Executive Summary / Key Takeaways

• WM Technology operates a dual-sided cannabis marketplace (Weedmaps) and B2B SaaS platform, strategically focusing on its core offerings and integrated technology to navigate a challenging regulatory and market environment.
• Despite industry pressures, the company demonstrated resilience in Q1 2025 with revenues holding steady at $44.6 million and average monthly paying clients increasing 5% year-over-year, while Adjusted EBITDA exceeded expectations at $10.1 million.
• Management is prioritizing strategic investments in technology (data infrastructure, AI/ML, product catalog) and marketing to strengthen the platform's foundation and enhance future innovation and brand connection.
• Planned horizontal expansion into adjacent markets like hemp, head shop, and homegrown seeds in the second half of 2025 represents a key growth initiative aimed at leveraging the existing platform and capturing emerging trends.
• The company maintains a strong balance sheet with $53.3 million in cash and no debt, providing financial flexibility for targeted investments and navigating ongoing market volatility, although regulatory uncertainty and competitive pressures remain significant risks.

A Foundation of Resilience in a Turbulent Market

WM Technology, Inc. ($MAPSW) stands at a critical juncture within the evolving and often volatile cannabis industry. Founded in 2008, the company has grown from a simple online listing service into a sophisticated dual-sided platform, encompassing the consumer-facing Weedmaps marketplace and the comprehensive Weedmaps for Business SaaS suite. This strategic evolution, solidified by its 2021 business combination with Silver Spike Acquisition Corp. (SSAC), positions WM Technology as a key technology provider aiming to power a transparent and inclusive global cannabis economy. However, this mission unfolds against a backdrop of significant regulatory hurdles, market maturation pains, and intense competition.

The cannabis industry in the United States remains fragmented and complex, burdened by inconsistent state-level regulations, high taxation, and increasing competition from the unregulated hemp market. These factors contribute to pricing pressures and consolidation among cannabis operators, directly impacting their financial health and, consequently, their ability to invest in services like those offered by WM Technology. Management explicitly acknowledges these challenges, noting that decreasing retail prices coupled with a lack of regulatory relief on operating costs lead to reduced cash flow for clients, ultimately decreasing their ability to buy services. Furthermore, the outlook for federal reform, including potential changes to taxes, banking, or rescheduling, remains uncertain, compelling the company to operate under the assumption of no immediate relief.

Within this challenging landscape, WM Technology faces competition from various angles. Direct rivals include other cannabis-focused marketplaces like Leafly (LFLY), delivery-centric platforms such as Eaze, and emerging dispensary technology providers focused on point-of-sale and inventory management. Leafly, for instance, competes directly for user traffic and dispensary listings, boasting a strong brand in consumer education but potentially lagging in integrated B2B software depth compared to WM Technology. Eaze's focus on rapid delivery presents a different competitive angle, emphasizing logistics and immediate access, where WM Technology's strengths lie more in scalable software and compliance integration. Emerging tech platforms offer tools that overlap with WM Technology's B2B suite, potentially at lower upfront costs, posing a threat to market share in specific dispensary software segments.

WM Technology's competitive advantage is rooted in its integrated technology platform and network effects. The Weedmaps marketplace benefits from a large user base, making it valuable for businesses seeking visibility. The Weedmaps for Business suite offers a comprehensive set of tools – from WM Listings and WM Orders to WM Store, WM Connectors, WM Insights, and WM Dispatch – designed to streamline operations, manage compliance, and enhance customer engagement. This integrated approach, particularly the focus on compliance tools, provides a tangible benefit to clients operating in a highly regulated environment, potentially offering greater efficiency in areas like regulatory reporting compared to less specialized platforms. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, WM Technology's established presence and comprehensive B2B offerings suggest a strong position in the cannabis ecommerce software segment.

Recent strategic decisions underscore the company's focus on leveraging its core technological strengths. The decision to sunset certain non-core products like WM AdSuite, WM CRM, and WM Screens in December 2023 was a deliberate move to narrow focus and investment on the core marketplace and its most impactful B2B solutions. Looking ahead, the company is prioritizing investments in its technology organization, focusing on foundational improvements to data infrastructure, automation (including machine learning and AI), and enhancing core capabilities like product catalog, taxonomy, and search. These efforts are aimed at laying the groundwork for the next generation of ad products and marketplace innovation, with the stated goal of improving market efficiency and deepening the consumer and client experience.

Performance Reflecting Strategic Discipline

Against the backdrop of persistent industry headwinds, WM Technology's recent financial performance reflects a strategy centered on operational discipline and targeted investment. For the first quarter of 2025, the company reported revenues of $44.6 million, a modest 1% increase compared to $44.4 million in the prior year period. This top-line stability was driven by growth in Weedmaps for Business and other ad solutions, which increased by $0.4 million and $0.8 million respectively, partially offset by a $1.0 million decrease in revenue from featured and deal listings. This shift in revenue mix highlights the impact of ongoing financial pressures on clients, leading to reduced discretionary spending on premium ad placements, while growth in standard listings and other ad solutions points to successful new client acquisition and diversification of ad offerings.

