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Mogo Announces Third Quarter 2015 Financial Results
Thursday, November 12, 2015Company Profile | Follow Company
Revenue Grows 70% Year over Year - Number of Members Surpasses 150,000
Vancouver, BC, November 12, 2015--(T-Net)--Mogo Finance Technology Inc. (TSX: GO), a leading Canadian digital financial platform, today reported its financial results for the third quarter ended September 30, 2015.
The third quarter also included several enhancements to Mogo's technology platform, continued progress in our new product development efforts and strengthening of our management team.
“With a membership base of over 150,000 and growing and more than $100 million invested to date in our platform, we believe Mogo is building the leading digital financial brand and technology platform in Canada,” said David Feller, Mogo's Founder and CEO.
“There is a digital transformation happening in financial services, which is being driven by millennials who are demanding the convenience of a fully digital experience.
As highlighted in a recent McKinsey report on the banking industry, this transformation will put at risk up to 60% of banks' retail profits to innovative financial technology firms. With our next-generation technology platform and millennial-focused brand, we have positioned Mogo at the heart of this disruption. From our successful start in consumer lending, our plan is to build a broader suite of financial products that leverage our platform and growing member base.”
“Year-on-year revenue increased 70% driven by the success of our installment loan product, which exceeded our initial expectations and validates our strategy to target the broader $280 billion Canadian consumer loan market,” said Greg Feller, Mogo's President and CFO. “Our business model continues to drive strong underlying economics as we scale revenue. Going forward, we plan to focus on disciplined growth of our loan portfolio while balancing this with continued investments in our technology platform, development of less capital-intensive products and demonstrating a clear path to profitability.”
Mogo reports in Canadian dollars and in accordance with IFRS
Third Quarter Financial Highlights
Third-Quarter Business Highlights
Outlook
Mogo is providing the following outlook regarding the fourth quarter 2015 and the full year 2016:
Mogo Finance Technology Inc. |
|||||||
Interim Condensed Consolidated Statement of Financial Position |
|||||||
(unaudited) |
|||||||
September 30, |
December 31, |
||||||
Assets |
|||||||
Cash and cash equivalents |
39,890,697 |
23,598,672 |
|||||
Loans receivable |
48,305,330 |
19,176,674 |
|||||
Prepaid expenses, deposits and other assets |
1,825,276 |
1,126,467 |
|||||
Investment tax credits |
1,616,353 |
1,453,516 |
|||||
Property and equipment |
3,450,537 |
598,323 |
|||||
Intangible assets |
5,531,479 |
3,455,900 |
|||||
100,619,672 |
49,409,552 |
||||||
Liabilities |
|||||||
Accounts payable and accruals |
7,164,813 |
3,625,956 |
|||||
Credit facilities |
28,158,968 |
12,818,716 |
|||||
Derivative Financial Liability |
235,731 |
- |
|||||
Debentures |
40,073,819 |
39,185,245 |
|||||
75,633,331 |
55,629,917 |
||||||
Shareholders' Equity (Deficit) |
|||||||
Share capital |
45,314,488 |
38,917,810 |
|||||
Contributed surplus |
882,578 |
460,939 |
|||||
Deficit |
(21,210,725) |
(45,599,114) |
|||||
24,986,341 |
(6,220,365) |
||||||
100,619,672 |
49,409,552 |
Mogo Finance Technology Inc. |
||||||||||
Interim Condensed Consolidated Statement of Comprehensive Loss |
||||||||||
(unaudited) |
||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||
Revenue |
||||||||||
Loan fees |
7,746,712 |
5,554,861 |
22,706,800 |
12,455,001 |
||||||
Loan interest |
2,347,806 |
453,624 |
4,863,059 |
740,078 |
||||||
Other revenues |
1,457,451 |
795,916 |
3,452,435 |
1,758,733 |
||||||
11,551,968 |
6,804,402 |
31,022,294 |
14,953,812 |
|||||||
Cost of revenue |
||||||||||
Provision for loan losses, net of recoveries |
3,579,650 |
2,036,250 |
9,800,557 |
4,367,318 |
||||||
Transaction costs |
751,348 |
435,702 |
1,901,526 |
1,103,135 |
||||||
4,330,998 |
2,471,951 |
11,702,083 |
5,470,453 |
|||||||
Gross profit |
