PSQ Holdings Inc

Thank you for standing by. My name is Gail and I'll be the operator for today's call. At this time, I would like to welcome each and every one of you to the public square first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw a question, kindly press star one again. It is now my pleasure to turn today's call over to William Kent. Please go ahead.

Thank you, Gail. Good afternoon, everyone, and welcome to Public Square's first quarter 2025 conference call. Joining me today is Michael Seifert, Chairman and Chief Executive Officer, Brad Searle, Chief Financial Officer, and Dusty Wunderlich, Chief Strategy Officer. 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 and 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. Please refer to today's earnings press release and our SEC filings, including our 2024 10-K, for factors that may cause actual results to differ materially from our forward-looking statements. We'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. I'll now hand the call to Michael. Michael, please go ahead.

Thank you, Will. And welcome, everyone, to our first quarter 2025 earnings call. I would like to take our time together today to cover our accomplishments from the quarter and express how they provide a strong foundation for the remainder of the year and beyond. So first I will start at the overall company level. Our revenue in the quarter grew by 95% year over year to 6.75 million compared to 3.47 million in the first quarter of 2024. Our fintech division, consisting of our payment processing stack and our buy now, pay later services, contributed 3.05 million. The public square marketplace added just over 0.4 million. And our brand segment, consisting of our EveryLife brand, contributed 3.27 million. Now, regarding expenses, while we've nearly doubled our revenue year over year, our operating expenses have actually decreased 10% year over year. from $16 million in Q1 of 2024 to $14 million in Q1 of 2025. Through our team's hard work and strategic creativity, our leveraging of AI tools for an increasing number of functions within the business, our exercising of synergies between our business lines, and our continually decreasing customer acquisition costs, we are truly accomplishing more with less. helping us drive closer and closer to operating cash flow positivity, even while remaining in hyper growth mode. And actually to elaborate further on our decreasing customer acquisition costs, as I mentioned on our last earnings call nearly two months ago, we anticipate that customer acquisition costs, especially in our FinTech division, will remain near zero for at least the next two years. This was also exemplified by the fact that our sales and marketing expenses in Q1 decreased 48% year over year. We are able to achieve organic growth at our core business without having to pay an arm and a leg for a new customer because of the community that we've worked so hard to build over the past three years, paired with the viral nature of our products and our brand. Finally, a word on margin. Our margin across the entire business expanded to 58% in Q1 of 2015. Compared to 43% in Q1 of 2024. Now we're going to dive a little deeper into each business segment. And first we will get started with payments. In Q1, we made significant progress integrating and onboarding a large number of the material backlog of merchants we have built up on our waiting list. These merchants have sought us out either because we were already serving them on marketplace or through our buy now pay later services. or they heard about us because of the positive feedback we've received from one of our payment processing launch partners currently using our services, or they were introduced to us by one of our board members, or they inquired about our services after the enormous viral traction we've received in the market because of the unique product differentiators we offer and the cancel proof promise we make to our merchants. We anticipate that much of the revenue from these onboarding and integration activities will begin to be realized in Q2 and especially in the latter half of the year. In Q1, PSQ payments came to the rescue for a number of merchants who had recently and abruptly experienced economic cancel culture. For one major example, after guns.com, one of the largest and most trusted digital marketplaces in the shooting sports industry, was abruptly canceled by their ACH provider, which was one of the largest ACH providers in the market, by the way, guns.com reached out to us in hopes that we could fill the void in a trusted, cancel-proof manner. We immediately jumped on the opportunity to protect guns.com as this is a perfect example of a merchant that we feel a great deal of responsibility to serve. And we launched our ACH processing product in February with guns as our launch partner. We have since scaled that product and we're excited about the trajectory as we move forward. And for guns.com. We now have the privilege of serving them with our full suite of FinTech products. We handle their buy now, pay later transactions through our Cordova business, which actually ups conversion rates at checkout for that merchant. And we also serve them with our credit and debit card transactions and B2B and C2B ACH processing through our PSQ payments products. This is what we're looking to replicate for many