Company targeting launch of new cryptocurrency account in Q1 2018
Other product revenue and fees now represent 30% of total revenue
Record gross profit margin of 68%, up from 60% last year
Adjusted EBITDA increased 96% year over year to $1.0 million
Mogo Finance Technology Inc. (OTCQX: MOGOF) (TSX: MOGO), one of Canada's leading financial technology companies, today announced its financial and operational results for the third quarter ended September 30, 2017.
"The third quarter represented an important inflection point for Mogo as we delivered more than 60% growth in other product revenue and fees, which highlights the power of Mogo's digital platform," said David Feller, Mogo's Founder and CEO. "As banking continues to undergo a digital transformation, in our view the next generation of consumers will want and expect multiple products in one seamless mobile account. We've invested more than $150 million building what we believe is the leading mobile-first digital banking experience in Canada – supported by a member base of more than 500,000, a brand that is increasingly recognized and trusted, and a 250-person FinTech team. Now we are ideally positioned to further monetize this platform by launching new products that add value to our members while creating additional revenue streams for Mogo. We have several new products on our near-term roadmap, including MogoProtect, an identify fraud protection product, along with the recently announced crypto account, which will give Canadians a simple and trusted way to buy and sell Bitcoin within their MogoAccount. It's clear that Bitcoin is going mainstream and increasingly viewed as the new digital gold. This will be the first of multiple products based around Bitcoin and blockchain technology."
"We delivered accelerating sequential revenue growth in Q3 led by a strong increase in other product revenue and fees, which are now 30% of our total revenue and approaching our target of 50% of revenue by the end of 2018," said Greg Feller, President & CFO. "Our third-quarter results were also highlighted by record gross profit margin of 68%, up almost 800 basis points over last year, and quarterly adjusted EBITDA of $1.0 million, an increase of 96% over last year. Looking ahead, we expect our high-margin, fee-based revenue to be the main driver of overall revenue growth."
Third Quarter 2017 Financial Highlights
- Other product revenue and fees rose 61% year over year driven by increased adoption of new products and services, and now represent 30% of the Company's total revenue.
- Total revenue in Q3 2017 was $12.6 million, up by 10% over Q2 2017 driven primarily by the growth of other product revenue and fees and loan interest.
- Gross profit margin increased to a record 68% of revenue, compared with 60% in the third quarter of 2016. The increase was driven by the growth of higher-margin fee-based products and strong credit performance.
- Charge-off rate1 improved for the fourth consecutive quarter to a record low of 15%, compared with 23% in the same period last year.
- Adjusted EBITDA1 increased 96% year over year to $1.0 million in the third quarter of 2017. This is the fifth consecutive quarter of positive adjusted EBITDA.
- At September 30, 2017, Mogo had $19.1 million in cash and cash equivalents.
- Gross loans receivable were $74.7 million as at September 30, 2017, compared to $69.6 million as at June 30, 2017.
- Adjusted net loss for the quarter ended September 30, 2017 of $4.1 million, a decrease compared with $4.3 million in the second quarter of 2017.
- Finalized a new senior secured credit facility of up to $40 million, as part of the Company's existing credit facilities that in aggregate can be increased up to $250 million under certain conditions. This new credit facility has a lower effective interest rate and extends the maturity date by two years to July 2, 2020.
Third Quarter 2017 Business Highlights
- Mogo announced it added dedicated blockchain capabilities to accelerate its plans to integrate Bitcoin and other cryptocurrencies into the MogoAccount.
- Added 53,000 new members in Q3 2017, a 23% increase over the new member additions in Q2 2017. In November 2017, the Company announced that it surpassed 500,000 members.
- Expanded into New Brunswick, Newfoundland, and Prince Edward Island. Subsequent to quarter end, expanded into Manitoba.
- Ongoing enhancements to mobile-first digital account and user experience with continued focus on making it easier for consumers to manage their financial health.
- Expanded lender relationships to enhance product selection for MogoMortgage customers.
- The Company expects continued growth in other product revenue and fees and is targeting for this segment to represent at least 50% of total revenue by end of 2018.
- The Company expects continued strong member growth and is now targeting to reach 800,000 – 1,000,000 members by the end of 2018.
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