Q4 2023 Mogo Inc Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Mogo Q4 2023 Financial Results Conference call. At this time, all lines are in listen-only mode.
Good afternoon, ladies and gentlemen, and welcome to the mogul Q4 2020 financial results Conference call. At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this quality required immediate assistance.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded.
Please press star zero for the operator this call is being recorded.
Operator: On Wednesday, March 20, 2024, I would now like to turn the conference over to Mr. Craig Armitage. Thank you. Please go ahead.
On Wednesday March 22024, I would now like to turn the conference over to Mr. Craig Army. That's thank you. Please go ahead.
Craig Armitage: Thank you, Operator, and good afternoon, everyone. Thanks for joining us today. Just a few notes before we get started. Today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligation to update these statements except as required by law.
Craig Armitage: Thank you operator, and good afternoon, everyone.
Craig Armitage: Thanks for joining us today, just a few notes before we get started.
Today's call will contain forward looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected the company undertakes no obligation to update these statements except as required by law.
Craig Armitage: Information about the risks and uncertainties is included in Mogo's Q4 near-end filings, as well as periodic filings with regulators in Canada and the United States, which you'll find on CDAR, EDGAR, and you can access the Investor Relations website as well. The second point is that today's discussion will include several adjusted financial measures, i.e., non-IFRS measures.
Craig Armitage: Information about the risks and uncertainties are included in Bogo is Q4 and year end filings as well as periodic filings with regulators in Canada, the United States, which youll find on SEDAR, Edgar and you can access to the <unk> Investor Relations website as well.
Craig Armitage: Second point is today's discussion will include several adjusted financial measures.
Craig Armitage: I E. Non <unk> measures. Please consider these as a supplement to and not as a substitute for the <unk> measures. You'll see we've included reconciliations to those measures in the press release, and the investor deck and with that I'll turn it over to Dave salary to get started please go ahead.
Craig Armitage: Please consider these as a supplement to and not as a substitute for the IFRS measures. You'll see we've included reconciliations to those measures in the press release and the Investor Deck. And with that, I'll turn it over to Dave Feller to get us started. Please go ahead, Dave.
David Marshall Feller: Thanks, Craig. Thank you. Good afternoon.
Dave: Thanks, Greg.
Dave: Yes.
Dave: Thank you good afternoon, and welcome to Mobiles fourth quarter fiscal 2023 results conference call I'm joined today by Great color, our president and CFO.
David Marshall Feller: Welcome to Mogo's fourth quarter fiscal 2023 results conference call. I'm joined today by Greg Feller, our president and CFO. Our focus in 2023 was to build a more profitable and efficient company while at the same time setting us up for long-term sustainable growth by increasing product velocity and driving improvements across our product. We are pleased that we have made excellent progress on both fronts. As you can see, our financial results really highlight the progress we've made. Q4 revenue was $17.2 million, up more than $1 million, or 6% sequentially.
Dave: Our focus in 2023 was to build a more profitable and efficient company. While at the same time setting us up for long term sustainable growth by increasing product velocity and driving improvements across our products. We're pleased we have made excellent progress on both fronts.
Dave: As you can see our financial results really highlight the progress we've made.
Q4 revenue was $17 2 million up more than $1 million or 6% sequentially.
David Marshall Feller: Another solid quarter with continued improvement in adjusted EBITDA, up 1000% from last year to positive $2.7 million this quarter. This brought us to $7.7 million in adjusted EBITDA for the year, towards the top of our guidance range, and most significantly, a $19.9 million improvement compared to the adjusted EBITDA loss of $12.2 million in 2022. Our business today is made up of three key pillars, wealth, payments, and crypto. We're excited by the long-term opportunities in each of these. I'll walk you through Wealth, and Greg will talk about Payments and Crypto.
Dave: Another solid quarter with continued improvement in adjusted EBITDA up 1000% from last year to positive $2 7 million this quarter.
Dave: This brought us to $7 7 million and adjusted EBITDA for the year towards the top of our guidance range and most significantly a $19 9 million improvement compared to the adjusted EBITDA loss of $12 2 million in 2022.
Dave: Our business today is made up of three key pillars wealth payments and crypto.
Dave: Excited by the long term opportunity in each of these.
Dave: I'll walk through wealth, and Greg will talk about payments and crypto.
David Marshall Feller: It's helpful to start with the market opportunity in wealth. The Canadian wealth market is measured in trillions and expected to grow from over $6 trillion today to over $11 trillion by the end of 2032. Within this, there are an estimated $2 trillion in mutual funds alone, along with annual contributions to RRSPs and TFSAs of over $100 billion per year.
Dave: It's helpful to start with the market opportunity in wealth, the Canadian wealth market as measured in the trillions and expect it to grow from over $6 trillion today. It's.
