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Edited Transcript of LIFT.V earnings conference call or presentation 5-Feb-20 2:00pm GMT

Q3 2020 Lift & Co Corp Earnings Call

Feb 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Lift & Co Corp earnings conference call or presentation Wednesday, February 5, 2020 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Katarzyna Malz

Lift & Co. Corp. - CFO

* Matei Olaru

Lift & Co. Corp. - CEO & Director

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Lift & Co.'s Q3 2020 Conference Call. (Operator Instructions)

Before we begin, I would like to remind you that certain statements made on this call today may be considered forward-looking. In that regard, I would refer you to the risk factors and cautionary provisions outlined in the press release issued by the company this morning as well as the filings made by Lift & Co. on SEDAR. Please note that this call is being recorded today, Wednesday, February 5, 2020.

I will now turn the conference over to Lift & Co.'s CEO, Matei Olaru, please go ahead.

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Matei Olaru, Lift & Co. Corp. - CEO & Director [2]

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Good morning, everyone, and welcome to our Third Quarter Fiscal 2020 Earnings Conference Call.

Overall, it's been a very exciting quarter for us here at Lift & Co. We were able to deliver sizable growth by effectively executing on our strategy, particularly, we entered into a number of important partnerships that are integral to the development of our Cohesion platform. And we held another successful Canadian Cannabis Awards Gala that continued to position Lift & Co. as a thought leader in the cannabis industry. On aggregate, with 4 dominant platforms: lift.co for consumers; CannSell for budtenders; Expo for the industry; and Cohesion for brands, we effectively connect and deliver value to the key stakeholders in the cannabis industry.

We are very pleased with the financial results that we achieved this quarter as well. Similar to previous quarters, we continue to demonstrate growth across our entire business because of our ability to solve key problems for cannabis brands, trying to market and understand their end consumer. Through our platform ecosystem, we are able to deliver invaluable business insights as well as the marketing channels to the industry, which lacks -- which the cannabis industry lacks due to stringent government-imposed advertising restrictions that inhibit creation of necessary infrastructure and the creation of brand.

Our ability to lead effectively is clearly reflected in our results for all 3 business segments. To break that down, our Trade Marketing platform, CannSell, is [Lift & Co.'s] retail education marketing platform of budtenders and is the dominant platform for cannabis retailers in Canada.

We're excited to note that following tremendous growth in this segment, we achieved our first quarter of profitability. With Ontario regulators announcing that they plan to license approximately 20 new stores per month beginning April of this year, further growth and profitability can be expected as these new stores are guaranteed to adopt CannSell per our multi-year exclusive mandate from the Alcohol and Gaming Commission of Ontario.

We recently received a regulatory approval for a new module of edibles, extracts and topicals, which launched on January 2 and must be completed by every budtender in the province, store manager and license holder by March 2 of this year. As a marketing channel, we've seen a lot of interest on the branded training modules on the CannSell platform. These modules allow producers or retailers and accessory manufacturers advertise directly to this captive budtender audience.

We launched a total of 4 brand training modules to date and, most recently, for PAX Labs and TerrAscend's Haven St. Premium Cannabis brand.

In total, we've sold 12 modules, 8 of which are in various stages of development and are expected to launch over the next 2 quarters. Our partnership with Mothers Against Drunk Driving, our exclusive mandate with the AGCO and our total reach across 8 jurisdictions in Canada with CannSell has given us a significant competitive advantage that has allowed us to achieve profitability this quarter and support significant growth for this segment going forward.

Our Data Insights platforms, lift.co and Cohesion, have seen impressive growth despite the fact that they continue to be under development. Cohesion is our flagship data-as-a-service platform, which provides nationwide coverage for consumer insights that provide an understanding and segmenting of the target cannabis consumers. We launched this product a short little while ago on September 10 and have seen significant interest as a result of our ability to provide the insights that are most relevant to brands today. Unlike POS analytics companies, Cohesion's -- Cohesion can tell the client who is buying and why products are moving by leveraging the data collected through the lift.co platform.

With respect to our accuracy, we receive enough volume of data from receipts to accurately predict sales of brands within a 5% margin of error, something that we've validated with several licensed producers. Our top provinces for insights are Ontario, Alberta and Manitoba. Laying on the demographic and psychographic data from our reviews and user profiles directly to these transactions had differentiated our product from companies like [Head2Head] and BDS. To date, we have over 30 licensed producers on the limited trial version of the platform, and we expect these clients to convert to long-term contracts during our Q4.

Our recent strategic partnership with Nielsen, a leading global analytics company, will allow us to further augment our Data Insights by combining our unique data sets with Nielsen's decades' worth of consumer segmentation data in this exclusive partnership. We'll be launching a product formally named Cohesion Segmentation powered by Nielsen.

And this product gets down to specific real individual consumer profiles that would allow marketers to segment, understand and market to target audience in ways not currently possible.

Once the product is launched in early 2020, clients will be able to accurately identify customer segments, predict their purchases and digitally activate tags against these customer segments directly through lift.co and our partner websites. Put another way, we predict this tool to be able to reduce the cost of acquisition by as much as 30% for digital ads and increase click-through rate by over 20%.

Our recently announced addition of Adobe's Advertising Cloud to Cohesion will further enable segmentation clients to seamlessly deliver compliant programmatic advertising to their target customer segment. This has never been done before in the cannabis industry. In the meantime, we will be releasing a version 2.0 of Cohesion to all our clients shortly in the next few days, which will be a much more powerful tool on the path to launching segmentation.

