WM Technology, Inc. Q1 FY2023 earnings call

• Utilized AI-driven algorithms to drive personalized user experiences like personalized sort orders and product recommendations, and deployed new language models for product catalog and brand matching.
• Executed first phase of end-market activation across major regions with street teams, increasing on-the-ground and field marketing presence by 3x and having weekly client events; rolled out new listing redesign and order status push notifications.
• Launched 20 Days of Deals integrated marketing campaign for 420 holiday, resulting in largest-ever order volume on a single day.
• Adjusted OpEx back to levels seen when closing go-public transaction in 2021, net headcount declined while making strategic hires, and was free cash flow positive before residual payments from headcount reductions.

Q1 revenue was $48 million. Adjusted EBITDA was a positive $7 million. Paying client base was marginally down vs last quarter but up 12% vs last year. Revenue per client was marginally down vs last quarter due to mix considerations, with higher growth in emerging regions (lower revenue per client dynamics) and elevated churn in mature markets due to billing issues. California marketplace revenue grew in Q1 vs Q4, and California's share of mix stands at 55% of Q1 revenue. California's revenue per client was flat vs last quarter.

• Expect Q2 revenue to be consistent with Q1. - Anticipate Q2 adjusted EBITDA to be in the $4 million area, with marketing investments ramping back down to more normalized levels in the second half. - Q2 cash will continue to be impacted by remaining termination costs related to headcount reductions and will be a low point for the year. - Committed to driving double-digit adjusted EBITDA margins and positive cash flow for the year as demonstrated in Q1.

• Licensed end markets continue to be challenged. - Client churn due to billing issues masks new licensees on the platform. - Broader macro environment uncertainty could affect consumer spend on discretionary products like cannabis, impacting allocation to licensed channels.

Q: Looking at sequential decline in average paying client, could you give sense of how much cut off, which cutoff mature markets, and mix degradation from new markets?

A: If removed churn due to billing issues, paying client count would be relatively flat. Vast majority of net client adds in emerging regions. Decline in revenue per paying client was largely driven by mix, with more client adds in emerging regions (lower revenue per client dynamics) and elevated churn due to billing issues in mature markets.

Q: On second quarter EBITDA step-down with similar sales rate, is step-down related to incremental advertising spend?

A: Adjusted EBITDA number for Q2 is related to increase in sales and marketing spend, gross margin rate expected to be constant vs Q1, product dev and G&A expected to stay relatively constant as percent of sales vs Q1.