Mogo Inc.

Good morning ladies and gentlemen and welcome to MOGO Inc. Q4 2024 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 call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, March 20, 2025. And I would now like to turn the conference over to Mr. Craig Armitage. Thank you. Please go ahead.

Thank you and good morning everyone. Just a few quick 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. Company undertakes no obligation to update these statements except as required by law. Information about the risks and uncertainties are included in MOGO's Q4 and year-end filings as well as periodic filings with regulators in Canada and the US which you'll find on CDAR and you can act in EDGAR and you can access via the investor relations website as well. And lastly today's session will include several adjusted financial measures or non IFRS measures. Please consider these as a supplement to and not a substitute for the IFRS measures. You'll see that we've included reconciliations to those in the press release and in the investor deck. There was some technical difficulty getting the slides uploaded but for anyone on the webcast you can download the slides to follow along and they will also be up in the IR website as well. So with that I'll turn the call over to Dave Feller. Go ahead Dave.

Thanks Craig. Thank you and good morning. Welcome to our fourth quarter of the full year 2024 results conference call. I'm joined today by Greg Feller, our president and CFO. I'll cover some of the key operating highlights and Greg will dig into the deeper financial results and I'll look. In 2024 we grew revenue by 9% to 71.2 million driven by a 16% increase in wealth revenue and a 21% increase in payments revenue. Our adjusted EBITDA for the full year was 6.7 million coming in above the middle of the range of our increased guidance. We also ended the year with 49.1 million in cash, marketable securities and investments up from 36.2 million in Q3. In wealth asset center management grew 22% year over year reaching 428 million. Our wealth platform continues gaining momentum with revenue reaching a 12 million dollar annual run rate. Our intelligent investing solution that includes MOCA, MOGO and Finch App Pro continues to gain traction with its unique and disruptive value proposition. In payments revenue grew 21% in 2024 reaching 8.6 million while total payments volume process increased 16% year over year to 11.5 billion. Reflecting the ongoing expansion of this business. We also took steps to stream our business including exiting our institutional brokerage operations to focus on higher margin areas and extending our credit facility to 2029 with lower interest rates. Looking ahead we see significant opportunity in wealth given the structural shifts happening in the market and the role that AI will play in reshaping how people invest. While it's still early we are focused on scaling wealth and payments in a disciplined way positioning ourselves for long-term growth in these key areas. Given the importance of a wealth business I want to take some time to explain a little more detail the opportunity and help investors understand our unique approach in this space. The market opportunity in wealth is massive Canadian households now hold 10.8 trillion in financial assets. We believe the entire industry is on the brink of a major transformation driven by the rise of AI. Investors today have access to more data than ever before but the traditional wealth management investing models have not kept up. Conflicted incentives, high fees, outdated strategies and a lack of transparency continue to hold investors back. The two trillion Canadians have in mutual funds with average fees of around two percent highlight the opportunity as Canadians continue to be sold into overcharging and underperforming products. Most financial platforms don't actually rethink wealth management. They just tweak the same old system. They operate within its constraints making minor adjustments instead of addressing real problems. But we're taking a first principles approach deconstructing wealth management investing down to its core truths and rebuilding it optimized for the investor not the firm. This is something that many don't fully appreciate as Charlie Munger put it the whole damn system is corrupt. The wealth management and self-directed investing market is designed to maximize investor success. It's designed to maximize corporate revenue and profitability. Fees, conflicts of interest, engagement driven platforms. They all keep investors in a cycle to benefit the firm more than the individual. We have a unique opportunity to change that by applying first principles thinking and leveraging AI. We're not just improving the system. We're fundamentally reshaping it. This first principles thinking applies not just to the products and experience but to the business model itself. A business model that actually aligns with the success of the investors combined with the power of AI will fundamentally change the industry and empower investors in a way they've never been before. When it comes to being a successful investor one of the questions investors need to ask themselves is what is my edge. Every successful investor has one Buffett, Munger, Lynch, the pros playing at the highest level don't win because they're lucky. They win because they have an advantage. But here's the problem. Most platforms are built to take the edge away from the users and give it to the house. They push you into high funds, fee funds. They push you to trade. They create experiences designed to drive behaviors that are optimized for their business model and your returns. The system is designed for them to win not you. We built Intelligent Investing to flip the script on its head. We're obsessed with one thing. The actual performance of our members as investors. Our solution is designed to help investors improve their informational, analytical, and most importantly behavioral edge. At MOGO we didn't just build another trading app. We built a system. Intelligent Investing is designed around the principles of the greatest investor of all time, Warren Buffett. This system is based on a few key truths. Firstly, as Warren Buffett says, success in investing is about temperament, not intellect. Our primary objective is giving investors the behavioral edge they need to win, which means it's designed to also help minimize the behaviors that lead to poor performance. The second truth is another thing that Buffett and Munger has been preaching for years. That the average investor would be way better off by simply