Dave: Silver 11 trillion by the end of 2032.
Dave: Within this there is an estimated two trailing the mutual funds alone along with annual contributions to RSP and tee up the days of over $100 billion per year.
David Marshall Feller: There are many players in the market today, and options for consumers include self-directed investing, wealth advisors, mutual funds, robo-advisors, and traditional brokers, while the majority of these assets are still with the big banks. With so many products and solutions available to Canadians today, the natural question is, what is the opportunity for a new player like Mogo? The reality is that, although there are many solutions in the market, the vast majority of Canadians are nowhere close to being on a path to retirement and financial freedom. Perhaps no stat sums this up as well as the 75% of Canadians between the ages of 55 to 65 who have yet to retire and have less than $100,000 saved versus the 1.7 million average Canadians believe they need to retire.
Dave: There are many players in the market today and options for consumers include self directed investing wealth advisers mutual funds Robo advisors and traditional brokers, while the majority of these assets are still with the big banks.
Dave: So many products and solutions to be able to Canadians today. The natural question is what is the opportunity for nuclear like model.
Dave: The reality is that although there are many solutions in the market. The vast majority of Canadians are nowhere close to being on a path to retirement and financial freedom.
Dave: Perhaps no stats sums this up as well as the 75% of Canadians between the ages of 55 to 65, who have yet to retire and have less than 100008 versus the $1 7 million average Canadians believe they need to retire.
David Marshall Feller: This is also why, of all the areas to improve in someone's life, 92% agree that improving their finances would have the biggest impact on their happiness. However, wealth building and investing is broken, and the status quo is in urgent need of disruption. Unlike what we see in the market today, we believe that the future of investing will be dominated, not by the incumbents, but by products and solutions that have the biggest impact on improving Canadians' wealth. Although this might seem obvious and common sense, that is not the reality today.
Dave: This is also why of all the areas to improve and someone's life, 92% agreed and improving their finances would have the biggest impact on happiness.
Building and investing is broken and the status quo is an urgent need of disruption. Unlike what we see in the market today, we believe that the future of investing will be dominated by the incumbents, but by products and solutions that have the biggest impact on improving Canadian as well, although this might seem obvious common sense that its not the reality today.
David Marshall Feller: So how do we intend to disrupt this market? Over the last few years, we've been heads down, building what we believe is the most effective wealth building platform in Canada. There are many things that differentiate our wealth products, but the biggest differentiation comes from our focus on leveraging behavioral science. As Warren Buffett has said, being a successful investor is way more about having the right temperament than it is about intelligence. Similar to achieving other important life goals, like getting in shape, knowledge of what to do is a very small part of what drives success. It's having the discipline to do the things that need to be done consistently that gets you results. And most importantly, avoid the bad things that take you off track.
Dave: So how do we intend to disrupt this market.
Dave: Over the last few years, we've been heads down building. What we believe is the most effective wealth building platform in Canada. There are many things that differentiate our wealth products, but the biggest differentiation comes from our focus on leveraging behavioral science.
Dave: As Warren Buffett, who said Dena successful investor is way more about having the right temperament than it is about intelligence.
Dave: Similar to achieving other important life goals like getting in shape the knowledge of what to do it's a very small part of what drives success.
Dave: Having the discipline to do the things that need to be done consistently they get you the results and most importantly avoided the bad things that take you off track the same applies in investing and we've incorporated this into our products.
David Marshall Feller: The same applies in investing, and we've incorporated this into our product. This simple graph highlights the kind of improvement that can be made in someone's wealth building journey compared to the average investor return. A consistent S&P strategy would result in over 16 times more money over a 50-year time horizon. Unlike other self-directed trading apps that are focused on getting you to trade, given that's how they make money, the more you trade, the more they make, the less you keep.
Dave: This simple graph highlights the kind of improvement that can be made in someone's wealth building journey compared to the average investor return the consistent S&P strategy will result in over 16 times more money over a 50 year time horizon.
Dave: Unlike other self directed trading apps that are focused on getting to trade given thats, how they make money the more you trade the more they make the less you Keith.
David Marshall Feller: Mogo is our self-directed investing app, and it's unlike any other trading platform in Canada. For one, our focus is solely on helping you improve your return, not trade excessively or speculate. The app now includes Buffett Mode, based on legendary value investor Warren Buffett, widely regarded as the most successful investor of all time. Buffett Mode is designed to help anyone invest based on the principles of value investing.
Dave: <unk> is our self directed investing and is unlike any other trading platform, Canada for one our focuses solely on helping you improve your return not trade excessively or speculate the App now includes Buffett mode based on legendary investor value Investor Warren Buffett widely regarded as the most successful in basketball time profit motive does.
