SpringBig Holdings, Inc.

Good afternoon, everyone. Welcome to the Spring Big's third quarter 2022 earnings conference call. I would now like to turn the call over to the Spring Big team.

Thank you. Hi, everyone, and thanks for joining our Q3 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 websites. 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 reconciliation of GAAP to 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 this afternoon's call. I'm excited to walk through our operating results, discuss key developments during the third quarter, and the progress we've made against our growth priorities. Our third quarter results reinforce my view that we are widening the gap as the leading technology loyalty platform across the cannabis sector. Although broader macroeconomic concerns have negatively impacted marketing budgets and digital spend, budget consideration for maintaining and growing existing customers, a central tenant of our platform, remains top of mind. Net-net, we continue to see an incredible opportunity ahead to increase our wallet share and ROI for retailers and brands. Now let's dive in and offer a bit more context on our results. We had a strong third quarter. Revenue came in at 7.4 million, representing growth of 22% year over year, and 13% quarter-over-quarter, an acceleration in growth compared to 13% year-over-year in Q2, despite inflationary headwinds facing the consumer, industry-specific margin pressures, and flattish overall revenue growth across our industry. Our growth this quarter was again underpinned by strength in subscription revenue growth, which accelerated to 48% year-over-year from 35% in Q2. Recall, 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 significantly above 100%, and growth in both number of clients and locations. While our focus remains on accelerating top-line growth, we also remain committed to driving leverage through a balanced investment approach I would like to reiterate our plan to achieve EBITDA break-even during 2023. I would now like to discuss the two primary segments in our business, our retailer and brands platforms. Our 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. This quarter, we added 90 new retail accounts and continue to see healthy additions of new locations from existing clients, something we are particularly proud of given the challenging environment, which can be characterized by a slower cadence of store openings. Our brands platform, which we launched in 2020 to help cannabis brands more easily connect with their consumers, saw record new customer ads in Q3. We're uniquely suited for the selling motion by allowing brands to connect directly with customers through our retailer platform, benefiting both the retailer by driving traffic to their locations and for the brand, increasing awareness and influence. This quarter, not only did the number of brands running campaigns grow quarter on quarter, but average spend per campaign more than doubled, a testament to the reciprocity between our retailer and brands platforms. Turning to the 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, our purpose-built co-marketing platform, allows brands to target customers who are shopping at retailers who are selling their products through the Spring Big 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. Importantly, this form of marketing also provides our retailers with co-op marketing dollars for their campaigns, subsidizing retailer marketing budgets. We continue to add functionality to differentiate our retail and brands platform offerings. For example, in the third quarter, we continued development on our upcoming spring pay solution, which allows consumers to pay directly from their loyalty wallet by simultaneously redeeming their earned points to reduce the amount owed for their purchase, along with paying for the remainder of the transaction with their stored payment options. We think the combination of simplicity and potential of spring pay, which offers the consumer the ability to use both loyalty points and a stored payment option within the consumer's loyalty wallet, presents a compelling value proposition to customers, particularly given the tight restrictions governing cannabis payment processing. In addition, leveraging our expertise in helping retailers and brands connect with their customers in restricted marketing industries, We are excited to announce that we have completed integration work with our first non-cannabis point of sale, offering a seamless loyalty program and data-driven communications platform to industries outside of the cannabis vertical. We continue to believe that our platform has the unique ability for retailers to boost foot traffic and drive a material increase in average ticket size, and we will continue to identify opportunities in other fast-growing markets where loyalty programs may be underrepresented or faith constraints. Second, the core component of our revenue, which is high growth subscriptions. As we have cited in the past, our retail clients enter into subscription contracts for 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. This quarter, we introduced our first consumer subscription program in partnership with Kind Plus, a subscribe and save offering, whereby customers pay a monthly subscription fee to receive specific discounts at certain retail locations. In addition to increasing our recurring revenue stream, these programs increase the stickiness of consumers on our platform. Third, I'd like to discuss the data opportunity. We currently have nearly 900 million records, which we believe to be among the most complete data sets in the industry. We have made material progress with our data normalization initiative and looking ahead, we intend to market our data to third party companies in order to make data driven decisions. By reaching beyond the traditional marketing departments and entrenched in other areas of their businesses, our offering becomes less discretionary with our clients. With that, let me share some examples of how customers are leveraging our platform with a few key wins and upsells from the quarter. First, demonstrative of our ability to expand within our customer base, in Q3, one of our key enterprise clients migrated tens of thousands of its members to the Spring Big database from another provider. This customer is now texting its aggregate membership daily, and in some cases, multiple times a day. As a result, ARR increased by $600,000 from this client, demonstrating the expansion and upsell opportunity that has become a natural part of the selling motion as our clients realize the embedded value of our platform. Second, in a competitive win with a large-scale operator in the Northwest, our data availability proved a differentiating factor. As our client compared solutions, our capabilities in data warehousing were simply unmatched by other vendors, as was our compliance framework, giving this client added comfort with regards to regulations around the enrollment and opt-out processes. Lastly, a large retailer in Northern California expressed frustrations around text deliverability with multiple other vendors that they had cycled through prior to choosing SpringVic. Our hands-on approach to account management, proven ability to consistently deliver text, and capacity to run an omni-channel communication strategy, including email and an app, set us apart as a partner that could grow alongside them. Thematically, I think it's important to note that we are mindful of legislative changes at the state and federal levels and the impact that they may have on our business. Namely, we are incrementally more positive on the potential for passage of the Safe Banking Act in the lame duck session and the White House directive on rescheduling cannabis, which could have major implications for the 280E tax code and capital markets access. Acknowledging these regulatory changes will take time, we remain cautiously optimistic. Looking ahead, we are managing our business efficiently to the factors within our control and recognize the current macro uncertainties. That said, it is clear to me that our growth strategy remains robust as we continue to leverage the network effect flywheel between retailers and brands, with additional targeted opportunities to monetize our data. We are pleased with the cadence of our new logo ads, while new products widen the feature gap between us and our competition. Lastly, feedback from customers and partners reaffirms that we are making the right investments to capture the long-term opportunity in front of us. With that, I'd like to turn things over to Paul, who will walk through our financial results for the third quarter and discuss our outlook. Paul, take it away.