MoneyLion (ML) - 2024 Q1 - Quarterly Report

General Information This section introduces MoneyLion Inc., its subsidiaries, trademark rights, and details its 1-for-30 reverse stock split Introductory Note This section clarifies MoneyLion Inc.'s identity, its consolidated subsidiaries, and its intent to assert trademark rights - MoneyLion Inc. refers to the company and its consolidated subsidiaries, including MALKA and Engine (formerly Even Financial Inc.)[9] Reverse Stock Split MoneyLion Inc. executed a 1-for-30 reverse stock split on April 24, 2023, to meet NYSE listing requirements, affecting equity awards and warrants - A 1-for-30 reverse stock split of Class A Common Stock was effective April 24, 2023, to meet NYSE minimum per share price requirements[10] - The reverse stock split resulted in proportionate adjustments to outstanding equity awards, warrants, and preferred stock conversion factors[10] - Fractional shares resulting from the split were compensated with cash payments[10] Cautionary Statement Regarding Forward-Looking Statements This section warns that the report contains forward-looking statements subject to risks, including market conditions, customer retention, and regulatory compliance - Forward-looking statements are based on management's beliefs and assumptions, and actual outcomes may differ materially due to inherent risks and uncertainties[13][14] - Key risk factors include market conditions, ability to acquire and retain customers, reliance on third-party partners, demand for products, and regulatory compliance[14][15] - The company does not undertake to update forward-looking statements unless required by applicable securities laws[17] Risk Factor Summary This section summarizes key risks to MoneyLion's business, including customer acquisition, third-party reliance, competition, and regulatory compliance - Inability to acquire, engage, and retain customers or effectively match consumer leads with product offerings could adversely affect the business[19] - Dependence on third-party partners and service providers, along with the risk of adverse changes in these relationships or non-compliance, poses a significant risk[19] - The company faces risks from intense competition, economic conditions, cyberattacks, and extensive, evolving regulatory oversight and legal proceedings[19][21][22] PART I – FINANCIAL INFORMATION This part presents MoneyLion's unaudited consolidated financial statements and management's discussion and analysis for Q1 2024 Item 1. Financial Statements This section presents MoneyLion Inc.'s unaudited consolidated financial statements for Q1 2024, including balance sheets, income statements, equity, and cash flows Unaudited Consolidated Balance Sheets The consolidated balance sheets show MoneyLion's financial position as of March 31, 2024, with increased assets, liabilities, cash, and consumer receivables | Metric | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---| | Cash | 93,177 | 92,195 | | Restricted cash | 8,725 | 2,284 | | Consumer receivables, net | 182,746 | 172,838 | | Enterprise receivables, net | 17,518 | 15,978 | | Intangible assets, net | 172,375 | 176,541 | | Total assets | 537,920 | 515,259 | | Secured loans, net | 64,408 | 64,334 | | Other debt, net | 129,675 | 125,419 | | Total liabilities | 267,462 | 258,036 | | Total stockholders' equity | 270,458 | 257,223 | Unaudited Consolidated Statements of Operations MoneyLion reported a net income of $7.1 million in Q1 2024, a significant improvement from a $9.2 million net loss in Q1 2023, driven by revenue growth | Metric | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Service and subscription revenue | 118,073 | 90,741 | 27,332 | 30.1% | | Net interest income on loan receivables | 2,933 | 2,928 | 5 | 0.2% | | Total revenue, net | 121,006 | 93,669 | 27,337 | 29.2% | | Total operating expenses | 109,943 | 97,145 | 12,798 | 13.2% | | Net income (loss) before other (expense) income and income taxes | 11,063 | (3,476) | 14,539 | -418.3% | | Interest expense | (6,817) | (7,511) | 694 | -9.2% | | Net income (loss) | 7,075 | (9,217) | 16,292 | -176.8% | | Net income (loss) per share, basic | 0.67 | (1.29) | 1.96 | -152.0% | | Net income (loss) per share, diluted | 0.60 | (1.29) | 1.89 | -146.5% | Unaudited Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity Total stockholders' equity increased to $270.5 million by March 31, 2024, driven by net income and stock-based compensation, reflecting the reverse stock split Total Stockholders' Equity | Metric | January 1, 2024 ($ thousands) | March 31, 2024 ($ thousands) | |:---|:---|:---|\n| Class A Common Stock Amount | 1 | 1 | | Additional Paid-in Capital | 969,641 | 975,801 | | Accumulated Deficit | (702,719) | (695,644) | | Treasury Stock | (9,700) | (9,700) | | Total Stockholders' Equity | 257,223 | 270,458 | - Stock-based compensation contributed $6.5 million to additional paid-in capital during Q1 2024[32] - Net income of $7.1 million reduced the accumulated deficit in Q1 2024[32] Unaudited Consolidated Statements of Cash Flows Cash and restricted cash increased by $7.4 million in Q1 2024, primarily from operating activities, partially offset by investing activities | Cash Flow Activity | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | Change ($ thousands) | |:---|:---|:---|:---|\n| Net cash provided by operating activities | 33,639 | 2,680 | 30,959 | | Net cash used in investing activities | (29,879) | (21,034) | (8,845) | | Net cash provided by (used in) financing activities | 3,663 | (24,599) | 28,262 | | Net change in cash and restricted cash | 7,423 | (42,953) | 50,376 | | Cash and restricted cash, end of period | 101,902 | 110,756 | (8,854) | Notes to Unaudited Consolidated Financial Statements These notes detail MoneyLion's business, accounting policies, reverse stock split impact, credit loss standards, and breakdowns of receivables, debt, and equity 1. Description of Business and Basis of Presentation MoneyLion offers personalized finance products and marketplace solutions; financial statements are GAAP-compliant, reflecting the 1-for-30 reverse stock split - MoneyLion provides personal finance products, tools, and content, and operates embedded finance marketplace solutions[39] - The consolidated financial statements include MoneyLion Inc. and its wholly-owned subsidiaries and consolidated variable interest entities (VIEs)[40] - A 1-for-30 reverse stock split was effected on April 24, 2023, to maintain NYSE listing, with all periods presented adjusted accordingly[41][44] 2. Summary of Significant Accounting Policies This note outlines MoneyLion's accounting policies, including revenue recognition, fair value, and the adoption of ASU 2016-13 for credit losses Revenue by Type | Revenue Type | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | |:---|:---|:---|\n| Consumer revenues: Service and subscription fees | 85,209 | 62,438 | | Consumer revenues: Net interest income on finance receivables | 2,933 | 2,928 | | Total consumer revenues | 88,142 | 65,366 | | Enterprise service revenues | 32,864 | 28,303 | | Total revenue, net | 121,006 | 93,669 | - The company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, applying changes prospectively with a cumulative-effect adjustment to retained earnings[50] - MoneyLion is evaluating the impact of ASU No. 2023-07 (Segment Reporting) and ASU No. 2023-09 (Income Tax Disclosures), effective for fiscal years 2025 and 2026, respectively[53][54] 3. Consumer Receivables Consumer receivables increased to $217.0 million by March 31, 2024, with a decreased allowance for credit losses, reflecting credit quality Consumer Receivables Before Allowance for Credit Losses | Receivable Type | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---|\n| Loan receivables | 68,918 | 66,815 | | Instacash receivables | 127,491 | 120,336 | | Fees receivable | 15,102 | 16,137 | | Subscription receivables | 4,138 | 3,491 | | Total consumer receivables | 217,049 | 208,167 | Changes in Allowance for Losses on Consumer Receivables (Q1 2024 vs Q1 2023) | Receivable Type | Q1 2024 Ending Balance ($ thousands) | Q1 2023 Ending Balance ($ thousands) | |:---|:---|:---|\n| Loan receivables | 4,608 | 5,791 | | Instacash receivables | 26,645 | 19,686 | | Fees receivable | 1,999 | 1,018 | | Subscription receivables | 1,051 | 978 | - Loan receivables 31-60 days delinquent increased from 6.7% to 8.2% YoY, and 61-90 days delinquent increased from 5.1% to 5.2% YoY[66] 4. Property and Equipment Net property and equipment increased to $1.98 million by March 31, 2024, due to additions in computers and equipment, offset by depreciation Property and Equipment, Net | Category | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---|\n| Leasehold improvements | 1,860 | 1,932 | | Furniture and fixtures | 255 | 361 | | Computers and equipment | 2,597 | 2,551 | | Less: accumulated depreciation | (2,737) | (2,980) | | Property and equipment, net | 1,975 | 1,864 | - Total depreciation expense for Q1 2024 was $186 thousand, down from $304 thousand in Q1 2023[72] 5. Intangible Assets Net intangible assets decreased to $172.4 million by March 31, 2024, primarily due to amortization, despite increased software development costs Intangible Assets, Net | Category | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---|\n| Proprietary technology and capitalized internal-use software | 44,943 | 43,105 | | Customer relationships | 160,500 | 160,500 | | Trade names | 15,960 | 15,960 | | Less: accumulated amortization | (50,708) | (44,719) | | Intangible assets, net | 172,375 | 176,541 | - Capitalized internal-use software costs were $1,860 thousand in Q1 2024, up from $1,162 thousand in Q1 2023[73] - Total amortization expense for Q1 2024 was $6,026 thousand, compared to $5,880 thousand in Q1 2023[74] 6. Other Assets Other assets increased to $61.4 million by March 31, 2024, primarily due to a significant rise in operating lease right-of-use assets Other Assets | Category | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---|\n| Receivable from payment processors | 35,722 | 37,362 | | Prepaid expenses | 7,239 | 5,987 | | Operating lease right-of-use assets | 14,319 | 6,159 | | Other | 4,124 | 4,051 | | Total other assets | 61,404 | 53,559 | 7. Debt Secured loans remained stable at $64.4 million, while other debt increased to $129.7 million by March 31, 2024, driven by SPV credit facilities Debt Breakdown | Debt Type | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | |:---|:---|:---|\n| Monroe Term Loans | 65,000 | 65,000 | | Unamortized discounts and debt issuance costs (Monroe) | (592) | (666) | | Total secured loans, net | 64,408 | 64,334 | | ROAR 1 SPV Credit Facility | 66,500 | 64,500 | | ROAR 2 SPV Credit Facility | 64,500 | 62,500 | | Unamortized discounts and debt issuance costs (Other debt) | (1,325) | (1,581) | | Total other debt, net | 129,675 | 125,419 | - The Monroe Term A-1 Loans had an interest rate of 14.56% as of March 31, 2024[80] - The ROAR 1 SPV Credit Facility decreased to $80 million during Q1 2024, bears 12.5% interest, and matures in March 2025 (extendable to March 2026)[81] 8. Leases Long-term operating lease liabilities totaled $14.99 million by March 31, 2024, with a 4.8-year average term, and lease expenses increased in Q1 2024 Maturities of Long-Term Operating Lease Liabilities | Period | March 31, 2024 ($ thousands) | |:---|:---|\n| Remainder of 2024 | 3,069 | | 2025 | 4,706 | | 2026 | 3,486 | | 2027 | 3,334 | | 2028 | 3,271 | | Thereafter | 2,939 | | Total lease payments | 20,805 | | Less: imputed interest | 5,818 | | Lease liabilities | 14,987 | - Long-term lease expenses were $1,104 thousand for Q1 2024, up from $796 thousand for Q1 2023[83] 9. Income Taxes The effective tax rate for Q1 2024 was -5.8%, down from 0.3% in Q1 2023, due to permanent differences and valuation allowance changes - Effective tax rate for Q1 2024 was -5.8%, compared to 0.3% for Q1 2023[86] - The decrease in effective tax rate was mainly due to US federal permanent differences, discrete items related to stock-based compensation, and changes in the valuation allowance[86] 10. Common and Preferred Stock This note details Class A Common Stockholder rights and the automatic conversion of Series A Preferred Stock into common stock on May 26, 2023 - Class A Common Stockholders are entitled to one vote per share and receive dividends as declared, subject to preferred stock preferences[87][88] - Series A Preferred Stock automatically converted into 