Greetings, and welcome to PSQ Holdings, Inc.'s Fourth Quarter and Year End 2024 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, William Kent, Senior Vice President of Corporate Affairs. Thank you, and you may begin. Thank you, Rob.

Afternoon, everyone, and welcome to PSQ Holdings, Inc.'s fourth quarter and year end 2024 earnings conference call. Joining me today are Michael Seifert, Chairman and Chief Executive Officer, Brad Searle, Chief Financial Officer, and Dusty Wunderlich, Chief Strategy Officer. Before we get started, we want to emphasize that the information discussed on this call, including our outlook, is based on information as of today and contains forward-looking statements that involve risks, uncertainties, and assumptions. We undertake no duty or obligation to update such statements as a result of new information or future events. Please refer to today's earnings press release and our SEC filings, including our 2024 10-K, filed this afternoon, for factors that may cause actual results to differ materially from our forward-looking statements. We would also like to point out that we present non-GAAP measures in addition to and not as a substitute for financial measures calculated in accordance with GAAP. I'll now hand the call to Michael. Michael, please go ahead.

Thank you, Will. And welcome everybody to our fourth quarter and year end 2024 earnings call. Our many accomplishments in 2024 were significant and have positioned us incredibly well for future success. But before I go any further, I want to say a heartfelt thank you and well done to our team for a successful and impactful 2024. I am convinced that we have the best group of people on the planet to accomplish our vision. This is a team that is deeply committed to enhancing the lives of, and providing value to our customers, merchants, and shareholders. Entering 2024, PSQ Holdings, Inc. looked markedly different from where the business stands today. All intents and purposes, we had the marketplace, EveryLife, and a vision introducing uncancelable secure financial technology into the mix. And what a difference a year makes. We have turned vision into reality. We've established a firm foundation for future success, and I would like to share some of the notable accomplishments from this past year with you all today. To get started, we're gonna look at the company overall. In 2024, we experienced a very notable acquisition. We purchased Cordova in March of 2024 in an all-equity transaction, bringing consumer finance products, including buy now, pay later, into our product offering. This acquisition was imperative to launch payments in late 2024 and is key to our broader financial technology strategy going forward. More on this in a minute. We strengthened our financial position through a number of strategic financing events, providing our company with the fuel needed to continue building and growing while adopting a more mature capital structure. We streamlined operating expenses through a strategic restructuring coinciding with the launch of the financial technology division, putting us on a solid footing for growth while strategically investing…

Thank you, Michael, and good afternoon, everyone. I'm honored to be with you today to discuss our fourth quarter and full year 2024 results. I'd like to present a few financial items to note starting with Q4. We increased Q4 net revenue by 167% to $7.2 million compared to the fourth quarter of 2023. Breaking that down a bit, $3.5 million of this came from our financial technology or fintech segment. Marketplace revenue was $0.6 million, and EveryLife generated $3.1 million of net revenue. Our overall gross margin was 61% in Q4 2024 compared to only 38% in Q4 2023. For the full year 2024, our results were as follows. We increased net revenue to $23.2 million, a 308% increase over 2023. Of that, FinTech was $10.1 million, and it's worth noting that this $10.1 million represents revenue from the acquisition date of March 13th through the end of the year. FinTech pro forma revenue as if the acquisition had occurred on January 1st was $13 million. Marketplace revenue was $2.9 million, and brands revenue net of returns and discounts was $10.2 million. Consolidated net revenue pro forma for the Cordova acquisition was $26.1 million. And finally, full year gross margin increased from 33% in 2023 to 61% in 2024. Moving on to cash, we ended 2024 with cash and cash equivalents of $36.3 million and $0.3 million in restricted cash. In terms of share count as of December 31st, 2024, we had 39,575,499 Class A common shares outstanding and 3,213,678 Class C common shares outstanding. The company had an outstanding principal balance of $3.8 million on its $10 million revolving line of credit as of year-end. So those were some of our Q4 and full year 2024 financial highlights. Now let's move on to Q&A. Thank you.

We will now begin the question and answer session. And we have no phone questions at this time.

