Wm Technology, Inc. Q1 FY2022 Earnings Call

Good day, good afternoon, everyone, and welcome to WM Technology Inc.'s First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your host, Tim O'Shea, Director of Relations. Please, go ahead.

Hi, everyone. Thanks for joining us today to discuss our fiscal 2022 first quarter results. We have our CEO, Chris Beals; and our CFO, Arden Lee, with us today. By now, everyone should have access to our earnings announcement. This announcement is also on our Investor Relations website, along with the supporting slide deck. During this call, we'll make forward-looking statements, including statements about our business outlook strategies and long-term goals. These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainties, some of which are beyond our control. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and our Investor Relations website, as well as the risks and other important discussed in today's earnings release. Should any of these risks materialize or should our assumptions prove to be incorrect, actual financial results could differ materially from our projections or those implied by these forward-looking statements. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events, except by law. Also during this call, we will discuss certain non-GAAP financial measures which are not intended to be a substitute for our reported GAAP results. While we believe these non-GAAP measures are helpful to investors in understanding our business, they are not intended to be a substitute for our GAAP results. A reconciliation of these measures to our GAAP results can be found in our earnings release. With that, I'd like to turn the call over to Chris.

Thanks, Tim, and hello to everyone on today's call. We had a really strong first quarter and I'm pleased with our performance across a number of key areas. This quarter demonstrated that we're playing offense and creating distance from the pack as the leading technology provider and commerce-driven marketplace in cannabis. This past 420 holiday provided clear evidence that consumer demand for cannabis remains strong, despite broader macroeconomic concerns impacting other consumer discretionary sectors. We saw not only large crowds at 420 events across the country, but also broke our single-day record for the highest order volume on Weedmaps this 420. Let's get straight into the results. We exceeded goals announced in February. For Q1, we grew revenue by 40% year-over-year and we continued to grow our user and client base uninterrupted despite the ongoing turbulence in some state cannabis markets. The power of the Weedmaps marketplace and the value that we provide, both to users and clients, is evidenced by the results we drove and continues to instill confidence in our long-term strategy. It's clear that our strategy is working with business results that reflect the user growth we are driving across the Weedmaps marketplace and the client engagement we're fostering through our WM software solutions. Looking at Q1, WM Tech's growth continues to be a result of three areas that I'll walk through today. First, driving deep client engagement for the cannabis retailers and brands we serve across all markets; second, innovating and expanding our Weedmaps marketplace to continue to be the center of commerce for cannabis consumers, regardless of shopping demographic; and third, expanding the adoption of WM Business suite of SaaS tools to enhance the client and user experience of accessing Weedmaps. Let's start with how we drove client engagement in Q1. We focused on delivering outsized value for our clients, as I've mentioned before. Our average revenue per paying client is a direct reflection of the returns that our clients are experiencing from being on our marketplace, regardless of the continued instability in end markets. We continue to expand our reach of clients across markets, with over 250 new paying clients added in the quarter. As new states come online, like Montana, which opened for recreational sales in January and New Mexico, which started recreational sales in April, we've been active in onboarding new clients and educating them on the breadth of the WM Business platform, while helping these retailers reach consumers and transact with them on the marketplace. We've completed the rollout of our Admin 2.0 portal that I spoke to in February. With this update, clients now have a simple-to-use homepage user interface providing visitor view and engagement trends in addition to ROAS metrics. This surface also lays the groundwork for self-serve, with elements for how clients can upgrade the quality of their digital presence on Weedmaps, view insights like top products across their listings and enable cross-product adoption and purchase upsell opportunities across our WM Business suite. We continue