Mogo(MOGO) - 2025 Q1 - Quarterly Report

Interim Condensed Consolidated Financial Statements This section presents Mogo Inc.'s interim condensed consolidated financial statements, including statements of financial position, operations, changes in equity, and cash flows, for the period ended March 31, 2025 Interim Condensed Consolidated Statements of Financial Position As of March 31, 2025, Mogo Inc. reported a decrease in total assets and total equity compared to December 31, 2024, while total liabilities also saw a reduction, primarily driven by a decrease in marketable securities and investment portfolio | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :----------------------- | :-------------------------- | :-------------------------- | | Total Assets | 170,241 | 189,648 | | Total Liabilities | 101,182 | 108,431 | | Total Equity | 69,059 | 81,217 | - Marketable securities decreased from $26,085 thousand to $16,322 thousand, and the investment portfolio decreased from $11,991 thousand to $9,473 thousand[4] Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For the three months ended March 31, 2025, Mogo Inc. experienced a significant increase in net loss compared to the same period in 2024, primarily due to a substantial revaluation loss, while total revenue slightly decreased and gross profit remained relatively stable | Metric | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total Revenue | 17,330 | 17,925 | | Gross Profit | 11,612 | 11,555 | | Loss from Operations | (1,379) | (1,889) | | Net Loss | (11,871) | (3,610) | | Basic and Diluted Loss Per Share | (0.49) | (0.15) | - The company recorded a revaluation loss of $7,662 thousand in Q1 2025, compared to a revaluation gain of $1,088 thousand in Q1 2024, significantly impacting the net loss[8] Interim Condensed Consolidated Statements of Changes in Equity (Deficit) Mogo Inc.'s total equity decreased from $81,217 thousand at December 31, 2024, to $69,059 thousand at March 31, 2025, primarily driven by the net loss for the period and a foreign currency translation reserve loss | Metric | December 31, 2024 (CAD '000s) | March 31, 2025 (CAD '000s) | | :-------------------------------- | :-------------------------- | :------------------------- | | Total Equity, beginning of period | 81,217 | 81,217 | | Net Loss | (11,871) | (11,871) | | Foreign Currency Translation Reserve | (762) | (762) | | Stock-based Compensation | 475 | 475 | | Total Equity, end of period | 69,059 | 69,059 | - The deficit increased from $(345,508) thousand to $(357,379) thousand during the three months ended March 31, 2025[11] Interim Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2025, Mogo Inc. generated positive cash flow from operating activities, a significant improvement from a net cash outflow in the prior year, with investing activities also providing cash, while financing activities resulted in a net cash outflow | Cash Flow Activity | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Cash from Operating Activities | 560 | (3,866) | | Net Cash from Investing Activities | 1,989 | (1,520) | | Net Cash from Financing Activities | (1,246) | 1,072 | | Net Increase (Decrease) in Cash | 1,290 | (4,333) | | Cash and Cash Equivalent, End of Period | 9,820 | 11,800 | - The positive operating cash flow in Q1 2025 was primarily driven by non-cash adjustments to net loss, including a large revaluation loss, and changes in working capital[14] Notes to the Interim Condensed Consolidated Financial Statements This section provides detailed notes to the interim condensed consolidated financial statements, explaining the company's operations, accounting policies, financial instrument risks, and equity structure 1. Nature of operations Mogo Inc. is a Canadian financial technology company offering digital solutions for wealth creation and financial freedom, with services including commission-free stock trading, managed investing solutions (Moka), digital loans and mortgages, and a low-cost payments platform (Carta Worldwide) - Mogo provides digital solutions for wealth creation and financial freedom, including commission-free stock trading and managed investing through Moka[16] - The company also offers digital loans and mortgages, and operates Carta Worldwide, a payments platform for card programs in Europe and Canada[16] 2. Basis of presentation These interim condensed consolidated financial statements are prepared in accordance with IAS 34 Interim Financial Reporting and are presented on a going concern basis, with management concluding adequate resources for at least the next 12 months based on assessed resources and cash flow projections - Statements are prepared under International Accounting Standard 34 Interim Financial Reporting and are consistent with the last annual consolidated financial statements[17] - Management has affirmed the company's ability to continue as a going concern for at least 12 months, based on cash flow projections and available investor/debt lender base[20][21][22] - The functional currency of the parent company and its Canadian subsidiaries is Canadian dollars, while other subsidiaries operate with GBP, EUR, MAD, or SGD[23] 3. Material accounting policies The accounting policies remain consistent with the annual consolidated financial statements for the year ended December 31, 2024, and while management considered the