Earnings call transcript: Mogo’s Q1 2025 Results Highlight AI Integration

Mogo Inc. (MOGO) reported its Q1 2025 financial results, showcasing a modest increase in revenue and continued positive cash flow. The company emphasized its strategic focus on AI-driven innovations and operational efficiencies. Despite these efforts, Mogo’s stock experienced a decline of 3.18%, closing at $1.10, amidst broader market fluctuations. According to InvestingPro analysis, the stock currently trades below its Fair Value, with significant price volatility being a key characteristic of its trading pattern.

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Key Takeaways

• Mogo reported Q1 2025 revenue of $16.7 million, up from $16.4 million the previous year.
• Positive adjusted EBITDA of $1.1 million, reflecting a 6.1% margin.
• Launched "Mogo 3.0," marking significant AI integration across business functions.
• Payments volume and revenue saw substantial growth, with payments revenue increasing by 34%.
• Mogo maintained a conservative outlook for 2025, with no changes to previous guidance.

Company Performance

Mogo’s Q1 2025 results reflect a steady performance with a slight year-over-year revenue increase. The company continues to leverage its AI capabilities, aiming to enhance efficiency and customer experience. This strategic pivot is evident in the launch of "Mogo 3.0," which integrates AI into over 60% of customer support interactions and engineering functions. The company also exited the Canadian market for Carta Worldwide to focus on European expansion.

Financial Highlights

• Revenue: $16.7 million, up from $16.4 million YoY.
• Adjusted EBITDA: $1.1 million, with a 6.1% margin.
• Adjusted net loss: $1.5 million.
• Positive cash flow from operations for the 10th consecutive quarter: $3.8 million.
• Total cash and investments: $39 million, including $13 million in cash and $25.8 million in marketable securities.

Outlook & Guidance

Mogo remains committed to its conservative outlook for 2025, with no revisions to its guidance. The company continues to integrate AI across its operations and aims to maintain EBITDA positivity for Carta Worldwide. Future guidance projects a gradual increase in revenue, with a focus on long-term value creation over short-term gains. According to InvestingPro data, analysts maintain a moderate buy consensus, though they don’t anticipate profitability this year, with an EPS forecast of -$0.35 for FY2025.

Executive Commentary

CEO Dave Feller emphasized Mogo’s strategic focus on AI, stating, "Eventually, there’ll be no part of our business that isn’t AI powered." He further highlighted the company’s long-term vision, saying, "We’re not chasing hype, we’re playing the long game and building for durable value." These statements underscore Mogo’s commitment to leveraging technology for sustainable growth.

Risks and Challenges

• Market Volatility: Fluctuations in the broader market could impact Mogo’s stock performance.
• AI Integration: The shift towards AI-driven operations may present implementation challenges.
• Competitive Landscape: As an AI-native fintech challenger, Mogo faces intense competition from established players.
• Regulatory Environment: Changes in financial regulations could affect Mogo’s operations and strategic plans.
• Economic Conditions: Broader economic pressures might influence consumer behavior and demand for Mogo’s services.

Mogo’s Q1 2025 results highlight its strategic focus on innovation and efficiency, despite facing challenges in a competitive and volatile market. The company’s continued emphasis on AI integration and operational optimization positions it as a unique player in the fintech landscape.

Full transcript - Mogo Inc (MOGO) Q1 2025:

Conference Operator: afternoon, ladies and gentlemen, and welcome to Mogo First Quarter twenty twenty five Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 05/08/2025. I would now like to turn the conference over to Craig Armitage, Investor Relations.

Please go ahead.

Craig Armitage, Investor Relations, Mogo: Thank you, operator, and good afternoon, everyone. Just a few quick notes before we get started. Today’s call will contain forward looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligation to update these statements except as required by law. Information about the risks and uncertainties are included in Mogo’s Q1 filings as well as periodic filings with regulators in Canada and The United States, which you’ll find on SEDAR and you can access via the Investor Relations website as well.

