Earnings call transcript: WM Technology Q1 2025 misses EPS, stock surges

WM Technology Inc. reported its Q1 2025 earnings with an EPS of $0.02, missing the forecast of $0.04. Revenue reached $44.61 million, slightly below the expected $44.65 million. Despite these misses, the company’s stock surged by 7.69% in aftermarket trading, closing at $1.26. According to InvestingPro data, the company maintains strong financial health with a GOOD overall score, supported by robust cash flow and profitability metrics.

Key Takeaways

• WM Technology missed EPS and revenue forecasts for Q1 2025.
• The stock surged 7.69% in aftermarket trading.
• The company reported a 1% YoY revenue increase and improved cash flow.
• Strategic focus on data infrastructure and AI capabilities.
• No outstanding debt, maintaining financial stability.

Company Performance

WM Technology showed modest growth in Q1 2025, with revenue increasing by 1% year-over-year. The company reported a net income of $2.5 million, up from $2.0 million, and an adjusted EBITDA of $10.1 million. InvestingPro analysis reveals impressive margins with a gross profit margin of 95.11% and a healthy return on assets of 7%. The company’s current valuation shows an EV/EBITDA ratio of 6.42x, suggesting reasonable pricing relative to earnings potential. Despite the challenging cannabis market environment, the company has maintained a lean cost structure and focused on ROI-driven investments.

Financial Highlights

• Revenue: $44.61 million, up 1% YoY
• Earnings per share: $0.02, below the forecast of $0.04
• Net Income: $2.5 million, up from $2.0 million
• Adjusted EBITDA: $10.1 million
• Cash from Operations: $1.3 million
• Ending Cash Balance: $53.3 million

Earnings vs. Forecast

WM Technology’s Q1 2025 earnings fell short of expectations, with an EPS of $0.02 compared to the forecasted $0.04, a 50% miss. Revenue also slightly missed the forecast by $0.04 million. This marks a deviation from the company’s internal guidance, which it claims to have exceeded.

Market Reaction

Despite missing earnings forecasts, WM Technology’s stock rose by 7.69% in aftermarket trading, indicating positive investor sentiment. The stock’s performance outpaced its 52-week range, suggesting confidence in the company’s future prospects and strategic initiatives. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model, with additional insights available through the comprehensive Pro Research Report, one of 1,400+ deep-dive analyses available to subscribers.

Outlook & Guidance

Looking ahead, WM Technology projects Q2 2025 revenue of $45 million and a non-GAAP adjusted EBITDA of $8 million. The company remains focused on long-term industry positioning and is hopeful for changes in federal cannabis regulations. InvestingPro Tips highlight the company’s strong financial position, with liquid assets exceeding short-term obligations and a debt-free balance sheet. Subscribers can access 6 additional exclusive ProTips and comprehensive financial metrics through the platform.

Executive Commentary

CEO Doug Francis stated, "We are proud of our first quarter results as we exceeded our Q1 guidance and grew revenue, adjusted EBITDA, and ending cash on a year-over-year basis." He emphasized the company’s commitment to long-term growth and industry leadership, saying, "We’re building for the long term, staying close to our customers, operating with discipline and positioning ourselves to lead as the industry matures."

Risks and Challenges

• Decreasing retail prices and reduced client cash flow in mature markets.
• Competitive pressure from unregulated hemp products.
• Potential regulatory challenges in the cannabis industry.
• Decline in average monthly revenue per paying client, impacting profitability.
• Industry reliance on potential federal cannabis regulation changes.

Full transcript - WM Technology Inc (MAPS) Q1 2025:

Conference Operator: Good afternoon, everyone, and welcome to WM Technology Inc. First Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode for the duration of the call. I would now like to turn the call over to your host, Simon Yao, Director of Investor Relations.

Simon Yao, Director of Investor Relations, WM Technology Inc.: Good afternoon, and thank you for joining us today to discuss our first quarter twenty twenty five results. We are joined by our CEO, Doug Francis and our CFO, Susan Eckert. By now, everyone should have access to our earnings announcement and supporting slide deck on our Investor Relations website. During this call, we’ll make forward looking statements about our business outlook, strategies and long term goals. Keep in mind that forward looking statements are not guarantees of future performance and are subject to a variety of risks and uncertainties, some of which are beyond our control.

Our actual results could differ materially from expectations reflected in any forward looking statements. For a discussion of risk and other important factors that could affect our actual results, please refer to our SEC filings available on our SEC website and our Investor Relations website. We specifically disclaim any intent or obligation to update these forward looking statements except as required by law. For the benefit of those who may be listening to the replay or archived webcast, this call was held on 05/08/2025. Since then, we may have made announcements related to the topics discussed, so please refer to the company’s most recent press releases and SEC filings.

We will also discuss non GAAP financial measures alongside those prepared in accordance with GAAP. Non GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. You can find a reconciliation of these measures to our GAAP results in our earnings presentation on our Investor Relations website. And finally, today’s call is being webcasted from our Investor Relations website, and an audio replay will be available shortly. With that, I will now turn it over to Doug.

Doug Francis, CEO, WM Technology Inc.: Thanks, Simon, and thank you all for joining us today. We are proud of our first quarter results as we exceeded our Q1 guidance and grew revenue, adjusted EBITDA and ending cash on a year over year basis. These results reflect focused execution in what continues to be a challenging environment for the cannabis industry. During our earnings call in March, I expressed concern about the harm that regulators have been doing to the industry with their inaction and ineffectiveness. The regulatory environment remains unchanged, and the outlook for the cannabis industry remains challenged by over taxation and competition from unregulated hemp.

