WM Technology, Inc. (MAPS) Earnings Call Transcript & Summary

Welcome to the Silver Spike Acquisition Corporation and WM Holding Company Investor Presentation. Silver Spike Acquisition Corp. has filed an investor presentation with the SEC on a Form 8-K. Please review the disclaimers included therein and use that as a guide for today's call. The presentation will also be helpful to reference in conjunction with management's commentary. We will now turn the call over to Silver Spike's Chairman and CEO, Scott Gordon.

Hello. This is Scott Gordon. I'm the CEO and the Founder of Silver Spike Capital. Thank you, everybody, for dialing in today. We're very excited to discuss the merger between Silver Spike Acquisition Corp. and WM Holdings, in what we believe will be a tremendous partnership. Silver Spike is an investment management firm focused on opportunities broadly in an around the cannabis space and its related adjacencies. The management team at Silver Spike consists largely of professionals with deep backgrounds both in the cannabis industry and extensive experience as principal investors, predominantly in the emerging markets. I personally began to explore the investment landscape for cannabis starting in 2013, after which time, I made several early investments and then ended up cofounding and serving as Chairman of an operating platform, Egg Rock Holdings, which is the parent company to the successful and well-known cannabis brand, Papa & Barkley. Along with my partners at Silver Spike, we have invested in dozens of cannabis companies and maintain an in-depth appreciation and understanding of the complex cannabis ecosystem. We launched our SPAC in August of last year really with the intention to identify and partner with a best-in-class company and management team that is positioned to capitalize on and benefit from the dynamic macro drivers surrounding cannabis. Our objective has been to both assist in shepherding a transition to the public markets and importantly to create a unique opportunity that would be exciting and worthy of institutional investor sponsorship. WMH is the perfect expression of our vision for Silver Spike, and we believe the most compelling investment opportunity in cannabis today and in the future. WMH is transforming the e-com experience for cannabis by combining the largest audience of frequent cannabis users with the broadest set of brands and retailers and supporting those businesses with a complete tech stack for cannabis. They have created a 12-year advantage and solved very complex issues, such as normalizing product data to drive user conversion or embedding compliance functionality throughout their software, while building the only comprehensive business-in-a-box software solution for cannabis retailers. Their metrics and financial performance, as you'll see, are stellar and put them in a class of one within the cannabis space. We've been particularly impressed by the quality of the management team. We first met the company earlier this year and were immediately struck by how their macro vision in and around the cannabis space evolved perfectly and aligned with our own view. We immediately latched on to Chris' vision for the company and how WMH fits within the evolving landscape of cannabis. We were also completely blown away by the team that he's assembled, as you can see here. This is a team that we stand behind, who have a track record of operational excellence and that we think is unparalleled within the cannabis space. So with that, I'll turn it over to Chris Beals.

Thanks, Scott. Really appreciate your partnership on this process. So before I dive in, I just want to level-set a little bit about why I'm so excited about this opportunity. So in terms of WMH, we're really comprised of two key areas, something that we've built over the last 12 years. On one side, we're the most powerful proprietary two-sided marketplace for cannabis, combining the largest audience of frequent cannabis consumers with the largest and most accurate set of brands and retailers. In conjunction with that, given the fact that there's no normalized product information, no SKU catalog, sort of no general sort of set of information that can be referenced to build this marketplace, we've then done an extraordinary amount of work ingesting, aggregating, doing things like machine learning and sort of normalized user feedback to create the raw data that's necessary to make this marketplace surface convert, to make consumers able to find what they want and purchase it. And we put a number of innovative discovery pathways on top of that to help consumers shop for cannabis in the way in which they want to. So to put it in another way, we're meshing over 10 million monthly active users with over 4,000 brands and retailers and driving almost a 15% conversion rate across the Weedmaps ecosystem. On the flip side, we're also a SaaS provider. We provide a comprehensive business-in-a-box, effectively an operating system for retailers, where businesses using that platform can run their entire business just using the Weedmaps set of solutions. We also have a related set of solutions for brands. And the thing that's really important about this is, given the crippling sort of compliance requirements for the cannabis space, we've really focused with this business-in-a-box solution on building compliance by design directly into the software that both makes the software sticky in terms of those we install it with, but it also is solving a critical and frankly dangerous pain point for businesses if they fail to comply with the regulations and their sort of continued evolution on a state-by-state basis. But the other thing is with this business-in-a-box solution is we're increasingly able to drive cheaper cross-adoption of products. But we're also able to get to market with new parts of the suite as well as new major features in a faster and cheaper fashion by continually relying on parts that have been built in the past or parts of our data lake. You take these two pieces and put them together, and what you get is this large and rapidly growing GMV we see across our platform to currently having over a $1.5 billion run rate GMV. The thing that's notable is with cannabis still remaining illegal on the federal level, we do not put any take rate or any sort of conversion that would turn that GMV into revenue simply because we don't feel comfortable doing that from a compliance view. And that's