Breaking Down Leafly Holdings, Inc. (LFLY) Financial Health: Key Insights for Investors

You're looking at Leafly Holdings, Inc. (LFLY) and trying to figure out if this cannabis marketplace is finally turning a corner, but the numbers from the 2025 fiscal year tell a complicated story about stabilization versus capital crunch. Honesty, the core issue is liquidity: as of March 31, 2025, the company's cash and cash equivalents dropped to $8.64 million from $14.53 million at the end of 2024, and they still have convertible promissory notes due in July 2025 that need addressing. Still, the cost-cutting is working; the net loss for Q1 2025 improved to $1.78 million, a clear step up from the $2.39 million loss a year prior, even as Q1 revenue dipped to $7.88 million. That's a tightrope walk. The business is leaner following its January 2025 transition to the Over-The-Counter (OTC) market after delisting from Nasdaq, but the clock is defintely ticking on that balance sheet, forcing management to even consider taking the company private to cut public company costs. We need to look past the gross revenue-the trailing twelve months (TTM) revenue sits at $33.47 million-and focus on the burn rate and the path to profitability, because the next few quarters are make-or-break.

Revenue Analysis

You need to know if Leafly Holdings, Inc. (LFLY) is generating enough cash to survive, and the short answer is that revenue is shrinking, but the core business is showing signs of stabilization and cost control is working. The company's revenue streams are straightforward, but the overall top line is under pressure from a challenging cannabis market.

For the first quarter of 2025, Leafly Holdings, Inc. reported revenue of just $7.88 million, a significant drop from the $9.05 million reported in the same quarter last year. This trend means the trailing twelve months (TTM) revenue as of March 31, 2025, sits at approximately $33.48 million, reflecting a year-over-year decline of about 16.42%. That's a serious headwind, so you can't ignore it.

The company's revenue primarily comes from two segments, both of which are subscription-based marketplace listings for cannabis businesses, making it an ancillary (non-plant-touching) player in the industry. The vast majority of its income comes from retailers, not brands. Here's the quick math on how those segments contributed to revenue in the most recently reported quarter with a segment breakdown (Q3 2024):

• Retail Revenue: This is the dominant source, primarily from subscriptions for dispensary listings, menus, and ordering features. It accounted for $7.4 million of the Q3 2024 total.
• Brand Revenue: This comes from digital display advertisements and other marketing services for cannabis brands. It was $1.0 million in Q3 2024.

To be fair, the decline in revenue is not a surprise. It's a direct result of the company cleaning up its platform-removing non-paying customers-plus the broader cannabis market facing oversupply and budget constraints for retailers. The good news is that management's focus on operational rigor has led to two consecutive quarters of positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), defintely a sign they are running a much leaner ship.

Here is a snapshot of the revenue segment contribution, which clearly shows where the company's focus must remain:

The key change is the shift in narrative: the retail business has largely stabilized sequentially, meaning the decline in accounts is flattening out. The CFO is now targeting growth next year from this 'firmer footing.' Still, the estimated full-year 2025 revenue of $32.89 million suggests analysts are factoring in continued softness. What this estimate hides is the urgency of the company's financial challenges, like its convertible notes due in July 2025, which is why strategic options, including potentially going private, are on the table. For a deeper dive into the capital structure and who is betting on this turnaround, you should be Exploring Leafly Holdings, Inc. (LFLY) Investor Profile: Who's Buying and Why?

Profitability Metrics

You want a clear picture of Leafly Holdings, Inc. (LFLY)'s financial health, and the profitability numbers from the most recent 2025 data tell a story of high operational efficiency but a persistent struggle to convert that into bottom-line profit. The direct takeaway is that Leafly operates with a superior gross margin, typical of a marketplace technology platform, but high operating expenses are still eating up all that profit and more.

