Mogo Inc. Earnings Call Highlights Growth and Strategic Shifts

Mogo Finance Technology ((TSE:MOGO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Mogo Finance Technology’s recent earnings call presented a balanced sentiment, reflecting both positive strides and challenges. The company showcased growth in revenue, cash position, and assets under management, while also navigating the strategic exit from its institutional brokerage business and a decline in interest revenue. Overall, the sentiment was a mix of optimism and caution, as Mogo shifts focus towards its wealth and payments segments.

Revenue Growth in 2024

Mogo Inc. reported a 9% increase in revenue, reaching $71.2 million in 2024. This growth was driven by a 16% rise in wealth revenue and a 21% increase in payments revenue, highlighting the company’s successful expansion in these segments.

Strong Cash and Investments Position

The company ended 2024 with a robust $49.1 million in cash, marketable securities, and investments, marking a significant increase from $36.2 million in Q3. This strong financial position underscores Mogo’s ability to invest in strategic growth areas.

Assets Under Management Growth

Mogo’s wealth segment saw a 22% year-over-year growth in assets under management, reaching $428 million. This substantial increase reflects the company’s effective strategies in expanding its wealth management services.

Payments Volume Increase

The payments segment also experienced growth, with payment volume processed increasing by 16% year-over-year to $11.5 billion. This rise is indicative of Mogo’s strengthening position in the payments industry.

Subscription Services Revenue Growth

Subscription services revenue grew by 11% year-over-year, showcasing the company’s ability to enhance its recurring revenue streams and customer engagement.

Positive Net Income

Mogo reported a positive net income of $10.4 million for Q4 2024, a significant achievement that highlights the company’s profitability amidst its strategic shifts.

Strategic Focus on High-Growth Areas

The company is concentrating on scaling its wealth and payments segments, with projected revenue growth of 20%-25% and mid to high teens, respectively, in 2025. This strategic focus aims to capitalize on high-margin opportunities.

Exit from Institutional Brokerage Business

Mogo decided to exit its institutional brokerage business, which contributed $1.6 million in Q4 2024 but offered negligible operating margin. This move is part of a broader strategy to focus on more profitable areas.

Interest Revenue Decline

Interest revenue declined by 3% in Q4 2024, with a projected decrease of 8%-10% in 2025. This decline is attributed to the company’s cautious approach to lending amid economic uncertainties.

Adjusted EBITDA Decline

Adjusted EBITDA for 2024 was $6.7 million, down from $7.7 million in 2023. This decline reflects the challenges faced by Mogo in maintaining its profitability while navigating strategic changes.

Cautious Approach to Lending

Due to economic uncertainty, Mogo is adopting a cautious approach to lending, which is impacting its interest revenue projections. This strategy is aimed at mitigating risks in a volatile market environment.

Forward-Looking Guidance

Looking ahead, Mogo projects significant growth in its wealth and payments segments, with expected revenue increases of 20%-25% and mid to high teens, respectively, in 2025. The company is also strategically exiting its institutional brokerage operations to focus on high-margin areas and has extended its credit facility to 2029 with lower interest rates.

In conclusion, Mogo Finance Technology’s earnings call reflected a balanced sentiment, with notable achievements in revenue growth and strategic shifts towards high-growth areas. While challenges such as declining interest revenue and adjusted EBITDA were acknowledged, the company’s forward-looking guidance suggests a focus on leveraging its strengths in the wealth and payments segments for future growth.