a huge area of growth we can attack in the future. Once federal legalization, the SAFE Act or other forms of reform come, we can do things like inserting payment rails, starting to provide the software layer that power subscription packages for retailers and brands. And so we can start to do a number of innovative things to start turning that GMV into revenue. So in terms of other things that excite me about the go-forward, at this point, we are many, many times larger, the WMH sort of ecosystem and both the -- and the company are many times larger than any other technology provider in the cannabis sector. And on top of that, there aren't direct competitors to our business-in-a-box. The competitive landscape is simply point solutions, where nobody competes with us across more than a single solution within that business-in-a-box or a marketplace suite. The GMV growth has continued to accelerate as we've launched sort of the business-in-a-box more widely. But then this election was a seismic shift for cannabis, where we saw a number of new states pass ballot initiatives, where they'll come online and those markets will open. But separately, a number of states that are already open but didn't have enough retail license density, we expect to increase the number of licenses being issued on the go-forward because a number of local jurisdictions also put ballot initiatives on to increase license's density. And so really, what we see is both a natural fit with our suite, our marketplace but also macro growth in terms of the cannabis industry at large coming out of the election. In terms of my background, how I came to join WMH. I'm a former technology and life sciences attorney, made the convert -- the transition to private equity. And when the cofounders came and pitched me about 6 years ago, I was incredibly blown away at the opportunity that existed. They had already built sort of a dominant marketplace. But there was so much more they could do in terms of ingesting, normalizing and presenting data to drive conversion. But on the flip side, looking at the technology landscape for cannabis, we've had these incredibly complex regulations, but almost none of the software solutions in the space have been built with compliance in mind or had been built directly for the cannabis space. And what that resulted in is these solutions often were unstable or the use of the software would often render these businesses less compliant than they were using pen and paper. In addition, for large parts of the software stack, where you would expect to see software solutions, there are simply nothing. Businesses were relying on pen and paper. And so really, what seems like the opportunity that lay before WMH was continuing to expand, continuing to drive on sort of the depth of the data and the conversion that they could capture on the marketplace but separately attacking this business-in-a-box opportunity and that there could be sort of a natural synergy between the two, where businesses using the business-in-a-box could get better success in the marketplace. And separately, businesses that were using the marketplace would have natural inroads to start using the business-in-a-box. I ended up coming to the company 5.5 years ago. And that's what I've been executing on since then, building out that business-in-a-box, bringing in the executive team that you saw on the last slide. And in terms of then versus now, when I came aboard the company, it was about 65 employees, $43 million in revenue and almost all of that revenue came from California, if not all of it. Fast forward to today, we're over 400 employees, over 40% of our headcount is engineering product and design. And we're on track to hit $160 million in revenue and $35 million in EBITDA. Looking at sort of the marketplace side of the equation that WMH has. So on the demand side, we not only have the highest volume of users for cannabis, these are overwhelmingly high-value cannabis consumers. And by that, what I mean is when you look at the general population, less than 10% of the population consumes cannabis monthly. These are the lifeblood of cannabis retailers and brands in terms of driving sales and keeping them operational. When you look at Weedmaps, over 90% of our monthly users report consuming cannabis at least monthly. In fact, over 70% report consuming cannabis daily. So what we've done is effectively down-segmented to the most valuable audience that is most critical to cannabis businesses. Where we see that audience capture manifest is sort of in traditional site metrics, things like high average session length, a high number of engagements per session, high percentage of traffic coming direct to the site versus via other channels. But then most importantly, we drive through the core business platform as well as WM Store, which is our e-commerce embed, an average order size that's about $100. And the thing that's really notable about that is when you look at data for retailers, you see an average order size that's about $50 to $60. So when you take high-value consumer eyeballs and then you take all of the sort of aggregated, cleansed and normalized data that we provide and then put discovery pathways over it, you can drive these much higher-value transactions. On the supply side, we have over 4,000 paying clients that include dispensaries, delivery services, brands, doctors. And we estimate we have about 55% share of all retail license in the U.S. on our platform, representing a mix of core markets, sort of those more established markets, think California and things like that, where we estimate we have about a 80% to 100% share, and in conquest markets, where we have below a 50% share because the markets are much more nascent and are just sort of emerging. Also, as we've executed on this business-in-a-box vision, we sort of no longer think of our relationship with retailers or brands in the sort of a binary, do we have a relationship or do we not? But instead, we think about the depth of the integration, the depth of the relationship we have with them, how many parts of the business-in-a-box are they using? It's also a great juncture to note that not only do we integrate across the business-in-a-box platform, we integrate with most third-party POS systems within the cannabis space. And all POS systems for the cannabis space are industry-specific, specialized software for reasons we'll get into a little bit later. So while the pieces of the