WM Technology, Inc. Q4 2025 Earnings Call - Cash build and discipline cushion revenue pressure

Operator: Thank you for standing by and welcome to the WM Technology, Inc. fourth quarter and full year 2025 earnings call. I’d now like to introduce your host for today’s program, Simon Yao. Please go ahead, sir.

Simon Yao, Investor Relations, WM Technology, Inc.: Good afternoon, and thank you for joining us to discuss our fourth quarter and full year 2025 results. Today we are joined by our CEO, Douglas Francis, and our CFO, Susan Echard. By now, everyone should have access to our earnings announcement and supporting slide deck on our investor relations website. During this call, we will 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 the 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 archive webcast, this call was held on March 12, 2026. 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 release and earnings presentation. 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.

Douglas Francis, Chief Executive Officer, WM Technology, Inc.: Good afternoon, everyone, and thank you for joining us today. Over the past year, we have remained focused on executing against a clear set of priorities, operating with discipline, strengthening our financial position, and continuing to invest in the platform to support long-term growth. While the cannabis industry continues to face significant structural headwinds, Weedmaps remains focused on the long game. For the full year 2025, we delivered $175 million in revenue, generating $40 million in Adjusted EBITDA and ending the year with $62 million in cash, an almost 20% increase in our cash balance at the end of 2024. Our 2025 results reflected our team’s ability to manage through industry cycles and the actions we have taken to reset and reinforce the business over the past several years.

We are navigating a survival and balance sheet management mindset across the sector, but our strong liquidity allows us to invest thoughtfully. Revenue for the fourth quarter came in at the top end of our prior guidance, and Adjusted EBITDA exceeded our guidance for the quarter. That said, both of these measures were down 10% or more compared to the fourth quarter of 2024, reflecting the continuation of the industry trends that we discussed last quarter, which persisted through the fourth quarter and into the start of this year. Susan will walk through how these trends affected our financial results in more detail. Before I turn it over to her, I would like to provide our view of some of the macro trends and how we see them impacting our business. The cannabis landscape continues to be reshaped by consolidation. We see this led by two groups.

On one hand, we have the MSOs, who largely operate outside of the legacy states, and on the other, we have the large California-based retailers who continue to dominate and expand in the market. MSOs are prioritizing states where the operating and regulatory conditions support sustainable path to profitability, while battle-hardened California operators are adapting to operate on low margins in one of the industry’s most competitive markets. This trend creates two possible challenges for Weedmaps. First, consolidation reduces the number of operators in a market, and like most marketplaces, our platform tends to perform best in regions with a larger and more competitive base of operators as they compete for visibility on our platform. Second, product choice and shelf space become streamlined, making a narrower set of brands available to the user.

As these market dynamics persist, we remain focused on enhancing our product offerings, deepening our relationships with large California-based clients and MSO partners, improving adoption in states with regulatory capture, and strengthening the overall marketplace experience. These efforts remain a strategic priority, and we expect to make meaningful investments across our teams and technology throughout the year as we continue building for the future of Weedmaps. On Schedule III, we remain cautious around its potential for Weedmaps despite the positive headlines. It is critical to understand that rescheduling will not make cannabis federally legal, nor will it immediately allow Weedmaps to enter new business lines or launch new revenue strategies. Being a company serving the cannabis industry market while being listed on a major U.S. exchange limits our strategic options relative to other technology businesses.

We are restricted in how we can monetize and execute cannabis technology and how we can handle transactions and logistics. Without these capabilities, we are not able to provide customers a regular e-commerce experience like what they are used to outside of cannabis, nor are we able to access the full benefit of our dual-sided marketplace. Unfortunately, Schedule III will not change this in the near term, nor do we believe plant-touching companies will be allowed on either of the U.S. exchanges anytime soon. While the potential elimination of 280E tax will improve cash flows for some, the impact may be more limited than the current positive sentiment within the industry suggests. Many plant-touching operators, including the majority of publicly traded MSOs, have adopted certain legal positions, utilized accounting consolidation strategies, or recorded allowances for uncertain tax liabilities.

As a result, most clients are already realizing cash flow benefits similar to what they would see if Section 280E did not apply. Rescheduling will just make the future of these benefits clearer and more certain, and rescheduling on its own will not erase these companies’ historical tax liabilities, which even if they are manageable, may slow down a client’s ability to spend that newly freed cash flow on growth rather than debt service. Furthermore, the tax benefits of rescheduling are likely to disproportionately favor large operators and MSOs who will continue to consolidate the market, which, as I explained, could have an impact on the Weedmaps business model. Ultimately, we want full legalization, and Schedule III is a step in that process. We are excited for the industry and the potential benefits rescheduling could provide, including extended research opportunities and greater regulatory clarity.