investing through a low cost index like the S&P 500. In fact, it outperforms 98% of professionals over the long run. So no plausible narratives to try and justify high fees for funds that underperform. And the third truth is that being a successful active investor is really hard, contrary to what is generally marketed today. As Charlie Munger said, anyone who thinks it's easy is stupid. Empowering investors with the right knowledge and analytical capabilities is critical for any chance to be a successful stock picker. Today, our top 100 members are curling on track to over 3 billion. This isn't about getting rich quick. It's about discipline, patient, long term wealth building. Real wealth isn't built on hype. It's built on consistency. And that's exactly what the first part of our solution is designed for. Mocha makes investing automatic. No market timing. No guesswork. Just set up scheduled contributions, stay invested, and let compounded do its thing. And the results speak for themselves. Last year, Mocha growth portfolio delivered a 34% return. That's the kind of performance that would have placed it third among the top hedge funds in the US. Without the complexity, without the high fees, and without the stress of active trading. Again, this is a fully managed solution. It's based on the proven forms of the S&P 500. It includes weekly dollar cost averaging, automated dividend reinvestments, and importantly, an experience is designed to help investors stay disciplined and consistent. Through the inevitable ups and downs of the market. One of Buffett's criticisms with the industry was that you won't find anyone telling their customers to simply go into a low cost index fund like the S&P. Because that's not where the money is. Even though that's where most investors would be better off. Well, now there is. Most self-directed investing apps today aren't for investing. They're dopamine fueled casinos. They're designed to maximize engagement, not returns. Flashing charts, zero commission trades, and social driven FOMO keep users trading constantly. Because that's how these platforms make money. But as any real investor knows, more trading usually leads to worse results. MoGo, the second part of our solution, is designed to take a different approach. We're not here to push trading. We're here to help our members build well. That means no gimmicks, no hidden fees, and no casino tricks. Just the right mindset, strategy, and tools to invest intelligently. Trading apps profit when investors are distracted and addicted. Our success is tied to helping our members actually succeed. If you understand that difference, you understand what MoGo is all about. We believe the future of investing will be won by the platforms that actually deliver the best results. Not the ones with the most features or those that have done the best job of gamifying trading. Most investors are at a disadvantage. They're making decisions with surface level data, hype driven analysis, and the same generic research is widely available. Meanwhile, institutions and hedge funds have access to far more sophisticated tools, giving them an edge that retail investors simply don't have. The third part of our intelligent investing is designed to change that. Dintchak Pro provides institutional grade data, hedge fund level research, and deep fundamental analysis. The kind of insights that give serious investors a real advantage. Normally, to access this level of research would cost $110 a month, but we've included it as part of the intelligent investing membership. For investors who care about performance over speculation, signal over noise, and long-term wealth building over short-term trading, Dintchak Pro is a game changer. The typical investing platform makes money in ways that don't align with the investor's best interests. Whether it's high management fees and underperforming funds, hidden spreads, or business models that rely on encouraging more training. The reality is simple. Most platforms profit even when you don't. We took a completely different approach. Instead of charging big management fees or relying on revenue from trading activity, we built a simple transparent subscription model, just $20 a month. While others push trading, we've designed our solution to minimize trading and focus on long-term patient investing, the approach that historically delivers the best results. In an industry with management fees that typically range from .5% to 2%, and trading revenue driven by commissions and foreign exchange fees as high as 2%, it's easy to see how the incentives aren't aligned. Our business model is built around helping our members become better investors, not more active traders. We are witnessing one of the most profound technological shifts in the world has ever seen as the impact on wealth management investing industry will be transformational with AI. For decades, banks, wealth advisors, and trading apps have controlled the industry, built on high fees, complexity, and models that serve institutions more than investors. That was before AI. Now we're entering the after AI era where technology is breaking down barriers, eliminating deficiencies, and fundamentally changing how wealth is built. AI driven platforms will enable those that have an investor first mindset to deliver a transformational experience and value proposition that delivers better performance, lower cost, and a level of transparency that traditional industry will be reluctant to match. This shift will enable new leaders to emerge, and we believe we have the approach and determination to be one of them. The future of investing isn't just about technology, it's about culture. The next generation doesn't just want tools, they want something they can believe in. A brand that stands for something, a brand that inspires them to invest intelligently. Most investing platforms today feel transactional, just another app with charts and numbers. But wealth building is more than that. It's about a mindset, identity, and a long term vision. That's why we're building more than just an investing platform. We're building a brand, a brand that challenges the status quo and brings the proven principles of the world's greatest investors to a new generation, but in a way that is culturally relevant. A brand that speaks to a new generation of investors who want to break free from the traps and take control of their financial future. This is about making intelligent investing aspirational, making it high status, making it something people want to be a part of. With that, I'll turn this call over to Greg. Greg?