business-in-the-box work incredibly well together, we also support these businesses to the extent they're using sort of third-party solutions all in the service of driving this marketplace. And on top of that, in terms of the value we provide to businesses, not only do we help them get down to this sub-10% portion of the population, we're by far the cheapest way to reach these consumers directly. And although some of this will change as we go forward, right now, we're providing essentially a $0.50 cost per click with a 5 to 10x higher conversion than they would see going through other traditional channels, like out-of-home or sort of Google AdWords and that sort of thing. So having run through sort of the marketplace, I want to flip over and talk about the SaaS offering. So when I executed on this vision of business-in-a-box, I think there were two things that underpinned it that are frankly a bit nonobvious. The first is that as we sort of move from a monolithic architecture to a more modern microservices architecture that we'd increasingly be able to build sequential pieces of the business-in-a-box more cost-efficiently because we could reuse both services as well as portions of our data lake in building these new pieces of software. The other was that as we leverage the fact that we have the highest value audience of business eyeballs, that we would increasingly be able to drive self-serve adoption or cross-adoption of these products, which would then lower our cost of acquisition for bringing businesses on the sequential pieces of the business-in-the-box platform. You can see that acceleration sort of showing itself in terms of the left side, looking at the launch dates. We've essentially built this entire business-in-a-box solution in the last 3 years. And we've been accelerating our speed both of new products as well as major features. Over the last couple of years also, we now are able to support the retailers through all cycles of sort of reaching consumers but also restock inventory and sort of managing their internal operations. A great example as sort of the ability to cross-convert as well as the efficiency of getting to market is with WM Store. That's the menu embed at the bottom. So when WNH embarked on this earlier this year, we were able to go from specification of the product launch in 2 months with essentially two engineers. Separately since then, the majority of onboards for that platform have been through self-service from the business admin. What we're doing right now is we're offering this bundle for $500. If you were to go out and buy these individual pieces of this business-in-a-box, it would cost many times that. And the reason we're doing that is we are driving sort of adoption and sort of penetration with these product offerings. But this, as we've conceptualized is really sort of the base level of a traditional SaaS pricing matrix. And so as we add additional features and additional products on, they'll slot in at sort of sequentially higher-priced tiers. And this takes us to sort of the right side. Because what this now presents us with is a number of interesting opportunities for expansion, some of which we're already executing on, things like, for instance, CRM, customer relationship management, loyalty, analytics. We have already launched an analytics package earlier this year, but we're receiving a great deal of inbound interest from both retailers and brands to get more detailed analytics to help them better understand the consumer base and more efficiently run their operations. Looking at sort of the macro landscape. This last election was frankly the most momentous we've seen to date for the cannabis space. We had 6 ballot initiatives in 5 different states. And all of them passed and passed overwhelmingly. It's also worth me mentioning that Weedmaps has built what has become, I think, at this point, the largest and most effective government relations and policy team for cannabis anywhere out there. That's critical not only for helping to get new markets open and sort of expand footprint, but it's also important because when you think about this business-in-a-box, a key component of it is building compliance by design, building all of these specialized state-by-state or city-by-city laws and regs directly into the software. Our legal and compliance team dictates sort of the shape of the laws and regs as they sit right now. And the government relations and policy team lets us build upcoming changes to laws and regs into our software in a fashion that sort of allows us to sort of build them in, in a timely fashion that fits the software development cycle. Flipping back to why this election was frankly so momentous. So the thing that was notable with these 6 ballot initiatives in the past was that each of them passed by margins that were far larger than what was anticipated. So you look at New Jersey, for instance. That ballot initiative for adult-use legalization passed with almost a 70% yes vote. And really, that challenged the assertion that people wanted cannabis but frankly didn't want it in their backyard. And New Jersey saw every single county vote yes on cannabis. And the state is moving quickly to roll out broader access under a recreational market with more licenses. Because I think the takeaway from this was people don't just want cannabis, they want cannabis sort of now and they want it nearby. Mississippi was another interesting state, although a deeply red state, there was about a 75% yes vote for medical legalization. And they're looking to, as sort of their example for how they want to open up, what is now currently the most efficient cannabis market anywhere in the country, namely Oklahoma, where you have about 2,600 to 2,700 retailers and essentially no illicit market. And I think the other storyline that was not obvious is most jurisdictions that have opened up already, California, Colorado, Washington, Oregon, generally the majority of cities do not currently allow cannabis retail, and it's been sort of a slow growth rate of new retailers being added. You saw a large number of local jurisdictions trying to deal with tax shortfalls or trying to generate additional jobs put binding or nonbinding ballot initiatives on at the local level of this election cycle. And the majority of those or the vast majority of those passed and passed overwhelmingly as well. So we expect to see, coming out of this election, acceleration of licenses in