Q1 2025 Mogo Inc Earnings Call
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With afternoon ladies and gentlemen, and welcome to Mogo First Quarter 2025 Financial of the Talks conference call. At this time, all lines are now listened on the mode.
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 calls may be recorded on Thursday, May 8, 2025.
Speaker Change: I would now like to turn the conference over to Craig Armitage, Investor Relations, please go ahead.
Craig Armitage: Thank you operator and good afternoon everyone, just a few quick notes before we get started. Today's call will contain four looking statements that are based on current assumptions and subject to risks and uncertainties. It could cause actual results to differ materially from those projected.
Speaker Change: Company undertakes no obligation to update these statements, except as required by law.
Speaker Change: Information about the risks and uncertainties are included in Mogo's Q1 filings, as well as periodic filings with regulators in Canada and the United States, which you'll find on Cedar, you can access via the Investor Relations website as well.
Speaker Change: Lastly, today's session will include several adjusted financial measures or non-IFRS financial measures. Please consider these as a supplement two and not a substitute for the IFRS measures. We'll see that we've included reconciliation so those in the press release and the investor deck.
Speaker Change: and with that, I'll turn the call over to Dave Feller to get us started.
Thanks for it.
Dave Feller: Thank you. Good afternoon. Welcome to Mogo's Q1 2025 results conference call. I'm joined today by Greg Feller, our president, TFO. I'll cover some of the key operating highlights in our strategic focus for the year, and then I'll pass it over to Greg through your financial
Dave Feller: Q1 was a solid quarter, especially with our continued momentum in both wealth and payments, with wealth revenue of 41% and payments revenue up 34%. Importantly, we also achieved this while maintaining positive adjusted EBITDA and strong balance sheet.
Dave Feller: Like every company, we've been spending a lot of time digging deep into AI and identifying all the ways that we can leverage it to help build our business.
Dave Feller: We've recently formalized this into what we are now calling Mogo 3.0, which is all about becoming an AI native business.
Dave Feller: This is a full reset on how we build, operate and scale across every part of our business. This means embedding intelligence in every layer, product, operations, finance, and member experience.
Dave Feller: It's a move to become leaner, smarter, and radically more efficient.
Dave Feller: This means fewer people, higher velocity, and one unified platform across lending and well. Eventually, there'll be no part of our business that isn't AI powered.
Dave Feller: It's hard to overstate the impact that it's already having and we are only scratching the surface. Things that were once not even possible are now very accessible. Just to give you a sense of the impact, there are certain areas where through AI, our product can be gained to be easily been 10 to 20x, including in product from marketing. Thank you very much.
Dave Feller: Today, almost every single one of our team members are using AI in their daily business and exploring new AI tools that are helping them dramatically improve their productivity.
Dave Feller: Historically, our lending experience, like most, was relatively simple. It was static, real-based, and reactive.
Dave Feller: We're now reimagining the entire experience as an AI native one. This means smarter marketing and customer acquisition, smarter underwriting that will include behavioral data, alternative data including spending patterns that will enable smarter credit decisions, and better outcomes for both the user and our business.
Dave Feller: AI will also enable us to better serve our customers, helping nudge them to better behaviors, including helping them get out of debt center, and ultimately to get them on a path to wealth building. This will continue into collections as well. There's no part of the experience that can't be radically improved with AI, and there's the key initiative as part of the 3.0 transformation.
Dave Feller: As we saw this course's performance, we're continuing to make progress in our wealth business, driven by continued improvement in the experience and value proposition, which is helping attract higher value users.
Dave Feller: But now with your heads down, re-imagining it as an AI native and unified experience.
Dave Feller: There was a time when having two separate apps made sense, but now that we have brought them together as a single intelligent investing value proposition, we believe unifying them into a single AI native app makes a lot of sense.
Dave Feller: We think this will be a big unlock for us and dramatically improve the experience and value proposition for our users.
Dave Feller: Again, while the market is dominated by what we call dopamine fuel casinos, we are building one that prioritizes discipline, patience, and long-term focus. Something that not only settles apart from the competition, but resonates with investors that are looking for something better.
Dave Feller: Our goal isn't to be the biggest, it's to be the most effective of well-building platform in the market.
