As the cannabis industry continues to evolve, it remains one of the hottest investment sectors for a large number of institutions and individual investors with a decent risk appetite. However, the focus of most of these investors remains on larger companies like Canopy Growth and Aurora Cannabis, which are already trading at huge revenue multiples even after the recent correction.
In such a scenario, it is important for investors to identify companies with an excellent growth potential, a focus on innovation, strong customer loyalty, and a reasonable valuation. One example is Leafbuyer Technologies, a hidden gem with immense potential to generate fantastic returns within the cannabis space.
What Is Leafbuyer’s Business?
Leafbuyer terms itself as a marketing and technology solutions company catering to the legal cannabis industry. Based in Colorado, the company operates through its online portal, Leafbuyer.com, which is one of the most comprehensive online sources for cannabis deals. Its purpose is to act as a common platform to connect legal cannabis businesses and dispensaries with consumers and allowing these businesses to display their product variety and build a loyal consumer base. Its business model is very similar to that of Priceline or Yelp for legal cannabis products. The platform integrates with several dispensary point-of-sale systems to offer live, up-to-date menu information.
The Leafbuyer Total Network boasts millions of visitors from legal states across the country each month. It has one of the largest cannabis deals databases in the industry, which helps connect consumers with low prices on popular cannabis products. In fact, Leafbuyer is the official cannabis deals platform of Voice Media Group, Dope Magazine and other prominent digital and print publications. The Leafbuyer management is also successfully taking steps towards entering the big data game as they collect the data of millions of consumers visiting the platform every month, analyze it, and pass on the relevant insights to the cannabis companies to help them in better understanding their needs and mindset, develop new products, and create more accurate demand forecasts.
How Is The Management Looking To Grow?
Leafbuyer is currently a market leader within its niche segment in Oklahoma and has penetrated several U.S. states. The rapids expansion and demand for Leafbuyer products and services warranted the June 2019 opening of the company’s first satellite office, located in Los Angeles. In early July 2019, the company was in the news for raising $4.5 million through a private placement of common stock and warrants to two institutional investors. The management intends to use the net proceeds of $4.04 million for financing its working capital and eventually generating positive free cash flows. Unlike other cannabis players that are burning heavy amounts of cash, Leafbuyer is near its break-even point. Management expects to achieve it by the end of the first half of 2020. This would be carried out through aggressive user acquisition as Leafbuyer aims to double its organic growth by the end of 2019 and reach a $4 million annualized revenue run rate through organic growth.
The core team is also looking at carrying out some relevant strategic acquisitions with strong synergies in the coming months, which could push the forecasted top line to as much as $8-10 million. The company’s short-term goal is to reach this turnover soon and uplift its listing to NASDAQ to enable them to go for a larger fundraise for further expansion and more tech-based acquisitions. Last year, Leafbuyer acquired Greenlight Technologies, a California-based application development company.The Greenlight mobile application allows consumers to place real-time orders and accrue loyalty rewards. Currently, Leafbuyer management is also in discussions to acquire Las Vegas-based trade show, CBD.io.
New Initiatives To Attract And Retain Customers
While there are other digital options for a consumer looking for information to buy cannabis products, Leafbuyer stands out because of its innovative offerings. The company offers a substantial loyalty platform to help dispensary clients retain existing customers, and blockchain technology enhances the transparency of this program Also, there is a big gap of customer loyalty between large retail chains and the small mom-and-pop stores and dispensaries. CEO Kurt Rossner believes that the use of blockchain technology helps bridge this gap and helps have stronger accountability while it is embedded into the point-of-sale system of the clients.
Rossner also announced the company’s intention to launch a new version of the mobile application, which integrates the Greenlight order ahead and delivery technology with the existing Leafbuyer app and blockchain wallet. This will help augment customer loyalty and improve retention.
Companies like Leafbuyer are among the frontrunners in the race to onboard and retain loyal cannabis purchasers who might eventually be able to use these platforms for direct purchases once the laws evolve. Leafbuyer is already growing its top line at a phenomenal rate (c.69% year-on-year revenue growth recorded in the previous quarter) and the management is also working hard toward new initiatives as well as highly pertinent acquisitions. With all these positive indicators, it is safe to say today that the company appears to have a bright future ahead.
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