to improve our deals offering with new features to allow clients to publish deals at scale across their listings. We've also created a new promotions hub within Admin 2.0, allowing clients to create and manage all promotions, including online promo codes, in-store deals, and online deals from one place. We've rolled out new promotions features within our WM Store e-commerce embed allowing clients to showcase promotions more easily on their own channels powered by WM Store. Moving on to our Weedmaps marketplace, our users are the core of our value proposition with clients. In Q1, we improved the user experience in our marketplace in several ways as we look to reinforce our position at the center for cannabis commerce. I noted last quarter how we've increased the discoverability and transactability of deals and promotions for users seeking value. Regarding convenience, we're piloting several new user enhancements including express reorder and order again features allowing users to easily select products they previously purchased, along with order type preferences, which lets users filter through available delivery and pickup options in their region. We also continue to test menu personalization leveraging our first-party user affinity data. We expect to ramp these tests across more users and regions as the results of our user engagements and conversion actions have been validating. Now let's discuss how we're expanding the adoption of our WM Business platform. The WM Business platform anchors our client experience in accessing the Weedmaps marketplace. The more solutions they leverage, the easier it is to drive consumer conversion. In turn, client utilization of these solutions drives a smoother marketplace experience and a higher propensity to adopt additional WM Business platform solutions. Client utilization of more solutions across the WM Business platform translates to things like up-to-date menus, accurate product information, and omnichannel shopping options across multiple brands and retailers on the marketplace—all to the benefit of our users. In Q1, we continue to expand our value-add integrations and now have menu integration with key point-of-sale companies serving cannabis. Nearly 70% of menus on Weedmaps are now supported by menu integrations ensuring real-time inventory and accuracy of product information. We're also focusing on expanding our orders integration with these same point-of-sale partners. Additionally, as we start to have point-of-sale partners integrate and market parts of the WM Business platform, navigating the inherent conflicts of being both the partner and competitors become increasingly challenging. Looking forward, I see an emerging opportunity position in the WM Business platform as a SaaS vendor to cannabis point-of-sale and ERP providers. I'm pleased to welcome the Enlighten team to WM Technology, and I look forward to scaling our solutions together. It's an incredibly synergistic acquisition. For instance, we're already pairing it with WM Store to do a jointly powered in-store experience. Moving forward, the acquisition positions us to be a tremendous partner to retailers and point-of-sale providers where you can ingest and cleanse point-of-sale data one time, enrich it from our brand information catalogs, and have that data power engaging and transactable consumers across the Weedmaps marketplace, web e-commerce, and in-store kiosk experiences. This example represents yet another value-add solution we can provide to our software partners. Looking back at what we delivered this quarter, I think it's important to highlight a very key differentiator and competitive advantage for WM Technology. With an engineering product and design organization that numbers nearly 300, we have what I believe to be the largest software development team focusing on the cannabis space. Not only that, we've been incredibly successful at attracting marquee talent from top-tier companies across the technology space who are drawn to the size of the opportunity we have, our culture, and our commitment to a just and socially conscious cannabis industry. In the first quarter alone, we grew our engineering product and design headcount by roughly 15% compared to where we were at the end of Q4. The end result of having a technical delivery team of our size that is thoughtful and passionate is an incredible pace of software and future delivery. We witnessed this last quarter as we delivered new solutions at the fastest pace I've seen during my time here at WM Technology. When I talk about us playing offense with our balance sheet and cash flow, a big part of that focus was in continuing to invest in the incredible engineering product and design teams, which is such a critical piece of our success. Looking forward, I'm excited by the work our teams are doing and the opportunities