Mogo Reports Results for Q4 & FY 2023
- Payments volume surged by 36% year-over-year to $9.9 billion, showcasing strong growth in Mogo's digital payment solutions business.
- Q4 revenue reached $17.2 million, a 6% sequential increase, reflecting growth in core products.
- Adjusted EBITDA for Q4 2023 stood at $2.7 million, marking a significant improvement from the prior year.
- The company ended 2023 with $55.6 million in cash and total investments, including significant crypto-related investments.
- Mogo's focus on profitability and efficiency led to a positive financial performance in 2023, with Adjusted EBITDA reaching $7.7 million.
- Mogo plans to accelerate marketing efforts in 2024 to drive growth in Subscription & Services revenue from its Wealth and Payments businesses.
- None.
Insights
The reported increase in payments volume and sequential revenue growth reflect positively on Mogo Inc.'s operational performance and strategic initiatives. The substantial year-over-year growth in Adjusted EBITDA and the shift from a net loss to net income signify a notable improvement in financial health and efficiency. Investors may interpret this as a sign of the company's growing ability to monetize its offerings effectively and manage expenses.
However, the reliance on non-IFRS measures like Adjusted EBITDA can sometimes mask underlying performance issues. While these measures provide a clearer picture of operational efficiency, they exclude costs that may be relevant to the company's long-term financial sustainability, such as stock-based compensation and other non-operating expenses.
Additionally, Mogo's investment in crypto-related assets introduces a layer of volatility and risk, as the valuation of these assets is highly susceptible to market fluctuations. This strategic decision may impact the company's financial stability, depending on cryptocurrency market trends.
The financial results indicate that Mogo Inc.'s digital wealth and payments business is gaining traction, which can be seen as a positive sign for its competitive positioning within the fintech sector. The increase in assets under management and user base growth are indicative of the company's product appeal and market expansion capabilities.
The strategic partnerships and technology platform transitions to entities like Oracle Cloud Infrastructure and Snowflake suggest a long-term investment in scalability and data management. This could enhance the company's ability to deploy Artificial Intelligence applications, potentially leading to innovative product development and improved customer personalization.
However, the fintech industry is known for rapid innovation and intense competition, which means that Mogo's continued investment in marketing and product development will be critical to maintain and accelerate its growth trajectory. The company's ability to execute on its 'Rule of 40' target, balancing revenue growth and profitability, will be a key factor in assessing its future performance.
Mogo Inc.'s strategic change to include Bitcoin and Bitcoin ETFs in its treasury management strategy introduces a significant risk factor due to the inherent volatility of cryptocurrency markets. While this move may align with the company's innovative and disruptive brand image, it also exposes the company to potential valuation swings that could impact its financial statements and investor perception.
Investors should also consider the potential implications of Mogo's share buyback program. While repurchasing shares can signal confidence in the company's future and support the share price, it also reduces the cash available for other investments or debt reduction. The effectiveness of this strategy in delivering shareholder value should be monitored closely.
The company's focus on cost efficiency has yielded a significant decrease in total operating expenses, which is commendable. However, it will be important to ensure that these reductions do not compromise the company's ability to innovate and respond to competitive pressures in the dynamic fintech landscape.
Payments volume increased
Q4 Revenue of
Q4 Adjusted EBITDA1 of
Ended year with
Mogo reports in Canadian dollars and in accordance with IFRS
“Our focus in 2023 was to build a more profitable and efficient company, while at the same time increasing product velocity and driving user experience improvements for our digital wealth platform,” said David Feller, Mogo’s Founder and CEO. “We made excellent progress on both fronts, meaningfully improving both the value of our wealth products and our profitability. Following the recent relaunch of both Moka and Mogo, we are in a great position to accelerate our marketing efforts in 2024 to build our user base and advance our mission to help the next generation of Canadians get on a path to achieving financial freedom. The wealth industry in
Key Financial Highlights for Q4 & Full-Year 2023
-
Q4 revenue of
$17.2 million 6% sequentially, reflecting increased growth in the company’s core products. -
Q4 2023 gross profit of
$11.5 million 67% margin), versus$11.7 million 68% margin) in Q4 2022. Full-year gross profit was$46.7 million -
Total operating expenses for Q4 2023 decreased by
25% to$11.7 million $15.5 million 24% during the same period. Since Q1 2022, when the Company implemented its efficiency initiatives, revenue per employee has increased by83% . -
Cash flows from operating activities before investment in gross loans receivable1 was positive for the fifth consecutive quarter, reaching
$4.7 million 79% increase over Q3 2023 and approximately923% over Q4 2022. For the full year, cash flows from operating activities before investment in gross loans receivable reached$9.5 million $20.1 million -
Adjusted EBITDA1 increased to
$2.7 million 16.0% margin), up from$2.1 million 12.8% margin) in Q3 2023 and$0.2 million 1.4% margin) in Q4 2022. Full-year Adjusted EBITDA increased to$7.7 million $6.0 $8.0 million $19.9 million $12.2 million -