states which have already opened up. Continuing on, I think in terms of sort of the macro cannabis landscape, I think there's a couple of things to call out that are critical. So the first is that cannabis is a specialty good that, to date, nobody has been able to grow a high-quality product on a large-scale footprint in a cost-effective fashion. The end result is that growing this product is frankly much more akin to heirloom tomatoes or a traditional farm market good than it is to alcohol. Separately, you have a product that has a wide range of clinical effects and a lot of the discovery path. A lot of what consumers are trying to understand is how will this product affect them. To use an analogy to the sort of pharmaceutical industry, what consumers are facing when they try and shop cannabis would be like going to the pharmacy and they say to the pharmacists, "I want to buy sort of a prescription drug." And the pharmacist looks up the counter and says, "Well, come back and pick something out." Cannabis ranges from effects such as sort of a sleepy couch lock effect to highly alert to suppressing appetite to increasing appetite. And consumers really need pathways to help discover this. So it really couldn't be less similar to alcohol or tobacco. The other thing that's really important to note is we've seen a massive growth in the number of brands, while on the flip side, 54% of our users who we surveyed can't even name a favorite brand. What we've seen in the last 6 to 12 months is retailers, who across the U.S. on average carry over 300 SKUs, have increasingly started to as brands, "Quantify to me why should I carry your product? What is your consumer affinity? Show me how many followers you have on Weedmaps? What's the shelf velocity going to be? I see your MSRP, how defensible is it? How do I know I'm not going to have to discount it?" And brands do not have the requisite data to drive quantitatively based sales. This is a huge opportunity for Weedmaps. Because frankly, we're the only ones who sit on the breadth of data that would be needed to arm brands with being able to do things like sale attribution or being able to show consumer affinity and sell-through. The other thing that I would note, and just in terms of the broader landscape, is that when you think about trying to reach these end consumers, these sub-10% of businesses, while a lot of businesses can reach the general population, using nonspecialized channels to reach consumers is incredibly inefficient from a cost viewpoint. If you were to use sort of traditional out-of-home, Google AdWords, things like that, you're effectively taking $0.90 to $0.95 of every ad dollar and throwing it down the drain because you're not hitting a cannabis consumer eyeball. But then separately, even if you do reach the right end consumer, you run into this pharmacy conundrum, where frankly there's just not enough information to make a complex product actionable in an online setting or frankly, for that matter, often and even in a physical setting. And this is really what we attack both with the marketplace side of things but then also the business-in-a-box software. Continuing on, I think on this slide, the thing I really want to call out here is that when we started WMH to the listing marketplace, it really wasn't about helping cannabis users find local retailers, but more importantly, how to interact and find specific products, how to price compare, how to understand the constituent compounds with THC and CBD. And so the solution for that was the weedmaps.com platform, which hosted these business listings. But the thing that's notable is conversion is only possible, consumers only purchase with robust and clean data and pathways that let people discover through the lens, whether that be price, brand, cannabinoid, strain. And so that's the magic to that is both the integrations that Weedmaps has on the back end, both with the other parts of business-in-the-box or, as I mentioned earlier, third-party piece of software, then making it actionable and discoverable. So if you look at sort of the middle image here, what you see is sort of is Wonder Bread is the brand, the blue checkmark means that they verified this retailer is actually carrying their product. And so it's automatically syndicated all of the brand data across. When you see those user reviews, if a user clicks into that, it lets them see reviews from users who are verified purchases of that product, whether it be through WM Orders or through the e-com embed WM Store. And also we force those users to give normalized feedback in terms of how does this smell, how does this taste, what's the reported clinical effect or perceived clinical effect? And so really, what appears fairly simple here is a result of taking a bunch of very rich, very complex data, aggregating it, normalizing it and then making it accessible to an end consumer who doesn't have a computer science degree. Continuing on, I think this is an overview of really the business-in-a-box in its full glory or what I should say is the base pricing to business-in-a-box. Executing on the vision of sort of providing an operating system to retailers, what we have here is there's sort of there's integration between listing menus and then the POS. That's WM Retail, if they use our solution or a third-party POS, orders through weedmaps.com and now embed the ability to receive transactable orders through their own store with WM Store, which is the e-com embed that they can put on their own website. Logistics and fulfillment software, most jurisdictions that allow delivery require things like real-time GPS tracking of drivers with record retention, limitation of how much product can be in the demarcation of driver breaks, that sort of thing. Separately, WM Dashboard, that's the analytics platform that we provide, and WM Exchange is the wholesale exchange, where brands can leverage all the brand catalog data they provide us and sort of indicate what quantities, what products they have for wholesale purchase. And conversely, retailers can look, shop both generalized products on the wholesale side as well as products that they currently have on their menu that recently went out of stock. And just to remind you, all of these solutions were developed over the past 3 years and our pacing of development has continually accelerated. And so really, what we're attacking here is the core critical industry need is that when you have a highly