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Mogo Inc
Symbol MOGO
Shares Issued 74,977,540
Close 2023-03-22 C$ 0.80
Market Cap C$ 59,982,032
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Mogo losses rise to $74.9-million in Q4 2022

2023-03-23 09:26 ET - News Release

Mr. David Feller reports


Mogo Inc. has released its financial and operational results for the fourth quarter and fiscal year ended Dec. 31, 2022.

"In the face of a highly challenging macroeconomic operating environment in 2022, we acted quickly to significantly accelerate our path to profitability, allowing us to reach positive Adjusted EBITDA in the fourth quarter," said David Feller, Mogo's founder and chief executive officer. "Through this restructuring process, we have considerably narrowed our strategic focus to products where we see the greatest potential for profitable growth. Our digital wealth products, Mogotrade and Moka, will remain the focus of our development efforts and the key drivers going forward, in addition to our digital payments platform, Carta. We will emerge from this period a more profitable and efficient company with exposure to multiple large markets with long-term growth tailwinds."

Key financial highlights for Q4 and full-year 2022:

  • Q4 revenue of $17.1-million, up 1 per cent over the prior year. Total revenue for fiscal 2022 increased 20 per cent to $68.9-million, at the high-end of the company's latest guidance;
  • Q4 gross profit of $11.7-million (68-per-cent margin), compared with $12.3-million (72-per-cent margin) in Q4 2021 but was up sequentially from $10.8-million (63 per cent) in Q3 2022. Full-year gross profit was $46.2-million, consistent with the prior year;
  • During Q4 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 initiatives, total operating expenses for Q4 2022 decreased by $8.1-million, or 34 per cent, compared with Q4 2021 and by 16 per cent from Q3 2022;
  • Mogo reported positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $200,000 in Q4 2022, well in advance of the company's target to achieve positive adjusted EBITDA by Q4 2023. This compares with adjusted EBITDA of negative $3.7-million in Q4 2021. This was the company's first time generating positive adjusted EBITDA since fiscal 2020;
  • Q4 net cash flow from operations before investment in receivables was also positive at $500,000, compared with negative $1-million in Q4 2021 and negative $1.5-million in Q3 2022. This was the first time the company generated positive cash flow from operations before investment in receivables since fiscal 2020;
  • Adjusted net loss decreased to negative $4.3-million in Q4 2022 from negative $9.7-million in Q4 2021 and negative $8.4-million in Q3 2022;
  • Net loss increased to negative $74.9-million in Q4 2022, compared with net loss of negative $29.6-million in Q4 2021. The increase is primarily driven by non-cash impairment charges of $37.2-million to goodwill and intangibles, and $31.5-million on the company's investment in Coinsquare in Q4 2022. These impairment charges have primarily resulted from recent broader equity declines during the period;
  • Ended 2022 with cash and total investments of $68.4-million. This included combined cash and restricted cash of $30.8-million, an investment portfolio of $12.5-million, and a book value of Mogo's 34-per-cent ownership in Canadian Crypto Investment Dealer Coinsquare of $25-million.

"Mogo has a proven history of managing expenses and cash flow in a challenging environment, and the restructuring we initiated last year has quickly reduced our cost structure, with total operating expenses down 34 per cent year-over-year in Q4," said Greg Feller, president and chief financial officer. "We also reached our positive adjusted EBITDA target well ahead of schedule with additional savings to follow in the coming quarters. As part of narrowing our strategic focus, we eliminated crypto activities in our operating business. As a result, our remaining crypto investment is primarily our 34 per cent ownership in Coinsquare, Canada's first IIROC [Investment Industry Regulatory Organization of Canada] registered crypto dealer. As we head into 2023, we remain in a solid financial position and are expecting to see accelerating adjusted EBITDA growth this year, while we continue to invest prudently in our digital wealth solutions and our payments platform, which we believe will drive top-line expansion in 2024."

