Second Quarter Revenue increased to $58.3
million representing growth of 24% year-over-year
Co-Founder Douglas Francis appointed Executive
Chair
WM Technology, Inc. (“WM Technology” or the “Company”) (Nasdaq:
MAPS), a leading technology and software infrastructure provider to
the cannabis industry, today announced its financial results for
the second quarter ended June 30, 2022.
“Our second quarter results demonstrates how our strategy
continues to drive growth for WM Technology as we grew our second
quarter net revenue by 24% year-over-year to reach $58 million and
increased Average Monthly Paying Clients to 5,537, both quarterly
records,” said Chris Beals, CEO of WM Technology. “We believe these
results again demonstrate how WM Technology is the enduring
platform for the cannabis end-markets. And while the current macro
environment, including challenges specific to the cannabis
end-markets, did impact our results, our pace of innovation and
continuing to deliver healthy returns to our clients resulted in us
achieving growth that exceeded our end markets by a wide-margin.
Clients continue to rely on our marketplace and WM Business
solutions to help grow their own businesses. For that reason, we
remain focused on executing against our plans to establish the
Weedmaps marketplace as the center of commerce for cannabis
consumers and WM Business as the software solution of choice for
cannabis businesses.”
“We continue to lean into the tremendous opportunity ahead of us
and are focused on driving both near and long-term sustainable
growth and profitability,” said Arden Lee, CFO of WM Technology.
“In this environment, we also understand the need for prudent
operational and investment decision making and we have taken steps
to ensure these remain the case. We are as confident as ever in our
business model and strategy.”
Second Quarter 2022 Financial Highlights
- Revenue increased to $58.3 million, up 24% from the second
quarter of 2021.
- Monthly active users(1) increased to 17.4 million at June 30,
2022, up 41% compared to the prior year period
- Average monthly revenue per paying client(2) decreased to
$3,509, a 5% decrease compared to the prior year period.
- Average monthly paying clients(3) increased to 5,537, a 31%
increase compared to the prior year period.
- Gross Profit was $54.4 million implying a 93% margin rate,
which reflects a 250bps margin reduction from the prior year given
investments made in new client solutions, our WM AdSuite offering
and continued investment in data initiatives.
- Net income was $19.8 million as compared to net income of $16.8
million from the prior year period.
- Adjusted EBITDA(4) was $(0.6) million as compared to $8.5
million from the prior year period.
- Basic and diluted net income per share was $0.14 and $0.13
based on 86.4 million and 87.2 million of Class A Common Stock
weighted average shares outstanding, respectively.
- Total shares outstanding across Class A and Class V Common
Stock is 145.3 million as of June 30, 2022.
- Cash totaled $47.6 million as of June 30, 2022, with no
long-term debt.
Reconciliations of GAAP to non-GAAP financial measures have been
provided in the tables included in this release.
______________________________
(1)
See “Definition of Key Operating and
Financial Metrics—Monthly Active Users” below for additional
information regarding MAUs.
(2)
Average monthly revenue per paying client
is defined as the average monthly revenue for any particular period
divided by the average monthly paying clients in the same
respective period.
(3)
Average monthly paying clients are defined
as the average of the number of paying clients billed in a month
across a particular period (and for which services were
provided).
(4)
For further information about how we
calculate EBITDA and Adjusted EBITDA as well as limitations of
their use and a reconciliation of EBITDA and Adjusted EBITDA to net
income (loss), see “Reconciliation of Net Income (Loss) to EBITDA
and Adjusted EBITDA” below.
