Good afternoon. Thank you for attending today's Leafly Q2 2022 earnings call. My name is Francis, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Keenan Zopf with The Blueshirt Group. Good afternoon, and welcome to Leafly's Q2 2022 earnings call. We will be discussing the results announced in our press release issued today. With me are Leafly CEO Yoko Miyashita and CFO Suresh Krishnaswamy. Today's call will contain forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the services offered by Leafly, the markets in which Leafly operates, business strategies, performance metrics, industry environment, potential growth opportunities, and Leafly's projected future results and financial outlook, and can be identified by words such as expect, anticipate, intend, plan, believe, seek, or will. These statements reflect our views as of today only, should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements, by their nature, address matters that are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks discussed in today's press release, our annual report on Form 10-K filed with the SEC on March 31, 2022, and our other periodic filings with the SEC. During the call, we will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of the GAAP and non-GAAP results is included in our earnings press release, which has been filed with the SEC and is also available on our website at investor.Leafly.com. With that, let me turn the call over to Yoko. Thanks, Keenan, and thank you to everyone for joining us for our Q2 call. Revenue in the quarter was $12 million, up 14% over Q2 last year and up 6% sequentially over Q1 as we continue to build on the investments we've made in the first half of this year. We saw an increase in monthly active users quarter-over-quarter, and ARPA remained relatively consistent. Like our peers in both technology and cannabis, we have not been immune to the macroeconomic headwinds. I want to talk to you about those headwinds and what they mean, and after that, talk about why we're still bullish about the long-term prospects of this industry and this business. We're starting to see some macroeconomic impacts, with signals for retailers, brands, and multi-state operators that their advertising budgets are under scrutiny. While we're putting strategies in place to navigate through these challenges, we believe these factors will impact the second half of the year. Accordingly, we are taking steps to reduce operating expenses and have implemented a hiring freeze on top of the slower pace of hiring we saw in Q2. Suresh will give specific details around our guidance, but I want to be upfront about one thing. We believe the medium and long-term prospects for the cannabis industry are strong, and we have a tremendous opportunity in front of us. Our overall strategy remains unchanged, and we will focus on maximizing efficiencies across all areas by prioritizing projects and products that will result in the highest returns. In spite of some of these headwinds, I'm particularly pleased with the growth we're seeing from brand advertisers associated with our Q4 2021 product launch. Revenue from brands in the Q2 was up 22% over Q2 last year and up 33% sequentially. We also saw a stabilization and steady improvement in our monthly active users, highlighting our strategic efforts to expand our consumer audience, deliver an exceptional consumer experience, and drive long-term valuable and returning customers. We're an essential part of the cannabis industry, and Leafly plays a critical role in connecting retailers and brands with the growing number of cannabis consumers across North America. We remain focused on the key priorities put in place earlier this year in order to increase our retailer and brand subscriber base, improve our ad platform, reduce friction for B2B partners, and create an incredible shopping experience. To deliver on these, we've recruited top technical product and UX talent this year. The team is now structured to innovate and nimbly execute our highest priority needs. In our last call, we talked about creating an incredible consumer shopping experience. In Q2, we released several enhancements that drive consumer engagement and differentiation. Our teams have been successful in driving downloads of our native apps this year, an important strategy to increase consumer engagement. Native app consumers are some of the most engaged and active consumers on our platform. We rolled out a number of in-app features to improve the consumer shopping experience. Consumers can now place delivery orders directly in our iOS app. They can also now request doctor's appointments directly from our app, making it easier for them to connect with nearby doctors to obtain medical marijuana cards. As you'll recall, we launched a new delivery functionality directly within Leafly in Q1 of this year. In Q2, we made a number of enhancements, including the addition of more filtering options so consumers can better see what dispensaries deliver and shop by product. This is a fundamentally different way to shop for cannabis. It's a product-first shopping experience that leverages our reviews and content, similar to how consumers are accustomed to shopping on other non-cannabis marketplaces. We continued to