Business Overview and History
WM Technology, Inc. (MAPS) is a leading online cannabis marketplace and technology solutions provider that has demonstrated remarkable resilience in the face of a dynamic and evolving cannabis industry. With a rich 16-year history, the company has established itself as a trusted partner to both cannabis consumers and businesses, offering a comprehensive suite of products and services designed to streamline operations, enhance compliance, and drive growth.
Founded in 2008 and headquartered in Irvine, California, WM Technology, Inc. has grown to become a dominant player in the cannabis information market. The company operates a leading online cannabis marketplace for consumers together with a comprehensive set of eCommerce and compliance software solutions for cannabis businesses. The company's primary business consists of its commerce-driven marketplace Weedmaps and its fully integrated suite of end-to-end Software-as-a-Service (SaaS) solutions, Weedmaps for Business.
The Weedmaps marketplace provides cannabis consumers with information regarding cannabis retailers and brands, allowing consumers to discover and browse cannabis products. It aggregates data from various sources, including retailer point-of-sale solutions, to provide consumers with the ability to browse by strain, price, cannabinoids and other information regarding locally available cannabis products. The company believes the size, loyalty and engagement of its user base and the frequency of cannabis consumption by its user base makes the Weedmaps marketplace highly valuable to its clients.
WM Technology's evolution has been marked by strategic pivots and adaptations to the constantly shifting regulatory landscape. The cannabis industry continues to be highly regulated, with complex and evolving laws and regulations that vary significantly by jurisdiction. This has required the company to navigate a complex regulatory landscape and ensure its clients remain compliant.
In 2021, the company completed a business combination with Silver Spike Acquisition Corp., which resulted in its public listing on the Nasdaq stock exchange under the ticker symbol MAPS. This transaction provided the company with the financial resources and public market exposure to accelerate its growth initiatives.
Despite its success, WM Technology has faced challenges over the years. The company has had to respond to an internal complaint and subsequent investigation by the SEC regarding its reporting of a key operational metric, which resulted in a settlement with the SEC in 2024. These challenges have required the company to strengthen its internal controls and reporting processes to maintain the trust of its stakeholders.
Financial Performance and Resilience
Despite the challenges faced by the cannabis industry, WM Technology has demonstrated remarkable financial resilience. For the year ended December 31, 2024, the company reported revenues of $184.5 million and net income of $12.2 million, marking a significant turnaround from the previous year's net loss of $15.7 million. This strong financial performance was underpinned by the company's disciplined operational focus, which enabled it to optimize costs and expand its profitability.
One key metric that highlights WM Technology's financial strength is its adjusted EBITDA, which reached $42.9 million in 2024, representing a 23.3% margin. This consistent profitability has allowed the company to maintain a robust cash position, ending the year with $52.0 million in cash and no long-term debt.
The company's revenue declined 2% year-over-year in 2024, primarily due to a decrease in revenue from Featured Listings and WM Deal products. However, this was partially offset by growth in the Weedmaps for Business segment. The average monthly paying clients decreased 6% to 5,080 in 2024, while average monthly revenues per paying client increased 5% to $3,030.
In the most recent quarter (Q3 2024), WM Technology reported revenue of $46.7 million and net income of $5.3 million. The company exceeded its guidance for both net revenues and adjusted EBITDA in Q3 2024, with adjusted EBITDA reaching $11.3 million.
For Q4 2024, the company has provided guidance of approximately $46 million in net revenues and approximately $7 million in non-GAAP adjusted EBITDA.
Liquidity
WM Technology's strong financial performance has contributed to its solid liquidity position. With $52.0 million in cash and no long-term debt as of December 31, 2024, the company has ample resources to fund its operations and pursue strategic growth initiatives. This robust liquidity provides a buffer against potential industry headwinds and positions the company to capitalize on emerging opportunities in the dynamic cannabis market.
The company's current ratio and quick ratio both stand at 2.28, indicating a strong ability to meet short-term obligations. WM Technology does not disclose any credit facilities or credit lines, suggesting that it relies primarily on its cash reserves and operating cash flow to fund its operations and growth initiatives.
Business Segments and Revenue Streams
WM Technology operates two primary business segments: the Weedmaps Marketplace and Weedmaps for Business.
The Weedmaps Marketplace segment is the company's online cannabis marketplace that connects consumers with licensed cannabis retailers and brands. This segment generated approximately 63% of the company's total revenues in 2024. Featured Listings, which provide premium placement and advertising solutions for clients, accounted for the largest portion of this segment's revenue at 63%.