Second Quarter 2022 Operational Highlights
- We grew Average Monthly Paying Clients by over 30% vs. last
year, with many of these clients coming from regions where our
licensee share is under 50%, demonstrating our ability to execute
in newer markets
- Rolled out new client tools including self-serve analytics and
improvements to our Deals offering, allowing a more streamlined
Deal creation and scheduling process
- Launched two delivery features which create a better user
experience:
- Scheduled Delivery Orders which allow users to schedule
specific time-slots for receiving delivery orders. With scheduled
delivery orders, our users can now order confidently with precise
delivery times
- Express Delivery Menus which support “ice cream truck” delivery
models launched in California and Michigan. This feature enables
clients to showcase limited menus that offer shorter delivery time
periods
- We continue to expand our integrations and API platform, WM
Connectors as well as our partner program. Through the quarter, we
expanded our menu, orders, loyalty and deals integration products
to our clients
- Continued to increase consumer awareness and brand recall of
the Weedmaps marketplace, both in underpenetrated existing markets
as well as new markets
- Expanded cross-product adoption efforts as clients are now
using 4 solutions on average of our dozen plus distinct
solutions
Second Half and Full Year 2022 Business Outlook
Based on current business trends and conditions, we are planning
against an outlook where total revenue is flat-to-down in the
mid-single digit percent area on a year-over-year basis for the
second half, which implies a low double-digit percent growth rate
for the full year 2022. We expect to end the year with positive
Adjusted EBITDA for the full year 2022.
The guidance provided above is only an estimate of what we
believe is realizable as of the date of this release. This guidance
assumes that no business acquisitions, investments, restructurings,
or legal settlements are concluded in the quarter. Our results are
based on assumptions that we believe to be reasonable as of this
date, but may be materially affected by many factors, as discussed
below in “Forward-Looking Statements.” Actual results may vary from
the guidance and the variations may be material. We undertake no
intent or obligation to publicly update or revise any of these
projections, whether as a result of new information, future events
or otherwise, except as required by law.
Co-Founder Douglas Francis Appointed Executive Chair
WM Technology also announced that the Company’s Board of
Directors has appointed WM Technology’s co-founder Douglas Francis
as Executive Chair. In this newly created role, Mr. Francis will
provide additional oversight and directly engage with management in
developing the Company’s strategy and driving its execution.
Mr. Francis said, “As one of the leading technology and software
providers to the cannabis industry, Weedmaps is ideally positioned
to professionalize the cannabis marketplace, creating value for
consumers and compelling returns for our shareholders. I have been
a part of the Company for over 14 years and am excited to again be
directly involved with management as we deliver on our mission to
power a transparent and inclusive global cannabis economy.”
About Douglas Francis
In 2008, Mr. Francis co-founded Legacy WMH, the predecessor
company to WM Technology. He served as the Company’s President from
2009 to 2016 and as Chief Executive Officer from 2016 until
2019.
Mr. Francis was appointed Chairman in 2019, serving in that role
until 2021 when he became a member of the WM Technology Board of
Directors. Mr. Francis has served in management positions in each
of Legacy WMH’s current subsidiaries.
Mr. Francis holds a B.S. in Business Administration and
Management from Chapman University.
Conference Call Details
The Company will host a conference call and webcast today,
Tuesday, August 9, 2022, at 2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time). Participants may register for the call at
https://edge.media-server.com/mmc/p/83rej9hw. A live webcast of the
call will also be available on the WM Technology investor relations
website at ir.weedmaps.com.
Earnings Presentation Details
A presentation with information on our Second Quarter 2022
earnings results can be found at ir.weedmaps.com at 2:00 p.m.
Pacific Time (5:00 p.m. Eastern Time).
About WM Technology
Founded in 2008, WM Technology operates a leading online
marketplace with a comprehensive set of eCommerce and compliance
software solutions sold to retailers and brands in the U.S.
state-legal and Canadian cannabis markets. The Company’s mission is
to power a transparent and inclusive global cannabis economy. We
address the challenges facing both consumers seeking to understand
cannabis products and businesses who serve cannabis users in a
legally compliant fashion with our Weedmaps marketplace and WM
Business software solutions. Over the past 13 years, we have grown
the Weedmaps marketplace to become a premier destination for
cannabis consumers to discover and browse information regarding
cannabis and cannabis products, permitting product discovery and
order-ahead for pickup or delivery by participating retailers. WM
Business is a set of eCommerce-enablement tools designed to help
our retailer and brand clients get the best out of their Weedmaps
experience, while creating labor efficiency and managing their
compliance needs.