regulated industry, where operations sort of require a high degree of regulatory scrutiny, and often those regulatory requirements fall on your hourly wage workers, need a seamless operating system to run your operations to get efficiencies but also to ensure compliance. Continuing on, I think just to touch quickly on sort of the broader consumer audience. As I mentioned earlier, high-value cannabis consumers, those who consume once a month or more, or in other consumer good areas, and let's just say these are consumers, there's less than 10% of the population. It's almost impossible to down-segment to this group of users using traditional census demographics. They're relatively evenly distributed, whether you slice it by gender, race, age, income level. And so what we've done here is essentially provide the only way to effectively reach this sort of highly unique group of users who are going to drive higher value transactions. We're going to have higher repeat order rates who are going to be drawn to your store if you differentiate yourself with in-demand, limited stock products and things like that. Continuing on, I think I've touched on it a few times, but it makes sense to highlight the fact just how complex the laws and regs are in the cannabis space. So for instance, until recently, Massachusetts with delivery was likely going to require body cams for delivery drivers with historic retention of the delivery images. In California, if you want to deliver cannabis, you have to GPS track your drivers real time. This is supported through our WM Dispatch solution through Android and iOS driver apps. But you have to real-time track those drivers. You have to retain those GPS logs for 90 days. If a driver is pulled over, they have to be able to show a digital manifest of what's in the car. If something is not delivered, unlike the food space where nobody cares if sort of the food goes undelivered, in the cannabis space, that product has to be brought back, accurately marked back into your POS and those updated inventory levels have to be reported to the state, which almost all states have a track and trace system that tracks not only what inventory retailers and brands have, but who has touched it, sort of some form of chain of custody. And so really, these software layers are critical to meeting that need. Separately, when deliveries are made, many jurisdictions require you to take a photo of the ID or get a signature scan. And so again, as I've mentioned earlier, while I think the rallying cry for cannabis legalization was regulated like alcohol, instead what we see as a level of regulation that is many, many times more complex and strict. It's also worth noting, for instance, with WM Retail, our POS solution, in each new state we launch that solution, we generally have to get certification from the state before we launch it, that it meets the state track and trace requirements and that sort of thing. Continuing on, I think in terms of the data that we capture, what's important to note is we are capturing data that does not exist anywhere else for the cannabis space. We can see consumer behavior in terms of what they purchase, what products, what retailers, what specific SKUs of a brand that they're engaging with that they're thinking about purchasing. We can see what transactions have been done. We can see normalized reviews around for verified purchasers of products, what products that they've engaged with and then sort of how they rate them in terms of smell, taste, these sort of again kind of hard-to-quantify metrics that will help dictate future purchases. And so the net effect of us aggregating all of this data is twofold. One is it sets us up to have frankly the most powerful analytics platform for brands and retailers anywhere in the industry. But also it enables us to solve the consumer reach and conversion conundrum for retailers and brands. And this is really critical and is only done by undertaking a deep degree of sort of data normalization, machine learning and aggregation work. Taking a step back and kind of looking at the broader landscape, I think the thing that's interesting is, at this juncture, there is no competitor to Weedmaps. We are the only one that provides a broad business-in-a-box solution that has a paired proprietary cannabis marketplace. And so when you look at the competitor sets to WMH, what you see is a series of single-point solutions. There's nobody who competes with us across more than one of these individual solutions. And increasingly, it's the connection points, it's the tie-outs between these different pieces of software between your POS and your dispatch solution, your e-commerce embed and your POS, things like that, where both your efficient operational efficiency sort of goes to die but also where your compliance can fall apart. And it's worth noting that in terms of this differentiation in size exists not only in the breadth of the software we have but then also in terms of our revenue. There's nobody who has more than a small fraction of sort of the revenue footprint that we have as well as sort of the global reach. So looking over to sort of the non-sort of-cannabis-specific side, there's no traditional marketplace or SaaS tech company that deals with the thorny regulatory issues and end market complexity we have. And none of them have a product market fit with cannabis or even the ability to tackle the regulatory challenges that face the space. So when you think about something like a GoodRx, while they may deal with a product that has used market regulatory complexity in pharmaceutical goods, they get to deal with normalized product catalogs, normalized tearsheet from some pharmaceutical makers. But they are not dealing with sort of a nation state of different states, choosing their own laws and regulations for products. They don't have to generate the product catalogs and normalize sort of adverse effects feedback. They don't have to deal with sort of reaching a consumer segment that is as small and niche as the one we reach. So we'll dive deeper into the next sections on the metrics related to our marketplace and how we monetize our business-in-a-box strategy. But what I'll leave you with is this, we're the 800-pound gorilla in the space with the full tech stack for cannabis. So think about Weedmaps as a primary operating system that powers cannabis retailers and brands. And with that, I'll turn it over to our CFO, Arden Lee.