impact of US tariffs on estimates, particularly for loan loss provisions and investment portfolio valuations, no material impact on expected credit loss provisions was found - Accounting policies are consistent with the annual consolidated financial statements for the year ended December 31, 2024[24] - Forward-looking macroeconomic assumptions for loan loss provisions were updated to include potential tariff impacts, but these changes did not materially affect expected credit loss provisions[26] - IFRS 18 Presentation and Disclosure in Financial Statements, issued in April 2024, will be effective for annual reporting periods beginning on or after January 1, 2027, and the Company is currently assessing its impact[29] 4. Loans receivable Loans receivable, net, decreased slightly from $58,620 thousand at December 31, 2024, to $56,996 thousand at March 31, 2025, while the allowance for loan losses increased during the period, reflecting ongoing credit risk management | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :---------------------- | :-------------------------- | :-------------------------- | | Gross Loans Receivable | 71,975 | 72,696 | | Allowance for Loan Losses | (14,979) | (14,076) | | Loans Receivable, Net | 56,996 | 58,620 | | Allowance for Loan Losses Changes | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Balance, beginning of period | 14,076 | 12,555 | | Provision for Loan Losses | 4,814 | 4,705 | | Charge offs | (3,930) | (3,770) | | Balance, end of period | 14,979 | 13,492 | - If a pessimistic scenario forecast were assigned 100% probability, the allowance for credit losses would be $1,431 thousand higher than reported at March 31, 2025[32] 5. Marketable securities Marketable securities significantly decreased from $26,085 thousand at December 31, 2024, to $16,322 thousand at March 31, 2025, primarily due to a reduction in holdings of WonderFi Technologies Inc | Security | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :----------------------- | :-------------------------- | :-------------------------- | | WonderFi Technologies Inc. | 15,983 | 25,654 | | Others | 339 | 431 | | Total | 16,322 | 26,085 | 6. Intangible assets The net book value of intangible assets decreased from $31,080 thousand at December 31, 2024, to $29,639 thousand at March 31, 2025, with amortization expense for the three months ended March 31, 2025, totaling $1,867 thousand | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :-------------------- | :-------------------------- | :-------------------------- | | Net Book Value | 29,639 | 31,080 | - Amortization of intangible assets for the three months ended March 31, 2025, was $1,867 thousand, a decrease from $2,296 thousand in the same period of 2024[35] 7. Credit facility Mogo Inc. amended its $60,000 thousand senior secured credit facility on February 26, 2025, extending the maturity date to January 2, 2029, and reducing the interest rate by 100 basis points to 7% plus the greater of 2% and SOFR, with an outstanding balance of $48,241 thousand as of March 31, 2025 - The credit facility maturity date was extended to January 2, 2029, from January 2, 2026[36] - The interest rate was reduced by 100 basis points to 7% plus the greater of 2% and SOFR[36] | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :----------------------- | :-------------------------- | :-------------------------- | | Principal and Interest Balance | 48,241 | 48,792 | | Interest Expense (Q1) | 1,446 | 1,656 | 8. Debentures The debentures balance decreased to $33,546 thousand at March 31, 2025, from $35,287 thousand at December 31, 2024, with maturity dates effectively extended to January 2, 2029, due to a subordination agreement with the credit facility | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :---------------- | :-------------------------- | :-------------------------- | | Principal Balance | 34,714 | 35,257 | | Total Debentures | 33,546 | 35,287 | - Debentures pay interest at a coupon rate between 8-10% per annum, with payments made quarterly in cash or Common Shares at Mogo's option[40] | Year | Principal Component of Quarterly Payment (CAD '000s) | Principal Due on Maturity (CAD '000s) | Total (CAD '000s) | | :--- | :--------------------------------------------------- | :------------------------------------ | :---------------- | | 2025 | 1,589 | — | 1,589 | | 2026 | 2,268 | — | 2,268 | | 2027 | 2,454 | — | 2,454 | | 2028 | 2,657 | — | 2,657 | | 2029 | 668 | 25,078 | 25,746 | 9. Revenue Total revenue for the three months ended March 31, 2025, was $17,330 thousand, a slight decrease from $17,925 thousand in the prior year, with wealth revenue and payments revenue increasing while interest revenue and other subscription-related revenue decreased | Revenue Type | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Interest Revenue | 6,599 | 7,234 | | Wealth Revenue | 3,481 | 2,472 | | Payments Revenue | 2,555 | 1,909 | | Other Subscription Related Revenue | 4,695 | 6,310 | | Total Revenue | 17,330 | 17,925 | 10. Geographic information Canada remains the primary source of revenue and location of non-current assets for Mogo Inc., though revenue from Europe showed growth, while non-current assets in Canada slightly decreased | Geographic Region | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------ | :------------------------------------------ | :------------------------------------------ | | Canada Revenue | 15,022 | 16,221 | | Europe Revenue | 2,308 | 1,704 | | Total Revenue | 17,330 | 17,925 | | Geographic Region | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :------------------ | :-------------------------- | :-------------------------- | | Canada Non-Current Assets | 69,049 | 70,623 | | Europe Non-Current Assets | 203 | 233 | | Other Non-Current Assets | 15 | 16 | | Total Non-Current Assets | 69,267 | 70,872 | 11. Expense by nature and function Total operating expenses decreased to $12,991 thousand for the three months ended March 31, 2025, from $13,444 thousand in the prior year, with personnel expense increasing while depreciation and amortization, hosting and software licenses, and professional services decreased | Expense by Nature | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Personnel Expense | 5,886 | 5,102 | | Depreciation and Amortization | 1,954 | 2,376 | | Hosting and Software Licenses | 1,297 | 1,411 | | Marketing | 1,110 | 1,183 | | Professional Services | 681 | 878 | | Total Operating Expenses | 12,991 | 13,444 | | Expense by Function | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | | Technology and Development | 4,134 | 3,844 | | Marketing | 1,162 | 1,237 | | Customer Service and Operations | 2,706 | 2,974 | | General and Administration | 4,989 | 5,389 | | Total Operating Expenses | 12,991 | 13,444 | 12. Revaluation loss (gain) Mogo Inc. recorded a significant revaluation loss of $7,662 thousand for the three months ended March 31, 2025, a substantial shift from a revaluation gain of $1,088 thousand in the prior year, primarily driven by an unrealized loss on the investment portfolio and marketable securities | Component | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Unrealized (Gain) Loss on Investment Portfolio and Marketable Securities | 10,090 | (919) | | Gain on Modification of Debentures | (1,367) | (84) | | Total Revaluation Loss (Gain) | 7,662 | (1,088) | 13. Other non-operating expense Other non-operating expenses increased to $416 thousand for the three months ended March 31, 2025, from $254 thousand in the prior year, mainly due to higher acquisition costs and other expenses | Component | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------ | :------------------------------------------ | :------------------------------------------ | | Acquisition Costs and Other | 416 | 240 | | Restructuring Charges | — | 14 | | Total | 416 | 254 | 14. Fair value of financial instruments This section details the fair value measurement of financial instruments, outlining the valuation process using a three-level hierarchy and presenting classifications and fair values as of March 31, 2025 (a) Valuation process The fair value of financial instruments is determined using a three-level hierarchy based on the observability of inputs, where Level 1 uses quoted prices in active markets, Level 2 uses observable inputs from non-active markets or similar instruments, and Level 3 relies on unobservable inputs - Level 1: Unadjusted quoted prices in an active market for identical assets and liabilities[58] - Level 2: Quoted prices in markets that are not active or inputs derived from quoted prices of similar assets/liabilities in active markets[58] - Level 3: Unobservable inputs supported by little or no market activity, significant to the estimated fair value[58] (b) Accounting classifications and fair values As of March 31, 2025, marketable securities are classified as Level 1, while the investment portfolio, loans receivable, and other receivables are classified as Level 3, and the credit facility is Level 2, with debentures being Level 3 for fair value measurement | Financial Instrument | Fair Value Hierarchy Level (March 31, 2025) | | :------------------- | :------------------------------------------ | | Marketable Securities | Level 1 | | Investment Portfolio | Level 3 | | Cash and Cash Equivalent | Level 1 | | Restricted Cash | Level 1 | | Loans Receivable | Level 3 | | Other Receivables | Level 3 | | Credit Facility | Level 2 | | Debentures | Level 3 | | Financial Instrument | Carrying Amount (March 31, 2025, CAD '000s) | Fair Value (March 31, 2025, CAD '000s) | | :------------------- | :------------------------------------------ | :------------------------------------- | | Marketable Securities | 16,322 | 16,322 | | Investment Portfolio | 9,473 | 9,473 | | Loans Receivable | 71,975 | 71,975 | | Debentures | 33,546 | 37,986 | (c) Measurement of fair values Level 3 fair values for the investment portfolio are measured using techniques like recent investment prices, implied multiples, and option pricing models, with significant unobservable inputs including revenue multiples and equity volatility, where a 5% movement in adjusted market multiple would result in a $474 thousand change in profit or loss - Investment portfolio valuation uses revenue multiples (1.65-2.4), equity volatility (50-110%), and discount for lack of marketability (0-20%) as significant unobservable inputs[64] - Loans receivable valuation uses discounted cash flows, considering expected timing and amount of cash flows and discount rates[64] | Sensitivity Analysis (Investment Portfolio) | Profit or Loss Increase (CAD '000s) | Profit or Loss Decrease (CAD '000s) | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | March 