Thank you for standing by. Welcome to the WM Technology, Inc. Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today’s program is being recorded. And now I would like to introduce your host for today’s program, Greg Stolowitz, Vice President of Investor Relations.

Hi, everyone. Thanks for joining us today to discuss our fiscal 2022 fourth quarter results. We have our Executive Chair, Doug Francis; and our CFO, Arden Lee with us today. By now everyone should have access to our earnings announcement. This announcement is also on our Investor Relations website along with the supporting 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-looking statements. For a discussion of risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website in our Investor Relations website as well as the risk and other important factors discussed in today’s earnings release. We specifically disclaim any intent or obligation to update these forward-looking statements except as required by law. For the benefit of those who maybe listening to the replay or archived webcast, this call was held and recorded on March 16, 2023. Since then, we may have made announcements related to the topics discussed, so please refer to the company's most recent press releases and SEC filings. Also during this call, we'll discuss certain non-GAAP financial measures and it isn't to financial information prepared in accordance with GAAP. These non GAAP financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with GAAP. Reconciliation of these measures to Our GAAP results can be found in our earnings presentation available on Investor Relations website. And finally, this call in its entirety is being webcast 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 Doug.

Thanks, Greg, and thanks everyone for joining us. Our fourth quarter results came in where we expected. We posted $49 million in Q4 revenue, $2 million in Q4 adjusted EBITDA and ended the year with $29 million in cash, while continuing to be debt free. Further, we grew our paying clients by double digits versus last year despite challenges in our end markets. In my first quarter back at the helm, our team's focus was stabilizing revenue and getting back to our operating culture of driving profitability. And while there is still work to do, we're pleased with the progress we've made so far and are confident we have the right team and strategy in place. Like many companies, we are facing challenges in the current environment. Inflation is eating into consumer and business spending power. The higher cost of capital is slowing growth, and the fear of a looming recession is front and center on folks minds. The cannabis industry is facing additional headwinds as we deal with over regulation, the slow rollout of new licenses across the country, a lack of government support combined with high taxes from all levels of government, commoditization of cannabis products, frozen capital markets, limited access to banking, and a thriving black market. Cannabis companies need all the help they can get right now. And when they're letting us know that Weedmaps continues to be one of the best ways to engage in active cannabis community and acquire targeted consumers. Our omni-channel approach of integrated digital, in-store events, community engagement and street activations can create hyper local traffic for our clients. Given the nature of our users, each user engagement that we send to our clients, whether online or offline, creates meaningful value, especially in times like these. As we've been getting back…

Thanks, Doug, and hello to everyone on today's call. Our fourth quarter performance reflected the expectations we had on growth heading into the quarter and the actions we took to drive profitability throughout the quarter. Q4 revenue came in at $49 million resulting in a 5% decline for total second half revenue, consistent with our prior guidance. Q4 adjusted EBITDA was a positive $2 million. While our adjusted EBITDA continues to be impacted by provision for doubtful accounts, we saw these non-cash charges narrow in Q4 as we expected. Adjusted EBITDA prior to these charges was $4 million, reflecting the cost reduction actions we took throughout the quarter. While our growth continues to be impacted by end market headwinds, which are driving reduced levels of spend by clients, we continue to expand our client base. Our paying clients grew by 19% versus last year. And when looking at spend levels by existing clients, we're seeing signs of stabilization, with our net dollar retention continuing to hold that levels consistent with the prior quarter. Our net dollar retention within California, which continues to be our largest region at 54% of Q4 revenue expanded in Q4 versus the prior quarter. Q4 adjusted EBITDA of $2 million reflected a 9% reduction in adjusted OpEx versus last year. We rationalize a number of areas across the company reducing excess management layers within our sales and marketing teams, and eliminating our cross functional domain orders in favor of a new centralized operating structure. Our adjusted sales and marketing and G&A declined by 14% and a 11% as a result, with product development increasing by 11% versus last year. We reported a net loss of $61 million for the quarter, which includes $6 million in stock-based compensation along with approximately $56 million in other non-recurring charges.…

[Operator Instructions] And our first question comes from the line of DJ Hynes from Canaccord. Your question please.

Hey guys, thanks for taking the questions. Arden, so really nice progress in the margin front and Q4 and what's implied in Q1. As we think about the historical financial profile of business, is that aspirationally where you think you can get back to? And as we think about the dials are turning to get there, is it more broad based discipline? Are there specific areas where we're taking a more calculated step back?