Thanks, Chris. In the next several sections, we'll dive deeper around metrics associated with our marketplace as well as the business-in-a-box strategy and then touch on our financial performance in the transaction. Chris spoke to this idea that we have the most valuable marketplace in all cannabis. We believe that starts with our users. We believe our users represent the most valuable engagements in all of cannabis. The data that you're seeing here would show that the average in-store ticket is currently running at $50 per transaction. In comparison, our users placing orders on Weedmaps have average order values currently that are running at a blended average between pickup and delivery at $100 per transaction or 2x the average in-store ticket. That is evidence of what Chris spoke to earlier about the high frequency of consumption by our users, which drives higher levels of transaction activity. When you look at the bottom of this slide, you can see the implied return on advertising spend that our clients receive based on the user engagements that we drive on our marketplace and the estimated online to offline conversion at an average in-store ticket of $50. That results in a very compelling return on advertising spend north of 5x. And how does that translate to economics for us? What you're seeing here is average monthly spend per client by cohort on the left side. How to read this, for example, is if you look at our 2016 cohort, the green line in months line, those clients were on average spending between $500 to $1,000 per month, whereas today, they're spending north of $2,000 per month. When you look at our 2018 to 2019 cohorts, in month 1, those clients were spending materially higher levels of spend at right around $1,500 per month. And the slope of the curve is steeper and up into the right. What that signals to us is a couple of things. Our clients, in general, the longer that they stay on our platform realize the compelling return on advertising spend that I referenced on the prior slide and spend more over time as they're on the platform. What you're also seeing is the impact of our WM business-in-a-box strategy. Over the last few years, as we've launched more SaaS enablement solutions into the marketplace, our clients are more engaged across these different solutions. And that's resulted in more monetization opportunities for us as our clients see the compelling return on spend that they realize from spend on our platform. And at the end of the day, that drives the unit economics, as you can see on the right-hand side of this chart. Touching on how we performed year-to-date. What you're looking at on the left side is demand metrics associated with monthly active users and user engagement for the year-to-date period. and client accounts and spend per client growth on the right-hand side, the supply side of our platform. We've certainly benefited from some demand acceleration on the user side related to COVID as well as general growth related to more consumption across cannabis. But what I'd say in the year-to-date period is that we've seen a number of tailwinds and headwinds across our clients. A number of these clients are still small-, medium-sized businesses in nature. A number of these clients weren't necessarily operationalized for curbside pickup or delivery when we entered into the pandemic. And in spite of the operating environment and the lack of visibility around consumer demand and how that may stabilize over time, we've seen more clients allocate increasing amounts of their OpEx dollars towards our platform, given the high ROAS that we're able to generate and the visibility of that return on spend. So let's now touch on levers of growth that really excite us as a business. What you're looking at here is the implied cost per click of listings inventory across our marketplace on the left-hand side. Just to explain this chart, our current listings inventory has an implied cost per click of about $0.50. And the conversion or the click-through rate on that on average is in the low-teens. Now that compares to other generalized industry benchmarks that are less targeted with less down-selected audiences, where, for example, if you look at the home goods category at close to $3 cost per click with a 2% click-through rate, our cost per click that we are delivering for our clients is meaningfully lower and results in meaningfully higher ROI and return on spend, especially given the conversion that we're driving. We do think there's an opportunity for us to close some of these gaps. We are actively testing performance-based pricing models in a couple test markets. And we will be rolling that out and expanding that across additional markets over the course of 2021. The other dynamic to call out is the right side of this page. We do periodic surveys of our clients. The last survey that we conducted of our dispensary clients would show that 80% of our clients spend 6% or less of their revenue against marketing services. 45% of that 80% are spending 3% or less against marketing services, which under-indexes traditional SMB spend on marketing services by a significant amount. We think as clients realize the high ROAS as they get on the platform and as markets continue to densify with new license issuance that these gaps will close as well, resulting in significant monetization opportunities for us. Speaking of density, what really excites us is the data that you see here. What you're looking at is all existing states that we currently monetize. This does not include any new states that recently passed ballot initiatives. This only includes states where we operate today. The data here is licenses per capita. So for example, a California bar at 40,000. California currently has equivalent of 1 license per 40,000 residents. Why that's meaningful is that we've done a lot of in-house research, there's third-party research out there that suggests that the minimum license density that you need to have a healthy, functioning license market is 1 license per 10,000 residents. If California were ultimately going to achieve that minimum level of density, that would mean 3,000 licenses issued in that state alone. We've seen steady license issuance across all these states over time. And we firmly believe that all of these states will ultimately not only achieve minimum levels of density but more optimal levels of density as defined by some of the markets that you see on the far right of the slide. Why that's so important for us is it speaks to our addressable market opportunity. The data that you see here on the right side highlights this. Currently, across