For the first quarter ended March 31, 2025, Leafly Holdings, Inc. reported revenue of $7.88 million. The company's business model, which is primarily a software-as-a-service (SaaS) and marketplace for cannabis discovery, results in an exceptionally high gross profit margin (GPM). Here's the quick math on the key margins based on Q1 2025 results:

• Gross Profit Margin: Approximately 89.85%
• Operating Profit Margin: Approximately -15.74%
• Net Profit Margin: Approximately -22.59%

This gross margin is a huge advantage. It means that for every dollar of revenue, nearly 90 cents are left after covering the Cost of Goods Sold (COGS). For comparison, a plant-touching cannabis operator like The Cannabist Company reported an Adjusted Gross Margin of only 36% in Q1 2025. This difference highlights Leafly Holdings, Inc.'s position as a high-margin technology company, not a low-margin retailer.

Operational Efficiency and Margin Trends

The core challenge for Leafly Holdings, Inc. is operational efficiency (or the lack thereof) below the gross profit line. While the gross margin is stable and high, the sheer volume of operating expenses-which totaled $8.32 million in Q1 2025-pushes the company deep into the red. You can see the effect immediately in the operating margin of -15.74%. This is where the company is spending heavily on sales, marketing, and general administrative functions to fight for market share in a fragmented, highly-regulated industry.

To be fair, the trend in managing the net loss is moving in the right direction, which shows management's focus on cost discipline. The Q1 2025 net loss of $1.78 million was an improvement from the $2.39 million net loss in the same quarter of the previous year. They are getting leaner, but they're defintely not profitable yet. The company also reported a Trailing Twelve Months (TTM) net loss of $5.14 million as of March 2025, which gives a broader view of the annual profitability challenge.

The company has also focused on achieving positive Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), a non-GAAP measure that strips out non-cash and non-core expenses. They achieved positive Adjusted EBITDA of $0.4 million in Q3 2024, which is a key milestone, but it doesn't change the fact that the GAAP-based operating and net profit margins remain negative. This is the classic marketplace model: high gross profit, but a huge cash burn to acquire customers and build the platform. For more context on the market dynamics, you should check out Exploring Leafly Holdings, Inc. (LFLY) Investor Profile: Who's Buying and Why?

Here is a snapshot of the core profitability ratios:

Debt vs. Equity Structure

You're looking at Leafly Holdings, Inc. (LFLY) to understand its financial foundation, and the first thing that jumps out is the stark contrast between its debt load and its shareholder equity. The quick takeaway is that Leafly Holdings, Inc. is currently in a highly leveraged and precarious financial position, relying almost entirely on debt and facing a significant capital deficit.

As of the first quarter of 2025, specifically March, the company's financial structure shows a total debt of approximately $25.7 million. The critical detail here is the composition: nearly all of this debt is short-term, as total long-term liabilities were only around $0.06 million. This heavy reliance on current liabilities means a much tighter liquidity squeeze and a constant, near-term pressure to generate cash flow to meet obligations.

• Total Debt (Mar 2025): $25.7 million
• Total Equity (Mar 2025): $-16.68 million
• Debt-to-Equity Ratio: -154.3%

The company's Debt-to-Equity (D/E) ratio is the headline figure for a seasoned analyst. Leafly Holdings, Inc. reported a D/E ratio of approximately -154.3%. Here's the quick math: a negative equity of $-16.68 million means the company's total liabilities exceed its total assets, which is a more serious situation than just having a high debt level. For context, the average D/E for a digital media company-a good proxy for Leafly Holdings, Inc.'s platform business-is typically around 0.79 (or 79%). Leafly Holdings, Inc.'s negative ratio signals a deep structural issue, not just a preference for debt financing.

On the financing side, there has been significant activity. The company's $30 million 8% convertible notes matured in January 2025. While the trailing twelve months leading up to March 2025 showed a net debt repayment of $-5.08 million, the overall debt level remains substantial relative to the company's size and negative equity. Management has defintely been looking for solutions, exploring financing and strategic opportunities to improve its liquidity and balance sheet. The challenge is that with such significant debt and a low stock price, using common stock to raise capital becomes highly dilutive and difficult. This leaves them in a tough spot, balancing the need for fresh capital against the risk of further depressing shareholder value.

