Q3 2024 MoneyLion Inc Earnings Call
As we invest in growth initiatives, we expect adjusted EBITDA margin between 14% to 18% in Q4 2024.
While we can throttle back growth to drive near term margin expansion now is not the time.
The opportunity in front of us is too big.
Instead, we are focused on increasing marketing to drive acquisition and importantly take market share now.
Now turning to guidance.
In the third quarter of 2024, our results met or exceeded guidance across all metrics.
Revenue was $135 million within our guidance range of $133 million to $138 million, representing a 23% year over year growth.
Adjusted EBITDA was $24 million above the high end of our guidance range of 18% to $21 million.
Turning to our outlook, we are positioned for accelerating growth in the fourth quarter.
For Q4 24 based on our full year guidance, we expect revenue between $149 million to $154 million, representing 32% to 36% year over year growth at the midpoint. This represents growth of 34% year over year up from 23% growth in Q3 <unk>.
Four.
We also expect adjusted EBITDA of 22 to 27 million representing.
Representing adjusted EBITDA margin of between $14, one to 17, 9%.
For the full year of 2024, we now expect revenue between $536 million to $541 million reps.
Representing 27% to 28% year over year growth at the midpoint. This represents 27% year over year growth for the full year of 2024 compared to 25% growth in our prior guidance.
We expect adjusted EBITDA of $88 million to $893 million, representing approximately 16, 3% to 17, 4% adjusted EBITDA margin at.
At the midpoint. This represents an adjusted EBITDA margin of 16, 8% up from our prior guidance of 15, 8%.
Speaker Change: With that I'll return the call to <unk> for his closing remarks.
Speaker Change: Thank you Rick as we look ahead to the future given our position as the first consumer digital finance ecosystem, we're focused on taking market share and expanding the scope of our opportunity.
Speaker Change: We've seen continued year over year growth in our consumer business with high contribution margins. This business has generated around $350 million over the last 12 months ending in the third quarter up 30% year over year. Moreover.
Speaker Change: Moreover, despite broad economic concerns with grown in managed credit incredibly well with loss rates, averaging below three 5% over the last eight quarters. We will continue to deepen our presence across the auto insurance credit cards and mortgage verticals will open ourselves up to serviceable revenue pools, all three of which we believe represent a 1 billion.
Speaker Change: Or more of annual revenue.
Speaker Change: We have the technology to serve these markets well and we intend to capitalize on this opportunity going forward.
Speaker Change: As mentioned earlier, our new Moneyline checkout experience minimize friction in the financial product shopping journey by offering an end to end experience.
Speaker Change: We are incorporating new data sources through strategic partnerships, enabling us to deliver even more personalized recommendations and offers.
Speaker Change: This improves the consumer experience and adds value to our product partners.
Speaker Change: We covered our 30 60 90 mix shift strategy in detail today, because it is key to our business equation.
Speaker Change: This strategy enables us to increase our mix of 90% contribution margin revenue will.
Speaker Change: We will be going direct to consumer with brand marketing investments as soon as Q4 2020 for driving consumers directly to Moneyline's owned and operated properties.
Speaker Change: There, we can engage with them directly and earn high contribution margin revenue.
Speaker Change: Together these initiatives will drive both revenue growth and margin expansion for us.
Speaker Change: last 10 years. It's not just, you know, we woke up and we found, you know, one regulatory regime going to another. We've been making investments for the last 10 years to our regulatory and compliance infrastructure.
Speaker Change: So, with respect to EWA, because we operate a marketplace, but also our own first-party Instacash product, we've been pleased that over the past year-plus, an increasing number of states
have created laws and frameworks.
for codifying early access.
Speaker Change: And so we're also glad to see recent federal regulatory developments that would create a nationwide framework for this product category as well.
Speaker Change: With respect to the CFPB's proposed interpretive rule, while we disagree with the Bureau's approach to treat the product like a credit product,
Speaker Change: We do not expect that the proposed rule, even if finalized in its current proposed form,
would impair our ability to continue providing
this really important financial safety net product.
Speaker Change: Millions and millions of American workers. In fact, we believe that, you know, how the rule came out really codifies the importance of this product for hard-working Americans, right?
Speaker Change: So we're confident that we'll be able to continue offering Instacash in Eid.
