SpringBig Holdings, Inc.

Hello, and welcome to Spring Big Third Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to Claire Volatieri. You may begin.

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 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-K filed with the SEC on March 28, 2023. 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 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, Claire, and thanks to everyone for once again joining our quarterly earnings call. Q3 was a solid quarter in which, despite the very challenging end market conditions, we continued to make progress towards our stated priority for this year of reaching positive adjusted EBITDA. During today's call, Paul and I will provide you details on our third quarter results, update you on key business initiatives, and provide guidance for the balance of 2023. Let me start by addressing up front some of the end market challenges that we have experienced throughout the year and which seem to have become more acute over this last quarter. While broader macroeconomic concerns continue to weigh on marketing budgets and digital spend, the headwinds caused by lower revenue growth and the compression of margins in the cannabis industry have also increased the financial stress on many of our clients. In an environment where cash is king, this has emerged as a challenge of ensuring timely, or in some cases, any payment for our services. We have and continue to work diligently with many clients to support them through the introduction of payment plans, but inevitably, this difficult economic climate also has led to us having no choice, in some cases, but to cease servicing non-paying clients. This impacts our revenues, which reduce by 5% year-on-year in the quarter to $6.9 million. Given the prevailing economic conditions and the prior year quarter being a particularly tough comparable, we view this a solid performance and are particularly pleased that our subscription revenue continues to grow with 13% and 19% year-on-year growth in the quarter and year-to-date, respectively. Our commitment towards the stated goal of EBITDA breakeven during 23 is as strong as ever, and we have now tantalizingly close to reaching that objective. We have continued to derive greater efficiencies across the company, enabling us to reduce our operating expenses. We completed a reduction in force a few weeks ago, reducing our employee roster to 89, representing almost a halving of employees compared with the peak in June of last year. And when taken together with non-employee related expense savings, we anticipate our operating expenses in Q4 this year will be approximately 40% lower than Q4 last year. We are now operating at an expense level that should enable us to deliver positive EBITDA even in the absence of meaningful revenue growth. And given our gross margin profile in the high 70% range, as we do deliver revenue growth, we can reasonably anticipate a rapid expansion in EBITDA. Turning to our revenue growth initiatives. We continue to develop and launch innovative product offerings to enable our clients to retain and grow their customer bases. Last quarter, we reported the launch of a VIP loyalty program subscriptions by Spring Big. Subscriptions by Spring Big enables our retail clients to offer consumers in return for a monthly or annual subscription fee the opportunity to earn additional loyalty rewards, access to special promotions, and other perks as VIP subscribers. Progress has been at a pace that we expected. In Q3, we had 20 clients expand their contracts to incorporate this new offering. and four have already launched their VIP subscription programs. We have a strong pipeline of client interest and anticipate both an acceleration in clients committing to this program and, of course, those already signed up rolling out their VIP subscriber programs. We see meaningful potential from both a revenue growth and profitability standpoint for both our retail partners and Spring Big as these VIP subscription programs get launched and mature over time. Our second key initiative, which we also see as having meaningful potential and expect to launch during Q4, is our offering of a unique gift card payment option that can be used by consumers as a method of payment in store directly from their existing loyalty wallet and will also enable the consumer to uniquely combine the use of loyalty points and the prepaid gift card. And third, we continue to expand beyond the cannabis vertical with our loyalty and messaging communications platform servicing other regulated industries such as alcohol, vape, smoke, and CBD. These newer initiatives are going to take time to evolve, especially given the current macro environment, but we are confident that in time they will fuel significant growth to complement the potential we believe is present in our existing offerings. We should not overlook the continuing growth in our core. As mentioned earlier, we grow our subscription revenues by 13% year-on-year in Q3, and we added 89 new clients during the quarter. Before I hand over to Paul, who will walk through our financial results for the third quarter in detail, I do want to comment on the state of Spring Break. We are managing our business efficiently for the factors within our control and recognize the challenging current macro and industry-specific realities. We are delivering on a rich pipeline of revenue-generating initiatives, and we have a strong, high-growth, recurring subscription revenue base. SpringVic is in an excellent position. Our technology platform is operational in more than 2,900 retail locations across the United States and Canada and present in the smartphones of over 35 million marketable consumers. We now have our operating expenses optimized at a level that will enable us to generate meaningful profitability in the future. I remain as confident as ever that our strategy is sound, with feedback from our clients and partners reaffirming 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 in greater detail and discuss our outlook.