our existing states, the states that you looked at on the prior slide, there is a known retail license universe of 8,000 licenses, give or take. We have currently about 55% of those as paying clients on a subscription platform. If all of those states reached a minimum level of density as defined as 1 per 10,000 residents, 8,000 licenses would go to 20,000 licenses. If all U.S. states opened up at a minimum level of density, 20,000 would double. And you can see on the far right what would happen if we ultimately achieve optimal levels of density across the entire U.S. over time. Why this excites us is our business model is as simple as with every new license that gets issued across either new or existing markets, those represent opportunities for us to get those clients on to our platform and drive them up the monetization curve as you've seen on prior slides. So now let's touch on our business-in-a-box strategy. I'll first speak to how we monetize currently and where we're shifting to. We historically have had two components for how we monetize with our paying clients. We sell a base subscription as well as a number of add-ons and upsells. Historically, our base subscription has consisted of a listing page on the Weedmaps marketplace. But over the last 3 years, as we've launched a number of the SaaS solutions that Chris spoke to earlier, we've engaged in the freemium strategy, where we've essentially given away this software functionality for free. Our upsells and add-ons historically have consisted of feature listing placements, nearby listings, deal promotions as well as the number of display ad unit products. As of January 1, 2021, all of our clients will now migrate over to the WM Business subscription package. What you'll see on the right-hand side is that it's a nuanced shift. Our clients will essentially receive the same functionality that they currently receive with a listing page, all the SaaS solutions that we've currently spoken to as well as our insights and analytics dashboard, which currently is only available to our featured listings clients. The upsells and add-ons will continue to consist of featured listings, nearby listing, deal promotions and deal display ad units. But we also have on our product road map additional functionality as it relates to analytics and CRM and loyalty tools, which we'll be launching into the marketplace over the course of 2021, sold as upsell subscription pricing tiers as part of our SaaS solution set. What excites us about our business-in-the-box strategy is the data that you're seeing here. What you're looking at is a comparison of clients that are on the full business-in-the-box, including our WM Retail POS solution, versus the market average in their region. While we are still in the early innings of our WM Retail POS rollout, we're seeing higher levels of engagement, upsell and listing health across the board. Whether it be the ability to purchase more featured listings, clients transacting more actively on our wholesale marketplace or leveraging our orders product, we're having average quality listing scores that are materially higher. That last piece is critical. Our quality listing score is a way that we grade the listing health of our clients. The higher your QLS, the more user traffic and engagement you will typically see as a client, generating more return on advertising spend to your benefit. And what that's driving ultimately is growth in GMV. We track GMV for two primary reasons. It's an important signal to us of client engagement across our solution set. But secondarily, it represents monetization opportunities for us in a post federally legal world. We started the year with $1 billion annual run rate GMV across all of our solutions. And at the end of Q3, we're at a $1.5 billion annualized run rate GMV. A number of these GMV streams represent important opportunities for us when federal regulation allows us to take true take rates or swipe fees against transaction activity or payment volume. We'll now touch on our historical financial performance. You can see here that historically, we've grown at a CAGR of 40%. In 2019, we did $144 million in revenue. That was 42% growth over 2018 and a 40% CAGR over the 5-year period. We generally like to target growth on the top line, which is in excess of our end markets. And historically, we've achieved that. The 1 year we saw growth deceleration was in fiscal 2018. That related to the advent of adult rec use going live in California. We saw a real state of disarray in the front half of the year, just given the way regulations rolled out, where a number of our clients were unclear around the scope of temporary licenses converting to permanent licenses, resulting in higher levels of churn within the California state market. It's important to note that back in 2018, we were a lot more heavily exposed to California. California was 85% of our revenue base, whereas year-to-date, it sits at approximately 50% of our revenue. That's not to say that California is not growing. As we spoke to earlier, we're seeing very robust license issuance across the states. But we're seeing higher rates of growth outside of California as we're expanding into newer markets that are more nascent. Moving down the shape of the P&L. You can see our EBITDA margins have fluctuated based on the level of investments that we've undertaken. 2019 was a heavy investment year for us as we were completing and accelerating the build-out of the componentry underlying WM Business, our business-in-a-box solution, as well as making strategic marketing investments as we were branching into newer markets. I'd also note that our CapEx here consists primarily of furniture and fixtures. We expense the vast majority of our product development in R&D expense. When we started 2020, it was important for us to continue targeting 40% growth on top line but off of an adjusted baseline for 2019. What I mean by that is we executed against a pretty significant shift in our business at the end of 2019. We announced over the summer that we were going to be exiting all non-licensed operators in the U.S. by year-end. On midnight, December 31, 2019, we executed a hard client account cutoff that resulted in a number of accounts coming off the platform. Those accounts generated just under $30 million of revenue for the 2019 period, which is why you see that second column there. And so when we started the year, we set a growth goal of doing $160 million of revenue, which was just about 40% growth off of that adjusted baseline and $20 million of EBITDA. You can see 3/4 of the way through the year that we're tracking