10-Q: SpringBig Revenue Declines 9% in Q2 2025, Net Loss Reported

SpringBig Holdings reports a 9% decrease in revenue and a net loss for Q2 2025, impacted by economic conditions and client budget constraints.

Summary

• SpringBig Holdings, Inc. reports a net loss of $1.141 million for the three months ended June 30, 2025, compared to a net loss of $647,000 for the same period in 2024.
• Revenue decreased by 9% to $5.837 million in Q2 2025 from $6.422 million in Q2 2024.
• Subscription revenue declined by 11% year-over-year, while excess use revenue decreased by 5%.
• The net revenue retention rate was 78% for the twelve months ended June 30, 2025, down from 86% in the prior year.
• Operating expenses increased by 7% due to severance payments and lease termination fees.
• The company's common stock is now quoted for trading on the OTCQB Venture Market.

Sentiment

Score: 3

Explanation: The filing indicates a decline in revenue and an increase in net loss, suggesting a negative outlook. The decrease in net revenue retention rate and the challenging macroeconomic conditions further contribute to the negative sentiment.

Positives

• Gross profit margin improved by 1% to 74% for the three months ended June 30, 2025, due to lower messaging distribution costs.
• Technology and software development expenses decreased by 3% due to lower expenses associated with offshore contract developers and a reduction in compensation expense.
• Interest expense decreased due to the repayment of high interest-bearing cash advances in 2024.
• Gross profit margin improved by 3% to 76% for the six months ended June 30, 2025, as a consequence of lower messaging distribution costs.

Negatives

• Revenue decreased by 9% to $5.837 million in Q2 2025 from $6.422 million in Q2 2024.
• Net loss increased to $1.141 million for the three months ended June 30, 2025, from $647,000 in the same period in 2024.
• Subscription revenue declined by 11% year-over-year.
• Excess use revenue decreased by 5% year-over-year.
• Net revenue retention rate decreased to 78% from 86%.
• Operating expenses increased by 7% due to severance payments and lease termination fees.
• General and administrative expenses increased by 14% due to separation agreement costs and lease termination fees.

Risks

• The overall economic environment and related changes to consumer behavior have a significant impact on the business.
• Regulation and maturation of cannabis markets could lead to increased competition.
• Negative publicity could tarnish the company's reputation and reduce the value of its brand.
• The company may be limited in its ability to raise additional capital due to restrictive covenants in existing debt agreements.
• The company's disclosure controls and procedures were not effective as of June 30, 2025.

Future Outlook

The company intends to explore new expansion opportunities as additional jurisdictions legalize cannabis and leverage its existing business model to enter new markets. A change in U.S. federal regulations could result in the company's ability to engage in additional outlets, including the fintech, payments and e-commerce space.

Management Comments

• The company monitors key financial and operational metrics to evaluate business performance, identify trends, formulate business plans, and make strategic decisions.

Industry Context

The company operates in regulated industries, including the cannabis sector, which face stringent, complex, and rapidly evolving regulations. These regulations restrict access to traditional marketing and advertising channels, preventing them from effectively engaging with consumers.

Comparison to Industry Standards

• Comparable companies in the marketing automation and customer loyalty space include HubSpot, Salesforce, and Braze.
• HubSpot reported a net revenue retention rate of 107% in their latest quarterly report, significantly higher than SpringBig's 78%.
• Salesforce's Service Cloud, a competitor in the CRM space, reported a 13% year-over-year revenue growth, while SpringBig experienced a 9% revenue decline.
• Braze, another marketing automation platform, reported a gross margin of 68%, slightly lower than SpringBig's 74%.

Management Changes

Legal Proceedings

• The company received a civil investigative demand from the United States Attorneys Office with regard to its Paycheck Protection Program Loan (PPP Loan) originally received in 2020 and forgiven in 2021.
• The company and Mr. Harris are currently engaged in litigation brought forth by Mr. Harris, former CEO and former Board Member.

Related Party Transactions

• Jeffrey Harris, the former CEO, and Paul Sykes, the former CFO, both participated in the debt financing transaction completed on January 23, 2024.
• On January 17, 2025, Jeffrey Harris entered into an agreement to sell notes to Mark Silver, a director of the Company.
• On May 7, 2025, Paul Sykes entered into an agreement to sell notes to Mark Silver, a director of the Company.
• There are two members of the board of directors at June 30, 2025, who are related parties to investors in the debt financing transaction completed on January 23, 2024.

Stakeholder Impact

• Shareholders may be concerned about the decrease in revenue and the increase in net loss.
• Employees may be affected by the management changes and potential cost-cutting measures.
• Customers may be impacted by any changes in the company's products or services.
• Suppliers may be affected by any changes in the company's financial condition.

Next Steps

• The company is assessing the potential implications of the One Big Beautiful Bill Act on its operations and consolidated financial statements.
• The company will continue to monitor the impact of inflation and minimize its effects through pricing strategies, productivity improvements, and cost reductions.

Key Dates

Recommendation

Given the declining revenue, increasing net losses, and decreasing net revenue retention rate, a seasoned investor would likely recommend selling the stock. The company's performance is significantly underperforming industry standards, and the negative trends indicate a challenging outlook.

Keywords

SpringBig, revenue, net loss, financial results, Q2 2025, marketing automation, customer loyalty, cannabis industry, OTCQB, SBIG