PSQ Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Acquisition: Purchased Cordova in March 2024 for consumer finance products, key to financial technology strategy.
• Financial Position: Strengthened through strategic financing events, adopting mature capital structure.
• Expenses: Streamlined operating expenses via restructuring, aligning with fintech division launch.
• Revenue and Margin: Increased revenue four times over previous year, gross margin expanded from 33% to 61%.
• Fintech Payments: Secured over $1 billion in annualized GMV, first client was $100M+ merchant, reduced delinquencies 29% and charge-offs 27%, average order value $1,194.
• Marketplace: Holiday 2024 orders up 34%, conversion doubled with reduced marketing spend, moved to self-service CPM model.
• EveryLife: 276% Y/Y revenue growth, 76% subscriber growth, 1,300+ ambassadors, first month of positive EBITDA, 3M+ diapers/wipes donated, launched feminine care line.

Segment Performance

• Financial Technology: In Q4 2024, FinTech revenue was $3.5 million. For full year 2024, FinTech revenue was $10.1 million (from acquisition date March 13th to end of year), with pro forma revenue if acquired Jan 1st being $13 million. Gross margin in Q4 2024 was 61%.
• Marketplace: Q4 2024 revenue was $0.6 million, and full year 2024 revenue was $2.9 million.
• Brands (EveryLife): Q4 2024 revenue was $3.1 million, and full year 2024 revenue was $10.2 million. Full year gross margin increased from 33% in 2023 to 61% in 2024.

Guidance

• Expect to more than double revenue in 2025.
• Grow payments business significantly, with over $2.5B signed GMV already.
• Advance credit business with Credit 2.0 initiative, leveraging AI-driven underwriting.
• Marketplace goals: Leverage synergies between divisions, focus on made in America products, build affiliate/ambassador programs.
• Brands: Expect revenue growth, expand product verticals, launch feminine care line.

Risks

• Forward-looking statements involve risks, uncertainties, and assumptions. Actual results may differ materially from forward-looking statements.
• Dependence on market acceptance of fintech products and services.
• Competition in the payment processing and buy now pay later spaces.

Question and Answer

Q: Tariffs are being imposed around the world and are going to dramatically incentivize manufacturing and production in the United States. Considering your business model and target demographics, do you believe PSQ Holdings, Inc. can become a competitive cornerstone in the marketplace like Amazon?

A: We absolutely believe that is the case. Put simply, we believe that tariffs are actually a great thing for our business. The global economy is changing for the better. There is a greater hunger than I've seen in my lifetime for America to prioritize American first. That means companies bringing their manufacturing back to our town and consumers prioritizing American-made goods in their purchases from small businesses they can trust. So we're incredibly grateful to find ourselves at the forefront of this new American golden age, and we believe we are set up to reap the benefits of deglobalization in a way that far outpaces our competition. We're very excited about the future, and we believe that every bit of the increasing America-first sentiment in our economy will only lead to a greater benefit for the movement that we are seeking to lead with our company.

Q: Darren Aftahi asked about the growth in GMV from over a billion to 2.5 billion, composition of clients, and timeline for revenue manifestation.

A: Yeah. Great question, Darren. Great to hear from you. So I will first talk about the types of merchants. And then I'll talk about the general size of the merchant. So the merchants that make up the over $2.5 billion in signed GMV today are largely representative of the Credova and PSQ Holdings, Inc. existing ecosystem. So we have a large representation of firearms merchants. Obviously, the firearms industry is an industry that is near and dear to our hearts. And they have been rather frustrated historically with the existing payment options. They've really seen us as a safe haven and a provider of best-in-class technology that can honestly commit with a cancel-proof promise to protecting their economic liberty. So we've done very well in that space here in these early days. We also have many merchants from the PSQ Holdings, Inc. community that have become awesome payments merchants for us in terms of signed GMV, some of which is a little bit more industry agnostic. So some of these are in the travel space. Others of these are in the consumer product space. But overall, the size of these merchants varies. You know, our smaller merchants that are currently signed onto the payment stack are in that $1 to $5 million in annual sales range. And we have other merchants that are in the hundreds of millions and beyond. So we are also excited about the existing pipeline. That's one other thing I'll add, Darren. Is that the $2.5 billion that we have currently signed to date is fairly representative of what we believe will be our first $10 to $15 billion in pipeline. The good news here for us is that these merchants have been acquired with no customer acquisition cost. They already exist within our ecosystem. And so, this is real low-hanging fruit for us. We're looking forward to serving them. And in terms of timeline, we said on our Q3 earnings call that with the shopping season coinciding with the launch of our payment stack, we were having great success with the signing of contracts with new payments merchants. But the majority of the actual onboarding would take place in Q1 and Q2, and we reaffirm that today. Q1 has been a tremendous onboarding quarter for us with this GMV, and Q2 will remain the same. So we're really looking forward to the remainder of 2025 being an incredibly fruitful year for investors to see the full impact of the revenue associated with the GMV we've signed today.

Q: Barry Haimes asked about timing to get to free cash flow breakeven and potential market for marketplace GMV.

A: Yeah. Great question. This is something we're actually accumulating currently. Given that, you know, obviously, we do not own these 80,000 plus merchants. These are third parties and many of them are small businesses, and the one to five million in annual sales range. And so, therefore, their financials are not public, and it can be difficult to get some of that information. So we've done some data pulling, and we've had some great interviews with subsets of our business community to begin to identify a total addressable market that exists within our marketplace ecosystem as it stands today. And to be frank with you, we do not have that answer yet. But that is an answer we are seeking to get. Now that, as I mentioned after Darren's question, our focus is really shifting toward onboarding our marketplace merchant, we feel like we're gonna have a very clear picture of what the three to five-year roadmap looks like and forecast looks like for the GMV and associated revenue produced by our marketplace merchant community here in the near term. So I look forward to following up on this question and excited to provide more clarity on those numbers as we move forward.

Q: William Kent asked if PSQ Holdings, Inc. will look into accepting cryptocurrency.

A: As a note, I'm a big believer personally in cryptocurrency. But we don't take the topic lightly. We are exploring as a company, and we are very intentional about our cryptocurrency strategy. We do believe nontraditional payment methods are going to take market share away from traditional payment rails, and we are positioning ourselves well for that future. But we would have nothing to announce today. So absolutely, we're exploring. We're very intentional about our cryptocurrency strategy. That we do plan to implement in the future. But in terms of driving down into any further detail, we would not have anything to announce today.