Dave: Signed to help anyone and Thats based on the principles of value investing.
David Marshall Feller: One of the key features of the app is how it's designed to help investors reduce trading and speculating, which has been proven to be one of the biggest drivers of underperformance, and instead focus on thoughtful, long-term value investors. We also have a very unique and disruptive pricing model that aligns with our customers' best interests, a simple $8 a month subscription fee. With this, our customers get access to commission-free and zero FX fee investing. So for most self-directed investors, this fee structure will actually save them money. But most importantly, we aren't trying to get them to trade like every other platform. Instead, we are obsessed with their performance.
Dave: One of the key features of the App is how it's designed to help investors reduce trading in speculating, which has been proven to be one of the biggest drivers of underperformance and instead to focus on thoughtful long term value investing.
Dave: We have also a very unique and disruptive pricing model that aligns with our customers' best interests are simple eight dollar month subscription fee with this our customers get access to commission free and Euro FX fee investing so for most self directed investors. This fee structure will actually save them money, but most importantly, we arent trying to get them to.
Dave: Trades like every other platform instead, we are obsessed with their performance.
David Marshall Feller: For a target demo on a 50-year time horizon, a simple 1% improvement in their annual performance can mean the difference in millions. As I stated earlier, we believe the future of investing will be dominated by products and brands that actually deliver the biggest impact on Canadians' wealth. We recently announced the launch of Mocha.ai, the next generation of our wealth building app, with significant updates and enhancements designed to help the next generation of Canadians get on a real path to becoming millionaires and achieve financial freedom.
Dave: So our target demo on a 50 year time horizon, a simple 1% improvement in their annual performance can mean the difference in millions.
Dave: As I stated earlier, we believe the future of investing will be dominated by products and brands that actually deliver the biggest impact to Canadian as well.
Dave: We recently recently announced the launch of <unk> Dot AI. The next generation of our wealth building up with significant updates and enhancements designed to help the next generation Canadians gain on a real path, becoming millionaires and achieve financial freedom like mogul behavioral science is at the heart of our experience along with a proven long term investment strategy with Milka we.
David Marshall Feller: Like Mogo, behavioral science is at the heart of our experience, along with a proven long-term investing strategy. With Mocha, we are seeing people go from being on a path to virtually nothing to literally millions. Some were investing in mutual funds. Some were simply putting money into a savings account. But most had no idea what the right approach or how much money they would need to invest to achieve financial freedom.
We're seeing people go from being on a path to virtually virtually nothing to literally millions.
Dave: Some we're investing in mutual funds some were simply not putting money into savings account, but most had no idea what the right approach for how much money do we need to invest to achieve financial freedom.
David Marshall Feller: Combining the right behavior and the right investment strategy creates a quantum improvement versus incremental. We have members that have increased what they are on track to by over 50 times simply by using Mocha. With the relaunch of the new products, we've also introduced new branding that we believe really helps elevate our products in a way that is specifically designed to resonate with our target demographics of Gen Z and Millennials.
Dave: A combination of the right behavior and the right investment strategy creates a quantum improvement versus incremental we are members that are increase what they are on track to by over 50 times simply by using Moca.
Dave: With the relaunch of the new products. We've also introduced new branding and we believe really helps elevate our products in a way that is specifically designed to resonate with our target demographics of Gen Z and millennials.
David Marshall Feller: This sets the stage for a ramp-up in our marketing efforts beginning in Q2. Given our target demographics, social media will be a key focus, including a very robust influencer-led campaign, and will be supported by other marketing activities, including marketing to our large member base and through our post-media partnerships. AI continues to dominate the tech headlines, and given the success we've already seen internally, we also continue to be excited by its transformational potential across every area of the business. There's no question that AI has already had a meaningful impact on our business, as it has been a large driver of our cost efficiency. Mogo today is a team of only 150 versus 320 at our peak, yet with a team of less than 50%, we wouldn't have been able to achieve the level of progress we made without the use of AI.
Dave: This sets the stage for a ramp up in our marketing efforts beginning in Q2, given our target demographic social media will be a key focus including a very robust influencer led campaign and will be supported by other marketing activities, including our marketing through our large member base and sort of post media partnership.
Dave: AI continues to dominate the tech headlines and given the success we've already seen internally. We also continue to be excited by its transformational potential across every area of the business.
Dave: There is no question that AI has already had a meaningful impact on our business as it has been a large driver of our cost efficiencies logo. Today is a team of only 150 versus 320 at our peak yet with a team of less than 50%. We wouldn't have been able to achieve the level of progress we made without the use of AI.
Dave: Clearly we're at very early stages of what we can do and continue to expect it with AI.
