WM Technology, Inc. Q2 FY2023 earnings call

• Focused on three objectives: delivering value to clients, improving marketplace, and driving profitable/sustainable growth. - Heavily investing in building deep relationships with clients at national and hyperlocal levels, combining offline promotional activations with digital platforms. - Continuously innovating and strengthening the marketplace, improving user experience, tuning product catalog, personalization, and conversion. - Technology team of over 200 working on consumer acquisition, conversion, retention; enhanced search and shopping experience, streamlined deal claiming, optimized checkout flow. - Financial discipline with 32% reduction in adjusted OpEx, focused on savings and strategic marketing investments.

In the second quarter, WM Technologies had revenues of $51 million, net income of $2 million, and adjusted EBITDA of $10 million. Adjusted OpEx was 32% lower than a year ago. Q2 revenue was $51 million, which beat the expectation of $48 million. Adjusted EBITDA was $10 million, exceeding the $4 million expectation. Average monthly paying clients in Q2 were 5,609, down less than 1% vs Q1. Revenue per client was $3,022 in Q2, up 7% from Q1. California represented 54% of revenue in Q2, slightly down from 55% in Q1. Monthly net dollar retention on listings revenue was 99.5% for the quarter.

• Q3 revenue is planned to be $47 million. - Adjusted EBITDA expected to be in the $4 million area for Q3. - Committed to double-digit adjusted EBITDA margin for fiscal year 2023 and generating positive cash flow for the year, expecting cash balance to increase in Q3.

• Industry struggling with growth and lack of regulatory support. - Churn in clients, especially in California and Oklahoma. - Mastercard shuttering cannabis transactions posing challenges for some clients. - Political support lacking in the industry affecting near-term outlook.

Q: Could you quantify the bump in $3,022 net spending per client from April to that number and what a good ongoing number is?

A: Greg said there was good momentum in the beginning of the quarter with larger clients increasing spend, but paying client count is likely to be relatively flat with growth offset by churn, impacting spend per client. Doug added emerging markets have lower average spend per client.

Q: What is net retention like in emerging markets and spending profile?

A: Greg said they're seeing good retention growth in emerging markets, but churn was in California and Oklahoma; spend levels in emerging markets are below average. Doug mentioned working with clients in emerging markets as their health impacts long-term outcome.

Q: On days receivable, can you comment on control?

A: Greg said they've made progress on receivables and collection policies, implemented stricter policies, allowance for bad debt is coming down but there are still known and unknowns.

Q: Comment on clients' appetite to invest in advertising and impact of Mastercard shutting cannabis transactions?

A: Doug said client appetite varies by state, with pressure on budgets but some players consolidating. On Mastercard, it's additional headwind, but most clients will likely adapt.