In the meantime, we continue to focus on what we can control, building a broad marketplace where consumers can discover the brands and the products they want and ultimately transact with our retail partners. We are optimistic about several growth levers. We have several product updates underway designed to enable product-first discovery and shopping journeys. We believe this mode of engagement with the platform will allow retailers and brands to offer consumers an e-commerce experience more similar to what they find when shopping in other industries. We’re pleased with the early momentum we’ve seen in New York and hope to leverage our learnings and experiences to grow our presence in other new markets, like Minnesota and Texas, and the regulatory captured markets where we’ve historically had less of a presence. I wanna thank our team for their continued focus and execution during a challenging period for the industry.

While there is still work ahead, we believe the investments we are making today position Weedmaps well for the next phase of the industry’s evolution. With that, I’ll turn it over to Susan.

Susan Echard, Chief Financial Officer, WM Technology, Inc.: Thanks, Doug. Now turning to our financial performance. Revenue for the fourth quarter was $43 million, a decline of 10% year-over-year, reflecting the persistent challenges our clients face across our core markets. In these regions, severe pricing compression, competition from the illicit markets, and elevated excise tax burdens continue to weigh on our clients’ margins and marketing budgets, limiting their ability to spend on our platform. These dynamics was reflected in lower spend across our Featured Listings and Deal Listings, which tend to be more sensitive to shifts in marketing spend. These conditions have driven contraction and consolidation across several of the industry’s largest markets, particularly California and Michigan, where both total retail sales and average retail prices declined year-over-year throughout 2025.

We saw encouraging growth in newer markets, such as New York and Ohio, where our teams prioritized client penetration as retailers come online in those states. While this growth did not offset the pressure in our more mature markets, we are pleased with the early momentum we have seen in these states. As a result, full year revenue was $175 million, compared to $185 million in 2024, representing a year-over-year decline of approximately 5%. Average paying clients in the fourth quarter were 5,120, down approximately 2% both year-over-year and sequentially, reflecting the consolidation in operator exits in the markets such as California, Michigan, and Oklahoma, partially offset by growth in newer markets like in New York, where our client count nearly doubled compared to the prior year.

For the full year, average paying clients were 5,091, up 2% compared to 2024. Average revenue per paying client for both the fourth quarter and the full year was approximately $2,800, down from prior year levels. This is attributed to lower spend from certain existing clients amid tighter marketing budgets, as well as the addition of clients in newer markets who typically begin at lower initial spend levels. Against a softer revenue backdrop, we remain disciplined in managing our cost structure throughout the year. Total operating expenses increased modestly by 2% to $174 million for the full year compared to $170 million in 2024, primarily due to certain non-recurring items.

Full year sales and marketing and product development expenses declined by $2 million and $8 million respectively, driven by lower headcount-related costs and reduced advertising spend following restriction actions taken earlier in the year to optimize and refocus these teams. These reductions were more than offset by higher general and administrative expenses, which increased approximately $6 million year-over-year. This increase included a couple of one-time items, including a $2.3 million non-cash loss contingency recorded in the second quarter related to a contractual obligation with our server provider, as well as a $2.8 million legal settlement disclosed as a subsequent event in our 2025 Form 10-K. Additionally, in the fourth quarter, we recorded a non-cash asset impairment charge of approximately $7.8 million, largely related to our goodwill asset. As a result, net income for the full year was $3 million.

Despite our revenue decline year-over-year, our cost control efforts resulted in a non-GAAP adjusted EBITDA for the full year of $40 million, compared to $43 million for 2024. In the current industry environment, maintaining tight cost control enables us to navigate these challenges while preserving the flexibility to invest in key organic growth initiatives. Our operating model allows us to manage expenses and maintain profitability while self-funding operations and continuing to invest in the business. Looking ahead, many of the industry dynamics that impacted our clients in 2025 have carried into the early part of this year and are expected to persist through 2026. As a result, we expect first quarter revenue to decline sequentially by mid- to high-single digits from the fourth quarter.

We plan to continue investing opportunistically across the business and, given the potential variability in the timing of these investments, we’ll not be providing Adjusted EBITDA guidance for 2026. The company remains committed to preserving financial flexibility and disciplined capital allocation as we assess the opportunities ahead. With that, I’ll turn the call back to the operator.

Operator: Thank you. Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.