Dave: Every single area of the business from engineering to customer service to marketing data and analytics and product development today, we're leveraging AI in customer service through our AI Chatbot marketing continues to be an area, where AI is increasingly impactful whether it's campaign creators are coffee product development Leverages AI and we design our products with the expectation that air will.
David Marshall Feller: Clearly, we're at the very early stages of what we can do and continue to expect with AI in every single area of the business, from engineering to customer service to marketing, data and analytics, and product development. Today, we're leveraging AI in customer service through our AR chatbot. Marketing continues to be an area where AI is increasingly impactful, whether it's campaign creatives or copy.
Dave: <unk> to become a big driver of the experience. There is no question that AI will have a transformative effect on the future of wealth building.
Aimed to be at the forefront of it.
Dave: With that I'll turn the call over to Greg Greg.
Thanks, Dave and good afternoon, let me first discuss two the other pillars, beginning with our payments business Carter worldwide.
Greg: Carter had a strong year in 2023 as reflected in the 30% increase in our payments volume to $9 9 billion.
David Marshall Feller: Product development leverages AI, and we design our products with the expectation that AI will continue to become a big driver of the experience. There's no question that AI will have a transformative effect on the future of wealth building, and we aim to be at the forefront of it. With that, I'll turn the call over to Greg.
<unk> growth in 'twenty three was driven by continued expansion of its core European payments business and we continue to be excited about this business and its long term growth prospects in the massive to an app trillion dollar global payments market importantly, we have a number of large existing customers, which we believe we continue to expand our business with give us high confidence to make the investments we expect to pay dividend.
Gregory Dean Feller: Thanks, Dave, and good afternoon. Let me first discuss two of the other pillars, beginning with our payments business, Carter Worldwide. Carta had a strong year in 2023, as reflected in a 30% increase in our payment volume to $9.9 billion. Carta's growth in 2023 was driven by continued expansion of its core European payments business, and we continue to be excited about this business and its long-term growth prospects in the massive $2.5 trillion global payments market. Importantly, we have a number of large existing customers with whom we believe we can continue to expand our business, giving us high confidence to make the investments we expect to pay dividends in the future. These investments include substantial enhancements to Carter's platform, including the previously announced migration to the Oracle Cloud.
In the future. These investments include substantial enhancements Carter's platform, including the previously announced migration to the Oracle cloud.
As we discussed last quarter. Another major pillar is there a crypto related investments, which collectively today represent about 40% of our market cap. The largest of these is a roughly 87 million shares and TSA explicit wonder if I wonder if I. It owns and operates on a leading digital asset businesses in Canada through their crypto trading platforms, they buy and quaint square, which is also the only fully.
Greg: Regulated crypto change in Canada. The company also has a crypto payments platform called smart pay.
Greg: Importantly, we believe quantify is an undervalued asset that had significant potential in this growing sector.
Greg: Turning to our financials, the fourth quarter was a very strong quarter to close out the year.
Greg: Over the past 24 months, you placed significant focus on driving increased efficiencies and profitability, including exiting a few subscale products.
Gregory Dean Feller: As we discussed last quarter, another major pillar is our crypto-related investments, which collectively today represent about 40% of our market cap. The largest of these is roughly 87 million shares in TSX-listed WonderFi. WonderFi owns and operates one of the leading digital asset businesses in Canada through their crypto trading platforms Bitbuy and Coinsquare, which is also the only fully regulated crypto exchange in Canada.
Greg: We have continued to prudently invest in development of wealth and payments zebu. These two segments is strong drivers of growth going forward. We have now clearly seen a return to revenue growth with Q4 revenue up 6% sequentially to $17 2 million third quarter in a row of sequential growth importantly, it also marked a return to year over year growth, which was significant given the 22 comparison.
Gregory Dean Feller: The company also has a crypto payment platform called SmartPay. Importantly, we believe OneFi is an undervalued asset that has significant potential in this growing sector. Turning to our financials, the fourth quarter was a very strong quarter to close out the year. Over the past 24 months, we have placed significant focus on driving increased efficiencies and profitability, including exiting a few subscale products. We've continued to prudently invest in the development of wealth and payments as we view these two segments as strong drivers of growth going forward. We have now clearly seen a return to revenue growth, with Q4 revenue up 6% sequentially to $17.2 million, the third quarter in a row of sequential growth. Importantly, it also marked a return to year-over-year growth, which was significant given the 22 comparison quarter had been difficult given our exit of certain products. Also, this growth is happening with less than a million dollars in marketing spend today per quarter.
Greg: Quarter had been difficult given our exit of certain products.
Greg: Also this growth is happening with less than 1 million of marketing spend today per quarter as we move into 'twenty, four and launch our marketing initiatives for our wealth platform. We believe that this along with strong growth, we're seeing in our payments and lending business set us up for delivering on accelerating subscription services revenue growth and 24.
