WM Technology, Inc. Reports Second Quarter 2022 Financial Results
Second Quarter Revenue increased to
Co-Founder
“Our second quarter results demonstrates how our strategy continues to drive growth for
“We continue to lean into the tremendous opportunity ahead of us and are focused on driving both near and long-term sustainable growth and profitability,” said
Second Quarter 2022 Financial Highlights
-
Revenue increased to
$58.3 million , up 24% from the second quarter of 2021.-
Monthly active users(1) increased to 17.4 million at
June 30, 2022 , up 41% compared to the prior year period -
Average monthly revenue per paying client(2) decreased to
$3,509 , a 5% decrease compared to the prior year period. - Average monthly paying clients(3) increased to 5,537, a 31% increase compared to the prior year period.
-
Monthly active users(1) increased to 17.4 million at
-
Gross Profit was
$54.4 million implying a 93% margin rate, which reflects a 250bps margin reduction from the prior year given investments made in new client solutions, our WM AdSuite offering and continued investment in data initiatives. -
Net income was
$19.8 million as compared to net income of$16.8 million from the prior year period. -
Adjusted EBITDA(4) was
$(0.6) million as compared to$8.5 million from the prior year period. -
Basic and diluted net income per share was
$0.14 and$0.13 based on 86.4 million and 87.2 million of Class A Common Stock weighted average shares outstanding, respectively. -
Total shares outstanding across Class A and Class V Common Stock is 145.3 million as of
June 30, 2022 . -
Cash totaled
$47.6 million as ofJune 30, 2022 , with no long-term debt.
Reconciliations of GAAP to non-GAAP financial measures have been provided in the tables included in this release.
______________________________
| (1) |
See “Definition of Key Operating and Financial Metrics—Monthly Active Users” below for additional information regarding MAUs. |
|
| (2) |
Average monthly revenue per paying client is defined as the average monthly revenue for any particular period divided by the average monthly paying clients in the same respective period. |
|
| (3) |
Average monthly paying clients are defined as the average of the number of paying clients billed in a month across a particular period (and for which services were provided). |
|
| (4) |
For further information about how we calculate EBITDA and Adjusted EBITDA as well as limitations of their use and a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), see “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” below. |
Second Quarter 2022 Operational Highlights
- We grew Average Monthly Paying Clients by over 30% vs. last year, with many of these clients coming from regions where our licensee share is under 50%, demonstrating our ability to execute in newer markets
- Rolled out new client tools including self-serve analytics and improvements to our Deals offering, allowing a more streamlined Deal creation and scheduling process
-
Launched two delivery features which create a better user experience:
- Scheduled Delivery Orders which allow users to schedule specific time-slots for receiving delivery orders. With scheduled delivery orders, our users can now order confidently with precise delivery times
-
Express Delivery Menus which support “ice cream truck” delivery models launched in
California andMichigan . This feature enables clients to showcase limited menus that offer shorter delivery time periods
- We continue to expand our integrations and API platform, WM Connectors as well as our partner program. Through the quarter, we expanded our menu, orders, loyalty and deals integration products to our clients
- Continued to increase consumer awareness and brand recall of the Weedmaps marketplace, both in underpenetrated existing markets as well as new markets
- Expanded cross-product adoption efforts as clients are now using 4 solutions on average of our dozen plus distinct solutions
Second Half and Full Year 2022 Business Outlook
Based on current business trends and conditions, we are planning against an outlook where total revenue is flat-to-down in the mid-single digit percent area on a year-over-year basis for the second half, which implies a low double-digit percent growth rate for the full year 2022. We expect to end the year with positive Adjusted EBITDA for the full year 2022.
The guidance provided above is only an estimate of what we believe is realizable as of the date of this release. This guidance assumes that no business acquisitions, investments, restructurings, or legal settlements are concluded in the quarter. Our results are based on assumptions that we believe to be reasonable as of this date, but may be materially affected by many factors, as discussed below in “Forward-Looking Statements.” Actual results may vary from the guidance and the variations may be material. We undertake no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.
