Mogo Reports First Quarter 2021 Financial Results Mogo Reports First Quarter 2021 Financial Results
VANCOUVER, British Columbia -- (Business Wire) --
Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO) (“Mogo” or the “Company”), a digital payments and financial technology company, today announced its financial and operational results for the first quarter ended March 31, 2021.
“The first quarter was among the most active and strategically important periods in Mogo’s history. We are building the most comprehensive digital wallet to address the needs of Canadian consumers, and the transactions we completed in the first quarter – both strategic and financial – accelerate our growth plans and vision significantly,” said David Feller, Mogo’s Founder and CEO. “In addition to the acquisition of Carta, our B2B payments business, subsequent to quarter end we expanded our product capabilities and addressable market in the $4+ trillion wealth management industry with the acquisition of Moka. We are seeing momentum across multiple areas of the business and, with the upcoming addition of new investing and saving options, a free stock trading solution and P2P payments in 2021, we will give Canadian consumers even more reasons to make Mogo an important part of their financial lives.”
“Our financial position has never been stronger, with over $120 million in cash and investments at quarter end, in addition to a growing crypto investment portfolio,” said Greg Feller, President and CFO of Mogo. “With the Coinsquare follow-on investment we announced today, we will also own 37% of Canada’s leading crypto trading platform. Crypto is the fastest-growing asset class, and this is fueling rapid growth at Coinsquare, highlighted by a 500%+ year-over-year increase in revenue in Q1 2021.
Mr. Feller added: “Our subscription and services revenue is showing increased growth, led by strong gains from MogoCrypto and higher transaction activity from MogoSpend. This organic growth momentum, combined with the acquisitions of Carta and Moka, which have also added scale and diversification to our revenue base, position us for accelerating revenue growth in 2021. With a favourable backdrop for fintech and an improved balance sheet, we are renewing our growth investments to take full advantage of industry tailwinds.”
Financial Highlights
- Accelerating subscription and services revenue of $6.0 million (53% of total revenue) in Q1 2021, up 32% sequentially from $4.6 million (46% of total revenue) in Q4 2020, driven by increased revenue from MogoCard and MogoCrypto as well as recognition of revenue related to payments processing.
- Q1 2021 revenue was $11.4 million, compared with $10.0 million in Q4 2020 and $13.9 million in Q1 2020. The sequential revenue growth was driven by increased subscription and services revenue while the year-over-year decrease resulted primarily from the strategic sale of a portion of our loan book in Q1 2020.
- Strong gross profit margin of 83.0% in Q1 2021, up from 60.4% in Q1 2020.
- Adjusted EBITDA was a loss of $1.1 million in Q1 2021, compared to Adjusted EBITDA of positive $0.5 million in the same period last year. The decrease in Adjusted EBITDA was driven primarily by an increase in product and technology investment as well as increased marketing spend.
- Q1 2021 net loss of $2.8 million, compared with net loss of $2.8 million in Q4 2020 and $10.1 million in Q1 2020. The reduction in net loss year-over-year was driven by a $5.8 million gain in our investment portfolio which was primarily attributable to the gain on our investment in Vena Solutions which was sold subsequent to quarter end.
Balance Sheet Highlights
- Significantly strengthened balance sheet to pursue organic and acquisitive growth.
- During Q1 2021, Mogo raised approximately $87.5 million of net cash proceeds and at quarter end, had approximately $121 million in combined cash and investments (up from $30.6 million at the end of Q4 2020).
- Completed early conversion of convertible debentures, resulting in reduced interest expense going forward.
- Consistent with plans to increase its on balance sheet investment in the blockchain and fintech ecosystem, Mogo acquired approximately 18 bitcoins to date in open market transactions at an average price of US$33,083. In May 2021, the Company also purchased approximately 146 units of Ether at an average price of US$2,777.
- In April 2021, Mogo sold its investment in Vena Solutions for proceeds of $4.7 million, a 116% increase from the book value as at December 31, 2020.
Business & Operations Highlights
- Net member additions of approximately 70,000, up 35% from Q4 2020; total members reached 1,195,000 members at quarter end.
- Following the closing of the acquisition of Moka Financial Technologies Inc. (“Moka”), Mogo’s member base now sits at approximately 1.6 million.
- MogoCrypto trading volume was up over 1,500% year-over-year
- MogoCard transaction volume was up over 1,000% year over year
Strategic Initiatives & Subsequent Events
- In January 2021, closed the acquisition of Carta Solutions Holding Corporation (“Carta”), a leader in digital payment solutions. The acquisition adds a next-generation business to business payments platform and significantly expands Mogo’s total addressable market.
- In April 2021, completed an initial strategic investment in Coinsquare Ltd. (“Coinsquare”), Canada’s leading digital asset trading platform, acquiring 19.99% ownership of Coinsquare’s outstanding common shares.
- Concurrent with its Q1 2021 results, Mogo also announced that it intends to increase its ownership position in Coinsquare from 19.99% to approximately 37% through the acquisition of an additional 5.4 million common shares of Coinsquare through a secondary transaction with an existing shareholder and by exercising a portion of its rights under the original investment agreement. Mogo also holds a purchase warrant in Coinsquare that, if and when exercised, would increase its total ownership interest to approximately 48%.
- In May 2021, completed the all-stock acquisition of Moka, one of Canada's leading saving and investing apps. The acquisition expands Mogo’s wealth offering to include saving and investing products and will accelerate Mogo’s plan to launch a free stock trading solution for Canadians in 2021.
- Announced a new partnership to provide MogoMembers with exclusive access to crypto and other equity research from FSInsight LLC, a market-leading, independent research firm that is a division of Fundstrat Global Advisors. Under the agreement, Mogo will be the exclusive distributor bringing FSI’s research to Canada’s retail investor market.
Financial Outlook
2020 was a transformational year for Mogo’s business and financial position. Based on the strong underlying profitability of our model along with the substantial growth opportunities we see across our core businesses, we expect to continue increasing our growth investments to drive accelerating member and revenue growth in 2021. Specifically, we expect:
- Continued increase in net Mogo member additions in 2021;
- Accelerated growth in subscription and services revenue in 2021; and
- Year-over-year growth of 80% to 100% in subscription and services revenue in Q4 2021 as compared to Q4 2020.
1 For more information regarding our use of these non-IFRS measures and, where applicable, a reconciliation to the most comparable IFRS measure, see “Non-IFRS Financial Measures” in the Company’s MD&A for the period ended March 31, 2021.
Conference Call & Webcast
Mogo will host a conference call to discuss its Q1 2021 financial results at 3:00 p.m. EDT on May 13, 2021. The call will be hosted by David Feller, Founder and CEO, and Greg Feller, President and CFO. To participate in the call, dial (833) 968-2206 or (778) 560-2782 (International). The webcast can be accessed at https://investors.mogo.ca. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.