Thank you, Rob. We'll take some questions that have been submitted via the Safe Act platform at this moment. The first question that we got, I'll read them directly. 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? Great question.

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. And we have a phone question from the line of Darren Aftahi from Roth Capital Partners. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my questions. A couple if I may. Michael, could the comments here about the growth in the GMV from I think it was a little over a billion to two and a half, you just talk about the composition and the type of clients that that kind of make that up and then kind of a time frame for when that could actually manifest into revenue.

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.

Great. That's helpful. And then a couple more. You talked about the integration of marketplace merchants and then onboarding to fintech. I guess, where are we in the curve in terms of when that's gonna occur and if it's already in the process of occurring, how is conversion going?

Yeah. Great question. We are currently in the process as of about two weeks ago. So as of about two weeks ago, the company began to court the marketplace merchant into the PSQ Holdings, Inc. payments platform universe, and we have been met with overwhelming demand. So, again, this is one of those topics we are excited for shareholders to see in the coming months and quarters. But we are already reaping the positive benefits of the synergies between our divisions. Nowhere greater than the topic we're discussing right now. Marketplace merchants have been hungering for a better payment solution. Many of our existing marketplace merchants are Stripe customers, and they've been eager to leave both because they really appreciate the trust that has been established between PSQ Holdings, Inc. and the marketplace, and their small business. And, also, because we're able to actually offer a more competitive rate. Something I wanna highlight here is one of the reasons we're able to offer better rates overall across the FinTech business to our merchants is because of the bundled product nature between payments and buy now, pay later. Given that the margin on the BNPL business is nearly 100% and can be a real serious cash flow generator for the business, it actually allows for us when we present this bundled offering to a merchant to get more aggressive with the rates on the payment processing side. So having these levers to pull when we're interacting with a merchant of really any size is incredibly advantageous and allows for us to give lower rates than many of our competitors in either the payments or the buy now pay later space respectively. Darren, I'll finish in answering your question with saying that our strategy for onboarding PSQ Holdings, Inc. marketplace merchants starts with the e-commerce businesses first. We are focusing on e-commerce consumer products-focused businesses over the course of the next quarter, and then we began to expand out of that universe to more custom offerings where business might have a brick-and-mortar presence as well as an e-commerce store. And then eventually the service-based businesses that are on the marketplace as well.

Great. And then just last one for me with the more than doubling of revenue in 2025. Can you just talk about relative mix? And then I guess on the FinTech side, just the relative mix of credit versus payments.

Yeah. Absolutely. I'll start there. On the fintech side, we anticipate that payments and credits will be roughly half and half. We anticipate that payments obviously will really begin to ramp from a revenue perspective from Q2 on through the remainder of the year. And with Credit 2.0 that I mentioned earlier, we really anticipate that the second half of 2025 will be a shining six months for the credit business. We then going to the earlier part of your question, anticipate that the overall mix in terms of revenue representation at the company will be ranked in this order. We believe that it will be payments and credit vying for the lead, followed by the brand division and then the marketplace.

That's right. Thanks. And tip of the hat for all the charity work you're doing.

Thank you, Darren. It's great to talk to you. Appreciate it. Your next question comes from the line of Barry Haimes from Sage Asset Management. Your line is open.

Thanks so much for taking my questions, and appreciate all the good hard work and accomplishments in 2024. Main question is, could you talk a little bit about the timing to get to free cash flow breakeven in the business and what has to happen, you know, in terms of revenues or any other way you like to characterize the progress to get from here to that point? Thanks so much.

