The COVID pandemic has disrupted the global economy and many household name companies have been forced to file for bankruptcy. From clothing brands to restaurant chains, almost every industry has been negatively impacted by the virus and we have been working to identify industries that have been bucking the trend.
Delivery companies have been major beneficiaries of the pandemic as consumers try to stay indoors and avoid crowded areas. Last month, Uber (UBER) reported earnings and recorded a massive increase in the amount of demand for its food delivery business. We have seen a similar trend in the cannabis industry as consumers have been utilizing delivery services instead of going to a dispensary.
In the cannabis industry, there are a limited number of cannabis delivery companies and this has created a great opportunity for the businesses that were focused on this vertical prior to COVID. Although Eaze is the best-known cannabis delivery service, Driven Deliveries (DRVD) has been steadily increasing its market share in California and this is a trend that we are bullish on.
When compared to Eaze, Driven Deliveries has a much better platform from both a consumer and a brand standpoint. Over the next year, we expect Driven to continue to increase market share in California as it starts to look to expand into new markets. Going forward, we believe that Driven is well positioned to report record growth on a quarter-over-quarter basis and want to provide an update on the opportunity.
Reports Massive Growth in the Second Quarter
Last week, Driven Deliveries released second quarter financial results and reported record revenue of $5.7 million. The cannabis delivery company is one of the few businesses that has benefited from the COVID pandemic and this is a trend that we expect to continue. Driven reported impressive on growth in almost all key metrics (i.e. revenue, margins, guidance, and EBITDA) and we expect the business to continue to report above-average growth on a going forward basis.
When compared to the prior quarter, Driven recorded a more than 150% increase in revenue and the growth was driven by the impact of its strategic plan to become a ‘direct-to-consumer’ e-commerce business and discontinue its dispensary-to-consumer delivery business. The management team played a key role in the success of the platform during the pandemic and we believe that the company’s ability to pivot is a testament to strength of the team.
During the quarter, Driven invested in its technology infrastructure, personnel, and intellectual property, which includes its advanced data analytics and marketing capabilities. The investments made it possible for Driven to scale the platform and capitalize on increases in demand. The company’s new data science program, Driven by Numbers, is an attractive vertical of the business that allows it to track improvements across operations to attract and retain customers. The platform put the company in position to capitalize on the increasing demand and provide great customer experience.
The pandemic and the stay at home order issued in California benefited Driven’s business from a customer acquisition standpoint. During the quarter, the cannabis delivery company attracted 14,000 new customers. The most important metric that is associated with the new customers is the 88% retention rate and we are bullish on how Driven has been able to retain new business. Going forward, the management team expects to report lower customer acquisition costs and this is a metric that our readers need to be aware of.
Another reason we are excited about Driven’s near and long-term outlook is due to the e-commerce and distribution agreement that it has with Stem Holdings (STEM.CN). Through the relationship, Driven expects to further scale the business, expand its footprint in California, and increase the number of products that are being offered to customers.
During the quarter, Driven’s online retail divisions, Ganjarunner and Budee, serviced more than 244,600 registered cannabis consumers. When compared to the first quarter, the company completed twice as many order in the second quarter and we believe that Driven has an attractive growth profile based on the increase in order, customers, and the higher retention rate. Driven was able to substantially grow the business while being able to lower the average new customer acquisition cost and we expect this to lead to continued margin expansion.
After the quarter ended, Driven raised more than $2.5 million and strengthened its balance sheet. With the capital on hand, the company will be able to further expand its footprint and we expect to see it enter new burgeoning markets in the US. We believe that Driven has a compelling valuation and substantial potential catalysts for growth. We are of the opinion that the cannabis delivery company is in the early innings of a major growth cycle and are favorable on the risk-reward profile that is associated with the operation.
A Growth Story that is Just Getting Started
At current levels, we believe that Driven represents an attractive growth opportunity and believe that the business is flying under the radar. The company is well positioned to thrive in the current market environment and are favorable on the direction that the management team is bringing the business.
Over the next year, we expect Driven to enter additional US markets and expect the management team to make strategic decisions about entering new markets. Based off the success that Driven has had in California as well as the technology that supports the platform, we expect the business perform well in markets that it expands into.
When compared to other cannabis operators, we believe that Driven is much better positioned to capitalize on the current market environment and are bullish on the long-term outlook of the business. We believe that COVID has greatly accelerated the growth of the company and are of the opinion that Driven has a compelling growth profile.
If you are interested in learning more about the cannabis delivery company, please send an email to email@example.com to be added to our Driven Deliveries distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Driven Deliveries Inc. we have been hired for a period of 90 days beginning July 28, 2020 and ending October 28, 2020 to publicly disseminate information about (DRVD) including on the Website and other media including Facebook and Twitter. We are being paid $7,000 per month (DRVD) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero (0) shares of (DRVD), which we purchased in the open market. We plan to sell the “ZERO” shares of (DRVD) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (DRVD) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.