Q4 2023 MoneyLion Inc Earnings Call
Good day and welcome to the Moneyline, Inc, fourth quarter and full year 2023 earnings call.
Operator: Good day and welcome to MoneyLion's quarterly and full year 2023 earnings call. At this time, all participants are in the listen only mode. We will have a question and answer session following the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
This time all participants are in a listen only mode. We will have a question and answer session. Following the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: Please note this conference is being recorded. Before we go further, I would like to turn the conference over to Sean Horgan, MoneyLion's Head of Investor Relations. Ladies and gentlemen, please stand by. We appear to be having technical difficulties.
Please note. This conference is being recorded before we go further I would like to turn the conference over to Shawn Horrigan Moneyline's head of Investor Relations.
Ladies and gentlemen, please standby we appear to be having technical difficulties again, please standby.
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Operator: Again, please stand by, www.moneylion.com and John Horton. Thank you. Thank you, www.moneylion.com, Ladies and gentlemen, we thank you for your patience. We will now resume our event. Sir, please go ahead.
Uh huh.
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Ladies and gentlemen, we thank you for your patience and we will now resume our event Sir. Please go ahead.
Sean Michael Horgan: Thank you, operator. Hi everyone. Thank you for joining us for our fourth quarter and full year 2023 earnings conference. MoneyLion CEO Di Choubey and CFO Rick Correa are here with me today to discuss our results. You can find the presentation accompanying our earnings press release on our investor relations website at investors.moneylion.com. Please note that any forward-looking statements made in this commentary are subject to our Safe Harbor Statement found in our SEC filings and in our earnings press releases. With that, I will turn the call over to Sean. Thank you, Sean.
Thank you operator, hi, everyone. Thank you for joining us for our fourth quarter and full year 2023 earnings conference call.
<unk> C O D childbirth, and CFO, Rick Korea argue with me today to discuss our results.
You can find the presentation accompanying our earnings press release on our Investor Relations website at investors <unk> Dot com.
Please note that any forward looking statements made in this commentary are subject to our safe Harbor statement.
Our SEC filings and our earnings press release with that I will turn the call over to Dave.
Thank you Sean good morning, and thank you all for joining us for our fourth quarter and full year 2023 earnings call.
Diwakar M Choubey: Good morning, and thank you all for joining us for our fourth quarter and full year 2023 earnings call. I'm excited to share that MoneyLion had its strongest year ever in 2023. We achieved record financial performance for the year, and we're positioned to scale efficiently going into 2024. In 2023, we prioritized profitability, and we exceeded the guidance we provided on profitability. In 2024, we are well-positioned for an efficient growth standard. We're going to play offense while remaining disciplined on costs.
I'm excited to share the money line had its strongest year ever in 2023, we achieved record financial performance for the year and we're positioned to scale efficiently going into 2024.
In 2023, we prioritize profitability and we exceeded the guidance we provided on profitability in 'twenty 'twenty four we are well positioned for an efficient growth stance.
Going to play offense, while remaining disciplined on costs and we're very confident we can do this now let me provide our key investor takeaways for 2023.
Diwakar M Choubey: And we're very confident we can do this. Now, let me provide our key investor takeaways for 2023. First, we achieve record revenue of $423 million in 2023. That represents 24% year-over-year growth.
First we achieved record revenue of $423 million for 2023 that represents 24% year over year growth.
Diwakar M Choubey: We generated record revenue across both our consumer and enterprise businesses for the year 2023, representing the strength of our two-sided ecosystem. It's worth repeating that we have a diversified revenue model. Our marketplace solutions, technology advantage, customer acquisition, and monetization products have set us up nicely as the gateway to American financial services. This diversification provides durability, and importantly, it will continue to propel MoneyLion forward and position the company for accelerating growth. Second, we saw gross profit margin expansion for both the full year and the fourth quarter of 2023.
We generated record revenue across both our consumer and enterprise businesses.
The year 2023, representing the strength of our Q Saturday ecosystem.
It's worth repeating we have a diversified revenue model, our marketplace solutions technology advantage customer acquisition and monetization product have set us up nicely as the gateway to American financial services. This diversification provides a durability and importantly, it will continue to propel moneyline forward and position the company.
For accelerating growth.
Second we saw gross profit margin expansion for both the full year and the fourth quarter of 2023.
Diwakar M Choubey: Our gross profit margin was 60% in 2023, up from 57% in 2022. We exited the year even higher with a 63% gross profit margin in Q4 2023, up from 61% in Q3 of 2023. These results exceeded our full-year gross profit margin guidance of 58 to 59 percent. And notably, this was our third consecutive quarter of gross profit margin expansion, really demonstrating our ecosystem advantage. Our third key takeaway.
Our gross profit margin was 60% in 2023 up from 57% in 2022.
We exited the year, even higher with a 63% gross profit margin in Q4 2023 up from 61% in Q3 of 2023.
These results exceeded our full year gross profit margin guidance of 58% to 59%.
And notably this was our third consecutive quarter of gross profit margin expansion.
Really demonstrating our ecosystem advantage.
Our third key takeaway.
Diwakar M Choubey: We generated a record adjusted EBITDA of $46 million in 2023, which represents nearly $110 million improvement compared to the prior year. I want to take this opportunity to really congratulate the entire MoneyLion team for this incredible achievement. This represented an adjusted EBITDA margin of 11%.
We generated record adjusted EBITDA of $46 million in 2023.
Which represents nearly $110 million improvement compared to the prior year.
I want to take this opportunity really to congratulate the entire moneyline team for this incredible achievement.
This represented an adjusted EBITDA margin of 11% in.
Diwakar M Choubey: In Q4, we reached 14.6% adjusted EBITDA margin, up from 12.1% in Q3 2022. This result exceeded our full year guidance of $39 million to $45 million. Q4 2023 also marked our fourth consecutive quarter of positive adjusted EBITDA, demonstrating our ability to scale while funding our growth through organic cash flow generation. And lastly, we're setting our sights on our next profitability milestone, to reach our first positive GAP EPS quarter in 2024. And the proof point is that we're getting really close. Our net loss before other income and expenses and income taxes was only 5.3 million for the year 2023, down from a loss of 98.7 million in 2022. And moreover, in Q4, the net loss per share was only 41 cents.
In Q4, we reached 14.6% adjusted EBITA margin up from 12% 12, 1% in Q3 2023.
This result exceeded our full year guidance of 39 million to $45 million.
Q4, 2023 also marked our fourth consecutive quarter of positive adjusted EBITDA, demonstrating our ability to scale, while funding our growth through organic cash flow generation.
And lastly, we're setting our sights on our next profitability milestone to reach our first positive GAAP EPS quarter in 2024.
And the proof point is that we're getting really close or net loss before other income and expenses and income taxes was only $5 3 million for the year 2023 down from a loss of $98 7 million in 2022, and Moreover, in Q4 net loss per share was only 41.
So positive GAAP EPS inside of 'twenty 'twenty four is certainly in our targets.
Diwakar M Choubey: So positive gap EPS inside of 2024 is certainly in our target. And finally, the fourth and final takeaway I would like to highlight today is the performance of our leading marketplace technology. We saw approximately 205 million total customer inquiries in 2023, up 78% from approximately 115 million in 2022. We are getting to great scale here.
And finally, the fourth and final takeaway I would like to highlight today is the performance of our leading marketplace technology.
We saw approximately 205 million total customer inquiries in 2023 up 78% from approximately $115 million in 2022 we're getting to great scale here I can't emphasize enough how big of an advantage. This is for us as we're becoming a key component of the broader financial indices.
Diwakar M Choubey: I can't emphasize enough how big of an advantage this is for us as we're becoming a key component of the broader financial industry's customer acquisition and monetization infrastructure. The increasing inquiries also give credence to our strategy of building value-add data products for enterprise clients, which is a new growth area for us. Separately, we're expanding the distribution capabilities of our marketplace technology. We will be focusing more on distribution deals in 2024, and a great proof point was our new strategic alliance with E&Y. We're incredibly excited about that relationship and what it means for our business, and we'll discuss it further in a moment. Lastly, we continue to focus on expanding the product verticals offered on our marketplace beyond our core lending verticals.
<unk> customer acquisition and monetization infrastructure.
The increasing inquiries also gives credence to our strategy of building value add data products for enterprise clients, which is a new growth area for us.
We were expanding the distribution capabilities of our marketplace technology.
We will be focusing more on distribution deals in 2024, and a great proof point was a new strategic alliance with E N y.
We're incredibly excited about that relationship and what it means for our business and will discuss it further in a moment.
Lastly, we continue to focus on expanding the product verticals offered in our marketplace beyond our core lending verticals.
Diwakar M Choubey: Increasing the mix of revenue from non-lending products helps support our growth through a macro environment marked by higher interest rates throughout 2023. And now we'll be leaning into this even further in 2024, as we develop and deepen our presence in areas like insurance, credit cards, and mortgages, while building on the foundational strength of our lending and credit vertical. And now, turning to total customers. We ended 2023 with over 14 million total customers, representing over 115% year-over-year growth. This means we added more than seven and a half million total customers in 2023. And next, the total number of products.