Co-Founder Douglas Francis Appointed Executive Chair
About
In 2008,
Conference Call Details
The Company will host a conference call and webcast today,
Earnings Presentation Details
A presentation with information on our Second Quarter 2022 earnings results can be found at ir.weedmaps.com at
About
Founded in 2008,
Headquartered in
Forward-Looking Statements
This press release includes “forward-looking statements” regarding our future business expectations which involve risks and uncertainties. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics and projections of market opportunity and market share. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including the Company’s financial and business performance, including key business metrics and any underlying assumptions thereunder; market opportunity and the Company’s ability to acquire new customers and retain existing customers; expectations and timing related to commercial product launches; success of the Company’s go-to-market strategy; ability to scale its business and expand its offerings; the Company’s competitive advantages and growth strategies; the Company’s future capital requirements and sources and uses of cash; the Company’s ability to obtain funding for our future operations; the outcome of any known and unknown litigation and regulatory proceedings; changes in domestic and foreign business, market, financial, political and legal conditions; risks relating to the uncertainty of the projected financial information with respect to the Company; future global, regional or local economic and market conditions affecting the cannabis industry; the development, effects and enforcement of and changes to laws and regulations, including with respect to the cannabis industry; the Company’s ability to successfully capitalize on new and existing cannabis markets, including its ability to successfully monetize its solutions in those markets; the Company’s ability to manage future growth; the Company’s ability to develop new products and solutions, bring them to market in a timely manner, and make enhancements to its platform and the Company’s ability to maintain and grow its two-sided digital network, including its ability to acquire and retain paying customers; the effects of competition on the Company’s future business; the Company’s success in retaining or recruiting, or changes required in, officers, key employees or directors; the possibility that we may be adversely affected by other economic, business or competitive factors; the possibility that the Company may be adversely affected by other economic, business or competitive and those factors discussed in the Company’s 2021 Annual Report on Form 10-K filed with
Use of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we have disclosed EBITDA and Adjusted EBITDA, both of which are non-GAAP financial measures that we calculate as net income (loss) before interest, taxes and depreciation and amortization in the case of EBITDA and further adjusted to exclude stock-based compensation, change in fair value of warrant liability, transaction related bonuses, transaction costs, legal settlements and other non-cash, unusual and/or infrequent costs in the case of Adjusted EBITDA. Below we have provided a reconciliation of net income (loss) (the most directly comparable GAAP financial measure) to EBITDA and from EBITDA to Adjusted EBITDA.
We present EBITDA and Adjusted EBITDA because these metrics are a key measure used by our management to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of investment capacity. Accordingly, we believe that EBITDA and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.
EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and both EBITDA and Adjusted EBITDA do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and
- EBITDA and Adjusted EBITDA do not reflect tax payments that may represent a reduction in cash available to us.
Because of these limitations, you should consider EBITDA and Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other GAAP results.
Definition of Key Operating and Financial Metrics
-
Monthly Active Users: In any given period, we calculate our monthly active users by determining the total number of unique users who opened our Weedmaps mobile app or gained access to our Weedmaps.com website during the final calendar month of the period. This number has been reported as Monthly Active Users (“MAUs”). This statistic includes users who gain access to the website through paid advertising channels. In the second quarter of 2022, our board of directors received an internal complaint regarding the calculation, definition, and reporting of our MAUs. In response, the board of directors formed a special committee (the “Special Committee”) of independent directors to conduct an internal investigation with the assistance of outside counsel. As a result of this internal investigation, we have determined to provide the following information.
As we have previously disclosed, one of the ways in which we acquire users is through paid advertising. To an increasing degree over time, growth of our monthly active users has been driven by the purchase of pop-under advertisements, which are marketing advertisements on third party websites that automatically present our platform on users’ screens in certain circumstances. Our internal data suggests that the vast majority of users who are directed to weedmaps.com via pop-under advertisements close the site without clicking on any links. Based on management’s review, users whose access to the website resulted from these pop-under advertisements represented approximately 65% of our MAUs as ofJune 30, 2022 , and 54%, 50% and 54% of our MAUs as ofMarch 31, 2022 ,December 31, 2021 andSeptember 30, 2021 , respectively.
Our management has utilized pop-under advertisements, and other digital marketing strategies, based on the belief that they have provided a cost-effective means of promoting awareness of the weedmaps.com website and Weedmaps mobile apps. However, we expect to shift our marketing spend in the coming months to rely less on the use of pop-under advertisements.
In addition, there are inherent limitations on the ability of online platforms to identify unique, rather than repeat, users across sessions. In particular, incognito browsing, usage across devices or mobile and internet platforms, blocking or deleting cookies and IP addresses or other similar methods employed by users limits our ability to identify unique users and, as a result, we believe it is likely that our MAUs may include a significant number of repeat underlying users.
