10-K: WM Technology Reports 2025 Revenue Decline Amid Cannabis Market Headwinds

WM Technology, Inc. reported a 5% decrease in revenues to $174.7 million for fiscal year 2025, alongside a significant drop in net income and ongoing material weaknesses in internal controls.

Summary

• WM Technology operates Weedmaps, a leading online cannabis marketplace, and Weedmaps for Business, a comprehensive suite of eCommerce and compliance software solutions for cannabis businesses.
• Revenues for the fiscal year ended December 31, 2025, decreased by 5% to $174.7 million, down from $184.5 million in 2024.
• Net income significantly declined to $3.3 million in 2025, compared to $12.2 million in the prior year.
• Adjusted EBITDA also decreased to $39.8 million in 2025 from $42.9 million in 2024.
• Average monthly paying clients increased by 2% to 5,190 in 2025, but average monthly revenues per paying client decreased to $2,805 from $3,029.
• The company recorded $7.1 million in goodwill impairment and $0.7 million in impairment charges related to capitalized implementation costs in 2025.
• Ongoing material weaknesses in internal control over financial reporting were identified as of December 31, 2025.
• A preliminary legal settlement agreement for a shareholder class action complaint was reached on February 12, 2026, with an accrued liability of $2.8 million recorded as of December 31, 2025.
• The SEC enforcement matter regarding monthly active users (MAUs) reporting was concluded in September 2024 with a $1.5 million civil money penalty.
• The company received a Nasdaq delisting notice on February 4, 2026, for failing to meet the minimum $1.00 bid price requirement.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging period for WM Technology, marked by declining revenues and net income, significant impairment charges, and persistent internal control weaknesses. While client growth is positive and federal cannabis policy shifts offer long-term potential, immediate operational and financial headwinds, coupled with a Nasdaq delisting notice, indicate significant near-term pressures.

Positives

• Average monthly paying clients increased by 2% to 5,190 in 2025, indicating continued client acquisition.
• Cash and cash equivalents totaled $62.4 million as of December 31, 2025, with no long-term debt, providing financial flexibility.
• The SEC enforcement matter regarding MAU reporting was concluded in September 2024, resolving a significant regulatory overhang.
• A preliminary settlement agreement was reached for the shareholder class action complaint on February 12, 2026, potentially mitigating future litigation costs.
• President Trump issued an Executive Order on December 18, 2025, directing cannabis rescheduling from Schedule I to Schedule III, which could remove Section 280E tax hindrances for clients, improving their financial health.
• The 'One Big Beautiful Bill Act' (OBBBA), signed July 4, 2025, benefits the company by restoring immediate expensing of domestic research and experimental expenditures and permanent 100% bonus depreciation for qualified property.

Negatives

• Revenues decreased by $9.8 million (5%) to $174.7 million in 2025 from $184.5 million in 2024, primarily due to headwinds in core markets, pricing pressure, and price deflation.
• Net income decreased significantly to $3.3 million in 2025 from $12.2 million in 2024, a drop of approximately 73%.
• Adjusted EBITDA decreased to $39.8 million in 2025 from $42.9 million in 2024.
• Average monthly revenues per paying client decreased to $2,805 in 2025 from $3,029 in 2024, indicating lower spend per client.
• Recorded $7.1 million in goodwill impairment and $0.7 million in impairment charges related to capitalized implementation costs in 2025.
• Ongoing material weaknesses in internal control over financial reporting persist as of December 31, 2025, affecting the reliability of financial reporting.
• Received a Nasdaq delisting notice on February 4, 2026, for not meeting the minimum $1.00 bid price requirement, posing a risk to stock liquidity and market perception.
• Provision for credit losses increased substantially to $4.377 million in 2025 from $38 thousand in 2024, reflecting increased client financial struggles.
• Identified a probable shortfall of $2.3 million in the AWS minimum commitment obligation, recorded as a loss contingency.
• Shareholder derivative actions remain ongoing, though currently stayed, representing continued legal uncertainty and potential costs.

