Casey Ryan: Okay. Yes, that’s actually sort of interesting. Okay. And then what can you say about, I guess, activity or sort of maybe account adds, I guess, I would say, in sort of newer states where we’ve seen good medical direct transition. I’m just curious of what we can say like, hey, is there some good news like — or maybe there isn’t great news in terms of Maryland and Missouri and states like that? Like do you feel like as you look across the country, your markets — you like do a sort of net positive account growth in some states, although, of course, the aggregates is negative, which is understandable, given the way you framed it. But yes, I’d love to…
Yoko Miyashita : Absolutely. Absolutely. And that can be net account or that can be net spend growth, right? And that is so market by market. I think that’s sort of the complexity, fascinating aspect of this industry overall. But we had shared some of the numbers, for example, with Maryland. And I’m so proud of the efforts in our activation in Maryland, where we started early the full rec sales, one. Got the demand-side levers going in terms of really cultivating that consumer audience, doing a lot more coverage being on the ground there. And then starting to work with retailers as we were nearing that July 1 date. There is sort of a natural cycle to this and how the market develops at appropriate times for them to be pulling advertising levers.
But what we’ve been able to see is both new account activation in that market, but also really growing spend across retailers, leveraging this consultative approach that we brought — that we’ve really focused on over the last year.
Casey Ryan: Yes. Okay, good. That’s really helpful. Probably the last question maybe for Suresh, just the bad debt expense ticked up, but it’s understandable as you guys are in the process. Where do you think it goes from sort of the current levels sort of flattish? Or do you think it goes up as you continue to focus on the sort of long tail accounts further as we go into Q4 and Q1 of next year?
Suresh Krishnaswamy : Casey, just to confirm. Were you — was that a question on accounts? Or are we talking about…
Casey Ryan: It was on bad debt expense?
Suresh Krishnaswamy : On the bad debt expense. Yes, absolutely. Sorry, it was just a little tough to hear. We have seen that pick up over the last couple of quarters. No question. I think in line with that, we have been very proactive in managing this, right? And some of the success that we have seen lately is going to filter through, as you know, with a lag. So we’re not looking for that or at this time to increase from these levels going into next year. We are looking to build a healthier revenue base as we go into 2024, right? So what we’re trying to do, all of this is to build revenue from clients who are able to pay, who do pay and that ensures durability of revenue over time. So we think our products are quite a bit of value to customers.
So when they do move off the platform, we see they’re putting themselves at a disadvantage. But we do know customers are going through a tough environment and people are making difficult decisions. So what we’re doing is working with them to optimize their spend within their budget. And at the same time, what we’re seeing is, over time, as Yoko said, the ones that do have the ability to pay come back to the platform. And we’ve seen pretty good reactivation rates from accounts sort of gone off of the platform. So all this to say that the tighter management processes that we have put in place for bad debt are working, and we should start seeing that level off and tick down as we go into next year.
Operator: The next question comes from the line of Dan Kurnos with Benchmark Company.
Daniel Kurnos: Just following up on that, Suresh, we’ve been spending most of the call on this. But I guess hypothetically speaking, I mean, we’ve seen this really with Zillow is sort of focusing on kind of the top 20% of the market and filtering down and then obviously changing their pricing models over time and not exactly a clean comparison here. But as you think about the market, I kind of just want to get your sense in terms of how much leverage do you still have with the top of the market? And if you were to focus yet even more of your time and effort on expanding ARPA with the top-tier retailers and drive more conversion to them, what that might look like, either from a growth or profitability perspective? And just the delta right now that you’re seeing from maybe that next year trading down where you want to keep them on platform, but for whatever reasons, macro or they’re just not good at running a business, how much trade down we’re seeing?
How much trade down pressure we’re seeing at this point in time that might rebound if either market or legal conditions were to change?
Yoko Miyashita : Dan, let me see if I can answer this from the perspective of we tend to talk about things in extremes, right? At the very top of the market, your largest MSOs, very bottom, your long tail smaller retailers. And our internal way of actually measuring and managing actually includes some of what we’ll call sort of this mid-tier, they’re multistate multi-store operators. And what we’re seeing is a lot of opportunistic behavior in that segment that we get really excited about. And if we break down some of the spend, we see a lot of activation where those players see the opportunity through a platform like Leafly, to get the word out, to get the brand recognition, to get the footfall in the stores. So that sort of what I’ll call mid-tier operator, that’s really smartening up around optimization and efficiencies.
Still you probably have gotten the most use out of that space over the course of this year. On the top end, think about those MSOs, these are your most sophisticated clients, highly focused on ROI and they’ve had very targeted strategies themselves in terms of markets they’ve abandoned or exited. And the conversations we’re having there around how — and very performance focused. So what are the products that can drive the performance that’s measurable and how can they activate across markets where it makes sense to do so. So I think that highly tailored approach is that necessary but to really see and drive the growth that we’d like to see out of that top segment. On the loan side, I think we’ve talked about that enough to really communicate.
Hey, it’s just about bringing them on with the right product, right price point and the right support structure. But watch, I am very optimistic about what we can do through this sort of 3 to 10 store operator size. And they’ve got — they don’t own massive market share in a large market like California, for example, but they’re peppering — they’ve got stores sort of throughout smaller but midsized markets. And I think there’s still a lot that we can do for that segment. But ultimately, whether you’re talking about the highest level MSO or you’re talking about the low tier, it’s really about aligning the right product at the right price, at the right support structure and truly delivering and communicating and helping them understand the value that we create for them.
Daniel Kurnos: Got it. That’s really helpful. And I guess, Yoko, we talked about this a little bit last quarter. You mentioned it kind of briefly on the call today, just in terms of the consumer aspect, too, I mean being able to leverage higher conversion, better flow through. And I know a lot of the focus right now is on retail — reducing retailer friction, but it feels like there’s still a lot of easy lift on your end that you can do or low-hanging fruit in terms of cart and other things to add, that could improve flow through? And maybe as those things come online, is that kind of the thought process on being able to reevaluate pricing models or further price hikes? Or I guess we just have to see how the market plays out.
Yoko Miyashita : Yes and yes. But I think the comment I’d put through there is truly about communicating that value, right? We’re just slightly different than traditional consumer marketplaces where you can do a take rate. So it’s really about driving that value in the form of customer activation, consumer activation for that retailer and brand. So for us, the one thing — sometimes you can miss is we’re focused on reducing retailer friction. There is a mirroring benefit on the consumer side, making it easier for the consumer. That’s what drives stickiness for the Leafly platform as well. So we see those as two-sided wins, whenever we’re implementing new features and helping that flow. Absolutely on the consumer side, the ability to improve and enhance that experience. And as you know, covering the space, in e-com. So broadly, lots of little things to test and learn and try and implement as we go.
Operator: There are no additional questions waiting at this time. I would now like to pass the conference back to Yoko for further remarks.
Yoko Miyashita : Thank you for joining us. We appreciate your time today, and we’re looking forward to sharing our year-end results with you on our next call.
Operator: That concludes today’s call. Thank you for your participation, and enjoy the rest of your day.