WM Technology holds a strong belief in the power of cannabis and
the importance of enabling safe, legal access to consumers
worldwide. Since inception, WM Technology has worked tirelessly,
not only to become the most comprehensive platform for consumers,
but to build the software solutions that power businesses
compliantly in the space, to advocate for legalization, social
equity, and licensing in many jurisdictions, and to facilitate
further learning through partnering with subject matter experts on
providing detailed, accurate information about the plant.
Headquartered in Irvine, California, WM Technology supports
remote work for all eligible employees. Visit us at
www.weedmaps.com.
Forward-Looking Statements
This press release includes “forward-looking statements”
regarding our future business expectations which involve risks and
uncertainties. Forward-looking statements may be identified by the
use of words such as “estimate,” “plan,” “project,” “forecast,”
“intend,” “will,” “expect,” “anticipate,” “believe,” “seek,”
“target” or other similar expressions that predict or indicate
future events or trends or that are not statements of historical
matters. These forward-looking statements include, but are not
limited to, statements regarding estimates and forecasts of
financial and performance metrics and projections of market
opportunity and market share. These statements are based on various
assumptions, whether or not identified in this press release, and
on the current expectations of the Company’s management and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the control of the
Company. These forward-looking statements are subject to a number
of risks and uncertainties, including the Company’s financial and
business performance, including key business metrics and any
underlying assumptions thereunder; market opportunity and the
Company’s ability to acquire new customers and retain existing
customers; expectations and timing related to commercial product
launches; success of the Company’s go-to-market strategy; ability
to scale its business and expand its offerings; the Company’s
competitive advantages and growth strategies; the Company’s future
capital requirements and sources and uses of cash; the Company’s
ability to obtain funding for our future operations; the outcome of
any known and unknown litigation and regulatory proceedings;
changes in domestic and foreign business, market, financial,
political and legal conditions; risks relating to the uncertainty
of the projected financial information with respect to the Company;
future global, regional or local economic and market conditions
affecting the cannabis industry; the development, effects and
enforcement of and changes to laws and regulations, including with
respect to the cannabis industry; the Company’s ability to
successfully capitalize on new and existing cannabis markets,
including its ability to successfully monetize its solutions in
those markets; the Company’s ability to manage future growth; the
Company’s ability to develop new products and solutions, bring them
to market in a timely manner, and make enhancements to its platform
and the Company’s ability to maintain and grow its two-sided
digital network, including its ability to acquire and retain paying
customers; the effects of competition on the Company’s future
business; the Company’s success in retaining or recruiting, or
changes required in, officers, key employees or directors; the
possibility that we may be adversely affected by other economic,
business or competitive factors; the possibility that the Company
may be adversely affected by other economic, business or
competitive and those factors discussed in the Company’s 2021
Annual Report on Form 10-K filed with Securities and Exchange
Commission (the “SEC”) and subsequent Form 10-Qs or Form 8-Ks filed
with the SEC. If any of these risks materialize or these
assumptions prove incorrect, actual results could differ materially
from the results implied by these forward-looking statements. There
may be additional risks that the Company does not presently know or
that the Company currently believes are immaterial that could also
cause actual results to differ from those contained in the forward
looking statements. In addition, forward-looking statements reflect
the Company’s expectations, plans or forecasts of future events and
views as of the date of this press release. The Company anticipates
that subsequent events and developments will cause the Company’s
assessments to change. However, while the Company may elect to
update these forward-looking statements at some point in the
future, the Company specifically disclaims any obligation to do so,
except as required by law. These forward-looking statements should
not be relied upon as representing the Company’s assessments as of
any date subsequent to the date of this press release. Accordingly,
undue reliance should not be placed upon the forward-looking
statements.
