By Sam Boughedda
WM Technology Inc (NASDAQ:MAPS) announced its financial results for the second-quarter aftermarket Tuesday, sending its shares more than 22% lower during Wednesday's session.
The technology and software infrastructure provider to the cannabis industry beat earnings expectations but missed revenue estimates, reporting earnings of $0.13 per share on revenue of $58.29 million. Analysts expected earnings of $-0.04 on revenue of $62 million.
Revenue increased 24% year-over-year, while the company's monthly active users increased to 17.4 million, up 41% compared to the prior year period. However, the average monthly revenue per paying client decreased to $3,509, a 5% fall compared to the prior year period.
The company said its results were impacted by the macro environment, including the cannabis end market.
"We believe these results again demonstrate how WM Technology is the enduring platform for the cannabis end-markets. And while the current macro environment, including challenges specific to the cannabis end-markets, did impact our results, our pace of innovation and continuing to deliver healthy returns to our clients resulted in us achieving growth that exceeded our end markets by a wide margin," stated Chris Beals, CEO of WM Technology.
Reacting to the earnings report on Wednesday, a Piper Sandler analyst downgraded the stock to Neutral from Overweight, cutting the firm's price target on WM to $4 from $8 per share.
"2Q results missed our expectations but were overshadowed by 2H guidance meaningfully below our expectations. A combination of inflationary, regulatory and operating challenges have upset a significant portion of Cannabis retail spend," said the analyst. "We underestimated these challenges in our original thesis. We slashed expectations for revenue and EBITDA moving forward."
Elsewhere, a Stifel analyst downgraded the stock to Hold from Buy, lowering the price target to $3.20 from $10 per share following what it said were "disappointing" results.
"We overestimated WM Technology's ability to continue growing revenue amid the deterioration of the company's key end markets while underestimate the increasing AR risk which impacted revenue as the company took a firmer stance. Against the significant guidance reduction precipitating layoffs/productivity versus an aggressive investment agenda, we now question the company's visibility into the business while applying greater scrutiny to investment and M&A," said the analyst. "We believe it is difficult to make a case for near-term ownership given tepid fundamentals, negative investor sentiment, and diminished credibility."