Increasing the mix of revenue from non lending products help support our growth through a macro environment marked by higher interest rates throughout 2023.
And now we'll be leaning into this even further in 'twenty 'twenty four as we develop and deepen our presence in areas like insurance.
Cards mortgages, while building on the foundational strength of our lending and credit verticals.
And now turning to total customers. We ended 2023 with over 14 million total customers representing over 115% year over year growth.
This means we added more than seven 5 million total customers in 2023.
And next to total product over 23 million total products are consumed on our platform through the end of 2023 compared to $12 9 million at the end of 2022.
Diwakar M Choubey: Over 23 million total products were consumed on our platform through the end of 2023, compared to 12.9 million at the end of 2022. By the end of the fourth quarter of 2023, 48% of the products consumed were third-party products, up from 26% through Q4 2022. This increasing mix of third-party product consumption demonstrates the successful execution of our marketplace-first approach, which enables us to scale and bring new customers onto our platform through our vast network, which can be accessed both inside and outside of the MoneyLion app ecosystem. We are positioned to serve each of our customers throughout their financial lives. As we nurture these customer relationships over time, incremental product adoption represents a significant revenue growth and profit opportunity over time for us. As a result, we continue to see inbuilt growth tailwinds in these financial KPIs. As we noted last quarter, we are rapidly approaching the rule of 40, which represents the concept that a company's revenue growth rate and profitability margin should equal or exceed 40.
By the end of the fourth quarter of 2023, 48% of the product <unk>.
Consumed where third party products up from 26% through Q4 2022, this increasing mix of third party product consumption demonstrates the successful execution of our marketplace first approach, which enables us to scale and bring new customers onto our platform through our vast network, which can be.
Accessed both inside and outside of the Moneyline App ecosystem.
We are positioned to serve each of our customers throughout their financial lives as we nurture these customer relationships over time incremental product adoption represents a significant revenue growth and profit opportunity over time for us as a result, we continue to see inbuilt growth tailwind in these financial Cape.
Yes.
As we noted last quarter, we are rapidly approaching the rule of 40, which represents the concept that accompanies revenue growth rate and profitability margin should equal or exceed 40. We believe this is an important target for us as we aim to strike the right balance of growth and profitability in.
Diwakar M Choubey: We believe this is an important target for us as we aim to strike the right balance of growth and profitability. In 2023, our revenue growth was 24% year over year, and our adjusted EBITDA margin was 11%, representing a total of 35. We're going to reach the Rule of 40 through continued execution.
In 2023 of revenue growth was 24% year over year and our adjusted EBITA margin was 11% representing a total of 35.
We're going to reach the rule of 40 through continued execution will focus on continued growth in a few ways first continued strength in our consumer businesses, where we now have over a decade of experience building must have consumer finance products and experiences will drive.
Diwakar M Choubey: We'll focus on continued growth in a few ways. First, continued strength in our consumer businesses, where we now have over a decade of experience building must-have consumer finance products and experiences will drive our progress. Second, we'll relentlessly optimize the very large, scaled funnel on behalf of our enterprise partners and find more pathways for cross-sell automation with our ever-improving proprietary MarTech stack. Third, as we said earlier, we'll deepen our presence in new vertical coverage across insurance, mortgages, and credit cards.
Our progress.
Second we will relentlessly optimize the very large scaled funnel on behalf of our enterprise partners to find more pathways for cross sell automation with our ever improving proprietary martech stack.
Third as we said earlier, we will deepen our presence in new vertical coverage across insurance mortgages and credit cards, and finally, we'll look to expand our distribution and go to market strategies.
Diwakar M Choubey: And finally, we'll look to expand our distribution and go-to-market strategy. Rick will discuss this further when he talks through the guidance, but before he discusses our financial performance, I'll provide a brief update on our business from a product and experience perspective and how that translates into growth opportunities for 2024, starting with our consumer business. Our personal financial management platform provides any consumer with the ability to save, borrow, spend, invest, and find personalized financial guidance from a rich and growing community of Americans looking to make their best financial decisions. We have shortened the distance between inspiration and education and conversion, bridging the gap that has historically prevented people from taking action.
Rick will discuss this further when he talks through the guidance.
But before he discusses our financial performance I'll provide a brief update on our business from a product and experience perspective, and how that translates into growth opportunities for 2024.
Starting with our consumer business, our personal financial management platform provides any consumer the ability to save borrow spend invest and find personalized financial guidance through a rich and growing community of Americans looking to make their best financial decisions, we have shortened the distance between inspiration and Ed.
Vacation and conversion bridging that bridging the gap that is historically prevented people from taking action.
Diwakar M Choubey: All of this functionality is supported by the latest advancements in AI-powered, LLM-enhanced search, which provides your customers with valuable insights that empower them to budget more effectively and find the right products and offers, importantly with context and personalization. It's also important to note that we're developing the core underlying technology and data structures to efficiently allow consumers to converse with their money. Deep consumer research is underway on how artificial intelligence can automate workflows and make better consumer experiences while delivering on the high compliance and regulatory standards that are set for the industry. We have officially launched our premium membership, MoneyLion WOW, which provides exclusive benefits alongside our bundled PFM suite. This is a great platform to continuously add more and more value for our consumers.
All of this functionality is supported by the latest advancements in AI powered LLM enhanced search, which provides our customers with valuable insights that empower them to budget more effectively and find the right products and offers importantly, with contacts and personalization.
It's also important to note here that we are developing the core underlying technology and data structures to efficiently allow consumers to converse with their money.
Deep consumer researches underway on how artificial intelligence can automate workflows and make better consumer experiences while delivering on the high compliance and regulatory standards that are set for the industry.
We have officially launched our premium membership moneyline, Wow, which provides exclusive benefits alongside our bundled P. F. M. Suite. This is a great chassis to add more and more value for our consumers continuously the engagement here will lead to healthy L. T V and <unk> dynamics over time.
Diwakar M Choubey: The engagement here will lead to healthy LTV and ARPU dynamics over time. Let's take a second to do a bit of a deeper dive into the MoneyLion WOW membership. WoW is an innovative membership that we believe is like nothing the industry has seen before. Priced at $9.99 a month, WoW offers hundreds of dollars in benefits annually, including cash back on first and third-party products and offers, and access to exclusive features like active investing and cash back on transactions using your debit card.
Let's take a second to do it a bit of a deeper dive into the moneyline while membership.
Wow is an innovative membership that we believe is like nothing the industry has seen before.
At 999, a month Wow offers hundreds of dollars of benefits annually, including Cashback on first and third party products and offers and access to exclusive features like active investing and cashback in transactions using a debit card.
Diwakar M Choubey: Ultimately, we have a suite of benefits that make the equation pretty obvious for consumers. Every member can get their membership cost back and much more in savings and cash back. Any WOW member will be very clearly incentivized to consolidate their financial lives with MoneyLion.
Ultimately, we have a suite of benefits that make the equation pretty obvious for consumers every member can get their membership costs back and much more in savings <unk> cashbox.
Anyway, I'll remember will be very clearly incentivize to consolidate their financial lives with moneyline.
Diwakar M Choubey: We believe this membership offering will expand our total addressable market and increase recurring revenue. As we offer unique cost savings and benefits to this new segment of the U.S. population, we believe our cash back and other premium benefits will entice a higher-income consumer segment as we become the premier marketplace for financial products and solutions, and, of course, this will increase product adoption of our bundled first-party products and offers, naturally increasing RPU and retention. And finally, we expect W.O.W.
We believe this membership offering will expand our total addressable market and increase recurring revenue.
As we offer unique cost savings and benefits to new segment of the U S population, we believe our cashback and other premium benefits will entice a higher income consumer segment as we become the premier marketplace for financial products and solutions.
And of course.
This will increase product adoption of our bundled first party products and offers naturally increasing <unk> and retention.
And finally, we expect why to deepen engagement with members as they take advantage of these exclusive benefits. We believe we can grow moneyline wowed industry, leading customer acquisition costs initial consumer demand has been really robust and the membership is offered as an upgrade insider for existing customer acquisition funnels.
Diwakar M Choubey: to deepen engagement with members as they take advantage of these exclusive benefits. We believe we can grow MoneyLion at industry-leading customer acquisition costs. Initial consumer demand has been really robust, and the membership is offered as an upgrade insider for existing customer acquisition funnels. We want to become the most trusted go-to marketplace for financial decisions, and our WoW membership is a step in that direction, providing unique value at a great price.
We want to become the most trusted go to marketplace for financial decisions and our Wow membership is a step in that direction provide a unique providing unique value at a great price.
Diwakar M Choubey: So zooming out to our holistic offering more generally, if you look at what we've built, it's the most full-featured PFM in the industry. It includes a robust consumer finance platform with many great categories, including first-party products like our digital wallet, Instacash, full-service investing, and an entire completion product set through third-party integrated products and offers. And, of course, it comes with intuitive and helpful product applications like calculators for loans, investments, retirement, and high-yield savings accounts. All of these help consumers make better decisions for their families. We've talked about the power of search.