we have ahead of us. We are innovating within cannabis technology and driving advancements that we believe will be more visible over the course of this year. Let me touch on something I'm incredibly excited about. We're piloting a new in-app messaging feature that allows our CRM clients to reach their followers on the Weedmaps marketplace with exclusive deals and product promotions. Clients using Sprout, the CRM solution we acquired in Q3, will be able to conduct targeted marketing campaigns toward their followers on Weedmaps, allowing these users to receive campaigns directly in their inbox on the Weedmaps iOS and Android apps. This beta essentially allows our clients to reach their shoppers as they're making purchasing decisions on Weedmaps, leading to higher conversion and a lower cost to the client than other channels and options—unlocking a potentially large growth flywheel for our marketplace businesses, increasing their use of in-app messaging and encouraging their customers to follow on Weedmaps, which in turn drives more end-user engagement across our marketplace. I'll turn now to another area that I believe is game-changing for our brand clients. We recently launched a new insight solution in beta, providing brand clients with powerful and actionable intelligence on brand and product rankings, retailer placements and performance, and product pricing insights, all of which are powered by our proprietary data. This brand's insights product addresses an acute pain point for cannabis brands that we don't believe is being served anywhere today. Apart from these areas, we're also rolling out scheduled orders functionality that allows users to receive orders with set delivery windows and continue to work towards rolling out dynamic delivery or what's known in the industry as 'ice-cream truck model' capabilities for our clients with delivery operations. We continue to unlock valuable integrations for our clients such as menu and orders integration with LeafLogix and BioTrack that are rolling out in the near future. We've also prepared to launch a new WM Business offering in Canada, centered around our WM Store, WM Dispatch, and Enlighten solutions. This will also include new payments functionality. Our learnings from payments in Canada will inform the approach we take in the U.S. once regulations enable us to monetize payments. Our teams continue to be laser-focused on what we call 'Winning the Big East', which is our initiative focused on owning critical new East Coast states as they come online. While it's still very early days, Weedmaps is resonating with clients in the tri-state area. We've already onboarded over 40% of licensees in New Jersey, for instance. We remain optimistic about these markets, though as a reminder, the revenue contribution we expect from New Jersey this year is not material given the nascent state of the market. Finally, I'd be remiss if I didn't take a moment to talk about another historic 420 holiday and what its success means not only for WM Technology but the broader cannabis industry itself. I've seen estimates that this year's 420 drove over $150 million in legal sales, an increase of over 35% from last year. In New Jersey, lines were out the door on the opening day of recreational sales the day after 420. On Weedmaps, we've had our highest volumes of orders placed this past 420, eclipsing prior all-time highs with double-digit growth in volume compared to last year's 420. Heading into 420, we launched our new 'Tumbleweed' series in April featuring Killer Mike, which is broadcasted by VICE TV. It is a multipart docuseries showcasing local cannabis culture across cities like Las Vegas, San Francisco, Chicago, and New York. We coupled Tumbleweed with content integration within the Weedmaps app that allowed our users to access exclusive content, merchandise, and promotions related to Tumbleweed. Our Tumbleweed content integration launched on 420 and contributed to a 27% increase in app downloads during the 420 week compared to historical weekly averages. Since the start of this year, we've seen states with a combined population of 10 million residents legalize adult recreational use, excluding states like New York with over 20 million residents. I think it's important to highlight the exciting time we’re at in this country, and indeed the world, with respect to cannabis. I believe it serves to emphasize our point that consumer demand for cannabis remains healthy, in fact, the healthiest it's ever been. While WM Technology continues to lead the push towards making legalized cannabis more accessible, it is up to our federal, state, and local governments to do their part to increase license density, which will drive more consumer demand away from non-licensed operators to licensed channels. With that, I will now turn the call over to Arden, our CFO.

