Driven Provides Shareholder Update on Growth, Operational Efficiencies, Vertical Integration, & Added Leadership as Catalysts to its 12-Month $29M Sales Forecast
LOS ANGELES, May 15, 2020 /PRNewswire/ -- Driven Deliveries Inc. (the "Company" or "Driven") (OTCQB: DRVD), California's fastest growing online cannabis retailer and direct-to-consumer logistics company, today provided a business update to its shareholders, as it prepares to release its Form 10-K for fiscal year 2019. Management also hosted a Shareholder Update call today at 8:30 a.m. ET.
Driven achieved several major accomplishments in 2019, including a transition to online retail sales vs enablement of final mile delivery made on behalf of licensed dispensaries. The change in strategy was led by Christian Schenk, who was appointed as the Company's CEO in May 2019. The leadership team was tasked with finding accretive acquisitions within the California online cannabis retail market to accelerate the Company's transition into an online retailer. The Ganjarunner acquisition took place in June 2019, followed by the assets of Sacramento-based Mountain High Recreation in July 2019. After integrating certain marketing, accounting and procurement functions in Q4 2019, the Company set out to find another service provider that would provide its now statewide operation with additional capacity, leadership and technology IP. In October 2019, a joint venture with Oakland-based Budee Inc. was established in conjunction with the announcement of the intent to acquire the operator. The companies collaborated on additional technology development as well as operations. At the end of December 2019, the combined online retail business was generating sales of approximately $1M per month. Driven announced today it was able to recognize unaudited total revenues of approximately $2.8M for fiscal year 2019, of which approximately $2M was generated in the fourth quarter alone. The unaudited pro-forma revenue from the combined businesses exceeded $10M for the year.
"2019 represented our transformation to an online retailer," said Christian Schenk, CEO of Driven Deliveries Inc. "We acquired great leadership, technology and best practices that enabled us to complete the integration of our delivery operations across the State of California, including synchronization of both our scheduled and on-demand network. Unaudited pro-forma revenue for 2019 was approximately $10 million, which provides a more complete picture of the sales generated, had all three entities including Budee, Inc. and Ganjarunner, Inc been operating as a combined business from January 1, 2019." Driven holds licensing in Sacramento, Oakland and Los Angeles and provides service to 92% of California, offering both next day delivery and express delivery services.
2019 provided the foundation for facility consolidation, technology consolidation, menu operation integration, and data science and marketing automation which were accomplished in Q1 2020. In January, the company relocated its headquarters to Los Angeles where all corporate functions now reside. Technology advancements included enhancements to the routing and sequencing engine, inventory management system (IMS), Metrc compliance and an enhanced Resource Allocation module. The Company has also begun efforts to productize its comprehensive technology stack for eventual licensing in other markets. Menu Operations, a new department within Driven, took over central management of all supply chain functions, pricing lanes, margin adherence protocols, as well as vendor performance and SKU performance. The centralization has contributed to considerable gross profit margin improvements which, in April 2020, reached 64%. A data science initiative was launched in February that was later announced as Driven by Numbers (DBN). The platform provides data visualization and reporting on all aspects of the Company's operation including real-time sales analysis, marketing performance, delivery performance, employee performance and menu performance. Additionally, DBN is now fully integrated into the Company's marketing platforms and its mobile application, Weedwaves, which provides scale through automatic segmentation to help increase engagement from registered customers while providing insights such as demographics and affinities for use in customer acquisition campaigns.
Marketing highlights included Q1 Cost of Acquisition (COA) which improved to $10.77 from $14.11 in the previous quarter. In April, new customer acquisitions reached 4600, up 61% from March. Due to this aggressive growth, Driven has now surpassed over 220,000 registered customers. "We were able to leverage a number of new marketing initiatives such as search engine optimization (SEO), increased brand content on our ecommerce sites, customer referral programs, social media and increased promotion as well as adoption of our Weedwaves platform to drive down COA," said Schenk.
The acquisition of Budee Inc closed in February 2020, which led to the appointment of Salvador Villanueva as President of Driven Deliveries. Villanueva is a seasoned serial entrepreneur with experience in both retail and service industries.
In March, Driven added additional talent to its Board of Directors with the appointment of Christopher DeSousa, an accomplished direct to consumer logistics and operations executive with experience in both freight and confectionary markets.
COVID-19 Shelter-in-Place orders contributed to major increases in demand for both Ganjarunner and Budee. Sales increased as much as 100% between early March and late March. Despite operational challenges due to employees needing to tend to their families, the resource planning and allocation team was able to stay ahead of the impact with increased planning and additional hiring which enabled the Company to meet the increase in demand.
April represented the highest grossing month in company history as sales continued to rise with further advancements in new customer acquisition such as Brand Budee, a new brand to consumer technology that was released to cannabis brands participating on menus. The solution allows consumers to purchase inventory that is available near them right from the brands website without being redirected to a third party ecommerce store. These and other initiatives provided the scale and reach that was needed to break all sales records during the industry holiday 4/20, where retail sales exceeded $100,000 in a single day.
With week over week growth now in the double digits and operational efficiencies continuing to improve the bottom line, the Company is on pace to generate retail sales revenue of more than $29,000,000 on a forward looking 12 month forecast with EBITDA exceeding 5%. Earlier this week the Company announced its intent to acquire Mozen, a lifestyle all-in-one vaporizer brand currently participating on the menu. Vertical integration is expected to play a large role in the continued improvement to the contributing gross margin of the combined businesses.
"We apologize to our shareholders for the delayed filing of the Form 10-k which was expected to be filed yesterday, May 14th. Unfortunately, due to restrictions put in place during the pandemic and subsequent compounding challenges, our ability to complete the Annual Filing on time has been impeded," noted Schenk. "We are committed to filing the 10-K within the 15-day extension period granted by the SEC and appreciate the commitment and patience of our shareholders as we remain rightfully focused on capitalizing on our momentum and driving shareholder value."
About Driven:
Driven Deliveries, Inc., is the first publicly traded cannabis delivery service operating within the United States. Founded by experienced technology and cannabis executives, the company provides e-commerce solutions, online sales, and on-demand cannabis delivery, in select cities where allowed by law. Driven offers legal cannabis consumers the ability to purchase and receive their marijuana in a fast and convenient manner. By 2020, legitimate cannabis revenue in the U.S. market is projected to hit $23 billion. By leveraging consumer trends, and offering a proprietary, turnkey delivery system to its customers, management believes it is uniquely positioned to best serve the needs of the emerging cannabis industry and capture notable market share within the sector. For more information, please visit www.DRVD.com and review Driven's filings with the U.S. Securities and Exchange Commission.
Forward-looking Statements:
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project" and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations, and intentions reflected in or suggested by the forward-looking statements are reasonable, we can give no assurance that we will achieve these plans, objectives, expectations or intentions. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company's control) and assumptions that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results to differ materially from those in the forward-looking statements and the trading price for our common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the company's filings with the U.S. Securities and Exchange Commission. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact:
KCSA Strategic Communications
Valter Pinto or Elizabeth Barker
+1 212-896-1254 or +1 212-896-1203
[email protected]
SOURCE Driven Deliveries, Inc.
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