hometowncd Two months ago, I said here that WM Technology (NASDAQ:MAPS) could double soon, and it is barely higher. The company reported its Q2 earlier this month after being late on its Q4 and Q1 earlier this year. The stock is the largest in my model portfolio that I share with subscribers of 420 Investor, and I continue to expect that it could rally significantly. WM Technology Q2 Was Solid When I last wrote about MAPS, it was less than a month after they released their Q4 and Q1 financials, which were l ...

Financial Performance - Net Revenues decreased to $45.9 million compared to $48.4 million in the prior year period[6, 7] - Net Income was $1.2 million, compared to $2.0 million in the prior year period[6, 7] - Adjusted EBITDA was $10.1 million, slightly down from $10.2 million in the prior year period[6, 7] - The Adjusted EBITDA margin was 22% compared to 21% in the prior year period[16] Customer Metrics - Average Monthly Paying Clients decreased to 5,045 from 5,609 in the prior year period[6, 11] - Average Monthly Net Revenues per Paying Client increased to $3,033 compared to $2,878 in the prior year period[6, 12] Revenue Breakdown - Weedmaps for Business and other SaaS subscriptions revenue increased to $13.4 million from $11.3 million[12] - Featured and deal listings revenue decreased to $28.4 million from $33.0 million[12] - Other ad solutions revenue slightly decreased to $4.1 million from $4.2 million[12] Balance Sheet and Cash Flow - Cash and Cash Equivalents increased to $41.3 million from $34.4 million at the end of the previous year[13]

[Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements, management's analysis of financial condition and results of operations, market risk disclosures, and internal controls assessment [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company reported a net income of $2.0 million for Q1 2024, a significant turnaround from a net loss of $4.0 million in Q1 2023; total assets slightly decreased to $165.8 million from $167.0 million at year-end 2023; cash provided by operating activities improved to $7.4 million; notably, the financial statements for the three months ended March 31, 2023, have been restated due to improper revenue recognition for certain customers, which reclassified $1.59 million from revenue to a reduction in general and administrative expenses (as a credit loss recovery) Condensed Consolidated Balance Sheets | Balance Sheet Items (In thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $35,717 | $34,350 | | Accounts receivable, net | $7,893 | $11,158 | | Total current assets | $50,261 | $51,486 | | Total assets | $165,849 | $167,021 | | **Liabilities & Equity** | | | | Total current liabilities | $29,995 | $33,715 | | Total liabilities | $59,021 | $63,870 | | Total stockholders' equity | $106,828 | $103,151 | Condensed Consolidated Statements of Operations | Income Statement (In thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 (As Restated) | | :--- | :--- | :--- | | Net revenues | $44,389 | $46,416 | | Total costs and expenses | $40,628 | $50,564 | | Operating income (loss) | $3,761 | $(4,148) | | Net income (loss) | $1,959 | $(3,969) | | Net income (loss) attributable to WM Technology, Inc. | $1,240 | $(2,475) | | Diluted income (loss) per share | $0.01 | $(0.03) | - The company achieved profitability in Q1 2024 with a net income of **$2.0 million**, compared to a net loss of **$4.0 million** in the prior-year period, driven by a significant reduction in total costs and expenses[20](index=20&type=chunk) Condensed Consolidated Statements of Cash Flows | Cash Flow Items (In thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 (As Restated) | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,402 | $2,157 | | Net cash used in investing activities | $(4,540) | $(3,226) | | Net cash used in financing activities | $(1,495) | $(1,612) | | Net increase (decrease) in cash | $1,367 | $(2,681) | | Cash – end of period | $35,717 | $25,902 | Notes to Condensed Consolidated Financial Statements - The company operates a leading online cannabis marketplace (Weedmaps) and provides a suite of eCommerce and compliance SaaS solutions (Weedmaps for Business) to retailers and brands[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - A restatement of Q1 2023 financials was required due to improper revenue recognition for certain customers on a cash basis, resulting in a **$1.59 million** decrease in reported Net Revenues and a corresponding decrease in General and Administrative expenses, with no impact on net income[36](index=36&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk) Disaggregated Net Revenues | Disaggregated Net Revenues (In thousands) | Q1 2024 | Q1 2023 (As Restated) | | :--- | :--- | :--- | | Weedmaps for Business and other SaaS solutions | $13,282 | $11,310 | | Featured and deal listings | $28,166 | $32,280 | | Other ad solutions | $2,941 | $2,826 | | **Total net revenues** | **$44,389** | **$46,416** | - The company has minimum purchase obligations of **$5.3 million** for the remainder of 2024, **$7.3 million** for 2025, and **$7.5 million** for 2026, primarily related to a three-year AWS Enterprise agreement[111](index=111&type=chunk) - The fair value of the warrant liability increased from **$0.6 million** at year-end 2023 to **$1.4 million** as of March 31, 2024, resulting in a non-cash loss of **$0.9 million** for the quarter[114](index=114&type=chunk)[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported Q1 2024 net revenue of **$44.4 million**, a 4% decrease YoY, primarily due to lower revenue from Featured Listing and WM Deal products; despite the revenue decline, the company achieved net income of **$2.0 million** and Adjusted EBITDA of **$9.6 million**, driven by a 20% reduction in total operating expenses; average monthly paying clients decreased by 12% YoY to 4,937, attributed to industry-wide price deflation, while average monthly revenue per paying client increased by 9% to $2,997; the company generated **$7.4 million** in cash from operations and ended the quarter with **$35.7 million** in cash Key Operating and Financial Metrics | Metric (in thousands, except per client data) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net revenues | $44,389 | $46,416 | | Net income (loss) | $1,959 | $(3,969) | | Adjusted EBITDA | $9,599 | $7,130 | | Average monthly revenue per paying client | $2,997 | $2,743 | | Average monthly paying clients | 4,937 | 5,641 | - Average monthly paying clients decreased by **12% YoY**, primarily due to elevated churn as the cannabis industry faces price deflation[188](index=188&type=chunk) - Average monthly revenue per paying client increased by **9% YoY**, partly due to the sunsetting of certain lower-spend products in late 2023[185](index=185&type=chunk) Results of Operations - Net revenues decreased by **$2.0 million** (**4% YoY**), driven by a **$4.1 million** decline in 'Featured Listing and WM Deal' products, partially offset by a **$2.0 million** increase in 'Weedmaps for Business' revenue[217](index=217&type=chunk) - Total costs and expenses decreased by **$9.9 million** (**20% YoY**), with significant reductions across