FinTech Giant's Profits Soar on Crypto Trading Surge

StreetSignals.com • 15 May 2024 - 15:37


Industry

Banking/Financial Services Cryptocurrency Publishing/Information Services OTC/SmallCap

Subject

Investments Opinions

FN Media Group Presents StreetSignals.com Market Commentary

NEW YORK, May 15, 2024 /PRNewswire/ -- Robinhood (NASDAQ:HOOD) reported a significant earnings beat for the first quarter, driven by a surge in crypto trading volumes and increased net interest revenue due to rate hikes. The positive momentum in the crypto sector was further bolstered by the US approval of the first spot bitcoin ETFs in January, revitalizing industry sentiment after several high-profile setbacks in recent years. Other FinTech companies making substantial inroads in the crypto and financial services sector include Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO), one of Canada's largest FinTech companies with an investment portfolio of substantial crypto-related ventures, Dave Inc (NYSE:DAVE), SoFi Technologies (NASDAQ:SOFI) and Block Inc. (NYSE:SQ).

Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO) is a digital wealth and payments company headquartered in Vancouver, Canada with over 2 million members, $9.9B in annual payments volume and an investment portfolio with substantial digital currency-related ventures that represent about 35% of the company's current total market cap value. This includes investments into WonderFi (TSX: WNDR), one of Canada's leading digital currency exchanges, American digital currency exchange Gemini Trust, and Canada's first licensed digital asset custodian, Tetra Trust. 

Mogo's platform is designed to simplify and improve its members' financial journeys by providing straightforward and meaningful financial solutions that promote wealth development and financial independence. MogoTrade provides commission-free stock trading, allowing users to invest wisely based on Warren Buffett's long-term investing strategy, while Moka provides Canadians with a real alternative to mutual funds and wealth managers that overcharge and underperform, offering a fully managed investing solution based on the proven outperformance of an S&P 500 strategy at a fraction of the cost.

On May 9, Mogo Inc. (MOGO.NCM – MOGO.TO) reported its Q1 2024 results, highlighting a period of significant financial and operational gains. The digital wealth and payments company reported a record revenue of $17.9 million, marking a 13% increase from the previous year, propelled by robust growth in its core wealth and payments sectors. Subscription & Services revenue alone rose to $10.7 million, evidencing the company's strengthening market presence.

During the quarter, Mogo demonstrated financial discipline, with operating expenses slightly down year-over-year and cash flow from operations increasing to $1.8 million, marking a 2,609% increase from Q1 2023. This financial prudence contributed to a net loss improvement to $3.6 million from a previous $6.9 million. The quarter also saw the company actively manage its investment portfolio, ending with $53.4 million in cash, marketable securities, and investments.

Operational achievements included significant strides in its digital payments solution, Carta Worldwide, which processed over $2.6 billion in payment volume, an 18% increase year-over-year. Mogo's wealth management division also saw substantial growth, with assets under management climbing 22% to $403 million. The launch of Moka.ai and enhancements to its Mogo app, such as the introduction of 'Buffett Mode', further illustrate Mogo's commitment to evolving its offerings and cementing its position as a leader in digital financial services.

For more information about Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO), please visit this link.

Financial Sector Q1 Performance Key Metrics and Outcomes

On May 8, Robinhood Markets (NASDAQ:HOOD) reported its financial outcomes for the first quarter, reporting significant growth, with net revenues rising 40% year-over-year to $618 million, bolstered by strong performances in transaction-based revenues and net interest incomes. Notably, cryptocurrency revenues saw a 232% increase, contributing significantly to the overall revenue growth. Net income for the quarter stood at $157 million, a stark contrast to the net loss in the previous year, reflecting Robinhood's enhanced profitability and operational efficiency. The company also reported substantial growth in its customer base, with Gold Subscribers increasing by 42% year-over-year to 1.7 million.

SoFi Technologies, Inc. (NASDAQ:SOFI) reported its first-quarter financial results for 2024, showing an adjusted net revenue of $581 million, up 26% year-over-year. The growth was primarily driven by a 54% increase in revenue from its Financial Services and Tech Platform segments, which now represent 42% of its total adjusted net revenue. Although revenue from the Lending segment remained stable, reflecting a cautious approach in uncertain economic conditions, SoFi achieved an adjusted EBITDA of $144 million. This figure represents a 91% increase from the previous year, with a 25% EBITDA margin. The company also strengthened its balance sheet, increasing its tangible book value to $4.1 billion.

On May 8, Block, Inc. (NYSE:SQ) announced a significant financing move, pricing $2.0 billion in 6.50% senior notes due 2032, up from an initial $1.5 billion, targeted at qualified institutional buyers and non-U.S. persons. Set to mature on May 15, 2032, these notes allow for early redemption, offering a repurchase option to holders under certain conditions, and permitting Block to redeem them early at a premium. The funds raised are slated for general corporate uses including debt repayment, potential acquisitions, capital expenditures, and bolstering working capital. This strategic financial maneuver underscores Block's continued focus on strengthening its balance sheet and supporting its expansive portfolio of services and platforms in the financial sector.

Leading neobank Dave Inc. (NASDAQ:DAVE) reported its financial results for the first quarter ending March 31, 2024. The company experienced a 14% increase in its monthly transacting members, reaching 2.2 million. This growth was highlighted by a significant financial gain of $33.4 million due to the extinguishment of a convertible note. During the quarter, Dave also processed over $1.1 billion in ExtraCash advances, a 32% increase from the previous year, with an improvement in credit performance attributed to its CashAI underwriting engine. This performance indicates Dave's ongoing efforts to adapt and grow in the competitive neobank sector.

On May 10, Mogo Inc. (MOGO.NCM – MOGO.TO) announced that it has extended the maturity of its $60 million credit facility to January 2, 2026. The credit facility, managed by affiliates of Fortress Investment Group LLC, continues to provide Mogo with the financial flexibility needed for its digital lending product. 

For more information about Mogo Inc. (NASDAQ:MOGO) (TSX:MOGO), please visit this link.

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