Speaker Change: super compliant, commercially effective manner while maintaining our unit economics. And that's an important point that we've invested so much in the multiple delivery methods of all of our products that we actually see really a tailwinds to growth into 2025 in that.
Speaker Change: And again, we'll be engaged on how this plays out as the administration changes, right? So again, just really important to remember that for 10 years we've seamlessly and successfully operated between the federal and state regulatory environments, right? This is the third administration that we've been operating under.
Speaker Change: And as we've said before, we've already built the technology, we already have the partnerships in place to offer the product in multiple different ways compliant with the relevant jurisdiction, if you will.
Great, really appreciate the detailed color. Thanks guys, nice quarter.
Speaker Change: Our next question comes from a line from George Sutton with Craig Callum. Please go ahead.
George Sutton: Thank you. I'm really excited to hear about the accelerating growth in the Q4, and I wanted to put my question and...
into this context.
Speaker Change: a pretty wide EBITDA range for Q4. As we're prepping for Q25 and looking for sort of branding type investments, I'm just curious how you're thinking of coming in the low end or the high end relative to your growth opportunities both short-term and long-term. My sense is it's largely in your control.
Hey George, great question.
Speaker Change: Yeah, so if you go look at what's been happening with the business, we've been
Speaker Change: of course, really focusing on our 30, 60, 90 strategy. And so while the macro is favorable for enterprise business, giving
Speaker Change: and the rates coming down. What we do control to your point is very much in the 30-60-90 strategy. And what we've been doing in addition to the investments.
that we've been making in terms of continuing to be.
increasing the number of channel partners and demand partners
We've been increasing our ability to go direct-to-market.
Speaker Change: and consumer. And by that we mean increasing some of our brand and marketing spend to do two things. What is to help to provide that air cover to consumers that are finding us on the Internet to our channel partners and just help with the increased conversions as they continue to see us as across the brand and the marketplace.
Speaker Change: Sean Horgan, Richard Correia, Sean Horgan, Richard Correia, Sean Horgan, Richard Correia,
The End
Speaker Change: Gotcha, okay. And then I wanted to, on the checkout solution, you ran through some very, what sound like powerful metrics.
Speaker Change: How should we think through the timing and the ultimate impact on your income statement as this plays through?
Speaker Change: Yes, so that's one where we are incredibly proud of what's been happening within just disrupting the entire consumer finance marketplace.
Speaker Change: So being able to kind of pioneer the way in which people go to market. Dee talked about it, where if you're kind of looking for a pair of sneakers, you know, the current experience is that you can search, you can evaluate, and you can...
Speaker Change: buy and check out within whatever marketplace you're buying those from.
Speaker Change: and Tim Ruffman. So what we're doing is we're expecting that to have a couple of strong benefits. One is going to be around just...
the Critical Partner for Acquiring Customers.
Speaker Change: and what are some other things you would like to help with for 2024?
Speaker Change: along, you know, with having a 17% growth last quarter means that management anticipates growth acceleration and enterprise. It's the first time you've seen us call that out, because we don't see any headwinds to that. We're going to continue to...
Speaker Change: to kind of focus on being that kind of pre-amendment place for the consumer market, the consumer finance marketplace.
Fabulous. Great, guys.
Speaker Change: Our next question comes from a line of Raina Kumar with Oppenheimer. Please go ahead.
Speaker Change: Good morning, Dee and Rick. Thanks for taking my question. It's good to see adjusted EBITDA coming in ahead of our forecast as well as the streets. I was wondering if there's any cost that came in below your expectations and if there's any drivers to that EBITDA exceedance?
Speaker Change: Welcome to the party. It was great to see you initiate last quarter. I appreciate the question in terms of EBITDA.
Speaker Change: The positioning that we've been making for years now, which is being a platform.
Speaker Change: And so what that means is we're getting that operating leverage and you're kind of seeing it pretty consistently now quarter over quarter. And so
Speaker Change: A couple of kind of standard items. One, as Dee mentioned, we had, and then I mentioned kind of in the...
and Diya.
and Cole.
Speaker Change: We have one of our best quarters when it comes to performance for our originations. We have a 3.1 provision as a percentage of originations. And so that certainly is a factor. And as we've said, we kind of solved for that. And so we'll continue to expect a strong performance. As I mentioned, enterprise was up sequentially 18%.
