around the level of trend that you're seeing related to, you know, to retailers going out of business? Thank you.

Sure.

So in the first half of the year, as Paul mentioned in his part of the update, our actual net retention grew to 114%. So we actually saw an uptick in net dollar retention as compared to end of last year and a year ago. So we are seeing some positive trends there. There are definitely, what I would say, some of the smaller accounts or the smaller account bucket, you might be seeing a little bit more churn than we saw before, particularly in Canada. We're seeing a tougher environment in Canada. But we are seeing some churn with smaller accounts. But fortunately for us, we put a lot of emphasis on focusing on the larger customer, the MSOs and the larger operators. So you very rarely will see churn at that level. And because of the subscription upgrades that we're seeing and the value that I think these clients are seeing in the platform, that's what's driving our net retention growth. So We had a net gain of customers, although I don't have the exact number of accounts because we measure more net dollar retention than we measure accounts or logo retention, but we know for sure that we had another growth in the quarter in terms of net accounts, so we know we grew our account base on top of growing our net dollar retention. Paul, anything to add to that?

Yeah, no. Hey, Harrison. The trend that we see, and I think this is what you're alluding to, that you see it in other businesses as well, is is in the smaller operators where the economic conditions put them under pressure and we're very conscious of seeing a little bit of churn there and also being able to collect the receivables from those guys where there's a little bit of pressure. But overall, as Jeff said, we measure net dollar retention and that has gone up compared significantly to where it was this time last year and even compared to where it was at the end of December 21.

Great.

That's helpful. Just kind of switching gears as we look at December 21.

Great.

That's helpful.

Just kind of switching gears as we look, and look, I know it's far out, but as we look to your expectations for the acceleration revenue growth in FY23, Jeff, I know you laid out those three pillars of growth. Can you kind of maybe just bucket out how you see each contributing to that growth and how you're kind of managing your expectations internally?

Yeah, sure. So we actually believe the brand retailer kind of network effect opportunity is probably where we're going to see most of our growth because what we see happening with that network and that flywheel is as we add more retailers and they get brands excited to want to participate with them and co-market with them, it actually happens in the reverse as well. As we add more brands, we're seeing more retailers get excited because we have more brands on the platform that can co-op the marketing expense for the retailer. And especially now where we're going into this different economic time than we've seen before, having the opportunity for brands to co-market marketing spend for the retailer is a usually important piece for a lot of our retailers because they have the ability to then stretch their marketing budgets and do more with the same or even less because they get brands to participate so we see a lot of upside coming next year from that network effect from an increase in brand retailer activity due to the brand's co-marketing platform and then although very new we do expect an opportunity to start leveraging the data that we have. So that's a young area of the business for us. We're just really kicking that off, but we do believe that that's going to start picking up steam next year as well.

Yeah, and in terms of an overall growth rate, Harrison, as we've said, subscriptions are growing at 35%. They did in Q1 and Q2. So if we maintain that growth rate, but just need to reverse the the decline in the excess use rate, and then we're getting a pickup in the overall growth rate. So it's really that excess use was particularly high in 2021, and we're suffering in terms of growth, the impact of that now, but we see that stabilizing going into 2023, which together with the subscription growth is going to give us a nice pickup along with brands growth as we go into 2023.

Okay, good. That's helpful.

And I guess, Paul, just to follow up, so I know you called out, I guess, similar levels of reduced excess use in 3Q, but can you speak to what level of recovery is embedded into your 4Q expectations for, I guess, what's embedded into the 2022 guide? Thank you.

Yeah, I'm still, I mean, we were down, what, 32% in Q2. I think Q3 will probably be similar, year-on-year reduction. And then it starts to pick up a little bit in Q4. But I still think we're down in Q4 compared to last year. So for the year overall, I think the excess will probably be down around 20% to 25% year-on-year. Good.

Thank you. Thank you very much. I'll get back to you. Thank you. One moment for our next question.

Our next question comes from the line of Pablo Zolanek from Cantor Fitzgerald. Your line is open.

This is Matthew Baker on for Pablo. Thank you for taking our questions. Can you remind us of your geographic footprint, either your top five states or key states contributing to 80% of revenues at present? That'd be very helpful. And then would you be able to differentiate your loyalty services from what Alpine IQ and Spro can provide? Thank you.

Sure. So in terms of the competitive set, there are a number of differences, but I'll focus in on a couple. Number one, the loyalty technology offering that we've built, our clients tell us provides greater functionality, more robust, We have integrations with more point of sales than either of those two competitors, both good companies, by the way, but we have more integrations than both of them. And then a key differentiator is we have a special expertise in helping clients get their messages delivered into the smartphone of the consumer. And by far and away, our ability to make that happen and do that on behalf of our clients really sets us apart because at the end of the day you know being in a restrictive marketing type industry that we're in helping our clients get their message delivered to the handset or the smartphone of the consumer is usually important to them and due to the expertise that we have and quite frankly some of the secret sauce components that we have in making that happen we do a better job at that than any of our competitors which really you know differentiates us from those guys. Again, both good companies, both do some good things, but those are some of the differences I think that you could point to between us and those guys. And I'll turn it over to Paul for the other part of the question.