capitalize on our unparalleled strain database with our Best Buds strain quiz. This simple, personalized quiz helps users identify which strain most closely matches the feelings and effects they are looking for, connecting them more quickly with the right product. We believe this more seamless connection to products that matter help demystify cannabis and build shopper confidence. Personalization remains one of the biggest and unmet needs for consumers, and Leafly, with its unique data and assets, is poised to solve this challenge. We see the consumer experience as a foundational element of our flywheel, and it expands across all sections of our platform, from the information and resources consumers have come to expect to the ease of ordering. In addition, our consumer and content teams have been laser-focused on expanding our consumer audience. We've made technical improvements in our top-of-funnel acquisition, that's the news and learn sections of our site, and implemented a stronger content strategy focused on our most popular top-performing material. We continued to see increased MAU growth through July due to the hard work and investments in this area, particularly to high-demand areas of our site, like our dispensary finder. Our long history, category expertise, deep catalog of content, and our strain database strongly position us to expand our consumer base as cannabis becomes more mainstream. On the advertising side, retail markets across North America continue to evolve at different paces. Illustrating this are our top-penetrated markets, which continue to drive growth in the business and provide key learnings as we expand into newer markets. I'm proud to share that our new automated auction-based bidding tool for retailers has now been rolled out in five states. We saw increases in ad revenue in the majority of those markets. These bidding-based ad products offer retailers greater opportunity to reach our valuable consumer audience and drive sales. We've built automation into our bidding process, resulting in greater efficiency as we take these ad units out for rebidding every 90 days. Our bidding success in early markets has demonstrated our ability to move retailers up the ARPA curve as markets mature, providing continued proof points that support our strategy. In lower-penetrated markets, we continue to bring new retailers onto the platform to reach critical scale, although we still continue to see churn in these lower-penetrated markets and in markets with structural challenges. Our newly structured sales teams were designed to focus on our local market strategy to both increase penetration and reduce churn. We repeatedly hear from retailers that greater flexibility and reduced friction is essential to empowering them to manage their ad spend and generate sales. We've greatly reduced the barrier of entry for retailers to work with Leafly. This past quarter, we launched pickup and delivery integration with BLAZE Point of Sale, which has allowed retailers using BLAZE to increase the volume and velocity of their sales. We are now menu-integrated with almost half of the cannabis point-of-sale systems serving licensed retailers in North America. This aligns with our strategy of integrating with existing systems rather than forcing retailers into a closed technology environment. We continue to emphasize putting cannabis retailers and brands in control of their businesses through access to data so they can attract consumers on our platform. In Q2, we released improvements and enhancements to our retailer dashboard, giving retailers greater visibility and transparency into their success on Leafly. More recently, we rolled out tools that allow clients instant access to ROI metrics and best-in-class insights so they can regularly see the value they are getting from us. We also recently launched our Deals packages, where retailers can offer promotions to consumers directly on our site in the path to purchase. We're seeing early adoption of this product, which provides an incremental revenue stream. We believe this product resonates well in the current macro environment, where consumers are looking for value and retailers are competing for sales. Now focusing on some other momentum we are seeing. In Q2, we reached 100% market penetration in the Garden State, meaning every dispensary in New Jersey had a menu on the Leafly platform. It is a strong indicator of our focus on important East Coast markets and the power and reach of the Leafly brand, spurred by our ability to build a presence even before a market legalizes. As we continue to invest for long-term growth, the industry is evolving at a rapid pace, and our strategy is directly aligned to capitalize on the great momentum we expect to see. The Leafly brand is becoming more widely recognized as a thought leader in the cannabis space. We have one of the largest repositories of cannabis data. This includes our cannabis data library of tens of thousands of cannabinoid and terpene strain profiles from Leafly-certified labs, subjective strain effects from consumer reviews, and cannabis popularity metrics. Given the breadth of this library, we recently launched a program called Leafly + University, which allows accredited cannabis researchers to