Greg: As Dave mentioned, one of the focus areas in 2003 was driving operational efficiencies and we've seen excellent results total opex decreased by 25% in Q4 and.
Greg: In dollar terms that was a $4 million.
Greg: A decrease of $4 million quarterly opex for the full year Opex was down 37%.
Greg: We believe that revenue per employee is an important.
Greg: <unk> metric and as you can see since the beginning for efficiency initiatives, we've increased our revenue per employee by 82%.
Greg: Although we will continue to operate with efficiency mindset in place. We also plan to invest some of the savings into increased marketing development spend to drive accelerating revenue growth and 24 importantly, any investment spend we do make will be guided by the rule of 40, and therefore require expectation of increased growth from that spend with a particular focus on focus on <unk>.
Gregory Dean Feller: As we move into 24 and launch our marketing initiatives for our wealth platform, we believe that this, along with the strong growth we are seeing in our payments and lending business, sets us up for delivering on accelerating subscription services revenue growth in 24. As Dave mentioned, one of the focus areas in 23 was driving operational efficiencies, and we've seen excellent results. Total OPEX decreased by 25% in Q4.
Greg: Celebrating subscription and services growth.
Greg: Yes.
Greg: Cost reductions translate into another strong quarter of adjusted EBITDA, which grew for the seventh quarter in a row, increasing to $2 7 million up from 200000 for the same period last year full year progress is significant adjusted EBITDA was $7 7 million and $19 9 million improvement compared to an adjusted EBITDA loss of $12 two in 'twenty.
Gregory Dean Feller: In dollar terms, that was a $4 million decrease of $4 million in quarterly OPEX. For the full year, OPEX was down 37%. We believe that revenue per employee is an important efficiency metric, and as you can see, since the beginning of our efficiency initiatives, we've increased our revenue per employee by 82%. Although we will continue to operate with an efficiency mindset in place, we also plan to invest some of the savings into increased marketing development spend to drive accelerating revenue growth in 24. Importantly, any investment spend we do make will be guided by the Rule of 40 and therefore require an expectation of increased growth from that spend with a particular focus on accelerating subscription and services growth. Cost reductions translate into another strong quarter of adjusted EBITDA, which grew for the seventh quarter in a row, increasing to $2.7 million, up from $200,000 for the same period last year. Full year progress is significant. Adjusted EBITDA was $7.7 million, a $19.9 million improvement compared to an adjusted EBITDA loss of $12.2 and $22.
Greg: You too.
Greg: Importantly, we've also seen a corresponding significant increase in cash flow from operations before.
Greg: Discretionary investment and loan book, which went from negative $10 million in 'twenty two to positive nine and a half in 'twenty three.
Greg: With $4 7 million of this generated in Q4 alone.
Greg: These improvements also resulted in a consistent reduction of adjusted net loss since the start of 'twenty two and that continued in Q4 with adjusted net loss of $2 6 million versus $5 four in the earlier period in Q4 led by gains in investments. We also reported positive net income of $8 5 million.
Greg: In addition to the improved profitability remain on solid financial position. We ended the year with cash and total investments of $55 million up from $44 million at Q3, and this include combined cash and restricted cash of $17 9 million other investments totaling 10, and crypto related investments totaling $27 seven.
Greg: Which means that with less than 25 million mogul shares outstanding today, our shareholders have significant per share leverage to this growing sector.
Greg: Turning to our outlook, having clearly demonstrated our ability to significantly reduce opex.
Greg: For 'twenty four we expect to shift the balance towards return to accelerating revenue growth while at the same time continuing to generate positive adjusted EBITDA.
Greg: We will increase investments in marketing and development to drive acceleration in subscription services revenue growth from its wealth from our wealth and payments business, which as discussed are areas, we see significant expansion opportunity.
Gregory Dean Feller: Importantly, we've also seen a corresponding significant increase in cash flow from operations before discretionary investment and loan book, which went from negative $10 million in 2022 to positive $9.5 million in 2023, with 4.7 million of this generated in Q4 alone. These improvements also resulted in a consistent reduction of our adjusted net loss since the start of 2022, and that continued in Q4 with an adjusted net loss of $2.6 million versus $5.4 million in the earlier period. In Q4, led by gains and investments, we also reported a positive net income of $8.5 million. In addition to the approved profitability, we remain in a solid financial position. We ended the year with cash and total investments of $55 million, up from $44 million at Q3 end. This includes combined cash and restricted cash of $17.9 million, other investments totaling $10 million, and crypto-related investments totaling $27.7 million, which means that with less than $25 million of Mogo shares outstanding today, our shareholders have significant per share leverage to this growing sector.
