WM Technology, Inc. Q1 FY2023 earnings call

• Using AI - driven algorithms to drive more personalized user experiences, including personalized sort orders and product recommendations, and deploying new language models to expand product catalog and brand matching. - Teams executing the first phase of end - market activation across major regions, increasing on - the - ground and field marketing presence by 3x, having weekly client events, and rolling out changes to aid clients on the marketplace like new listing redesign and order status push notifications. - Kicking off the 20 Days of Deals integrated marketing campaign for 420 holiday, with regional event activations and Retailer Appreciation Day Dispensary tours, and achieving largest - ever order volume on a single 420 day. - Focusing on what can be controlled in terms of investment and operation mindset, adjusting OpEx to 2021 levels, showing discipline in hiring and achieving productivity to fund investments, with net headcount declining during the quarter despite strategic hires.

Q1 revenue was $48 million, exceeding the $47 million expectation. Adjusted EBITDA was a positive $7 million, surpassing the $4 million expectation. Paying client base was marginally down Q - o - Q but up 12% Y - o - Y. Revenue per client was marginally down Q - o - Q due to mix considerations, with California's marketplace revenue accounting for 55% of Q1 revenue. Monthly net dollar retention on subscription revenue was back above 100% in Q1. Adjusted OpEx for the quarter was at the level of Q2 and Q3 of fiscal 2021. Adjusted sales and marketing spend declined by 50% Y - o - Y and G&A by 22% Y - o - Y.

• Expect Q2 revenue to be consistent with Q1. - Expect Q2 adjusted EBITDA to be in the $4 million area, with marketing investments ramping back down to more normalized levels in the second half. - Q2 cash will continue to be impacted by remaining termination costs related to headcount reductions and will represent a low point for the year, but committed to driving double - digit adjusted EBITDA margins and positive cash flow for the year.

• Licensed end markets continue to be challenged, with clients struggling to bring consumer demand back to licensed channels while dealing with crippling taxes and lack of federal regulatory help. - Broader macro environment uncertainty which could affect consumer pocketbooks and their spend for discretionary product.

Q: Looking at sequential decline in average paying client, could you give sense of cut off, new vs mature markets and mix degradation?

A: If removed churn due to billing issues, paying client count would be relatively flat Q - o - Q. Vast majority of net client adds in last quarter from emerging regions. Revenue per paying client decline Q - o - Q was largely driven by mix, with more client adds in emerging regions with lower revenue per client dynamics and elevated churn due to billing issues in mature markets.

Q: Coming into second quarter, more optimistic about demand environment?

A: Client demand is a tail of two different sets of markets. Established markets like California and Colorado have headwinds with steady sequential week - over - week decline in licensed end market GMV. Other regions have states with double - digit or triple - digit growth. User demand for cannabis is still strong but need to watch macro environment impact on consumer spend.

Q: Quantify percentage growth of 420 promotion order volume?

A: Year - over - year, 420 order volume was up in low single - digit percent area, and deal claims were up well into double digits Y - o - Y.