1,012,293 shares of Class A Common Stock on May 26, 2023, after the stock price met the conversion threshold[92] - Accrued annual dividends on Series A Preferred Stock for 2022 were paid on June 30, 2023, through a mix of Class A Common Stock and cash[93] 11. Stock-Based Compensation Stock-based compensation expense increased to $6.5 million in Q1 2024, with equity awards valued using stock price or Black-Scholes/Monte Carlo models - Stock-based compensation expense was $6,497 thousand for Q1 2024, up from $5,705 thousand for Q1 2023[94] Outstanding Equity Awards as of March 31, 2024 | Type | Vesting Conditions | Units Outstanding | |:---|:---|:---|\n| Restricted Stock Unit | Service-based | 1,000,559 | | Performance Stock Unit | Service and performance-based | 230,159 | | Performance Stock Unit | Service and market-based | 273,894 | | Options | Service-based | 587,402 | 12. Stock Warrants MoneyLion's Public Warrants are equity-classified, while Private Placement Warrants are liability-classified, with liability decreasing to $0.7 million by Q1 2024 - Public Warrants are equity-classified, while Private Placement Warrants are liability-classified and measured at fair value[101] Changes in Private Placement Warrant Liability | Metric | Amount ($ thousands) | |:---|:---|\n| Warrants payable balance, December 31, 2023 | 810 | | Mark-to-market adjustment | (81) | | Warrants payable balance, March 31, 2024 | 729 | - The per warrant price of Public Warrants was $0.90 as of March 31, 2024[101] 13. Net Income (Loss) Per Share MoneyLion reported basic net income per share of $0.67 and diluted net income per share of $0.60 for Q1 2024, a significant improvement Net Income (Loss) Per Share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |:---|:---|:---|\n| Net income (loss) attributable to common shareholders | $7,075 | $(11,194) | | Weighted-average common shares outstanding - basic | 10,526,417 | 8,652,218 | | Weighted-average common shares outstanding - diluted | 11,810,917 | 8,652,218 | | Net income (loss) per share - basic | $0.67 | $(1.29) | | Net income (loss) per share - diluted | $0.60 | $(1.29) | - Dilutive common stock equivalents of 1,284,500 shares were included in Q1 2024, while all potential dilutive securities were excluded in Q1 2023 due to antidilution[105] 14. Commitments and Contingencies MoneyLion faces legal proceedings from the CFPB, MALKA Seller Members, and Former Series A Preferred Stockholders, with uncertain outcomes that could materially impact the company - The company is involved in a civil action initiated by the CFPB in September 2022, alleging violations of the Military Lending Act and Consumer Financial Protection Act, with the case currently stayed[112] - Litigation from MALKA Seller Members alleges entitlement to a $25.0 million earnout payment, which MoneyLion disputes and is vigorously defending against[113] - Former Series A Preferred Stockholders filed a lawsuit alleging the reverse stock split was designed to trigger an automatic conversion event and that proxy statements contained misleading information[114] 15. Mergers and Acquisitions This note details the acquisitions of Engine (2022) and MALKA (2021), with related contingent consideration settled in 2023 - The acquisition of Engine (formerly Even Financial Inc.) in February 2022 powers MoneyLion's embedded finance marketplace solutions[115] - The Earnout for the Engine Acquisition was settled in May 2023 through the issuance of 4,354,092 shares of Series A Preferred Stock and cash payments[117] - The MALKA Acquisition, completed in November 2021, provides digital media and content production services; its earnout was settled as of March 31, 2023[118] 16. Subsequent Events No subsequent events requiring disclosure were identified through May 7, 2024 - No subsequent events requiring disclosure were identified through May 7, 2024[119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of MoneyLion's financial condition, operating results, liquidity, and capital resources for Q1 2024 Overview MoneyLion, a fintech leader, served 15.5 million customers with 25.3 million products and over 1,100 partners by March 31, 