more merchants in our pipeline as we move forward. another example of a business we assisted with our fintech products after they recently faced cancellation i'll reference tenacity arms when tenacity arms an american manufacturer and online retailer of firearms received a sudden notice from their payment processor threatening to freeze their funds and terminate service their business was at risk of grinding to a halt within hours public square's fintech division stepped in with the new psq payments product and a direct shopify integration migrating tenacity arms to the cancel proof payment platform that is purpose-built for resilience, speed, and the functionality needed to operate a growing American-made firearms business. We're proud to support liberty-minded business owners like this as they exercise their God-given rights to grow their business and protect the Second Amendment. And as I just alluded to when referencing Shopify, another event we announced recently was the launch of our Shopify integration to PSQ Payments. This is a powerful move that catapults our business's ability to serve our tens of thousands of marketplace e-commerce merchants at publicsquare.com, 80% plus of whom host their digital storefront on Shopify. We utilize this integration with Yonder, one of our top performing public square marketplace merchants and the first marketplace merchant that we have onboarded fully to our payment processing stack. Now moving over to the buy now, pay later business. We saw a slight dip in the originations volume due to the normal seasonal shift coming out of the Christmas shopping season. And in addition, our proprietary economic forecast model indicates that we're in a transitional period with consumer credit and credit scores shifting downward as consumers continue to experience the effect of the inflation that plagued household finances over the past few years. In response, we've tightened our AI driven underwriting models and reduced both approval amounts and monthly payments while also helping consumers manage their credit in the process. These adjustments are designed to mitigate credit risk while supporting consumers with responsible access to credit during a challenging economic environment. As a positive note, we had tremendous traction in onboarding new merchants to our Buy Now, Pay Later services, and we actually grew our database of pre-qualified applicants by 198,196 in Q1, which reaffirms our position as one of the fastest growing consumer databases in the shooting sports industry. These positive enhancements set us up for a powerful remainder of 2025 in our Buy Now, Pay Later segment. We also made significant progress in the continued development of what we are calling Credit 2.0, an initiative we introduced on our last earnings call that we believe will drive repeat customer growth, easier onboarding for merchants, and a gamified experience for the consumer. Stay tuned for more there in the coming months. I spoke last quarter about how we were beginning to strategically deploy capital to expand margins, enhance cash flow efficiency, and build a robust consumer lending portfolio on our balance sheet, which will have a materially positive effect on revenue over time. During the first quarter, we used approximately 1.1 million in cash to retain certain consumer receivables, which include loans and leases that we deemed high quality, utilizing our AI-driven underwriting tools. We continue to expand the use of AI throughout the business, And AI is a critical component of our future credit strategy. We leverage AI to enhance underwriting, mitigate risk, and drive smarter lending decisions. Investors can expect us to continue to share progress here in the coming months. And this is an important point that we'll seek to drive home continually. AI will be an increasingly essential component of our ability to create and maintain an industry competitive cost structure with margin expansion opportunities across the business moving forward. Finally, a quick update on our new line of credit, which I highlighted during our last call. As I mentioned, we expect this line of credit to reduce our cost of capital by approximately 50%. And we expect this new line of credit to be in place and active by no later than the end of the third quarter. This is an important new banking relationship for public square and even more impactful as we continue to scale the business. And we're grateful for this partnership. Now moving on to the marketplace. On our last call, I presented a sneak peek at our vision for the marketplace as we move through 2025, which included the leveraging of synergies between our payments and marketplace business segments, accelerating the growth of our ambassador program, and elevating our Made in America focus. And I'm very pleased to say that we have made significant progress on all fronts. As I mentioned earlier, we recently announced the first marketplace merchant to onboard to PSQ Payments. And we anticipate the exercising of this important synergy between payments and marketplace will continually and materially ramp up as we move through the year. This strategy is one of the major differentiators that sets us apart from not just other payment companies, but also other marketplaces. No other payment company or marketplace can secure a merchant's economic liberty through a cancel-proof