Net income (loss) improved to income of
$8.5 million $74.9 million -
Adjusted net loss1 decreased to
$2.6 million $5.4 million -
Ended 2023 with cash and total investments of
$55.6 million $43.7 million $17.9 million $37.8 million -
In 2023, the Company repurchased and cancelled 474,353 common shares under its share buyback program on NASDAQ and its normal course issuer bid on the Toronto Stock Exchange at an average price of
$2.36 4.4% of the Company’s current outstanding common shares. The Company currently has 24.5 million common shares issued and outstanding. -
Subsequent to year end, Mogo announced that its Board of Directors has approved a change to its treasury management strategy to include Bitcoin and Bitcoin ETFs and authorized an initial investment of up to
$5.0 million
“Our fourth-quarter results clearly demonstrate our success in returning the business to meaningful profitability during 2023 while at the same time resuming top-line growth,” said Greg Feller, President & CFO. “Revenue increased sequentially for the third quarter in a row and, importantly, increased year - over - year for the first time in 2023. At the same time, our Q4 Adjusted EBITDA reached
Business & Operations Highlights
-
Mogo's digital payment solutions business, Carta Worldwide, processed over
$9.9 billion 36% compared to 2022. -
Assets under management in the Company’s Wealth businesses increased
23% year-over-year to$351.3 million -
Mogo members increased to 2.1 million at year end, up
6% from the prior year. -
In July 2023, Mogo announced that Coinsquare Ltd. completed a business combination with WonderFi and CoinSmart Financial Inc. This transaction positioned the resulting entity, WonderFi (TSX:WNDR), as the only fully regulated crypto exchange in
Canada . As at December 31, 2023, Mogo was the largest shareholder of WonderFi holding ~ 87 million shares (a ~13% ownership interest), valued at$25.7 million - Mogo continued to focus on increasing the value of its digital wealth platform. In March 2024, the Company announced the launch of Moka.ai, the next generation of its wealth-building app with significant updates and enhancements designed to help the next generation of Canadians get on a real path to becoming millionaires and achieving financial freedom.
- Mogo continued to build a highly efficient and scalable technology platform and operation. Mogo entered a multi-year agreement to transition to Oracle Cloud Infrastructure to support the long-term growth of the Company’s digital wealth platform.
- Mogo completed a strategic agreement to transition to Snowflake as the sole data warehouse for its wealth and lending platforms. This aligns with Mogo’s objective to deploy new Artificial Intelligence (AI) applications in wealth.
Financial Outlook
In 2023, Mogo focused on accelerating its path to profitability by placing an emphasis on cost efficiency and building financial resiliency in light of challenging financial market conditions. As a result of these initiatives, 2023 total operating expenses decreased by
For fiscal 2024, Mogo expects to shift the balance toward accelerating revenue growth while at the same time continuing to generate positive Adjusted EBITDA3. The Company will increase investments in marketing to drive acceleration in Subscription & Services revenue growth from its Wealth and Payments businesses where it sees significant opportunity for expansion.
Specifically, for 2024 Mogo expects accelerating Subscription & Services revenue growth during the year with an overall Subscription & Services revenue growth rate in the mid-teens for the full year.
1 Non-IFRS measure. For more information regarding our use of these non-IFRS measures and, where applicable, a reconciliation to the most comparable IFRS measure, see “Non-IFRS Financial Measures” in the Company’s MD&A for the period ended December 31, 2023. |
2 Includes combined cash and restricted cash of |
3 Adjusted EBITDA is a non-IFRS measure. Management has not reconciled this forward-looking non-IFRS measure to its most directly comparable IFRS measure, net loss before tax. This is because the Company cannot predict with reasonable certainty and without unreasonable efforts the ultimate outcome of certain IFRS components of such reconciliations due to market-related assumptions that are not within our control as well as certain legal or advisory costs, tax costs or other costs that may arise. For these reasons, management is unable to assess the probable significance of the unavailable information, which could materially impact the amount of the future directly comparable IFRS measures. |
Conference Call & Webcast
Mogo will host a conference call to discuss its Q4 & FY2023 financial results at 2:00 p.m. ET on March 20, 2024. The call will be hosted by David Feller, Founder and CEO, and Greg Feller, President and CFO. To participate in the call, dial (416) 764-8658 or (888) 886-7786 (International) using conference ID: 72419362. The webcast can be accessed at http://investors.mogo.ca. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.
Non-IFRS Financial Measures
This press release makes reference to certain non‑IFRS financial measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as additional information to complement the IFRS financial measures contained herein by providing further metrics to understand the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non‑IFRS financial measures, including Adjusted EBITDA, Adjusted net loss and Cash provided by (used in) operating activities before investment in gross loans receivable, to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. Our management also uses non‑IFRS financial measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. For more information, please see “Non-IFRS Financial Measures” in our Management’s Discussion and Analysis for the period ended December 31, 2023, which is available at www.sedarplus.com and at www.sec.gov.