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our
financial results, we have disclosed EBITDA and Adjusted EBITDA,
both of which are non-GAAP financial measures that we calculate as
net income (loss) before interest, taxes and depreciation and
amortization in the case of EBITDA and further adjusted to exclude
stock-based compensation, change in fair value of warrant
liability, transaction related bonuses, transaction costs, legal
settlements and other non-cash, unusual and/or infrequent costs in
the case of Adjusted EBITDA. Below we have provided a
reconciliation of net income (loss) (the most directly comparable
GAAP financial measure) to EBITDA and from EBITDA to Adjusted
EBITDA.
We present EBITDA and Adjusted EBITDA because these metrics are
a key measure used by our management to evaluate our operating
performance, generate future operating plans and make strategic
decisions regarding the allocation of investment capacity.
Accordingly, we believe that EBITDA and Adjusted EBITDA provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management.
EBITDA and Adjusted EBITDA have limitations as an analytical
tool, and you should not consider it in isolation or as a
substitute for analysis of our results as reported under GAAP. Some
of these limitations are as follows:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future, and both EBITDA and Adjusted EBITDA do not reflect
cash capital expenditure requirements for such replacements or for
new capital expenditure requirements;
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs; and
- EBITDA and Adjusted EBITDA do not reflect tax payments that may
represent a reduction in cash available to us.
Because of these limitations, you should consider EBITDA and
Adjusted EBITDA alongside other financial performance measures,
including net income (loss) and our other GAAP results.
Definition of Key Operating and Financial Metrics
- Monthly Active Users: In any given period, we calculate
our monthly active users by determining the total number of unique
users who opened our Weedmaps mobile app or gained access to our
Weedmaps.com website during the final calendar month of the period.
This number has been reported as Monthly Active Users (“MAUs”).
This statistic includes users who gain access to the website
through paid advertising channels. In the second quarter of 2022,
our board of directors received an internal complaint regarding the
calculation, definition, and reporting of our MAUs. In response,
the board of directors formed a special committee (the “Special
Committee”) of independent directors to conduct an internal
investigation with the assistance of outside counsel. As a result
of this internal investigation, we have determined to provide the
following information. As we have previously disclosed, one of the
ways in which we acquire users is through paid advertising. To an
increasing degree over time, growth of our monthly active users has
been driven by the purchase of pop-under advertisements, which are
marketing advertisements on third party websites that automatically
present our platform on users’ screens in certain circumstances.
Our internal data suggests that the vast majority of users who are
directed to weedmaps.com via pop-under advertisements close the
site without clicking on any links. Based on management’s review,
users whose access to the website resulted from these pop-under
advertisements represented approximately 65% of our MAUs as of June
30, 2022, and 54%, 50% and 54% of our MAUs as of March 31, 2022,
December 31, 2021 and September 30, 2021, respectively. Our
management has utilized pop-under advertisements, and other digital
marketing strategies, based on the belief that they have provided a
cost-effective means of promoting awareness of the weedmaps.com
website and Weedmaps mobile apps. However, we expect to shift our
marketing spend in the coming months to rely less on the use of
pop-under advertisements. In addition, there are inherent
limitations on the ability of online platforms to identify unique,
rather than repeat, users across sessions. In particular, incognito
browsing, usage across devices or mobile and internet platforms,
blocking or deleting cookies and IP addresses or other similar
methods employed by users limits our ability to identify unique
users and, as a result, we believe it is likely that our MAUs may
include a significant number of repeat underlying users. Prior to
and in the course of the internal investigation described above, we
have continued to review user engagement metrics to determine which
metrics may be most useful for investors in evaluating our evolving
business and quarterly results of operations, and we intend to
update investors on those efforts in connection with the results of
operations for the quarter ending September 30, 2022. The
information described above and currently under further review by
the Special Committee is not expected to affect our financial
results under GAAP or the reporting or disclosure of any currently
disclosed non-GAAP financial metric.
