WM Technology, Inc.

Good afternoon, everyone, and welcome to the WM Technology, Inc.' 's fourth quarter 2021 earnings conference call. I would now like to turn the call over to your host, Greg Stolowitz, Vice President and Investor Relations and Corporate Development.

Hi, everyone. Thanks for joining our Q4 2021 earnings conference call. We have Chris Beals, our CEO, and Arden Lee, our CFO, with us today. By now, everyone should have access to our earnings announcement. This announcement is also on our investor relations website, along with a supported slide deck. During this call, we'll make forward-looking statements, including statements about our business, outlook strategies, and long-term goals. These statements are not guarantees of future performance. They 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 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's website and our Investor Relations website, as well as the risk and other important factors discussed in today's earnings release. Also during this call, we'll discuss certain non-GAAP financial measures, which are not intended to be a substitute for our reported GAAP results. Reconciliation of these measures to our GAAP results can be found in our earnings release. And finally, this call in its entirety is being broadcast from our investor relations website, and an audio replay will be available on our website in a few hours. With that, I'd like to turn the call over to Chris.

Thanks, Greg. And hello to everyone on today's call. We have a lot of exciting developments to cover. But before I do, I'm going to take a moment to highlight what an incredible place we're in right now as a company. Not only do we cap off a year of really strong revenue growth, we are by far and away in the strongest place we've ever been as a company. And we did all of this while maintaining our commitment to fiscal discipline, building on our over 10 years of continuous profitability. With that, I'll jump right into it. Looking at our Q4 and full fiscal year, our business results highlighted the strength and resiliency of the WeedMaps model and the unique competitive advantage we have as the industry's leading marketplace and technology platform. In many ways, we're providing essential services to the cannabis sector. In Q4, We generated $54 million in revenue, or 39% year-over-year growth in the U.S., with full-year revenue of $193 million, or 48% year-over-year growth in the U.S. Our growth exceeded the guidance we set last quarter and comes at a time when in-market cannabis demand and license channels continues to be sluggish across a number of markets. In times like these, the strong only gets stronger, and Q4 made this reality clearer than ever. As many of our in-markets saw mid-single to double-digit declines in licensed volumes for Q4 versus Q3, we're able to grow our revenue by mid-single digits versus Q3. We also added over 300 new paying clients during the quarter and expanded our share of licensees in the U.S. meaningfully. We believe that our clients fundamentally see not just the value of their spend on our platform, but also how the Weedmaps marketplace and our WM business solutions are vitally essential to their ability to survive and thrive in the current environment. WM Tech's growth has been and will continue to be driven by three areas that I'll walk through today. One, driving deep client engagement with cannabis retailers and brands across all regulated markets. Two, establishing Weedmaps as the center of commerce for consumers seeking cannabis in all markets. Three, expanding adoption of our WM business solutions to enhance the client and user experience of Weedmaps. So first, let's discuss how we drive client engagement. Our focus throughout most of 2021 has been on meeting clients where they are. With the continued increase in the number of cannabis businesses, it's critical that retailers and brands leverage the most efficient channels to stay front and center with frequent cannabis consumers and offer more ways to surface promotions and deals to get revenue from customers who are seeking value. Businesses looking to grow in tough demand environments must invest to grow, and they must invest wisely in channels that deliver tangible and outsized returns on spend. Environments like these provide opportunities for our team to advise clients on making ROI and base decisions to allocate spend, and we did just that through training initiatives and other investments in our client-facing teams, as well as developing product features that help make the return on investment crystal clear to our clients. To that end, we launched several tools for our clients, including the rollout of our new Admin 2.0, which is the primary surface where we drive client engagement and cross-sell. Our new Admin 2.0 features highly visible dashboards on listing traffic trends and other return on ad spend metrics, in addition to various calls to action to drive higher listing performance by leveraging our solutions. Separately, we introduced several new features to assist clients in showcasing deals and promotions. We've streamlined the process for our clients to create deals on Weedmaps and make them more discoverable across our marketplace. This is allowing us to drive increasing user conversion. During Q4, for example, we saw over a 30% increase in deals published and a 50% increase in users claiming deals on our marketplace. We also saw average order values increased by over 15% for users utilizing deals or promo codes. We also have continued to invest behind our client support operations, which has meaningfully improved service levels and response times across our entire client base for our full suite of products. These are just a few examples of how we've helped our clients drive growth and see the returns on spend in the current environment. Moving on to my second point, we're relentlessly focused on building upon Weedmaps' position with cannabis consumers as the destination with what we believe is the broadest product selection, the most accurate product information, and the best values in all of cannabis. Weedmaps has historically been synonymous with cannabis, and we're continuing to work on enhancing the experience in our marketplace to drive higher levels of user growth and conversion. Our teams have been actively testing numerous ways to drive user engagement. whether through personalized experiences on our menu surfaces, express reordering for repeat order users, or the ability to order directly from our brand listing pages, just to name a few initiatives. We've continued to improve the accuracy of product information on Marketplace with the continued expansion of live menus. We launched a new weekly sweepstakes contest in quarter four called Snag the Bag, allowing Weedmaps app users to win cash prizes and merchandise. We also started to leverage our 13 years of transactional data to build powerful personalization for consumers to help guide them to what products and brands to purchase. These are just several examples of how we've improved user growth and engagement in our marketplace, as evidenced by the over 50% year-over-year growth in our monthly active users we saw in Q4. My third point is about expanding adoption of our e-comm enablement and compliance software, or what we call WM Business, which improves the marketplace experience for our clients and users. The software we offer through WM Business creates labor and time savings for our clients and