Thank you. I appreciate it. Yeah. I would answer this question by saying that we are wholly focused on positive unit economics for each of the divisions of our company in 2025. And so you heard my remarks earlier that we achieved our first month of EBITDA positivity for the EveryLife brand. These are milestones we really are hanging our hats on and are excited about that are driving us forward because when you pair that with the fact that our margin at the company has nearly doubled over the last year, we're really excited about the direction that we are trending in as a business to be able to generate significant cash flows over the long term. The other thing to keep in mind, and this is continually at the top of our mind, is that we are operating as a growth company. So the big thing that I always want to make sure we're doing is utilizing our cash as best as possible to derive forward growth. This year, we see a pipeline in the FinTech business that is tremendous. And so the thing I don't want to do is actually miss out on the opportunity to provide quality supply to the overwhelming demand purely for the sake of generating profit. I want to make sure that our long-term profitability outlook is as best as it possibly can be. And so I'd say this year in 2025, we have the ability to break even from a cash flow positivity perspective. The question that we are asking as a management team and as a board of directors is what is the best utilization of our cash to ride that fine line between hyperfocus on profitability and ensuring that we're able to grow to hit the milestones that we believe are at our doorstep and offered to the company in a very unique season. I think one thing, and this is the last thing I'll say, we came into 2025 feeling like we have a tremendous amount of wind in our sails. Not just as a company, but even as a country. We feel like we have a unique moment in time to really go capitalize on the growth afforded to our company, given our positioning in the market, and we do not want to miss that moment. And so those are all the factors that we consider when we think about cash flow positive and we're excited to continually update shareholders as we go closer to that milestone.

Great. One quick follow-up. If you were to look at the marketplace, and the total amount of GMV that could be created if, you know, in the hypothetical that all of them went with you guys, just to get a feel for the potential market, any way to characterize that? Thanks.

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.

Great. Thanks so much. Appreciate it.

Thank you.

And, again, if you would like to ask a question, I will turn it back to you, Will, for further questions.

Thanks, Rob. Next question, that we received via Safe Act, and I mentioned that these are in order of uploaded by shareholders just so you understand how these questions were picked. Will PSQ Holdings, Inc. be looking to hone in on more acquisition opportunities or partnerships with payment processors, with the money used from the direct offering that you did in December, and could you help outline utilization of those dollars?

Yeah. Great question. So I'll answer this in two chunks. First, I will say related to the use of proceeds from the over $30 million raise in December, we are really prioritizing our fintech segment. We believe that the fintech segment, as I've mentioned, has overwhelming demand, and we want to ensure that we can keep up with that demand by producing quality supply that meets the moment. So that is the largest use of capital as we look into 2025. The second thing that I would say is that we're really looking to put our balance sheet to work. So I mentioned this a bit earlier in our credit business. But we actually want to leverage our own balance sheet in our loan and lease portfolio to be able to drive a significant positive enhancement to the unit economics of our credit business. And we're really looking forward to that. And finally, on the M&A piece, I would say that we are always open to M&A activity as we move forward into the future. And a perspective in terms of how we view product development as a company. Anytime that we have a new feature that we want to bring to the market in any of our respective divisions, we always ask the question, is it best to build this feature or buy this feature? So for example, when we knew we wanted to get into fintech, when the merchants on our PSQ Holdings, Inc. marketplace had made it clear that they were looking for checkout solutions that were cancel-proof, we asked the question. Do we buy the FinTech segment, or do we build the FinTech segment? And where we landed is actually a little bit of both. We purchased Cordova in an all-equity transaction in March of 2024, and that acquisition actually served as the foundation for the payment processing capabilities we built on top of that Cordova business. And so we're gonna continue that attitude as we move forward in the future. We're always open to building and or buying related to any of the features we want to bring to the market in our product roadmap. Final thing that I will say is that we will enhance much of our creative marketing expenditures in the second half of 2025. Again, as I mentioned, with the unique season we find ourselves in as a company and as a country, we want to make sure that we are increasingly getting our message out and the quality of our products displayed and the stories of our business owners told. And we really believe that we've learned a lot about how to appropriately and effectively market this company with the highest return on investment. And we're gonna leverage a lot of those findings in the second half of 2025 in our marketing spend.

Thank you, Michael. Next question. What are the biggest cost drivers impacting margins? And how do you plan on optimizing operation efficiency? I know we've covered some of this, Michael, but certainly, some greater detail might be helpful.