So zooming out for a holistic offering more generally.
If you look at what we've built it's the most full featured PFM in the industry.
It includes a robust consumer finance platform.
With many grades crack categories, including first party products like our digital wallet instant cash full service investing in an entire completion product set to third party integrated products and offers.
And of course that comes with intuitive and helpful product applications like calculators for loans investments retirement and high yield savings accounts all of these help consumers make better decisions for their families.
We've talked about AI powered search.
Diwakar M Choubey: We talked about the investments we've made in the technology here, but from a consumer's perspective, cutting-edge insights and easier budgeting tools than what's available in the industry are now right around the corner as a natural progression of cutting-edge technologies that we're seeing. And we're, of course, at the forefront of delivering those through an application layer directly to our consumers. These tools help us engage and retain our consumer base on our platform through a trusted and meaningful relationship. Our curated content feed is based on each customer's individual interests and behavior, providing guidance through their financial journey. We're providing behavioral insights that provide unique benefits that translate to savings. For example, our driver score now tracks how customers drive, potentially saving them money. Significant money on auto insurance.
We talked about the investments we've made in the technology here, but from a consumer's perspective, cutting edge insights and easier budgeting tools than what's available in the industry are now right around the corner is as a natural progression of cutting edge technologies that we're seeing we're of course at the forefront of delivering those to an application layer directly to her.
Consumers these tools help us engage and retain our consumer base on our platform with the trusted and meaningful relationship.
Our curated content feed is based on each customer's individual interests and behavior, providing guidance through their financial journey. We're.
We're providing behavioral insights that provide unique benefits that translate to savings for example, our drivers score now tracks, how customers drive potentially saving them.
Significant money on auto insurance, we're offering credit monitoring this is a useful tool for consumers as they navigate their financial lives, whether it's today or tomorrow and of course lastly, all of those compounds into and builds up to personalized offers these are a function of the one to many network of offers we provide through our marketplace and our ability to <unk>.
Diwakar M Choubey: We're offering credit monitoring. This is a useful tool for consumers as they navigate their financial lives, whether it's today or tomorrow. And of course, lastly, all of this compounds into and builds up to personalized offers. These are a function of the one-to-many network of offers we provide through our marketplace, and our ability to smartly make a next best offer recommendation based on the massive amount of data that we ingest each day becomes really interesting. So what are we doing with all of this functionality?
Smartly, making next best offer recommendation based on the massive amount of data that we ingest each day.
<unk> really interesting.
So what are we doing with all of this functionality.
Diwakar M Choubey: We are making it available to any business. Our marketplace of financial products, along with supplier and publisher tools like embeddable video content, widgets, and calculators, and our generative AI search engine, are all available today in a developer-friendly manner, either through easy-to-use embedded offer walls and co-branded partner pages, or as full custom APIs so our partners can embed them natively into their own apps and experiences. Diwakar Choubey said, "We will be working to strengthen this technology so that it's even more developer friendly."
We are making it available to any business.
Our marketplace of financial products, along with supplier and publisher tools like embedded both video content wage ipsen calculators and our generative AI search engine are all available today and a developer friendly manner, either through easy to use embedded offer walls and cobranded partner pages, whereas full cost.
AP is so our partners can embed them natively into their own apps and experiences.
Throughout 2024.
We will be working to strengthen this technology, so that it's even more developer friendly.
Diwakar M Choubey: Integrating MoneyLion into web and mobile applications should become a great growth loop to strengthen our role in the overall ecosystem. You've seen us talk about this slide many times, but it's a good illustration of our two-sided enterprise network. In 2023, our enterprise business achieved record annual revenue. However, in our enterprise marketplace during the year, we experienced heightened headwinds in our lending verticals. In particular, in Q4, there was a quarter-over-quarter decline in the enterprise business, which we attribute exclusively to the macro environment.
Integrating moneyline into web and mobile application should become a great gross loop to strengthen our role in the overall ecosystem.
You've seen us talk about this slide many times, but it is a good illustration of our two sided enterprise network.
In 2023, our enterprise business achieved record annual revenue.
In our enterprise market place during the year, we experienced heightened headwinds in our lending verticals in particular in Q4, there was a quarter over quarter decline in the enterprise business, which we attribute exclusively to the macro environment. However.
Diwakar M Choubey: However, we have great confidence in this business and see it as a continued pillar of our growth going forward. And we'll continue to combat these dynamics through our ongoing diversification efforts. In 2023, approximately 60% of our enterprise marketplace revenue was from our personal loan vertical, down from 85% in 2022.
We have great confidence in this business and see it as a continued pillar to our growth going forward and we'll continue to combat. These dynamics there were ongoing diversification efforts and.
In 2023, approximately 60% of our enterprise marketplace revenue was from our personal loan vertical importantly.
Importantly down from 85% in 2022.
Diwakar M Choubey: This reflects a tremendous amount of progress in expanding into non-lending verticals. Moreover, it also represents a latent catalyst for growth once the macro environment normalizes. Our network of 1100 plus enterprise partners drove approximately 205 million total customer inquiries in 2023.
This reflects a tremendous amount of progress in expanding into non lending verticals. Moreover, it also represents a latent catalyst for growth once the macro environment normalizes or.
Our network of 1100, plus enterprise partners drove approximately 205 million total customer inquiries in 2023.
What does it represent as we continue to expand our top of funnel with more suppliers and publishers joining our network our data advantage grows.
Diwakar M Choubey: As we continue to expand our top of funnel with more suppliers and publishers joining our network, our data advantage grows. It also means there's a large opportunity in front of us to increase conversions for enterprise partners and scale growth. You might have noticed that with each passing quarter, the lines between our consumer and enterprise businesses have become increasingly blurred. This is by design.
It also means theres, a large opportunity in front of us to increase conversions for enterprise partners and scale growth.
You might have noticed with each passing quarter that the lines between our consumer and enterprise businesses have become increasingly blurred. This is by design. We believe that money line has the ultimate marketplace solution.
Diwakar M Choubey: We believe that MoneyLion has the ultimate marketplace solution. It includes a vast network of enterprise partners who want one-to-many industry connectivity with simple-to-use, compliance-first technology. Embedded marketplace technologies that are developer-friendly. Recommendation and decisioning engines.
It includes a vast network of enterprise partners want.
One to many industry connectivity with simple to use compliance first technology.
Embedded marketplace technologies that our developer friendly recommendation and Decisioning engines targeting and marketing channel tools and capabilities.
Diwakar M Choubey: Targeting and marketing channel tools and capabilities, a content feed, content as a service capabilities, and in-house production and much more. In short, MoneyLion combines the technology, data, and AI capabilities, content, and product knowledge to help our partners easily acquire, grow, and importantly monetize consumers at scale. And our alliance with E&Y is a perfect proof point of how we're bringing this all to market. Thousands of brick-and-mortar banks, your local credit union or mainstreet bank, are playing catch-up as today's consumers want more of their financial services to be delivered online. They're also fighting deposit consolidation among the top 20 banks. This is where we can really help.
Content feed content as a service capabilities and in house production and much more.
In short Moneyline combines the technology data and AI capabilities content and product knowledge to help our partners easily acquire grow and importantly, monetize consumers at scale.
And our alliance with E. N Y is a perfect proof point of how we're bringing this all to market.
Thousands of brick and mortar banks your local credit Union or a main street bank are playing catch up as today's consumers want more of their financial service to be delivered online.
We're also fighting deposit consolidation of the top 20 banks. This is where we can really help moneyline brings embedded finance and leading marketplace technology to the table.
Diwakar M Choubey: MoneyLion brings embedded finance and leading marketplace technology to the table. E&Y brings decades of trusted expertise in the banking sector and relationships with banks, and together, we will deploy turnkey solutions to enable smaller banks to serve an increasingly digital-first consumer. Like I've said before, distribution is key.
N Y brings decades of trusted expertise in the banking sector, and our relationships with banks and together.
We will deploy turnkey solutions to enable smaller banks to serve an increasingly digital first consumer.
Like I've said before distribution is key.
Diwakar M Choubey: And this is a great example of the type of alliances we're building. Both the MoneyLion and the E&Y teams are excited about this partnership as we begin to ramp up in 2024. And we'll look forward to providing updates on our progress along the way. And with that, now I'll turn the call over to Rick to walk through our financials in detail. Thanks, Dean. Good morning to everyone.
And this is a great example.
The type of alliances we're building.
Both the moneyline and the NY teams are excited about this partnership as we begin to ramp up in 2024, and we will look forward to providing updates on our progress along the way.
And with that now I'll turn the call over to Rick to walk through our financials in detail.
Thanks, Steve and good morning to everyone I look forward to sharing details about our financial performance for the fourth quarter and full year ending December 31 2023.
Richard Correia: I look forward to sharing details about our financial performance for the fourth quarter and full year ending December 31st, 2023. I will also discuss our guidance and outlook for the first quarter of 2024. For more information, please refer to our GAAP Consolidated Financial Statements and Non-GAAP Reconciliations, which are available in today's earnings release and our 10-K filings.
