WM Technology, Inc. (MAPS): 5 FORCES Analysis [Nov-2025 Updated]

You're assessing WM Technology, Inc., the engine behind Weedmaps, and wondering if its leading position in the highly regulated US cannabis marketplace can withstand the current headwinds in late 2025. Honestly, the pressure is real: Q3 revenue clocked in at $\text{42.2 million}$, and with industry price deflation hitting clients hard, their bargaining power is high, driving Average Monthly Revenue Per Paying Client down to $\text{2,693}$. We face stiff rivalry, and the core software is perceived as 'easily replicable,' so understanding the full spectrum of competitive forces-from supplier leverage to the threat of new entrants-is defintely crucial before deciding your next step.

WM Technology, Inc. (MAPS) - Porter's Five Forces: Bargaining power of suppliers

When looking at WM Technology, Inc. (MAPS) and its suppliers, the power dynamic leans heavily in favor of the company. This is a classic case where the value captured by the platform itself dwarfs the cost of the necessary inputs, which translates directly into a very low threat from the supplier side.

Low power is definitely supported by the company's exceptional profitability structure. For the second quarter of 2025, WM Technology, Inc. reported a gross profit margin of 95.15%. Honestly, when you maintain a margin that high, it tells you that the cost of goods sold (COGS), which would include any direct supplier costs, is a tiny fraction of your revenue. Suppliers simply don't have much leverage when their collective cost is less than 5% of the price you charge your customers.

Here's a quick look at the financial context from that period:

The nature of WM Technology, Inc.'s business model further constrains supplier power. Software and cloud services, the likely backbone of their operations, are largely commoditized. This means that while they rely on cloud providers, switching costs for those foundational services aren't prohibitively high, limiting any single provider's pricing leverage.

Also, WM Technology, Inc.'s core asset isn't a specialized physical input that a single vendor controls. Their value is proprietary: the data generated by the cannabis ecosystem and the network effect created by connecting businesses and consumers on the Weedmaps platform. You can't easily substitute that data moat.

Labor is the main cost component for a software company, but it's not a highly concentrated or monopolistic supplier group in the traditional sense. While the company has been focused on operational discipline, evidenced by significant year-over-year cost reductions in Sales and Marketing (down 20%) and Product Development (down 22%) in Q2 2025, this suggests management has levers to pull on internal costs rather than being held hostage by external, specialized labor suppliers. The threat from labor suppliers remains manageable because the talent pool for general software and sales roles is broad, even within the specialized cannabis tech vertical.

The key takeaways on supplier power are:

• Gross Margin of 95.15% in Q2 2025 shows minimal supplier cost impact.
• Core technology inputs are largely commoditized cloud services.
• Value resides in proprietary data and network effects, not physical supplies.
• Labor costs are the primary variable, but the group is not monopolistic.

Finance: draft the Q3 2025 COGS breakdown to confirm the supplier cost percentage by next Tuesday.

WM Technology, Inc. (MAPS) - Porter's Five Forces: Bargaining power of customers

You're looking at a situation where the customers of WM Technology, Inc. (MAPS) definitely hold significant sway right now. Honestly, the numbers from late 2025 tell a clear story about client leverage.

The bargaining power of customers is high, evidenced by the decline in the Average Monthly Revenue Per Paying Client (ARPU). For the third quarter ended September 30, 2025, WM Technology, Inc.'s ARPU dropped to $2,693 from $3,043 in the prior year period. This 11.4% year-over-year drop in the average amount each client spends per month signals that clients are either spending less or the new clients acquired have lower initial spend levels.

Dispensaries and brands are feeling the squeeze from industry-wide price deflation, which forces them to cut back on non-essential spending, like advertising on platforms like WM Technology, Inc.'s marketplace. The CFO noted that industry pressures affect clients' operating margins and their ability to spend on the platform. When budgets tighten, the first thing clients scale back are the higher visibility placements, such as featured and deal listings. This pressure is rooted in the broader market reality; since 2021, average retail cannabis prices have fallen by 32%. In some established markets, wholesale prices have seen steep declines, like Michigan's dropping from $300-$350 per ounce to approximately $225.

Here's a quick look at the metrics reflecting this customer pressure:

For software and marketplace providers, low switching costs are a major driver of buyer power, and while WM Technology, Inc. doesn't publish a specific cost, the client behavior suggests low friction to change spend allocation. You see this in the churn within established markets, which partially offset new client acquisitions in developing markets. If onboarding to a competitor's platform was difficult or expensive, you'd expect clients to cut spend rather than churn, but the combination of ARPU decline and churn suggests clients have viable alternatives or are willing to absorb the friction of moving to save on operating costs. It definitely means WM Technology, Inc. has to work harder to retain every dollar of spend.