Thanks, Chris, and hello to everyone on the call. Today's environment continues to be incredibly dynamic. The human tragedy overseas and inflation fears at home are driving concerns about the health of consumer and discretionary spending. While these dynamics weigh on the business outlook for many companies, the same does not hold true for WM Tech. Consumer demand for cannabis remains strong, access to licensed products continues to improve, and the visibility of our opportunities is getting clearer with each passing quarter. These trends were reflected in our Q1 results. We delivered $57 million in revenue, which is 40% growth compared to last year and approximately $1.5 million higher than the top end of our guidance. Although we completed the Enlighten acquisition in Q1, we recognized less than $1 million of incremental revenue from that transaction during the quarter. We now have over 5,000 average monthly paying clients with over 250 new clients added—a 28% growth year-over-year. Our average monthly revenue per paying client is approximately $3,800, which is 9% higher compared to last year. We continued to grow our user base with over 50% growth in monthly active users compared to last year. Our Q1 performance exemplifies the value we continue to deliver to both our users and clients and the scale advantages we have compared to other technology solutions providers in the cannabis industry. Moving down the P&L, our Q1 operating expenses reflect the investments we’re making as we expand our new client solutions, such as our new multichannel Weedmaps ad network offering, along with several of our data initiatives. Our reported operating expenses after the cost of revenues and before depreciation and amortization came in at $64 million for the quarter. This reported OpEx includes $7.5 million in stock-based compensation along with $2.3 million in other non-recurring charges related to our recent transactions. A detailed breakdown of these charges is available in our earnings release and earnings slide deck. Excluding these items, our non-GAAP adjusted OpEx for the quarter was $54 million, or a 78% increase compared to last year. Our Q1 adjusted OpEx increase was driven by continued investments in our go-to-market teams, our engineering product and design orgs, as well as incremental expenses incurred from the acquisition of Enlighten. We also continue to see elevated levels of expense due to clients struggling in the current environment, which impacted our adjusted EBITDA by $3 million for the quarter. Our Q1 adjusted EBITDA, given these factors, was a loss of $1 million. As a reminder, we expected our first-half adjusted EBITDA margins to be breakeven to slightly positive, reflecting the strategic investments for 2023 and beyond that we discussed back in February. We believe that the pull-forward of these investments will accelerate our dominance in key areas. Our reported net loss was $31 million, which includes an $18 million change in the fair value of our warrant liability resulting from the change in our accounting following the SEC statement earlier last year regarding accounting for these types of warrants. Our fully diluted share count across just our Class A and B share classes was 144 million at the end of the quarter. A reconciliation of adjusted EBITDA to net income, as well as the details of our share classes and share count calculation are provided in our earnings release and quarterly results presentation that were posted to our Investor Relations site. We ended the quarter with $56 million in cash and zero debt. We believe that our highest returns on capital will come from investing in growth opportunities, whether organically or via investments like the Enlighten transaction. We also continue to receive more partnership and acquisition proposals, allowing us to be very selective and disciplined in our strategic investments. Looking ahead to Q2, our outlook for 2022 remains unchanged. We continue to expect 2022 revenue to grow to between $255 million and $265 million, which represents a 32% to 37% growth over our fiscal 2021 results. While we see potential upside from increasing visibility on new state openings, traction against our innovation pipeline, and our recent acquisition of Enlighten, we are also cognizant of macro volatility that weighs on consumer health and the ongoing business challenges facing our clients across several end markets. We expect to drive consistent revenue growth across our subscription-like products, in line with our prior guidance. A reminder that over 90% of our revenue continues to be recurring in nature. We continue to see higher levels of spending from clients, where we see return dynamics support net dollar expansion growth. We are also expanding our client base, as evidenced by our growth in paying clients this past quarter. Progress continues on the opportunities we have with under-penetrated clients and across new solutions. Although our guidance for the year did not take into account material growth from new East Coast markets or Canada monetization, we are making strides in building relevance in New Jersey and rolling out a new product-driven strategy in Canada, as Chris discussed earlier. We are also evaluating a freemium strategy to scale adoption through our acquisition with a focus on installs rather than revenue, so we do not expect that transaction to materially change our outlook for the year. On February's call, I mentioned that we expect our growth to be more consistent this year compared to fiscal 2021, given the absence of planned shifts in the business. In that regard, our outlook for Q2 revenue is in the range of $60 million to $63 million. Regarding margins, our outlook remains unchanged. We continue to expect fiscal 2022 adjusted EBITDA to be in the range of $15 million to $20 million, including our investments to support fiscal 2023 priorities. We also anticipate that our adjusted EBITDA margins for the first half will be breakeven to slightly positive, as we prioritize investments against growth opportunities for the second half of this year as well as fiscal 2023 strategic initiatives. Adjusted EBITDA profitability is core to our DNA as a company; we have always maintained positive adjusted EBITDA annually throughout our 10-plus-year history, and we will continue to practice rigorous cost discipline in areas that are not points of strategic differentiation for us as a company. In closing, our strategy is working, our teams are executing, and the cannabis end markets continue to strengthen. As we play offense, our scale advantages within the cannabis tech ecosystem create a gravitational pull benefiting Weedmaps and our WM Business platform. Against that backdrop, WM Tech represents a differentiated and insulated story compared to the broader technology landscape in today's macro environment. With that, let's open it up for questions.