2024, leveraging AI - MoneyLion's mission is to empower consumers with financial decisions by bridging financial literacy and access gaps[122] - As of March 31, 2024, MoneyLion had 15.5 million Total Customers and 25.3 million Total Products[124] - The company utilizes innovative technology, data, and AI capabilities to create personalized financial experiences and insights[124] Revenue Streams MoneyLion generates revenue from Consumer (interchange, Instacash fees, subscriptions, loan interest) and Enterprise (marketplace fees, media services) businesses - Consumer business revenue is primarily from RoarMoney Banking (interchange, cardholder fees), Instacash (tips, instant transfer fees), Membership Programs (subscription fees, Credit Builder Loan interest), MoneyLion Investing (administration fees), and MoneyLion Crypto (Zero Hash fees)[125][126] - Enterprise business revenue is derived from Consumer Marketplace fees (clicks, impressions, transactions, revenue share), Enterprise Marketplace fees (clicks, transactions, revenue share, SaaS fees), and Media Services based on contract performance[127][128] Factors Affecting Our Performance Performance is influenced by customer growth, product innovation, economic conditions, competition, pricing, product mix, and financing access - Key factors include new customer and client growth, increasing usage of existing products, and continuous expansion and innovation of products and services[130][131] - General economic and market conditions, such as interest rate fluctuations and consumer spending behavior, significantly impact performance[132] - The company faces intense competition across all business lines and is affected by seasonality, pricing strategies, product mix, and the access and cost of financing[133][134][135][136][137] Key Performance Metrics MoneyLion tracks Total Customers, Total Products, Enterprise Partners, and Total Originations to evaluate growth in its customer base and product adoption Key Performance Metrics | Metric | March 31, 2024 | March 31, 2023 | Change (%) | |:---|:---|:---|:---|\n| Total Customers | 15.5 million | 7.8 million | 98.7% | | Total Products | 25.3 million | 14.7 million | 72.1% | | Enterprise Partners | 1,181 | 1,085 | 8.8% | | Total Originations | $717 million | $506 million | 41.7% | - Adjusted EBITDA is a non-GAAP measure used by management and investors to assess operating performance and creditworthiness[143][164] Results of Operations for the Three Months Ended March 31, 2024 and 2023 Total revenue increased by 29.2% to $121.0 million in Q1 2024, leading to significantly improved net income despite increased operating expenses Revenues Total revenue increased by 29.2% to $121.0 million in Q1 2024, driven by service and subscription fees and enterprise service revenues Revenue Performance (Q1 2024 vs Q1 2023) | Revenue Type | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Service and subscription fees | 85,209 | 62,438 | 22,771 | 36.5% | | Net interest income on finance receivables | 2,933 | 2,928 | 5 | 0.2% | | Total consumer revenues | 88,142 | 65,366 | 22,776 | 34.8% | | Enterprise service revenues | 32,864 | 28,303 | 4,561 | 16.1% | | Total revenue, net | 121,006 | 93,669 | 27,337 | 29.2% | - Increase in service and subscription fees was primarily driven by $21.4 million from Instacash instant transfer fees and tips, and $0.8 million from membership revenues[146] - Enterprise service revenues increased due to $7.6 million higher marketplace revenues, partially offset by $3.0 million lower media revenues from exiting non-core functions[148] Operating Expenses Total operating expenses increased by 13.2% to $109.9 million in Q1 2024, driven by credit loss provisions, marketing, and direct costs Operating Expenses (Q1 2024 vs Q1 2023) | Expense Category | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Provision for credit losses on consumer receivables | 20,230 | 16,511 | 3,719 | 22.5% | | Compensation and benefits | 24,786 | 24,408 | 378 | 1.5% | | Marketing | 10,866 | 6,392 | 4,474 | 70.0% | | Direct costs | 31,389 | 29,802 | 1,587 | 5.3% | | Professional services | 5,766 | 4,999 | 767 | 15.3% | | Technology-related