WM Technology, Inc. Q4 FY2022 earnings call

• Doug Francis noted Q4 results met expectations, with $49M revenue, $2M adjusted EBITDA, $29M cash, and debt-free status. Paying clients grew double digits despite end market challenges. Focus in 2023 is on marketplace experience (creating differentiated cannabis content, improving search, leveraging user data), delivering undeniable value to clients (expanding ad solutions, new deal types, SaaS integrations), and driving profitable growth (lean operating mentality, removing excess management layers).
• Arden Lee stated Q4 revenue was $49M, a 5% decline in second half. Adjusted EBITDA was $2M, with non-cash charges narrowing. Paying clients grew 19%, and net dollar retention held, with California's net dollar retention expanding. Net loss was $61M including stock-based comp and non-recurring charges (valuation allowance and severance). Monitoring banking situation, reported material weakness in IT controls with remediation underway.

In the fourth quarter, WM Technology, Inc. posted $49 million in revenue. Q4 adjusted EBITDA was $2 million. Paying clients grew by double digits. California was the largest region, contributing 54% of Q4 revenue. Q4 adjusted EBITDA was positively impacted, though non-cash charges related to doubtful accounts narrowed. Adjusted OpEx was down 9% year-over-year, with sales and marketing and G&A costs reduced, while product development increased 11%.

• No full-year revenue or adjusted EBITDA guidance provided. Q1 revenue expected to be ~$47M, slightly down from Q4 due to seasonality. Expect double-digit adjusted EBITDA margins and positive cash flow in 2023. Q1 adjusted EBITDA expected ~$4M, with focus on ramping investments ahead of 420 holiday. Committed to positive cash flow with cost reductions achieved.

• Macro environment challenges: inflation, higher cost of capital, recession fears. Cannabis industry headwinds: over-regulation, slow license rollout, lack of government support, high taxes, commoditization, frozen capital markets, limited banking access, thriving black market. Material weakness in general IT controls related to internal user access and change management over financial reporting systems.

Q: Commentary on margin progress and future aspirations A: Arden Lee discussed historical cash flow generation, cost reductions, and focus on productivity, stating the business model can return to prior EBITDA and cash flow levels, with focus on lean operations and removing excess infrastructure.

Q: Floor in monthly revenue for paying clients A: Arden Lee mentioned pressure in scaled markets like California due to end market declines, but healthy demand in other regions, with eyes on client tone in those scaled markets.

Q: Cash needs and tax distributions A: Doug Francis noted residual cash charges from Q4 cost reductions, tax distributions averaging ~$0.25, and comfortable liquidity position with clear line of sight to positive cash flow.

Q: Third-party metrics and investment level A: Doug Francis mentioned hiring new CMO, focusing on content and features to drive movement in marketplace, though end markets remain tough.

Q: Strategic value of being public A: Doug Francis focused on executing the plan, noting benefits of being public but acknowledging tough capital markets, with focus on executing the current plan.

Q: Macro challenges and IT controls A: Doug Francis talked about state-by-state market challenges and industry support needs, while Arden Lee discussed bad debt normalization and collections efforts to control AR and aging buckets