Mogo Announces Third Quarter 2015 Financial Results

Revenue Grows 70% Year over Year
Number of Members Surpasses 150,000

VANCOUVER, Nov. 10, 2015 /CNW/ - Mogo Finance Technology Inc. (TSX: GO), Canada's leading digital financial platform, today reported its financial results for the third quarter ended September 30, 2015. The third quarter also included several enhancements to Mogo's technology platform, continued progress in our new product development efforts and strengthening of our management team.  

"With a membership base of over 150,000 and growing and more than $100 million invested to date in our platform, we believe Mogo is building the leading digital financial brand and technology platform in Canada," said David Feller, Mogo's Founder and CEO. "There is a digital transformation happening in financial services,  which is being driven by millennials who are demanding the convenience of a fully digital experience.  As highlighted in a recent McKinsey report on the banking industry, this transformation will put at risk up to 60% of banks' retail profits to innovative financial technology firms. With our next-generation technology platform and millennial-focused brand, we have positioned Mogo at the heart of this disruption. From our successful start in consumer lending, our plan is to build a broader suite of financial products that leverage our platform and growing member base."

"Year-on-year revenue increased 70% driven by the success of our installment loan product, which exceeded our initial expectations and validates our strategy to target the broader $280 billion Canadian consumer loan market," said Greg Feller, Mogo's President and CFO. "Our business model continues to drive strong underlying economics as we scale revenue.  Going forward, we plan to focus on disciplined growth of our loan portfolio while balancing this with continued investments in our technology platform, development of less capital-intensive products and demonstrating a clear path to profitability."

Mogo reports in Canadian dollars and in accordance with IFRS

Third Quarter Financial Highlights

• Total revenue for the third quarter of 2015 was $11.6 million, a 70% increase from the third quarter of 2014. Within this, Loan interest revenue grew 418% driven by the success of the Company's line-of-credit and installment loan products.
• Gross profit margin was 62.5% in the third quarter of 2015, up 50 basis points from the second quarter of 2015.
• Gross loans receivable increased by 192% to $53.9 million in the third quarter of 2015, compared to the third quarter of 2014. Within this, long-term loans receivable represented 68% of the total gross receivable, up from 24% in the third quarter of 2014, driven by the successful ramp of the Company's installment loan product.
• Loan originations for the third quarter 2015 were $82.4 million, up 81% from the third quarter in 2014.
• Our Provision Rate decreased to 4.3% in the third quarter of 2015 from 4.6% in the second quarter of 2015 based on the continued mix shift in our loan portfolio to higher credit quality Liquid installment loan customers.
• Reported positive Contribution¹ of $4.0 million in the third quarter of 2015, up from $2.3 million in the third quarter of 2014.
• Cash flow used in operations before investment in loan receivables was $0.8 in the third quarter of 2015, compared to $1.5 million in the third quarter of 2014.
• At September 30, 2015, Mogo had $39.9 million in cash and cash equivalents.

Third-Quarter Business Highlights

• Exceeded 158,000 total Mogo Members, up 148% from the third quarter of 2014.
• Loan products and unique Level-up program driving compelling customer lifetime value.
• Finalized new expandable credit facility of up to $200 million under certain conditions, with Fortress Credit Co LLC, to finance the continued expansion of our consumer installment loans.
• Continued additions to our industry leading Technology, Development and Product teams, which now total 100 members.
• Strengthening of our senior management team with the additions of key team members including financial industry veterans: Lisa Skakun, who joined Mogo from Canada's leading Credit Union as our Chief Legal & Administrative Officer, Carlos Medeiros who joins the Company as Vice President, Credit Risk, and Shirley Chen who joins as Mogo's Treasurer.

Outlook

Mogo is providing the following outlook regarding the fourth quarter 2015 and the full year 2016:

• As we continue to execute on our strategy of building Canada's leading digital financial platform, it is critical that we balance our use of capital between the disciplined growth of our loan portfolio and the continued investment in our platform and new products that will drive future growth.
• The Company is also focused on achieving profitability and plans to reduce marketing spend in the fourth quarter of 2015, which it expects will moderate its loan growth rate, demonstrate operating leverage and reduce net losses.
• In 2016, the Company expects to increase the mix of non-capital-intensive, fee-based revenue, through the introduction of new products, including the new Mogo Prepaid Visa, the Mogo mortgage and Mogo marketplace lending.
• Management reiterated expectation of reaching EBITDA positive in 2016.
• The selected financial information included in this release is qualified in its entirety by, and should be read together with the Company's full financial statements and MD&A, which are available at www.sedar.com and http://investors.mogo.ca/.

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¹ See description of Contribution and Contribution Margin in MD&A

Conference Call & Webcast

Mogo will host a conference call to discuss its Q3 2015 financial results at 5:00 p.m. EST on November 10, 2015. The call will be hosted by David Feller, Founder & CEO, and Greg Feller, President & CFO. To participate in the call, dial 647-427-7450 or 1-888-231-8191 using the conference ID 64753693.  The webcast can be accessed at http://investors.mogo.ca. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected. 

Non-IFRS Measures

Loan originations, adjusted EBITDA, long-term loans receivable and provision rate are non‑IFRS financial measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non‑IFRS financial measures, including loan originations, adjusted EBITDA, long-term loans receivable and provision rate, to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We believe that securities analysts, investors and other interested parties frequently use non‑IFRS financial measures in the evaluation of issuers. Our management also uses non‑IFRS financial measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on any non‑IFRS measure and view it in conjunction with the most comparable IFRS financial measures.   Readers are referred to our MD&A for the third quarter ended September 30, 2015 which is available at www.sedar.com and http://investors.mogo.ca/ for more information regarding our use of these measures and a reconciliation to the most comparable IFRS measure.

About Mogo

Mogo (TSX: GO) is a financial technology company focused on leveraging software to bring a new level of convenience, simplicity and value to consumer financial services.  With over 150,000 members and over 1 million loans originated, we are leading the shift in Canada as consumers begin to move away from traditional banking services toward a fully digital experience.  We're transforming financial services by building the first digital platform designed to give Canadians convenient and controlled access to a range of financial products that make it easier stay in control of their financial health. With personal loans that help you get out of debt, and a free prepaid Visa that helps you control spending, we're building a digital financial brand that empowers a whole new generation of Canadians.  To learn more about Mogo – recently referred to as the potential "Uber of banking" by CNBC – visit mogo.ca

 Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the future growth of Mogo's business, its intention to invest in its technology platform, to expand into other products and markets and Mogo's financial expectations and outlook for the balance of 2015 and 2016. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Mogo's growth, its ability to invest in its platform and expand into new products and markets and its expectations for its financial performance for the balance of 2015 and 2016 are subject to a number of conditions, many of which are outside of Mogo's control. For a description of the risks associated with Mogo's business please refer to MD&A for the quarter ended September 30, 2015 and the long form prospectus dated June 18, 2015, both of which are available at www.sedar.com. Except as required by law, Mogo disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.

Approved on Behalf of the Board

 Signed by "Greg Feller"                , Director

 Signed by "Minhas Mohamed"     , Director

SOURCE Mogo Finance Technology Inc