WM Technology(MAPS)2022-08-09 23:44Financial Data and Key Metrics Changes - The company reported a revenue growth of 24% year-over-year for Q2 2022, primarily driven by an increase in the paying client base [11][37] - The gross margin rate for Q2 was 93%, consistent with Q1, reflecting investments in new client solutions [42] - Adjusted EBITDA for Q2 was minus 1.5 million, falling short of breakeven expectations [48][51] Business Line Data and Key Metrics Changes - The number of paying clients grew by over 30% year-over-year, despite significant churn due to financial challenges faced by clients [23][38] - Average monthly revenue per paying client experienced a mid-single-digit year-over-year decline, offsetting the growth in the number of paying clients [40][54] - The company had to remove nearly 500 clients from the platform or put them on payment plans due to billing issues, primarily affecting clients in California [38][100] Market Data and Key Metrics Changes - The California licensed cannabis market saw a decline of 10% year-over-year in Q2, while the company's California marketplace revenue grew by nearly 10% [41] - The company is planning for a flat to mid-single-digit decline in total revenue for the second half of the year, reflecting ongoing challenges in the market [55][56] Company Strategy and Development Direction - The company is focusing on driving deep client engagement, improving the shopping experience on the Weedmaps marketplace, and expanding the adoption of its software and ad network solutions [22][29] - The strategy includes rigorous cost discipline and preparing for unknowns, with a recent headcount reduction of approximately 10% to create efficiencies [30][36] - The company aims to maintain its position as the platform of choice for cannabis users, retailers, and brands, despite the challenging macro environment [29][64] Management's Comments on Operating Environment and Future Outlook - Management expressed caution for the second half of the year due to inflationary pressures and liquidity challenges faced by clients [14][52] - Despite current challenges, management remains optimistic about long-term growth opportunities, particularly in emerging markets like New York and New Jersey [31][57] - The company is not assuming material revenue contributions from new markets this year, as visibility on license issuance remains unclear [57][60] Other Important Information - The company ended Q2 with $48 million in cash and is comfortable with its liquidity position, indicating no immediate need for outside capital [50] - The company is actively engaging in international markets, with a focus on Canada and potential opportunities in the EU and Mexico [78][79] Q&A Session Summary Question: Monthly paying clients and M&A impact - The company added about a couple of hundred clients via M&A, with the balance being organic growth despite churn [69] Question: ARPU assumptions for the back half - The company expects pressure on revenue per client due to client financial health challenges, offset by growth in paying clients [72][74] Question: Updates on international market - The company is engaging in international markets, with progress in Canada and slow developments in the EU [78][79] Question: Linear performance within the quarter - The company noted that performance tracked with California gas prices, with strong retention early in the quarter but challenges later on [83][86] Question: Transparency on removed clients - The 500 clients removed from the platform were a mix of those unpublished and those on payment plans, with the majority being California-based [100][104] Question: Legislative changes in California - Recent legislative changes include a reduction in state tax on cannabis and grants to local governments to encourage licensing [93][96]