Some states have made overtures towards increased regulation of intoxicating hemp products, but while there has been a lot of noise, there has been little progress. In the last couple of months, we have also started facing a new source of murkiness from tariffs, which have the potential to increase our clients’ operating costs at a time when consumers are likely to be more price sensitive, leading to further compression of already said margins. While some in the industry are expressing optimism about the directional signals related to their current administration’s view of cannabis, we only see headlines and mixed signals and therefore operating with the assumption that there is no relief in sight in terms of federal regulation around taxes, banking, or rescheduling. However, we remain hopeful that there will be movement and are ready to support the administration’s effort when the time comes. Fabrizio’s polling report was clear.

The vast majority of Americans in both parties want federal legalization. This is an 8020 issue, and hopefully, the current administration takes the 80 in the near term. The commercial impact of these regulatory hurdles has magnified the existing market forces that are creating challenges for operators. In mature markets, industry data continues to show decreasing retail prices and that when coupled with the lack of regulatory relief on operating costs leads to reduced cash flow for our clients, thus ultimately decreasing their ability to buy our services. While emerging markets have shown potential, they remain subscale in the overall industry picture, and their growth generally does not make up for the challenges in the more mature markets.

Against this backdrop, I am pleased with how our team is executing. We’ve remained disciplined and intentional on how we run the business, keeping our cost structure lean, focused on ROI driven investments, and continuing to generate cash even as many in the industry face mounting challenges. We’ve continued to grow our client base, especially in underpenetrated markets while helping existing clients better navigate today’s dynamics. Our marketplace remains a vital resource for both consumers and businesses, and we remain committed to delivering technology and data solutions that create transparency, drive efficiency, and unlock value across the ecosystem. I’d like to highlight two areas that give me optimism about our long term potential.

First, our technology and product development organization has made meaningful progress under our new CTO. In q one, we focused on foundational improvements to our data infrastructure and automation, including better use of machine learning and AI. We also made significant headway in enhancing our product catalog, taxonomy, and search capabilities, which laid the groundwork for the next generation of ad products and marketplace innovation. Second, we restructured our marketing organization in q one and are beginning to see the early impact. The team is working to reconnect with our heritage as a brand synonymous with the cannabis culture and community.

A great example was our four twenty activations this year, which felt true to who we are and where we’re heading. There’s more work to do, but I’m excited about what’s coming from this group in the quarters ahead. We’re building for the long term, staying close to our customers, operating with discipline and positioning ourselves to lead as the industry matures. With that, I’ll turn it over to Susan to walk through the financial results in more detail.

Susan Eckert, CFO, WM Technology Inc.: Thanks, Doug. Now turning to our financial performance. First quarter revenue was 44,600,000.0 roughly in line with the $44,400,000 reported in the prior year period. The modest increase of $200,000 or 1% was driven by growth in standard listings, which increased by 400,000.0 and display advertising, which grew by 800,000.0. These gains were partially offset by a $1,000,000 decline in revenue from our featured and deal listings.

This shift in product mix reflects broader trends we’re seeing in the business. Growth in standard listings is tied to our continued efforts to acquire new clients in underpenetrated markets, while the decline in featured and deal listings highlights the ongoing financial pressures limiting discretionary spend across the industry. These dynamics are also evident in our client and monetization metrics. Average monthly paying clients for the quarter increased 5% year over year to 5,179, driven by new client acquisitions in certain markets. However, average monthly revenue per paying client declined to $2,871 from $2,997 in the prior year, reflecting spend pullbacks in more mature markets.

This decline was primarily driven by persistent industry headwinds, including pricing pressures and consolidation, which continue to impact our clients’ marketing budgets. These challenges were partially offset by the contribution from newly acquired clients in certain markets. Turning to our expenses, GAAP OpEx, which includes cost of revenues and depreciation and amortization, totaled $42,000,000 in the first quarter. This represents a $1,300,000 or 3% increase over the prior year period, which reflects an increase of $2,900,000 in general and administrative expenses, partially offset by lower sales and marketing and product development expenses. The increase in G and A expenses includes $2,000,000 of non recurring charges, which includes certain one time legal expenses and severance associated with recent workforce reductions.

Despite the modest increase in operating expenses, net income rose to $2,500,000 up from $2,000,000 in the prior year period. The increase was primarily driven by mark to market adjustments on our warrants and higher interest income. Adjusted EBITDA for the first quarter was 10,100,000.0 which exceeded our expectations. The outperformance was driven by slightly higher than expected revenue, as well as lower than anticipated expenses, primarily due to reduced advertising spend and wage related costs in our product development organization. We generated $1,300,000 in cash from operations and ended the first quarter with a cash balance of 53,300,000.0 This marks our seventh consecutive quarter of cash growth, in line with the increase seen in Q1 of last year.

With no debt on our balance sheet, we have the flexibility to make strategic investments in the business while navigating the ongoing industry challenges. Our share count across Class A and B common stock was 154,400,000.0 as of 03/31/2025. A reconciliation of non GAAP metrics to their nearest GAAP result, as well as the details of our share classes and share count calculation are provided in our earnings presentation posted on our Investor Relations website. Now turning to our financial outlook. We expect revenues for the second quarter to be approximately 45,000,000 and non GAAP adjusted EBITDA is estimated to be approximately $8,000,000 We are pleased with the progress made this quarter, and we continue to execute our 2025 plans.

With that, I’ll now turn the call back over to the operator to conclude our call.

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