WM Technology, Inc. Q2 FY2023 earnings call

• Doug Francis highlighted three objectives for the year: delivering value to clients, improving the marketplace, and driving profitable and sustainable growth. They are investing in building relationships with clients, using off-line promotional activations combined with digital platforms, and innovating the marketplace. - Duncan Grazier discussed the technology team, with over 200 professionals working on developing and maintaining the platform. They have made strides in mobile-first transition, data focus, and customer centricity, with advancements in search, product experience, and data science to enhance user and client experiences. - Mary Hoitt reviewed Q2 financials, noting revenue beat expectations, adjusted EBITDA was $10 million, and adjusted OpEx was reduced by 32% year-over-year. She also mentioned client numbers, revenue per client, and the company's comfortable liquidity position.

In the second quarter, WM Technologies had revenues of $51 million, net income of $2 million, and adjusted EBITDA of $10 million. Adjusted OpEx was 32% lower than the previous year. California accounted for 54% of Q2 revenue, slightly down from 55% in Q1. There were 5,609 average monthly paying clients in Q2, a decrease of less than 1% compared to Q1. Revenue per client in Q2 was $3,022, an increase of 7% from Q1, but expected to decline in the coming quarters due to clients in emerging markets having lower initial spend.

• WM Technologies expects Q3 revenue to be $47 million and adjusted EBITDA to be in the $4 million area. - The company remains committed to achieving double-digit adjusted EBITDA margin for fiscal year 2023 and generating positive cash flow for the year, with the cash balance expected to increase in Q3.

• The cannabis industry faces challenges such as lack of regulatory support and headwinds in certain states. - Client churn, particularly in California and Oklahoma, and issues with receivables and bad debt. - Mastercard shutting down cannabis transactions, which is an additional headwind for the industry and clients.

Q: Could you quantify the bump from April to the $3,022 net spending per client and what a good ongoing number is?

A: Greg Stolowitz said there was good momentum in the beginning of the quarter with larger clients increasing spend, but paying client count is expected to be relatively flat with some growth and offsetting churn, impacting spend per client. Doug Francis added that emerging markets have lower average spend per client.

Q: What is net retention like in emerging markets and the spending profile?

A: Greg Stolowitz stated they are seeing good retention growth in emerging markets, but spend levels are below the average of mature states. Doug Francis mentioned they are working with clients in emerging markets facing headwinds.

Q: Can you comment on days receivable and if it's under control?

A: Greg Stolowitz said they feel good progress has been made on receivables and collection policies, with the allowance for bad debt coming down but still some known and unknowns.

Q: Can you comment on client appetite to invest in advertising given the macro backdrop?

A: Doug Francis said client spending varies by state, with pressure on budgets across the board but some players consolidating and opportunities to build relationships.

Q: What are the puts and takes on Mastercard shutting down cannabis transactions?

A: Doug Francis said it's an additional headwind for the industry, with some companies having technology relying on Mastercard's ability, but most clients are expected to adapt.