supplement their work with our large cannabis data set that would otherwise not be available. Rhode Island is expected to begin adult-use sales in December, with Connecticut and New York expected to come on hopefully soon thereafter. We're closely watching the midterm elections that could bring legalized cannabis to millions of more consumers across the U.S. We're also excited about the 185 conditional retail licenses that were recently issued in Illinois after being tied up in litigation. These elections and moments change the landscape within local markets. Governments hold the keys to when and how markets open up, from number of licenses to legalized e-commerce and delivery. We're closely watching the prospects for federal banking legislation this fall. Over the years, we've seen tremendous momentum in this industry, and while we face headwinds today, the industry is set up for long-term growth. Leafly is positioned to reap the benefits of this growth as we continue to serve consumers, brands, and retailers who join us along on this journey. With that, I'll turn it over to Suresh. Thank you, Yoko, and welcome everyone. Revenue in the Q2 was $12.1 million, up 13.8% year-over-year. We saw continued strength in local markets where we have high penetration and increased ARPA in those markets. Ending retail accounts grew 18.8% year-over-year. Breaking revenue down further, revenue from retail was $9.1 million, up 11.3% over last year. Revenue from brands was $3 million, up 22.2% over last year. On a sequential basis, total revenue was up 5.5%. Revenue from retail was down 1.2% quarter-over-quarter, primarily as a result of slightly higher-than-normal churn rates in lower-penetrated markets where the marketplace dynamics haven't developed sufficiently to fuel a competitive marketplace. Combined with slower-than-expected new retailer additions, ending retail accounts at the end of Q2 declined 3.2% sequentially. Retail ARPA in the Q2 was $579, a 9.8% decline year-over-year. This is an aggregate across all markets with a wide range between the low and high end. In the majority of markets with greater penetration, ARPA is significantly higher than our average. Once markets achieve scale between consumer demand and strong retail penetration, we can introduce bidding, which typically drives ARPA higher. ARPA was up just slightly from last quarter, reflecting increased pricing leverage in our top markets and early quarter success from our bidded ad products. Arizona is an example of one of those top markets where ARPA increased 25.9% quarter-over-quarter. Although currently retailers are showing softness in ad spend due to the macroeconomic backdrop, we believe that over the long term, our auction-bidded products will drive increased monetization from retailers. Turning to brands, on a sequential basis, revenue grew 33.2% over Q1. Growth came primarily from the new menu merchandising products we launched in Q4 and from owned channel advertising, reflecting continued growth of those products over time. Brand accounts grew 6.4% over Q1 as we continue to increase the brand subscriber and advertiser base on our platform. As mentioned, we're starting to see some macroeconomic impacts on the business, with softer ad spend as budgets are under greater scrutiny, particularly in discretionary spend. We started to see this late in Q2, and we expect to see this downward pressure continue in both retail and brand advertising spend through the second half. Now turning to gross margin. We are asset light and we continue to benefit from high gross margin as our fixed costs to operate the platform are relatively minimal. Total gross margin in the Q2 was 88%, a decrease from 88.5% in Q2 2021, driven by increased business platform expenses. Moving on to operating expenses. Total operating expenses were $19.5 million, an increase of 83.9% over $10.6 million in Q2 2021. We started investing in the business following a convertible note raise at the end of Q2 2021, which is reflected in the significant year-over-year increase. This increase was largely due to increased headcount in marketing and advertising costs. In the Q2, we continued to invest in and align our organizational structure across our sales and product teams. For example, we moved to a geographically based local sales model. In the product and design teams, we reorganized the teams to be able to deliver against our highest roadmap priorities. These reorgs are complete, and we expect to scale over the long term. Breaking these line items down further, sales and marketing expenses increased 86.7% over Q2 last year. We increased headcount and invested more in advertising and marketing, primarily around 420, our delivery product launch, and targeted paid advertising in strategic markets. G&A expenses increased 141.2% over last year and included additional headcount and associated compensation as well as public company costs, which includes D&O insurance. Product and development expenses increased 26.2% over Q2 last year. Total operating loss for the Q2 was $8.9 million. Net income was $14.8 million, which benefited from a $24.4 million change in the fair value of derivative liabilities. Total adjusted EBITDA in the Q2, which excludes the change in fair value of