PSQ Holdings Inc

Greetings and welcome to Public Square's third quarter 2023 earnings conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, William Kent, VP of Investor Relations. Thank you. You may begin.

Thank you. Good afternoon, everyone, and welcome to Public Square's third quarter 2023 earnings conference call. Hosting today's call are Michael Seifert, Chairman of the Board and Chief Executive Officer, and Brad Searle, Chief Financial Officer of Public Square. The information discussed today is qualified in its entirety by the Form 8-K that is filed today by Public Square, which may be accessed on the FCC's website and Public Square's website. Today's call is also being webcast, and a replay will be posted to Public Square's Investor Relations website. Please note that statements made during this call, including financial projections or other statements that are not historical in nature, may constitute forward-looking statements. Such statements are made on the basis of Public Square's views and assumptions regarding future events and business performance at the time they're made, and we do not undertake any obligation to update these statements. Forward-looking statements are subject to risks which could cause public squares actual results to differ from its historical results and forecasts, including those risks set forth in public squares filings with the SEC. And you should refer to and carefully consider those for more information. This cautionary statement applies to all forward-looking statements made during this call. Do not place undue reliance on any forward-looking statements. In addition, during this call, we may refer to certain non-GAAP financial measures, including EBITDA, which is referred to as adjusted EBITDA. These measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the company's quarterly filing today with the SEC and the press release filed on Form 8K. I will now open the call to Michael Seifert. Michael, please go ahead.