I will also discuss our guidance and outlook for the first quarter of 2024.
For more information please refer to our GAAP consolidated financial statements and non-GAAP reconciliations, which are available in today's earnings release, and our 10-K filing.
Richard Correia: Turning to our Customer Acquisition and Lifecycle Strategy, our top of funnel drove approximately $205 million in total customer inquiries, up 78% from roughly $115 million in 2022. This converted into about 7.5 million new total customers in 2023 and over 10 million total products consumed during the year.
Turning to our customer acquisition and lifecycle strategy, our top of funnel drove approximately 205 million total customer inquiries.
Up 78% from roughly $115 million in 2022.
This converted into about seven 5 million, new total customers in 2023 and over 10 million total products consumed during the year.
Richard Correia: We continue to scale our customer base, due in large part to our massive top of funnel. Going forward, one of our key initiatives is to drive incremental uplift in our conversion rate. A small increase here represents a large opportunity, turning you into economics. In 2023, our customer acquisition cost was under $15, and our payback period was around three months, consistent with prior periods. Turning to ARPU.
We continue to scale, our customer base due in large part to our massive top of funnel.
Going forward one of our key initiatives is to drive incremental uplift in our conversion rates are small increase here represents a large opportunity.
Turning to unit economics.
In 2023, our customer acquisition cost was under $15 and a payback period was around three months consistent with prior periods.
Turning to <unk>, our <unk> was around $41 for the full year of 2023 at around 34 in the fourth quarter.
Richard Correia: ARPU was around $41 for the full year of 2023 and around $34 in the fourth quarter. As we said in prior quarters, we've been focused on expanding our camera and introducing more customers to our platform. And it's working.
As we said in prior quarters, we've been focused on expanding our Tam and introducing more customers to our platform and it's working.
Richard Correia: This continues to be a deliberate strategic decision to capture customers in the near term and then focus on accelerating growth and increasing lifetime value with those customers. In the longer term, we believe we can continue to provide value to new customer cohorts, which will drive ARPU expansion as we expand our relationship with them. And then they come back to MoneyLion time and time again for additional content and products. As we've demonstrated quarter after quarter, our revenue continues to be primarily recurring in nature. Starting with the consumer.
This continues to be a deliberate strategic decision to capture customers in the near term and then focus on accelerating growth and increasing lifetime value with those customers.
Longer term, we believe we can continue to provide value to new customer cohorts, which will drive <unk> expansion as we expand our relationship with them and then they come back to Moneyline and time and time again for additional content and products.
As we've demonstrated quarter after quarter, our revenue continues to be primarily recurring in nature.
Starting with consumer in the full year of 2023, approximately 80% of our consumer revenue came from historical cohorts.
Richard Correia: In the full year of 2023, approximately 80% of our consumer revenue came from historical cohorts. Let's take a look at 2022. In that cohort, you can see that we are successfully deepening our product penetration and revenue expansion, a real proof point for the platform approach to consumer finance and our enterprise business. Over 90% of revenue came from our marketplace in prior year cohorts. Investments that we make in acquiring new partners have meaningful recurring SaaS-like revenue contribution. Shifting Gears to Total Origination. In the fourth quarter of 2023,
Take a look at 2022 in that cohort you can see that we are successfully deepening our product penetration and revenue expansion, our real proof point for the platform approach to consumer finance.
In our enterprise business over 90% of revenue came from our marketplace from prior year cohorts.
Investments that we make and acquiring new partners has meaningful recurring SaaS like revenue contribution.
Shifting gears to total originations.
In the fourth quarter of 2023.
Richard Correia: Total originations were 644 million, up 30% year over year and 14% just quarter over quarter. A real testament to the product market fit and AI-driven underwriting and risk management of consumer origination. And for 2023, total originations were $2.3 billion, up 27% year over year. Credit performance trends remain stable in Q4 2023, and for the full year of 2023, our provision expense as a percentage of total originations was 3.4% for the full year of 23. This demonstrates our continued ability to optimize credit quality as we continuously implement changes and leverage over a decade of experience helping customers meet their liquidity needs with our leading fintech solutions. You've heard me say this before, but it's really worth reiterating that we solve for the origination's performance output.
Total originations were 644 million up 30% year over year, and 14% just quarter over quarter, a real testament to the product market fit and AI, driven underwriting and risk management of consumer originations.
And for 2023 total originations were $2 3 billion up 27% year over year.
Credit performance trends remained stable in Q4 2023 and for the full year of 2023, our provision expense as a percentage of total originations was three 4% for the full year of 'twenty three.
This demonstrates our continued ability to optimize credit quality as we continuously implement changes and leverage over a decade of experience, helping customers meet their liquidity needs with our leading fintech solution.
You've heard me say this before but it's really worth reiterating that we sold for the originations performance outcome.
Richard Correia: And we flex up or we slow down based on our AI signals, which allow us to grow and abstract away from the macro environment. Now, turning to some of our other key financial measures. Revenue for the year grew 24% year over year to $423 million.
And we flex up where we slow down based on our AI signals, which allow us to grow and abstract away from the macro environment.
Now turning to some of our other key financial metrics revenue.
Revenue for the year grew 24% year over year to $423 million.
Richard Correia: This performance was driven by strength across our entire business, with record revenue in both our consumer and enterprise businesses. Looking at gross profit, the gross profit margin for 2023 was 60%, up from 57% in 2022. We exited the year even higher with a 63% gross profit margin in the fourth quarter of 23, up from 61% in the third quarter of 2022. Now on to our Path to Profitability. During 2023, we generated 46 million of adjusted EBITDA, making a positive adjusted EBITDA year in parallel with record annual revenue. For the fourth quarter, Q4 marked our fourth consecutive quarter of positive adjusted EBITDA and further margin expansion. Adjusted EBITDA was $17 million compared to $13 million in the third quarter of 2023.
This performance was driven by strength across our entire business with record revenue in both our consumer and enterprise businesses.
Looking at gross profit gross profit margin for 2023 was 60% up from 57% in 2022.
We exited the year, even higher with 63% gross profit margin in the fourth quarter of 23 up from 61% in the third quarter of 2023.
Now on to our path to profitability. During 2023, we generated $46 million of adjusted EBITDA, making a positive adjusted EBITDA year in parallel with record annual revenue.
For the fourth quarter Q4 marked our fourth consecutive quarter of positive adjusted EBITDA and further margin expansion.
Adjusted EBITDA was 17 million compared to $13 million in the third quarter of 'twenty three.
Richard Correia: This represents an Adjusted EBITDA margin of approximately 14.6%, representing about 250 basis points of expansion compared to 12.1% in the third quarter of 2023. As for our cash position, we closed the year with $92 million of cash, compared to $94 million in Q3, while also paying down $10 million of senior debt in Q4. For the full year of 2023, we paid down a total of $25 million of senior debt, and we don't have any additional senior debt principal repayments due until 2026.
This represents an adjusted EBITDA margin of approximately 14, 6% representing about 250 basis points of expansion compared to 12, 1% in the third quarter of 2023.
As for our cash position, we closed the year with 92 million of cash compared to $94 million in Q3, while also paying down $10 million of senior debt in Q4.
For the full year of 'twenty, three we paid down a total of 25 million of senior debt and we don't have any additional senior debt principal repayments due until 2026.
Richard Correia: As part of our efforts to proactively manage our balance sheet, we are in the process of entering into a new forward flow financing arrangement to finance our originations as an alternative to our current warehouse financing facility. This forward flow arrangement, which we currently expect to enter into in Q2 2024, will simplify our balance sheet and, importantly, is a more cash efficient method to finance our originations, allowing us to reinvest in our business. As we continue to drive towards positive gap net income, it's important to note that in Q4 2023, we incurred other expenses of $6 million, of which the majority is attributable to the total litigation-related reserves for our previously disclosed litigation. Excluding this one-time non-recurring expense, MoneyLion would have generated break-even net income for Q4 2023. Well, we are proud of our progress on adjusted EBITDA. We're always looking forward.
As part of our efforts to proactively manage our balance sheet. We are in the process of entering into a new forward flow financing arrangement to finance our originations as an alternative to our current warehouse financing facility.
This forward flow arrangement, which we currently expect to enter into in Q2, 2024 will simplify our balance sheet and importantly is a more cash efficient method to finance, our originations, allowing us to reinvest in our business.
As we continue to drive towards positive GAAP net income. It is important to note that in Q4 2023, we incurred other expenses of $6 million of which the majority is attributable to the total litigation related reserves for our previously disclosed litigations.
Excluding this one time nonrecurring expense moneyline would've generated breakeven net income for Q4 2023.
While we are proud of our progress on adjusted EBITDA.
We're always looking forward as <unk> mentioned, we are setting our sights on our first positive GAAP EPS quarter within fiscal year 2024.
Richard Correia: As Dee mentioned, we are setting our sights on our first positive GAP EPS quarter in fiscal year 2024. And based on recent performance and management execution capabilities, we say this with a high degree of confidence. Turning to our results relative to guidance, revenue was $423 million, within our guidance range of $420 to $425 million.