derivative liabilities, was negative $8.4 million compared to negative $0.8 million from a year ago and prior to investments. Looking ahead, we're implementing plans to reduce operating expenses, excluding stock-based compensation, by close to $3 million for the second half of the year, primarily in marketing and P&E and the savings from implementing a hiring freeze. We continue to manage our expenses carefully and look at ways to proactively manage our cash flow. Now turning to the balance sheet. We ended the quarter with $35.4 million in cash and $31.9 million in restricted cash. Effective August first this year, holders of the forward share purchase agreements exercised their options to have the company repurchase all of the remaining shares under the agreements for a total repurchase price of $31.7 million. Now let me provide some details on a go-forward basis. For the full year 2022, we now expect revenue between $48 million and $51 million, representing 15% growth over 2021 at the midpoint and more weighted in the Q4. Our full-year forecast is impacted by the following. We restructured our sales organization, and the pacing of retailer acquisition and increased monetization were impacted during that transition. In addition, we've seen higher than normal churn levels, including out-of-business churn, reflective of the current macroeconomic environment. Combined with the softening in ad spend we expect in the second half of the year, the impact of these headwinds in the first half is leading us to reduce growth expectations from retail by approximately $4 million for the full year. In brands, we're taking a cautious outlook as a result of the softer demand for ad products we've already seen in June and July. We've also paused additional product launches as we're focused on driving greater value for customers from existing products. This will have a roughly $2 million expected impact to the full year. We have since redirected resources to strengthen B2B integrations and invest in our platform. At the low end of our guidance, we have built-in assumptions that retailer and brand ad spend softens further than what we're seeing today. At the high end of our guidance, we assume churn stabilizes or returns to historical levels, pacing of acquisition and upgrades improves, and retailer ad spend on auction bidding inventory increases. As a result of the lower revenue projections, we have made adjustments to our expense structure. With a disciplined approach, we now expect an adjusted EBITDA loss of approximately $26 million-$28.5 million for the year. This implies a significant reduction in previously planned second-half investments and includes a hiring freeze that we've already implemented. With the talent we have on board, our focus remains on positioning for long-term growth and, in the short term, driving better productivity and value for our retail and brand customers, building out our consumer experience to drive high-value consumer traffic to Leafly, and continued improvements in our B2B integrations, which makes it easier for retailers and brands to do business with us. We are navigating through an uncertain economic environment, but the cannabis industry continues to grow, and we have significant opportunity in front of us. We have laid the foundation for growth. Our focus now is on streamlined execution. With that, I'll turn the call over to our operator and open it up for questions. Thank you. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove your question, press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from Harrison Vivas with Cowen. Please go ahead. Great. Thanks. First question, kind of wanted to dig in on churn, kind of a multipart question. You called out higher degrees of churn in under-penetrated or new markets. My understanding is that these are historically lower ARPA markets, and so you'd think they're most affordable for retailers. Can you just talk about, I guess, specifically what markets you're seeing the greatest level of churn in? And then I guess just given the uncertainty, I think, you know, transparency goes a long way. Can you kind of maybe break out more, you know, the new account adds that you saw during the quarter, the number of accounts that were closed, and are you pulling any retailers off the platform because they're either late or not paying to be on? Harrison, thanks for the question. What we're seeing in churn and what we saw in the Q2 is really we had sort of in the first half two categories of churn, right? We did talk about this a little bit in Q1, where we do have structurally challenged and low penetration markets in which we have low penetration, right? Some of these were Oklahoma, for example, is something we called out. In these markets, really the marketplace dynamics have not developed sufficiently to really allow for competitive marketplace. We did see that churn increase. I mean, they are lower ARPA markets, so that impacts the ending number of retail accounts, and you know, obviously has a lower impact on overall revenues. The other thing that we did see is the emerging macro impacts and we really saw that in the Q2. We saw rising out-of-business churn, which really reflects the challenges that our clients are facing in the current