Mogo Inc. Q2 FY2025 earnings call

Key Points

• Q2 was a strong quarter with net income of $13.5 million, profitable, high margin.
• Wealth revenue grew 48% YOY, Payments up 23%, adjusted EBITDA margin 11.4%, cash flow positive.
• Wealth AUM reached an all-time high of $462 million. Began regulatory process to offer crypto trading in Canada, positioning to be 1 of 2 companies in Canada offering both crypto and equities.
• Expanded Bitcoin treasury strategy, deployed $1 million into Bitcoin ETFs in Q2 and added another $1.4 million post quarter from WonderFi monetization (~$14 million).
• European payments strong with Carta volume up 15% YOY in Europe (excluding exited Canadian business).
• Building dual compounding strategy across product and capital, embedding Bitcoin in product stack.
• New unified AI native platform for long-term investors, V1 launch expected in Q4.

Wealth revenue grew 48% year-over-year. Payments was up 23% year-over-year. Q2 net income was $13.5 million. Adjusted EBITDA margin expanded to 11.4%. Wealth AUM hit an all-time high of $462 million. Payments processed $2.8 billion volume in Q2, flat YOY reported but core European business (excluding exited Canadian) up 15% YOY. Cash, marketable securities investments totaled over $50 million. Book value stood at $81.6 million or $3.41 per share.

Forward-Looking

• Planning Q1 2026 marketing ramp for the intelligent investing Wealth platform.
• Continued focus on Bitcoin treasury strategy and integrating Bitcoin into product stack.
• Expecting to be one of 2 companies in Canada authorized to offer both crypto and equities in a regulated experience through ongoing regulatory process.

Risks

• Forward-looking statements subject to risks and uncertainties causing actual results to differ materially from projections.
• Regulatory process for crypto trading may take longer than the minimum 6 months anticipated.
• Market conditions could impact performance of Bitcoin and other investments.

Q: How do you prioritize or balance the accumulation of Bitcoin for the balance sheet versus using that same cash to reinvest in some of your high-growth business verticals?

A: Our plan is to do both. Using Bitcoin as a hurdle rate, if we believe we can get a Bitcoin like or higher return in our core business that will be the hurdle rate to invest money there. With proceeds from WonderFi transaction and continued liquidity, we can do both invest in Bitcoin and the business.

Q: Given your liquidity position and anticipated liquidity position, how are you thinking about or what's your appetite for potential M&A to accelerate growth in maybe Wealth or even Payments?

A: We're always open to M&A. But it would have to be strategic and make sense, meeting the hurdle rate for the areas we're focused on as we've got high return opportunities in core business and Bitcoin.

Q: On the crypto trading initiative, can you give us a sense of timeline to work through the regulatory process? And does it require any kind of meaningful investment from you guys in terms of increased OpEx or anything to get through -- to get to approval, I guess?

A: From a regulatory perspective, minimum of 6 months, can be longer depending on issues. We think existing infrastructure for wealth business helps, and there are parallel paths. There will be some investment but not a massive investment.

Q: If you can talk a little bit about the lending business and how you see the environment and maybe what your plans are with that business here over the next 12 months or so?

A: Lending is a profitable cash flow-generating business with high ROI. We've got 20+ years of experience. We grew the loan book this quarter. It's supportive of growth, not a drag, and we'll be disciplined in growing it.