Risks

• Inability to generate sufficient revenue to achieve profitability in the future as costs increase.
• Failure to retain existing clients and consumers or acquire new ones cost-effectively.
• Failure to offer optimal pricing for products and solutions.
• Adverse effects on revenue and business if expansion into new markets is ineffective.
• Competition from the illicit cannabis market.
• Business concentration in California, making performance susceptible to unique California market factors.
• Litigation or legal proceedings exposing the company to significant liabilities and negative reputational impact.
• Federal law enforcement deeming clients in violation of U.S. federal law (Controlled Substances Act), undermining the business model.
• Clients' non-compliance with licensing and regulatory requirements, leading to legal/regulatory enforcement and negative publicity.
• Dependence on U.S. state laws and regulations, with changes potentially incurring substantial compliance costs or altering the business plan.
• Difficulty predicting future prospects due to rapid changes in the cannabis industry and applicable laws.
• Dependence on continued market acceptance of cannabis by consumers; any negative trends could adversely affect operations.
• Expansion dependent on continued legalization of cannabis; any slowdown or reversal could negatively impact business.
• Clients facing unique challenges (limited capital, Section 280E tax impact, price deflation) affecting their financial health and ability to spend.
• Failure of clients and consumers to provide high-quality content, impacting consumer traffic and competitiveness.
• High dependence on brand recognition and reputation; erosion could adversely affect business.
• Intense and intensifying competition in the cannabis information market.
• Failure to manage employee operations and organization effectively.
• Inability to recruit, train, retain, and motivate key personnel.
• Reliance on search engine placement, syndicated content, paid digital advertising, and social media marketing; limitations could impair client attraction.
• Ineffectiveness of current marketing model, potentially requiring higher-cost methods.
• Apple App Store or Google Play limiting functionality or availability of the mobile application.
• Inability to scale and adapt technology and network infrastructure, harming reputation and results.
• Dependence on third-party payment providers and evolving payment laws/regulations.
• Difficulty accessing or maintaining banking/financial services due to cannabis industry connection.
• Reliance on internal tools for performance metrics, subject to inherent measurement challenges and potential inaccuracies.
• Inability to successfully drive engagement on the platform or changes to user engagement/advertising strategy.
• Compromise of information technology systems or data, leading to adverse consequences.
• Governmental regulation of the internet developing unfavorably.
• Ongoing material weaknesses in internal control over financial reporting, affecting accurate and timely financial reporting.
• Previous restatement of financial statements, resulting in unanticipated costs and potential adverse effects on investor confidence.
• Public statements from investors increasing stock price volatility.
• Volatility of Class A Common Stock and Public Warrants.
• Risk of delisting from Nasdaq due to failure to meet listing standards.
• Exposure to U.S. and foreign export/import controls, sanctions, embargoes, and anti-corruption laws.
• Risks inherent in foreign operations (social, political, economic flux, compliance).
• Subject to industry standards, governmental laws, contractual obligations, and policies governing privacy, data protection, and information security.
• Potential claims due to content provided on the platform.
• Legal claims based on content published to the platform.
• Future investments in alternative revenue streams or acquisitions disrupting business.
• Need to raise additional capital, potentially on unfavorable terms or causing dilution.
• Responsibility for collection and remittance of state sales taxes or other indirect taxes.
• Potential adverse tax consequences domestically and in foreign jurisdictions.
• Cannabis remaining prohibited under federal law, leading to inability to execute business plan.
• Financial transactions related to cannabis potentially constituting criminal money laundering.
• Difficulty using bankruptcy courts due to involvement in regulated cannabis industry.
• Conduct of third parties jeopardizing business or regulatory compliance.
• FDA regulation of cannabis and hemp products negatively affecting the industry.
• Synthetic or hemp-derived products competing with cannabis.
• Section 230(c)(1) of the Communications Decency Act (CDA) potentially not providing immunity.
• Constraints on marketing products.
• Unfavorable U.S. tax treatment for cannabis businesses (Section 280E).
• Civil asset forfeiture for cannabis businesses.
• Difficulty obtaining desired insurance.
• Difficulty enforcing certain commercial agreements and contracts.
• Non-U.S. citizens (directors, officers, employees, investors) facing constraints on cross-border travel into the U.S.
• Concentration of ownership among existing executive officers, directors, and affiliates.
• Reduced reporting requirements as a smaller reporting company making common stock less attractive.
• No anticipated dividends in the foreseeable future.
• Certificate of Incorporation designating exclusive forum for certain litigation matters.
• Sale of substantial number of shares causing price drop.
• Issuance of additional shares diluting interests.
• Impact of global, regional, or local economic and market conditions.
• Increased costs and administrative burden as a public company.
• Employee/independent contractor misconduct.
• Analysts ceasing coverage or changing recommendations.
• Insufficient funds to satisfy indemnification claims.

