Image source: The Motley Fool.
DATE
Thursday, March 12, 2026 at 5 p.m. ET
Call participants
- Executive Chair and Co‑Founder — Douglas Francis
- Chief Financial Officer — Susan Echard
Takeaways
- Total revenue -- $43 million for the quarter, a 10% decrease year over year due to persistent challenges in mature markets including pricing pressure, illicit market competition, and elevated excise taxes.
- Full year revenue -- $175 million, representing a 5% decline from $185 million in 2024.
- Average paying clients -- 5,120 for the quarter, down about 2% year over year and sequentially, with contraction in California, Michigan, and Oklahoma offset in part by client count growth in New York.
- Full year average paying clients -- 5,190, an increase of 2% over 2024.
- Average revenue per paying client -- Approximately $2,800 for both the quarter and the year, down from prior year due to lower client spend and initially lower spend from new markets.
- Adjusted EBITDA -- $40 million for the year, compared to $43 million in 2024, reflecting cost control amid falling revenue.
- Year-end cash balance -- $62 million, increasing nearly 20% from year-end 2024 due to liquidity management.
- Operating expenses -- $174 million for the year, rising 2% over 2024; a $2 million decrease in sales/marketing and $8 million decline in product development were offset by a $6 million rise in general and administrative expenses.
- Legal and noncash charges -- $2.3 million noncash loss contingency in the second quarter tied to a server provider, a $2.8 million legal settlement in the fourth quarter, and a $7.8 million goodwill-related asset impairment.
- Net income -- $3 million for the year despite lower revenue and increased nonrecurring charges.
- Outlook for Q1 -- Management expects revenue to decrease sequentially by a mid- to high single-digit percentage from the fourth quarter.
- Adjusted EBITDA guidance -- No guidance provided for 2026 due to anticipated timing variability in investments.
- Strategic focus -- Management emphasized investment in product enhancements and marketplace experience, with particular attention to expanding in New York, Minnesota, and Texas, and improving penetration in regulatory capture markets.
- Industry dynamics commentary -- Francis said, “Schedule III will not make cannabis federally legal nor will it immediately allow Weedmaps to enter new business lines or launch new revenue strategies.”
Need a quote from a Motley Fool analyst? Email [email protected]
Risks
- Mature market revenue was pressured by “severe pricing compression, competition from the illicit markets and elevated excise tax burdens” constraining client spend on the platform.
- Francis said, consolidation reduces the number of operators in the market, which narrows platform competitiveness and operator base.
- Francis also stated, the tax benefits of rescheduling are likely to disproportionately favor large operators and MSOs who will continue to consolidate the market, which, as I explained, could have an impact on the Weedmaps business model.
- Echard said, we expect first quarter revenue to decline sequentially by mid- to high single digits from the fourth quarter.
Summary
WM Technology (MAPS +1.67%) reported a year-over-year revenue decline, reflecting structural pressures in established cannabis markets and platform-dependent operator contraction. Management maintained positive cash flow and increased liquidity, despite booking multiple nonrecurring charges. Strategic investments will focus on product-driven experience and marketplace expansion, particularly in regulatory-capture states and new entrants like New York. The company will not provide adjusted EBITDA guidance for 2026, citing investment timing variability, and expects continued market challenges ahead.
- Management cited early growth in New York as encouraging, with intentions to leverage these learnings for further expansion in Minnesota, Texas, and other underpenetrated markets.
- The company expects that Schedule III rescheduling, if implemented, will not create new near-term revenue streams or materially improve WM Technology’s addressable market due to federal restrictions and listing status.
- Reductions in sales and marketing, as well as in product development expense, are intended to support ongoing profitability while funding targeted technology and marketplace investments.
Industry glossary
- MSO: Multi-state operator; a cannabis company with operations in more than one U.S. state.
- Schedule III: A federal drug classification proposed for cannabis that may alter certain tax and medical research rules but does not legalize cannabis federally.
- Section 280E: A U.S. tax code section restricting cannabis operators from deducting most business expenses due to federal illegality.
- Regulatory capture market: A state or region where compliance and licensing regimes limit new entrants and are often controlled by incumbent operators.
Full Conference Call Transcript
Doug Francis; and our CFO, Susan Echard. By now, everyone should have access to our earnings announcement and supporting slide deck on our Investor Relations website. During this call, we will make forward-looking statements about our business outlook, strategies and long-term goals. Keep in mind that forward-looking statements are not guarantees of future performance and 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 website and our Investor Relations website.