- Average Monthly Revenue Per Paying Client: Average
monthly revenue per paying client measures how much clients, for
the period of measurement, are willing to pay us for our
subscription and additional offerings and the efficiency of the
bid-auction process for our featured listings placements. We
calculate this metric by dividing the average monthly revenue for
any particular period by the average monthly number of paying
clients in the same respective period. The calculation of monthly
revenue includes revenue from any clients that cease to be paying
clients during the applicable month.
- Average Monthly Paying Clients: We define average
monthly paying clients as the monthly average of clients billed
each month over a particular period (and for which services were
provided).
WM TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except for
share data)
June 30, 2022
December 31, 2021
Assets
Current assets
Cash
$
47,604
$
67,777
Accounts receivable, net
27,305
17,550
Prepaid expenses and other current
assets
15,375
13,607
Total current assets
90,284
98,934
Property and equipment, net
21,211
13,283
Goodwill
67,156
45,295
Intangible assets, net
11,259
8,299
Right-of-use assets
33,805
36,549
Deferred tax assets
183,222
152,097
Other assets
10,774
10,687
Total assets
$
417,711
$
365,144
Liabilities and Equity
Current liabilities
Accounts payable and accrued expenses
$
31,317
$
23,155
Deferred revenue
7,522
8,057
Operating lease liabilities, current
5,885
5,463
Other current liabilities
98
1,125
Total current liabilities
44,822
37,800
Operating lease liabilities,
non-current
36,321
39,377
Tax Receivable Agreement liability
142,726
128,567
Warrant liability
13,445
27,460
Other long-term liabilities
2,473
—
Total liabilities
239,787
233,204
Stockholders’ equity
Preferred Stock - $0.0001 par value;
75,000,000 shares authorized; no shares issued and outstanding at
June 30, 2022 and December 31, 2021
—
—
Class A Common Stock - $0.0001 par value;
1,500,000,000 shares authorized; 88,836,328 shares issued and
outstanding at June 30, 2022 and 65,677,361 shares issued and
outstanding at December 31, 2021
9
7
Class V Common Stock - $0.0001 par value;
500,000,000 shares authorized, 56,466,013 shares issued and
outstanding at June 30, 2022 and 65,502,347 shares issued and
outstanding at December 31, 2021
5
7
Additional paid-in capital
59,135
2,173
Retained earnings
59,168
61,369
Total WM Technology, Inc. stockholders’
equity
118,317
63,556
Noncontrolling interests
59,607
68,384
Total equity
177,924
131,940
Total liabilities and equity
$
417,711
$
365,144
WM TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except for
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenues
$
58,294
$
46,931
$
115,746
$
88,085
Operating expenses
Cost of revenues
3,858
1,908
7,598
3,765
Sales and marketing
22,123
15,271
44,005
24,388
Product development
13,263
10,271
26,353
18,139
General and administrative
29,610
33,770
58,665
47,136
Depreciation and amortization
2,458
988
6,403
1,990
Total operating expenses
71,312
62,208
143,024
95,418
Operating loss
(13,018
)
(15,277
)
(27,278
)
(7,333
)
Other income (expenses)
Change in fair value of warrant
liability
32,234
37,791
14,015
37,791
Other expense, net
(678
)
(6,069
)
(1,180
)
(6,041
)
Income (loss) before income taxes
18,538
16,445
(14,443
)
24,417
Benefit from income taxes
(1,310
)
(392
)
(3,058
)
(151
)
Net income (loss)
19,848
16,837
(11,385
)
24,568
Net income (loss) attributable to
noncontrolling interests
8,156
12,574
(9,184
)
20,305
Net income (loss) attributable to WM
Technology, Inc.