Greg: For 'twenty four we expect accelerating subscription and services revenue growth during the year with an overall subscription and services growth rate in the mid teens for the full year.
Greg: We will also continue to focus on increasing our combined subscription and services revenue growth and adjusted EBITDA margin toward our target rule of 40.
Speaker Change: With that we will now open the call to questions operator.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad and should you wish to cancel your request. Please press star followed later if.
Speaker Change: If you're using a speaker phone please lift the handset before pressing any keys. Once again that is star and wanted to ask your question.
Speaker Change: Your first question comes from the line of adhere Cadby from <unk> capital. Please go ahead.
Adhere Cadby: Hey afternoon, guys. This is Karen answer idea.
Karen Cadby: Just wanted to start off by touching on the forward guidance. It's also good to see.
Karen Cadby: The uplift in our subscription revenue growth I'm, just curious where that confidence is coming from and what are some of the triggers to get to that double digits.
Gregory Dean Feller: Turning to our outlook, having clearly demonstrated our ability to significantly reduce OPEX for 2024, we expect to shift the balance toward returning to accelerating revenue growth while at the same time continuing to generate positive adjusted EBITDA. We will increase investments in marketing and development to drive acceleration in subscription services revenue growth from our wealth and payments business, which, as discussed, are areas we see significant expansion opportunities. For 24, we expect accelerating subscription services revenue growth during the year with an overall subscription services growth rate in the mid-teens for the full year.
Karen Cadby: Yeah. Thanks for that it's Greg So I think we feel very good about continued growth in our payments business, which for the most part is being driven by expansion with existing customers.
So we feel really good about that continuing on in 2024.
Greg: And then as you've heard from Dave We've made really massive investments in our wealth platform, we're getting very strong early feedback from our users.
Greg: So we're seeing a high NPS score.
Greg: And that along with some of the recent growth we've seen in Q4.
Greg: And ramping up our marketing spend to get that story out there I mean, we've really been spending less than a million a quarter in marketing.
Gregory Dean Feller: We will also continue to focus on increasing our combined subscription services revenue growth and adjusted EBITDA margin toward our target rate of 40. With that, we will now open the call to questions. Operator?
Greg: So any growth that we have seen in the business has been on very limited marketing Ah, we feel that puts us in a good position to.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. And should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please leave the handset before pressing any keys.
Greg: Really deliver on that.
Speaker Change: I appreciate that and on oncology.
Speaker Change: I'm very positive on our payments business.
Speaker Change: Can you maybe touch on what 'twenty credit scores look like but it looked like it was a good idea.
Operator: Once again, that is Star and one to answer your question. Your first question comes from the line of Adhir Kadve from Aiton Capital. Please go ahead. Good afternoon, guys. This is Kiran Ansar here.
Speaker Change: More net new net new users all you isn't going to be activating the current use of this and I'll leave it there. Thank you.
Yes, no encarta as I say, it's really going to be about expansion with existing customers.
Gregory Dean Feller: Just wanted to start off by touching on the Forward Guide itself. It's good to see the uplift in subscription revenue growth. I'm just curious where that confidence is coming from and what are some of the triggers to get to that double. Yeah, thanks for that. It's Greg.
Speaker Change: We've got a few big customers, including Clark C, which was recently spun off from <unk> in France.
Speaker Change: That we've been winning a lot of business with a they are a global player massive player in the market.
Gregory Dean Feller: So I think we feel very good about continued growth in our payments business, which for the most part has been driven by expansion with existing customers. So we feel really good about that continuing in 2024. And then, as you've heard from Dave, we've made really massive investments in our wealth platform. We're getting very strong early feedback from our users. We're seeing a high NPS score.
Speaker Change: And we've been winning a lot of their business.
And so.
Speaker Change: So that really sort of gives us a different lens on <unk>.
Speaker Change: Versus say going out there and trying to win new business.
So I think we expect more of the same in 2024, so launching in new countries and expanding existing programs in existing countries with some of our biggest customers.
Gregory Dean Feller: And that, along with some of the recent growth we've seen in Q4 and ramping up our marketing spend to get that story out there. I mean, we've really been spending less than a million dollars a quarter on marketing. So, you know, any growth that we have seen in the business has been on very limited marketing.
Speaker Change: I'll pass the line.
Speaker Change: Thank you and your next question comes from the line of Scott Berg from each senior Wainright. Please go ahead.
Hi, Good afternoon, guys. Thanks for taking my questions.
Scott Christian Buck: First I was hoping maybe you could provide a little bit more color on where some of the incremental marketing dollars are going to be going.