environment. Basically what we're doing is looking at the second half of the year and really projecting some of those trends to continue. In terms of new account adds and specifically in the Q2, it was also impacted by a few things. One, we had our sales reorg in the Q2. We talked about that. While that positions us really well at the local markets level to scale, it also temporarily slowed down our execution. That had impacts on retailer acquisition pacing. That is something that, you know, we can point to that directly impacted the rate of retail acquisition of new accounts in the Q2. On that, I'd say that we're encouraged by the pace that we've seen so far in the Q3. July has stabilized, and our guidance does project a continuation of the recent trends that we saw. In terms of pulling retailers off the platform, and your question about that, we have seen increased churn, like I mentioned. We have seen some impact on higher than expected movement into the bad debt bucket. However, we've not seen that significantly impacting our revenue projections. I mean, what we're really looking at is on a go-forward basis, where do we see the trends given the macro environment and where we think we have room to continue to add accounts. We're seeing that so far, starting off on a pretty positive note in Q3. Okay. That's helpful. Just one small follow-up. Can you talk more about the dynamics in Oklahoma? Maybe as in, you know, as a something like a read-through to the broader space, but Oklahoma is, you know, a very dense dispensary market, so you'd think that the competitive dynamics are there to, you know, to drive either higher ARPAS or higher utilization from dispensaries. Can you talk about why that's, you know, what you're seeing from that market specifically? For Leafly, I think it's the intersection of two things. It's a lower penetration market in terms of the establishment of our marketplace, combined with the structural issues that we're well aware of, right? You've got the unlimited number of licenses compared to the number of patients, and I think we're all starting to acknowledge that oversaturation of licenses is as problematic as insufficient number of licensed stores. What's interesting about Oklahoma for us is not one of our best states, but by zone, it can be attractive. We're looking at strategies of taking where the marketplace has taken root within Oklahoma to drive monetization. You know, from our perspective, the structural issues work themselves out over time. Unfortunately, that's more out of business until the market reaches equilibrium, as well as continuing in our local market strategy with our sales teams to work with those retailers on the ground. Okay. That makes sense. Second question on MAUs. I guess last quarter, as you were talking about MAUs being down year-over-year, obviously, there's the COVID benefit to 2021. And I think you talked, Yoko, about seeing more traffic to the higher value parts of the site. This quarter, I understand. Right. I'm hearing that it seems like there was focus on driving more traffic to the top of funnel portion of the site, which, I guess I'm just trying to understand, you know, how are you balancing investment behind driving traffic towards top of funnel versus towards the bottom of the funnel on the site? You know what I think we've had over the last, what I'll call six months, is really a keen understanding of what works and what doesn't. We're really interested in developing that high value organic traffic, and we're really pleased with how we've built back over the last quarter and are continuing to see that growth into Q3. We're not going to be spending our marketing dollars in paid acquisition every quarter. That's not our model. That's not who we are. For us, it's been this investment in building a sustainable long-term traffic content source that we control and is really brand aligned. You know, all of those things remain true. You've got to drive the top of funnel, and you've got to drive them through the funnel to high value portions of our site that really deliver the kind of audience that our retailers and brands are looking for, and that's where we've been focused. Great. That's helpful. I'll jump back in the queue. Thanks. Thanks, Harrison. Thank you for your questions. Our next question comes from Eric Des Lauriers with Craig-Hallum Capital Group. Please proceed. Thank you for taking my questions. So you mentioned you rolled out bidding in or automated bidding in 5 markets. You saw increased spend in most. What is your perspective on the markets that did not increase? I mean, is this just a simple, you know, factor of timing, they've only been out there for, you know, a couple of weeks? Is it sort of amid the macro, you know, tightening of ad spends, or is this something that you see, you know, about the product overall? We'd just love to hear your perspective. Thank you. Yes, that is a great question, Eric. You know, a reminder of when we launched this. We launched this totally manual, telephones and spreadsheets, Q4, and we launched that in 2 markets, and we've expanded this now over 5, and we are just coming out of our second full round and actually early third rounds in some markets. We've really leveraged the learnings out