Prior to and in the course of the internal investigation described above, we have continued to review user engagement metrics to determine which metrics may be most useful for investors in evaluating our evolving business and quarterly results of operations, and we intend to update investors on those efforts in connection with the results of operations for the quarter endingSeptember 30, 2022 .
The information described above and currently under further review by the Special Committee is not expected to affect our financial results under GAAP or the reporting or disclosure of any currently disclosed non-GAAP financial metric.
- Average Monthly Revenue Per Paying Client: Average monthly revenue per paying client measures how much clients, for the period of measurement, are willing to pay us for our subscription and additional offerings and the efficiency of the bid-auction process for our featured listings placements. We calculate this metric by dividing the average monthly revenue for any particular period by the average monthly number of paying clients in the same respective period. The calculation of monthly revenue includes revenue from any clients that cease to be paying clients during the applicable month.
- Average Monthly Paying Clients: We define average monthly paying clients as the monthly average of clients billed each month over a particular period (and for which services were provided).
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except for share data) |
||||||
|
|
|
|
|
|
||
|
Assets |
|
|
|
|
||
|
Current assets |
|
|
|
|
||
|
Cash |
|
$ |
47,604 |
|
$ |
67,777 |
|
Accounts receivable, net |
|
|
27,305 |
|
|
17,550 |
|
Prepaid expenses and other current assets |
|
|
15,375 |
|
|
13,607 |
|
Total current assets |
|
|
90,284 |
|
|
98,934 |
|
Property and equipment, net |
|
|
21,211 |
|
|
13,283 |
|
|
|
|
67,156 |
|
|
45,295 |
|
Intangible assets, net |
|
|
11,259 |
|
|
8,299 |
|
Right-of-use assets |
|
|
33,805 |
|
|
36,549 |
|
Deferred tax assets |
|
|
183,222 |
|
|
152,097 |
|
Other assets |
|
|
10,774 |
|
|
10,687 |
|
Total assets |
|
$ |
417,711 |
|
$ |
365,144 |
|
Liabilities and Equity |
|
|
|
|
||
|
Current liabilities |
|
|
|
|
||
|
Accounts payable and accrued expenses |
|
$ |
31,317 |
|
$ |
23,155 |
|
Deferred revenue |
|
|
7,522 |
|
|
8,057 |
|
Operating lease liabilities, current |
|
|
5,885 |
|
|
5,463 |
|
Other current liabilities |
|
|
98 |
|
|
1,125 |
|
Total current liabilities |
|
|
44,822 |
|
|
37,800 |
|
Operating lease liabilities, non-current |
|
|
36,321 |
|
|
39,377 |
|
Tax Receivable Agreement liability |
|
|
142,726 |
|
|
128,567 |
|
Warrant liability |
|
|
13,445 |
|
|
27,460 |
|
Other long-term liabilities |
|
|
2,473 |
|
|
— |
|
Total liabilities |
|
|
239,787 |
|
|
233,204 |
|
Stockholders’ equity |
|
|
|
|
||
|
Preferred Stock - |
|
|
— |
|
|
— |
|
Class A Common Stock - |
|
|
9 |
|
|
7 |
|
Class V Common Stock - |
|
|
5 |
|
|
7 |
|
Additional paid-in capital |
|
|
59,135 |
|
|
2,173 |
|
Retained earnings |
|
|
59,168 |
|
|
61,369 |
|
|
|
|
118,317 |
|
|
63,556 |
|
Noncontrolling interests |
|
|
59,607 |
|
|
68,384 |
|
Total equity |
|
|
177,924 |
|
|
131,940 |
|
Total liabilities and equity |
|
$ |
417,711 |
|
$ |
365,144 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except for share data) |