We specifically disclaim any intent or obligation to update these forward-looking statements, except as required by law. For the benefit of those who may be listening to the replay or archived webcast, this call was held on March 12, 2026. 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. We will also discuss non-GAAP financial measures alongside those prepared in accordance with GAAP. Non-GAAP financial measures should be considered in addition to, but not as a substitute for the information prepared in accordance with GAAP. You can find a reconciliation of these measures to our GAAP results in our earnings release and earnings presentation.
Finally, today's call is being webcasted from our Investor Relations website, and an audio replay will be available shortly. With that, I will now turn it over to Doug.
Douglas Francis: Good afternoon, everyone, and thank you for joining us today. Over the past year, we have remained focused on executing against a clear set of priorities, operating with discipline, strengthening our financial position and continuing to invest in the platform to support long-term growth. While the cannabis industry continues to face significant structural headwinds, Weedmaps remains focused on the long game. For the full year 2025, we delivered $175 million in revenue, generating $40 million in adjusted EBITDA and ended the year with $62 million in cash, an almost 20% increase in our cash balance at the end of 2024.
Our 2025 results reflected our team's ability to manage through industry cycles and the actions we have taken to reset and reinforce the business over the past several years. We are navigating a survival and balance sheet management mindset across the sector, but our strong liquidity allows us to invest thoughtfully. Revenue for the fourth quarter came in at the top end of our prior guidance and adjusted EBITDA exceeded our guidance for the quarter. That said, both of these measures were down 10% or more compared to the fourth quarter of 2024, reflecting the continuation of the industry trends that we discussed last quarter, which persisted through the fourth quarter and into the start of this year.
Susan will walk through how these trends affected our financial results in more detail. Before I turn it over to her, I would like to provide our view of some of the macro trends and how we see them impacting our business. The cannabis landscape continues to be reshaped by consolidation. We see this led by 2 groups. On one hand, we have the MSOs who largely operate outside of the legacy states. And on the other, we have the large California-based retailers who continue to dominate and expand in the market.
MSOs are prioritizing states where the operating and regulatory conditions support sustainable path to profitability, while battle-hardened California operators are adapting to operate on low margins in one of the industry's most competitive markets. This trend creates two possible challenges for Weedmaps. First, consolidation reduces the number of operators in the market. And like most marketplaces, our platform tends to perform best in regions with a larger and more competitive base of operators as they compete for visibility on our platform. Second, product choice and shelf space become streamlined, making a narrower set of brands available to the user.
As these market dynamics persist, we remain focused on enhancing our product offerings, deepening our relationships with large California-based clients and MSO partners, improving adoption in states with regulatory capture and strengthening the overall marketplace experience. These efforts remain a strategic priority and we expect to make meaningful investments across our teams and technology throughout the year as we continue building for the future of Weedmaps. On Schedule III, we remain cautious around its potential for Weedmaps despite the positive headlines. It is critical to understand that rescheduling will not make cannabis federally legal nor will it immediately allow Weedmaps to enter new business lines or launch new revenue strategies.
Being a company serving the cannabis industry market while being listed on a major U.S. exchange limits our strategic options relative to other technology businesses. We are restricted in how we can monetize and execute cannabis technology and how we can handle transactions and logistics. Without these capabilities, we are not able to provide customers a regular e-commerce experience like what they are used to outside of cannabis nor are we able to access the full benefit of our dual-sided marketplace. Unfortunately, Schedule III will not change this in the near term nor do we believe plant touching companies will be allowed on either of the U.S. exchanges anytime soon.
While the potential elimination of 280E tax will improve cash flows for some, the impact may be more limited than the current positive sentiment within the industry suggests. Many plant touching operators, including a majority of publicly traded MSOs have adopted certain legal positions, utilized accounting consolidation strategies or recorded allowances for uncertain tax liabilities. As a result, most clients are already realizing cash flow benefits similar to what they would see if Section 280E did not apply.
Rescheduling will just make the future of these benefits clearer and more certain, and rescheduling on its own will not erase these companies' historical tax liabilities, which, even if they are manageable, may slow down a client's ability to spend that newly free cash flow on growth rather than debt service. Furthermore, the tax benefits of rescheduling are likely to disproportionately favor large operators and MSOs who will continue to consolidate the market, which, as I explained, could have an impact on the Weedmaps business model. Ultimately, we want full legalization, and Schedule III is a step in that process.
