Executive Summary / Key Takeaways

• WM Technology (MAPS) stands as a foundational technology provider in the cannabis industry, leveraging its Weedmaps marketplace and comprehensive SaaS solutions to bridge consumers and businesses within a complex regulatory environment.
• The company demonstrates robust financial discipline, marked by 11 consecutive quarters of adjusted EBITDA profitability and 8 quarters of cash growth, culminating in a debt-free balance sheet with $59 million in cash as of Q2 2025.
• Strategic investments in technological differentiation, particularly expanding AI/ML capabilities for product data standardization and developing new premium brand placements, are designed to strengthen its competitive moat and unlock future monetization.
• MAPS is actively pursuing vertical and horizontal market expansion, including successful client onboarding in emerging markets like New York and planned launches into adjacent sectors such as an online head shop ("Hedi") and the homegrown seed market.
• While Q3 2025 revenue guidance ($41M-$43M) reflects ongoing market softness and increased strategic investments, the company's long-term outlook is anchored in its adaptable strategy and technological leadership amidst persistent regulatory challenges.

The Digital Foundation of Cannabis Commerce: WM Technology's Enduring Vision

WM Technology, Inc., founded in 2008, established itself early as a leading online cannabis marketplace, Weedmaps, connecting consumers with retailers and brands. This foundational role has evolved into a comprehensive ecosystem that includes not only product discovery and order-ahead functionalities but also a robust suite of Software-as-a-Service (SaaS) solutions known as Weedmaps for Business. This dual-sided approach positions MAPS as a critical infrastructure provider within the rapidly expanding, yet highly regulated, U.S. cannabis industry, valued at over $45 billion in 2025 with strong projected growth.

The company's journey has been marked by strategic adaptations. Following a significant business combination in 2021 that established its current Up-C structure, MAPS faced an internal review and subsequent SEC investigation regarding its monthly active users (MAUs) metric in 2022. This period, coinciding with Doug Francis's return to an operating leadership role, underscored the need for operational rigor and a "long game" strategy. The SEC matter concluded in September 2024, with the company paying a civil penalty, allowing MAPS to fully concentrate on its strategic roadmap. This history of resilience and adaptation is central to its current strategy of disciplined execution and thoughtful investment.

In the competitive landscape, MAPS operates alongside direct rivals such as Leafly Holdings, Inc. (LFLY), which focuses more on discovery and reviews, and private entities like Dutchie (specializing in POS and backend operations) and Eaze (focused on delivery services). MAPS differentiates itself through its integrated ecosystem, offering a more comprehensive compliance and ecommerce experience. Its Weedmaps for Business suite, encompassing WM Listings, WM Orders, WM Store, WM Connectors, and WM Insights, provides an end-to-end platform that streamlines operations and manages compliance for licensed cannabis businesses. This broad offering, coupled with its established marketplace, gives MAPS a strategic edge in fostering network effects and recurring revenue streams, potentially leading to stronger customer loyalty compared to competitors with more specialized offerings.

Technological Edge: Building the Industry's Data Backbone

WM Technology's core competitive advantage is deeply rooted in its differentiated technology, which underpins its integrated marketplace and SaaS solutions. The company's WM Connectors provide a centralized integration platform with API tools that enable seamless menu management, automatic inventory updates, and streamlined order fulfillment. This technology directly translates into tangible benefits for clients by creating business efficiencies and improving the accuracy and timeliness of information across the Weedmaps platform, enhancing the experience for both businesses and consumers.

Further enhancing its technological moat is WM Insights, an analytics platform that leverages data across the Weedmaps marketplace and software solutions. This tool provides clients with critical data and analytics on user engagement, traffic trends to their listing pages, and for brands, the ability to monitor product rankings, identify retailers, and track top products by category and state. These insights are invaluable for businesses operating in a complex and evolving market, offering a data-driven approach to strategic decision-making.

In a significant move to deepen its technological leadership, MAPS is expanding its Artificial Intelligence (AI) and Machine Learning (ML) teams and capabilities, specifically targeting the product data that powers the industry. Management explicitly states that the industry "lacks standardization across product catalogs," and MAPS is making "great progress to becoming the key dataset for the industry." This initiative aims to entrench MAPS's data and ML tools into partners' tech stacks and the Weedmaps platform, establishing the company as an indispensable infrastructure layer. This strategic focus on data standardization and AI is expected to drive long-term value by improving platform stickiness, enhancing data-driven insights for clients, and creating new monetization avenues. The company is also in beta for expanded premium placement opportunities for brands, a new product expected to generate revenue and offset headwinds in legacy markets. Additionally, a new online head shop, "Hedi," is slated for near-term launch, showcasing glass artists and offering accessories, further diversifying its digital offerings.

Financial Resilience Amidst Headwinds: A Disciplined Approach

WM Technology's financial performance in the first half of 2025 reflects a company executing with discipline in a challenging environment. For the second quarter of 2025, revenues totaled $44.8 million, a 2% decline year-over-year. This was primarily driven by a $1.4 million decrease in revenue from Featured Listing and WM Deal products, which constitute approximately 60% of total revenues, and a $0.1 million decrease in Weedmaps for Business and other SaaS solutions (approximately 30% of revenues). These declines underscore the ongoing pressure on client margins and discretionary marketing spend due to industry headwinds. However, an increase of $0.4 million in other ad solutions revenue (approximately 10% of revenues) partially offset these declines, demonstrating the company's ability to reallocate client budgets towards diverse ad offerings.