|||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues |
$ |
58,294 |
|
|
$ |
46,931 |
|
|
$ |
115,746 |
|
|
$ |
88,085 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
|
Cost of revenues |
|
3,858 |
|
|
|
1,908 |
|
|
|
7,598 |
|
|
|
3,765 |
|
|
Sales and marketing |
|
22,123 |
|
|
|
15,271 |
|
|
|
44,005 |
|
|
|
24,388 |
|
|
Product development |
|
13,263 |
|
|
|
10,271 |
|
|
|
26,353 |
|
|
|
18,139 |
|
|
General and administrative |
|
29,610 |
|
|
|
33,770 |
|
|
|
58,665 |
|
|
|
47,136 |
|
|
Depreciation and amortization |
|
2,458 |
|
|
|
988 |
|
|
|
6,403 |
|
|
|
1,990 |
|
|
Total operating expenses |
|
71,312 |
|
|
|
62,208 |
|
|
|
143,024 |
|
|
|
95,418 |
|
|
Operating loss |
|
(13,018 |
) |
|
|
(15,277 |
) |
|
|
(27,278 |
) |
|
|
(7,333 |
) |
|
Other income (expenses) |
|
|
|
|
|
|
|
||||||||
|
Change in fair value of warrant liability |
|
32,234 |
|
|
|
37,791 |
|
|
|
14,015 |
|
|
|
37,791 |
|
|
Other expense, net |
|
(678 |
) |
|
|
(6,069 |
) |
|
|
(1,180 |
) |
|
|
(6,041 |
) |
|
Income (loss) before income taxes |
|
18,538 |
|
|
|
16,445 |
|
|
|
(14,443 |
) |
|
|
24,417 |
|
|
Benefit from income taxes |
|
(1,310 |
) |
|
|
(392 |
) |
|
|
(3,058 |
) |
|
|
(151 |
) |
|
Net income (loss) |
|
19,848 |
|
|
|
16,837 |
|
|
|
(11,385 |
) |
|
|
24,568 |
|
|
Net income (loss) attributable to noncontrolling interests |
|
8,156 |
|
|
|
12,574 |
|
|
|
(9,184 |
) |
|
|
20,305 |
|
|
Net income (loss) attributable to |
$ |
11,692 |
|
|
$ |
4,263 |
|
|
$ |
(2,201 |
) |
|
$ |
4,263 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Class A Common Stock: |
|
|
|
|
|
|
|
||||||||
|
Basic income (loss) per share |
$ |
0.14 |
|
|
$ |
0.07 |
|
|
$ |
(0.03 |
) |
|
$ |
0.07 |
|
|
Diluted income (loss) per share |
$ |
0.13 |
|
|
$ |
(0.17 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
Class A Common Stock: |
|
|
|
|
|
|
|
||||||||
|
Weighted average basic shares outstanding |
|
86,425,352 |
|
|
|
63,738,563 |
|
|
|
79,476,383 |
|
|
|
63,738,563 |
|
|
Weighted average diluted shares outstanding |
|
87,230,850 |
|
|
|
71,347,746 |
|
|
|
79,476,383 |
|
|
|
71,347,746 |
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) |
|||||||
|
|
Six Months Ended |
||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
Cash flows from operating activities |
|
|
|
||||
|
Net (loss) income |
$ |
(11,385 |
) |
|
$ |
24,568 |
|
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
|
6,403 |
|
|
|
1,990 |
|
|
Change in fair value of warrant liability |
|
(14,015 |
) |
|
|
(37,791 |
) |
|
Impairment loss on right-of-use asset |
|
551 |
|
|
|
2,372 |
|
|
Stock-based compensation |
|
15,611 |
|
|
|
19,433 |
|
|
Deferred income taxes |
|
(3,058 |
) |
|
|
(392 |
) |
|
Provision for doubtful accounts |
|
4,691 |
|
|
|
660 |
|
|
Changes in operating assets and liabilities: |
|
|
|
||||
|
Accounts receivable |
|
(13,612 |
) |
|
|
(2,104 |
) |
|
Prepaid expenses and other assets |
|
2,867 |
|
|
|
4,362 |
|
|
Other assets |
|
(87 |
) |
|
|
32 |
|
|
Accounts payable and accrued expenses |
|
8,851 |
|
|
|
1,737 |
|
|
Deferred revenue |
|
(631 |
) |
|
|
1,672 |
|
|
Net cash (used in) provided by operating activities |
|
(3,814 |
) |
|
|
16,539 |
|
|
|
|
|
|
||||
|
Cash flows from investing activities |
|
|
|
||||
|
Purchases of property and equipment |
|
(8,554 |
) |
|
|
(836 |
) |
|
Cash paid for acquisitions, net of cash acquired |