Dave Feller: We're already leveraging AI and giving our members a behavioral edge.
but we're only scratching the surface of what's possible.
Dave Feller: As a refresher, unlike Commission Free Act to focus on training activity and foreign exchange fees, we offer a very compelling value proposition at $20 a month that includes zero commission and zero effect fees along with a fully managed S&P 500 base portfolio and a serious research and analytical tool. [inaudible]
Dave Feller: This model helps the line our success with the success of our members. While others push trading activities to drive increased revenues, we focus on improving the performance of our members, which usually means more discipline, patience, and fear of trade. We call it bus mode.
Dave Feller: Now it's important to understand that becoming AI native isn't a flip of the switch, especially non-imfinancial services where trust, accuracy, and compliance are non-negotiable.
Dave Feller: That's why we are approaching this to the phase transformation starting where the impact is the highest and the risk is low and then expanding from there.
Dave Feller: Right now we're in phase one. We're embedding AI to augment our teams and workflows. Support is a great example where over 60% of our interactions are now handled by our AI agent.
Dave Feller: In engineering, we're using co-pilot and AI tools at Cursor, and the percentage of our code is written by AI continues to increase, with some engineers reporting as much as 50% of their code now written by AI.
Dave Feller: The next phase is where AI starts to own full workflow and end. Always for human oversight. At this stage, we move from augmentation to orchestration with AI running core business processes and humans focusing on oversight, refinement and innovation.
Dave Feller: and then we enter the third phase where AI becomes the brains of the platform. This is where real compounding begins, where intelligence flows across lending, investing, support, and operations to drive performance retention and long-term value.
Dave Feller: The point is we're not rushing this. We're building this with purpose. We know where this is headed and we're building the architecture, the culture and the capabilities to get it there, responsibly but aggressively.
MOGO 3.0 is our reset.
Dave Feller: Liener, Smarter, and more focused. We're not chasing hype with playing the long game and building for durable value.
Dave Feller: Our objective is to be one of the most product-focused AI-native challenges in Fintech. Things are moving faster than ever, and our team is working hard to execute on the strategic initiatives that will transform Mogo. With that, I'll pass it over to Greg.
Greg Feller: Thanks, Dave. Let me start by spending a few minutes on our payments business, Carter Worldwide, which, as you know, is a separate wholly owned subsidiary of Mogo, and alongside Wealth comprises one of our two primary areas of focus for driving long-term growth in massive
We've discussed previously.
Greg Feller: that we've been investing heavily in Cardiff Tech platform in the past couple of years and recently completed our OCI migration.
Greg Feller: which positions a business to continue its growth trajectory and move towards David F. Palsett of this year.
Greg Feller: Also, we completed our exit of the Canadian market, given the smaller scale of this market for us and increased the efficiencies we're able to achieve by exiting the card of business from Canada. This also allows us to increase our focus on card as main growth market in Europe and enhance our ability to serve our European customers.
Greg Feller: Turning to our investment portfolio, which continues to be a major component of value for Mogo when it's shareholder is given as total value at quarter end, represented close to 70% of our current market cap.
Greg Feller: Largest portion of this portfolio is crypto related with our staking Canadian crypto exchange 1 to 5 valued at 16.3 million at quarter end, like many other equities or stock prices affected by the recent market volatility.
Greg Feller: During Q1 prior to much of the volatility we sold the first tranche for a 1 to 5 position liquidating 5 million of our approximately 87 million shares for Proceeds of approximately 1.7 million. We also monetized an investment, one of our private investments for net proceeds of 750,000.
Turning to our financials.
Greg Feller: Cordily adjusted total revenue, which removes the legacy brokerage business, which we announced last quarter that we exited with 16.7 million in Q1 up from 16.4 million in the prior year.
Greg Feller: The increased room by a continued strong double digit growth from wealth and payment.
Greg Feller: Offset by lower interest revenue. Q1 results in wealth benefit from an increase in new higher value users on our intelligent investing platform based on the additional value we've built into the platform.
Greg Feller: This more than offset the plan to client and interest revenues we take a more cautious approach again in our lending business regarding economic uncertainty.