Lastly, today’s session will include several adjusted financial measures or non IFRS financial measures. Please consider these as a supplement to and not a substitute for the IFRS measures. You’ll see that we’ve included reconciliations to those in the press release and the investor deck. And with that, I’ll turn the call over to Dave Feller to get us started. Dave?

Dave Feller, CEO, Mogo: Thanks, Greg. Thank you. Good afternoon. Welcome to Mogo’s Q1 twenty twenty five results conference call. I’m joined today by Greg Feller, our President and CFO.

I’ll cover some of the key operating highlights and our strategic focus for the year, and then I’ll pass it over to Greg to review our financial results. Q1 was a solid quarter, especially with our continued momentum in both wealth and payments with wealth revenue up 41% and payments revenue up 34%. Importantly, we also achieved this while maintaining positive adjusted EBITDA and strong balance sheet. Like every company, we’ve been spending a lot of time digging deep into AI and identifying all the ways that we can leverage it to help build their business. We’ve recently formalized this into what we are now calling Mogo three point zero, which is all about becoming an AI native business.

This is a full reset on how we build, operate, and scale across every part of our business. This means embedding intelligence in every layer of product, operations, finance, and member experience. It’s a move to become leaner, smarter, and radically more efficient. This means fewer people, higher velocity, and one unified platform across lending and wealth. Eventually, there’ll be no part of our business that isn’t AI powered.

It’s hard to overstate the impact that it’s already having and we are only scratching the surface. Things that were once not even possible are now very accessible. Just to give you a sense of the impact, are certain areas where through AI our productivity gains can be easily been 10 to 20x, including in product marketing. Today almost every single one of our team members are using AI in their daily business and exploring new AI tools that are helping them dramatically improve their productivity. Historically, our lending experience like most was relatively simple.

It was static rule based and reactive. We’re now reimagining the entire experience as an AI native one. This means smarter marketing and customer acquisition, smarter underwriting that’ll include behavioral data, alternative data, including spending patterns that will enable smarter credit decisions, and better outcomes for both the user and our business. AI will also enable us to better serve our customers, helping nudge them to better behaviors, including helping them get out of debt sooner and ultimately to get them on a path to wealth building. This will continue into collections as well.

There’s no part of the experience that can’t be radically improved with AI. And this is a key initiative as part of the three point zero transformation. As we saw this quarter’s performance, we’re continuing to make progress in our wealth business driven by continued improvement in the experience and value proposition, which is helping attract higher value users. But now with your heads down, reimagining it as an AI native and unified experience. There was a time when having two separate apps made sense, but now that we have brought them together as a single intelligent investing value proposition, we believe unifying them into a single AI native app makes a lot of sense.

We think this will be a big unlock for us and dramatically improve the experience and value proposition for our users. Again, while the market is dominated by what we call dopamine fueled casinos, we are building one that prioritizes discipline, patience, long term focus. Something that not only sets us apart from the competition, but resonates with investors that are looking for something better. Our goal isn’t to be the biggest, it’s to be the most effective wealth building platform in the market. We’re already leveraging AI and giving our members a behavioral edge, but we’re only scratching the surface of what’s possible.

As a refresher, unlike commission free assets focused on trading activity and foreign exchange fees, we offer a very compelling value proposition at $20 a month that includes zero commission and zero FX fees, along with a fully managed S and P 500 based portfolio and a serious research and analytical tool. This model helps align our success with the success for our members. While others push trading activity to drive increased revenue. We focus on improving the performance of our members, which usually means more discipline, patience, and pure trades. We call it buff mode.

Now, it’s important to understand that becoming AI native isn’t a flip of the switch, especially non financial services where trust accuracy and compliance are non negotiable. That’s why we’re approaching this as a phase transformation starting where the impact is the highest and the risk is the lowest, and then expanding from there. Right now we’re in phase one. We’re embedding AI to augment our teams and workflows. Support is a great example where over 60% of our interactions are now handled by our AI agents, delivering faster and better responses at a lower cost.