Gregory Dean Feller: We feel that puts us in a good position to really deliver on that. And on CARTA, you know, it's very positive data on the payments business. Could you maybe touch on what 2024 is going to look like? Is it going to be more net new users, or is it going to be activating the current user base? And I'll leave it there.
Scott Christian Buck: Sure Dave do you want to touch on that.
Dave: Sure Yeah as I mentioned in my.
Dave: Call there, we've put a lot of work into both of our wealth products Mocha and Bogo, So again Boca.
Dave: Is the fully managed solution. So when we talk about our wealth platform. It includes both a fully managed solution as well as the self directed solution mobile being self directed solution.
Gregory Dean Feller: You know, on Carta, as I say, it's really going to be about expansion with existing customers. We've got a few big customers, including Pluxy, which was recently spun off from Sodexo in France, that we've been winning a lot of business with. They are a global player, a massive player in the market, and we've been winning a lot of their business. And so that really sort of gives us a different lens versus, say, going out there and trying to win new business.
Dave: We've had really strong product velocity on both of those products. We've also made.
A lot of changes even to the branding and our kind of marketing and bringing those to life.
Speaker Change: And as Greg just touched on we also had very positive response from our net promoter score is and you're starting to see some just really good feedback from users. So we're going to be kicking up.
Gregory Dean Feller: So I think we expect more of the same in 2024, so launching in new countries and expanding existing programs in existing countries with some of our biggest customers. Thanks, I'll pass the line.
Speaker Change: Some significant marketing efforts starting in Q2 so April.
Speaker Change: Again as I mentioned, it'll be primarily led by strong kind of Influencer focus just given our target demo of Gen Z and millennials.
David Marshall Feller: Thank you. And your next question comes from the line of Scott Buck from HC Wainwright. Please go ahead. Hi, good afternoon, guys. Thanks for taking my questions. First, I was hoping maybe you could provide a little bit more color on where some of the incremental marketing dollars are going to be going. Sure, Dave, you want to touch on that?
Speaker Change: So marketing, obviously expense literally related to bringing on influencers, both bigger influencers and micro influencers.
David Marshall Feller: Sure. As I mentioned in my call there, we've put a lot of work into both of our wealth products, Mocha and Mogo. Again, Mocha is the fully managed solution.
And then complementing that with the campaigns to our member base as well as through our post media partnership.
David Marshall Feller: When we talk about our wealth platform, it includes both a fully managed solution as well as a self-directed solution, Mogo being a self-directed solution. We've had really strong product velocity on both of those products. We've also made a lot of changes, even to the branding and our marketing, and brought those to life. As Greg just touched on, we also have had a very positive response from our net promoter scores, and we're starting to see some really good feedback from users. We're going to be kicking up some significant marketing efforts starting in Q2, so April. Again, as I mentioned, it will be primarily led by a strong influencer focus, just given our target demo of Gen Z and Millennials. Marketing obviously expands literally related to bringing on influencers, both bigger influencers and micro-influencers, and then complementing that with campaigns to our member base as well as through our post-media partnership.
Speaker Change: So we will be expecting to ramp that up all through Q2, so that really is going to be the where the main focus is from a marketing perspective, both on mogul and mocha.
Great I appreciate that.
Speaker Change: And then I was curious.
How you guys are feeling about <unk>.
Speaker Change: Share repurchases today I know you had bought back some shares in 'twenty three and it looks like it was at an average price maybe.
Speaker Change: Or even a little above where we are today just kind of curious your thought process now on share repurchases and kind of capital allocation in general.
Speaker Change: Yes, Scott So we obviously continue to have a share repurchase.
Speaker Change: <unk> in place, we have not been able to repurchase any shares.
Speaker Change: For quite a while here.
Speaker Change: Given our blackouts with reporting year end.
But otherwise we bought back in <unk>.
Gregory Dean Feller: And so we'll be expecting to ramp that up all through Q2. So that really is going to be where the main focus is from a marketing perspective, both on Mogo and Mocha. Great, I appreciate that. And then I was curious, you know, how you guys are feeling about share repurchases today? I know you bought back some shares in 23. And it looks like it was at an average price, maybe at or even a little above where we are today.
Speaker Change: Most every other quarter.
Speaker Change: In 2023.
Speaker Change: No.
Speaker Change: Given given where our share price is today I think it's reasonable to assume that that will be a part of our capital allocation here going forward as well.
Speaker Change: Great and then last one for me I'm curious to get your thoughts on.
Speaker Change: Yes.
Speaker Change: Wonder Fi share price I'd be I think the stock is down kind of 15% year to date versus the at least the perception that theres been a real rebound in crypto and a broadening of interest there.