Thank you, sir. I show our first question comes from Tom Champion from Piper Sandler. Please go ahead.

Thank you. Good afternoon, guys, and congrats on the strong results. Can you provide a little more context and detail on what you're seeing in the end markets? I think at the macro level, investors are debating inflation and other cost increases. I'm curious about what you're seeing there with both the consumer and your licensed clients. Overall, it seems like there is a lot of uncertainty, and I wonder if that plays into your Q2 guidance after a very strong start to the year in Q1. Also, if I can add one more question, Chris, it seems like there is a long list of product improvements that you discussed in the script. Could you isolate one or two that you think will really drive the results? What moves the needle here? Thanks, guys.

Great, thanks, Tom. First of all, I want to highlight that cannabis demand at the aggregate level continues to trend upward. We're seeing an increase in the number of people reporting monthly cannabis consumption in the U.S., which has continued to rise after states legalize. It's materially higher in Canada in some cases—it's higher than it is here. It’s not just new consumers; it’s an increase in the frequency with which people are consuming cannabis. Separately, we’ve had several states come online. As states undergo legalization, the speed of opening varies. That has been a powerful trend - in some of the data we’re seeing, an increase in consumers opting to shop through a centralized specialized marketplace, specifically us. Thus, our growth rates, our return user rates, and our performance, especially around 420, have outpaced what we observe in brick-and-mortar cannabis retail. A lot of this comes down to a reduction in consumer aversion to ordering cannabis online and receiving it via home delivery. We offer the best way to browse, shop, identify cannabis products, and compare deals and prices conveniently delivered to your home without hassle. One interesting aspect of the data we’re seeing is that, as retailers increase, some same-store sales are showing a decline, which does not stem from illicit market dynamics, but rather that, as the number of options for consumers increases, they become choosier about where they shop. The friction that once existed in locating a new store has diminished. Overall, it is worth noting that while there may be bumps—especially with high tax rates and challenges in accessing legal stores—these factors are decreasing over time. Concurrent with this trend, our marketplace continues to grow stronger.

Thanks, Chris.

Thank you. Our next question comes from the line of Andrew Carter from Stifel. Please go ahead.

Thanks, guys. Can you all hear me okay?

Yes.

Yes.

Okay. Good. First question I wanted to ask, backing up on the end markets question. You're up 40% in the quarter, but I understand some key markets have been fairly flat. Are you seeing any major differences? I mean, you’re in Colorado, Oklahoma, and California; I think Oklahoma is under the most pressure. Are you seeing any major differences where you're observing declines impacting your businesses?

To some degree, it's difficult to generalize an entire state because there are variations. I would say many of the conditions have more commonality than is apparent in trade coverage. That said, tax season was particularly tough in California, as many businesses faced significant state tax bills due in April, leading some to be caught off-guard. The good news is California looks likely to implement substantial tax reductions and reforms in cannabis, which, if included in the trailer bill, could take effect in July, freeing up more capital for these businesses to spend on SaaS solutions with us and improve their visibility in the marketplace. In summary, I see more common trends than people acknowledge, while on the flip side, there has been evidence of stability and a decline in volatility.

The only thing I’d add, Andrew, is that in some of those markets you noted, operators are indeed facing challenges. However, I believe this could work to our advantage, as some operators seem to be reallocating their spend towards channels that work. For example, in California, revenue per client trends have continued to grow versus last quarter, which represents an upside surprise we experienced in Q1.

Okay, thanks. Additionally, I know you noted the bad debt expense, which I believe you stated was around $3 million on the cash flow statement. Just as a percentage of revenue, that has been increasing for three consecutive quarters. Could you provide any comfort concerning the aging? Has it peaked? Can you offer any insight regarding clients possibly facing greater challenges?

Absolutely. As I previously mentioned, specifically in California, there are operators that are struggling; this reality is widely acknowledged. Many operators are instructed internally to prioritize urgent payments for rent, taxes, or utilities. Unfortunately, we’ve had to terminate some clients while placing others on payment plans. However, we think we've weathered the worst. Dialogue with clients facing operational challenges indicates improvement, as evidence by some third-party and internal data showing strengthening trends going into Q2. We want to be there for our clients; our platform is uniquely positioned to help them endure this storm and reach the other side. We remain optimistic overall.

I appreciate the insights. Thanks, guys.

Thank you. Our next question comes from the line of Pablo Zuanic from Cantor Fitzgerald. Please go ahead.

Hello everyone. I got disconnected, so I apologize if my question has already been asked. If we consider your average monthly spend per client as similar to the same-store sales concept, how would you assess it? In year-over-year terms, you added about 800 retailers, and the average spend per month has increased from about $3,700 to $3,800. However, I’m assuming these new clients entering the market are starting from a much lower rate. Do you believe you have a decent lift in average spend on your existing client base?

Yes, that’s correct, Pablo. Most of our new client growth is emerging from regions that are either new markets like New Mexico or Montana, or markets that have been operational for a time but are still under-penetrated. New clients in emerging regions do generally incur lower monthly spending rates compared to more established markets. That said, I want to highlight that newer clients across regions tend to increase their spending at a faster rate than previous cohorts, which is encouraging when looking at our future growth. Therefore, it is truly market-specific, as it largely depends on the dynamics happening within each region.

Thank you. One final question if I may. Chris, it seems you have some reconsideration regarding entering new verticals, as it looks like you might prefer to partner with some potential competitors instead of going solo. Can you offer any further color on that?

