WM Technology, Inc. (NASDAQ:MAPS), a marketplace and technology solutions provider to the cannabis industry, released its earnings report Wednesday, revealing its biggest quarterly revenue of $54 million, representing 39% year-over-year growth in its U.S. business.
Other Financial Highlights
- Gross Profit was $52.0 million implying a 96% margin rate, which reflects a 70bps margin expansion from the prior year period.
- Net income was $78.4 million as compared to $10.1 million from the prior year period.
- Adjusted EBITDA was $3.8 million as compared to $11.1 million from the prior year period.
The Analyst
Cantor Fitzgerald’s analyst Pablo Zuanic kept an ‘Overweight’ rating on WM Technology stock and raised the price target to $7.65 from $6.25.
The Thesis
The company’s Q4 sales of $54.2 million beat the guidance of $50 to $52 million, while sequential growth of 6% was led by the growth of average monthly paying clients (+322 to 4,766) and stable average monthly revenue per client (-0.7%), the analyst pointed out in his Thursday analyst note. This means that both metrics were ahead of management’s expectations, while EBITDA was within the guidance range.
There are several factors that could push most cannabis operators to consider high return on digital advertising spend solutions and ultimately “migrate to one-stop solution providers,” Zuanic noted.
According to the analyst, those factors include:
- Increased company spending
- Organizational transformation
- A critical mass of almost 15 million monthly average users
- Higher competition across many U.S. markets
“We have increased our sales projections more in line with guidance and have increased our Dec 2022 price target (still using 3x our CY23 estimates). We view the valuation as attractive,” Zuanic said.
Price Action
WM Technology shares were trading 23.46% higher at $5.42 per share at the time of writing Thursday.