Thanks, David. Good morning. I have to say I love the dopamine fueled casinos line. It's so true. And it's why we're so excited with our intelligent investing solution and why we believe it's so disruptive, especially in the new world. Where more and more investors are going to be leveraging AI to make smart decisions. Really nothing like it either in Canada or even in the US market. So I want to first make a few comments on our payments business, Carter Worldwide. As mentioned for the first time this quarter, we're now breaking out revenue from this business alongside of wealth. As they represent our two primary areas of focus for driving long term growth in two massive addressable markets. Payments businesses is also our only international segment with the majority of Carter's revenues coming from European customers. And our wealth and our lending business are Canada only. As highlighted, Carter had another strong quarter. It's reflected in a 14% year over year increase in payments volume to 3.2 billion in the quarter. During the same period, revenue actually grew at a higher rate of 27% to 2.4 million. For the full year, transaction volume was up 16% to 11.5 billion. Revenue was up 20% to 8.6 million. We've been investing heavily in Carter's technology platform over the past year, which we've spoken about before and we're on track to complete the major portion of this investment. By the end of this quarter, positioning the business to continue growth trajectory and move towards profitability. Turning to our investment portfolio, which is a major value driver for shareholders given its substantial size. Total 38.1 million. A large portion of this is crypto related with a stake in Canadian crypto exchange, WunderFi. This is also a fairly liquid asset that offers us flexibility to monetize portions of our portfolio when it makes sense for us. In fact, post year end, we sold some of this position, 5 million of our 87 million shares. For proceeds of 1.7 million, and we also monetize private investments for an additional 750,000. Revenue for the quarter with strong, we increased to 18 million of 5%. Growth driven by 11% in subscription services revenue, which more than offset 3% decline in interest revenue. Full year revenue was up 9% to 71 million and subscription services was up 11% year over year. 24 with also milestone year for wealth and payments in terms of scale, which is why we're now breaking these businesses out. Wealth and payments both saw accelerated growth in the fourth quarter. Up 19% in Q4 for wealth and 27% for payments during the same period. Based on the strength, we're guiding to 20 to 25% growth in wealth for 25 and mid to high teens growth for payments in 25. Adjusted EBITDA for the quarter with 2.1 million or 11 and a half percent consistent with Q3 and a modest decline from the prior year. Full year adjusted EBITDA of 6.7 million was above the midpoint of our previously increased guidance and compared with 7.7 million in 2023. We reported positive net income of 10.4 million compared to with 8.5 in the prior period. And Q4 net income reflects 13.8 million gain in marketable securities compared to 13.6 in the same period last year. Adjusted net loss was only 400,000 and improvement from the 500,000 in Q3 and bringing us very close to break even. Our continued focus on cash flow in 24 yielded substantial results, specifically cash flow from operating activities before investment in gross loan receivable was positive for the ninth consecutive quarter reaching 4.1 million in Q4. For the full year cash flow from operating activities before loan receivables increased 53% to 14 and a half million. Total cash flow from operating activities net of investment in loan receivables was also positive for the third quarter consecutive quarter at half a million in Q4 compared to negative 2.2 million in the prior period. Overall, for the full year, we reduced our total cash use and operating activities net of investment loan receivables from 9.2 million negative in 2023 to only 1.3 million negative in 2024. We maintain a solid financial position at year end with cash and total investments of 49 million, including combined cash and restricted cash of 11 million and 38.1 million of marketable securities and investment portfolio. As previously mentioned, we monetized over 2.4 million of our investments in the current quarter. So post year end, and we believe we will have additional monetization opportunities to fund any incremental capital requirements. For a growth plan in 2025. With our year end results, we updated our 25 outlook. One key piece you will see in our press release, which factors into our updated guidance relates to our decision in this current quarter Q125 to exit our institutional brokerage business. As part of our strategic decision to move away from low margin revenue streams. Although this business contributed 1.6 million and 5.3 million of revenue for the three months and year ended December 31st, 24 respectively. It contributed negligible operating margin during these same periods. This revenue is historically been reported within our subscription and services revenue segments. Based on this, we're updating our 25 guidance for subscription services revenue, which we previously expected to grow at high single digit rate. This on a reported basis will now decrease by 5 to 8%. However, when you adjust for the exit of the trading business out of 2024 numbers, we expect subscription services revenue to still grow at mid to high single digit rate. As articulated, we're especially focused on growing a high margin wealth and payments business going forward. Specifically, we anticipate accelerated growth and wealth with revenue expected to increase by 2025% and our payments business projected to grow in the mid to high teens. The strategic shift allows us to focus on two high growth areas, each within trillion dollar total addressable markets, positioning us to build meaningful scale in these attractive markets. Turning to interest revenue from our lending business, we now expect this to decrease by 8 to 10% in 25 driven by a more cautious approach to lending due to economic uncertainty, particularly the potential impact. Uncertain impact of US Canadian tariff disputes on the Canadian economy. As a result of the lower interest revenue and increased investments in technology and marketing to support growth in our key growth areas, we now expect adjusted EBITDA to be in the range of 5 to 6 million. In fiscal 2025, we also are no longer focused on generating positive adjusted net income for the year given these decisions, including the prioritization of growth. And our view is in the most recent quarter, we got pretty close to getting to positive adjusted net income. So we continue to have dials that we can turn if we need to to increase EBITDA and to get to positive adjusted net income, but we strongly believe that the right decision now given the the things that we're seeing around wealth in particular is to move more towards a growth and investment posture and we feel comfortable with our balance sheet with existing cash and monetization opportunities for us to be able to fund that. As you know, we've been a generally a consistent buyer of our stock, the company has. Dave and I have also been consistent buyers of the stock when we haven't been in blackout periods. And we continue to be in the position where we have never individually ever sold any shares. So we are very much putting our money where our mouth is alongside of our investors. So with that, I will turn it back to the operator to open it up for questions.