31, 2025 (5% movement in market multiple) | 474 | (474) | 15. Nature and extent of risk arising from financial instruments This section outlines the company's exposure to various financial instrument risks, including credit risk from loans receivable, interest rate risk from its credit facility, and liquidity risk management strategies Credit risk Mogo Inc. is exposed to credit risk primarily from its loans receivable, which it manages through ongoing credit evaluations, monitoring loan portfolio aging, and maintaining an allowance for loan losses, though there is a risk of increased loan losses if underwriting models based on historical data are not predictive - Credit risk arises primarily from loans receivable, managed through ongoing credit evaluations, loan portfolio monitoring, and an allowance for loan losses[69][70] - Underwriting models are based on historical performance, and there is a risk that delinquency and loss rates could increase significantly if historical data is not representative[71][72] Interest rate risk The company is exposed to interest rate risk mainly through its credit facility, which bears interest at a variable rate of 7% plus SOFR with a 2% SOFR floor, while debentures have fixed interest rates and are not subject to this variability - The credit facility's interest rate is 7% plus SOFR (Secured Overnight Financing Rate), with a 2% SOFR floor[73] - As at March 31, 2025, SOFR was 4.32% (December 31, 2024 – 4.49%)[73] Liquidity risk Mogo Inc. manages liquidity risk by planning to refinance outstanding amounts under its credit facility and debentures as they become due, with the debentures effectively extending their maturity dates due to subordination to the credit facility - Management intends to refinance outstanding credit facility and debenture amounts as they become due[75] | Contractual Obligation | 2025 (CAD '000s) | 2026 (CAD '000s) | 2027 (CAD '000s) | 2028 (CAD '000s) | 2029 (CAD '000s) | | :--------------------- | :--------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Commitments - Operational | 29,204 | 9,754 | 9,200 | 7,983 | 6,059 | | Commitments - Principal Repayments | 1,589 | 2,268 | 2,454 | 2,657 | 73,987 | | Total Contractual Obligations | 30,793 | 12,022 | 11,654 | 10,640 | 80,046 | 16. Equity This section details Mogo Inc.'s equity structure, including share capital, treasury share reserve, stock options, and warrants, as of March 31, 2025 (a) Share capital Mogo Inc.'s authorized share capital includes an unlimited number of Common Shares and preferred shares, with 24,472,377 Common Shares issued and outstanding as of March 31, 2025 - The company has an unlimited number of authorized Common Shares and preferred shares[78] - As at March 31, 2025, there were 24,472,377 Common Shares issued and outstanding, unchanged from December 31, 2024[78] (b) Treasury share reserve As of March 31, 2025, Mogo Inc. held 190,706 Common Shares in its treasury share reserve, consistent with the prior period - The company held 190,706 Common Shares in its treasury share reserve as at March 31, 2025 and December 31, 2024[79] (c) Options The number of stock options outstanding slightly increased to 2,776 thousand at March 31, 2025, from 2,760 thousand at December 31, 2024, with total stock-based compensation costs for the three months ended March 31, 2025, amounting to $475 thousand | Metric | March 31, 2025 (000s) | December 31, 2024 (000s) | | :-------------------- | :-------------------- | :----------------------- | | Options Outstanding | 2,776 | 2,760 | | Options Exercisable | 1,709 | 1,543 | - Stock-based compensation costs for the three months ended March 31, 2025, were $475 thousand, a decrease from $561 thousand in the same period of 2024[83] - Options are valued using the Black-Scholes model with assumptions including a risk-free interest rate of 2.76% and expected volatility of 88% for Q1 2025[82] (d) Warrants The number of warrants outstanding remained at 769 thousand at March 31, 2025, with 580 thousand exercisable, and an additional 1,018,519 USD stock warrants are classified as a derivative financial liability due to their USD exercise price, with a balance of $nil for the current period | Metric | March 31, 2025 (000s) | December 31, 2024 (000s) | | :-------------------- | :-------------------- | :----------------------- | | Warrants Outstanding | 769 | 769 | | Warrants Exercisable | 580 | 402 | - 1,018,519 USD stock warrants are classified as a derivative financial liability and are subject to revaluation under the Black Scholes model[86] 17. Related party transactions Related party transactions primarily involve debenture holders, including shareholders, officers, directors, and management, with the related party debentures balance at $133 thousand at March 31, 2025, incurring $3 thousand in interest expense for the quarter | Metric | March 31, 2025 (CAD '000s) | December 31, 2024 (CAD '000s) | | :------------------------ | :-------------------------- | :-------------------------- | | Related Party Debentures Balance | 133 | 136 | | Metric | Three months ended March 31, 2025 (CAD '000s) | Three months ended March 31, 2024 (CAD '000s) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Related Party Debentures Interest Expense | 3 | 6 | - Related party debentures bear an annual coupon interest of 8.0%[88]