WM Technology, Inc. Q1 FY2025 earnings call

· CEO Doug Francis mentioned that the company exceeded Q1 guidance and saw growth in revenue, adjusted EBITDA, and ending cash year-over-year, reflecting focused execution in a challenging cannabis industry environment. · Highlighted the unchanged regulatory environment with challenges like over taxation, competition from unregulated hemp, and tariffs affecting clients' operating costs and margins. · The team is disciplined, keeping cost structure lean, focusing on ROI-driven investments and generating cash despite industry challenges. · Technology and product development made meaningful progress with foundational improvements to data infrastructure and automation, including better use of machine learning and AI, and enhancements to product catalog, taxonomy, and search capabilities. · Marketing organization was restructured in Q1, and early impact was seen, such as 420 activations that felt true to the brand's culture and community.

First quarter revenue was $44.6 million, which was roughly in line with the $44.4 million reported in the prior year period. The $0.2 million or 1% modest increase was driven by growth in standard listings (an increase of $0.4 million) and display advertising (an increase of $0.8 million), while this was partially offset by a $1 million decline in revenue from featured and deal listings. The average monthly paying clients for the quarter increased 5% year-over-year to 5,179 due to new client acquisitions in certain markets. However, the average monthly revenue per paying client decreased to $2,871 from $2,997 in the prior year, reflecting spend pullbacks in more mature markets. GAAP OpEx, which includes cost of revenues and depreciation and amortization, totaled $42 million in the first quarter, representing a $1.3 million or 3% increase over the prior year period. Net income rose to $2.5 million from $2 million in the prior year. Adjusted EBITDA for the first quarter was $10.1 million. We generated $1.3 million in cash from operations and ended the first quarter with a cash balance of $53.3 million.

· Expect revenues for the second quarter to be approximately $45 million. · Non-GAAP adjusted EBITDA is estimated to be approximately $8 million.

· Regulatory environment remains unchanged with over taxation and competition from unregulated hemp continuing to challenge the industry. · Tariffs present a risk of increasing clients' operating costs and compressing already tight margins. · Mature markets are seeing decreasing retail prices, leading to reduced cash flow for clients and ultimately their ability to purchase the company's services. · Emerging markets, while showing potential, remain subscale and don't make up for the challenges in more mature markets.