Operational metrics provide further insight. Average monthly paying clients increased 5% year-over-year to 5,179 in Q1 2025, primarily due to new client acquisitions in certain markets. However, average monthly revenue per paying client declined to $2,871 from $2,997 in the prior year, reflecting the spend pullbacks in mature markets grappling with pricing pressures and consolidation. This dynamic underscores the challenge of increasing revenue per existing client in the current environment, even as the company successfully expands its client base.

Expense management remains a key focus. Total costs and expenses increased by $1.3 million or 3% year-over-year in Q1 2025, reaching $42.0 million. This was primarily driven by a $2.9 million increase in general and administrative expenses, which included higher outside service costs related to ongoing litigation, severance expenses from workforce reductions, and increased software and personnel costs. Sales and marketing and product development expenses saw decreases, reflecting efforts to optimize spending in these areas, although depreciation and amortization increased due to capitalized software development.

Despite the increase in operating expenses, net income rose to $2.5 million in Q1 2025, up from $2.0 million in the prior year period. This improvement was significantly influenced by non-operating factors, including a favorable change in the fair value of warrant liability and higher interest income. Adjusted EBITDA, a key profitability metric for the company, came in at $10.1 million for the quarter, exceeding expectations. This outperformance was attributed to slightly higher-than-expected revenue combined with lower-than-anticipated expenses, particularly reduced advertising spend and wage-related costs in product development.

Looking at the full year 2024, the company reported revenue of $184.5 million, a decrease from $188.0 million in 2023. This decline was primarily due to client marketing budget constraints, industry consolidation, and the impact of sunsetting certain products, partially offset by favorable pricing changes for the Weedmaps for Business product enacted in late 2023. Despite the revenue decrease, full-year 2024 Adjusted EBITDA increased to $42.9 million, demonstrating the company's ability to maintain operational discipline and manage costs effectively even amidst revenue headwinds.

Financially, WM Technology maintains a solid position. The company ended Q1 2025 with $53.3 million in cash, marking its seventh consecutive quarter of cash growth. Importantly, the balance sheet remains debt-free, providing significant financial flexibility. Operating cash flow in Q1 2025 was $5.7 million provided, contributing to the cash build.

Management noted that the strong operating cash flow in 2024 was boosted by a focused effort on collecting outstanding accounts receivable, a cash influx not expected to recur at the same level in 2025, suggesting that future cash generation will rely more directly on ongoing operational profitability.

Outlook and Strategic Horizon

Management's outlook for the second quarter of 2025 anticipates revenues of approximately $45 million and non-GAAP adjusted EBITDA of approximately $8 million. This guidance signals an expectation of continued stability in the top line, consistent with the trends observed in Q1 2025, while projecting a slight decrease in Adjusted EBITDA compared to the prior quarter. This anticipated decrease in near-term profitability is explicitly linked to the company's strategic decision to prioritize and increase investments in key technology and marketing initiatives throughout 2025. These investments are deemed necessary to strengthen the platform's foundation and position the company for long-term growth, despite the ongoing challenges in the market.

The strategic roadmap for 2025 involves not only strengthening the core platform but also exploring new avenues for growth. A key initiative is the planned horizontal expansion into natural adjacencies such as the hemp, head shop, and homegrown seed markets, with launches anticipated in the second half of the year. These areas are seen as opportunities to leverage the existing Weedmaps platform and capture emerging market trends, potentially driving greater user engagement. The company is also exploring vertical expansion opportunities by adding new products and features upstream and downstream in the cannabis supply chain.

While these strategic initiatives offer potential upside, they also come with inherent risks, particularly in the context of regulatory uncertainty surrounding the hemp market. The delayed federal farm bill has led to inconsistent state-level regulation, and potential state bans or integration of hemp into existing cannabis models could significantly alter the market landscape and remove advantages currently held by hemp businesses. WM Technology must remain agile to adapt to these potential shifts.

Other significant risks include the ongoing litigation the company faces, including shareholder class action and derivative actions related to historical reporting metrics. Furthermore, the company continues to address ongoing material weaknesses in its internal control over financial reporting, related to entity-level controls, IT general controls, and process-level controls. While remediation efforts are underway, the success and timing of these efforts are not assured, and failure to remediate could impact the accuracy and timeliness of financial reporting.

Despite these challenges and risks, the company's leadership, now with Doug Francis assuming the CEO role, remains focused on maintaining operational discipline, keeping a lean cost structure, and making ROI-driven investments. The goal is to play the long game, building a robust platform and strong balance sheet to capitalize on future market improvements and potential federal reforms, should they materialize.

Conclusion

WM Technology operates in a demanding environment, but its recent performance and strategic direction suggest a company focused on building resilience and positioning for the future. The stability in revenue and growth in paying clients in Q1 2025, coupled with strong Adjusted EBITDA performance, demonstrate the effectiveness of its operational discipline amidst industry headwinds. By prioritizing investments in its core technology platform and planning strategic expansions into adjacent markets, WM Technology is laying a foundation for potential long-term growth. The company's debt-free balance sheet and cash reserves provide crucial flexibility in this uncertain landscape. While significant risks persist, particularly related to regulatory unpredictability and competitive pressures, WM Technology's focus on its core strengths, financial prudence, and targeted innovation presents a compelling narrative for investors looking for a technology leader navigating the complexities of the cannabis industry. The ability to successfully execute on its investment priorities and adapt to the evolving regulatory landscape will be key determinants of its future success.