Leafly Holdings, Inc. is not balancing debt and equity; it is currently running on debt and liabilities. You can find more details on their long-term strategy in their Mission Statement, Vision, & Core Values of Leafly Holdings, Inc. (LFLY).

Liquidity and Solvency

You need to know if Leafly Holdings, Inc. (LFLY) can cover its near-term bills, and honestly, the liquidity picture is tight. The company's current and quick ratios, based on the most recent financial data for the quarter ended March 31, 2025, signal a significant liquidity risk. A current ratio below 1.0 means current liabilities outweigh current assets, and Leafly Holdings, Inc.'s is only 0.37. That's a serious red flag.

The Current Ratio is the first check-current assets divided by current liabilities-and a healthy business usually aims for 1.5x to 2.0x. Leafly Holdings, Inc.'s ratio of 0.37 means for every dollar of short-term debt, the company only holds about 37 cents in assets that can be converted to cash within a year. The Quick Ratio (or acid-test ratio), which is even more stringent because it excludes less liquid assets like inventory, is an even lower 0.33. This suggests a defintely challenging position for meeting immediate obligations.

Here's the quick math on the balance sheet: as of March 31, 2025, Leafly Holdings, Inc. reported total Current Assets of $11.24 Million against Current Liabilities of $30.63 Million. This disparity leads directly to a substantial negative working capital position. Working capital is the simple difference between what you owe soon and what you own soon, and a negative number means you have to scramble to cover short-term debts.

The working capital trend is a major concern. The company is operating with negative working capital of approximately $-19.39 Million as of the end of the first quarter of 2025. This negative balance is a direct consequence of the high current liabilities relative to current assets and points to an ongoing need for external financing or significant asset sales to bridge the gap. It's a structural issue that needs a strategic fix, not just a tactical one. For more on the company's long-term strategy, you can review their Mission Statement, Vision, & Core Values of Leafly Holdings, Inc. (LFLY).

Looking at the cash flow statement overview for the quarter ended March 31, 2025, we see the following trends:

• Operating Cash Flow: This was negative $-1.86 Million. This is the cash generated (or, in this case, used) by the core business, and a negative figure means the daily operations are consuming cash, not producing it.
• Investing Cash Flow: This was also negative at $-0.35 Million, primarily representing money spent on capital expenditures, like software and equipment.
• Financing Cash Flow: This showed a cash outflow of $-3.68 Million, which can include debt repayments or interest payments, further reducing the overall cash balance.

While the Trailing Twelve Months (TTM) Operating Cash Flow was slightly positive at $336,000, the Q1 2025 data shows a return to cash burn from operations. The combined effect of these activities resulted in a total decrease in cash of $-5.89 Million for the quarter, leaving the company with an ending cash balance of $8.88 Million. The core liquidity strength is simply not there right now.

The main liquidity concern is the significant debt obligations, including convertible notes, which have been a major focus for the company's management. The low current and quick ratios, coupled with the negative working capital, mean any unexpected market or operational hiccup could quickly spiral into a crisis. The company is actively exploring financing and strategic opportunities to improve its balance sheet, but until those materialize, this remains a high-risk liquidity profile.

Valuation Analysis

You're looking at Leafly Holdings, Inc. (LFLY) and trying to figure out if it's a deep-value play or a value trap. Honestly, the valuation metrics scream high-risk, speculative stock, which isn't surprising for a micro-cap company in a volatile sector. The quick takeaway is that traditional metrics suggest the stock is undervalued relative to analyst targets, but the underlying financial health-marked by negative profitability-makes it a highly speculative hold.

The stock has been on a brutal slide, with the price dropping by -96.06% over the last 52 weeks, a massive destruction of capital. As of November 21, 2025, the share price sits around $0.260, which is a far cry from its 52-week high of $124.98. That is a serious correction. The market capitalization is tiny, at just $227,143, while the Enterprise Value (EV) is substantially higher at $17.34 million, reflecting the company's net debt position.