The Weedmaps for Business segment provides a comprehensive suite of eCommerce and compliance software solutions for cannabis retailers, delivery services, and brands. This segment accounted for 29% of the company's total revenues in 2024.
In addition, the company offers other ad solutions, including banner ads and promotion tiles on the Weedmaps marketplace, which generated the remaining 8% of total revenues in 2024.
Geographic Performance
WM Technology operates primarily in the United States, with a significant concentration in California. In 2024, approximately 53% of the company's revenue was generated from California, up slightly from 52% in 2023. As of December 31, 2024, the company actively operated in over 35 U.S. states and territories that have adult-use and/or medical-use cannabis regulations in place.
Navigating Industry Challenges
The cannabis industry has faced a myriad of challenges, including regulatory uncertainty, intense competition, and economic headwinds. WM Technology has navigated these obstacles with agility, leveraging its deep industry expertise and technological capabilities to support its clients and adapt its business model.
One significant area of uncertainty has been the regulatory landscape, particularly at the federal level. The company has closely monitored developments, such as the potential rescheduling of cannabis from its current Schedule I status under the Controlled Substances Act. While the company remains cautious about the timeline and implications of such changes, it is well-positioned to capitalize on any favorable regulatory shifts that could unlock new growth opportunities.
Furthermore, WM Technology has demonstrated its ability to weather industry consolidation and pricing pressures. The company's diverse client base, which includes both large and small cannabis businesses, has enabled it to maintain a stable revenue stream. Additionally, the company's focus on operational efficiency has allowed it to navigate these challenges without sacrificing profitability.
Industry Trends and Market Outlook
The cannabis industry in the United States was estimated to be between $30-31 billion in 2024 and is expected to grow to approximately $35 billion by 2027, assuming continued legalization progress at the state level. However, growth in the legal cannabis market has been constrained by factors such as high taxes, complex regulations, and competition from the illicit market.
Despite these challenges, WM Technology believes it is well-positioned to capitalize on the continued growth and evolution of the U.S. cannabis industry. By expanding its presence in existing markets, entering new markets as more states legalize cannabis, and continuing to develop and monetize new software solutions, the company aims to strengthen its position as a leading provider of technology and services to the cannabis ecosystem.
Expansion and Innovation
Looking ahead, WM Technology is poised to leverage its strong financial position and technological expertise to drive strategic growth. The company's expansion plans encompass both vertical and horizontal dimensions, with a focus on enhancing its core Weedmaps marketplace and exploring adjacent opportunities, such as the hemp and homegrown cannabis markets.
The company's vertical expansion efforts aim to deepen its integration with the cannabis supply chain, offering new products and services that address the evolving needs of its clients. Meanwhile, the horizontal expansion strategy involves the development of dedicated marketplaces for complementary cannabis-related products and services, further strengthening the company's position as a comprehensive technology solutions provider.
In addition to these growth initiatives, WM Technology remains committed to innovation, continuously enhancing its platform and offerings to deliver greater value to its clients and consumers. The company's investments in data analytics, compliance tools, and user experience improvements are designed to solidify its competitive advantage and enhance the overall ecosystem it has built.
Legal and Regulatory Challenges
WM Technology has faced some legal and regulatory challenges in recent years. In 2022, the company's board of directors received an internal complaint regarding the calculation, definition, and reporting of the company's monthly active users (MAUs) metric. This led to an internal investigation and the company providing additional information on MAUs in its Q2 2022 earnings report. The SEC subsequently launched an investigation, which the company voluntarily reported and ultimately settled in 2024 by paying a $1.5 million civil penalty without admitting or denying the findings.
In October 2024, a putative shareholder class action lawsuit was filed alleging the company made material misrepresentations or omissions related to its historical public reporting of MAUs. In November 2024, two shareholder derivative lawsuits were also filed making similar allegations. These legal proceedings are ongoing and represent a potential risk for the company.
Conclusion
WM Technology, Inc. (MAPS) has demonstrated remarkable resilience and adaptability in the face of an ever-changing cannabis industry landscape. With its robust financial performance, strong cash position, and strategic growth initiatives, the company is well-positioned to navigate industry headwinds and capitalize on emerging opportunities. As the cannabis industry continues to evolve, WM Technology's comprehensive technology solutions and deep industry expertise make it a compelling investment opportunity for those seeking exposure to this dynamic market.