Mogo Inc. Q3 FY2023 earnings call

• The company is making progress in building an efficient and profitable operating platform. Q3 adjusted EBITDA was positive $2.1 million compared to a loss of $2.8 million last year.
• Carta saw over 30% growth in payments volume driven by existing customers, and is migrating to the Oracle cloud for more efficient scaling.
• Mogo's wealth products offer a passive S&P 500 index strategy with low costs, fractional investing, dividend reinvestment, and MogoTrade focuses on helping users improve performance with educational content and zero commission.
• The team's high-performance culture has contributed to revenue per employee, and the company is focused on long-term organic growth across products.

The company has two main segments: Mogo (including wealth and lending) and Carta (payments business). Q3 revenue was $16.2 million, up from $16 million in Q2 2023, marking the second consecutive quarter of sequential revenue growth. Gross profit increased to $11.4 million with a 70% margin, compared to $10.8 million and 63% margin in Q3 last year. Carta saw Q3 payments volume increase over 30% to $2.4 billion. Mogo's wealth products focus on a passive S&P 500 index strategy with low costs, fractional investing, and dividend reinvestment, while MogoTrade emphasizes helping users improve performance with zero commission, etc. Revenue contribution: Mogo's wealth and lending, along with Carta's payments, contribute to the overall revenue.

• Reiterated 2023 adjusted EBITDA target of $7 million to $9 million, with Q4 target of $2.5 million to $3.5 million, aiming for an annual adjusted EBITDA run rate of $10 million to $14 million by year-end.
• Plan to invest cost savings into marketing and technology for 2024 growth, targeting the rule of 40 (revenue growth + adjusted EBITDA margin ≥ 40).

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections.
• Regulatory and market risks in fintech and payments.
• Credit environment risks, though Mogo's customer base has weathered previous cycles.

Q: How does return to revenue growth in 2024 fit with rule of 40 and levers for adjusted EBITDA?

A: Greg Feller mentioned targeting revenue growth and adjusted EBITDA margin to total at least 40 in 2024, with bias towards growth but remaining adjusted EBITDA positive.

Q: Sixth consecutive quarter of sequential decline in tech spend?

A: Greg Feller said it reflects higher productivity with a smaller team, and in 2024, investments in technology and marketing will increase using cost savings.

Q: State of consumer credit in the business?

A: Greg Feller said Mogo's customer base in Canada has weathered cycles, with continued improvement in credit metrics like charge off rate and delinquencies, and a majority of customers rent, insulated from mortgage payment impacts.

Q: Current repurchase authorization and share buybacks?

A: Greg Feller said there's significant capacity in share buyback authorization, and the trend of buying back shares will likely continue as they see value in the stock.

Q: Growth drivers for payments, wealth, and lending?

A: Greg Feller said growth will be a combination of all three, with wealth and payments expected to grow faster than lending, but lending not a drag on growth.

Q: Balance of marketing for new users vs current user base?

A: Dave Feller said they'll leverage existing member base first, focusing on converting existing users, and balance with paid marketing based on customer lifetime value (LTV) and customer acquisition cost (CAC).

Q: Broader optimization cost efficiency, done with it?

A: Greg Feller said there are still additional initiatives like cloud migration, but they'll invest savings in growth rather than just driving OpEx down.