Thank you, Will, and thank you to everyone for joining this call. We really appreciate it. It has been an incredible journey thus far as a public company. And we're delighted to share with you all the new and exciting updates to our business as we seek to change the country through the power of commerce. We are grateful to be a company by the people, for the people, and owned by the people. And we're certainly grateful that we get to grow with all the businesses and consumers that are a part of this wonderful platform. Today, what I'd love to do is start off by reviewing some financial highlights. I'm going to give a 30,000-foot view of the company as a whole, and then we'll dive into the specific verticals like marketplace, every life, et cetera. So to start, let's review the metrics and some key financial highlights for the quarter, and you can find a more detailed discussion of these topics in our 10Q filed with the SEC today, as well as in our press release, as Will mentioned. To kick off, we saw quarter threes. third quarter gross consolidated revenues of $2.2 million. This equates to growth of 327% compared to the second quarter of this year, which is a 1,529% increase from Q3 of last year. We increased our marketplace revenue specifically, meaning advertising, by 65% compared to Q2 of this year, to $0.9 million, which equates to 602% growth from the third quarter of last year, 2022. We saw net revenue of over $1 million from EveryLife, our wholly owned baby care brand that was launched in mid-July, July 13th specifically. And it's really important to note, by the way, that 71% of this net revenue from EveryLife was subscription-based. which is a great positive sign for the recurring revenue potential of this vertical. Also related to cost and expenses, as a reminder, due to the transaction that took place this quarter, we did go public this quarter, Q3 of this year, as well as outsized research and development expenses associated with the launch of e-commerce, our going forward costs will diminish significantly compared to what was seen in Q3. On the growth side, in terms of consumers and businesses, the growth of these consumers and businesses joining the platform continues at a rapid pace. Over 1.6 million consumer members and over 71,000 small businesses are now using the platform as of the end of the third quarter. As the feature functionality of our platform continues to advance, so too does our usage. For example, we launched e-commerce on November 1st. just about two weeks ago. And we saw an average traffic increase of 3x over the norm during the first two weeks of November because of the increased accessibility of our platform, increased functionality of our platform. These enhancements we're very grateful for and have been working very hard to achieve. While our business is certainly nascent, we've developed a strong track record in less than 18 months since our national launch on July 4th of 2022 that proves our model for growth and diversified revenue is evident and successful. As a reminder, our business exists primarily as a marketplace. This marketplace provides proprietary data about what solutions our consumers are looking for. We can then cross-reference that data with market data to discover opportunities for product creation or acquisition in order to fulfill the needs of our consumers at greater scale. Once we create or acquire our own products, we sell them back into our marketplace with attractive margins and the revenue flywheel spins. EveryLife is a perfect example of this. We launched EveryLife July 13th, and I can say confidently that PublicSquare, the platform itself, which you can find at publicsquare.com or on the App Store or Google Play, was 5x more successful at driving new traffic to EveryLife as a brand than any other marketing endeavors we pursued. In fact, we ran a video on X that saw over 3 million views in its first week, and even still, Public Square was even more successful in driving new traffic, which is affirming to the core business plan that I'm describing with this flywheel here. Obviously, our big milestone that we're tracking towards is profitability. We're very excited to achieve that significant milestone at a quicker rate than it took some of our competitors. There's a few notes that I want to point out here. Profitability for us is not binary. meaning we have multiple paths to get there. Because of the asset-like nature of our business, we actually could achieve profitability this quarter if we were to desire to, but we're actually strategically investing in growth for the future so that we're better suited for the long haul of our business with a solid foundation of businesses, members, and technical infrastructure to maintain the traffic we expect to see into the future. As we look at profitability, we're investing heavily in the developments of these technical features that provide that firm foundation. Like I mentioned, e-commerce was the big one. We've been working all year at that set of features that we launched November 1. And as we move forward into the next year, the focus is more businesses, more members, and more money. Revenue is king heading into 2024. We've built the movement. Now we get to monetize it. When we get to be the brokers at the center of this parallel economy, and monetize the transactions taking place between values aligned businesses and consumers. We know that that is not only a liberating endeavor, it's a highly lucrative one. Also, it's important to note, we are public at a much earlier point in our life cycle than other businesses, which we see as a real strategic advantage that we get to grow with our consumers and businesses and investors alike. We have no debt. We have a clean balance sheet and we are off to the races. And we are proud to reiterate on this call today that we expect our first profitable quarter in 2024. To break it down further, I want to talk about the marketplace specifically. Our e-commerce launch fundamentally changed the game for our company from a user experience, business experience, and revenue potential perspective. While our advertising revenue continues to grow at a healthy rate, It is great to see that we now have the opportunity to profit off of the brokering of these transactions taking place within our marketplace. And this launch, we talk a lot about e-commerce, but it included far more than that as well. It included things like guest browsing, where you can actually access the platform now without needing an account or needing to sign in. It included a new and improved search functionality that hyper-targets exactly what you're looking for with a greater level of intelligence and predictive analysis. And a brand revamp. So you might notice, on our last earnings call, we're public SQ. There are a lot of strategic reasons we chose that brand at the beginning of our company's journey. But we have embarked upon a strategic brand revamp over the course of the last few weeks. and have moved the brand to Public Square. We also acquired publicsquare.com as a domain, and so we are really excited for this next chapter as a company titled Public Square. You can find out more at publicsquare.com. We plan to continue to add features to the marketplace into 2024, such as user rewards, more business automation and controls for a business to have over their own experience, and payment system upgrades, which will further insulate us from any sort of cancellation pressure, and it will also provide an opportunity for us to further realize our revenue potential as we net more of the transaction. Speaking of EveryLife, our baby care brand we launched on July 13th, this is a premium line of products that has a simple yet profound message. No matter where you're from, who you are, the color of your skin, your socioeconomic background, EveryLife is a miracle, and we're proud to support those precious babies with premium baby care products. Today, that looks like diapers and wipes. And we are seeing growth that is unheard of in this industry. As I mentioned earlier, 71% of our revenue from Q3 was from subscription sales, meaning month over month sales where the diapers and wipes arrive at the consumer's door. This obviously is a great sign for recurring revenue moving forward. And we're not stopping at diapers and wipes. We'll soon be rolling out soaps and baby lotions as well as pull-ups in order to further diversify our product line. We had a significant investment in Q3 for inventory, which has us covered for the foreseeable future. Now we get to go sell products to great consumers that are excited not only about the values we espouse, but the quality of the baby care that they are receiving. We've initiated special partnerships with pregnancy resource centers, faith-based nonprofits, and various churches, which we believe will ultimately continue to provide bulk sales in a way that is rare in the world of direct-to-consumer products. Just to be more specific, there are over 3,000 pro-life, pro-family pregnancy care resources centers in the United States, and it's an entirely untapped market for values-aligned baby care products. That's our opportunity, just with that one vertical. Finally, we actually launched our own sales platform in mid-October called PSQ Links. primarily for our own outbound usage within our sales department, but also for our small business vendors to take advantage of. It's a white-labeled tool with a few of our own custom features built into the mix, specific to the small business's needs. The engagement of this tool has been tremendous so far, and while we won't be sharing exact numbers until the Q4 earnings, PSQ Link is meeting expectations and has proven helpful and as a viable solution for small businesses looking for a technological advantage. This is a subscription-based service priced at $200 per month, and you can learn more at psqlink.com. As I mentioned, our theme for 2024 is more members, more merchants, more money. 2024 is focused on growth, and we are excited to lean into targeted advertising, partnership deals, like with Tucker Carlson. We're proud to be his first partner in his new media endeavor, which we announced a few weeks ago. and strategic events and outreach endeavors, such as the Public Square Town Hall Series, which we launched a few weeks ago in order to capitalize on the energy around the election season in 2024. Finally, before passing it off to Brad, our wonderful CFO, I want to share a few testimonies about the success of our platform in its early stages. One cool data point that I wanted to share with everyone is that our TAM is truly being realized, and it is larger, we believe, than many people currently realize. In fact, the New York Post ran an article last week that talked about how the anti-woke marketplace public square has seen a surge in traffic from Democrats. So we are finding that the message of public square, a love for country, constitution, and the values that it protects, a rejection of woke ideology, and an embrace of excellence and meritocracy is being met From people across the political spectrum, to be more specific, some internal research has shown recently that 26% of our new members over the course of the past month are actually registered Democrats. 52% are registered Republicans, and the rest are either independent or no party preference. This, again, speaks to the TAM potential here and that Americans broadly are ready for the solution that public square can provide. We had a small business reach out recently and say, I want to thank you and your team for carefully considering your transaction commission. I used to sell on Amazon and the fees were so high. A small business like mine could just not compete at all. So thank you for enabling small business owners to thrive again on this platform. We had a consumer reach out and say that they ordered all of their Christmas gifts from this platform. And he said, I'm proud to give my money to the types of small businesses I find on public square. We had a consumer reach out and share about the wide variety of products and services like you can find on the platform. They said, I've purchased diapers, hired a pest control company, bought many pastries, and hired an appliance repair company all on Public Square. I actually enjoy spending my money on top tier products and services, and I've seen an explosion of companies join the platform recently. Finally, to sum it all up, there was a small business that actually serves toiletries. reached out and said, we love, in all caps, having our products on Public Square. It has made a huge difference on our family-owned and operated company. When people ask who we're doing this for, it's businesses like that. So before we go to questions at the conclusion of this call, I would like to hand it over to Brad Thurl to discuss a few items on the financial side of things. Brad? Thank you, Michael.