Q4 2024 WM Technology Inc Earnings Call
Speaker Change: All participants will be in a listen only mode for the duration of the call. I will now let they turn the call over to your host, Sam and Yao, Director of Investor Relations. It may begin. Good afternoon and thank you for joining us to discuss our fourth quarter and four year 2024 results. Today we are joined by our CEO , Doug Francis and our CFOs to the
Speaker Change: By now, everyone should have access to our earnings announcement and supporting slide deck on our best relations website.
Speaker Change: 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 out of our control.
Speaker Change: Our actual results could differ materially from expectations reflected in any four lucky statements.
Speaker Change: For a discussion of risks and other important factors that could affect our actual results, please refer to our SEC filing available on our SEC website and our Industrial Relations website. We specifically disclose any intent or obligation to update these forward-looking statements, except as required by law.
Speaker Change: For the benefit of those who may be listening to the replay or archive webcast, this call was held on March 16th, 2025. Since then, we may have made announcements related to the topic discussed. So please refer to the company's most recent press release and SQC climate.
Speaker Change: We will also discuss non-GAAP financial measures alongside those prepared in accordance with Gap. non-GAAP financial measures should be considered in addition to, and not as a substitute for the information prepared in accordance with Gap.
Speaker Change: You can find the reconciliation of these measures to adopt the goals in our any specific patient on our industrial relationship website.
Speaker Change: And finally, today's call is being web-capted from my investigation website and an audio replay will be available shortly.
With that, I will now turn it over to Doug.
Thanks, Simon, and hello to everyone joining up today.
Speaker Change: Before we get into our performance, I'd like to welcome our new Chief Technology Officer, Sarah Griffiths, who joined us at the beginning of the year.
Speaker Change: With her background in data, marketplaces, and highly regulated industry, Sarah hit the ground running and has already made a meaningful impact on our technology organization. We're glad to have her on the team.
Now turn to our performance.
Speaker Change: I am pleased to share the results we've achieved in 2024, as we conclude the year with another quarter of sequential growth and profitability.
Speaker Change: For the fourth quarter, we deliver 47.7 million in revenue, 11.9 million in adjusted EBITDA, bringing our full year revenue to 184.5 million in adjusted EBITDA of 42.9
Speaker Change: These results reflect the continuous focus and discipline of our teams in driving profitability, even as headwind persisted throughout the year, pressures that weighed on the both of our clients and the broader industry.
Speaker Change: Our ability to navigate these challenges has allowed us to end the year with a strong debt-free balance sheet closing with 52 million cash.
Speaker Change: When I returned to the company in an operating role in 2022, we recognized that the life of some cannabis industry path to recovery would be a turbulent one.
Speaker Change: Regulatory burdens over taxation, wholesale pricing pressures, and competition from both elicit and now the hemp markets have created significant challenges.
Speaker Change: Given these realities, we knew the best way forward was to focus on what we could control optimizing our operating structure, strengthening our core marketplace, continuing to support our clients where they operate and securing wind for a possible.
Speaker Change: Fast forward to today, the industry remains under serious pressure with regulatory uncertainty at both the state and federal levels, continuing to affect the overall industry health.
Speaker Change: At the state level, licensed markets are experiencing persistent pricing and regulatory pressures, leading to consolidation across mature markets.
Speaker Change: Operators in our home state of California are now contending with a potential increase in excess taxes while newer markets like New York implored us face their own regulatory obstacle.
Speaker Change: New York continues to struggle with illicit competition, while Florida's momentum has slowed following the failure to pass the dog use legislation in November . Despite these challenges, we remain hopeful that market dynamics will stabilize over the long term.
Speaker Change: The impact of these emerging states remains relatively small today, but we remain invested in developing and growing with these markets.
Speaker Change: At the federal level, early indications suggest that Canada's reform will not be a priority for the new administration. This is the reality we are and will continue to navigate carefully, while the industry challenges will present.
