Mr. Craig Armitage reports
MOGO REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS
Mogo Inc. has released its financial and operational results for the three and nine months ended Sept. 30, 2022.
"In our 20-year corporate history, we have seen many challenging macroeconomic operating environments, and this is clearly another one," said David Feller, Mogo's founder and chief executive officer. "In response to this, we are taking aggressive steps that while difficult, accelerate our path to profitability and make us a more efficient company. At the same time, we will also be looking to narrow our focus to only those products and areas where we see the greatest opportunities for profitable growth. It's clear that in today's market, prioritizing profitability over growth is the focus, and we are adjusting accordingly."
Key financial highlights for Q3 2022:
Total revenue increased 12 per cent over the comparable quarter in 2021 to $17.3-million, including subscription and services revenue of $10.4-million, up 10 per cent over the same period last year;
Gross profit decreased
11 per cent to $10.8-million (62.8-per-cent margin), compared with $12.2-million (78.9-per-cent margin) in Q3 2021;
During Q3 2022, Mogo continued to focus on accelerating its path to profitability by placing an emphasis on cost efficiency and building financial resiliency. As a result of these initial steps, total operating expenses decreased by 25 per cent in Q3 2022 compared with Q1 2022;
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $2.8-million, a 32-per-cent decrease compared with adjusted EBITDA loss of $4.1-million in Q2 2022 and a 19-per-cent decrease from Q3 2021;
Net cash flow from operations before investment in receivables improved 47 per cent to negative $1.2-million, compared with negative $2.3-million in Q3 2021 and negative $7.2-million in Q1 2022;
Adjusted net loss improved to negative $8.4-million, down from negative $9.5-million both in Q2 2022 and Q3 2021;
Net loss of $20-million in Q3 2022, up from negative $9.8-million in Q3 2021, primarily driven by changes in non-cash losses, and Mogo's share of losses in affiliates totalling $11.9-million, but down substantially from negative $51.9-million reported in Q2 2022 due primarily to a reduction in impairment related expenses. These losses have mainly resulted from broader equity and cryptocurrency declines during the period;
Ended the quarter with cash and cash equivalents of $35.3-million, investment portfolio of $13.8-million and digital assets of $700,000, along with a book value of investment in Coinsquare of $56.1-million as at Sept. 30, 2022.
"While our financial position remains solid, in light of the macroeconomic conditions, we are acting decisively to adjust the balance between growth investment and profitability," said Greg Feller, president and chief financial officer. "Our initial actions are already generating material savings, and additional initiatives are expected to reduce cash operating expenses by an extra 25 to 35 per cent in the coming quarters. We will continue investing prudently in initiatives that we believe will drive top-line expansion over the long-term, with a focus on our digital wealth solutions, which are profitable products in markets with long-term growth tailwinds. Subsequent to quarter-end, we monetized our digital assets, bitcoin and ethereum. With our recent announcement to exit our MogoCrypto product, our sole remaining crypto exposure is comprised of our investment in Canada's first IIROC [Investment Industry Regulatory Organization of Canada]-registered crypto dealer Coinsquare, along with several smaller crypto-related investments in our investment portfolio."
Additional business and operations highlights:
Mogo's total member base increased by approximately 17 per cent, from 1,766,000 members as at Sept. 30, 2021 to 2,061,000 members as at Sept. 30, 2022;
Ended the quarter with assets under management of approximately $293-million;
Mogo's portfolio company Coinsquare received approval from the Investment Industry Regulatory Organization of Canada for its investment dealer registration and IIROC membership. This regulatory status positions Coinsquare as the first crypto-only, IIROC-registered investment dealer and marketplace member across all provinces and territories of Canada;
Mogo announced its decision to wind down its current bitcoin product, MogoCrypto.
restructuring and financial outlook
As discussed in its Q2 2022 financial results, Mogo commenced a plan to reduce its expense base and increase its focus on profitability, with a goal of reaching positive adjusted EBITDA by Q4 2023. During Q3 2022, Mogo reduced its marketing and product development investments, reduced headcount and, subsequent to quarter-end, began to wind down its current bitcoin product, MogoCrypto. In addition, the company announced to members that it will be shutting down Moka in France in Q4 2022.
Beginning in Q4 2022, the company is taking additional steps to accelerate its path to profitability. Specifically, the company is implementing a broad restructuring plan that it expects will result in a further 25-per-cent to 35-per-cent reduction in operating expenses over the next several quarters. In addition to headcount reductions, the company is evaluating other efficiency and product rationalization opportunities, which may include eliminating unprofitable or subscale products. Once implemented, the company expects these initiatives to have a 10 per cent to 15 per cent impact on quarterly revenue in the near term.
Mogo previously provided revenue guidance for 2022 of $69-million to $72-million. In light of the restructuring, the company expects total revenues of $68-million to $69-million for 2022.
Conference call and webcast
Mogo will host a conference call to discuss its Q3 2022 financial results at 3 p.m. ET on Nov. 10, 2022. The call will be hosted by Mr. D. Feller, founder and CEO, and Mr. G. Feller, president and CFO. To participate in the call, dial 416-764-8658 or 888-886-7786 (international). The webcast can be accessed at the company's website. Listeners should access the webcast or call 10 to 15 minutes before the start time to ensure they are connected.
Mogo, one of Canada's leading financial technology companies, is empowering its more than two million members with simple digital solutions to help them get in control of their financial health while also making a positive impact with their money. Through the free Mogo application, consumers can access a digital spending account with the Mogo Visa Platinum Prepaid Card featuring automatic carbon offsetting, free monthly credit score monitoring and identity fraud protection, and access personal loans and mortgages. Mogo's new MogoTrade application offers commission-free stock trading that helps users make a positive impact with every investment and, together with Moka, Mogo's wholly owned subsidiary bringing automated, fully managed flat-fee investing to Canadians, forms the heart of Mogo's digital wealth platform. Mogo's wholly owned subsidiary, Carta Worldwide, also offers a digital payments platform that powers the next-generation card programs from innovative fintech (financial technology) companies in Europe, North America and APAC (Asia Pacific).
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