And based on our recent performance and management execution capabilities, we say this with a high degree of confidence.
Turning to our results relative to guidance revenue was 423 million within our guidance range of $420 million to $425 million.
Richard Correia: Gross profit margin was 60%, exceeding the high end of our guidance of 58 to 59%. Adjusted EBITDA was $46 million, exceeding the high end of our guidance of $39 to $45 million. This represents an 11% adjusted EBITDA margin, approximately a 30 percentage point improvement relative to 2022. Before I turn to our guidance for the first quarter of 2024, I'd like to discuss key growth drivers for 2024 and why we are expecting to achieve the Rule of 40 alongside record revenue, EBITDA, and net income. We believe we are well-positioned for growth acceleration in 2024, supported by the following four pillars of growth. Continued growth in the consumer business. Our consumer business continues to deliver strong results regardless of the macro environment.
Gross profit margin was 60% exceeding the high end of our guidance of 58% to 59%.
And adjusted EBITDA was 46 million exceeding the high end of our guidance of 39% to $45 million.
This represented an 11% adjusted EBITDA margin approximately a 30 percentage point improvement relative to 2022.
Before I turn to our guidance for the first quarter of 2024, I'd like to discuss key growth drivers for 2024, and why we are expecting to achieve the rule of 40 alongside record revenue EBITDA and net income.
We believe we are well positioned for growth acceleration in 2024 supported by the following four pillars of growth.
Continued growth in the consumer business, our consumer business continues to deliver strong results regardless of the macro environment.
Richard Correia: Demand for our consumer products remains robust, providing value for our customers. Moreover, this business is growing increasingly efficient and profitable. Our consumer business will continue to serve as a growth engine throughout the year. Relentless funnel optimization.
Demand for our consumer products remains robust providing value for our customers. Moreover, this business is growing increasingly efficient and profitable or.
Our consumer business will continue to serve as a growth engine throughout the year.
Relentless funnel optimization, we ingest a tremendous amount of data into our top of funnel.
Richard Correia: We ingest a tremendous amount of data into our top of funnel. As we've mentioned before, we see hundreds of millions of total customer inquiries across our platform each year. While this translated into an impressive number of new customers, we are highly focused on optimizing conversions as a small uplift represents substantial upside to our top line. Vertical Expansion, In addition to continuing our market-leading position as a credit marketplace, we are working in real time to expand and deepen the number of product verticals we offer in our market. We saw tremendous ROI on the vertical expansion investments in 2023 and are therefore prioritizing this again in 2024.
As we've mentioned before we see hundreds of millions of total customer inquiries across our platform each year.
While this translated into an impressive number of new customers. We are highly focused on optimizing conversions as a small uplift represents substantial upside to our topline.
Vertical expansion. In addition to continue our market leading position as a credit marketplace. We are working in real time to expand and deepen the number of product verticals, we offer in our marketplace.
We saw a tremendous ROI in the vertical expansion investments in 2023.
And are therefore are prioritizing this again in 2024, namely we are focused on the insurance credit cards and mortgage verticals. This will continue to diversify our marketplace revenue on the products that we see high demand for over the near and medium term.
Richard Correia: Namely, we are focused on the insurance, credit cards, and mortgage verticals. This will continue to diversify our marketplace revenue on the products that we see high demand for over the near and medium term. Expanded Distribution.
Expanded distribution as <unk> mentioned, we are working on strategic partnerships to expand the distribution of marketplace technology.
Richard Correia: As Dee mentioned, we are working on strategic partnerships to expand the distribution of marketplace technology. One notable milestone on this front is our recently announced alliance with EY. We are in the early innings of this alliance, but we're incredibly excited about the prospect of delivering our marketplace technology to the thousands of banks in the U.S. This represents a massive opportunity, and our alliance already has a ready-built pipeline that only represents upside to our previously communicated target.
One notable milestone on this front is our recently announced alliance with Eli.
We are in the early innings of this alliance, but we're incredibly excited about the prospect of delivering our marketplace technology to the thousands of banks in the U S.
This represents a massive opportunity and our alliance already has a ready built pipeline that only represents upside to our previously communicated targets.
Underpinning these growth pillars, a reversion in the macro environment provides additional upside to growth in 2024.
Richard Correia: Underpinning these growth pillars, a reversion in the macro environment provides additional upside to growth in 2024, as our marketplace business would benefit from a rebound in approval rates within our lending vertical. Any positive macro trend that lowers rates will increase conversion, which has material benefits to revenue and unit economics. Now we'll turn to our first quarter 2024 guidance. For the first quarter of 2024, we expect revenue between $115 to $118 million, representing 23 to 26% year-over-year growth and acceleration from the 19% year-over-year growth in Q4 2023. Adjusted EBITDA of $15 to $18 million, representing 13 to 15 plus percent of the adjusted EBITDA market. Going forward, we will no longer be providing financial guidance for gross profit margin as one of our key performance metrics.
As our marketplace business would benefit from a rebound in approval rates within our lending verticals any positive macro trend that lowers rates will increase conversion, which has material benefits to revenue and unit economics.
Now I'll turn to our first quarter 2020 for guidance.
For the first quarter of 2024, we expect revenue between $115 million to $118 million, representing 23% to 26% year over year growth.
An acceleration from the 19% year over year growth in Q4 2023.
Adjusted EBITDA of $15 million to $18 million, representing 13% to 15 plus percent adjusted EBITDA margin.
Going forward, we will no longer be providing financial guidance for gross profit margin as one of our key performance metrics.
Richard Correia: Due to differences in accounting under the forward flow arrangements versus warehouse facilities, we expect gross profit and gross profit margin to present comparable measures of our performance going forward, versus historical data, as we transition from our current warehouse facility to the new, more cash-efficient forward flow arrangement. To be clear, our unit economics remain strong and continue to improve, which is evidenced by our revenue growth, EBITDA, and net income targets. Last quarter, we noted that we have a financial profile that is rapidly approaching the Rule of 40. Our Q1 guidance reflects that we continue to trend in that direction, implying a Rule of 40 metric of 36 to 41 for the first quarter of 2024. As we look back on 2023, we're incredibly proud of the progress we've made and look forward to another strong year in 2024. With that, I'll turn it back over to Dee for his closing remarks. Thank you, Rick.
Due to differences in accounting under the four floor arrangements versus warehouse facilities.
We expect gross profit and gross profit margin to present comparable measures of our performance going forward versus historically as we transition from our current warehouse facility to the new more cash efficient forward flow arrangement.
To be clear our unit economics remain strong and continue to improve which is evidenced by our revenue growth EBITDA and net income targets.
Last quarter, we noted that we have a financial profile that is rapidly approaching the rule of 40, our Q1 guidance reflects that we continue to trend in that direction, implying a rule of 40 metric of 36 to <unk> 41 for the first quarter of 2024.
As we look back at 2023, we're incredibly proud of the progress we've made and look forward to another strong year in 2024.
With that I'll turn it back over to D for his closing remarks.
Thank you Rick and closing I will leave you with a couple of final thoughts.
Diwakar M Choubey: In closing, I'll leave you with a couple of final thoughts. 2023 was another great year of performance for MoneyLion and important in our evolution to becoming an industry stalwart. We have come a long way in scaling the business and driving operational efficiency, generating record results in 2023 across our key metrics. While the year was great, we don't settle for good enough.
2023 was another great year of performance for Moneyline and important in our evolution to becoming an industry stalwart we've.
We've come a long way in scaling the business and driving operational efficiency generating record results in 2023 across our key metrics.
While the year was great. We don't settle for get enough. We're always looking forward to the next milestone and Moneyline's evolution, how can we innovate on our technology differentiate the value proposition for millions of Americans and scale, our financial Kpis further and we have no doubt we will continue to drive strong results on the heels of a record performance in <unk>.
Diwakar M Choubey: We're always looking forward to the next milestone in MoneyLion's evolution. How can we innovate on our technology, differentiate the value proposition for millions of Americans, and scale our financial KPIs further? And we have no doubt we'll continue to drive strong results. On the heels of our record performance in 2023, we couldn't be better positioned for the setup for 2024.
<unk> thousand 23, we couldnt be better positioned for the setup for 2024.
Diwakar M Choubey: Our plan hinges on our growth pillars, including continued execution in our consumer business, aided by our plan to move towards a more cash efficient financing mechanism that makes us balance sheet light. It will also hinge on funnel optimizations on the enterprise side, bringing new data products to our partners, deepening our product verticals, and expanding our distribution. And, of course, as the macro interest rate environment reverts at some point.
Our plan hinges on our growth pillars, including continued execution in our consumer business.
Aided by our plan to move towards a more cash efficient financing mechanism that makes us balance sheet light.
It will also hinge on funnel optimizations on the enterprise side, bringing new data products to our partners deepening our product verticals and expanding our distribution.
And of course, as the macro interest rate environment reverts at some point.
