What happened
Shares of WM Technology (MAPS -2.63%) were down 20.6% as of 12:44 p.m. EST on Friday after reporting third-quarter financial results.
So what
Revenue grew 9% year over year to reach $51 million. However, adjusted revenue grew 46% in the U.S., after excluding certain Canada-based retailers that failed to provide valid license information and were removed from the Weedmaps marketplace. Monthly active users increased by 37% year over year to 13.9 million. "Our third-quarter results reflect the momentum we are seeing as we focus on executing and investing against our growth opportunities," CEO Chris Beals said.
Image source: Getty Images.
WM Technology is maneuvering to be the software solution of choice for businesses that operate in the cannabis industry. In September, it acquired leading cloud-based marketing platform Sprout, which helps cannabis retailers target new customers through email and texts and provides analytics and tools to retain existing ones.
However, investors might have been looking for better performance in profitability. Adjusted earnings before, interest, taxes, depreciation, and amortization (EBITDA) came in at $10.4 million compared to $16.5 million in the year-ago quarter.
Now what
Management continues to invest in the future. It's continuing to hire at a good clip and roll out new features to its mobile app, including the recent introduction of order-ahead functionality in the iOS app. But the company's guidance leaves a lot to be desired for this highly valued stock.
For the fourth quarter, management is calling for revenue to remain roughly even with the third quarter, coming in a range of $50 million to $52 million. Adjusted EBITDA is expected to decline sequentially to between $3 million to $5 million, which might also be contributing to the negative investor reaction.
