Following launch of new digital platform, Company achieves record member growth and first quarter of positive adjusted EBITDA since IPO
VANCOUVER, Nov. 9, 2016 /CNW/ - Mogo Finance Technology Inc. (TSX: GO), one of Canada's leading financial technology companies, today announced its financial and operational results for the third quarter ended September 30, 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 Management's Discussion and Analysis, which are available at www.sedar.com and http://investors.mogo.ca/.
Strategy yielding results
"In the third quarter, the three key pillars of our strategy – platform, products, and brand – came together to drive a significant increase in new members and our first quarter of positive adjusted EBITDA since our IPO," said David Feller, Mogo's Founder and CEO. "We launched our new digital account and mobile app, which truly showcase the power of our technology to deliver a great digital experience. We also launched our new free monthly credit score monitoring product and harnessed the reach of our Postmedia partnership. The result was a record number of new members. The increase in our members grew by three times over the second quarter, and last month we surpassed 300,000 members, putting us on target to reach our goal of one million members in the next three years."
Platform driving efficiencies while growing member base sets stage for new fee-based products
"Our results in Q3 clearly demonstrate the power of our platform and the tangible benefits it can drive in our financial results. With our member growth we also saw an increase in the number of prime credit score customers which aligns well with the upcoming launch of our new revenue generating fee-based products such as mortgage and the digital spending account. This puts us in a great position to profitably monetize our significantly growing member base," said Greg Feller, Mogo's President and CFO. "We also achieved a major milestone this quarter with our first positive adjusted EBITDA as a public company. We achieved this in large part through the efficiencies realized from our digital platform which fundamentally is a more efficient and effective model for delivering innovative financial products to our customers. This was further demonstrated by our significant reduction in net cash use in the quarter which was down 55% from Q2 2016 to $2M."
Third Quarter 2016 Financial Highlights
- Revenue for the third quarter of 2016 was $12.6 million, a 9% increase from the third quarter of 2015. Within this, loan interest and other revenue increased a combined 67% to $6.4 million, driven by the success of focusing on the growth of installment loans and line of credit products.
- Gross profit grew 5% to $7.6 million (60% of revenue) from $7.2 million (63% of revenue) in the third quarter of 2015.
- Achieved positive adjusted EBITDA(1) of $0.5 million in the third quarter of 2016. This represents the Company's first positive adjusted EBITDA since its IPO in 2015 and the fourth consecutive quarter of improvement of adjusted EBITDA and a $3.7 million year over year improvement compared to ($3.2) million in the third quarter of 2015. This was driven by continued benefits of increased scale as well as operating efficiencies, including an 18% decrease in general and administrative expenses and a 34% decrease in marketing expenses, compared to the second quarter of 2016.
- Net cash flow from operating activities before investment in loans receivable(1) had its third consecutive positive cash inflow in the third quarter of $2.1 million, with year-to-date cash inflow of $3.3 million.
- The Company reduced its total use of cash by more than 55% to $2.0 million in Q3 2016, down from $4.5 million in Q2 2016. At September 30, 2016, Mogo had $22.1 million in cash and cash equivalents.
- Gross loans receivable were $71.0 million as at September 30, 2016, representing a 32% increase compared to $53.9 million as at September 30, 2015. Within this, gross loans receivable – long-term(1) increased by 57% compared to the third quarter of 2015 and represented 81% of the total gross loans receivable, compared to 68% of the total gross loans receivable as at September 30, 2015. This was a result of the Company's continued focus on its long-term loan products.
- Adjusted net loss(1) had its fourth consecutive improvement to $3.3 million in the third quarter of 2016, a 21% improvement compared to $4.2 million in the second quarter of 2016; and a 44% year over year improvement compared to an adjusted net loss of $6.0 million in the third quarter of 2015.
- Net loss in the third quarter of 2016 was $3.6 million, an improvement of $1 million compared to the net loss of $4.6 million in the second quarter of 2016.
Third Quarter 2016 Business Highlights
- Launched Mogo's new digital platform including the MogoAccount and iOS app enabling Mogo to deliver what we believe is Canada's first truly digital banking experience.
- Increased Mogo's brand awareness which accelerated our member growth to approximately 292,000 as at September 30, 2016, an 85% increase compared to approximately 158,000 as at September 30, 2015. In October, the company surpassed 300,000 Mogo members, demonstrating accelerating member growth.
- Announced the addition of experienced technology capital markets executive Tom Liston to Mogo's board of directors subsequent to quarter end.
Mogo Changes Trading Symbol from "GO" to "MOGO"
Now that the Toronto Stock Exchange can accommodate four-letter trading symbols, Mogo will be changing its ticker symbol to "MOGO" effective November 14, 2016.
Conference Call & Webcast
Mogo will host a conference call to discuss its Q3 2016 financial results at 5:00 p.m. EST on November 9, 2016. 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 7689013. The webcast can be accessed at http://bit.ly/2dSJqAc or http://investors.mogo.ca. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected. A copy of the presentation will be available at http://investors.mogo.ca.
Non-IFRS Financial Measures
This news release makes reference to certain non-IFRS financial measures such as adjusted EBITDA, adjusted net loss, net cash flow from operating activities before investment in loans receivable and gross loans receivable – long term. 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 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 period ended September 30, 2016, 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 measures.
This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements regarding Mogo's revenue, revenue growth and adjusted EBITDA, the future growth of Mogo's business, its intention to invest in its technology platform, to expand into other products and markets, Mogo's expectations regarding members, and Mogo's financial expectations and outlook for 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 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 the "Risk Factors" section of Mogo's annual information form dated March 30, 2016 for the year ended December 31, 2015, which is 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.
Mogo (TSX: GO)—a Vancouver-based financial technology company—offers Canadians a new way to manage their finances through its multi-product digital platform designed to help consumers get in control of their financial health. In under three minutes, users can sign up for a Mogo®Account and get instant access to three innovative products: Canada's only free credit score with free monthly credit score monitoring; a digital spending account with no monthly fee, accessible through a Mogo Platinum Prepaid Visa® Card; and an instant pre-approval on a personal loan—all with no impact to their credit score. As a full spectrum lender, Mogo is dedicated to giving consumers finances with benefits, regardless of their credit score. With more than 300,000 members and growing, Mogo is quickly becoming the new face of banking in Canada. To learn more, visit mogo.ca or download the mobile app.
(1) adjusted EBITDA, adjusted net loss, net cash flow from operating activities before investment in loans receivable and gross loans receivable – long-term are non IFRS financial measures. For more information regarding our use of these measures see "Non-IFRS Financial Measures" and, where applicable, a reconciliation to the most comparable IFRS measure, see "Reconciliation of Non IFRS Financial Measures" in the MD&A for the period ended September 30, 2016.
SOURCE Mogo Finance Technology Inc.
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