Diwakar M Choubey: A rising tide will lift all ships, providing MoneyLion with built-in revenue growth for more credit-oriented matches on our network. Importantly, due to our increasing scale, we're now a credible complement and alternative to Google and Facebook for customer acquisition in the financial services sector. These factors, coupled with disciplined execution, will continue to propel MoneyLion forward in 2024 and beyond, and we're just getting started. Thank you all very much.
A rising tide will lift all ships.
Riding moneyline built in revenue growth for more credit oriented matches on our network.
Importantly, due to our increasing scale. We are now a credible complement an alternative to Google and Facebook for customer acquisition and the financial services sector.
These factors coupled with disciplined execution will continue to propel moneyline Ford in 2024 and beyond and we're just getting started.
Thank you all very much I will now turn the call back over to the operator before we take your questions.
Operator: I will now turn the call back over to the operator before we take your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question.
Thank you we will now be conducting a question and answer session.
I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pickup your handset before pressing the star keys, one moment, please while we poll for questions.
George Frederick Sutton: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. Our first question comes from George Sutton, on behalf of Craig Hallam. Thank you. wonderful job, guys. Great numbers. I'm curious, as we look at this EY partnership, you mentioned it's not embedded in your guidance, but you have built a pipeline. We're certainly aware of their competence in the financial services sector, but can you give us a little better sense of how big this EY opportunity could be, and are there other partnerships like this that you would look to pursue? Hey George, good morning.
Our first question comes from George Sutton from Craig Hallum. Please proceed.
Thank you wonderful job guys great numbers so.
I'm curious as we look at this <unk> partnership you mentioned, it's not embedded in your guidance, but you have built a pipeline.
We're certainly aware of there.
Competence in the financial services sector, but can you give us a little better sense of how big cannot see why opportunity be and are there. Other partnerships like this that you would look to pursue.
Diwakar M Choubey: It's a great question. So look, I think, as we said in our prepared remarks, the idea here is really to co-build turnkey digital solutions alongside EY. And as you can imagine, we didn't stumble upon this relationship by accident and that there's been a lot of time spent by both companies, multiple quarters really setting this up for success. So in that process, we've actually had a lot of conversations with potential clients, and the demand for the product is actually pretty acute. And if you think about some of the dynamics in the marketplace in terms of mid-sized financial institutions, do they have access to the right fraud tools, the right KYC tools, the right onboarding tools, and ultimately, everyone's looking to diversify their deposit acquisition strategies in the world that we're in with interest rates, as well as their non-interest income and fee generation capabilities. So we can help on all three elements, right?
Hey, George Good morning, It's a great question. So look I think as we said in our prepared remarks. The idea here is really to co build turnkey digital solutions alongside E y.
And as you can imagine that we didnt stumble upon this relationship by mistake and Thats theirs.
Been a lot of time spent by both companies.
Multiple quarters really setting us up for success in that process, we've actually had a lot of conversations with potential clients and.
The demand for the product.
Is actually pretty acute and if you think about some of the dynamics in the marketplace in terms of mid sized financial institutions do they have access to the right fraud tools are right KFC tools right Onboarding tools and.
And ultimately everyone's looking to diversify their deposit acquisition strategies in the world that we're in with interest rates as well as our non interest income and fee generation capabilities. So we can we can help on all three elements right. So this is where and why it really opens the door for the distribution element the trustworthiness element that really.
Diwakar M Choubey: So this is where EY really opens the door for the distribution element, the trustworthiness element, the relationship element that's really important in the banking world. And we provide the benefit of 11 plus years of building consumer-facing technologies, right? So that's why, you know, as we're taking that to market, we've seen a lot of resonance with that product set. So it's early innings, but we do expect it to be fairly meaningful to our contribution later this year and certainly in 2025. Yeah, I think, you know, we love this question because, you know, we didn't make a big splash with EY because this is going to be small.
Asian ship.
Element, that's really important in the banking world and we provide the benefit of the 11 plus years now building consumer facing technologies right. So that's why.
As we're taking that to market, we've seen a lot of residents with that product set. So it's early innings, but we do expect it to be fairly meaningful.
It's our it's our contribution.
Later this year and certainly in 2025, yes, I think we are.
This question, because we didn't make a big splash.
With E Y because this is going to be small.
Diwakar M Choubey: And so, when we think about the fee pools that are available, you know, they're in the $20 billion range. And as you know, when MoneyLion sets its sights on a fee pool, we take market share. And so, we're going after the digital transformation of the regional banks, the national banks, and the credit unions with our marketplace technology. And so, this is really that kind of mosaic coming together in terms of MoneyLion moving very aggressively into providing marketplace technology to the most important customers that we have within our spectrum. Awesome stuff.
And so when we think about the fee pools that are available you know its in the $20 billion range and as you know when moneyline sets its sights on a fee pool, we take market share.
And so we're going after that.
The digital transformation of the regional banks the national banks.
Unions with our marketplace technology and so this is really that kind of mosaiq coming together in terms of money line moving very aggressively into providing at marketplace technology into the most important customers.
That we have within our spectrum.
Awesome stuff one other question so the CFPB came out and it has tapped down.
George Frederick Sutton: One other question. So the CFPB came out and has tapped down on credit card late fees, which is expected to create a fairly significant amount of change in credit availability. I would think that you being able to provide a breadth of solutions would ultimately be a nice beneficiary of this, particularly as you're just now entering the credit card vertical. Can you just give us a sense of thoughts there?
The credit card late fees that is expected to create a fairly significant amount of change in credit availability I would think for you being able to provide a breadth of solutions with.
Would ultimately be a nice beneficiary of this particularly.
Particularly as you are just now entering the credit card vertical can you just give us a sense of thoughts there.
Diwakar M Choubey: Yeah, look, first of all, it's two days since that was announced, so I think the industry will digest it, and then they'll have, you know, their proper response that we think will take a while for it to actually get to reality. But you know, the American financial services ecosystem, the industry is incredibly dynamic, right? The credit card vertical is incredibly dynamic.
Yes look I think first of all.
It's two days since that's been announced so I think the industry will digest that and then they will have.
They are proper response that we think will take a while for it to actually get to a reality.
But the American financial services.
Our system the industry's incredibly dynamic like the credit card vertical is incredibly dynamic you have everything from secured cards to subprime to near prime to prime and.
Diwakar M Choubey: You have everything from secured cards to subprime, to near prime, to prime, and they all have different unit economics, right? So the United States runs on credit card line availability, you know; it's going to have a multiplier effect for sure in those different verticals. But as it relates to your question around how it impacts the credit products that we offer both on a first and third-party basis, our positioning as a marketplace really sets us up well, right? Because we are the interface layer for helping consumers make the decision on whether it's a personal loan that's right for them, a credit card, an income-based advanced product, a HELOC, or a secured card. So because we're the tooling on top of the existing offer set, we absolutely think that we'll be in a better position to actually help consumers demystify which product to take. From a unit economic perspective, I think it's early.
They all have different unit economics right. So.
The United States runs on credit card line availability.
It's going to have a multiplier effect for sure in those different verticals, but as it relates to your question around how it impacts potentially.
Credit products that we offer both on our first and third party basis, our positioning as a marketplace really sets us up well right. Because we are the interface layer for helping consumers make the decision on whether it's a personal loan that's right for them a credit card.
Income based advanced product or a HELOC our secured card so because we're the tooling on top of the existing offer set.
We absolutely think that will be now in a better position to actually help consumers demystify, which products to take from a unit economic perspective, I think it's early I think that it takes a.
Diwakar M Choubey: I think that it takes, you know, a long while for this actually to come to reality and ultimately hit those unit economics. And in that case, we expect products to also change a little bit. If you think of it as a natural progression, and you actually do think that when it hits, credit availability comes down on the credit card side, because we have the marketplace with other offers, our first-party Instacash offer. We provide a marketplace of income-based advanced products with some of the leading providers out there. I think, again, it's one of those things where, you know, we're really well-positioned to take market share across the spectrum.
Yes, a long while for this actually to come to reality and ultimately hitting those unit economics and then in that case, we expect products to also change a little bit if you think of it from a natural progression and you actually do think that when it hits credit availability comes down on the credit card side, because we have the marketplace with other offers.
Our first party instant cash offer that we provide a marketplace us income based advanced products with some of the leading providers out there I think again, it's one of those things were.
No.
We're really well positioned to take market share across the spectrum.
I agree with that conclusion, thanks, guys.
George Frederick Sutton: Thanks, guys. Our next question comes from Hal Goetsch from B Reilly Securities. Please proceed.
Our next question comes from how <unk> from B Riley Securities. Please proceed.
Harold Lee Goetsch: Hey guys, terrific quarter. Just want to clarify some numbers that were given on your enterprise side. Did I hear this right?
Hey, guys terrific quarter, just wanted to I just wanted to clarify some numbers that will give it on your enterprise side did I hear this right.
Richard Correia: Like about 85% of the business in 2022 was personal loans, and that fell to six. And if that the math is right, that means your personal loan business was down pretty sharply by about 20%, yet the enterprise business still grew, is that correct? So from a percentage perspective, what that number is representing is the percentage mix of our revenue that is coming from our marketplace business, specifically within the credit vertical. And so I think what's important about that metric is not that that business actually fell, but actually that that business has become less of the overall unit economics as there are macro headwinds in that space. And so the corollary to that is that we were able to build up and expand into other verticals.