The following tables present a reconciliation of each non-IFRS financial measure to the most comparable IFRS financial measure.
Adjusted EBITDA
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
||||
Net income (loss) before tax |
$ |
8,432 |
$ |
(75,030) |
$ |
(18,287) |
$ |
(166,014) |
||||
Depreciation and amortization |
|
2,385 |
|
3,166 |
|
9,067 |
|
12,636 |
||||
Stock-based compensation |
|
580 |
|
835 |
|
2,478 |
|
8,712 |
||||
Credit facility interest expense |
|
1,595 |
|
1,363 |
|
6,064 |
|
4,640 |
||||
Debenture and other financing expense |
|
1,141 |
|
779 |
|
3,519 |
|
3,225 |
||||
Accretion related to debentures |
|
222 |
|
315 |
|
958 |
|
1,249 |
||||
Share of loss in investment accounted for using the equity method |
|
— |
|
31,142 |
|
8,267 |
|
78,832 |
||||
Revaluation (gain) loss |
|
(13,600) |
|
(2,020) |
|
(9,628) |
|
2,375 |
||||
Impairment of goodwill |
|
— |
|
31,758 |
|
— |
|
31,758 |
||||
Other non-operating expense |
|
1,988 |
|
|
7,940 |
|
|
5,231 |
|
|
10,360 |
|
Adjusted EBITDA |
|
|
2,743 |
|
|
248 |
|
|
7,669 |
|
|
(12,227) |
Adjusted Net Loss
( |
|
|
|
|
|
|||||||
|
|
Three months ended |
|
Year ended |
||||||||
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
||||
Net income (loss) before tax |
$ |
8,432 |
$ |
(75,030) |
$ |
(18,287) |
$ |
(166,014) |
||||
Stock-based compensation |
|
580 |
|
835 |
|
2,478 |
|
8,712 |
||||
Share of loss in investment accounted for using the equity method |
|
— |
|
31,142 |
|
8,267 |
|
78,832 |
||||
Revaluation (gain) loss |
|
(13,600) |
|
(2,020) |
|
(9,628) |
|
2,375 |
||||
Impairment of goodwill |
|
— |
|
31,758 |
|
— |
|
31,758 |
||||
Other non-operating expense |
|
1,988 |
|
|
7,940 |
|
|
5,231 |
|
|
10,360 |
|
Adjusted net loss |
|
|
(2,600) |
|
|
(5,375) |
|
|
(11,939) |
|
|
(33,977) |
Cash Provided by (used in) Operations before Investment in Gross Loans Receivable
( |
|
|
|
|
|
|
|
|
|
|||||||
|
|
Three months ended |
|
|
Year ended |
|
||||||||||
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
||||
Net cash used in operating activities |
|
$ |
(2,199 |
) |
|
$ |
(1,356 |
) |
|
$ |
(9,168 |
) |
|
$ |
(27,009 |
) |
Net issuance of loans receivable |
|
|
(6,875 |
) |
|
|
(1,813 |
) |
|
|
(18,655 |
) |
|
|
(16,392 |
) |
Cash provided by (used in) operations before investment in gross loans receivable |
|
|
4,676 |
|
|
|
457 |
|
|
|
9,487 |
|
|
|
(10,617 |
) |
Forward-Looking Statements
This news release may contain “forward-looking statements” within the meaning of applicable securities legislation, including statements regarding Mogo’s path to profitability, the Company’s ability to make investments in long-term growth products, the Company’s plan for accelerating revenue growth in 2024, the Company’s treasury management strategy and the Company’s financial outlook for 2024. Forward-looking statements are typically identified by words such as "may", "will", "could", "would", "anticipate", "believe", "expect", "intend", "potential", "estimate", "budget", "scheduled", "plans", "planned", "forecasts", "goals" and similar expressions. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at the time of preparation, are inherently subject to significant business, economic and competitive uncertainties and contingencies, and may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Mogo's growth, its ability to expand into new products and markets and its expectations for its future financial performance are subject to a number of conditions, many of which are outside of Mogo's control, including the receipt of any required regulatory approval. For a description of the risks associated with Mogo's business please refer to the “Risk Factors” section of Mogo’s current annual information form, which is available at www.sedarplus.com and www.sec.gov. Except as required by law, Mogo disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.
About Mogo
Mogo Inc. (NASDAQ:MOGO; TSX:MOGO) is a financial technology company headquartered in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240320948741/en/
For further information:
Craig Armitage
Investor Relations
investors@mogo.ca
(416) 347-8954
US Investor Relations Contact
Lytham Partners, LLC
Ben Shamsian
shamsian@lythampartners.com
(646) 829-9701
Source: Mogo Inc.
FAQ
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