• Payments Volume: Increased 23% year-over-year to $3 billion in Q3.
• Subscription and Services Revenue: Grew 12% year-over-year.
• Payments Business Growth: 20% year-over-year increase.
• Wealth Business Growth: Mid-teens year-over-year growth.
• Interest Revenue: Increased 5% year-over-year.
• Adjusted EBITDA: $2.1 million with a 12% margin.
• Rule of 40 Performance: Improved to over 24% in Q3 from 4% last year.
• Adjusted Cash Flow from Operations: Reached $4.8 million, up 85% year-over-year.
• Total Cash Flow from Operations: Positive $1.5 million in Q3 versus negative $4.2 million last year.
• Adjusted Net Loss: Reduced to $500,000 in Q3 from $1.5 million in Q2.
• Cash and Total Investments: $36 million at quarter end.
• Cash and Restricted Cash: Increased to $12.4 million from $11.3 million in Q2.
• Marketable Securities: $12.5 million.
• Investment Portfolio: $11.3 million.
• Subscription Services Revenue Growth (2024): Expected approximately 10% for the full year.
• Adjusted EBITDA Guidance (2024): Raised to $6 million to $7 million.
• Adjusted EBITDA Guidance (2025): $10 million to $12 million, a 69% increase year-over-year.

• Warning! GuruFocus has detected 5 Warning Signs with MOGO.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Mogo Inc (NASDAQ:MOGO) raised its 2024 EBITDA guidance and introduced 2025 guidance with an expected 69% growth at the midpoint.
• For the first time, Mogo Inc (NASDAQ:MOGO) anticipates positive adjusted net income for 2025.
• The company reported a 23% year-over-year increase in payments volume, reaching $3 billion in Q3.
• Mogo Inc (NASDAQ:MOGO) has introduced a wealth platform with a unique value proposition, aiming to outperform existing solutions.
• The company has partnered with FinChat.io to integrate AI capabilities, enhancing its wealth-building platform.

Negative Points

• Mogo Inc (NASDAQ:MOGO) faces challenges with the new rate cap in Canada, which lowers the maximum APR from 47% to 34%.
• The company has been cautious with loan originations due to the rising rate environment, impacting interest revenue.
• Mogo Inc (NASDAQ:MOGO) has been burning cash, although at a decreasing rate, and aims to achieve cash flow positivity.
• The deceleration in subscription and service revenue growth is expected to continue into 2025.
• Mogo Inc (NASDAQ:MOGO) is still in the early stages of developing its wealth platform, indicating potential future challenges.

Q & A Highlights

Q: With the EBITDA guide calling for about $4.5 million to $5 million in adjusted EBITDA improvement into fiscal 2025, where do you think you can drive those efficiencies from? Is there any particular area you're targeting? A: Gregory Feller, President and CFO, explained that efficiencies will be spread across three areas: migration to OCI at both Carta and Mogo, payroll reduction, and vendor expense reduction. The company has been focusing on increasing productivity with smaller, high-performing teams, which has led to more benefits than just cost reduction.

Q: How are you balancing investing in the wealth business and the Carta business while driving efficiency? A: Gregory Feller noted that the focus is on increasing productivity rather than just reducing costs. Investments will continue in product improvements and partnerships, such as with Fundstrat and Postmedia, to leverage resources efficiently. The migration in Carta is expected to drive positive EBITDA in 2025.

Q: How are you thinking about the loan book as we look into 2025 and beyond, considering the interest rate caps coming into effect? A: Gregory Feller stated that the company has been cautious during the rising rate environment but sees the loan book as a growth opportunity. The rate cap may present near-term pressure but also expands the opportunity, with expectations for the lending business to contribute to growth in the latter half of 2025.

Q: Can you provide more color on the deceleration in revenue growth in subscription and service for 2025? A: Gregory Feller explained that the guidance for high single-digit growth in 2025 is consistent with 2024. The focus is on profitability and cash flow over growth, aiming to achieve cash flow positivity, which will provide flexibility for future growth investments.

Q: Does the potential crypto catalyst with the US presidential election change your long-term view on the WonderFi investment? A: Gregory Feller acknowledged strong tailwinds for the crypto space and sees WonderFi as a strong asset in the Canadian market. The company believes that regulatory certainty in the US will benefit WonderFi and that Mogo's significant crypto exposure offers leverage to investors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.