of this first year of bidding to know what are the right market conditions that drive the bidding outcomes we're looking for. Let me give you an example of that. What is the right concentration of stores in a zone to drive bidding? What are some of the default settings in your bidding process if you win or lose a spot? It's that kind of iteration that we're excited about that continues to inform the evolution of our bidding strategy. Thank you very much. Thank you for your question, Eric. Our next question comes from Jason Helfstein with Oppenheimer. Please go ahead. Hey, how are you? A few questions. First, when did you roll out the new retailer dashboard, and can you tell us, like, what% of retailers have already interacted with it? I mean, I'll just ask them one at a time questions. Thanks. You know, our retailer dashboard is in constant evolution. In terms of engagement metrics, we have not disclosed those. You're trying to get at a deeper point there, so tease that out for me as I think about. Basically, an improved dashboard will take the learnings you've learned, right? And help the retailers make smarter decisions about what you know, should they be raising their bid, should they not, et cetera. Because we're dealing with small businesses, you know, how many of them just set it and forget it and then don't look. You may be making progress with some, but if, I don't know, like a high percentage haven't interacted with the new dashboard, that's kind of something to look forward to. That's what I'm trying to understand. Absolutely. I think it's the, not just the dashboards, but it goes to fidelity of adoption of the products, right? Like, how do you actually drive the benefit of these? That comes through in what we've done with the local market sales structure. When you can match them to a CSM and an account manager in your zone, it's the power of the platform and the data combined with that human touch of reaching out to our small, you know, they are long tail and saying, "Are you using our data properly? Let us show you best practices. Let us teach you how you can use the data and what other tools you can use on Leafly to increase sales on our platform. Just, could you clarify the comment, just because I think the wording may be a little confusing, about churn was impacted by immature competitive marketplace dynamics. Are you specifically referring to, like, the situation in Oklahoma that you're talking about? Yes. In terms of marketplace dynamics and churn, right, you got to reach sufficient penetration. We've got some numbers in mind of where we see the best behaviors rolling out. Remember, for us, you got to get the retailers on the. Demand's here to start because they're reading our content. You get the retailers on. When you get the retailers on, you get their menus on. The more menus, the better consumer experience. That's the flywheel. For us, hard to do when you don't have a majority of the retailers in a particular area on platform. That's why in our local market focus, in our lower pen markets, we're focused on penetration. Okay. Just 2 more. That takes time. It's not instantaneous. Until you can prove that value by making that flywheel work for you, we do expect to see some churn in those zones. The comment on the subscription and the subscription box was that. Is that a box of items that people subscribe to and that's in the brand bucket now? Oh, I think you're referring. Maybe you're referring to our Brand Subscription product. We are not a subscription in a box. We have our Retailer Subscription, and we have our Brand Subscription product. Am I following? Okay. I just wanna clarify because, yeah, there was some picture- Yeah In the slides of a box of stuff. I wanna just add some more color about the share count. You gave us kind of like a post kind of FPA treasury share count of 63.6. You gave us a share count fully diluted of 63.6. Is that using the treasury method based on the current stock price? Because it seems high based on the current stock price. Yeah, that's using. That's just the full number of shares in each of these cases. What we are using, you know, we sort of listed out the potential diluted securities, and that adds up to the 66.6. Okay. I mean, just do you wanna share it? I mean, I don't know if you want it on record, but I mean, based on our math, it seems like at the current stock price, the dilutive impact is, like, more like 53 million shares. Does that make more sense? Yeah. I could do the math and just get back to you on that. Okay. Maybe just one more. Just to clarify, again, 'cause it's just good to have it on record. Post the FPA, you have $35 million in cash. Are any of the non-current liabilities still there? Do those still exist or some of those went away with the FPA and the lockup? Yeah. No, we had $31.9 in restricted cash and, you know, the FPA holders all redeemed all their shares, so $31.7 basically has been returned. We're ending up with what we ended Q2 with in terms of free cash of $35.4 million. Got it. Okay. Thank you. Thank you for your questions, Jason. There are no further questions in the queue at this time. This will conclude today's Leafly Q2 2022 earnings call. Thank you for your participation. You may now disconnect your line.