Also, market consolidation among cannabis retailers increases the size and leverage of the remaining clients. In 2025, the industry is seeing a wave of consolidation where stronger companies with cash are acquiring smaller, struggling operators. As the client base consolidates into fewer, larger entities, those remaining customers gain greater negotiating leverage over their technology and advertising partners. These larger, more sophisticated buyers can demand better pricing or service terms because they represent a larger portion of the remaining serviceable market spend, which directly pressures the ARPU.

• Consolidated buyers can negotiate volume discounts.
• Larger clients demand better platform integration.
• Consolidation increases the impact of a single client loss.
• Stronger buyers push back on pricing structures.

Finance: review Q4 2025 client contract renewal terms for any observed price concessions by end of month.

WM Technology, Inc. (MAPS) - Porter's Five Forces: Competitive rivalry

You're looking at a sector where the fight for every dollar is getting tougher, and WM Technology, Inc. (MAPS) is feeling the heat directly in its top-line numbers. The competitive rivalry in the cannabis technology space is definitely high, with established players like Leafly and Dutchie putting pressure on market share. Honestly, when revenue starts shrinking, you know the competition is biting hard.

The financial results from the third quarter of 2025 clearly show this revenue pressure. WM Technology, Inc. (MAPS) reported revenue of $42.2 million for the quarter ending September 30, 2025. That figure is down from $46.6 million in the same period last year, representing a year-over-year decrease of 9%. This revenue softness is a direct symptom of intense competition and market dynamics.

The erosion of pricing power suggests that the platform may lack a sufficiently deep competitive moat, meaning its offerings are not differentiated enough to command premium pricing or prevent client migration. Here's the quick math on that: the average monthly revenue per paying client fell by 12% year-over-year, dropping to $2,693 in Q3 2025 from a prior period level of $3,043. While the company managed to grow its average monthly paying clients to 5,221-a 2% increase YoY-the lower revenue per client shows that new client acquisition is happening at lower spending levels or that existing clients are cutting back spend due to their own margin compression.

The market itself is contributing to this rivalry intensity. Slow overall market growth in established states means the fight is now purely about taking share from rivals rather than riding a wave of new market openings. Management noted that key legacy markets are seeing significant price compression, which directly impacts client profitability and, consequently, their marketing spend on the WM Technology, Inc. (MAPS) platform.

Consider the specific pressures in these mature areas:

• Average retail flower prices in California are down 9% year-over-year.
• Average retail flower prices in Michigan are down more than 20% year-over-year.
• Michigan added a wholesale excise tax of 24% on top of existing retail taxes.

This environment forces WM Technology, Inc. (MAPS) to compete aggressively on price and features, which is evident in the declining ARPU. Competitors, especially those with greater name recognition or larger marketing budgets, can exploit this weakness to gain an edge.

Here is a snapshot of the Q3 2025 financial context reflecting this competitive strain:

The fact that Adjusted EBITDA fell from $11.3 million in Q3 2024 to $7.6 million in Q3 2025, despite maintaining a strong cash position of $62.6 million, shows that the pressure on revenue is forcing a significant margin compression, which is a classic sign of high rivalry where differentiation is hard to maintain.

Finance: draft 13-week cash view by Friday.

WM Technology, Inc. (MAPS) - Porter's Five Forces: Threat of substitutes

When you look at the competitive landscape for WM Technology, Inc. (MAPS), the threat of substitutes is definitely present, and it's coming from several directions that don't require a direct competitor in the SaaS space. Honestly, it's about where the customer-the dispensary or brand-can spend their marketing or operational budget instead of on your platform.

Direct Digital Marketing Channels

The threat from direct digital marketing channels like Search Engine Optimization (SEO) and social media is moderate because, while heavily restricted, they offer a direct path to consumers that bypasses a dedicated marketplace like WM Technology, Inc. (MAPS). Large cannabis brands and Multi-State Operators (MSOs) can invest directly to capture that demand. For instance, data from late 2024/early 2025 shows that cannabis brands are still pushing hard into these areas, even with the regulatory hurdles.

Here's a quick look at the digital engagement landscape that acts as a substitute for platform-driven discovery:

• Over 70% of cannabis companies invest in social media advertising despite restrictions.
• Brands focusing on SEO saw a 50% higher web traffic increase in 2023.
• Mobile local search queries account for 57% of total searches.
• Google maintains a search engine market share of 91.47% across all devices (as of January 2024).
• User-generated content on social media sees 3x higher engagement rates.

If a large MSO can effectively capture a consumer through their own optimized website, they reduce the need for a discovery platform. What this estimate hides is the cost and expertise required to maintain this level of digital presence against platform providers.