Despite the revenue softness, MAPS achieved a net income of $2.2 million in Q2 2025, an 81% increase year-over-year. Non-GAAP adjusted EBITDA reached $11.7 million, up 16% from the prior year period, marking the 11th consecutive quarter of adjusted EBITDA profitability. This consistent profitability is a testament to the company's operational rigor and cost management efforts. GAAP operating expenses decreased by 4% year-over-year, primarily due to reduced digital advertising spend and lower personnel costs following recent restructurings within sales, marketing, and product development teams. General and administrative expenses did see an increase of approximately $2.2 million, largely due to a one-time non-cash loss contingency of $2.3 million related to a shortfall in its AWS minimum commitment obligation, reflecting ongoing efforts to optimize cloud infrastructure.

Operational metrics also highlight this mixed environment. Average monthly paying clients increased 4% year-over-year to 5,241 in Q2 2025, driven by new client acquisitions in emerging markets like New York and Ohio. However, average monthly revenue per paying client declined 6% to $2,852, reflecting reduced spend from existing clients in mature markets and lower initial spend levels from new clients. The company's strong balance sheet remains a significant asset, ending Q2 2025 with $59 million in cash, an increase of $5.7 million from Q1, marking its eighth consecutive quarter of cash growth. Critically, MAPS operates with no debt, providing substantial flexibility to navigate market uncertainty and fund strategic initiatives. The 2024 free cash flow was notably boosted by a focused effort on accounts receivable collections, a non-recurring cash influx that strengthened its liquidity.

Strategic Initiatives: Cultivating Future Growth

WM Technology's strategic roadmap is designed to cultivate long-term growth by expanding its marketplace and enhancing its technological offerings. The company is pursuing growth along two key dimensions: vertical and horizontal expansion. Vertical expansion involves adding new products and features both upstream and downstream in the cannabis supply chain, with specific details to be unveiled closer to launch. This aims to deepen the platform's integration into the cannabis ecosystem.

Concurrently, MAPS is actively pursuing horizontal expansion into natural adjacencies. This includes exploring the hemp market, although management acknowledges the "increasingly uncertain" regulatory landscape at both federal and state levels, which tempers growth expectations. Despite this, the company plans to move more aggressively once regulatory clarity emerges, aiming to provide safe consumer access while supporting licensed cannabis operators. Other horizontal initiatives include the near-term launch of "Hedi," an online head shop for glass, devices, and accessories, and developing marketplaces for the "seeds and homegrown category." These initiatives are considered "low risk in the short-term" and are expected to be "key products" when industry headwinds eventually turn into tailwinds.

The company's commitment to innovation is further evidenced by the appointment of Sarah Griffis as the new Chief Technology Officer at the beginning of 2025. Under her leadership, MAPS has made significant headway in foundational improvements to its data infrastructure, automation, machine learning, and AI capabilities. This includes enhancing its product catalog, taxonomy, and search functionalities, which are crucial for the next generation of ad products and marketplace innovation. A marketing organization restructuring in Q1 2025 is also aimed at reconnecting with the brand's heritage and driving greater user engagement. These investments in technology and marketing are critical for strengthening the Weedmaps platform and positioning the company to capitalize on future industry developments.

Outlook and Risks: Navigating an Evolving Landscape

WM Technology's outlook for Q3 2025 reflects a pragmatic approach to persistent industry challenges and strategic investment. The company expects Q3 revenue to be approximately $41 million to $43 million, with non-GAAP adjusted EBITDA in the range of $5 million to $7 million. This guidance factors in "continued softness in key markets" and an "opportunistic ramp [of] investments to support future growth." Management anticipates that the revenue impact from ongoing industry challenges will be visible over the coming quarters.

Key assumptions underlying this outlook include the expectation of continued regulatory uncertainty at both state and federal levels. Management operates under the assumption of "no relief in sight in terms of federal regulation around taxes, banking or rescheduling," despite widespread public support for federal legalization. The company actively lobbies for "reasonable, whole regulation" and believes cannabis should be treated like wine, not a Schedule I controlled substance. The "One Big Beautiful Bill Act of 2025," enacted in July 2025, is expected to result in a $1.6 million reduction of the Tax Receivable Agreement (TRA) liability and a corresponding increase in other income in Q3 2025, providing a discrete positive financial impact.

However, significant risks persist. The industry faces structural challenges from over-taxation, over-regulation, price compression, and competition from both illicit and unregulated intoxicating hemp markets. California, a major revenue source (56% in Q2 2025), presents specific risks with a recent excise tax increase to 19% and potential legislation regulating online cannabis marketplaces, which could impact monetization and increase operational costs. The regulatory future of the hemp market remains highly uncertain, with states independently attempting to regulate or ban intoxicating hemp products, which could remove competitive advantages currently enjoyed by hemp businesses. Furthermore, MAPS continues to address ongoing material weaknesses in its internal control over financial reporting, particularly concerning IT general controls and process-level controls. While remediation efforts are underway, these weaknesses pose a risk of material misstatement and could affect investor confidence.

Conclusion

WM Technology (MAPS) is a resilient and strategically agile leader in the cannabis technology sector, navigating a complex and often turbulent industry landscape. Its core investment thesis is anchored in its established two-sided marketplace, comprehensive SaaS solutions, and a disciplined approach to financial management, which has yielded consistent profitability and a strong, debt-free balance sheet. By strategically investing in AI-driven data standardization and pursuing both vertical and horizontal market expansions, MAPS is building a robust technological moat designed to capture long-term growth opportunities as the cannabis industry matures and regulatory clarity potentially emerges.

While the company faces significant near-term headwinds from regulatory inaction, market pressures, and geographic concentration, its proactive stance on technological innovation and market diversification positions it favorably. The commitment to becoming the "key dataset for the industry" through AI/ML, coupled with new product launches like "Hedi," underscores a forward-looking strategy. For discerning investors, MAPS represents a foundational play in a high-growth ancillary sector, offering a blend of operational stability, technological leadership, and strategic optionality that could unlock substantial value as the cannabis economy evolves.