Yeah. Very happy to. This is a great question. So one thing I would recall from my statements earlier is the significant restructuring of the company that we conducted in later the fourth quarter of 2024. This operational restructuring coincided with the launch of our fintech segment and really streamlined our company for not only growth into the future but also better operational efficiency in terms of our expenditures. For example, we do believe that our operating expenses will actually decrease year over year. And we're excited that we feel like we've got the right team members in the right seats to be able to execute efficiently moving forward, not only through the remainder of 2025 but even for the years beyond. By division, you know, the marketplace margin has increased significantly due to the restructuring of our ad platform. As I mentioned previously in this call, and not only has that improved our margin on the marketplace, it's actually helped us with customer acquisition costs on the merchant side as well. And it is better for the merchant experience, which we've appreciated greatly. The brand's margin is increasing steadily due to economies of scale and an increasingly favorable relationship with our suppliers. And then in the fintech side, you know, buy now, pay later is virtually a 100% margin. And the payments margin is a long game. The payments margin, as I expressed on the Q3 earnings call, will continually improve over time. And just as a helpful reference point for investors as they are thinking about the revenue associated with the payments GMV. As a reminder, we anticipate that revenues for GMV fall between 1.9% and 2.3% of that GMV. So when we say things like $2.5 billion in potential annualized GMV already under signed contract, the best way to get that revenue is to take 1.9% to 2.3% of that GMV. And, ultimately, we're excited about some of the margin enhancements that we get to the payments business through the bundling of buy now, pay later and the processing functionality. Which we're excited to talk more about on future earnings calls.

Excellent. Next question. Will PSQ Holdings, Inc. be looking into accepting any cryptocurrency anytime soon? This is the topic of the year. I love it.

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.

Excellent. And our last submitted question being a relatively new organization, what are the primary growth strategies for the next few years and are the key initiatives to achieve profitability?

Well, this is a great question. I would say a few things. First, I would say, obviously, we're looking forward to 2025. Providing that guidance that we do anticipate that our revenue will more than double year over year between 2024 to 2025. And we believe that ultimately that revenue doubling will be driven by our fintech segment. So in the near term, we really are leaning hard into FinTech, meeting the demand that is currently in our pipeline, and ensuring that we can exercise the synergies between our divisions. We want our company, marketplace, fintech, and brands, to be a one plus one plus one equals ten exercise. We believe that the best way we can operate our company moving forward is by playing to the strength of each of these divisions in order that a rising tide would actually lift all boats associated with our company. That's the first thing I'd say. The second thing I'd say is that if you wanna break it down by division a little bit more, I'd say that, obviously, the fintech division, the name of the game in the near term is to go and meet the demand that's already been presented to us. Both not only in signing these contracts but in onboarding these merchants efficiently and then actually earning that associated revenue with that GMV. But then in the marketplace, I would say we really have a long game strategy associated with the marketplace. We actually believe that the marketplace will be a very fundamental revenue and profit driver for this company long term, and so the name of the game in this season for the marketplace is to ensure that its brand identity is able to grow organically with as much of a community movement behind it as possible. So that's really our focus, and I mentioned that earlier with some of the ambassador and affiliate programs we're bringing to market as well as the refined strategy around exclusively showcasing made in America products, which we're really excited about. And then in the brand division, I'd say that, you know, we've really captured a customer that is so family-driven, and they want to ensure that all the products that they are getting for their household, all of these essential goods for their children and for themselves, anything they put on their body or in their body, they want to make sure that it is clean, that it is premium, and that it is sourced from a brand that they can trust. And we really feel like that's where EveryLife fits in. So EveryLife launched as a baby care brand, we really anticipate that moving forward over the course of the coming year or two, EveryLife will begin to become known as more of a holistic family brand, which we're very much looking forward to.

Thank you, Michael. And that ends our submitted questions. I'll hand it back to you for any closing remarks.

Awesome. Well, thank you, Will. Thank you, Brad. And thank you to all of our shareholders that joined us on today's call and for the questions we received on the call-in feature. I really appreciate everyone joining us this afternoon, and we'd love the opportunity to speak with you today about where we've been and where we are going. As we seek to accomplish our mission of building commerce for a better America. We hope you all have a tremendous remainder of your Thursday afternoon and evening, and we look forward to speaking with you soon.

This concludes today's conference call. Thank you for your participation. You may now disconnect.