all categories: Cost of Revenues (**-34%**), Sales and Marketing (**-20%**), Product Development (**-16%**), and General and Administrative (**-21%**)[219](index=219&type=chunk) - The decrease in Sales and Marketing expenses was primarily due to a **$3.6 million** reduction in personnel-related costs, including a **$1.8 million** decrease in transaction-related bonuses[221](index=221&type=chunk) - The decrease in General and Administrative expenses was driven by a **$1.1 million** reduction in the provision for credit losses and lower personnel, insurance, and software costs[223](index=223&type=chunk) Liquidity and Capital Resources Liquidity Metrics | Liquidity Metrics (In thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash | $35,717 | $34,350 | | Accounts receivable, net | $7,893 | $11,158 | | Working capital | $20,266 | $17,771 | - Net cash provided by operating activities increased to **$7.4 million** in Q1 2024 from **$2.2 million** in Q1 2023[233](index=233&type=chunk)[235](index=235&type=chunk) - Management believes existing cash and cash generated from operations will be sufficient to meet anticipated cash needs for at least the next 12 months[229](index=229&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks include foreign currency fluctuations, interest rate changes, and inflation; however, management states that exposure to foreign currency risk is insignificant, and the company's cash-only portfolio is insensitive to interest rate changes; while inflation has not had a material effect to date, the company continues to monitor its potential impact on client spending and operating costs - The impact of foreign currency exchange rate fluctuations was insignificant for the three months ended March 31, 2024 and 2023[251](index=251&type=chunk) - The company's portfolio consists only of cash, making its fair value insensitive to interest rate changes; a hypothetical 100 basis point change in interest rates would not have a material effect[253](index=253&type=chunk) - As of March 31, 2024, the company held cash balances exceeding the FDIC insurance limit with five financial institutions, but management believes the risk of loss is not significant[254](index=254&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were not effective due to multiple material weaknesses in internal control over financial reporting; these weaknesses span entity-level controls, IT general controls (including change management and access controls), and process-level controls in key financial cycles like order-to-cash; the weakness in the order-to-cash cycle directly led to the restatement of the first three quarters of 2023; a remediation plan is being developed - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were **not effective**[258](index=258&type=chunk) - Multiple material weaknesses were identified, including deficiencies in the control environment, risk assessment, and monitoring activities[263](index=263&type=chunk) - Specific material weaknesses include ineffective IT general controls for key financial systems (related to change management and access controls) and ineffective process-level controls for order-to-cash, procure-to-pay, and other key cycles[264](index=264&type=chunk) - The material weakness in the order-to-cash cycle resulted in an inadequate revenue recognition policy that led to the restatement of the unaudited financial statements for the first three quarters of 2023[264](index=264&type=chunk)[266](index=266&type=chunk) [Part II - Other Information](index=49&type=section&id=Part%20II%20-%20Other%20Information) This section details ongoing legal proceedings, confirms no material changes to previously disclosed risk factors, and addresses other required disclosures including equity sales and defaults [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with an ongoing SEC investigation that began after the company voluntarily reported an internal complaint regarding the calculation of its historical Monthly Active Users (MAUs) metric; the SEC has issued subpoenas for documents and employee testimony, which occurred in July and August 2023; the outcome is uncertain but could result in penalties or other sanctions - The company is cooperating with an SEC investigation following a 2022 internal complaint about the calculation and reporting of its Monthly Active Users (MAUs) metric[271](index=271&type=chunk) - The SEC's Division of Enforcement has issued two subpoenas for information and documents, and several current and former employees provided testimony in July and August 2023[271](index=271&type=chunk) - The internal investigation found no impact on the company's GAAP financial results or currently disclosed non-GAAP metrics; the company ceased reporting MAUs in Q3 2022[271](index=271&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - The risk factors disclosed in the company's 2023 Form 10-K have not materially changed[273](index=273&type=chunk) [Other Items (2, 3, 4, 5)](index=49&type=section&id=Other%20Items%20(2,%203,%204,%205)) There were no unregistered sales of equity securities, defaults upon senior securities, or other material information to report under these items for the quarter; mine safety disclosures are not applicable - Item 2: No unregistered sales of equity securities[274](index=274&type=chunk) - Item 3: No defaults upon senior securities[274](index=274&type=chunk) - Item 5: No other information to report[275](index=275&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including the Certificate of Incorporation, Bylaws, officer certifications (pursuant to Sarbanes-Oxley Sections 302 and 906), and XBRL data files

[Explanatory Note](index=4&type=section&id=Explanatory%20Note) [Restatement Background and Internal Control Considerations](index=4&type=section&id=Restatement%20Background%20and%20Internal%20Control%20Considerations) Unaudited 2023 financial statements were restated due to improper revenue recognition and a material weakness in internal controls - The company discovered an inadequate policy for revenue recognition concerning cash collections from certain customers on a cash basis, leading to a material misstatement[10](index=10&type=chunk) - Unaudited condensed consolidated financial statements for the three, six, and nine months ended March 31, June 30, and September 30, 2023, respectively, were materially misstated and required restatement[10](index=10&type=chunk) - The error involved improperly recognizing revenue from cash receipts that should have been classified as credit loss recoveries[10](index=10&type=chunk) - Management identified a material weakness in internal controls related to the order-to-cash cycle, which caused the misapplication of revenue recognition policies[12](index=12&type=chunk) [Part I](index=9&type=section&id=Part%20I) [Item 1. Business](index=9&type=section&id=Item%201.