Fellow shareholders,
Since the last newsletter, we concluded another record quarter and saw 44% year-over-year revenue growth in the nine months ending March 31, 2020. This advancement is more than triple the cannabis industry’s annual growth rate of 14% according to New Frontier Data. During this same period, operating expenses remained essentially neutral. As indicated in today’s press release, this progress brings us
within reach of becoming cash flow positive. Our current forecasts indicate that Leafbuyer could achieve this milestone within the next quarter.
In March, we announced our pivot to positioning Leafbuyer as a communication and ordering solution for cannabis businesses facing the COVID-19 outbreak. This strategy has been a success. New dispensary clients are eager to use our texting, loyalty, and online ordering tools as they adapt to new ways to sustain and grow their customer base.
Meanwhile, every department is focused on our strategic goals, and we have employed new tools to track performance and ensure effective communication. We remain committed to developing our industry-leading technology, securing ongoing clients in all legal markets, and establishing advantageous industry relationships. I will strive to keep you informed of our progress. On behalf of the Leafbuyer team, thank
you for your support.
Kurt Rossner, Chairman and CEO
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Notable Advances
• The development team rolled out a new web application solution that allows dispensaries to offer pickup and delivery options from their own websites.
• The sales team used the new Flowhub POS integration to secure a long-term contract with the powerhouse dispensary chain Lightshade.
• The Company launched the Leafbuyer Gives campaign providing free texting and loyalty to small businesses in the food and service industries that were affected by COVID-19.
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The COVID-19 Pivot
Over the past few months, the COVID-19 pandemic has dealt the international economy a massive blow. However, while Leafbuyer has had to quickly adjust to this new paradigm, the changes have largely benefited the Company. The vast majority of Leafbuyer’s recurring revenue comes from dispensaries which were quickly classified as essential businesses. Current clients and prospects have demonstrated strong demand for Leafbuyer’s texting, loyalty, and online ordering tools.
During this tumultuous time, dispensaries recognize that clear communication with their customers is essential. SMS and MMS communications are the most effective way to communicate timely information such as store hours, new ordering options, and product specials. Since President Trump's national emergency declaration on March 13, 2020, Leafbuyer realized a 41% increase in text usage compared to the previous period. More recently, new sales and client upgrades have resulted in 63% quarter to quarter growth in texting credits.
Grappling with social distancing requirements, dispensaries have been forced to quickly pivot to alternative purchasing methods like pickup and delivery. The Leafbuyer online ordering solution supports both options and allows
clients to continue processing orders. Stores that allow customers inside still must limit the number of visitors, so Leafbuyer Order Ahead has grown in popularity as owners aim to process more transactions per hour.
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Every industry has been forced to grapple with the COVID-19 outbreak. The cannabis industry has overall been fortunate during this time, and Leafbuyer is poised to succeed as dispensaries seek to communicate with their customers and process orders online.
In the long run, the coronavirus crisis is likely to advance cannabis legalization. Legal states are incentivized to keep dispensaries open as the tax revenue from cannabis sales helps soften the economic impact to state budgets. States
that have not legalized medical or recreational cannabis could be looking to legalize much more quickly to help cover the impact of COVID-19 on state revenue shortfalls.
Meanwhile. Leafbuyer continues to focus on the fundamentals and aim for positive cash flow. By creating outstanding products, maintaining long-term customer relationships, and securing new business in multiple markets, the company will continue to grow revenue and build value for its shareholders.
Leafbuyer will issue timely communications as important information becomes available.
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