Mr. Greg Feller reports

MOGO REPORTS RESULTS FOR Q4 & FY 2023

Mogo Inc. has released its financial and operational results for the fourth quarter (Q4) and fiscal year (FY) ended Dec. 31, 2023.

"Our focus in 2023 was to build a more profitable and efficient company, while at the same time increasing product velocity and driving user experience improvements for our digital wealth platform," said David Feller, Mogo's founder and chief executive officer. "We made excellent progress on both fronts, meaningfully improving both the value of our wealth products and our profitability. Following the recent relaunch of both Moka and Mogo, we are in a great position to accelerate our marketing efforts in 2024 to build our user base and advance our mission to help the next generation of Canadians get on a path to achieving financial freedom. The wealth industry in Canada needs to change -- people are overpaying and underperforming, and the statistics show that most are not on a path to build the wealth they need to retire. We believe we have a disruptive value proposition and products that can change this outcome, helping the next generation achieve financial freedom."

Key financial highlights for Q4 and FY 2023:

• Q4 revenue of $17.2-million, up slightly over the prior year and by 6 per cent sequentially, reflecting increased growth in the company's core products.
• Q4 2023 gross profit of $11.5-million (67-per-cent margin), versus $11.7-million (68-per-cent margin) in Q4 2022. Full-year gross profit was $46.7-million, up slightly versus the prior year.
• Total operating expenses for Q4 2023 decreased by 25 per cent to $11.7-million, compared with $15.5-million in Q4 2022, reflecting the company's continued efficiency efforts, which also resulted in a significant improvement in revenue per employee of 24 per cent during the same period. Since Q1 2022, when the company implemented its efficiency initiatives, revenue per employee has increased by 83 per cent.
• Cash flows from operating activities before investment in gross loans receivable was positive for the fifth consecutive quarter, reaching $4.7-million in Q4 2023, a 79-per-cent increase over Q3 2023 and approximately 923 per cent over Q4 2022. For the full year, cash flows from operating activities before investment in gross loans receivable reached $9.5-million, a $20.1-million improvement compared with 2022.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased to $2.7-million in Q4 2023 (16-per-cent margin), up from $2.1-million (12.8-per-cent margin) in Q3 2023 and $200,000 (1.4-per-cent margin) in Q4 2022. Full-year adjusted EBITDA increased to $7.7-million, the high end of the company's initial target of $6-million to $8-million, and a $19.9-million improvement compared with the adjusted EBITDA loss of $12.2-million in 2022.
• Net income improved to income of $8.5-million in Q4 2023, compared with net loss of $74.9-million in Q4 2022.
• Adjusted net loss decreased to $2.6-million in Q4 2023 from adjusted net loss of $5.4-million in Q4 2022.
• Ended 2023 with cash and total investments of $55.6-million, up from $43.7-million at the end of Q3 2023. This included combined cash and restricted cash of $17.9-million, and investment portfolio of $37.8-million.
• In 2023, the company repurchased and cancelled 474,353 common shares under its share buyback program on Nasdaq and its normal course issuer bid on the Toronto Stock Exchange at an average price of $2.36 per share. Including the 600,000 common shares repurchased in 2022 under the Nasdaq buyback program, the company has repurchased 1,074,353 common shares to date, representing 4.4 per cent of the company's current outstanding common shares. The company currently has 24.5 million common shares issued and outstanding.
• Subsequent to year-end, Mogo announced that its board of directors has approved a change to its treasury management strategy to include bitcoin and bitcoin ETFs (exchange-traded funds), and authorized an initial investment of up to $5-million.

"Our fourth-quarter results clearly demonstrate our success in returning the business to meaningful profitability during 2023 while at the same time resuming top-line growth," said Greg Feller, president and chief financial officer. "Revenue increased sequentially for the third quarter in a row and, importantly, increased year-over-year for the first time in 2023. At the same time, our Q4 adjusted EBITDA reached $2.7-million, or 16-per-cent margin, bringing us to $7.7-million in adjusted EBITDA for the year compared to a loss of $12.2-million in 2022. In 2024, we plan to increase our investments to accelerate top-line growth of our subscription and services revenue, including our newly launched wealth products, along with continued growth of our Carta payments platform. We will also continue to focus on increasing our combined subscription and services revenue growth and adjusted EBITDA margin toward our target rule of 40."

Business and operations highlights:

• Mogo's digital payment solutions business, Carta Worldwide, processed over $9.9-billion of payment volume in 2023, an increase of 36 per cent compared with 2022.
• Assets under management in the company's wealth businesses increased 23 per cent year-over-year to $351.3-million.
• Mogo members increased to 2.1 million at year-end, up 6 per cent from the prior year.
• In July, 2023, Mogo announced that Coinsquare Ltd. completed a business combination with WonderFi and CoinSmart Financial Inc. This transaction positioned the resulting entity, WonderFi, as the only fully regulated crypto exchange in Canada. As at Dec. 31, 2023, Mogo was the largest shareholder of WonderFi, holding approximately 87 million shares (an approximately 13-per-cent ownership interest), valued at $25.7-million.
• Mogo continued to focus on increasing the value of its digital wealth platform. In March, 2024, the company announced the launch of Moka.ai, the next generation of its wealth-building app, with significant updates and enhancements designed to help the next generation of Canadians get on a real path to becoming millionaires and achieving financial freedom.
• Mogo continued to build a highly efficient and scalable technology platform and operation. Mogo entered a multiyear agreement to transition to Oracle cloud infrastructure to support the long-term growth of the company's digital wealth platform.
• Mogo completed a strategic agreement to transition to Snowflake as the sole data warehouse for its wealth and lending platforms. This aligns with Mogo's objective to deploy new artificial intelligence (AI) applications in wealth.

Financial outlook

In 2023, Mogo focused on accelerating its path to profitability by placing an emphasis on cost-efficiency and building financial resiliency in light of challenging financial market conditions. As a result of these initiatives, 2023 total operating expenses decreased by $29.3-million, or 37 per cent, compared with 2022, and the company reported a significant year-over-year increase in adjusted EBITDA, which increased to $7.7-million in 2023, a $19.9-million year-over-year improvement from an adjusted EBITDA loss of $12.2-million in 2022.

For fiscal 2024, Mogo expects to shift the balance toward accelerating revenue growth while at the same time continuing to generate positive adjusted EBITDA. The company will increase investments in marketing to drive acceleration in subscription and services revenue growth from its wealth and payments businesses, where it sees significant opportunity for expansion.

Specifically, for 2024, Mogo expects accelerating subscription and services revenue growth during the year, with an overall subscription and services revenue growth rate in the mid-teens for the full year.

Conference call and webcast

Mogo will host a conference call to discuss its Q4 and FY 2023 financial results at 2 p.m. Eastern Time on March 20, 2024. The call will be hosted by David Feller, founder and chief executive officer, and Greg Feller, president and CFO. To participate in the call, dial 416-764-8658 or 888-886-7786 (international) using conference ID: 72419362. The webcast can be accessed at the company's website. Listeners should access the webcast or call 10 minutes to 15 minutes before the start time to ensure they are connected.

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