Yes. [Indiscernible] thanks for that question. Appreciate that. So, a couple things, and let me know if I don't cover fully your questions. We talked in the past about our business model being inheritive -- inherently cash flow, generative. And when we've gone through cycles of accelerating investment, how we've been able to kind of show shortly after that investment acceleration ends the cash flow kind of generation that our business model supports, right. So back in fiscal 2019, when we went -- last went through an investment acceleration year. You'll see in fiscal 2020, I think that's what you're referencing, the EBITDA and cash flow that we were able to generate, coming off the heels of that. We don't think there's any reason why we can't get back to those levels. Obviously, we've done a lot of heavy lifting, as Doug referenced, over the last quarter. We hit the ground running when we started the year. We took a lot of these difficult actions over the course of Q4 to set ourselves up to do so. Come January and in terms of your second question around, where do we find these opportunities, I'd say: a, there's a general kind of mindset of let's find productivity and operate leanly across the company. Now, with that being said, a lot of the cost reductions that we took in Q4 were very surgical around certain areas. And what I characterize those areas, as is: a, we eliminated a lot of excess kind of management layers and infrastructure that we had created. So we have created a number of cross functional orgs across the company, that candidly we're slowing [technical difficulty] ability to get our teams to move at the speed at which they wanted to. And then if you looked at the other areas where we've really accelerated investment, it's a lot of our go-to-market kind of teams. And so what we've done is been a lot smarter round, kind of pruning our go-to-market resources to kind of align with the market opportunity that we see in the near-term. And then on the margin, I'd say that there were certain areas that were kind of nice to haves, but not necessarily need to have in this area in this environment. And so we took a hard look at how our teams were working and try to see where we could, again, remove redundancy to get more productivity.

Yes, yes. Okay, got it. And then just as a follow-up. So at what level do you think we might see a floor in that monthly revenue for paying client metric? And I guess the question really is like, how are you internally thinking about modeling and budgeting for that over the course of '23?

Yes, so for us, we expect to continue to see pressure against that number. And I guess the answer to your question, DJ is a bit nuanced. And why I say that is, in theory, when we're dealing with healthy marketplace dynamics, we would like to see that number not grow too much, because we're continuing to expand in new regions, right. And as we talked about in the past, as we're expanding in new regions, those tend to be lower spend levels versus our skilled regions. Now, the issue that we're having in this environment, as we talked about for the last few quarters, is that across our scaled markets, specifically California, Colorado, Oklahoma, as folks have seen with a third-party data, end market GMV continues to decline, continues to decline on a quarter-over-quarter basis. If you look at the data year-to-date in 2023, so far, it's been sequentially down for the better part of the Q1 to date period. And so we're very mindful of that dynamic in terms of how remodeling out plan and planning against those skilled markets or the skilled states of California, Oklahoma and Colorado. What I will say though, is outside of those three states, we're seeing very healthy demand trends amongst your clients. We're seeing healthy demand trends, in terms of not only our ability to grow our paying client base, but also spend levels across these regions. So for us, what does that mean? We've got our eyes focus specifically on those three states to just to get a read around client tone and health of our clients, because it's still touching go obviously in those three states, but outside of that it's business as usual as getting after the opportunity.

Okay, got it. Thank you for the color.

Thank you. [Operator Instructions] And our next question comes from the line of Andrew Carter from Stifel. Your question please.

Hey, thank you. Good evening. Good afternoon. So first question I would ask in terms of what you're seeing on the cash needs, I think the cash burn in the quarter was $4 million versus the kind of adjusted $4 million number, how much was cash charges? How much is kind of left to go in cash charges and help us understand if there's anything due on the distributions given the special shareholder class? Or on the cash basis?

Yes, yes. So Andrew, I can take that one. So a couple things. So as we referenced earlier on the call, we still have some residual charges, cash costs related to the cost reduction efforts that we took in Q4. So we talked, or we filed in our 8-K last quarter, the severance charges related to the headcount reductions that we took. The bulk of those will hit in the first half. So we talked about just under $11 million of cash charges when we filed our 8-K in December. We paid out over the course of Q4, about a quarter of those. So we still have some residual cost up to go. On your question around tax distributions, our tax distributions have been averaging at about a buck, a quarter or so. And so we don't expect much movement in the very near-term on that front. What I will say is, we've fully thought through the severance charges that have -- that are left to go in terms of our liquidity and cash management and planning and the like. And, as you mentioned, on the call, we feel very comfortable with our liquidity position. We've sized our cost base at a level where we have clear line of sight towards generating positive cash flow regardless of what happened in California, Colorado, Oklahoma. And I've touched on the dynamics that we're seeing in some of these other states.

