Mogo Announces First Quarter 2016 Financial Results

Member Base Surpasses 200,000
Demonstrates Operating Leverage for Second Consecutive Quarter

VANCOUVER, May 12, 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 quarter ended March 31, 2016.

"Recent news from the banks underscores that the financial services industry is undergoing a fundamental digital transformation, and we continue to be at the forefront of this change in Canada," said David Feller, Mogo's Founder and CEO. "As we say, we are not a bank by design – we are not trying to replace the banks but through technology and design we are bringing value and convenience to our members that the banks cannot offer and our aim is to have consumers add Mogo to their financial wallet. A key priority in 2016 is continuing to invest in our technology platform and new products. We now have close to 100 team members focused exclusively on technology development, including software and design, which represents roughly one-third of our total headcount. The team continues to make good progress toward the near-term launch of our next-generation digital account, our new mobile app, as well as the new Mogo Card and Mogo Mortgage.  2016 is also about growing our member base, focused on millennials, who represent a growing percentage of the Canadian workforce and are underserved by the banks today. We recently surpassed 200,000 members – an important milestone on the path to our one million member goal in the next three years.  We expect our member base to continue to grow as we drive greater awareness of the Mogo brand through our strategic partnership with Postmedia. Our strategy is to leverage our technology platform to deliver a broad suite of digital financial solutions over time, which will allow us to further monetize this growing member base."

"Our first quarter results demonstrated continued improvement in adjusted EBITDA¹ and adjusted net loss, which reflects the operating leverage inherent in our model as well as our focus on driving operating efficiencies across the organization," said Greg Feller, Mogo's President and CFO. "In addition, excluding investment in loan receivables, we generated positive net cash flow from operations this quarter. Our priorities for 2016 continue to include investing in our technology platform, increasing brand awareness through our Postmedia partnership and launching new non-capital-intensive/fee-based products..  We will also continue to balance these initiatives with the careful growth of our long-term loans and our goal of achieving positive adjusted EBITDA beginning in the fourth quarter of 2016. We believe this approach will position the Company to deliver increased revenue diversification and accelerated revenue growth in 2017." 

First Quarter 2016 Financial Highlights

• Revenue for the first quarter of 2016 was $12.7 million, a 39% increase from the first quarter of 2015. Within this, Loan interest revenue grew 273% to $3.6 million, driven by the success of the Company's range of installment loan and line of credit products.
• Gross profit grew 37% to $7.8 million (61% of revenue) from $5.7 million (62% of revenue) in the first quarter of 2015.
• Reported positive Contribution¹ of $4.3 million, an increase of 34% compared to the first quarter of 2015.
• Adjusted EBITDA¹ had its second sequential improvement to ($0.96) million in the first quarter of 2016, a 34% sequential improvement compared with ($1.46) million in the fourth quarter of 2015 and a 16% improvement compared with ($1.1) million in the first quarter of 2015. This was driven by increased operating efficiencies including a 15% sequential decrease in Customer Services and Operations expenses, 7% decrease in Marketing expenses and 13% decrease in General and Administration expenses, compared to the fourth quarter of 2015.
• Gross loans receivable were $70.0 million as at March 31, 2016, this represented a 139% increase compared to $29.2 million as at March 31, 2015. Within this, gross loans receivable – long-term¹ represented 77% of the total gross loans receivable, compared to 45% of the total gross loans receivable as at March 31, 2015. This was driven by the continued success of the Company's installment loan product as well as our line of credit product.
• Net cash flow from operating activities before investment in loans receivable¹ in the first quarter was $0.6 million, representing a $1.4 million improvement compared to ($0.8) million in the first quarter of 2015 and a $0.6 million improvement compared to the fourth quarter of 2015.
• Adjusted net loss¹ had its second sequential improvement to $4.4 million, in the first quarter 2016 an 8% sequential improvement compared to an adjusted net loss¹ of $4.8 million in the fourth quarter 2015 and a 26% improvement compared with an adjusted net loss of $6.0 million in the third quarter of 2015.
• At March 31, 2016, Mogo had $28.6 million in cash and cash equivalents.

First Quarter Business Highlights

• Mogo's strategy is to continue to build its member base with a three-year goal of reaching 1 million members and, over time, introducing new products and services to these members. As at March 31, 2016, Mogo's member base grew to approximately 204,000, a 106% increase compared to 99,000 as at March 31, 2015.
• In January 2016, Mogo and Postmedia announced a ground-breaking strategic marketing collaboration providing Mogo with a minimum of $50 million of media value over the next three years². Leveraging the power of Postmedia's‎ more than 200 trusted brands, audience reach of 12.8 million average monthly unique visitors to its digital properties and 8.3 million weekly print readership, Mogo has a unique opportunity to accelerate brand awareness while significantly reducing and de-risking marketing spend.
• Mogo continues to focus on building out what we believe is one of Canada's leading financial technology teams which today includes 95 members within our Technology & Development team representing close to 32% of Mogo's total headcount of 301.
• Mogo's investment in its technology platform includes continued enhancements to our existing user experience and products as well as continued investment in development of new upcoming products, including our mobile app, Mogo's Platinum Prepaid Visa card and Mogo's mortgage product, all of which we plan to launch later this year.

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 MD&A, which are available at www.sedar.com and http://investors.mogo.ca/.

Conference Call & Webcast

Mogo will host a conference call to discuss its Q1 2016 financial results at 5:00 p.m. EST on May 12, 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 5503802.  The webcast can be accessed at http://bit.ly/1TjdUpd 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 Measures

Gross loans receivable (short-term and long-term), contribution, contribution margin, adjusted EBITDA, adjusted net income (loss), charge-off rate and cash provided by (used in) operating activities before investment in loans receivable 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 gross loans receivable (short-term and long-term), contribution, contribution margin, adjusted EBITDA, adjusted net income (loss), charge-off rate and cash provided by (used in) operating activities before investment in loans receivable, 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 March 31, 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 measure.

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 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 Company's Annual Information Form and MD&A for the period ended March 31, 2016, 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.

About Mogo

Mogo (TSX: GO) is not a bank—by design. It's a financial technology company focused on offering Canadians a more convenient and engaging digital alternative to the banks. With over 200K members and growing, we are using technology and design to offer consumers online and mobile access to solutions that are designed to help recover and improve their financial health. Whether looking to borrow money, refinance credit card debt, or getting tips on managing their money, Mogo is making it easier for our members to get in and stay in financial control. To learn more about Mogo—recently referred to as the potential "Uber of finance" by CNBC, Toronto Star, and others—visit mogo.ca.

(1) Contribution, 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 March 31, 2016.

(2) It is subject to the terms and conditions of the Agreement included in the Company's filings. 

SOURCE Mogo Finance Technology Inc.

Craig Armitage, Investor Relations, [email protected], [phone]; Alex Langer, Capital Markets, [email protected], [phone]