7,220,971 |
4,332,450 |
19,320,211 |
9,483,359 |
||||||
Operating expenses |
||||||||||
Technology and development |
2,133,548 |
1,099,225 |
5,371,624 |
2,885,892 |
||||||
Customer service and operations |
2,394,057 |
1,525,708 |
6,366,208 |
3,806,657 |
||||||
Marketing |
3,655,782 |
1,794,011 |
8,213,853 |
3,356,629 |
||||||
General and administration |
3,008,448 |
1,370,233 |
7,294,009 |
3,710,294 |
||||||
Total operating expenses |
11,191,835 |
5,789,177 |
27,245,694 |
13,759,472 |
||||||
Loss from operations |
(3,970,864) |
(1,456,726) |
(7,925,483) |
(4,276,113) |
||||||
Other expenses |
||||||||||
Unrealized foreign exchange loss (gain) |
436,721 |
293,374 |
893,002 |
314,143 |
||||||
Funding interest expense |
820,702 |
517,349 |
2,246,437 |
704,898 |
||||||
Corporate interest expense |
1,568,935 |
1,532,009 |
4,682,852 |
4,520,790 |
||||||
Other financing (income) expenses |
5,716 |
126,611 |
4,565 |
647,327 |
||||||
2,832,074 |
2,469,343 |
7,826,856 |
6,187,158 |
|||||||
Loss before income taxes |
(6,802,938) |
(3,926,069) |
(15,752,339) |
(10,463,271) |
||||||
Provision for income taxes |
3,779 |
137 |
3,353 |
170 |
||||||
Loss and comprehensive loss |
(6,806,717) |
(3,926,206) |
(15,755,692) |
(10,463,441) |
||||||
Loss per share |
||||||||||
Basic and fully diluted |
(0.375) |
(0.512) |
(0.867) |
(1.364) |
||||||
Weighted average number of basic and fully |
18,162,432 |
7,671,941 |
18,162,432 |
7,671,941 |
Mogo Finance Technology Inc. |
||||||||
Interim Condensed Consolidated Statement of Changes in Equity (Deficit) |
||||||||
(unaudited) |
||||||||
Share capital |
Contributed |
Deficit |
Total |
|||||
Balance, December 31, 2014 |
38,917,810 |
460,939 |
(45,599,114) |
(6,220,365) |
||||
Loss and comprehensive loss |
- |
- |
(15,755,692) |
(15,755,692) |
||||
Issuance of Class B preferred shares |
1,226,271 |
- |
- |
1,226,271 |
||||
Stock based compensation |
- |
553,041 |
- |
553,041 |
||||
Reduction of stated capital |
(40,144,081) |
- |
40,144,081 |
- |
||||
Shares issued through initial public offering |
50,000,000 |
- |
- |
50,000,000 |
||||
Share issue costs associated with initial |
(4,816,914) |
- |
- |
(4,816,914) |
||||
Warrants exercised |
131,402 |
(131,402) |
- |
- |
||||
Balance, September 30, 2015 |
45,314,488 |
882,578 |
(21,210,725) |
24,986,341 |
||||
Share capital |
Contributed |
Deficit |
Total |
|||||
Balance, December 31, 2013 |
1,000 |
79,135 |
(32,526,187) |
(32,446,052) |
||||
Loss and comprehensive loss |
- |
- |
(10,463,441) |
(10,463,441) |
||||
Issuance of common shares |
4,842,960 |
- |
- |
4,842,960 |
||||
Issuance of Class A preferred shares |
5,187,050 |
- |
- |
5,187,050 |
||||
Issuance of Class B preferred shares |
10,706,019 |
- |
- |
10,706,019 |
||||
Share issue costs common shares |
(153,794) |
- |
- |
(153,794) |
||||
Share issue costs Class B preferred shares |
(366,322) |
- |
- |
(366,322) |
||||
Stock based compensation |
- |
259,976 |
- |
259,976 |
||||
Options exercised |
148,807 |
(148,557) |
- |
250 |
||||
Issuance of warrants |
- |
169,962 |
- |
169,962 |
||||
Balance, September 30, 2014 |
20,365,720 |
360,516 |
(42,989,628) |
(22,263,392) |
Mogo Finance Technology Inc. |
||||||||||
Interim Condensed Consolidated Statement of Cash Flows |
||||||||||
For the three and nine months ended September 30, 2015 and September 30, 2014 |
||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||
Cash provided by (used for) the following activities |
||||||||||
Operating activities |
||||||||||
Loss and comprehensive loss |
(6,806,717) |
(3,926,206) |
(15,755,692) |
(10,463,441) |
||||||
Depreciation and amortization |
424,319 |
358,384 |
1,133,143 |
1,045,158 |
||||||
Amortization of deferred finance costs |
93,766 |
86,968 |
267,103 |
144,447 |
||||||
Provision for loan losses |
3,796,159 |
2,173,844 |
10,387,385 |
4,813,468 |
||||||
Stock based compensation expense |
396,000 |
41,632 |
553,041 |
259,976 |
||||||
Unrealized foreign exchange loss (gain) |
435,623 |
270,035 |
888,568 |
288,903 |
||||||
(1,660,850) |
(995,343) |
(2,526,452) |
(3,911,489) |
|||||||
Changes in working capital accounts |
||||||||||
Increase in loans receivable |
(19,044,887) |
(7,205,628) |