About 85% of the business in 2022 was personal loans that fell to 60.
If that debt.
<unk> is right that means your personal loan business was down.
Pretty sharply about 20% yet the enterprise business still grew is that debt correct.
So from a percentage perspective, what that number is as representing is the percentage mix of our revenue.
That is coming from our.
Marketplace business, specifically within the credit vertical and so I think what's important about that metrics is not that that business actually fell but actually that that business.
Has become less of the overall unit economics is there a macro headwinds in that space and so the corollary to that is that we were able to buildup and expand into other verticals that sets us up incredibly well for 2024, because what it means is that.
Richard Correia: That sets us up incredibly well for 2024 because, as rates come back and that increases our conversions in the credit vertical, we're going to have the benefit of both seeing the uplift from a revenue perspective within that vertical, alongside continuing to match customers with products that sit in the insurance vertical, the mortgage vertical, auto refi, etc. And so I think from our perspective, we were highlighting what was a really important build out of products and technology that, again, sets us up really well for 2024. OK. Can I ask one follow-up question on the subscription business? You've mentioned or alluded to initial product market fit and traction. What can you tell us about the product market fit and traction you're seeing with the subscription business? generally, or are actually qualitatively things.
As rates come back and that increases our conversions in the credit vertical we're going to have the benefit of both seeing the uplift from a revenue perspective within that vertical alongside continuing to match customers with products that sit in the insurance vertical the mortgage vertical auto refi et cetera, and so.
I think from our perspective, we were highlighting what was a really important build out of kind of products and technology.
Again sets us up really well for 2024.
Okay.
Can I ask one follow up on the subscription business.
Okay.
Before letting you alluded to yes.
Initial product market fit in traction can you just what can you tell us about the product market fit and traction youre seeing with the subscription business maybe.
Generally our actually quality quantitatively. Thanks.
Yeah.
Harold Lee Goetsch: Yeah, Hal, as you know, we've been working on really honing the value proposition and the product market fit for the last couple of quarters. The MoneyLion WoW membership, the subscription business, has been in beta for a couple of quarters now. We want it to be the best of MoneyLion. We want it to be the gateway, the interface layer to our marketplace. We want it to be a single point of decision making for consumers. And if you look at our proof points, if you look at the cohort slides that we share every quarter, 80% of our revenue comes from prior cohorts, right? So right now, the first phase of rollout is really here is the upsell and the upgrade path with our existing customers. As we continue getting more partners and the value proposition becomes, it becomes irrational for anyone not to have the MoneyLion WoW membership.
Joe.
Been working on really honing the value proposition in the product market fit.
Last couple of quarters now.
<unk> line, while membership the subscription business has been in beta for a couple of quarters now we want it to be the best of multi line. We wanted to be the gateway the interface layer to our marketplace, we want us to be a single point of decision making for consumers.
And if you look at our proof points. If you look at the cohort slides that we share every quarter, 80% of our revenue comes from prior cohorts right. So right now the first phase of rollout really here is the upsell and the upgrade path with our existing customers as we continue getting more partners in the value proposition becomes that it becomes irrational for anyone.
Not to have the money line while membership.
Diwakar M Choubey: I think that's really when we put a lot of marketing dollars behind it. But if you look at our track record of already providing a recurring nature to our consumer revenue, I think this only bolsters it and enhances sort of that revenue line around consumers. If you're an investor looking at our P&L and sort of the breakdown of our consumer business, I think the existence of the bundle of the subscription and the membership really should give you confidence that, you know, we're really tying the consumer into our ecosystem for a long period of time. We want them to come back for the second time when they want to make a financial decision.
That's really when we put a lot of marketing dollars behind it but if you look at our track record of already providing a recurring nature to our consumer revenue I think this only but bolsters it and then enhances.
So sort of that revenue line around consumers appear to investor looking at our P&L in sort of the breakdown of our consumer business I think the existence of the bundle of the subscription up the membership really should give you confidence that we're really tying in the consumer and to our ecosystem for a long period of time, we want them to come back for the second time, when they want to make a financial decision. If you look at the <unk>.
Diwakar M Choubey: If you look at the products that we're building with AI search, they're all around engagement, retention, and extending the lifetime of this consumer trusting MoneyLion to make that financial decision. And, of course, that provides an incredible benefit to our enterprise business. This is where we say that the lines are blurring a little bit between the two businesses because the longer they are on MoneyLion, the more times we can offer vetted consumers with exactly matched personalized products in our ecosystem. And that's ultimately the game here, to extend that lifetime value over time. Thank you. The next question comes from Josh Siegler from Cantor Fitzgerald. Yeah, hi guys.
Products that we're building with AI search theyre, all around engagement retention and extending the lifetime that this consumer is trusting moneyline to make that financial decision and of course that provides an incredible benefit to our enterprise business. This is where we say that the lines are blurring a little bit between the two businesses is.
The longer they are on moneyline, the more times, we can offer vetted consumers with exactly matched personalized products in our ecosystem and that's ultimately the game here is to extend that lifetime value over time.
Yes.
Okay cool thank you.
Our next question comes from Josh Seigler from Cantor Fitzgerald. Please proceed.
Yeah, Hi, guys. Thanks for taking my question and Great results here really nicely.
Joshua Michael Siegler: Thanks for taking my question. Great results here. Really nice to see.
Joshua Michael Siegler: First of all, I was wondering, you know, obviously, you have a significant amount of customer inquiries coming in at the top of the funnel. How are you thinking about actually growing the customer base throughout 2024? Yeah, so look, we don't see any headwinds in terms of the growth rate of our total customer inquiries.
First of all I was wondering you know obviously you have a significant amount of customer inquiries coming in top of funnel. How are you thinking about actually growing the customer base throughout the mine plan for it.
Yeah, So look I.
We don't see any headwinds in terms of the growth rate on our total customer inquiries. In fact, if you think about it why our total customer inquiries or increasing our network the technology value proposition that we have in the marketplace through our engine by Moneyline, our enterprise business as well as our media business, that's becoming more.
Diwakar M Choubey: In fact, if you think about why our total customer inquiries are increasing, our network, the technology value proposition that we have in the marketplace through our engine by MoneyLion, our enterprise business, as well as our media business, that's becoming more and more a must-have. So if you're acquiring consumers digitally, it's becoming, we're getting to the scale where you likely have to go through our engine, our enterprise business, So what that allows us to do is increase both the suppliers and the publishers because we're creating more and more monetization opportunities for them, as well as a financial lender, an insurance company, a mortgage company, a credit card company. We're providing more and more data tools to actually pinpoint the audience that's best for them, because every financial institution has a different segmentation strategy. With our data advantage, we are now creating really interesting tools that are advanced, that are using machine learning, that are using some of the advancements to pinpoint the exact consumer some of these financial institutions want, right? And that really just drives the multiplier effect on both sides.
More and more of a must have if you're acquiring consumers digitally.
It's becoming it where we're getting to a scale, where you likely have to go through engine, our enterprise business to acquire those consumers. So that what that allows us to do is increase both the suppliers and publishers, because we're creating more and more monetization opportunities for them as well as our financial lender or an insurance company a mortgage.
Company, a credit card company or providing more and more data tools to actually pinpoint the audience, that's best for them right because every.
Every financial institution has a different segmentation strategy with our data advantage. We are now creating really interesting tools that are advanced or using machine learning that are using some of the advancements to pinpoint the exact consumer some of these financial institutions want right and.
And because and that really just drives the multiplier effect on both sides. The more supply you have the more demand that comes in more demand you have the more revenue per lead you can give to your publishers and your suppliers.
Diwakar M Choubey: The more supply you have, the more demand that comes, and the more demand you have, the more revenue per lead you can give to your publishers and your suppliers. And that's, you know, our pipeline is really good. We're going to continue investing in sales and partner solutions, as we've said in the past, in 2024. And I think a combination of that continues to give us a tailwind in the total number of inquiries increasing in 2024. Got it. That's really helpful, Cullard.
And that's in our pipeline is really good we're going to continue investing in sales and partner solutions as we've said in the past in 2024, and I think a combination of that continues to give us a tailwind in the total inquiries increasing in 'twenty 'twenty four.
Got it that's really helpful color. Thank you and then I also wanted to focus on the other side of the things that is just increasing lifetime value of those customers. We saw really strong expansion of the 2022 cohort are you focused on cross selling and Upselling on the 2023 cohort moving forward.
Joshua Michael Siegler: And then, you know, I also wanted to focus on the other side of things, which is just, you know, increasing the lifetime value of those customers. You know, we saw a really strong expansion of the 2022 cohort. How are you focused on, you know, cross-selling and, you know, up-selling on the 2023 cohort moving forward? Yeah, hey, Josh. I appreciate the question.
Hey, Josh I appreciate the question. So when you look at our focus for 2024 and those kind of growth pillars.