%20Business) WM Technology operates a leading online cannabis marketplace and provides SaaS solutions to cannabis businesses in legalized U.S. markets - The company operates a leading online cannabis marketplace (Weedmaps) and a suite of SaaS solutions (Weedmaps for Business) for cannabis retailers and brands[23](index=23&type=chunk)[25](index=25&type=chunk) - In December 2023, the company sunset its WM AdSuite, WM CRM, and WM Screens product offerings to focus on core marketplace and eCommerce products[32](index=32&type=chunk) - As of December 31, 2023, the company operated in over **35 U.S. states and territories**, with substantially all revenue generated in the United States[33](index=33&type=chunk) Key Business Metrics (FY 2023) | Metric | Value | | :--- | :--- | | Revenue | $188.0 million | | Average monthly paying clients | 5,419 | - Growth strategies include growing the two-sided marketplace, expanding into new and existing markets, enhancing SaaS solutions, and pursuing strategic acquisitions[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - The company faces competition from cannabis-focused tech companies like Leafly and Dutchie, as well as general internet search engines like Google and Yelp[45](index=45&type=chunk) - As of December 31, 2023, the company had **440 full-time employees** and **19 temporary employees**[59](index=59&type=chunk) - The U.S. government is moving to reclassify cannabis from a Schedule I to a Schedule III controlled substance, which could have significant but currently unknown implications for the industry and the company's clients[65](index=65&type=chunk)[212](index=212&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including declining revenue, California market concentration, federal cannabis prohibition, and material weaknesses in internal controls - Revenue declined in 2023 compared to 2022, and the company may not be able to generate sufficient revenue to achieve profitability as costs increase[76](index=76&type=chunk) - The business is heavily concentrated in California, which generated approximately **52%**, **56%**, and **61%** of revenue for the years 2023, 2022, and 2021, respectively, making it susceptible to market-specific conditions[84](index=84&type=chunk) - The company is subject to an SEC investigation following a voluntary report of an internal complaint regarding the calculation of its monthly active users (MAUs) metric[85](index=85&type=chunk) - Cannabis remains a prohibited controlled substance under federal law (CSA), and strict enforcement against the company's clients would materially harm the business[89](index=89&type=chunk)[205](index=205&type=chunk) - The company has identified material weaknesses in its internal control over financial reporting as of December 31, 2023, which could prevent the accurate and timely reporting of financial results[182](index=182&type=chunk)[183](index=183&type=chunk) - The restatement of prior quarterly financial statements may harm investor confidence, increase costs, and raise the possibility of legal or regulatory proceedings[189](index=189&type=chunk) - As a holding company, its ability to pay taxes and other obligations depends on distributions from its operating subsidiary, WMH LLC[192](index=192&type=chunk) - The company is obligated to make potentially substantial payments under a Tax Receivable Agreement (TRA) for certain tax benefits it may receive[198](index=198&type=chunk)[199](index=199&type=chunk) [Item 1B. Unresolved Staff Comments](index=51&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[267](index=267&type=chunk) [Item 1C. Cybersecurity](index=51&type=section&id=Item%201C.%20Cybersecurity) The company maintains a cybersecurity risk management program overseen by its CTO and Board committees, involving threat identification, assessment, and management - The company has implemented information security processes to identify, assess, and manage material cybersecurity risks[268](index=268&type=chunk) - The security team is managed by the Chief Technology Officer (CTO) and Senior Director of Information Security[270](index=270&type=chunk)[277](index=277&type=chunk) - The Board of Directors, specifically the Audit and Technology committees, is responsible for overseeing the cybersecurity risk management processes[276](index=276&type=chunk) - The company utilizes third-party service providers for functions such as penetration testing, threat intelligence, and cloud data hosting, and has a vendor management program to manage associated risks[273](index=273&type=chunk)[274](index=274&type=chunk) [Item 2. Properties](index=53&type=section&id=Item%202.%20Properties) The company's executive offices are in Irvine, California, with additional leased spaces in Los Angeles and Denver - The company's main executive offices are located at 41 Discovery, Irvine, California, with the lease expiring in **2025**[281](index=281&type=chunk) - Additional leased offices are maintained in Los Angeles, California (lease expires **2031**) and Denver, Colorado[281](index=281&type=chunk) [Item 3. Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) The company is cooperating with an SEC investigation regarding its Monthly Active Users (MAUs) metric, which could result in penalties - In August 2022, the company voluntarily reported an internal complaint and investigation concerning its Monthly Active Users (MAUs) metric to the SEC[284](index=284&type=chunk) - The company has since received two subpoenas from the SEC's Division of Enforcement for information and documents, and several employees have provided testimony[284](index=284&type=chunk) - The internal investigation found no impact on the company's GAAP financial results or reported non-GAAP metrics[284](index=284&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[286](index=286&type=chunk) [Part II](index=54&type=section&id=Part%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A Common Stock and Public Warrants are listed on Nasdaq, with significant shares outstanding and no anticipated cash dividends - Class A Common Stock and Public Warrants trade on Nasdaq under symbols "MAPS" and "MAPSW"[288](index=288&type=chunk) Shares Outstanding (as of May 13, 2024) | Class | Shares Outstanding | | :--- | :--- | | Class A Common Stock | 95,051,735 | | Class V Common Stock | 55,486,361 | - The company has not paid any cash dividends to date and does not anticipate declaring any in the foreseeable future[290](index=290&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2023, net revenue decreased to **$188.0 million**, but net loss narrowed significantly to **$15.7 million**, and Adjusted EBITDA turned positive due to cost reductions FY 2023 vs. FY 2022 Financial Highlights | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Revenue | $188.0 million | $215.5 million | | Net Loss | $(15.7) million | $(82.7) million | | Adjusted EBITDA | $36.9 million | $(9.6) million | | Avg. Monthly Paying Clients | 5,419 | 5,457 | | Avg. Monthly Revenue per Client | $2,891 | $3,291 | - The **13%** decrease in net revenue was primarily driven by a **$23.1 million** decline in revenue from Featured Listings and WM Deal products[338](index=338&type=chunk) - Total costs and expenses decreased by **28%** year-over-year, mainly due to workforce reductions that lowered personnel-related costs in sales & marketing (**-43%**), product development (**-29%**), and general & administrative (**-38%**)[340](index=340&type=chunk)[341](index=341&type=chunk) - Asset impairment charges increased significantly to **$24.4 million** in 2023 from **$4.3 million** in 2022, primarily related to an operating lease, intangible assets from sunsetted products, and an equity investment[347](index=347&type=chunk) Cash Flow Summary (in thousands) | Cash Flow | 2023 | 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $22,928 | $(11,621) | | Net cash used in investing activities | $(11,871) | $(17,768) | | Net cash used in financing activities | $(5,290) | $(9,805) | - As of December 31, 2023, the company had cash of **$34.4 million** and working capital of **$17.8 million**, with no long-term debt[298](index=298&type=chunk)[358](index=358&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's exposure to market risks like foreign currency, interest rates, and inflation is currently considered immaterial due to its U.S.