(39,516,038) |
(13,919,912) |
||||||
Investment tax credits |
- |
(157,500) |
(157,500) |
(474,000) |
||||||
Prepaid expenses, deposits and other assets |
264,608 |
(95,582) |
(698,284) |
(157,458) |
||||||
Accounts payable and accruals |
554,511 |
(248,475) |
3,532,998 |
(376,704) |
||||||
Net cash used in operating activities |
(19,886,618) |
(8,702,528) |
(39,365,276) |
(18,839,563) |
||||||
Investing activities |
||||||||||
Purchases of property and equipment |
(1,999,435) |
(82,725) |
(3,059,684) |
(258,284) |
||||||
Investment in software |
(1,365,233) |
(450,772) |
(3,001,252) |
(1,269,567) |
||||||
Net cash used in investing activities |
(3,364,668) |
(533,497) |
(6,060,936) |
(1,527,851) |
||||||
Financing activities |
||||||||||
Proceeds from initial public offering, net of |
30,652 |
- |
45,183,085 |
- |
||||||
Advances of debentures |
- |
2,000,000 |
- |
6,732,389 |
||||||
Repayment of debentures |
- |
- |
- |
(290,934) |
||||||
Credit facility Advances |
10,517,549 |
6,485,594 |
15,680,590 |
11,984,194 |
||||||
Credit facility financing costs |
(203,965) |
- |
(425,873) |
(920,386) |
||||||
Common shares issuance costs |
- |
- |
- |
(153,794) |
||||||
Issuance of warrants |
54,164 |
- |
54,164 |
- |
||||||
Options exercised |
- |
- |
- |
250 |
||||||
Proceeds from issuance of Class A preferred |
- |
- |
- |
30,000 |
||||||
Proceeds from issuance of Class B preferred |
- |
(10,000) |
1,226,271 |
10,378,256 |
||||||
Net cash provided by financing activities |
10,398,400 |
8,475,594 |
61,718,237 |
27,759,975 |
||||||
Increase in cash resources |
(12,852,886) |
(760,431) |
16,292,025 |
7,392,561 |
||||||
Cash and cash equivalents, beginning of period |
52,743,583 |
9,604,005 |
23,598,672 |
1,451,013 |
||||||
Cash and cash equivalents, end of period |
39,890,697 |
8,843,574 |
39,890,697 |
8,843,574 |
||||||
Supplementary cash flow information |
||||||||||
Interest paid |
2,371,828 |
2,042,377 |
6,896,754 |
5,280,216 |
||||||
Non-IFRS Measures
Loan originations, adjusted EBITDA, long-term loans receivable and provision rate are non-IFRS financial measures. 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, including loan originations, adjusted EBITDA, long-term loans receivable and provision rate, 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 third quarter ended September 30, 2015 which is available at www.sedar.comand http://investors.mogo.ca/ for more information regarding our use of these measures and a reconciliation to the most comparable IFRS measure.
About Mogo
Mogo (TSX: GO) is a financial technology company focused on leveraging software to bring a new level of convenience, simplicity and value to consumer financial services. With over 150,000 members and over 1 million loans originated, we are leading the shift in Canada as consumers begin to move away from traditional banking services toward a fully digital experience. We're transforming financial services by building the first digital platform designed to give Canadians convenient and controlled access to a range of financial products that make it easier stay in control of their financial health. With personal loans that help you get out of debt, and a free prepaid Visa that helps you control spending, we're building a digital financial brand that empowers a whole new generation of Canadians. To learn more about Mogo - recently referred to as the potential “Uber of banking” by CNBC - visit mogo.ca
Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the future growth of Mogo's business, its intention to invest in its technology platform, to expand into other products and markets and Mogo's financial expectations and outlook for the balance of 2015 and 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 the balance of 2015 and 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 MD&A for the quarter ended September 30, 2015 and the long form prospectus dated June 18, 2015, both of which are 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.
[1] See description of Contribution and Contribution Margin in MD&A
For further information:
Craig Armitage Investor Relations
craiga@mogo.ca
(416) 347-8954
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