With all that in mind, we recently announced our first step towards our U.S. expansion. Through partnerships with Enlighten, a leading U.S. technology provider in the cannabis industry, it will allow us to expediate the developments of our U.S. products platform, which is expected to launch sometime this year. This partnership with Enlighten will allow us to both replicate the platform we've created here in Canada by leveraging Enlighten's distribution network in over 1,000 legal dispensaries across the U.S. for faster consumer penetration at the point-of-sale and faster data collection on products across the United States.

Our Event Marketing platform, of course, continues to establish us and solidify us as the market leader in the cannabis industry. And generating positive cash flows overall for this segment has established important business relationships that support the other segments we've discussed so far.

This quarter, we hosted the annual Canadian Cannabis Awards, which has, since inception, become the industry standard for product and brand excellence in the industry. The event was, of course, bigger and better than prior years, with several prominent producers press releasing their wins driven by over 30,000 votes in the form of reviews and receipts, which were submitted to lift.co, all of which, of course, provided data to power Cohesion and our upcoming product with Nielsen.

More recently, we held our Vancouver Cannabis Business Conference and Expo, where we saw a 15% increase in exhibitors and over 120 speakers and the launching of several new products. Both of them contributed to our continued trend of year-over-year revenue growth. Notwithstanding market dynamics, that's been an incredible quarter for Lift & Co., and we are excited to continue to demonstrate our position as an information and insights leader and to deliver to investors strong revenue growth, operating efficiencies and a clear path to profitability and cash flow generation.

With that said, I'll now turn the call over to our Chief Financial Officer, Kasia Malz, who will provide a financial overview of the quarter's performance and financial results.

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Katarzyna Malz, Lift & Co. Corp. - CFO [3]

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Thank you, Matei, and thank you for everyone for joining us today. I will be summarizing results for the third quarter of fiscal 2020. But first, I'd like to remind listeners that all dollar amounts referred to are in Canadian dollars.

Overall, we are pleased with our third quarter results. Total revenue for the 3-month period was CAD 926,000, up 11% from last year. And total revenue for the 9-month period was CAD 4.6 million, up 41%. In addition, loss from operations decreased by 7% to CAD 2 million for the 3-month period and decreased by 17% to CAD 4.8 million for the 9-month period. Trade Marketing revenue was CAD 139,000 for the quarter, an increase of 145% over last year. For the 9-month period, revenue was CAD 364,000, up 77% over last year.

This quarter, we sold almost 900 CannSell retail training certifications and to date have over 5,000 registered budtenders on our platform. We have also sold in total 12 branded modules, of which 4 have launched and 8 are under various stages of development. This has resulted in an unearned revenue balance of CAD 456,000 at the end of the quarter, which exceeds our revenue for the trailing 9 months. This quarter also marked our first quarter of profitability for this segment as a result of higher revenues, driven by our new brand training modules as well as lower development costs.

Data Insights revenue was CAD 360,000 for the quarter, an increase of 30% over last year. For the 9-month period, revenue was CAD 748,000, an increase of 73%. This growth was driven by a targeted focus on monetizing the lift.co website, to the sale of various digital marketing products as well as preliminary sales of our new Cohesion product. As a result of our sales efforts this quarter, we closed the quarter with CAD 775,000 in unearned revenue, which, again, exceeds our revenue for the trailing 9 months. In addition, Cohesion sales are only in their infancy, and we expect sales to increase significantly over the next 2 quarters as we have experienced significant interest in the product to date.

Event Marketing revenue was CAD 427,000 for the quarter, a decrease of 15% due to a onetime retail sales trade show that was held last quarter. We also held our Canadian Cannabis Awards this quarter, for which revenue increased by 29%. For the 9-month period, revenue was CAD 3.5 million, an increase of 33%, driven by the success of our Toronto Expo, which was held in the first quarter. Subsequent to the quarter, we held our Vancouver Expo, which also saw an increase in revenue of 14%. Event Marketing continues to be an important cash generator for us that finances the remaining business segments.

Overall, loss per share decreased from CAD 0.08 to CAD 0.04 for the 9-month period. Expenses remained relatively flat this quarter compared to last despite the fact that revenues and cost of revenues increased, resulting in a decrease in operating losses of 7% for the 3-month period and 17% for the 9-month period. This quarter was also our first quarter of positive cash flow from operations due to our ability to successfully increase our revenue.

We continue to review nondilutive options to fund further developments of our digital businesses. In the meantime, have sufficient cash to execute on our strategy for at least the next 2 quarters and to continue on our path to profitability as demonstrated by Trade Marketing this quarter. That concludes the financial portion of the presentation. I will now turn it back to Matei to conclude and open for questions.

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Matei Olaru, Lift & Co. Corp. - CEO & Director [4]

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Thank you, Kasia, and thank you, everyone, on the call for joining us this morning and staying connected to our evolution and continued success. We're pleased with the third quarter results and proud of our recent milestones. And certainly excited for the opportunities ahead. We will now pass it on to the operator and open the line for questions.

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Operator [5]

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(Operator Instructions) We have no telephone questions at this time. I'll turn the call back to our presenters.

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Matei Olaru, Lift & Co. Corp. - CEO & Director [6]

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Thank you, operator. And thank you again, everyone, for joining the call. And we look forward to joining again with you for our Q4 release in the near future.

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Operator [7]

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This concludes today's conference call, you may now disconnect.