Financial Performance - For the three months ended June 30, 2024, the net loss increased to $4.8 million, compared to a net loss of $4.4 million for the same period in 2023, reflecting an increase of $0.4 million [117]. - Operating revenues for Q2 2024 decreased by $0.1 million, or 1%, totaling $12.5 million, while operating expenses decreased by $0.5 million, or 3%, totaling $17.2 million [117]. - The loss from operations for Q2 2024 was $4.7 million, which is a decrease of $0.4 million compared to the loss of $5.0 million in Q2 2023 [117]. - The company reported a loss before income tax expense of $4.8 million for Q2 2024, an increase of $0.4 million from the loss of $4.4 million in Q2 2023 [117]. - For the six months ended June 30, 2024, net loss decreased by $5.3 million to $4.1 million compared to the same period in 2023 [120]. - Basic and diluted earnings (loss) per common share improved to $(0.35) for the six months ended June 30, 2024, compared to $(0.81) in the same period of 2023 [120]. Revenue and Expenses - Operating revenues increased by $2.7 million, or 10%, to $28.7 million for the six months ended June 30, 2024 [122]. - Operating expenses decreased by $4.7 million, or 13%, to $32.7 million for the six months ended June 30, 2024, including one-time costs of $1.6 million related to NextGen implementation [126]. - Interchange and card revenue increased by $1.3 million, or 29%, to $5.7 million for the six months ended June 30, 2024 [122]. - Servicing fees increased by $1.5 million, or 11%, to $15.8 million for the six months ended June 30, 2024 [122]. - Total operating revenues decreased by $0.1 million, or 1%, to $12.5 million for the three months ended June 30, 2024, primarily due to a decrease in servicing fees [121]. Cash Flow and Liquidity - Net cash provided by operating activities increased to $1,656,000 for the six months ended June 30, 2024, compared to a net cash used of $(4,064,000) for the same period in 2023, representing a change of $5,720,000 [131]. - The increase in net cash from operating activities was primarily driven by a $5.3 million increase in net income and a $3.4 million increase from prepaid and other assets [132]. - Cash used in investing activities increased by $0.2 million to $(3,254,000) for the six months ended June 30, 2024, primarily due to increased development of internal use software [133]. - Cash used in financing activities decreased by $2.2 million to $(233,000) for the six months ended June 30, 2024, mainly due to larger tax payments related to share-based compensation awards [133]. - Cash and cash equivalents decreased to $12.5 million at June 30, 2024, from $14.3 million at December 31, 2023 [128]. - Management believes there are sufficient funds available to support ongoing business operations for at least the next 12 months, projecting liquidity of $16.7 million at August 14, 2025 [130]. Accounting and Regulatory Matters - The company is evaluating the impact of new accounting standards that will be effective for annual periods beginning after December 15, 2024 [112]. - The company's effective tax rate was 0.0% for the three months ended June 30, 2024, and (0.4)% for the six months ended June 30, 2024 [127]. - The company does not hold a bank charter and is not subject to direct banking regulation, operating instead as a service provider to partner banks [108]. Customer and Credit Risk - BMTX's primary revenue sources include interchange and card revenue, servicing fees, account fees, and university fees, driven by customer activity [106]. - At June 30, 2024, Customers Bank accounted for 0% of total accounts receivable, down from 16% at December 31, 2023 [134]. - FCB accounted for 46% of total accounts receivable at June 30, 2024, compared to 2% at December 31, 2023 [134]. - A BaaS partner accounted for 20% of total accounts receivable at June 30, 2024, down from 48% at December 31, 2023 [134]. - MasterCard accounted for 19% of total accounts receivable at June 30, 2024, slightly down from 21% at December 31, 2023 [135]. - The company has not experienced losses on cash accounts held with Customers Bank, which may exceed the FDIC coverage limit of $250,000 [135]. - Management believes that the credit risk associated with deposits at Customers Bank is not significant [135].
BM Technologies(BMTX) - 2024 Q2 - Quarterly Report