Is Leafly Holdings, Inc. Overvalued or Undervalued?

When a company is losing money, you can't use the standard Price-to-Earnings (P/E) ratio to gauge value, so we turn to other measures. Here's the quick math on the key ratios for Leafly Holdings, Inc. based on 2025 trailing twelve months (TTM) data:

• P/E Ratio: -0.0275
• P/B Ratio: -0.01
• EV/EBITDA: -6.8x

A negative P/E ratio of -0.0275 simply means the company is unprofitable. The Price-to-Book (P/B) ratio of -0.01 is also negative, which is a red flag indicating that the company's total liabilities exceed its total assets-a negative book value. The negative Enterprise Value-to-EBITDA (EV/EBITDA) of -6.8x also confirms negative earnings before interest, taxes, depreciation, and amortization (EBITDA), a key measure of operational cash flow. These ratios defintely point to a distressed equity situation.

Stock Trend and Analyst Consensus

The stock price trend is unequivocally negative, having fallen by over 96% in the past year. This massive decline is the market punishing the stock for its operational losses and the reverse stock split that occurred on September 15, 2025. Still, the analyst community sees a massive potential upside, but you have to be careful here.

Analyst consensus, while based on ratings from late 2024 and early 2024, places the average price target at $7.59. Compared to the current price of $0.260, this suggests the stock is dramatically undervalued by analysts. However, the last analyst rating was a 'Hold'. This huge gap-$7.59 target versus $0.260 price-tells me the market has completely ignored or discounted the old analyst models, likely due to the reverse split and continued financial struggles. The consensus is a theoretical 'Buy' based on the target, but the actual rating is a cautious 'Hold'.

For income-focused investors, there is no dividend to consider. The dividend yield is 0.00%, as Leafly Holdings, Inc. does not pay dividends.

If you want to dive deeper into the operational side, you can find more information here: Breaking Down Leafly Holdings, Inc. (LFLY) Financial Health: Key Insights for Investors. Your next step should be to look at the cash burn rate to see how long the company can survive without raising more capital.

Risk Factors

You need to look past the cost-cutting headlines and face the harsh reality: Leafly Holdings, Inc. (LFLY) is operating under a significant financial cloud. The core issue isn't just industry competition; it's a critical liquidity problem that casts substantial doubt on the company's ability to continue as a going concern (a business that is expected to continue operating for the foreseeable future).

The company's biggest near-term hurdle is financial. Leafly Holdings, Inc. does not currently have the capital to repay its convertible promissory notes, which were due in July 2025. This is a red flag you can't ignore, even with management's efforts to manage capital, like extending the maturity date of its 2022 Notes to July 1, 2025, and agreeing to a 12.5% principal reduction. Honestly, the clock is ticking on a debt resolution.

Operational and External Headwinds

The cannabis industry remains a tough place to make money, and Leafly Holdings, Inc. is feeling the pinch on both the demand and regulatory sides. While the company has managed to reduce its net loss, the decline in its top line is a clear signal of market pressure. For the first quarter of 2025, total revenue dropped to $7.88 million, a decrease from $9.05 million in the same period last year.

Here's the quick math on the operational risks, which are compounded by the volatile nature of the legal cannabis market:

• Market Development Risk: The legal cannabis market is still new and faces a patchwork of state and federal laws, meaning it may not develop as quickly or as profitably as anticipated.
• Customer Churn: Leafly Holdings, Inc. is grappling with higher-than-expected customer churn, plus macroeconomic pressures that are squeezing advertising and marketing budgets for cannabis businesses.
• Regulatory Changes: Any shift in cannabis laws, whether federal rescheduling or state-level rule changes, can immediately impact its operations and financial performance.
• Third-Party Reliance: The business relies on third-party service providers for critical aspects, and a failure or termination of these relationships could cause operational disruptions and higher costs.