Speaker Change: The operational improvements we have implemented over the last two years have positioned us well to invest and build for the future growth as the landscape continues to evolve.
Speaker Change: As we enter 2025, we plan to prioritize investments in our technology and marketing organization to strengthen the foundation of the lead mass platform and unlock future opportunities.
Speaker Change: Our investment approach will remain disciplined while focusing on initiatives that drive long-term value while maintaining the prudent cost management we have demonstrated in recent years.
Speaker Change: Building a strong Marketplace Foundation is critical to our future success and the effort will require collaboration across the entire company, not just within our technology team.
Speaker Change: By enhancing our marketplace, we aim to improve the experience for our users' clients today, while provisioning ourselves to capitalize on the future industry developments.
Speaker Change: Beyond these foundational improvements, we are also executing on key initiatives to capture emerging market trends.
Speaker Change: These include expanding horizontally into the hemp, head shop and home grow and seed markets. Natural adjacency to our existing marketplace that we believe will help drive greater user engagement. We anticipate launching these initiatives in the second half of the year.
Speaker Change: While these opportunities hold significant potential, they also come with inherent risk.
Speaker Change: For example, a federal loophole has allowed the hemp industry to flourish attracting attention from many industry participants, including multi-state operators.
Speaker Change: However, the regulatory uncertainty remains, as states are increasingly introducing their own legislation that could alter the opportunity landscape overnight. That's this recently proposed regulation being a prime example.
Speaker Change: As we navigate this evolving landscape, we must remain agile, both with our ability to pivot when needed and in our readiness to identify and invest in the right opportunities as they emerge.
Speaker Change: The Adaptability and Financial Discipline we've developed over the past few years are core strengths that will continue to guide us through 2025. I am proud of our team's dedication and hard work in positioning us where we are today.
Speaker Change: The industry is filling its early stages. We are confident that the strategic actions we take now will lay in a foundation for long-term growth and expanded opportunities.
Speaker Change: But to be clear, without support from legislators and regulators around the globe, the candidates industry will continue to struggle, and most operators will be forced to the hemp and black markets to survive.
Speaker Change: The world out of Canada has been an absolute failure by government bureaucrats, killing their chance at creating a thriving industry of opportunities and job creation for all walks of life.
Speaker Change: Legislation and regulation of candidates should focus on ensuring safety and maximizing access and otherwise the government needs to get out of the way and let the free market work.
Speaker Change: Instead of doing this, time and time again, we see the people in government who do not understand Canada's strangle our industry, acting in their own interests but not in the best interests of the consumers or the industry.
Speaker Change: We need legislators and regulators to take a builder's mindset towards the industry and for that acting like a demolition team raising the structure that is barely more than a foundation.
Speaker Change: We will be happy to work with them and until then we must continue to fight for smart regulation, open and accessible markets and
Speaker Change: Thanks, Doug. Revenues in the fourth quarter exceeded our guidance and increased to 47.7 million.
Speaker Change: Compared to the fourth quarter of the prior year, revenues increased 3% driven by growth from our deal listings and display ad products partially offset by lower spend on our featured listings product and the impact on revenue from the products we sent that in Q4 last year.
Speaker Change: Despite the financial challenges and budget constraints, many of our clients continue to face, we are pleased with our sequential quarter and year-over-year growth in revenue.
Speaker Change: Due for Average Monthly Paying Clients of 5,025, Mark yet another Confective Quarterly Increase and an increase of 4% versus a prior year period.
Speaker Change: The increase from the prior year period was due to new client acquisitions and client reactivations partially upset by churn.
Speaker Change: We remain focused on adding new accounts and minimizing turn across all of our markets. However, we recognize that ongoing industry pressures will continue to impact client profitability and drive further consolidation in the industry.
Speaker Change: The average monthly revenue for paying client in Q4 decreased 2% to 3,041 when compared to the prior year period due to the ongoing client marketing budgetary constraints in our client's limited capacity for upsell.