In engineering, we’re using Copilot and AI tools like Cursor, and the percentage of our code that’s written by AI continues to increase with some engineers reporting as much as 50% of their code now written by AI. The next phase is where AI starts to own full workflows end to end, always with human oversight. At this stage, move from augmentation to orchestration with AI running core business processes and humans focusing on oversight, refinement, and innovation. And then we enter the third phase where AI becomes the brains of the platform. This is where real compounding begins, intelligence flows across lending, investing support, and operations to drive performance, retention, and long term value.

The point is we’re not rushing this. We’re building this with purpose. We know where this is headed, and we’re building the architecture, the culture, and the capabilities to get it there responsibly, but aggressively. Mogo three point zero is our reset. Leaner, smarter, and more focused.

We’re not chasing hype, we’re playing the long game and building for durable value. Our objective is to be one of the most product focused AI native challenges in fintech. Things are moving faster than ever, and our team is working hard to execute on the strategic initiatives that will transform Mogo. With that, I’ll pass it over to Greg.

Greg Feller, President and CFO, Mogo: Thanks, Dave. Let me start by spending a few minutes on our payments business, Carta Worldwide, which as you know, is a separate wholly owned subsidiary of Mogo and alongside wealth comprises one of our two primary areas of focus for driving long term growth in massive TAMs. Carta had another strong quarter as reflected in our 26% year over year increase in volume to $3,200,000,000 And revenue growth during the period was even higher at 34% due to the impact of better pricing. We’ve discussed previously that we’ve been investing heavily in Carta’s tech platform in the past couple of years and recently completed our OCI migration, which positions the business to continue its growth trajectory and move towards EBITDA positive this year. Also, we completed our exit of the Canadian market given the smaller scale of this market for us and increased efficiencies we’re able to achieve by exiting the Carta business from Canada.

This also allows us to increase our focus on Carta’s main growth market in Europe and enhance our ability to serve our European customers. Turning to our investment portfolio, which continues to be a major component of value for Mogo and its shareholders, given its total value at quarter end, representing close to 70% of our current market cap. A large portion of this portfolio is crypto related with our stake in Canadian crypto exchange, WonderFi, valued at $16,300,000 at quarter end. Like many other equities, their stock price was affected by the recent market volatility. During Q1, prior to much of the volatility, we sold the first tranche for a one to five position liquidating 5,000,000 of our approximately 87,000,000 shares for proceeds of approximately 1,700,000.0.

We also monetized an investment, one of our private investments for net proceeds of $750,000 Turning to our financials. Quarterly adjusted total revenue which removes the legacy brokerage business which we announced last quarter that we exited was $16,700,000 in Q1, up from $16,400,000 in the prior year. The increase driven by continued strong double digit growth from wealth and payments offset by lower interest revenue. Q1 results in wealth benefit from an increase in new higher value users on our intelligent investing platform based on the additional value we built into the platform. This more than offset the planned decline in interest revenues as we take a more cautious approach again in our lending business regarding economic uncertainty.

We are also achieving strong growth in these businesses while maintaining positive adjusted EBITDA, which was 1,100,000 in the quarter, a 6.1% margin, modest increase from the prior year. Adjusted net loss for the quarter was 1,500,000.0. Our continued focus on cash flow showed through again in Q1, specifically cash flow from operations before investment in gross loan receivables was positive for the tenth consecutive quarter reaching 3,800,000.0 in Q1. Total cash flow from operating activities, which includes the investment in loan receivables was also positive for quarter at 600,000.0 compared to negative 3,900,000.0 in the prior year period. We maintain a solid position at year end with cash and total investments of roughly $39,000,000 This included combined cash and restricted cash of $13,000,000 up from the prior quarter and $25,800,000 in marketable securities and investment portfolio.