Business and operations highlights

  • In 2023, Mogo launched the Mogotrade app in Quebec, making it available in both English and French languages and increasing the company's total addressable market opportunity by approximately 28 per cent. Mogotrade remains available by invitation only.
  • In March, 2023, Mogo amended its marketing collaboration agreement with Postmedia Network Inc. and extended the agreement until Dec. 31, 2024. Postmedia is a Canadian news media company representing more than 130 brands across multiple print, on-line and mobile platforms.
  • Mogo's digital payment solutions business, Carta Worldwide, processed over $2.2-billion of payments volume in Q4 2022, which was up over 20 per cent sequentially from Q3 2022.
  • In December, 2022, Mogo repurchased one million of its own common shares for a total cost of $700,000 at an average price of 67 cents per share. In June, 2022, Mogo repurchased 800,000 of its own common shares for a total cost of $1-million at an average price of $1.19 per share. The repurchases are pursuant to a share repurchase program approved by the board on March 22, 2022, which authorizes the repurchase of up to $10-million (U.S.) of common shares in the aggregate.
  • On Oct. 13, 2022, Mogo announced that Coinsquare Ltd., a company in which Mogo is an approximate 34 per cent shareholder as at Dec. 31, 2022, received approval from the Investment Industry Regulatory Organization of Canada for its investment dealer registration and IIROC membership through its wholly owned subsidiary, Coinsquare Capital Markets Ltd. With Coinsquare being IIROC-regulated, clients will now have the added comfort and security of knowing that Coinsquare is subject to the highest level of dealer compliance and oversight under the existing regulatory system.
  • During Q4 2022, Mogo monetized its digital assets investment for proceeds of $600,000, along with the exit of Mogocrypto. As at Dec. 31, 2022, Mogo's sole remaining crypto exposure comprises its investment in Canada's first IIROC-registered crypto dealer, Coinsquare, along with certain smaller crypto-related investments in the company's investment portfolio.

Corporate restructuring and financial outlook

During fiscal 2022, Mogo continued to focus on accelerating its path to profitability by placing an emphasis on cost-efficiency and building financial resiliency in light of challenging financial market conditions. The following cost reduction initiatives were implemented in 2022:

  • An approximately 33-per-cent reduction in work force headcount as at Dec. 31, 2022, compared with March 31, 2022;
  • A reduction in vendor expenses by all departments;
  • Completed the exit of Moka France during Q4 2022;
  • Completed the exit of Mogo's bitcoin product (Mogocrypto).

As a result of these initiatives, total operating expenses decreased by 37 per cent in Q4 2022, compared with Q1 2022.

For fiscal 2023, the company reiterates its previous guidance on cost reduction of 25-35 per cent for operating expenses over the next several quarters, relative to the company's Q3 2022 operating expenses. In addition to the wind down of Mogocrypto and exit from Moka France in Q4 2022, Mogo plans to sunset its legacy Mogoapp, including Mogocard, as part of its goal to simplify to one app and eliminate unprofitable or subscale business segments. Consistent with its previous guidance, Mogo expects its quarterly revenue in the near term will be impacted by 10-15 per cent as a result of these restructuring initiatives.

For fiscal 2023, the company will continue to focus on accelerating its path to profitability with a specific focus on increasing its adjusted EBITDA. Specifically, for 2023, Mogo is focused on achieving:

  • Full-year adjusted EBITDA of $6-million to $8-million;
  • Exiting 2023 with an annual adjusted EBITDA run rate of $10-million to $14-million (based on a Q4 2023 adjusted EBITDA target of $2.5-million to $3.5-million).

Conference call and webcast

Mogo will host a conference call to discuss its Q4 2022 financial results at 3 p.m. EDT on March 23, 2023. The call will be hosted by David Feller, founder and chief executive officer, and Greg Feller, president and chief financial officer. To participate in the call, dial 416-764-8658 or 888-886-7786 (international) using conference ID (identification): 97196810. Listeners should access the webcast or call 10 to 15 minutes before the start time to ensure they are connected.

About Mogo Inc.

Mogo, one of Canada's leading digital finance companies, is empowering its members with simple digital solutions to help them build wealth and achieve financial freedom. Mogo's trade app, Mogotrade, 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 also offers digital loans and mortgages. Through Mogo's wholly owned subsidiary, Carta Worldwide, the company also offers a digital payments platform that powers the next-generation card programs from innovative fintech companies in Europe and Canada.

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