In-House E-commerce Development

Large MSOs have the capital to develop and maintain their own e-commerce and technology stacks, viewing this as a viable alternative to relying on third-party technology providers. We see the scale of existing third-party platforms, like one powering over 6,500 dispensaries and handling over $22 billion in annual transactions, which shows the size of the market MSOs might want to bring in-house. Furthermore, for those who do use third-party e-commerce solutions, top performers are reporting that online sales can account for 50%+ of their total revenue, making the investment in a proprietary system more attractive to the biggest players. Still, the average Carrot customer sees 22% of total revenue from online sales, suggesting many are not yet at that top-tier self-sufficiency level.

Non-Cannabis Specific Discovery Tools

Consumers are not exclusively using cannabis-specific tools for discovery; they default to general search engines and mapping services, which is a constant, low-friction substitute. Since Google maintains a dominant search engine position of 91.47% across all devices (as of January 2024), any local search for a dispensary name or general product type often starts there, not on a dedicated cannabis platform. This means WM Technology, Inc. (MAPS) is competing against the default behavior of the entire internet population.

The Rise of the Intoxicating Hemp Market

The intoxicating hemp market presents a significant, regulatory-lighter substitute category that directly competes for consumer dollars. This sector has seen explosive growth, moving from about $200 million in sales in 2020 to nearly $2.8 billion in 2023 for products like Delta-8 THC. This market, which generates an estimated $1 billion annually just from THC-infused beverages, benefits from lower taxes and lighter regulation in many areas, allowing hemp-derived products to often undercut the pricing of regulated cannabis products. In fact, some data suggests about 18% of users have reported switching from traditional cannabis to these hemp-based alternatives. The overall North American hemp industry is projected to reach a valuation of US$30.24 billion by 2029, showing the sheer scale of this substitute threat, even with recent regulatory uncertainty surrounding the Farm Bill's status as of late 2025.

To put the scale of this substitute into perspective against WM Technology, Inc. (MAPS)'s own performance, compare the hemp market's potential to the platform's financials:

The fact that WM Technology, Inc. (MAPS) reported a revenue decrease to $42.2 million in Q3 2025 while the hemp market continues to grow aggressively highlights the financial pressure this substitute category exerts on the core cannabis industry's marketing budgets.

WM Technology, Inc. (MAPS) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for WM Technology, Inc. is a nuanced calculation, balancing significant regulatory hurdles against the potential for rapid software replication in a growing market. You have to look at both the compliance moat and the technology layer separately.

Moderate-to-high barriers to entry due to the complex, state-by-state cannabis regulatory compliance requirements.

Entering the market isn't just about writing code; it's about mastering the patchwork of state-level mandates. New entrants must immediately contend with evolving compliance requirements, such as new labeling rules in California under Proposition 65 as of January 1, 2025, and data privacy laws in states like New Jersey and Iowa. The federal-state conflict, with cannabis still a Schedule I substance under the Controlled Substances Act, complicates banking, taxation (like IRC Section 280E), and interstate commerce, forcing any new player to build compliance infrastructure from day one. This regulatory fatigue and confusion create a high initial compliance cost that weeds out less serious competitors.

WM Technology's established brand, Weedmaps, provides a significant first-mover advantage and network effect.

Weedmaps has the advantage of being the premier destination for consumers to discover and browse products, access deals, and order ahead. This established marketplace presence creates a powerful network effect. Data suggests that personal experiences with established brands build affinity and loyalty among consumers. To challenge this, a new entrant needs to overcome the established user base that relies on the platform for market visibility. The platform's role in shaping the legal cannabis economy is a key differentiator.

Low barrier for new software-only competitors, as the core UX is considered 'easily replicable.'

While compliance is a high barrier, the core software functionality-the user experience (UX) for dispensary operations-can be less defensible. Competition is intensifying, which drives innovation toward more user-friendly and feature-rich Point-of-Sale (POS) systems. New entrants can focus on a niche or a superior, easily replicable UX layer to attract clients who are less concerned with the underlying compliance engine, provided they can navigate the regulatory landscape themselves.

High capital is needed to build a national, compliant client network of 5,221 paying clients.

Building a client base at the scale of WM Technology, Inc. requires substantial capital, even if the software itself is less complex to build. A new entrant must fund the sales and marketing required to onboard a significant number of businesses across multiple, disparate regulatory zones. WM Technology, Inc. reported an average monthly paying client count of 5,221 as of the third quarter of 2025. To compete, a new firm needs the financial runway to sustain operations while acquiring this base, especially when average monthly revenues per paying client are under pressure, falling to $2,693 in Q3 2025. WM Technology, Inc. maintained a strong balance sheet with $62.6 million in cash as of September 30, 2025, which provides a significant buffer against market volatility and funds client acquisition efforts.

Here's a quick look at the financial scale WM Technology, Inc. operated at in Q3 2025, which sets the capital bar for a competitor:

The ability of WM Technology, Inc. to remain profitable, reporting net income of $3.6 million in Q3 2025, despite revenue softness, shows operational efficiency that a new entrant would need to match without the benefit of an established client base.