| Impact: Positive - Mogo reported solid FQ1 results with better revenues and in-line adj. EBITDA relative to our/Street expectations. · The revenue beat was led by subscription and fee-based revenues, which accelerated with 32% q/q growth, reflecting initial contribution from B2B payments with the recent Carta acquisition. Further, momentum with the Mogo platform continues to build with the 3rd straight quarter of acceleration in new member adds (+70k, +52% y/y) and growing engagement evidenced by transaction volume growth in key product initiatives: MogoCrypto (+1,500% y/y) and MogoCard (+1,000% y/y). · Alongside the results, the company provided an updated financial snapshot of Coinsquare, highlighting strong operational momentum, while increasing their stake in the business from 19.99% to 37% for an incremental ~$48mm at an implied $282mm valuation vs. an estimated $1.1bn valuation for Coinsquare based on current valuation for Coinbase (COIN-N; Not Rated) at ~11x F22E Revenues. · Applying Mogo’s stake, assuming exercise of a remaining share purchase warrant for a total 48% ownership at an incremental cost of ~$60mm, yields a per share value of >$7/share for their Coinsquare investment. This is effectively close to where Mogo trades at today, reflecting nearly zero value in the stock for Coinsquare, in our view. Further, we see a path to a majority +50% ownership, which would consolidate financials for both companies, with potential for Mogo to ultimately be the public exit vehicle for Coinsquare, suggesting further valuation upside. · We will revisit our forecast and valuation post this afternoon’s conference call with management at 3:00pm EST (dial-in: (833)968-2206). Key Quarterly Highlights: · FQ1 Revenue was $11.4mm (+14% q/q and -18% y/y), vs. Street/Eight Capital expectations at $10.9mm. o Subscription and Fee-Based Revenue came in at $6.0mm (+32% q/q and +3% y/y) vs. our $5.4mm estimate o Loan Interest from long-term loans came in at $5.4mm (flat q/q and -33% y/y) vs. our $5.4mm estimate · Adj. EBITDA was ($1.1)mm, vs. Street/Eight Capital expectations of ($1.0)mm. · Adj. EPS of ($0.10), vs. Street/Eight Capital expectations of ($0.16). · Mogo added 70k new members during the quarter (vs. 52k in Q4/F20 and 46k in Q1/F20). Total customer base now sits at 1.2mm (+17% y/y), or 1.6mm inclusive of recent Moka acquisition. · Mogo ended the quarter with Cash and Cash equivalents of $121mm (consisting of $95mm in cash, $24.2mm in investments and $1.32mm in digital currencies) vs. $26.8mm LQ, reflecting the company’s recent C$87.5 equity raise. Mogo increases Coinsquare ownership stake to 37%; Coinsquare update highlights growing momentum in AUM and revenue growth, with impressive margins · Mogo also announced they will be increasing their ownership in Coinsquare to 37%, up from an initial 19.99%, for total consideration of between $46.9-$48.6mm, payable via cash or shares. |