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. You will hear a prompt that your hand has been raised and should you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first

question. And your first

question comes in

the line of Scott back from each see, we write, please go ahead.

Hey, good morning guys. Thanks for taking my questions. I guess first I was hoping we could get a little bit more color on the timing on the decision to leave the institutional brokerage business. What, you know, why is now the right time has something changed in the macro that makes that business? You know, less attractive. I mean, any kind of additional color there, I think would be helpful.

Yeah, he's got it's Greg. So look, that was a business that was a legacy business that we got when we acquired a business years ago to get us to regulatory licenses for the mogul trading business. So it was never a core part of our strategy. We just inherited it. And it's a, it's a pretty volatile business. So the quarterly numbers on that can be very up and down makes it difficult to manage. At least with our reported financials. And then we, so, you know, we continue to look at efficiencies in the business. And as we, as we've been doing for the last several years. And efficiencies not only include removing unnecessary costs, but it also includes removing businesses that you don't believe align with our core objectives, because they are also distractions. So a business that had volatile quarterly revenue. Effectively negligible operating margin. So it's not really impacting our EBITDA and was a distraction because it really wasn't core to our focus. We just made the decision that now was the time as we sort of ramped up our focus on on our wealth and our payments business for growth going forward.

Great, that's that's helpful. And second, I'm curious, as you look to scale wealth and payments, could we see potential acquisitions there? To to accelerate that process?

I mean, you know, never say never. We've obviously done some in the past that not not our priority for us right now. I think we, we believe we've got a massive opportunity. With what we're doing in wealth, we believe it's highly differentiated from anything else out there. We don't even think there is something out there that would make sense to us. I think, look, as that business scales, there could be other pieces to bring into the ecosystem of wealth that could make sense, but nothing on the near term horizon.

Okay, perfect. And then last one for me, the decision to pull back in the lending business. Are you being proactive here or are you already seeing some deterioration in credit quality in the loan book?

We're we're being proactive. I think one of the things we've always, you know, emphasize in our business is lending, which, you know, years ago was the majority of our revenue has become a smaller and smaller piece of our revenue. So it allows us to turn those dials up and down when appropriate. When your business is exclusively lending, your incentive is to keep pushing ahead, you know, sort of no matter what. But when for us, we're not in that position. And so we've always, I think, taken a more cautious approach to lending. And right now, with the macro environment, the uncertainty around tariffs and how that could impact things, we just decided to, you know, take a conservative posture there. Look, if things change and things settle out over the next, you know, several months, we could always revisit that decision. But we felt that was the right guidance to give given at this stage right now. It is very uncertain and clearly from a lending perspective, the tariff issue would be a much bigger issue, we believe, for the Canadian economy than it would be for the US economy.

Great. Well, I appreciate the added color, guys. Thank you very much for the time. Thanks.

Thank you once again, should you have a question, please press star fall by the one on your telephone keypad.

And there are

no further questions at

this time. I would now hand the call back to Mr. Dave Feller for any closing remarks.

Thank you. Thanks again for taking the time to join us this morning. Also wanted to end by again thanking all of our team members for their continued hard work. This is definitely a team sport. We've got a lot of dedicated team members who work hard every day to make this happen. We look forward to talking to you again after our first two one results. Thanks again.

Thank you. This concludes today's call. Thank you for participating. You may all disconnect.