Okay. Second question I have is sort of third-party kind of metrics. We look at [indiscernible] shows the time on the platform is down pretty significantly and accelerated year-to-date. That might be in part a function of the end markets themselves. But also what's kind of your sense of the MAU base? I know, you're still kind of evaluating that, going back to draw board what you’re disclosed, but your sales teams also, obviously have to be armed with something to the value. So anything you can help on that? And do you think you're investing at the right level, behind that the demand generation both sides of the funnel, obviously.

Yes, I will take that. This is Doug. We recently hired a new CMO, who is an absolute Pro on that. So we've been digging in. There's no doubt there's absolute pressure across the board, on the marketplace, but we're still dialing in to see what the best metric is that reflects the health of our marketplace. But again, the end markets are tough. We are feeling it. But there are pockets of what we used to do great at Weedmaps, which is kind of tell the plant story. So we feel within like health and wellness, with Dr. Goldstein and some of these other moves, we have top of the funnel moves that we can make that are opportunistic. And then these new features that we discussed, like category based allows us to really penetrate lower in the funnel. So we have enough slot that’s coming up here where we think we can get positive movement. But again, nope, there's no question there's pressure.

Got it. Final question, I guess I'll just ask and this is a realized you can't control the market. But if you think if you step back and think about the original thesis of the Go Public transaction, a lot of it was the kind of take advantage of being a public cannabis play and being kind of most capital efficient. And if you're not rewarded for that, do you see the strategic value in remaining there and given you've got cash flow insight, this is a capital efficient platform, you're going to have more options than others. So just anything, I'd love to hear any commentary on that.

Yes, I can start on that one, Andrew. Listen, we're focused on executing the [indiscernible] plan. We obviously went public for a reason. We have benefited from the ability to tell our story externally and being able to kind of showcase the business model and the like. Obviously, it's a tough capital markets environment. But for us, we're focused on what we can control, what we control is executing against the plan that we have. And I'll leave it at that.

Fair enough. I'll pass it on.

Thank you. [Operator Instructions] And our next question comes from the line of Tom Champion Callahan from PSC. Your question please.

Hi, thanks. This is Jim on for Tom. Thanks for taking the question. So I guess first, one for Doug, so you've been back with the company for about four months now. And there's a lot of macro challenges you're kind of dealing with. Can you just kind of talk us through some of your biggest takeaways, and what you've learned so far as you've been getting back involved with the business? And I had one for Arden, it seems like the allowance for doubtful accounts kind of keeps coming up, I guess curious how we think about the cadence of that through the balance of the year. Thank you.

Yes. So, this is Doug, It's really a challenging market, that's for sure. But it is really a state-by-state and market-by-market story. So as I'm getting out there and talking to folks, the one thing that does come up is, because a lot of budgets are compressed in the industry, they're really reading on Weedmaps, to tell their brand story. So kind of bring in some of the old gang back in the company has been exciting as well, because we've been able to build some relationships with the MSOs and brands on the East Coast, that were a little elusive to us. So, what we're really doing now is focusing on the marketplace, our data and our search. We're really developing our content, which we think will help in all markets. Weedmaps really used to really be the source of truth for the industry. And through our data integrations and bringing kind of the pros back around, that's really our goal is to be the thought leader. And we hope that, that drives from state to state as we help folks learn how to search for cannabis and how to consume cannabis the right way. But the main takeaway that I've gotten from most folks is that, it's tough. And since we have full knowledge of the supply chain. We were already given counsel and advice kind of beyond technology. So, the main takeaway, again, is just the support that's needed.

Yes. And even on the second question you had, you're right, we did have bad debt expense again, in the quarter, it was about just over $2 million. We did call out in our November call that we expected bad debt to remain elevated in Q4 and to start normalizing over the course of 2023. Listen, it's still touching go, as I mentioned before, in those three states, and with end market declines, trending the way they are we continue to be very kind of vigilant around not only collections and or gross, AR growth. But how AR is moving through various ageing buckets, we've done a lot. We continue to do a lot operationally to control. Like I said, what we can control. One of the big moves that we made starting the year was to put the accountability of our collections back into the hands of a lot of our account teams, because they're quite successful in terms of managing that client relationship. So we're seeing some good, good, good results stemming out of that.

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