Financial Data and Key Metrics Changes - Q2 2022 core EBITDA reached $5.9 million, a 16% increase year-over-year, with first half core EBITDA exceeding $15 million [3][9] - Q2 revenues increased by 3% year-over-year to $23 million, up from $22.4 million in Q2 2021 [9] - Core earnings increased by 184% year-over-year to $1.9 million, or $0.15 per diluted share [9] Business Line Data and Key Metrics Changes - Average service deposits totaled $2 billion in Q2 2022, a 29% increase compared to Q2 2021 [10] - New business service deposits increased over 50% to $1.5 billion compared to Q2 2021 [10] - The student business disbursed $6.9 billion in refunds in the first half of 2022, a 7% increase from the first half of 2021 [10] Market Data and Key Metrics Changes - Debit card spend was $700 million in Q2 2022, a decrease of 12% compared to the first half of 2021 due to the absence of stimulus [11] - Revenue per account grew by 13% year-over-year to approximately $49 in Q2 2022 [13] Company Strategy and Development Direction - The company is focused on a B2B2C strategy, acquiring bank customers at low costs, with a goal of creating lifelong customers [4] - The company has invested over $60 million in its Banking-as-a-Service technology, positioning itself competitively in the market [5] - The merger with First Sound Bank is expected to close by year-end, enhancing the company's capabilities as a Fintech bank [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging macro environment while achieving growth [30] - The company is considering slowing deposit growth to reduce capital needs and enhance EPS valuation [17] - Management highlighted the importance of transitioning to a bank charter to create a sustainable and profitable business model [16] Other Important Information - The company has signed contracts with a new significant Banking-as-a-Service partner, expected to launch in early 2023 [7] - The company is working on transitioning to a modern technology stack to enhance user experience for students [18] Q&A Session Summary Question: Can you comment on how much development work for the new BaaS partner has already been expensed? - The company stated that the amount spent to date is not significant and will not break it out separately [24] Question: Can you mention what category bucket this new partner falls into? - The company refrained from disclosing specific details about the new partner but emphasized its significance and potential [25] Question: How is the increasing rate environment affecting your product quality? - Management noted that they have seen competitors adjust deposit pricing and have increased some rates in July [26][27] Question: Can you talk about the 3% revenue growth? - Management acknowledged the challenging environment and noted that the student business remains strong, while some deposits are more rate-sensitive [30][31] Question: What is the normalized seasonality for the second half? - Management explained that the first quarter is the strongest due to semester peaks, while the second quarter is typically weaker [42][43] Question: How could integration with the banking charter add value? - Management highlighted that having a bank charter allows for deploying deposits into asset generation opportunities, enhancing profitability [45]
BM Technologies(BMTX) - 2022 Q2 - Earnings Call Transcript