-centric operations and cash-only portfolio - The company's exposure to foreign currency fluctuation is considered insignificant as operations are primarily within the United States[398](index=398&type=chunk) - Interest rate risk is minimal as the company's portfolio consists only of cash, making its fair value insensitive to interest rate changes[400](index=400&type=chunk) - The company has cash balances at five financial institutions that exceed the FDIC insurance limit, but management believes the risk of loss is not significant[401](index=401&type=chunk) - Management does not believe that inflation has had a material effect on the business, financial condition, or results of operations[402](index=402&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=69&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2021-2023, including independent auditor reports and detailed financial disclosures - This item incorporates by reference the company's consolidated financial statements and supplementary data, which begin on page F-1 of the report[403](index=403&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=69&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[404](index=404&type=chunk) [Item 9A. Controls and Procedures](index=69&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2023, due to multiple material weaknesses in internal control over financial reporting, leading to prior financial statement restatements - Management concluded that disclosure controls and procedures were not effective as of December 31, 2023[406](index=406&type=chunk) - Multiple material weaknesses were identified, including deficiencies in the control environment, risk assessment, and monitoring activities at the entity level[411](index=411&type=chunk) - Specific material weaknesses include ineffective IT general controls for change management and access controls, and ineffective process-level controls for the order-to-cash and procure-to-pay cycles[412](index=412&type=chunk)[413](index=413&type=chunk) - The material weakness in the order-to-cash cycle resulted in the restatement of the unaudited financial statements for the first three quarters of 2023[413](index=413&type=chunk) - The company has started the process of developing and implementing a remediation plan to address these weaknesses[414](index=414&type=chunk) [Item 9B. Other Information](index=71&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[415](index=415&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=71&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable - Not applicable[416](index=416&type=chunk) [Part III](index=72&type=section&id=Part%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=72&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's directors and executive officers, highlighting the board's independent majority, its four standing committees, and adopted governance policies - Douglas Francis, a co-founder, serves as Executive Chair and Principal Executive Officer[419](index=419&type=chunk) - The Board of Directors has determined that **six** of its directors are independent under Nasdaq listing standards[428](index=428&type=chunk)[429](index=429&type=chunk) - Brenda Freeman serves as the lead independent director, providing a balance to the combined role of Executive Chair and principal executive officer[431](index=431&type=chunk)[433](index=433&type=chunk) - The Board has four standing committees: Audit, Compensation, Nominating and Corporate Governance, and Technology, each with a specific charter and responsibilities[439](index=439&type=chunk) - The company has adopted a Code of Conduct applicable to all employees, officers, and directors, as well as Corporate Governance Guidelines[457](index=457&type=chunk)[458](index=458&type=chunk) [Item 11. Executive Compensation](index=80&type=section&id=Item%2011.%20Executive%20Compensation) The 2023 executive compensation program for NEOs included base salary, cash bonuses, and performance-based equity awards, with a significant variable component tied to revenue and Adjusted EBITDA targets - The Named Executive Officers for 2023 were Douglas Francis, Brian Camire, and Duncan Grazier[466](index=466&type=chunk) 2023 NEO Base Salaries and Bonuses | Named Executive Officer | 2023 Base Salary | 2023 Target Bonus | Actual 2023 Cash Bonus | | :--- | :--- | :--- | :--- | | Douglas Francis | $1,020,000 | N/A | $700,000 (Signing Bonus) | | Brian Camire | $410,000 | $205,000 | $181,425 | | Duncan Grazier | $408,171 (blended) | $212,500 | $188,062 | - The 2023 short-term incentive plan for Messrs. Camire and Grazier was based on Revenue and Adjusted EBITDA goals, achieving **66.5%** of target. The Compensation Committee approved a discretionary increase, bringing the total payout to **88.5%** of target[490](index=490&type=chunk) - In September 2023, Mr. Grazier and Mr. Camire received RSU awards with grant date fair values of **$914,718** and **$865,218**, respectively, which vest quarterly over three years[496](index=496&type=chunk)[498](index=498&type=chunk)[499](index=499&type=chunk) - Performance-based RSU (PRSU) awards granted in 2021 for the 2022-2023 performance period vested at **25%** of target, as the company did not achieve the threshold Revenue CAGR metric but did achieve the Adjusted EBITDA Margin metric[505](index=505&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=93&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of May 13, 2024, directors and executive officers collectively owned **23.2%** of total voting power, with co-founders holding significant individual stakes Beneficial Ownership and Voting Power (as of May 13, 2024) | Name of Beneficial Owner | Combined % of Total Voting Power | | :--- | :--- | | All Directors and Executive Officers (10 Individuals) | 23.2% | | Douglas Francis (Executive Chair) | 18.4% | | Justin Hartfield (Co-founder) | 19.5% | | Tony Aquila (Director) | 3.5% | | Morgan Stanley | 4.0% | | James J. Pallotta | 3.3% | - The beneficial ownership percentages are based on **150,538,096** shares of Class A and Class V Common Stock outstanding[550](index=550&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=95&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This section details related party transactions, including the Tax Receivable Agreement requiring **85%** of tax savings to original unitholders, and 2023 transactions with Executive Chair Douglas Francis's affiliated entities - The company has a Tax Receivable Agreement (TRA) requiring it to pay **85%** of the cash savings from certain tax benefits to the original Class A Unit holders[575](index=575&type=chunk) - In 2023, Shield Management Group, LLC, an entity majority-owned by Executive Chair Douglas Francis, paid the company **$427,797** for listing products and brand promotion[586](index=586&type=chunk) - In 2023, Glasir Group, LLC, a business owned by Mr. Francis and his spouse, paid the company **$169,095** for a sublease of its Irvine office space[587](index=587&type=chunk) - The company holds a promissory note from Silver Spike Holdings, an affiliate of a board member, for **$1.1 million** in reimbursable transaction costs from the 2021 business combination. The remaining balance was **$0.7 million** as of year-end 2023[584](index=584&type=chunk) - The Board has adopted a written Related Person Transactions Policy, requiring Audit Committee review and approval of transactions exceeding **$120,000** involving a related person[589](index=589&type=chunk) [Item 14. Principal Accountant Fees and Services](index=100&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Moss Adams LLP billed **$2,124,250** in aggregate fees for FY2023, a significant increase from 2022, primarily for audit and audit-related services pre-approved by the Audit Committee Accountant Fees (in thousands) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $2,066,100 | $842,400 | | Audit-Related Fees | $58,150 | $19,440 | | **Total Fees** | **$2,124,250** | **$861,840** | - All fees were pre-approved by the Audit Committee in accordance with its policy[596](index=596&type=chunk)[597](index=597&type=chunk) [Part IV](index=101&type=section&id=Part%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=101&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and various exhibits filed with the Annual Report, including key corporate and contractual documents - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K[600](index=600&type=chunk)[603](index=603&type=chunk) - All financial statement schedules were omitted as they were not applicable or the required information was included elsewhere[602](index=602&type=chunk) [Item 16. Form 10-K Summary](index=103&type=section&id=Item%2016.%20Form%2010-K%20Summary) Not applicable - Not applicable[606](index=606&type=chunk)

[Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements based on current expectations that are subject to substantial risks and uncertainties - The report contains forward-looking statements regarding future results, business strategy, market opportunity, and other operational plans[9](index=9&type=chunk) - Key areas covered by forward-looking statements include financial performance, client acquisition, product launches, competitive advantages, capital requirements, and the impact of macroeconomic conditions and regulatory changes in the cannabis industry[11](index=11&type=chunk) - The company explicitly states that these forward-looking statements are subject to risks and uncertainties and that actual results may differ materially[10](index=10&type=chunk)[12](index=12&type=chunk) Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the period ending September 30, 2023 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $178.7 million as of September 30, 2023, from $199.0 million at year-end 2022 Condensed Consolidated Balance Sheet Data (in thousands) | | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $46,929 | $54,983 | | **Total assets** | $178,694 | $199,035 | | **Total current liabilities** | $31,088 | $46,323 | | **Total liabilities** | $63,912 | $84,258 | | **Total stockholders' equity** | $114,782 | $114,777 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2023 revenue was $47.7 million, with a net loss narrowing to $2.5 million from $10.5 million in Q3 2022 Q3 2023 vs Q3 2022 Statement of Operations (in thousands) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net revenues | $47,725 | $50,500 | | Total operating expenses | $53,273 | $70,145 | | Operating loss | $(5,548) | $(19,645) | | Net loss | $(2,512) | $(10,464) | | Basic and diluted loss per share | $(0.02) | $(0.06) | Nine Months 2023 vs 2022 Statement of Operations (in thousands) | Metric | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | Net revenues | $146,584 | $166,246 | | Total operating expenses | $152,497 | $213,169 | | Operating loss | $(5,913) | $(46,923) | | Net loss | $(4,498) | $(21,849) | | Basic and diluted loss per share | $(0.03) | $(0.09) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $12.4 million for the nine months ended September 30, 2023, a significant year-over-year improvement Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $12,410 | $(10,466) | | Net cash used in investing activities | $(8,870) | $(14,848) | | Net cash used in financing activities | $(4,402) | $(8,293) | | **Net decrease in cash** | **$(862)** | **$(33,607)** | | **Cash – end of period** | **$27,721** | **$34,170** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue recognition, and impairment charges related to sunsetting products - The company operates an online cannabis marketplace (Weedmaps) and provides a suite of eCommerce and compliance SaaS solutions (Weedmaps for Business) to retailers and brands[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - Approximately **52% of revenue for Q3 2023** and 54% for the nine months ended September 30, 2023, originated from California, indicating a geographic concentration risk[44](index=44&type=chunk) - The company recorded an impairment charge of **$6.1 million on intangible assets** and **$2.3 million on property and equipment** in Q3 2023 related to certain product offerings expected to be sunset in December 2023[58](index=58&type=chunk)[61](index=61&type=chunk) Disaggregated Net Revenues (in thousands) | Revenue Source | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Weedmaps for Business and other SaaS | $10,877 | $12,383 | $33,847 | $38,093 | | Featured and deal listings | $32,945 | $34,644 | $101,840 | $116,709 | | Other WM Ad solutions | $3,903 | $3,473 | $10,897 | $11,444 | | **Total net revenues** | **$47,725** | **$50,500** | **$146,584** | **$166,246** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 5% year-over-year revenue decline to $47.7 million in Q3 2023, offset by cost reductions and improved profitability [Key Operating and Financial Metrics](index=34&type=section&id=Key%20Operating%20and%20Financial%20Metrics) Key metrics show a decline in paying clients and revenue per client, but a significant improvement in Adjusted EBITDA Key Metrics Comparison | Metric (in thousands, except client data) | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $47,725 | $50,500 | $146,584 | $166,246 | | Net loss | $(2,512) | $(10,464) | $(4,498) | $(21,849) | | Adjusted EBITDA | $10,671 | $(9,630) | $28,028 | $(11,178) | | Average monthly revenue per paying client | $2,938 | $3,019 | $2,932 | $3,433 | | Average monthly paying clients | 5,414 | 5,576 | 5,555 | 5,380 | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q3 2023 results show a 5% revenue decrease but a 24% reduction in operating expenses, driven by cost-cutting initiatives - Q3 2023 net revenues **decreased by $2.8 million (5%) YoY**, driven by lower revenue from Weedmaps for Business subscriptions and Featured Listings products[207](index=207&type=chunk) - Sales and marketing expenses for Q3 2023 **decreased by $6.3 million (35%) YoY**, primarily due to a $6.3 million reduction in personnel-related costs from lower headcount[209](index=209&type=chunk) - General and administrative expenses for Q3 2023 **decreased by $14.3 million (43%) YoY**, mainly due to an $8.9 million decrease in the provision for doubtful accounts and lower personnel costs[212](index=212&type=chunk) - Depreciation and amortization for Q3 2023 **increased by $9.3 million (369%) YoY**, largely due to an **$8.4 million impairment loss** on intangible assets and property related to the decision to sunset certain product offerings[213](index=213&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $27.7 million in cash and generated $12.4 million from operations in the first nine months of 2023 Key Liquidity Figures (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash | $27,721 | $28,583 | | Accounts receivable, net | $12,314 | $17,438 | | Working capital | $15,841 | $8,660 | - For the nine months ended September 30, 2023, **net cash provided by operating activities was $12.4 million**, compared to net cash used of $10.5 million in the same period of 2022[234](index=234&type=chunk)[235](index=235&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is marked as not applicable in the report - The company states that this item is not applicable[259](index=259&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to a material weakness in IT general controls, with remediation underway - Disclosure controls and procedures were deemed **not effective** as of September 30, 2023, due to a material weakness in internal control over financial reporting[260](index=260&type=chunk) - The material weakness relates to ineffective IT general controls (ITGCs) in user access and program change-management, where developers had excessive administrative rights and monitoring was insufficient[261](index=261&type=chunk) - Remediation actions, including removing excessive access and enhancing monitoring, have been implemented and the company expects the material weakness to be fully remediated by the end of the year ending December 31, 2023[262](index=262&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with an SEC investigation regarding its calculation of monthly active users - The company is involved in an **SEC investigation** following a voluntary report of an internal complaint about the calculation and reporting of its monthly active users (MAUs) metric[267](index=267&type=chunk) - The SEC's Division of Enforcement has issued two subpoenas for documents and also subpoenaed several current and former employees for testimony, which took place in July and August 2023[267](index=267&type=chunk) - The company states it is fully cooperating with the investigation, but the outcome is uncertain and could lead to penalties, sanctions, and reputational harm[267](index=267&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors are reported for the period - There have been **no material changes** to the risk factors disclosed in the 2022 Form 10-K and the prior Form 10-Q[269](index=269&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is marked as 'None' in the report - The company reports no unregistered sales of equity securities during the period[270](index=270&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including employment agreements and officer certifications - The report includes several exhibits, such as an Executive Services Agreement, an Employment Agreement with Douglas Francis, and a Separation and Release Agreement with Randa McMinn[275](index=275&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act of 2002, are also filed as exhibits[275](index=275&type=chunk)

Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents WM Technology, Inc.'s unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, Equity, and Cash Flows, with detailed accounting policy notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $47,264 | $54,983 | | **Total Assets** | $188,742 | $199,035 | | **Total Current Liabilities** | $32,597 | $46,323 | | **Total Liabilities** | $68,268 | $84,258 | | **Total Stockholders' Equity** | $120,474 | $114,777 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $50,852 | $58,294 | $98,859 | $115,746 | | **Operating Income (Loss)** | $3,783 | $(13,018) | $(365) | $(27,278) | | **Net Income (Loss)** | $1,983 | $19,848 | $(1,986) | $(11,385) | | **Net Income (Loss) attributable to WM Technology, Inc.** | $1,226 | $11,692 | $(1,249) | $(2,201) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $4,092 | $(3,814) | | **Net cash used in investing activities** | $(5,806) | $(10,267) | | **Net cash used in financing activities** | $(2,266) | $(6,092) | | **Net decrease in cash** | $(3,980) | $(20,173) | | **Cash – end of period** | $24,603 | $47,604 | [Business and Organization](index=12&type=section&id=1.%20Business%20and%20Organization) - The company operates a leading online cannabis marketplace (Weedmaps) and provides a comprehensive suite of eCommerce and compliance SaaS solutions (Weedmaps for Business) to retailers and brands[33](index=33&type=chunk)[34](index=34&type=chunk) - The business model is based on monthly subscriptions for its core package (WM Listings, WM Orders, WM Store, etc.) and additional fees for add-on products like WM Ads, WM CRM, and WM Dispatch[35](index=35&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - As of June 30, 2023, the company actively operated in over 30 U.S. states and territories, with a presence in Canada and non-monetized listings in several European countries[39](index=39&type=chunk)[41](index=41&type=chunk) [Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Disaggregation of Revenue (in thousands) | Revenue Source | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Weedmaps for Business and other SaaS solutions | $11,286 | $12,973 | | Featured and deal listings | $35,401 | $40,595 | | Other ad solutions | $4,165 | $4,726 | | **Total revenues** | **$50,852** | **$58,294** | - The company determined in Q4 2022 that a full valuation allowance was required against its net deferred tax assets, which impacts the income tax provision. As a result, the company recorded **zero income tax provision** for the three and six months ended June 30, 2023[108](index=108&type=chunk)[113](index=113&type=chunk) - The company's revenue is primarily derived from monthly subscriptions for access to its marketplace and SaaS solutions, with revenue recognized over the subscription term. Substantially all revenue was generated in the United States[88](index=88&type=chunk)[96](index=96&type=chunk) [Fair Value Measurements](index=23&type=section&id=4.