checkout while also driving new customers to them through a consumer-facing marketplace. In Q1, we also made strides to improve our ambassador program and the related technical functionality that is needed to launch our new and improved ambassador program in late Q2. As a reminder, organic grassroots marketing is the key to low-cost growth for us, and the strong ambassador network we've accumulated over the last few years is the primary driver of those marketing efforts. Finally, in Q1, Our primary focus was building the foundation for the evolution of the marketplace that will launch in late Q2. This evolution will include our marketplace becoming primarily known above all else for its Made in America product assortment. We've been looking forward to taking this crucial step, honestly, since the beginning of our marketplace journey. And starting in late Q2, you'll see an aggressive and grassroots push to promote our mission. What is that mission? The mission of the marketplace is to champion Made in America products from businesses that uphold life, liberty, and family. To us, this is more than a branding statement. It's a modern embodiment of what the founders hoped America would become in an age where so much is outsourced. Products, values, even identity. Public Square, our marketplace, stands as a reminder that America works best when Americans invest in one another. This move will satiate the desires of our customers looking to purchase Made in America goods support the small business owners who are putting in the hard work to manufacture their products in America, and set ourselves up with a significant competitive advantage in an American economy that is increasingly embracing economic nationalism, which we as a team are highly in support of. While our best-selling products have always been resoundingly made in America, we're excited to extend the same spirit and requirement to the merchants across our entire platform. And stay tuned over the remainder of Q2 for more progress updates on this front. As we focused our marketplace efforts singularly on prepping for this material next step, we significantly reduced our marketing efforts in Q1, which was responsible for the drop in marketplace revenue. This was fully anticipated, and we look forward to intentionally putting our growth foot on the gas for the marketplace in the second half of the year through the initiatives I have just mentioned. And one more important note here. There's been a lot of talk recently about tariffs. Tariffs have obviously been on people's minds the last few months. And while it may seem self-evident, it's worth reiterating. Our position is simple. We believe as a company that we are exceptionally positioned to benefit from the growing focus on American manufacturing, specifically with our marketplaces increasing made in America focus. Finally, over to the brands division. We saw year over year revenue growth in the every life business greater than 40%. And we saw 68%. or 2.2 million, of our Q1 revenue come from subscription orders, which is a fantastic sign of the strength of our repeat customer. Also, and this is big news, we just recently received our largest ever bulk order from a pregnancy resource center coalition for $2 million, paid in full earlier this week, which amounts to an immediate increase in cash, with the revenue recognized as the components of this order are shipped throughout the coming months. This bulk order will be used to support their network's efforts for the next year, and we anticipate that this bulk order will recur annually. We also see this expansion as a crucial component of our every life growth story moving forward. There are thousands of similar pregnancy centers and nonprofit coalitions across the country, and we're increasingly presenting them with opportunities to stock their shelves with our consumer products. This is a liberating and lucrative opportunity for our brands division, and we're excited to create more partnerships like this as we move forward. In closing, our FinTech division is uniquely positioned to deliver strong revenue and cash flow growth as the core business segment for our company moving forward. Q1 was the onboarding and integrating quarter. The focus of Q2 is on ramping up GMV, and Q3 and Q4 are positioned perfectly for tremendous revenue growth from these efforts. The marketplace is hitting its stride with our core customers and is on track for a breakout second half of 2025 and beyond, particularly as we lean into our Made in America product lineup. And meanwhile, our brand division is driving momentum for the business through strong repeat purchasing and increased product assortment and monumental bulk order partnerships like I've previously stated. We're exactly where we want to be as a business right now. It's clear that there's never been a greater need for the services were providing and given our performance in Q1 and our roadmap for the remainder of the year. We want to reaffirm our previously stated guidance of total year over year revenue growth of greater than 100% or said differently, greater than $46 million and our operating expense defined as general administrative. sales and marketing, and research and development to actually decrease in 2025 from 2024. I will now turn the call over to Brad to discuss some important financial highlights. Here you go, Brad.