WM Technology, Inc. (NASDAQ:MAPS) is a leading online cannabis marketplace and comprehensive software solutions provider for the cannabis industry. Founded in 2008 and headquartered in Irvine, California, the company operates the premier Weedmaps marketplace and offers a suite of eCommerce and compliance tools through its Weedmaps for Business platform.

Business Overview

Weedmaps is a two-sided marketplace that connects cannabis consumers with licensed retailers and brands. On the consumer side, Weedmaps provides a platform for users to discover and browse cannabis products, access deals and discounts, and order ahead for pickup or delivery. On the business side, Weedmaps offers a suite of tools to help cannabis retailers and brands reach consumers, manage compliance, and streamline operations.

Weedmaps for Business is the company's comprehensive SaaS offering, providing features such as online listings, order management, inventory integration, and analytics. This end-to-end platform enables cannabis businesses to compliantly operate and engage with consumers through the Weedmaps marketplace.

The company's mission is to power a transparent and inclusive global cannabis economy. WM Technology's technology addresses the challenges facing both consumers seeking to understand cannabis products and businesses who serve cannabis users in a legally compliant fashion.

Financials

For the full year 2023, WM Technology reported annual revenue of $187,993,000, a decrease of 4% compared to the prior year. Net income for the year was a loss of $9,898,000. The company generated annual operating cash flow of $22,928,000 and annual free cash flow of $11,057,000.

In the first quarter of 2024, the company reported net revenue of $44,389,000, a 4% decrease compared to the prior year period. Net income for the quarter was $1,959,000, a significant improvement from the net loss of $3,969,000 in the same period last year. The company generated $7,402,000 in operating cash flow and $2,862,000 in free cash flow during the quarter.

Geographic Breakdown

Substantially all of WM Technology's revenue is generated in the United States. For the first quarter of 2024, approximately 52% of the company's net revenue originated in California, compared to 53% in the prior year period.

Revenue Breakdown and Trends

WM Technology's revenue is primarily derived from three main sources: Weedmaps for Business subscriptions, featured and deal listings, and other advertising solutions.

Weedmaps for Business subscriptions, which include listings, order management, and other SaaS tools, accounted for 30% of total net revenue in the first quarter of 2024, up from 24% in the prior year period. This increase was driven by the company's focus on expanding its software offerings and supporting the growth of its cannabis business clients.

Featured and deal listings, which provide premium placement and promotional tools for clients, represented 63% of net revenue in Q1 2024, down from 70% in the prior year period. This decrease was primarily due to the sunset of certain lower-margin products in late 2023.

Other advertising solutions, including banner ads and promotion tiles, contributed 7% of net revenue in the first quarter of 2024, up slightly from 6% in the same period last year.

Liquidity

As of March 31, 2024, WM Technology had $35,717,000 in cash and cash equivalents, compared to $34,350,000 as of December 31, 2023. The company's working capital position was $20,266,000 as of March 31, 2024, up from $17,771,000 at the end of 2023.

The company believes its existing cash and cash generated from operations will be sufficient to meet its anticipated cash needs for at least the next 12 months. WM Technology may seek to raise additional funds through equity, equity-linked or debt financing arrangements to support its growth initiatives and strategic objectives.

Risks and Challenges

WM Technology operates in the rapidly evolving and highly regulated cannabis industry, which presents several risks and challenges. The company's business is subject to the uncertain legal and regulatory environment surrounding cannabis, as the drug remains illegal at the federal level in the United States. Changes in state or federal laws could have a material impact on the company's operations and financial performance.

Additionally, the company faces competition from other cannabis-focused marketplaces, as well as general online platforms and media companies. Maintaining and enhancing the Weedmaps brand, as well as continuing to innovate and expand its product offerings, will be critical to the company's long-term success.

Outlook

WM Technology is well-positioned to capitalize on the continued growth and evolution of the cannabis industry. The company plans to focus on the following key initiatives to drive future growth:

1. Expanding its presence in existing and new cannabis markets: As more states legalize cannabis for medical and/or adult use, WM Technology intends to leverage its established platform and expertise to enter new markets and increase its market share.

2. Enhancing the Weedmaps consumer experience: The company will continue investing in product development, data analytics, and user engagement to provide a more compelling and valuable experience for cannabis consumers.

3. Expanding and monetizing Weedmaps for Business: WM Technology will focus on growing its SaaS offerings, adding new features and functionality to better serve its cannabis business clients and unlock additional revenue opportunities.

4. Increasing brand awareness and marketing: The company plans to accelerate its investments in marketing, both online and offline, to further strengthen the Weedmaps brand and attract more consumers and businesses to its platform.

Conclusion

WM Technology is a leading player in the rapidly growing cannabis industry, operating a premier online marketplace and providing comprehensive software solutions to cannabis businesses. The company's strong brand, two-sided platform, and focus on innovation position it well to capitalize on the continued legalization and mainstreaming of cannabis. While the industry faces regulatory uncertainties, WM Technology's financial performance, liquidity, and growth strategies suggest it is poised to play a pivotal role in powering a transparent and inclusive global cannabis economy.