Again, as we mentioned, we monetize about 2,400,000.0 of investments during the quarter. There is no change to our outlook for 2025 that we presented at year end. And so, with that, I’ll turn it back to Dave and open it up for any questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two.

If you’re using a speakerphone, please lift the handset before pressing any keys. Your first question comes from the line of Scott Buck from H. C. Wainwright. Your line is now open.

Scott Buck, Analyst, H.C. Wainwright: Hi. Good afternoon, guys. Thanks for taking my questions. First, it looks like growth in both wealth and payments was well above the full year growth expectation during the first quarter. Are you expecting a slowdown in that growth remainder of the year or was there something unique mechanically in the first quarter that made growth so kind of outpaced the full year expectation?

Greg Feller, President and CFO, Mogo: So, Greg. Thanks Scott. Yeah, we’re not changing our guidance for the year at this point. We’ll continue to assess that as we go down in later quarters. I think on the payment side, there was some increase from the exiting of Canada, and there’ll be some decrease from the exiting of Canada, you know, in the last three quarters of the year.

So

Dave Feller, CEO, Mogo: I

Greg Feller, President and CFO, Mogo: think that will moderate the growth rate in the next few quarters. So again, at this time, we’re not changing the guidance. And look, we feel very good about wealth as well, but our view is that at this stage, we’re going to take a conservative approach, keep guidance where it is. And we’re still seeing a fairly, I would say, volatile overall economy and market and uncertainty. So, we think it’s we’re better positioned here to stay conservative and keep things where they are and see how things play out over the next quarter or two.

Scott Buck, Analyst, H.C. Wainwright: Great. I appreciate that. And I think that makes makes sense. I understand the caution on the lending side, but I’m curious. Have you actually seen any deterioration in the lending business so far this year?

Greg Feller, President and CFO, Mogo: No, we haven’t. So that’s great news. So we haven’t seen any deterioration there. And so, again, that’s something we’re going to kind of monitor here over the next couple of quarters and see how some of these tariff negotiations pan out and the potential impact that that could or couldn’t have on the Canadian economy. So at this stage, that caution may not be as warranted, but look, one of the benefits that we have as far as lending just being one leg of the stool and payments and wealth being primary focus to growth is that we can take that cautious approach to lending and wait until we see how things sort of develop further in the year before we decide if we want to get more aggressive there.

But at this stage, no, we haven’t seen any specific deterioration there.

Scott Buck, Analyst, H.C. Wainwright: That’s perfect. And then last one for me. I’m curious on the operating expense side. Some of these added investments you’re making in AI. How do you balance the size of those investments and timing with a desire to maintain profitability?

Or does accelerating these investments take priority over profitability in the near term?

Greg Feller, President and CFO, Mogo: Look, I think our goal will continue to stay EBITDA positive while making the appropriate investments. I think you know, we are seeing, you know, as I mentioned, Carta’s in a position to turn EBITDA positive this year, which is going to help, and not last year it was negative. And then, you know, look, we part of the benefit of AI investments is that actually it does drive efficiencies as well. So there’s an ROI to those investments. So I think we, you know, at this stage believe that we can manage the the right level of investment with maintaining positive EBITDA that we’re focused on.

Scott Buck, Analyst, H.C. Wainwright: Great. Well, I appreciate the the added color, guys. Thanks again.

Conference Operator: There are no further questions at this time. I will now turn the call over to David Speller. Please continue.

Dave Feller, CEO, Mogo: Okay. Thanks again for joining us for our Q1 call. We’re excited about our new focus on Mogo three point zero. I think that also is one of the going to be the key kind of long term driver and kind of the balance in investing in AI and balancing that long term growth opportunity. Specifically, I think on the wealth side, but also better position us even in a volatile lending market as well with a more of an AI driven platform there.

We look forward to updating you post our Q2 earnings. Thanks again.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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