Future Outlook

The company plans to continue making investments in raising brand awareness, increasing penetration within existing markets, and expanding to new markets as cannabis legalization progresses. It also intends to develop and monetize new solutions to extend the functionality of its platform. A significant growth opportunity is anticipated from new retail licenses if the U.S. reaches a density of one retailer per 10,000 residents, potentially adding approximately 15,000 new retail licenses in existing markets and up to 34,500 nationwide. The potential rescheduling of cannabis to Schedule III, as directed by President Trump's Executive Order, is expected to remove Section 280E tax hindrances for clients, which could increase their cash flow and liquidity. However, the timing and full implications of such changes remain uncertain, and the company expects significant near-term investments to enhance data assets and evolve its offerings, which may lead to short-term negative impacts on operating results and cash flows.

Management Comments

• Our mission is to power a transparent and inclusive global cannabis economy.
• We believe we offer the only comprehensive software platform that allows cannabis retailers to reach their target audience, quickly and cost effectively, addressing a wide range of needs.
• We are committed to building the software solutions that power cannabis businesses compliantly in the industry, to advocating for legalization, licensing and social equity of cannabis and to facilitating further learning through partnership with subject matter experts to provide detailed, accurate information about cannabis.
• We believe the size, loyalty and engagement of our user base and the frequency of consumption of cannabis by our user base makes the Weedmaps marketplace highly valuable to our clients.
• We believe that the principal competitive factors in our market include the scale of our network, comprehensiveness of offerings, ease of adoption and use, ability to facilitate compliance with the complex, disparate regulations applicable to businesses operating in the cannabis industry and the breadth and trustworthiness of information available to consumers and brand. We believe we compete favorably based on these factors.
• We believe that our existing cash and cash equivalents and cash generated from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months.

Industry Context

StockSavvy.ai notes that WM Technology operates in a rapidly evolving and fragmented cannabis industry, which is still nascent despite significant growth. The potential rescheduling of cannabis to Schedule III, as directed by President Trump's Executive Order, could be a momentous change, potentially increasing competition from non-cannabis technology companies but also removing significant tax burdens (Section 280E) for cannabis businesses, which could improve client financial health. The industry continues to face challenges from the illicit market, price deflation, and complex, varying state-level regulations, which directly impact WM Technology's clients and, consequently, its revenue. The company's focus on compliance software and a two-sided marketplace positions it to capitalize on continued legalization, but it remains vulnerable to regulatory shifts and market maturity.

Comparison to Industry Standards

• WM Technology believes its Weedmaps for Business is the industry's only comprehensive solution combining a scaled marketplace and software, differentiating it from competitors like Leafly (marketplace only) and Dutchie/Jane Technologies (software only).
• The company competes with general two-sided networks like Yelp and online merchant platforms such as Shopify, Square, and Lightspeed, which typically have broader market presence and resources.
• DoorDash's expanded offering for hemp-derived THC and CBD products in January 2025 indicates increasing competition from established delivery companies entering the broader cannabinoid market, potentially impacting WM Technology's client base.
• The company's 17-year operating history (since 2008) provides it with a 'leading position and a recognized brand' compared to many newer entrants in the nascent cannabis industry.

Management Changes

Corporate Governance

Legal Proceedings

• A shareholder class action complaint (Seret Ishak v. WM Technology, Inc. et al.) was filed on October 17, 2024, alleging material misrepresentations and/or omissions regarding historical public reporting of MAUs. A preliminary settlement agreement was reached on February 12, 2026, with an accrued liability of $2.8 million recorded as of December 31, 2025.
• Shareholder derivative actions (DeGennaro v. Francis, et. al and Pearson v. Francis, et. al) were filed on November 8, 2024, and November 18, 2024, respectively, alleging individual defendants authorized false statements regarding MAUs and corporate governance matters. These actions were consolidated and stayed, with a further stay extended to April 10, 2026, to discuss potential resolution.
• An SEC investigation regarding MAU reporting was concluded in September 2024 with an administrative cease-and-desist order and a $1.5 million civil money penalty.