Greg Feller: Our continued focus on cash flow showed through, again in Q1, specifically, cash flow from operations before investment in gross loan receivables was positive for the 10th consecutive quarter reaching 3.8 million in Q1. Total cash flow from operating activities which includes the investment in loan receivables was also positive for the 4th.
Greg Feller: for the quarter at 0.6 million compared to negative 3.9 million in the prior year period.
Greg Feller: We maintain a solid position at your end with cash and total investments of roughly 39 million. This included combined cash, restricted cash of 13 million up from the prior quarter, and 25.8 million of marketable securities and investment portfolio.
Greg Feller: There is no change to our outlook for 2025 that we presented at your end, and so with that, I'll turn it back to Dave and open it up for any questions.
Dave Feller: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star, follow the number one on your touch stone phone. You will hear a prompt that your hand has been raised.
Greg Feller: Should you wish a decline from the polling process, please press start too.
Dave Feller: If you're using a speaker phone, please lift the handset before pressing any keys.
Greg Feller: Once again, it is part one if you wish to ask a question.
Speaker Change: Your first question comes from the line of Scott Buck from H.C. Windrite, your line is now open.
Alright, good afternoon guys. Thanks for taking my questions.
First.
It looks like growth in both wealth and payments.
Speaker Change: So yes, Greg. Thanks, Scott. Yeah, we're not changing our guidance for the year at this point.
Speaker Change: We'll continue to assess that as we go down in later quarters.
I think on the on the payment side there was...
Speaker Change: Some increase from the exiting of Canada, and there will be some decrease from the exiting of Canada in the last three quarters of the year, so I think that will moderate the growth rate in the in the next few quarters.
So again, at this time, we're not changing the guidance.
Speaker Change: that at this stage we're going to take a conservative approach.
Speaker Change: Keith Guidance, where it is, and we're still seeing a fairly, I would say, volatile overall economy and market and certainty. So we think we're better positioned here to stay conservative and keep things where they are and see how things play out over the next quarter or two.
Craig, I appreciate that and I think that makes sense.
Speaker Change: I understand the caution on the lending side but I'm curious have you actually seen any deterioration in the lending business so far this year?
No, we haven't. So, that's great news.
So we haven't seen any deterioration there.
Speaker Change: and so again, that's something we're going to monitor here of the next couple of quarters and see how. Now.
Speaker Change: You know, some of these tariff negotiations pan out and the potential impact that that could or couldn't have on the Canadian economy.
Speaker Change: So at this stage, that caution may not be as warranted, but that
Speaker Change: You know, look, one of the benefits that we have as far as lending just being, you know, one leg of the stool and, you know, payments and wealth being primary folks to growth is that we can take that cautious approach to lending.
Speaker Change: and and wait until we see how things sort of develop, you know, further in the year before we decide if we want to, you know, you know, get more aggressive there. But at this stage, no, we haven't seen any specific deterioration there.
Speaker Change: A desire to maintain profitability or where it is accelerating these investments take priority over profitability in the near term.
Speaker Change: Look, I think our goal will continue to stay EBITDA positive while making the appropriate investments. I think.
Speaker Change: You know, we are seeing, you know, you know, as I mentioned, cart is in a position to attorney, but up positive this year, which is going to help in that last year, it was negative. And then, you know, we part of the benefit of AI investments, is that actually it does drive efficiencies as well.
Speaker Change: So, there's an ROI to those investments. So, I think we, you know, at this stage believe that we can manage the right level of investment with maintaining positive EBITDA that we're focused on.
Great, I appreciate the added color guys, thanks again.
Thanks.
Speaker Change: Once again, I said a reminder, if you have a question, please press star one on your telephone keypad.
Speaker Change: There are no further questions at this time. I will not turn the call over to David Speller. Please continue.
Okay, thanks again for joining us for a Q1 call.
David Feller: We're excited about our our new focus on Mogo 3.0. I think that also is is one of the
David Feller: They're going to be the key kind of long-term driver and kind of a balance in investing in AI and balancing that long-term growth opportunity, you know, specifically I think on the weld size but also a better position as. [inaudible]
David Feller: even in a volatile lending market as well with a more of an AI-driven platform there. We look forward to updating you, poster, Q2 earnings. Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.