Yeah, and in terms of geographic spread of revenue, we don't have a concentration in any particular states because obviously as a technology business, we're operating across all 38 states that have either medical or adult use programs. The largest state, not surprisingly, is California, but it's only about 15% of our revenue. And interestingly, we're actually seeing slight increases in the revenue out of California, rather than declines from California. And I think that talks again to the point we made earlier, that as the economy gets tighter, then the value of our platform, given the high ROI the clients derive from it, the value is greater and they see this as very worthwhile marketing spend.

Thank you for that. And then just for my follow-up question, regarding your offering to the brand owners, how does that really work? Do you guys have to subsidize the retailer or is the brand offering only for those doing direct delivery in the states like California? Just trying to get a better understanding on how it actually works.

Thank you. No, it's a good question. And thank you because the more we could talk about this platform, the better we are. So the brand platform is very unique in that what we're doing is we already know through point of sale data which brands are being sold in which retailers. So what we do is we give brands that are selling into the retailers that are already on our platform, and we're installed in over 2,800 locations across the country. We give those brands the opportunity to serve up messaging content to the retailers that are selling their product. And then if the retailer wants to grab that content and include it in a message that they're going to send out to their consumers that have already enrolled into that retailer's loyalty program, The brand pays for every consumer that receives that message, and the retailer has that message subsidized, meaning the retailer gets that message for free. So the quid pro quo or the win-win in this platform are brands have the ability to create content, serve it up to retailers that are selling their product to gain access to those retailers' consumers that they don't have the ability to do so directly because they don't really have those consumer databases because of the distribution model that is prevalent in most places in cannabis. And so they win by having access, not only access, but getting their content into the smartphone of the consumer via the text feed. And then on the other hand, the retailer wins because they get great content developed by the brand that they then have the ability to leverage in their messaging. So their messages look better, look more professional. And then on the other hand, they get those messages subsidized by the brand. So therefore, if we think about it this way, we're facilitating the ability for brands to serve up content to retailers. We charge the brand X. We give the retailer that message for free. Obviously, the arbitrage of what we charge and what we give is healthy for Spring Big, so it's going to drive a lot of incremental revenue for us. And on top of that, give retailers a real interesting benefit as well as the brand.

Thank you for the color.

Sure. Thank you. One moment for our next question.

And we have a follow-up from Owen Bennett from Jefferies. Your line is open.

Hey, guys. Yeah, just had a couple of follow-ups, please. Firstly, just building on the last question around brands, could you talk a bit more around how that part of the business is trending this year and how many campaigns are running now versus the beginning of the year? Is it going kind of on the trajectory that you were hoping or are we seeing a bit of pressure there as well?

No, sure. So a couple interesting stats on that. Number one, we're seeing the average revenue per campaign has more than doubled from just about three or four months ago. So we're seeing an average revenue per campaign closer to $600 for brands, where a few months ago it was in the $250 range. So that's a very important stat that we're tracking. Also, we've seen the number of campaigns in the month of July more than double. from the month of March so we're seeing month over month increases not only in the average revenue per campaign but the number of campaigns so we are we're seeing some really nice traction on the brand side both in terms of revenue per and the number of campaigns the other piece we're seeing we're seeing more brands run campaigns so we're seeing more even though a brand signs up they don't necessarily have to run a campaign on a regular basis we're seeing probably double the number of brands running campaigns on a regular basis and then Lastly, we're seeing more retailers take advantage of it. So all of the trending on the brand side is good. It continues to grow month over month, quarter over quarter. So we're excited for where it's going.

Great. Thanks, Jeff. And then just one question I keep getting from investors. It's just around the warrants and any updates and plans for those warrants.

I'll turn that over to our table CFO to answer.

Well, no immediate plans. I mean, we will look at potentially doing something with the warrants. Obviously, having 16 million warrants out as part of our cap chart is a legacy of being a DSPAC. And in time, we'll probably look to address that. But at the moment, they are, as you well know, substantially out of the money.

Great. Thanks, guys. Appreciate the time. Thank you.

Thank you. That's all the time we have for Q&A today. And I'd like to turn it back over to management for any closing remarks.

Again, thank you for joining us on our first earnings call as a public company. We appreciate it and look forward to continuing to update both the analyst group that was on today as well as the investor base on a quarter-by-quarter basis. Thank you again. Have a great evening.

And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.