against our top line goals of $160 million for the year and we're seeing meaningful upside on EBITDA. What's driven that upside in EBITDA has been primarily the economies of scale that we've achieved over the course of this year. To give you an example, we launched our WM Store menu embed product earlier this year during the course of Q2 and Q3. From start to finish, that product was launched -- conceptualized and launched in under 2 months, leveraging two full-time engineers. It's difficult to plan against those types of economies of scale. And that's what we've seen over the course of the year-to-date period. We, of course, have also benefited from the general increase in productivity from the work-from-home environment as well as marginal OpEx savings resulting from being in the pandemic and not spending as much on out-of-home and outdoor events as we typically would. Moving to the next slide. As we think about our base case projection, a few things to level-set on. We generally like to plan our top line, minimizing the variables that are outside of our control. What that means is we typically do not plan against new market openings in a very robust way. What we do typically plan against is the visibility that we have based on the government relations and policy dialogue around license issuance within our existing markets. Why I give you that context is within our projections, we are assuming no new states opening up over the course of '21 and 2022. We have a handful of new states that are flowing through our revenue projection for fiscal 2023. The other thing that I would call out is the growth that you're seeing here assumes continued capture of new license issuance within our existing markets and continued growth in average revenue per client in line with our historical net dollar retention and expansion trends, coupled with acceleration from some new pricing model tests that are undergoing -- that we're undergoing in certain markets. Our 2021 growth also reflects the reset of Canada. We recently completed a reset of that market, where we exited all non-licensed operators and will be lapping the impact of that in 2021. On gross margin, we factored in some gross margin compression over the projection period, reflecting increased server utilization from a number of different initiatives across the data, performance-based pricing space as well as increased installs on WM Retail, our POS product. And then lastly, on EBITDA, our projections assume that we will continue accelerating investments in sales and marketing. It assumes that we're going to continue investing in product dev expense, that OpEx will grow at the rate of revenue growth and what will drive our EBITDA margin expansion is leverage against G&A over time. Our base case projections have us growing to $440 million revenue by 2023, which is a 40% CAGR versus where we expect to end -- land this year. We're projecting $205 million of revenue in 2021 as well. Important to note, as I referenced earlier, that there are no new states assumed in 2021 and 2022. So to the extent some of the states that recently passed out initiatives opened up earlier than 2023, that represents potential incremental opportunities versus the base case plan that you see here. Moving to the far right of the slide, you'll see that we're targeting a 30% EBITDA margin by 2023, which reflects continued investments, as I referenced earlier, in gross margin, sales and marketing and product dev, offset by margin leverage against G&A over time. Our growth strategy is fairly straightforward. We plan to continue scaling both sides of our two-sided Weedmaps listing marketplace, both in terms of driving users and user engagement to deliver on behalf of our clients. We plan to continue expanding our existing markets as we see healthy license issuance and capturing those licenses of clients on the platform and then entering new markets as regulation passes, whether that be here in the U.S. or internationally. We plan to continue driving adoption and usage and engagement of our business-in-a-box software solution and grow GMV. Lastly, to the extent that we identify opportunities to accelerate or pull forward growth through strategic M&A, we will look to leverage those opportunities. We currently do not have anything in the near term that we've identified. But we would like to be opportunistic, especially with the proceeds from this transaction. So touching on the transaction highlights. We've agreed to a transaction with our partners at Silver Spike that values the pro forma company at $1.5 billion equity value and pro forma enterprise value of $1.4 billion. That implies a 6.8x 2021 revenue multiple and a 4.7x 2022 revenue multiple. It implies 28x 2021 EBITDA and 17.5x 2022 EBITDA. As part of this transaction, we've raised a fully committed common stock pipe of $325 million at $10 per share. That PIPE has been meaningfully oversubscribed and upsized versus our original goal. It includes a meaningful commitment from Silver Spike Capital as well as top-tier institutional investors across the technology as well as cannabis space. Important to note that Chris, myself, our entire leadership team and management are rolling 100% of our equity into this transaction. We are not selling into this deal. Moving to the middle of this page. You can see in terms of cash sources and uses, the total cash sources of this transaction are $575 million, including the PIPE that I referenced earlier plus Silver Spike's $250 million cash and trust. In terms of uses of cash, we anticipate that cash consideration to our selling shareholders will be $450 million and the balance, $125 million, will be primary capital for the company. We were very deliberate with our partners at Silver Spike around putting the transaction terms. We're the classic definition of an online marketplace meets vertical SaaS business model with a heavy e-commerce enablement component, operating in end markets with high degrees of regulation, very thorny issues that need to be solved, high degrees of complexity, nascency as well as high growth. And in these markets, we have leading share. Based on other peer sets that fit those types of business characteristics, we believe the transaction that we've agreed to with our partners represents a very attractive entry point for new investors coming into the story. With that, we thank you for joining this conference call to discuss the merger between Silver Spike Acquisition Corp. and WM Holding Company. And with that, I'll turn it back to the operator.

This concludes today's conference call. Thank you for joining us. You may now disconnect.