Gregory Dean Feller: Just kind of curious about your thought process now on share repurchases and kind of capital allocation in general. Yes, Scott, so we obviously continue to have a share repurchase authorization in place. However, we have not been able to repurchase any shares for quite a while here, given our blackouts with reporting year-end.
Yeah look obviously were large shareholders as the largest shareholder.
Speaker Change: And so we do obviously watch that that soft carefully as well.
Speaker Change: As I mentioned in my remarks, our view is theirs.
Gregory Dean Feller: But otherwise, we bought back almost every other quarter in 2023. So given where our share price is today, I think it's reasonable to assume that that will be a part of our capital allocation here going forward as well. Great. And then last one for me, I'm curious to get your thoughts on the WonderFi share price. I mean, I think the stock is down kind of 13% year-to-date versus, you know, at least the perception that there's been a real rebound in crypto and, you know, a broadening of interest there.
Speaker Change: Some some valuable assets there at <unk>.
Speaker Change: And we don't think that.
Speaker Change: That it's getting proper recognition in the market.
Speaker Change: So our basis, just so you don't win Wonder Phi is over a dollar a share effectively.
Speaker Change: And so we.
Speaker Change: Obviously thinking a lot about.
Speaker Change: About that but agreed.
Speaker Change: Our view is that at this stage right now we don't think the share price reflects reflects the value there for sure.
Gregory Dean Feller: Yeah, look, obviously, we're large shareholders, the largest shareholder, and so we do obviously watch that stock carefully as well. As I mentioned in my remarks, our view is that there are some valuable assets there at Wunderphi, and we don't think that it's getting proper recognition in the market.
Speaker Change: Great I appreciate the added color guys and congrats on the quarters results.
Speaker Change: Thanks Scott.
Speaker Change: Thank you once again should you have a question. Please press Star then the number one on your telephone keypad.
Gregory Dean Feller: So, you know, our basis, just so you know, in Wunderphi is over $1 a share, effectively. And so, you know, we are obviously thinking a lot about that, but agreed. Our view is that, at this stage right now, we don't think the share price reflects the value there, for sure.
Speaker Change: And your next question comes from the line of <unk> from Raymond James. Please go ahead.
Raymond James: Thank you for taking my questions.
Raymond James: Could you give us some more color on the decision to.
Invest in bitcoin or be quite ETF this quarter. Thank you.
Scott Christian Buck: Great. I appreciate the added color, guys, and congrats on the quarter's result. Thanks, Scott. Thank you. Once again, should you have a question, please press start, then the number one on your telephone keypad. And your next question comes from the line of Andy Nguyen from Lehman James. Please go ahead. Thank you for taking my questions. Could you give us some more color on the decision to invest in Bitcoin and the Bitcoin ETF this quarter? Yeah, look, we've been longtime believers in Bitcoin as a store of value, and we kind of subscribe to Michael Saylor's view of the depreciation of the dollar. And so we think, actually, as part of our overall portfolio, having some of our, let's call it, excess cash sitting in Bitcoin, whether it's Bitcoin directly or a Bitcoin ETF, we think it makes sense for us. Obviously, we ultimately believe that Bitcoin and crypto more broadly is going to be part of any next-gen financial platform. And that's obviously what we're building in Canada.
Raymond James: Yes look we've been longtime believers in bitcoin.
Raymond James: As a store of value.
And.
Raymond James: When we kind of subscribe to.
Raymond James: Michael Saylor his view of the depreciation of the dollar and so we think actually as part of our overall portfolio.
Having some of our let's call it excess cash sits.
Raymond James: Sitting in bought in bitcoin, whether it's Ah.
Raymond James: Bitcoin directly or a bitcoin etfs.
Raymond James: It makes sense.
Raymond James: For us obviously.
Raymond James: We ultimately believe that bitcoin crypto more broadly is going to be part of.
Raymond James: Any nexgen.
Raymond James: Financial platform and and that's obviously, what we're building in Canada. So we think it's consistent.
David Marshall Feller: So we think it's consistent with our focus and our view of the market. Thank you. Thank you. There are no further questions at this time. Mr. Dave Feller, please proceed. Thank you for joining our call today. We look forward to updating you on our Q1 results. Thanks again. Thank you. That concludes our conference today. Thank you for participating. You may now disconnect. Buck, David Feller, Gregory Feller, Craig Armitage, Andy Nguyen, Mogo
Raymond James: With our focus and our view of the market.
Speaker Change: Thank you best of luck.
Speaker Change: Thank you there are no further question at this time, Mr. Dave <unk>. Please proceed.
Dave: Thanks, operator.
Speaker Change: Thank you for joining our call today, we look forward to updating you post our Q1 results. Thanks Kim.
Speaker Change: Thank you that concludes our conference today. Thank you for participating you may all disconnect.
Speaker Change: [music].