Speaker Change: And so, you know, that continues to be an important driver, as I mentioned, the kind of 30, 60, 90, you know, that's something that we're now seeing a lot of success around is more and more of our kind of customer journeys.
Speaker Change: are ending up in that kind of 90% and importantly kind of life cycle for our customers. You know, we have a massive top of funnel, we keep talking about it. The other number that we...
Speaker Change: We encourage everyone to keep thinking about is your product consumption.
Speaker Change: So once you're on the platform, we're really successful at getting customers to take that second and third derivative product. And that showed up this quarter where we had 3 million products consumed on the platform, and that was up from 2.4 million last quarter.
Speaker Change: And so those things kind of drive, of course, going to top line, but as I said, that next shift towards 90% helps as well.
Speaker Change: Great. Thank you for the color. And I know it's only been a couple of weeks, but any early indications of the uptake on Moneyline checkout?
[inaudible]
Yeah, hey Raina, good morning, it's Dee.
Speaker Change: Look, we were just at the Money 2020 conference in Las Vegas last week and sort of the excitement that we're seeing from our partners is palpable. Really the adoption in Checkout is going to be taking the existing client base that are already integrated to the Moneyline Exchange, if you will, through an API and converting them into Checkout customers, right? So we already have really a handful of very large institutions already using Checkout.
Speaker Change: As we said before, we're seeing great CTR improvements of almost over 25%, two-and-a-half times conversions, 30%-plus on the revenue per lead improvement for our clients there. So as we take those case studies...
Speaker Change: The name of the game really is to go to the rest of the client base and then, you know, kind of engage with them to get them converted from the existing integration that they have onto the checkout integration.
Understood. Thank you.
Speaker Change: Our next question comes from the line of Hal Goats with B. Riley Securities. Please go ahead.
Hal Goats: Hey Ricky, can you give us any color on on some of the new verticals? I know auto insurance is also in a big upswing for...
Hal Goats: Customer acquisition from other companies that are in the industry. There's probably a lot of overpriced auto loans out there, so auto loan refi seems to be a lot of pent up potential demand for that in the next year or two as rates come down. And the third question is, can you just give a little color on
Speaker Change: The adjustments to EBITDA, you usually have a few other expenses, but this quarter it was a little bit more on $8 million. If you could give us some color on that, was that related to the Ford's Oil Agreement expenses or something like that? Let us know. Thank you.
Thanks, Hal.
Speaker Change: I'll take the easy one, and then I'll give Dee the vertical question. When it comes to the EBITDA adjustments, this was primarily just tied to one-time legal expenses. I wish it was a little more entertaining than that, but that was what drove the increase to the other line with the EBITDA adjustments.
All right, terrific, okay.
Speaker Change: Hey Hal, I'll take your new vertical expansion question, right. So look, if you look at our, if you look at the public peers you'll see that these operate, these marketplaces
Speaker Change: Really a product and technology-led improvement of the form factor that currently exists in the market, right? So again,
and really sitting between the consumer and the product provider.
So, uh...
Speaker Change: That's a differentiated strategy that we're taking in auto insurance so we can actually get the car.
consumer, in consideration, in market, highly qualified, vetted.
Speaker Change: and deliver them to insurers really deep into the funnel. Our approach from a product perspective is slightly different from what's in the market and we believe that ultimately it's going to lead to higher margins, higher payouts, all the things that we're seeing.
On the personal loan side, we want to replicate.
Speaker Change: into auto insurance, mortgages, and credit cards. But as we've said before, no doubt in this environment, we expect.
Speaker Change: There is a lot of pent-up demand over the last couple of years.
Speaker Change: We've been operating with one hand tied behind our back on the personal loan verticals because of the imbalance between supply and demand. The loans are priced at a level where consumers just don't want to transact, but now with a little bit of a change in sort of the overall sentiment, we'll find both the personal loans verticals as well as our new and thin verticals are going to all see some tailwinds in terms of consumer demand for those products and for the substitution of those products.
All right.
Speaker Change: Can I ask one follow-up? You know, the cash balance continues to build. Can you give us any...