costs | 6,586 | 6,038 | 548 | 9.1% | | Other operating expenses | 10,320 | 8,995 | 1,325 | 14.7% | | Total operating expenses | 109,943 | 97,145 | 12,798 | 13.2% | - Provision for credit losses increased by approximately $3.7 million, primarily from Instacash advance receivables, partially offset by decreases in Credit Builder Loan and Instacash instant transfer fees/tips provisions[152] - Marketing expenses surged by 70.0% due to higher spend on digital advertising platforms[154] Other (Expense) Income Total other expense decreased by 24.1% to $4.4 million in Q1 2024, due to reduced interest expense and positive warrant liability changes Other (Expense) Income (Q1 2024 vs Q1 2023) | Category | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Interest expense | (6,817) | (7,511) | 694 | -9.2% | | Change in fair value of warrant liability | 81 | (149) | 230 | nm | | Change in fair value of contingent consideration from mergers and acquisitions | — | 246 | (246) | -100.0% | | Other income | 2,359 | 1,649 | 710 | 43.1% | | Total other expense | (4,377) | (5,765) | 1,388 | -24.1% | - Interest expense decreased by $0.7 million due to a reduction in average outstanding debt balances[159] - Other income increased by $0.7 million, primarily from interest bearing deposit accounts[161] Income tax benefit The income tax benefit significantly increased to $0.39 million in Q1 2024, reflecting changes in the effective tax rate Income Tax Benefit (Q1 2024 vs Q1 2023) | Category | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Income tax benefit | (389) | (24) | (365) | 1520.8% | - The increase in income tax benefit is explained in Note 9, 'Income Taxes,' primarily due to US federal permanent differences, stock-based compensation, and valuation allowance changes[162][86] Non-GAAP Measures MoneyLion uses Adjusted EBITDA, a non-GAAP measure, for performance evaluation and strategic planning, which significantly increased in Q1 2024 - Adjusted EBITDA is defined as net income (loss) adjusted for corporate debt interest, income tax, depreciation, amortization, changes in fair value of warrant liability and contingent consideration, goodwill impairment, stock-based compensation, and other non-recurring expenses[164] - Adjusted EBITDA is considered useful for investors, analysts, and management in evaluating operating performance and creditworthiness[164] Adjusted EBITDA Reconciliation Adjusted EBITDA for Q1 2024 was $23.5 million, a substantial increase from $7.3 million in Q1 2023, reflecting improved profitability Adjusted EBITDA Reconciliation (Q1 2024 vs Q1 2023) | Metric | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | |:---|:---|:---|\n| Net income (loss) | 7,075 | (9,217) | | Add back: Interest related to corporate debt | 2,795 | 3,560 | | Add back: Income tax benefit | (389) | (24) | | Add back: Depreciation and amortization expense | 6,212 | 6,184 | | Add back: Changes in fair value of warrant liability | (81) | 149 | | Add back: Change in fair value of contingent consideration from mergers and acquisitions | — | (246) | | Add back: Stock-based compensation expense | 6,497 | 5,705 | | Add back: Other expenses | 1,376 | 1,185 | | Adjusted EBITDA | 23,485 | 7,296 | Changes in Financial Condition to March 31, 2024 from December 31, 2023 Total assets increased by 4.4% to $537.9 million and total liabilities by 3.7% to $267.5 million from December 2023 to March 2024 Consolidated Financial Condition (March 31, 2024 vs December 31, 2023) | Category | March 31, 2024 ($ thousands) | December 31, 2023 ($ thousands) | Change ($ thousands) | Change (%) | |:---|:---|:---|:---|:---|\n| Cash and restricted cash | 101,902 | 94,479 | 7,423 | 7.9% | | Consumer receivables, net | 182,746 | 172,838 | 9,908 | 5.7% | | Enterprise receivables, net | 17,518 | 15,978 | 1,540 | 9.6% | | Intangible assets, net | 172,375 | 176,541 | (4,166) | -2.4% | | Other assets | 61,404 | 53,559 | 7,845 | 14.6% | | Total assets | 537,920 | 515,259 | 22,661 | 4.4% | | Debt agreements | 194,083 | 189,753 | 4,330 | 2.3% | | Accounts payable and accrued liabilities | 50,043 | 52,396 | (2,353) | -4.5% | | Warrant liability | 729 | 810 | (81) | -10.0% | | Other liabilities | 22,607 | 15,077 | 7,530 | 49.9% | | Total liabilities | 267,462 | 258,036 | 9,426 | 3.7% | | Total stockholders' equity | 270,458 | 257,223 | 13,235 | 5.1% | Assets Total assets increased by $22.7 million (4.4%), driven by cash, receivables, and other assets, partially offset by intangible asset decrease - Cash and restricted cash increased by $7.4 million (7.9%) to $101.9 million[170] - Consumer receivables, net, rose by $9.9 million (5.7%) to $182.7 million, mainly from Instacash and loan receivables[171] - Other assets increased by $7.8 million (14.6%), primarily due to a new operating lease for the corporate headquarters[174] Liabilities Total liabilities increased by $9.4 million (3.7%), mainly due to higher debt and other liabilities, offset by decreased payables and warrant liability - Debt agreements increased by $4.3 million (2.3%) to $194.1 million, driven by net proceeds from special purpose vehicle credit facilities[175] - Other liabilities increased by $7.5 million (49.9%) to $22.6 million, primarily due to new operating lease liabilities for the corporate headquarters[177] - Accounts payable and accrued liabilities decreased by $2.4 million (-4.5%) due to annual bonuses and state taxes paid[175] Liquidity and Capital Resources MoneyLion expects current cash and operating cash flows to cover needs for 12 months, with future needs tied to growth and receivables financed by SPV facilities Overview of Liquidity MoneyLion expects existing cash and operating cash flows to cover working capital for the next year, with future needs tied to growth and M&A - Existing cash and operating cash flows are expected to meet operating working capital needs for at least the next twelve months[178] - Future financing requirements depend on growth, platform development, marketing, and M&A activity[178] - Receivables are primarily financed through special purpose vehicle financings from third-party institutional lenders, with $66.5 million and $64.5 million outstanding under ROAR 1 and ROAR 2 SPV Credit Facilities, respectively[179] Cash Flows Cash and restricted cash increased by $7.4 million in Q1 2024, driven by operating cash flows and improved financing activities Net Change in Cash and Restricted Cash | Activity | Q1 2024 ($ thousands) | Q1 2023 ($ thousands) | |:---|:---|:---|\n| Net cash provided by operating activities | 33,639 | 2,680 | | Net cash used in investing activities | (29,879) | (21,034) | | Net cash provided by (used in) financing activities | 3,663 | (24,599) | | Net change in cash and restricted cash | 7,423 | (42,953) | Operating Activities Net cash from operating activities significantly increased to $33.6 million in Q1 2024, driven by improved profitability and working capital changes - Net cash provided by operating activities increased by approximately $30.9 million in Q1 2024, driven by increased profitability and working capital changes[184] Investing Activities Net cash used in investing activities increased to $29.9 million in Q1 2024, primarily due to higher finance receivable originations and software development - Net cash used in investing activities increased by $8.8 million in Q1 2024, primarily due to higher net originations of finance receivables and software development[185] Financing Activities Net cash from financing activities was $3.7 million in Q1 2024, a significant improvement due to increased SPV facility proceeds - Net cash provided by financing activities increased by $28.0 million in Q1 2024, mainly due to higher net proceeds from special purpose vehicle facilities[186] Contractual Obligations Total contractual obligations were $242.3 million by March 31, 2024, with significant portions due 2025-2026 from loans and SPV facilities Contractual Obligations as of March 31, 2024 ($ thousands) | Obligation Type | Total | Remainder of 2024 | 2025 – 2026 | 2027 – 2028 | Thereafter | |:---|:---|:---|:---|:---|:---|\n| Monroe Term Loans | 65,000 | — | 65,000 | — | — | | ROAR 1 SPV Credit Facility | 66,500 | — | 66,500 | — | — | | ROAR 2 SPV Credit Facility | 64,500 | — | 64,500 | — | — | | Operating lease obligations | 20,805 | 3,069 | 8,192 | 6,605 | 2,939 | | Vendor unconditional purchase obligations | 25,500 | — | 17,000 | 8,500 | — | | Total | 242,305 | 3,069 | 221,192 | 15,105 | 2,939 | Item 3. Quantitative and Qualitative Disclosures About Market Risk MoneyLion faces market risk from interest rate fluctuations, potentially impacting customer engagement, repayment ability, and interest margins - The company's primary market risk exposure is due to fluctuations in interest rates[194] - Higher interest rates could deter customers from using credit products, increase delinquencies and charge-offs, and reduce interest margins on variable-rate debt[195][196] - A one percent change in the interest rate on variable interest rate debt would result in an approximately $0.7 million impact to annual interest expense[196] Item 4. Controls and Procedures MoneyLion's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2024, ensuring timely and accurate reporting[197] - Disclosure controls provide reasonable, not absolute, assurance and are subject to inherent limitations and resource constraints[198] - No material changes in internal control over financial reporting occurred during Q1 2024[199] PART II - OTHER INFORMATION This part provides additional information on legal proceedings, risk factors, equity sales, defaults, and other disclosures Item 1. Legal Proceedings MoneyLion is involved in legal proceedings with the CFPB, MALKA Seller Members, and Former Series A Preferred Stockholders, with uncertain outcomes - The company is subject to ongoing legal proceedings, including a civil action by the CFPB alleging violations of the Military Lending Act and Consumer Financial Protection Act[205] - Litigation from MALKA Seller Members claims entitlement to a $25.0 million earnout payment, which MoneyLion is vigorously defending against[206] - Former Series A Preferred Stockholders have filed a lawsuit alleging the reverse stock split was designed to trigger an automatic conversion event and that proxy statements were misleading[207][208] - As of March 31, 2023, amounts accrued for legal proceedings were not material, but ultimate outcomes remain uncertain[201] Item 1A. Risk Factors No material changes to risk factors were reported since the Annual Report on Form 10-K for December 31, 2023 - No material changes to risk factors were reported as of the date of this Quarterly Report on Form 10-Q[210] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds to report[210] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[210] Item 4. Mine Safety Disclosures Mine Safety Disclosures are not applicable to MoneyLion Inc.'s operations - Mine Safety Disclosures are not applicable to the registrant[210] Item 5. Other Information Several officers adopted Rule 10b5-1 trading arrangements in Q1 2024 for potential sales of Class A Common Stock, RSUs, and PSUs - Mark Torossian (Chief Accounting Officer) adopted a Rule 10b5-1 plan on March 12, 2024, for up to 75% of net shares from 5,144 RSUs and 7,197 PSUs, expiring June 30, 2025[212] - Dee Choubey (CEO) adopted a Rule 10b5-1 plan on March 13, 2024, for up to 112,607 shares of Class A Common Stock, expiring June 17, 2025[212] - Rick Correia (President, CFO, Treasurer) adopted a Rule 10b5-1 plan on March 13, 2024, for 10,157 shares and net shares from 59,215 RSUs and 63,503 PSUs, expiring June 30, 2025[212] - Tim Hong (Chief Product Officer) adopted a Rule 10b5-1 plan on March 14, 2024, for 45,000 shares from vested options and net shares from 30,890 RSUs and 29,122 PSUs, expiring June 30, 2025[213] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, employment agreements, and certifications - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, employment agreements, and certifications from the CEO and CFO[216] - The agreements and documents filed as exhibits are not intended to provide factual information beyond their specific terms[215] Signatures The report was signed by Richard Correia (President, CFO, and Treasurer) and Mark Torossian (Chief Accounting Officer) on May 7, 2024 - The report was signed by Richard Correia (President, CFO, and Treasurer) and Mark Torossian (Chief Accounting Officer) on May 7, 2024[220]