WM Technology, Inc. Q2 FY2025 earnings call

• Acknowledged the challenging structural environment in the cannabis industry, with balance sheet strengthening allowing action on near-term opportunities. - Despite Q2 revenue being below expectations, delivered consecutive quarters of adjusted EBITDA profitability and positive cash flow. - Addressed California's excise tax increase and lobbying efforts, as well as regulation of online cannabis marketplaces. - Noted progress in emerging markets like New York with accelerating client onboarding. - Mentioned new products in the pipeline, including expanded premium placement opportunities, and the launch of a new online head shop. - Highlighted uncertainty in the hemp market due to legislative activity and ongoing work to launch hemp products once clarity is achieved. - Expanded AI and ML teams and capabilities to become a key dataset for the industry.

Revenue for the second quarter was $44.8 million, a 2% decline from the prior year period. The decline was mainly due to lower revenue from featured and deal listings products because of market headwinds affecting client margins and discretionary marketing spend, but was partially offset by an increase in display advertising revenue. Average monthly paying clients increased 4% to 5,241, but average monthly revenue per paying client decreased 6% due to reduced spend from existing clients in mature markets and lower initial spend from new clients. GAAP OpEx totaled $42.9 million, a 4% decrease from the prior year period, with general and administrative expenses increasing by ~$2.2 million due to a one-time noncash loss contingency. Non-GAAP adjusted EBITDA was $11.7 million, up 16% from the prior year period. Cash ended the quarter at $59 million, an increase of $5.7 million from Q1, with no debt.

• Expect Q3 revenue to be approximately $41 million to $43 million. - Anticipate non-GAAP adjusted EBITDA to be in the range of $5 million to $7 million, with opportunistic ramping of investments to support future growth.

• California's excise tax increase and potential regulation of online cannabis marketplaces. - Price compression, consolidation, taxes, overregulation in Michigan and other early cannabis states. - Uncertainty in the hemp market due to federal and state legislative back-and-forth.