Speaker Change: Thoughts on your corporate debt, its interest rate, and what you can do now that your cash balance continues to grow.
Thanks.
Yeah, hey Al, absolutely Adam.
Speaker Change: We are proud that we continue to kind of build You know the kind of free cash flow kind of quarter over quarter in terms of our senior debt Yeah, when you think about the profile of our company
Speaker Change: that we can share with you. And so you would expect a company like ours.
and
Speaker Change: to have, you know, senior debt that's somewhere in the zip code of, you know, SOFR plus, you know, $150,000 to $300,000. And today we're kind of 2X that on the high end. And so, you know, certainly we will continue to explore opportunities.
to have a significantly lower cost of capital.
Speaker Change: Our next question comes from the line of Jacob Steffen with Lake Street. Please go ahead.
Jacob Steffen: Hey guys thanks for taking my questions and I'll add my congrats on the quarter as well. I just kind of wanted to focus on the, you know, 18% growth guidance in enterprise. Maybe you could help us kind of think about what's driving that. Is that more on the new product side, new vertical side, or is that, you know, assume some rebound in personal loans as well?
Yeah, so, uh, hey Jacob, this is one where...
Yeah, we've been playing for this
The investments that we've been making...
the diversification across the different verticals.
Jacob Steffen: Of course, you know rates coming down helps because as a leader within the personal lending space
Speaker Change: marketplace perspective, that's coming our way. And then the investment that we've been making in terms of really kind of shifting the mix of our customer journeys.
Speaker Change: you know, from the kind of 30 and 60 into the 90. And so it's all of the above. And it's what, again, kind of gives us so much confidence in terms of being able to kind of take our enterprise business...
Speaker Change: who defeats growth acceleration within the fourth quarter within the enterprise business.
Speaker Change: And of course, within consumer, you know, that business was up 27% year-over-year. We've been continuing to be very kind of focused on shifting towards the kind of forward-flow type of financing arrangements within consumer. We're through that completely within...
Speaker Change: from the Instacash products. And so you'll kind of see that business kind of revert to its kind of historical growth in terms of top line growth. So we got to feel really good about, you know, the overall business and specifically enterprise now kind of hitting on all cylinders.
Speaker Change: Okay, got it. That's helpful. And then maybe I'll just ask another question on kind of the checkout product you guys just launched. You know, can you kind of help us think about, is this really going to take offers from kind of, you know, first-party product, third-party product, and essentially, you know, approve customers and, you know,
Speaker Change: match them with the correct product or Kind of help us think about you know where this falls into the kind of the 30 60 90 framework
Jacob Steffen: Sure, I'll start, Jacob, there. Look, I think if you think about the landscape, right,
Jacob Steffen: There are a lot of financial technology companies, sophisticated banks, that already integrate into the money line through APIs.
Jacob Steffen: To really, it improves conversion rates on both sides. It creates a much better product for the consumer because they don't get clicked out into four or five different websites where they're re-entering their information. We become the lingua franca.
Jacob Steffen: for really kind of integrating different types of offers across asset classes.
Jacob Steffen: the capabilities that we have, but it expands the number of enterprise partners that can actually now engage with Moneyline and provide their offers deep into our funnel.
Jacob Steffen: Over time, you know, whatever we offer through the Moneyline Consumer Marketplace...
Jacob Steffen: We also offer through software development kits that any bank or financial institution can now embed inside of their own digital ecosystem.
whether that's a mobile app.
Jacob Steffen: Whether that's a website, we're starting to see a lot of success.
Jacob Steffen: with folks taking that SDK and putting that into their own ecosystems? So I think the answer is both, right? As we increase more of the awareness of the Moneyline brand, we've always said that this is a brand that works a little bit in the background.
Jacob Steffen: Now, really, just putting a little bit of investments into brand, all inside of the guidance, all inside of the margin profile that we've illustrated here. We believe that we can now provide a little bit of air cover for the Moneyline consumer marketplace where consumers can come here directly to make their best decisions.
Jacob Steffen: But also everything that we're doing from a technology perspective that can be distributed through any of our partners through APIs and SDKs
I want you toat a little bit.
Speaker Change: Our next question comes from the line of Mike Grondahl with Northland. Please go ahead.
Speaker Change: Hey guys, thanks. First question, what are you guys most excited about?