$
11,692
$
4,263
$
(2,201
)
$
4,263
Class A Common Stock:
Basic income (loss) per share
$
0.14
$
0.07
$
(0.03
)
$
0.07
Diluted income (loss) per share
$
0.13
$
(0.17
)
$
(0.03
)
$
(0.17
)
Class A Common Stock:
Weighted average basic shares
outstanding
86,425,352
63,738,563
79,476,383
63,738,563
Weighted average diluted shares
outstanding
87,230,850
71,347,746
79,476,383
71,347,746
WM TECHNOLOGY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended June
30,
2022
2021
Cash flows from operating
activities
Net (loss) income
$
(11,385
)
$
24,568
Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating activities:
Depreciation and amortization
6,403
1,990
Change in fair value of warrant
liability
(14,015
)
(37,791
)
Impairment loss on right-of-use asset
551
2,372
Stock-based compensation
15,611
19,433
Deferred income taxes
(3,058
)
(392
)
Provision for doubtful accounts
4,691
660
Changes in operating assets and
liabilities:
Accounts receivable
(13,612
)
(2,104
)
Prepaid expenses and other assets
2,867
4,362
Other assets
(87
)
32
Accounts payable and accrued expenses
8,851
1,737
Deferred revenue
(631
)
1,672
Net cash (used in) provided by operating
activities
(3,814
)
16,539
Cash flows from investing
activities
Purchases of property and equipment
(8,554
)
(836
)
Cash paid for acquisitions, net of cash
acquired
(713
)
—
Cash paid for acquisition holdback
release
(1,000
)
—
Net cash used in investing activities
(10,267
)
(836
)
Cash flows from financing
activities
Taxes paid related to net share settlement
of equity awards
(13
)
—
Proceeds from the Business Combination
—
80,284
Repayment of note payable
—
(205
)
Distributions
(1,790
)
(18,110
)
Repurchase of Class B Units
—
(5,565
)
Repayments of insurance premium
financing
(4,289
)
(364
)
Net cash (used in) provided by financing
activities
(6,092
)
56,040
Net (decrease) increase in cash
(20,173
)
71,743
Cash – beginning of period
67,777
19,919
Cash – end of period
$
47,604
$
91,662
WM TECHNOLOGY, INC. AND
SUBSIDIARIES
RECONCILIATION OF NET INCOME
(LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
(In thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net income (loss)
$
19,848
$
16,837
$
(11,385
)
$
24,568
Benefit from income taxes
(1,310
)
(392
)
(3,058
)
(151
)
Depreciation and amortization expenses
2,458
988
6,403
1,990
EBITDA
20,996
17,433
(8,040
)
26,407
Stock-based compensation
8,094
19,433
15,611
19,433
Change in fair value of warrant
liability
(32,234
)
(37,791
)
(14,015
)
(37,791
)
Transaction related bonuses
1,073
1,550
3,030
1,550
Transaction costs
—
—
251
—
Legal settlements and other legal
costs
925
—
1,064
—
Warrant transaction costs
—
5,506
—
5,506
Impairment of right-of-use assets
551
2,372
551
2,372
Adjusted EBITDA
$
(595
)
$
8,503
$
(1,548
)
$
17,477
______________________________
(1)
Stock-based compensation expense is
recorded in the following expense categories on the accompanying
consolidated statements of operations for the three and six months
ended June 30, 2022 and 2021:
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Sales and marketing
$
2,072
$
3,826
$
3,883
$
3,826
Product development
1,516
1,994
2,928
1,994
General and administrative
4,506
13,613
8,800
13,613
Total stock-based compensation expense
8,094
19,433
15,611
19,433
Amount capitalized to software
development
519
—
929
—
Total stock-based compensation cost
$
8,613
$
19,433
$
16,540
$
19,433
WM TECHNOLOGY, INC. AND
SUBSIDIARIES
SELECTED OPERATING KEY
METRICS
(Unaudited)
Selected Key
Operating and Financial Metrics
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Average monthly paying clients
5,537
4,221
5,282
4,068
Average monthly revenue per paying
client
$
3,509
$
3,706
$
3,652
$
3,609
Monthly active users
17,402
12,302
17,402
12,302
View source
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WM Technology (NASDAQ:MAPS)
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