%20Fair%20Value%20Measurements) Warrant Liability at Fair Value (in thousands) | Warrant Type | Fair Value Hierarchy | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | :--- | | Public Warrants | Level 1 | $1,500 | $1,250 | | Private Placement Warrants | Level 3 | $910 | $840 | | **Total Warrant Liability** | | **$2,410** | **$2,090** | - The company recorded a non-cash **loss of $1.0 million** and **$0.3 million** for the three and six months ended June 30, 2023, respectively, due to the change in fair value of its warrant liabilities. This compares to non-cash **gains of $32.2 million** and **$14.0 million** in the same periods of 2022[146](index=146&type=chunk) [Stock-based Compensation](index=28&type=section&id=10.%20Stock-based%20Compensation) Stock-Based Compensation Expense (in thousands) | Period | 2023 | 2022 | | :--- | :--- | :--- | | **Three Months Ended June 30** | $3,709 | $8,094 | | **Six Months Ended June 30** | $8,092 | $15,611 | - As of June 30, 2023, total unrecognized stock-based compensation expense for non-vested RSUs was **$28.8 million**, expected to be recognized over a weighted-average period of **2.1 years**[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a **13% year-over-year revenue decrease** for Q2 2023, driven by lower average revenue per client, while achieving operating income through significant expense reductions [Key Operating and Financial Metrics](index=35&type=section&id=Key%20Operating%20and%20Financial%20Metrics) Key Metrics Comparison (in thousands, except per client data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenues | $50,852 | $58,294 | | Net income (loss) | $1,983 | $19,848 | | Adjusted EBITDA | $10,227 | $(595) | | Average monthly revenue per paying client | $3,022 | $3,509 | | Average monthly paying clients | 5,609 | 5,537 | - Average monthly paying clients increased by **1% YoY** for the three months ended June 30, 2023, primarily due to new client acquisitions. However, average monthly revenue per paying client declined due to reduced spending in established markets amid client liquidity challenges[210](index=210&type=chunk)[213](index=213&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Comparison of Three Months Ended June 30, 2023 and 2022 (in thousands) | Line Item | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $50,852 | $58,294 | $(7,442) | (13)% | | **Total operating expenses** | $47,069 | $71,312 | $(24,243) | (34)% | | **Operating income (loss)** | $3,783 | $(13,018) | $16,801 | N/M | - Sales and marketing expenses for Q2 2023 decreased by **$9.6 million (43%) YoY**, driven by a **$6.4 million reduction** in personnel-related costs from lower headcount and bonuses[244](index=244&type=chunk) - General and administrative expenses for Q2 2023 decreased by **$10.4 million (35%) YoY**, primarily due to lower personnel-related costs (**$4.9 million**), insurance expense (**$1.7 million**), and professional services (**$1.8 million**)[246](index=246&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity Position (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash | $24,603 | $28,583 | | Working capital | $14,667 | $8,660 | - Net cash provided by operating activities was **$4.1 million** for the six months ended June 30, 2023, a significant improvement from the **$3.8 million used** in the same period of 2022. This was despite a **$13.5 million decrease** in accounts payable and accrued expenses, which included an **$8.5 million payout** related to a prior acquisition[270](index=270&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The company believes existing cash and cash generated from operations will be sufficient to meet its anticipated cash needs for at least the **next 12 months**[267](index=267&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this section is not applicable, indicating no material quantitative or qualitative disclosures about market risk are required for this reporting period - The company has determined that there are no applicable quantitative and qualitative disclosures about market risk to report for this period[293](index=293&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were not effective due to a material weakness in IT general controls, with remediation expected by year-end 2023 - Disclosure controls and procedures were concluded to be **ineffective** as of June 30, 2023, due to a material weakness in internal control over financial reporting[294](index=294&type=chunk) - The material weakness relates to ineffective IT general controls (ITGCs) in user access and program change-management over certain financial reporting systems. This weakness did not result in any identified misstatements[295](index=295&type=chunk)[296](index=296&type=chunk) - Management has implemented remediation measures, including removing direct production access for certain users and enhancing monitoring. The company expects remediation to be complete by the **end of the year ending December 31, 2023**[297](index=297&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with an SEC investigation initiated after a voluntary report of an internal complaint regarding the calculation of its historical Monthly Active Users (MAUs) metric, involving subpoenas for information and testimony - The company is cooperating with an SEC investigation that began after it voluntarily reported an internal complaint about the calculation of its Monthly Active Users (MAU) metric[302](index=302&type=chunk) - The SEC's Division of Enforcement has issued **two subpoenas** for information and documents, and has also subpoenaed current and former employees for testimony[302](index=302&type=chunk) - The company states that the original internal investigation found **no impact** on its GAAP financial results or currently disclosed non-GAAP metrics[302](index=302&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) A key risk factor is the company's dependence on banking relationships, as financial institutions may be reluctant to serve businesses associated with the cannabis industry, potentially impacting financial services access - A primary risk is the difficulty in maintaining banking relationships due to the company's connection to the cannabis industry, despite not selling cannabis products directly[305](index=305&type=chunk) - Banks may be reluctant to serve the company because of its name and revenue sources, which could jeopardize payroll, client payments, and access to credit[306](index=306&type=chunk)[309](index=309&type=chunk) - Recent actions by Visa and Mastercard to prohibit cannabis sale transactions on their networks could extend to cannabis-related businesses, potentially terminating the company's merchant processing relationships and adversely affecting business[309](index=309&type=chunk)

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WM Technology, Inc. (NASDAQ:MAPS) Q1 2023 Earnings Conference Call May 9, 2023 5:00 PM ET Company Participants Greg Stolowitz - Vice President, Investor Relations Doug Francis - Executive Chair Arden Lee - Chief Financial Officer Conference Call Participants Brett Knoblauch - Cantor Fitzgerald Operator Good day and thank you for standing by. Welcome to the WM Technology, Inc. Q1 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a qu ...