works hand in glove with Weedmaps Marketplace by providing the power tools for our clients to easily set up their Weedmaps digital presence with accurate menus and ways to convert users to order, compliantly fill demand, and retarget users either through our Marketplace or their own website, all powered by WM Business. To that end, we have continued to broaden the availability of our menu and orders integration. which in turn is driving more adoption of our orders functionality and our WM store e-comm embed. For those new to our story, that offering is essentially Shopify for cannabis. Our team has also been actively working on integrating the recent acquisitions of Sprout, Canva, and Concurrent as we look to scale these solutions this year. One example of that is we are building functionality to allow businesses using Sprout to message and target the consumers who follow their business within the Weedmaps marketplace. As we look ahead to fiscal year 22, the opportunities for WM technology are significant. We remain more bullish than ever in our long-term strategy and growth runway. Consumer demand for cannabis is stronger than ever, and with increasing license issuance across existing markets and new state openings, we'll see more consumer demand shift to license channels, which in and of itself creates demand for our marketplace and software. We're also seeing continual growth in the number of regular cannabis consumers across the jurisdictions in which we operate. As the industry's leading marketplace and technology platform, our goal isn't merely to grow share, it's to grow the entire market. I'm particularly excited by several products and client-driven opportunities for fiscal year 22. I spoke last quarter about the opportunity we have with multi-state operators, or MSOs, and brands. We've barely scratched the surface of what's possible with these client segments. For example, our revenue with MSOs grew by over 50% last year. Yet, this client segment is still less than 5% of our total revenue. I also spoke last quarter about the special needs of these clients. MSOs are seeking a one-stop shop to optimize their spend across all user acquisition channels and across all the varied jurisdictions in which they operate. And they increasingly want to make those spending decisions leveraging data and customer segmentation and targeting. They require bespoke tech solutioning services to integrate their operations. Brands are looking for more ways to reach consumers directly at scale and are desperately seeking better data and visibility on performance. Our recently acquired capabilities, as well as the solutions we pilot in Q4, such as our multi-channel media and revamped brand offerings, are already driving strategic client wins as we start this year. As a result of piloting these initiatives, we've had sizable increases in spend commitments and new client wins across several top MSOs and brands, and have plans to meaningfully increase the share of business that we do with these client segments in fiscal year 22. We've also invested in better servicing these client segments and have built dedicated MSO and brand client-facing teams, both on the go-to-market and technical support sides. I'm also excited by the new states that are coming online this year. In Montana, with the shift to adult use in January, our regional teams were actively onboarding operators in Q4 and have already achieved nearly 20% licensee share in that market. Our teams are gearing up for the launch of New Mexico adult use sales later this spring and have already onboarded most of the multi-location operators within that market. As we look towards the East Coast, we plan to invest heavily ahead of the tri-state area opening later this year and in early 2023. As many of you know, these states have structured their licensing programs to support a balanced approach to both enterprise and SMB businesses, with New York and Connecticut, for example, earmarking half of all licenses for social equity candidates, and New Jersey earmarking nearly 30%. We believe these markets will be more functional out of the gate than states like Illinois or Florida that continue to lack a balance between supply and demand. While we wait for licensees to become operational in these markets, we've already begun outreach efforts in these areas, including hosting local social equity workshops and live education events to generate awareness of both Weedmaps and WM Business. We've also continued to invest behind our regional client-facing teams, which will drive early momentum as we attack these markets. We also see a lot of potential internationally as countries like Germany and Portugal inch their way towards legalization. In light of these opportunities, we're revisiting the approach we have to our international strategy. Our international footprint is an underappreciated part of our story. We've had a very central presence in the European Union for almost a decade, and our marketplace platform is widely used in Spain as an information resource for their cannabis social clubs. In many ways, this was a bellwether investment in the nascent EU opportunity, and while we currently have listings in Germany, Spain, Austria, the Netherlands, and Switzerland, we don't yet monetize these regions. That's a huge long-term opportunity for us that we're reevaluating in light of the tide of legalization across Europe. To position ourselves, we plan to begin localizing the Weedmaps app this year and lay the groundwork as these countries head toward cannabis legalization. We're also revisiting our approach to Canada and evaluating how we tailor our solutions to take a more product-driven monetization strategy as that region continues to be challenged with less profit potential than what we see in the U.S., Within the U.S., I want to highlight that we've taken a leading role in bringing cannabis conversations into the mainstream. Some of you may have seen recent press around our commercial, Brock Ollie. If you haven't seen it, I encourage you all to go visit our Weedmaps YouTube site. Time to the Super Bowl, we debuted a digital commercial spot which addresses the current social media and content restrictions imposed on legal cannabis businesses and brands for marketing their products and services. The digital ad personifies cannabis as a character named Brock Ali, who, as you may have guessed, resembles a head of broccoli, the vegetable emoji commonly used as a visual representation of cannabis. Our digital ad struck a nerve in an important national discourse and was covered extensively in the press, with over 325 million media impressions and feature stories in outlets including Adweek, Fox Business, and Forbes. I also visited Super Bowl's Radio Row this year to talk about sports and cannabis and the censorship we are experiencing in the industry. We'll continue to fight for fair, smart, common sense, and effective policies across many issues that are facing this industry and driving forward the macro growth of the cannabis sector. Lastly, I'd like to thank our WM Technology teammates. While fiscal year 21 was a challenging year for the industry, our team has delivered for our users, clients, and the cannabis community at large. So I just want to take a moment to recognize and personally thank our team. You've demonstrated creativity, teamwork, and resilience, and you're the reason that we are where we are today. I'll now turn things over to Arden to discuss our financial performance.