To clarify, we've always had a partner strategy. Since I assumed the role of CEO, one of my strategic goals has been to build SaaS and marketplace solutions leveraged not only by in-licensees but also by software providers and ancillary services within the cannabis space. Over the past several years, we invested heavily in this strategy through various acquisitions. We structured these acquisitions for seamless integration with the WM platform and to serve the needs of cannabis-related ERPs, POS solutions, and other systems critical to the industry. So what we're observing is a realization of that strategy where several software companies desire to enhance their services by integrating parts of the WM platform into their offerings. We’re also seeing menu and online order integrations develop further through our relationships with partner companies.

Got it, thank you.

Thank you. I show our next question comes from the line of David Hynes from Canaccord. Please go ahead.

Hey guys. This is Luke on for DJ. Thanks for taking the question. Arden, you mentioned your growth in ARPU was an area of upside surprise in the quarter. Could you elaborate or contextualize some other areas where you saw surprise, or alternatively, areas where results fell short of expectations?

Certainly. In no particular order, I want to highlight areas of upside in Q1. First, our revenue per client, especially in California and some of our other mature markets showed growth relative to our expectations, which informed our original guide for Q1. Second, we witnessed stronger-than-expected new client growth in our emerging regions compared to our forecasts. Lastly, several of our new solutions scaled quicker than anticipated this quarter, whether that be the multichannel media offering called our WM Ad Network or assumptions surrounding our SaaS solutions, specifically Sprout and Cannveya. Overall, the growth was widespread in emerging regions for acquiring new clients, while in mature markets, we saw more revenue per client.

Excellent, that’s helpful. Can you expand on the freemium offering you mentioned and the opportunities that it might create?

Sure, regarding freemium, we are seeing clients eager for value, creating a platform effect where those utilizing one piece of the platform are more inclined to adopt other facets or remain engaged. One strategy we're deploying is allowing clients to use it initially for free for a specified period under a longer-term contract; this could change the pricing structure where baseline software usage is complimentary, and they may pay for additional features or services. A prime example is in the CRM space, where the recurring SaaS fee could differ from campaign-based charges. This reflects our commitment to increasing penetration while providing high ROI.

Thank you. I show our last question comes from Scott Fortune from ROTH Capital Partners. Please go ahead.

Hey, you’ve got Nick on for Scott. I apologize if my question has been asked but I got cut off earlier. Could you describe the upside surprise in California? Can you unpack what you saw in California specifically and its contribution to the quarter regarding mix and overall growth outlook in that market?

Yes. California saw growth relative to our expectations and assumptions for Q1, particularly in spend per client—this was driven by factors we previously mentioned. In times of heightened scrutiny regarding their mix of spending, we tend to be the beneficiaries. For context, California continues to be a growth market for us. We expect to continue growing within California despite modest license issuance not moving at the pace we anticipated. We're determined to make our compelling value proposition clear to clients seeking to reassess their vendor mix, showcasing the returns on ad spend we deliver. With additional solutions being introduced, we're actively targeting the heavy delivery segment, strengthening our foothold in California.

It's critical to note that California will likely remain a bellwether for how retailers in the cannabis space will operate. Trends we're observing in California—such as shifts to smaller and more flexible footprints—will influence other regions as well. We are also piloting in-store kiosk ordering solutions with Enlighten and WM Store, improving recommendation capabilities for products. Adoption of delivery services is becoming essential for survival, with retailers realizing they can’t afford to ignore this trend. We're attacking this with solutions such as Cannveya for direct ordering integrations. We’re also working on price competition through our deals engine and better price comparison tools within the marketplace. Our strategies are becoming increasingly vital for retailers, and the consequent benefits and profitability are beginning to surface in other states too.

Got it, that’s really helpful. Regarding the East, with New Jersey's recreational sales underway, you've mentioned onboarding about 40% of clients with other states to potentially follow. Are you looking to accelerate your investments in that area, or are you still comfortable following the timelines in place?

We have indeed front-loaded many of our investments for this year, which is reflected in our ongoing positive EBITDA guidance. So, I believe we’re on track with our timelines. The groundwork for relationship-building has been laid over some time now. In New Jersey, while we currently see about 12 retailers offering recreational sales, that number should greatly increase. However, there is some supply constraint, as those retailers must ensure they have enough stock available for medical sales. Right now, the supply and functionality of the recreational market are still quite nascent.

Got it. I appreciate the clarification.

Thank you. That concludes the Q&A session and today's conference call. Thank you all for participating. You may all disconnect.