Part I - Financial Information [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The company's Q1 2023 financials show decreased revenue and total assets, but a significantly narrowed net loss and improved operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased as of March 31, 2023, while stockholders' equity saw a slight increase Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $25,902 | $28,583 | | Accounts receivable, net | $15,401 | $17,438 | | Total current assets | $48,169 | $54,983 | | Total assets | $190,626 | $199,035 | | **Liabilities & Equity** | | | | Accounts payable and accrued expenses | $26,170 | $33,635 | | Total current liabilities | $39,708 | $46,323 | | Total liabilities | $75,387 | $84,258 | | Total stockholders' equity | $115,239 | $114,777 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2023 revenue declined year-over-year, but a significant reduction in operating expenses led to a much smaller net loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenues | $48,007 | $57,452 | | Total operating expenses | $52,155 | $71,712 | | Operating loss | $(4,148) | $(14,260) | | Net loss | $(3,969) | $(31,233) | | Net loss attributable to WM Technology, Inc | $(2,475) | $(13,893) | | Basic and diluted loss per share | $(0.03) | $(0.19) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated positive cash from operations in Q1 2023, a reversal from the prior year, though the overall cash balance decreased Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,157 | $(3,850) | | Net cash used in investing activities | $(3,226) | $(4,914) | | Net cash used in financing activities | $(1,612) | $(3,156) | | **Net decrease in cash** | **$(2,681)** | **$(11,920)** | | Cash – end of period | $25,902 | $55,857 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's business model, accounting policies, warrant liabilities, and the establishment of a full valuation allowance - The company operates a B2C online cannabis marketplace (Weedmaps) and a B2B suite of SaaS solutions (Weedmaps for Business) for cannabis retailers and brands[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - A **full valuation allowance** was established against the company's net deferred tax assets in the fourth quarter of 2022 due to uncertainty about future taxable income[101](index=101&type=chunk) - The allowance for doubtful accounts **increased to $13.4 million** as of March 31, 2023, from $12.2 million at the end of 2022[61](index=61&type=chunk)[62](index=62&type=chunk) - Warrant liabilities are measured at fair value, with changes recognized in the statement of operations, resulting in a **gain of $0.7 million in Q1 2023**, compared to a loss of $18.2 million in Q1 2022[80](index=80&type=chunk)[145](index=145&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 16% revenue decline due to lower client spending, offset by significant cost reductions that drove positive Adjusted EBITDA [Key Operating and Financial Metrics](index=36&type=section&id=Key%20Operating%20and%20Financial%20Metrics) Q1 2023 saw lower revenue and average revenue per client, but a narrowed net loss, positive Adjusted EBITDA, and growth in paying clients Key Metrics Comparison (Q1 2023 vs Q1 2022) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues | $48,007 thousand | $57,452 thousand | | Net loss | $(3,969) thousand | $(31,233) thousand | | Adjusted EBITDA | $7,130 thousand | $(953) thousand | | Average monthly revenue per paying client | $2,837 | $3,810 | | Average monthly paying clients | 5,641 | 5,026 | - The increase in average monthly paying clients was primarily due to new client acquisitions, but this was offset by a **decline in average revenue per client** due to spending declines in established markets and client liquidity challenges[210](index=210&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) A 16% revenue decrease in Q1 2023 was more than offset by a 27% reduction in operating expenses, improving the operating loss - Revenues **decreased by $9.4 million (16%) YoY**, primarily due to a decrease in revenue from featured and deal listing products[236](index=236&type=chunk) - Sales and marketing expenses **decreased by $9.8 million (45%) YoY**, mainly from reductions in personnel-related costs, website advertising, and outside services[238](index=238&type=chunk) - General and administrative expenses **decreased by $6.6 million (23%) YoY**, driven by lower personnel costs, insurance, and bad debt expense[241](index=241&type=chunk) - Other income was positively impacted by a **$18.9 million favorable change** in the fair value of warrant liability compared to the prior year period[244](index=244&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company generated positive operating cash flow and believes its current cash position is sufficient for the next 12 months Liquidity Position (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash | $25,902 | $28,583 | | Accounts receivable, net | $15,401 | $17,438 | | Working capital | $8,461 | $8,660 | - Net cash provided by operating activities was **$2.2 million for Q1 2023**, compared to net cash used of $3.9 million in Q1 2022[252](index=252&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The company expects to fund its liquidity requirements from cash on hand and cash provided by operating activities, and believes it has **sufficient funds for at least the next 12 months**[248](index=248&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports that its exposure to foreign currency, interest rate, and inflation risks is not material - The impact of foreign currency exchange rate fluctuations on assets and liabilities is **considered insignificant**[276](index=276&type=chunk) - The company's portfolio is **insensitive to interest rate changes** as it only holds cash, and a hypothetical 100 basis point change would not have a material effect[278](index=278&type=chunk) - Management does not believe inflation had a **material effect** on the business during the first quarter of 2023[279](index=279&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to a material weakness in IT general controls, with remediation efforts underway - Disclosure controls and procedures were deemed **not effective** as of March 31, 2023, due to a material weakness in internal control over financial reporting[280](index=280&type=chunk) - The material weakness relates to **ineffective IT general controls (ITGCs)** in user access and program change-management over certain financial reporting systems[281](index=281&type=chunk) - Remediation actions are in progress, including removing privileged access and enhancing monitoring, with the company expecting **remediation to be complete by the end of 2023**[282](index=282&type=chunk) Part II - Other Information [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with an ongoing SEC investigation related to its historical calculation of Monthly Active Users - The company is cooperating with an **SEC investigation** following a voluntary report of an internal complaint about the calculation of its historical Monthly Active Users (MAUs) metric[287](index=287&type=chunk) - The SEC has issued **two subpoenas to the company** for information and documents, as well as subpoenas to several current and former employees for testimony[287](index=287&type=chunk) - The internal investigation found **no impact on the company's GAAP financial results** or currently disclosed non-GAAP metrics[287](index=287&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been made to the risk factors disclosed in the company's 2022 Annual Report on Form 10-K - There have been **no material changes** to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K[289](index=289&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the reporting period - None[290](index=290&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including required officer certifications - Lists required filings such as officer certifications (31.1, 31.2, 32.1) and Inline XBRL documents[295](index=295&type=chunk)

WM Technology, Inc. (NASDAQ:MAPS) Q4 2022 Earnings Conference Call March 16, 2023 5:00 PM ET Company Participants Greg Stolowitz - Vice President, Investor Relations Doug Francis - Executive Chair Arden Lee - Chief Financial Officer Juan Feijoo - Chief Operating Officer Conference Call Participants DJ Hynes - Canaccord Genuity W. Andrew Carter - Stifel Financial Corp. Tom Champion - Piper Sandler Operator Thank you for standing by. Welcome to the WM Technology, Inc. Fourth Quarter 2022 Earnings Conference C ...