Speaker Change: While we've been encouraged by the recent relative stabilization of this metric, we expect this metric to fluctuate as we continue to see headwinds across our mature markets while we add new clients across developing markets that are typically onboarded at lower
Turning to Longer Expenses
Speaker Change: Our GAP OPECS, which includes our cost of revenue, decreased 27% versus the prior year Q4 results, primarily driven by the 16 million impairment charges we took last year related to the sunset of certain products, leases, and minority investments.
Speaker Change: Net income for the quarter came in at 3.7 million, which compares to a net loss of 11.2 million in Q4 of last year.
Speaker Change: Our Q4 adjusted EBITDA of $11.9 million, which represents a 25% adjusted EBITDA margin compared to adjusted EBITDA for Q4 2023 of $8.9 million or 19%, and be it our guidance.
Speaker Change: Touching on our full-year results, revenue of 184.5 million decreased from 188 million in the prior year.
Speaker Change: The overall decrease from prior year revenue was due to the continued constraints in our clients marketing budgets and the ongoing consolidation of our industry.
Speaker Change: Specifically, amongst our client-based and the revenue loss from the Sunset of Certain Products in December 20th, 23.
Speaker Change: These declines were partially upset by favorable pricing changes relating to our weed maps for business product enacted in Q4 of 2023.
Speaker Change: The Average Monthly Paying Clients for the Full-Year Period Declined
Speaker Change: 2777 from 5,419 in the prior year and it's primarily due to the client and compilated to the aforementioned sunset products.
Speaker Change: as well as the removal of paying clients from our platform who have become delinquent and the client churn due to continued industry challenges such as price deflation and ongoing consolidation.
Speaker Change: Turning to our expenses, our gap uphacks, which includes our cost of revenue, decreased 22% versus fiscal year 23 results, primarily driven by the 24.4 million impairment charges we took last year related to the sunset of our certain products, leases, and minority investments.
Speaker Change: Net income for the full year came in at 12.2 million which compares to a net loss of 15.7 million in 2023 due to the aforementioned impairment charge and cost reduction across our operating expenses.
Speaker Change: Increased 6 million over 2023 and is a reflection of the operational discipline they are able to enact during revenue headwinds to manage our continued profitability.
Speaker Change: We ended 2024 with a very strong balance sheet position. We generated 17.6 million in cash for the full year, closing the year with a cash balance of 52 million.
Speaker Change: Three cash flow in 2024 was booted by a focus on a comfortable and collections.
Speaker Change: Our 2023 year-end growth receivables of approximately 20 million had significant past due accounts, and we were successful with collecting the majority of them which yielded a higher than normal cash influx that is not expected to be repeated.
Speaker Change: We continue to work with our customers and keeping our collections in line, and that partnership has continued to lower churn.
Speaker Change: Our cash balance and debt free position provides us with the flexibility to explore a variety of strategic growth initiatives.
Speaker Change: as we execute against opportunities to maximize shareholder value, invest in our platform and infrastructure, continue to lay foundation in our emerging markets, and provide the business with liquidity in the event of unexpected industry challenges.
Speaker Change: Our share count across our Class A and B common stock was approximately 153 million as of December 31, 2024.
Speaker Change: A reconciliation of non-GAAP metrics to their nearest gap 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.
Speaker Change: The company is strategically investing in key technology and marketing roadmap initiatives in 2025.
Speaker Change: As a result, we expect Q1 revenues to be approximately 44 million, which is consistent with our prior year results, and Q1 non-GAPA just did EBITDA to be approximately 7 million.
Speaker Change: While we are very pleased with the progress we made in 2024, the challenges we face as we enter 2025 remain and will require strategic investments to support our long-term growth and health.
Speaker Change: To that end, we are prioritizing key technology and marketing initiatives to further strengthen our platform.
Speaker Change: As a result, we expect Q1 revenues to be approximately 43 million and Q1 non-GAAP adjusted to be approximately 7 million. With that, I'll now turn the call back over to the operator to conclude our call.
Speaker Change: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.