Speaker Change: credit card, auto, mortgage, you know, which one represents the most upside for Moneyline?
Speaker Change: Hey Mike. Well, I think we're excited about all of this. You know, certainly when you think about
Speaker Change: The lack of personalization kind of within, you know, the entire consumer finance experience and specifically if you think about kind of credit cards like the benefit of us now being able to have kind of check out that
takes into into the ecosystem
Speaker Change: You know, a breadth of data from our partner like we announced with TransUnion, with Plaid that we announced as well. We're going to be able to kind of bring a very specific and unique...
Speaker Change: approach to developing personalized offers. And of course, that's kind of how we approach things. We're not just going to go into a vertical and expand into a vertical with a meet-you strategy. And so we're most excited about being able to do that within the credit card vertical.
Speaker Change: Got it. And then on your 30-60-90 strategy, could you give us an example or two of how you're executing the 90, that top quadrant?
Speaker Change: Yeah, we have millions of examples, but I'll stick to a couple.
Speaker Change: You know, hundreds of partners, product partners, that we are matching with product offers. So, kind of going direct and being at, you know, really a place where customers are starting to make their financial decisions, that's the kind of strategic position.
Speaker Change: Sean Horgan, Richard Correia, Sean Horgan, Richard Correia, Sean Horgan, Richard Correia,
The other, as I've mentioned, is
Speaker Change: You know, when we talked about, you know, increasing the number of products being consumed on the platform, that's really a testament to our ability now to kind of life-cycle somebody. We develop deeper and deeper profiles in terms of what we understand about a person. As I mentioned, you know, their propensity to buy a kind of basket of financial products is best understood by Moneylion.
Speaker Change: And so, what we've been able to do now is once they're on our platform, we're able to give them the kind of second and third derivative offers that also kind of represent that kind of 90-50% customer return.
Speaker Change: Yeah, I'll also, Mike, just reiterate what we said on the call, right, that, you know, we have built...
We're always improving and really investing in
the nation's leading personal financial management tool.
Speaker Change: And if you just download the Moneyline app and you look at sort of the incredible amounts of capabilities we've put into that, it really is a super app, right? And what we're seeing now a lot of success in are things like community, right? So if you go into the community section of the app, there's, you know, thousands of people talking about various parts of their financial life.
Speaker Change: Then they're inviting their friends and their family to join those conversations.
Speaker Change: Right, so a lot of the work that we do on the direct-to-consumer product perspective is all around really providing incredible premium features to the consumer for free, mostly the Moneyline search capabilities, the link your bank account, let us give you some advice and some insights.
Speaker Change: We've just enhanced even our free credit score capabilities that's leading in the industry now. It's not just a free credit score. We can simulate it for you.
Speaker Change: If youっぜ that question and you weren't able to find our question in the live chat, please feel free to put your question into the chat. We'll be glad to answer any questions we might have.
Speaker Change: were with an incredible toolkit to manage their daily financial lives, their financial operating systems as we think about it. And then of course, we've got our first party and third party products, but that engagement
Speaker Change: keeps the consumer in our ecosystem between financial inflection points or decision-making points when they're thinking about a mortgage or an insurance or a credit card.
Speaker Change: That's the best representation of the 90% strategy because we're engaging the consumer daily, weekly, monthly. We've got a lot of data that's got their wallet all linked with Moneyline.
Speaker Change: We've got the ability now, really, to give them precise, high-converting offers that are relevant for them, that are personalized for them, and that are contextualized for what's happening in their lives that day. So I think together with all of that really drives, you know, the excitement that we have on the margin expansion by keeping people engaged.
Speaker Change: consumer and our ecosystem. And I don't think that there are a lot of people that could have this level of a PFM capability in sort of the peer group or in the markets today. Yeah, that's pretty robust, and that's helpful. Hey, just lastly, did you guys comment about October at all?
over you
Speaker Change: You mean Halloween or something more specific? How the month of October went.
Yeah.
Okay, thanks.
Speaker Change: This concludes today's Q&A session and concludes today's call. You may now disconnect.
Speaker Change: RICHARD CHOUBEY & SEAN HORGAN DIRECTED BY SIMONE COusement With Written by In Chorus TAKE THE JAM