|
(713 |
) |
|
|
— |
|
|
Cash paid for acquisition holdback release |
|
(1,000 |
) |
|
|
— |
|
|
Net cash used in investing activities |
|
(10,267 |
) |
|
|
(836 |
) |
|
|
|
|
|
||||
|
Cash flows from financing activities |
|
|
|
||||
|
Taxes paid related to net share settlement of equity awards |
|
(13 |
) |
|
|
— |
|
|
Proceeds from the Business Combination |
|
— |
|
|
|
80,284 |
|
|
Repayment of note payable |
|
— |
|
|
|
(205 |
) |
|
Distributions |
|
(1,790 |
) |
|
|
(18,110 |
) |
|
Repurchase of Class |
|
— |
|
|
|
(5,565 |
) |
|
Repayments of insurance premium financing |
|
(4,289 |
) |
|
|
(364 |
) |
|
Net cash (used in) provided by financing activities |
|
(6,092 |
) |
|
|
56,040 |
|
|
|
|
|
|
||||
|
Net (decrease) increase in cash |
|
(20,173 |
) |
|
|
71,743 |
|
|
Cash – beginning of period |
|
67,777 |
|
|
|
19,919 |
|
|
Cash – end of period |
$ |
47,604 |
|
|
$ |
91,662 |
|
|
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (Unaudited) (In thousands) |
|||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
Net income (loss) |
$ |
19,848 |
|
|
$ |
16,837 |
|
|
$ |
(11,385 |
) |
|
$ |
24,568 |
|
|
Benefit from income taxes |
|
(1,310 |
) |
|
|
(392 |
) |
|
|
(3,058 |
) |
|
|
(151 |
) |
|
Depreciation and amortization expenses |
|
2,458 |
|
|
|
988 |
|
|
|
6,403 |
|
|
|
1,990 |
|
|
EBITDA |
|
20,996 |
|
|
|
17,433 |
|
|
|
(8,040 |
) |
|
|
26,407 |
|
|
Stock-based compensation |
|
8,094 |
|
|
|
19,433 |
|
|
|
15,611 |
|
|
|
19,433 |
|
|
Change in fair value of warrant liability |
|
(32,234 |
) |
|
|
(37,791 |
) |
|
|
(14,015 |
) |
|
|
(37,791 |
) |
|
Transaction related bonuses |
|
1,073 |
|
|
|
1,550 |
|
|
|
3,030 |
|
|
|
1,550 |
|
|
Transaction costs |
|
— |
|
|
|
— |
|
|
|
251 |
|
|
|
— |
|
|
Legal settlements and other legal costs |
|
925 |
|
|
|
— |
|
|
|
1,064 |
|
|
|
— |
|
|
Warrant transaction costs |
|
— |
|
|
|
5,506 |
|
|
|
— |
|
|
|
5,506 |
|
|
Impairment of right-of-use assets |
|
551 |
|
|
|
2,372 |
|
|
|
551 |
|
|
|
2,372 |
|
|
Adjusted EBITDA |
$ |
(595 |
) |
|
$ |
8,503 |
|
|
$ |
(1,548 |
) |
|
$ |
17,477 |
|
______________________________
|
(1) |
Stock-based compensation expense is recorded in the following expense categories on the accompanying consolidated statements of operations for the three and six months ended |
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
|
Sales and marketing |
$ |
2,072 |
|
$ |
3,826 |
|
$ |
3,883 |
|
$ |
3,826 |
|
Product development |
|
1,516 |
|
|
1,994 |
|
|
2,928 |
|
|
1,994 |
|
General and administrative |
|
4,506 |
|
|
13,613 |
|
|
8,800 |
|
|
13,613 |
|
Total stock-based compensation expense |
|
8,094 |
|
|
19,433 |
|
|
15,611 |
|
|
19,433 |
|
Amount capitalized to software development |
|
519 |
|
|
— |
|
|
929 |
|
|
— |
|
Total stock-based compensation cost |
$ |
8,613 |
|
$ |
19,433 |
|
$ |
16,540 |
|
$ |
19,433 |
|
SELECTED OPERATING KEY METRICS (Unaudited) |
|||||||||||
|
Selected Key Operating and Financial Metrics |
|||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
|
Average monthly paying clients |
|
5,537 |
|
|
4,221 |
|
|
5,282 |
|
|
4,068 |
|
Average monthly revenue per paying client |
$ |
3,509 |
|
$ |
3,706 |
|
$ |
3,652 |
|
$ |
3,609 |
|
Monthly active users |
|
17,402 |
|
|
12,302 |
|
|
17,402 |
|
|
12,302 |
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