We are excited for the industry and the potential benefits rescheduling to provide, including extended research opportunities and greater regulatory clarity. In the meantime, we continue to focus on what we can control, building a broad marketplace where consumers can discover the brands and the products they want and ultimately transact with our retail partners. We are optimistic about several growth levers. We have several product updates underway designed to enable product-first discovery and shopping journeys. We believe this mode of engagement with the platform will allow retailers and brands to offer consumers an e-commerce experience more similar to what they find when shopping in other industries.
We're pleased with the early momentum we've seen in New York, and hope to leverage our learnings and experiences to grow our presence in other new markets like Minnesota and Texas and the regulatory capture markets where we've historically had less of a presence. I want to thank our team for their continued focus and execution during a challenging period for the industry. While there is still work ahead, we believe the investments we are making today position Weedmaps well for the next phase of the industry's evolution. With that, I'll turn it over to Susan.
Susan Echard: Thanks, Doug. Now turning to our financial performance. Revenue for the fourth quarter was $43 million, a decline of 10% year-over-year reflecting the persistent challenges our clients face across our core markets. In these regions, severe pricing compression, competition from the illicit markets and elevated excise tax burdens continue to weigh on our clients' margins and marketing budgets, limiting their ability to spend on our platform. This dynamic was reflected in lower spend across our featured and deals listings, which tend to be more sensitive to shifts in marketing spend.
These conditions have driven contraction and consolidation across several of the industry's largest markets, particularly California and Michigan, where both total retail sales and average retail prices declined year-over-year throughout 2025. We saw encouraging growth in newer markets such as New York and Ohio, where our teams prioritized client penetration as retailers come online in those states. While this growth did not offset the pressure in our more mature markets, we are pleased with the early momentum we have seen in these states. As a result, full year revenue was $175 million compared to $185 million in 2024, representing a year-over-year decline of approximately 5%.
Average paying clients in the fourth quarter were 5,120, down approximately 2% both year-over-year and sequentially, reflecting the consolidation in operator exits in the markets such as California, Michigan and Oklahoma, partially offset by growth in newer markets like in New York where our client count nearly doubled compared to the prior year. For the full year, average paying clients were 5,190, up 2% compared to 2024. Average revenue per paying client for both the fourth quarter and the full year was approximately $2,800, down from prior year levels.
This is attributed to lower spend from certain existing clients amid tighter marketing budgets as well as the addition of clients in newer markets who typically begin at lower initial spend levels. Against a softer revenue backdrop, we remain disciplined in managing our cost structure throughout the year. Total operating expenses increased modestly by 2% to $174 million for the full year compared to $170 million in 2024, primarily due to certain nonrecurring items. Full year sales and marketing and product development expenses declined by $2 million and $8 million, respectively, driven by lower headcount-related costs and reduced advertising spend following restructuring actions taken earlier in the year to optimize and refocus these teams.
These reductions were more than offset by higher general and administrative expenses, which increased approximately $6 million year-over-year. This increase included a couple of onetime items, including a $2.3 million noncash loss contingency recorded in the second quarter related to a contractual obligation with our server provider, as well as a $2.8 million legal settlement disclosed as a subsequent event in our 2025 Form 10-K. Additionally, in the fourth quarter, we recorded a noncash asset impairment charge of approximately $7.8 million, largely related to our goodwill assets. As a result, net income for the full year was $3 million.
Despite our revenue decline year-over-year, our cost control efforts resulted in a non-GAAP adjusted EBITDA for the full year of $40 million compared to $43 million for 2024. In the current industry environment, maintaining tight cost control enables us to navigate these challenges while preserving the flexibility to invest in key organic growth initiatives. Our operating model allows us to manage expenses and maintain profitability while self-funding operations and continuing to invest in the business. Looking ahead, many of the industry dynamics that impacted our clients in 2025 have carried into the early part of this year and are expected to persist through 2026.
As a result, we expect first quarter revenue to decline sequentially by mid- to high single digits from the fourth quarter. We plan to continue investing opportunistically across the business. And given the potential variability and the timing of these investments, we will not be providing adjusted EBITDA guidance for 2026. The company remains committed to preserving financial flexibility and disciplined capital allocation as we assess the opportunities ahead. With that, I'll turn the call back to the operator.
Operator: Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