Richard Correia: So when you look at our focus for 2024 and those kind of growth pillars, that relentless focus on funnel optimization, one of the components of that, in addition to, of course, what Dee just talked about in terms of expanding the top of the funnel, is really looking at kind of the middle and kind of lower end of that funnel. So from the middle of the funnel, our AI-driven conversion continues to improve quarter over quarter. And so matching customers with the right product is something we're just getting better and better at. And it's what's making us such a big participant within the kind of marketplace space across all of financial services. But then, when you look at the bottom of the funnel, what you've highlighted is exactly another area that we're focused on. 2022 is the proof point that our ability to kind of land and expand is working. And so our ability to kind of take that marketplace technology and use it to cross-sell that second and third derivative product has a couple impacts. Of course, it has an impact on our LTV, but it also has an impact on ARPU.
That relentless focus on funnel optimization, one of the components of that in addition to of course would you just talked about in terms of expanding that top of funnel is really looking at kind of the middle and lower end of that funnel. So from the middle of the funnel.
Our AI driven conversion continues to improve quarter over quarter, and so matching customers with the right product is something we are just getting better and better at it's what's making such a big participant within the marketplace.
Base across all of financial services, but then when you look at the bottom of the funnel you've highlighted is exactly another area that we're focused on 2022 as a proof point that our ability to kind of land and expand is working and so our ability to kind of take that marketplace technology and use it to cross sell that second and third derivative product has a couple of impacts of course it has an <unk>.
Packed on our LTV, but it also has an impact on <unk> and so the game, we're playing in terms of letting our proven a drift down.
Joshua Michael Siegler: And so the game we were playing in terms of letting ARPU kind of drift down to expand basically the number of customers coming into the ecosystem was because we had such confidence in being able to kind of cross-sell that again, that second and third derivative product. And in some cases, those are kind of products that have 30, 40% margins. And in other cases, those are products that have 70 to 90% margins. And so it's an important part of our overall strategy, and it's a high priority and focus area for Moneyline in 24. Thanks Rick, I appreciate it, and congrats again on the results.
Expand basically the number of customers coming into the ecosystem is because we have such confidence meal to kind of cross sell that again that second and third product and in some cases those are kind of products that have 30, 40% margins and in other cases, the other parks that having a 70% to 90% margins.
So it's an important part of our overall strategy and it's a high priority and focus area for <unk> and 'twenty four.
Thanks, Greg I appreciate it and congrats again on the results guys.
Joshua Michael Siegler: Yeah, thanks, Josh. Thanks, Josh. Our next question comes from Jacob Stefan from Lake Street Capital Markets. Yeah, good morning, guys.
Thanks, Josh Thanks, Josh.
Our next question comes from Jacob <unk> from Lake Street Capital markets. Please proceed.
Yes, good morning, guys. Congrats on the results and strong guidance here.
Jacob Stefan: Congratulations on the results and strong guidance here. Thank you. Maybe just kind of looking at capital allocation priorities. As your model continues to scale, you're throwing off incremental free cash flow. Obviously, you paid down debt in the quarter, but how can we think about kind of the mix of debt reduction and leverage reduction?
Maybe just kind of looking at capital allocation priorities.
As you as your model continues to scale your thorough enough incremental free cash flow.
Obviously, you paid down debt in the quarter, but how can we think about kind of the mixes debt reduction leverage reduction too.
Jacob Stefan: Overall, kind of reinvesting back into the business. Hey, first of all, welcome and Jacob, and we kind of appreciate you picking up coverage in terms of your question. I think in 2023, you saw us pay down about $25 million of senior debt. We don't have another payment due until 2026.
Overall kind of reinvesting back into the business.
Hey, first of all welcome and Jacob when we kind of appreciate you picking up coverage.
In terms of your question.
And I think in 2023, you saw us pay down about $25 million of senior debt.
Don't have another payment due until 2026.
Richard Correia: We believe the best use of our cash right now is to continue focusing on scaling and growing our business. It's why you'll see from a revenue perspective, we've got it accelerate our revenue growth. In Q4 of 23, we had a 19% year-over-year growth in revenue.
We believe actually the best use of our cash right now is to continue focusing on kind of scaling and growing our business is why you will see from a revenue perspective, we've guided to accelerating our revenue growth Q4, 'twenty three we had a kind of a 19% year over year growth in revenue and we're guiding to something in the Zip.
Richard Correia: We're guiding to something in the zip code of over 24% year-over-year growth. That's where we're focusing from a capital allocation perspective. To dig into the specifics, which we just touched upon, it's about funnel optimization at every level. It's about the top of the funnel with more distribution and more channel partners. It's about AI-driven conversions and matching with the right product, and it's about cross-selling the second and third derivative products.
Code of over 24% year over year growth, So that's where we're focusing.
A capital allocation perspective to dig into the specifics, which we just touched upon.
It's about funnel optimization of at every level, it's about the top of the funnel with more distribution and more channel partners.
The AI, driven conversions and matching with the right product and it's about cross selling the second and third derivative product, that's where we're going to put our cash and we're able to do it with efficiency at we're able to do it while continuing to focus on our rule of 40, so again driving.
Richard Correia: That's where we're going to put our cash. We're able to do it with efficiency. We're able to do it while continuing to focus on our rule of 40. Again, driving growth alongside EBITDA margins in the 13% to 15% range, which is what we've got for the first quarter, puts us in that kind of rule of 40 in the 36% to 41% zip code. I think if you compare this against others in the space, it's pretty remarkable.
Growth alongside EBITDA margins in the 13% to 15% range, which is what we've guided for the first quarter puts.
Puts us in that kind of a rule of 40.
In the 36% to 41% ZIP code I think if you're conscious against others. In this space is pretty remarkable and so that's where you're going to see us continuing to focus.
Richard Correia: That's where you're going to see us continuing to focus as we generate and spin up more cash given the efficiency of our business today. Okay, got it. And maybe just one more on the MoneyLion WOW. Maybe you could kind of talk about the conversion rate of, you know, non-premium subs to kind of premium subs. What has that uptake been like? Could you kind of quantify that?
We generate and spin up more cash given the efficiency of our business today.
Yes.
Okay got it.
Maybe just one more on the moneyline, while maybe you could kind of talk about conversion rate.
Non premium subs to kind of premium subs.
Does that.
I'll take that Mike could.
Could you kind of quantify.
Jacob Stefan: The user base on the premium platform. So, Jacob, I think there are a couple of strategies to growing our MoneyLion WOW subscription over time. And we're taking a little bit of a phased approach. You know, we've been providing bundles and subscriptions since 2016, right? And we were one of the first really to kind of put it all together in one seamless application.
The user base.
<unk> premium platform.
So Jacob I think Theres, a couple of strategies to growing our moneyline Wow subscription over time, and we're taking a little bit of a phased approach.
We've been providing bundles and the subscriptions since 2016 right.
The first really to kind of put it altogether.
In one seamless application.
Diwakar M Choubey: So right now, the first phase is really to have MoneyLion WOW as an upgrade in this cross-sell journey in the existing funnels. As I said before, 80% of our consumer revenue comes from prior cohorts. So these are really loyal, really sticky, really recurring customers to begin with, and we'll be really offering them the upgrade to the MoneyLion WOW membership. As we continue over the next few months to add more partners, more capabilities, and more cash back. We've got a metal debit card coming out that we're excited about. A lot of interesting, engaging financial literacy components are being added to it. You know, as we talked about in the past, we have a unique ability to tell our own story through our product production capabilities or content-as-a-service capabilities.
So right now the first phase is really to.
Have moneyline Wow as an upgrade into the cross sell.
Ernie and the existing funnels as I've said before 80% of our.
Consumer revenue comes from prior cohorts. So these are really loyal really sticky really recurring customers to begin with and we'll be really offering them.
The upgrade in the sort of.
Upgrades to the moneyline, while membership as we continue over the next few months to add more partners more.
More capabilities more cash back we've got a metal debit card coming out that we're excited about a lot of interesting engaging financial literacy components are being added to it as we've talked about in the past we have a unique ability to tell our own story through our product production capabilities of content as a service capability.
<unk>.
Diwakar M Choubey: As those all get installed inside of the membership, we will be putting incremental marketing dollars and brand dollars behind MoneyLion WOW. And I think that'll be a more appropriate time for us to really kind of signal in terms of subscriber growth. But for now, think of it really as bolstering the existing recurring revenue of the platform and being cross-sold to those consumers that are already using the product.
As those all get installed inside of the membership we will be putting incremental marketing dollars and brand dollars behind moneyline, Wow, and I think that'll be a more appropriate time for us to really kind of signal in terms of the subscriber growth for now think of it really as bolstering the existing recurring revenue of the platform and being cross sells.
To those consumers that are already using the product.
Jacob Stefan: Okay, got it. Thanks, guys. Thanks, Jacob. This concludes our question and answer session. This also concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Hmm, hmm, hmm, hmm.
Okay got it.
Thanks, guys.
Thanks Jacob.
Yes.
This concludes our question and answer session.
This also concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Yeah.
Uh-huh.
Hum.
Uh-huh.
Mhm.
[music].
Hum.
Okay.