Financial and Strategic Risks Highlighted in Q1 2025

Beyond the debt maturity, the company's financial position shows strain despite aggressive cost management. The net loss for Q1 2025 was $1.78 million, an improvement over the prior year, but still a loss. This reduction was driven by significant cost-cutting, with operating expenses dropping to $8.32 million from $9.82 million year-over-year. Still, cash reserves are dwindling.

The financial details from the Q1 2025 report paint a clear picture of the challenge:

What this estimate hides is the impact of the stock delisting from Nasdaq, which has limited trading and could trigger defaults under other contracts. The company's market capitalization, as of September 15, 2025, was only about $1 million, which defintely limits its ability to raise public capital.

Mitigation Strategies and Investor Action

Management is actively trying to navigate this with a two-pronged strategy: cutting costs and exploring strategic alternatives. The biggest strategic option being explored is taking the company private to eliminate the significant costs associated with being a public entity. On the operational side, they are focusing on improving sales by hiring more professionals and refining selling strategies to combat customer churn.

From an analyst's perspective, these are necessary, but not sufficient, steps. The core financial risk-the debt maturity-must be resolved. For investors, the next step is clear: monitor the debt refinancing news and the progress of the strategic review. You should read the full analysis in Breaking Down Leafly Holdings, Inc. (LFLY) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path forward for Leafly Holdings, Inc. (LFLY) amidst a challenging market, and honestly, the immediate focus isn't explosive revenue growth-it's financial stabilization. The company's Q1 2025 results show this pivot in action: revenue declined to $7.88 million from $9.05 million year-over-year, but the net loss improved to $1.78 million from $2.39 million. That's the quick math on their cost-cutting strategy working.

The real opportunity lies in converting its massive audience into higher-margin, recurring revenue, plus capitalizing on the inevitable-but slow-federal regulatory shifts. They need to get their balance sheet in order, especially with convertible promissory notes due in July 2025.

Key Growth Drivers: Personalization and Penetration

Leafly Holdings, Inc.'s near-term growth is driven less by large-scale acquisitions and more by operational efficiency and deepening market penetration. The strategy is simple: be the best resource for the consumer and the most effective tool for the retailer. They are bolstering their sales team to improve penetration in key markets, essentially focusing on adding more paying retail subscribers to their base.

Product innovation centers on 'improving consumer personalization' and 'local market strategies.' This means better matching the right consumer to the right product at the right local dispensary, which is how you defintely increase conversion rates for your retail partners. Their shift to a content-first, community-driven, multi-sided marketplace is a smart move to keep those 5.1 million average monthly visitors engaged.

Future Revenue and Earnings Estimates

Near-term projections are anchored in cost control, not top-line expansion. The 2025 fiscal year will likely be defined by a continued push toward sustained positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), building on the positive $0.4 million achieved in Q3 2024. What this estimate hides is the significant challenge of generating sufficient capital, especially after the January 2025 delisting from Nasdaq to the OTC Pink Open Market.

The company is actively exploring strategic options, including potentially going private, which is a clear signal that cost reduction is the number one priority over aggressive revenue growth for now. The goal is to stabilize the business before re-accelerating revenue. Here's a snapshot of the Q1 2025 performance:

Enduring Competitive Advantages

Leafly Holdings, Inc.'s biggest asset is its entrenched position as the Wikipedia of cannabis. This is a powerful, low-cost competitive moat (barrier to entry) that newcomers can't easily replicate. They have a massive, trusted content library that drives organic traffic:

• Over 5,000 cannabis strains detailed.
• Over 1.3 million user-generated reviews.
• Over 11,000 news and information articles.

This content engine supports a vast marketplace with over 14,000 retail listings, of which more than 3,300 are paid accounts. That's a huge network effect. You can see their long-term vision for this platform in their Mission Statement, Vision, & Core Values of Leafly Holdings, Inc. (LFLY). The challenge is simply converting that high-quality traffic into more profitable transactions for the company.

Next Step: Finance: Monitor Q2 2025 earnings release for updates on the July 2025 debt maturity and any progress on the going-private initiative.