Related Party Transactions

• A sublease agreement with an affiliate of the Chief Executive Officer, which commenced June 1, 2022, and expired October 31, 2024. Income on the sublease was nil in 2025 and $0.6 million in 2024.
• A promissory note with Silver Spike Holdings (an affiliate of Silver Spike Sponsor, related to a board member) for $1.1 million, bearing 5% interest, maturing December 31, 2025. The remaining balance was $0.1 million as of December 31, 2025.
• Reimbursed $0.4 million in 2025 and $0.2 million in 2024 to Silver Spike Holdings for certain legal fees related to the SEC investigation.

Stakeholder Impact

• Shareholders face dilution risk from potential future capital raises or equity incentive plan issuances. The volatility in stock price due to financial performance, market conditions, and investor statements, along with a potential delisting from Nasdaq, could reduce liquidity and market price. Exclusive forum provisions may limit their ability to bring certain claims.
• Employees have been impacted by past reductions in force and executive departures. Future success depends on the company's ability to recruit, train, retain, and motivate key personnel. Misconduct by employees could lead to adverse effects.
• Customers (Cannabis Businesses) are directly impacted by declining operating margins and marketing budgets due to price deflation and industry challenges. They face risks from federal law enforcement, non-compliance with state regulations, limited access to capital, and unfavorable tax treatment (Section 280E). Potential benefits from cannabis rescheduling could improve their financial health.
• Consumers are impacted by the quality and availability of content on the Weedmaps platform. The company's efforts to improve product discovery and access to deals aim to enhance their experience.
• Creditors face potential impact from the company's ability to meet obligations under the Tax Receivable Agreement, especially if cash resources are insufficient.

Next Steps

• Continue making investments in raising brand awareness, increasing penetration within existing markets, and expanding to new markets.
• Continue developing and monetizing new solutions to extend the functionality of the platform.
• Expand Weedmaps for Business solutions and monetize Gross Merchandise Value (GMV) if U.S. federal regulations allow.
• Selectively pursue strategic acquisitions of complementary technology offerings.
• Remediate ongoing material weaknesses in internal control over financial reporting, including commencing configuration of a new ERP system, which will replace the legacy ERP system in the fiscal year ended December 31, 2026.
• Monitor the closing bid price of its stock and assess potential actions to regain Nasdaq compliance by August 3, 2026.
• Lead plaintiff to file a motion for preliminary approval of the shareholder class action settlement by April 13, 2026.
• Parties to discuss a potential resolution to the consolidated shareholder derivative action by April 10, 2026.
• The Attorney General is directed to take all necessary steps to complete the rulemaking process related to rescheduling cannabis from Schedule I to Schedule III.
• White House staff to work with Congress to update the statutory definition of hemp and develop a regulatory framework for hemp-derived cannabinoid products.

Key Dates

Recommendation

WM Technology faces significant headwinds, including declining revenues, reduced profitability, and persistent internal control issues, which are compounded by a Nasdaq delisting notice. While the potential federal rescheduling of cannabis and the company's strategic investments offer long-term upside, the immediate operational and financial challenges, coupled with ongoing legal proceedings, create substantial uncertainty. A 'hold' recommendation is appropriate as investors should monitor the company's progress in remediating internal control weaknesses, regaining Nasdaq compliance, and the actual impact of federal cannabis policy changes before making further investment decisions.

Keywords

Cannabis Marketplace, SaaS, Weedmaps, WM Technology, SEC Filing, 10-K, Financial Results, Cannabis Industry, Regulatory Risk, Internal Controls, Goodwill Impairment, Nasdaq Delisting, E-commerce, Compliance Software, Cannabis Legalization, Tax Receivable Agreement, Shareholder Litigation, Hemp-derived products, Section 280E