Financial Data and Key Metrics Changes - Operating revenues for the third quarter totaled $14.7 million, a 14% quarter-over-quarter improvement compared to the previous quarter [11] - Core operating expenses were $15.5 million for the quarter, reflecting a 16% year-over-year improvement driven by profit enhancement plan initiatives [79] - Core loss before interest, taxes, depreciation, and amortization totaled negative $0.8 million for Q3 2023, showing sequential improvement from negative $0.9 million in Q2 2023 [74] Business Line Data and Key Metrics Changes - Average service deposits totaled $853 million for Q3 2023, down from $922 million in Q2 2023 and from $1.6 billion in Q3 2022, primarily due to interest rate sensitivity [14] - New checking account sign-ups in the higher education vertical improved by 85% over Q2 2023 and 6% year-over-year [83] - Interchange and card revenue totaled $2.7 million for Q3 2023, down from $5.3 million in the prior year [41] Market Data and Key Metrics Changes - Spending totaled $737 million for Q3 2023, an increase from $658 million in Q2 2023 and from $683 million in Q3 2022 [42] - Average spend per 90-day active accounts in the higher education vertical was $2,267, and $1,523 in the BaaS vertical, both significantly up compared to the previous quarter and year [42] Company Strategy and Development Direction - The company plans to double down on its student business, which is seen as a unique opportunity, while also looking to opportunistically expand its BaaS strategy [40][113] - A move to First Carolina Bank is expected to improve interchange rates for the higher education vertical by approximately 20 basis points [6] - The company aims to achieve full profit enhancement plan savings within the first half of 2024 [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the tough year for the fintech industry due to unprecedented interest rate hikes and their impact on the deposit base [38] - There is optimism about future growth potential in the higher education segment, with significant untapped opportunities identified [85] - The company is focused on building a sustainable growth model and aims to return to $20 million plus in EBITDA over the next 24 to 36 months [114] Other Important Information - Liquidity remained strong with $8.8 million in cash and no debt as of September 30, 2023 [16] - The company processed over $3.6 billion of student financial aid refund disbursements during Q3 2023, compared to $3.4 billion in Q3 2022 [83] Q&A Session Summary Question: What are the thoughts on the buyback authorization? - Management confirmed that buyback is a strategic alternative actively considered for 2024, focusing on the highest return to shareholders [115] Question: How should we think about deposit growth in the higher education and BaaS sides? - Management indicated that chasing rate-sensitive deposits does not make sense currently, and they are not focused on deposit growth in that area [119] Question: Can you provide insights on the technology communications spending? - Management explained that the increase in technology spending is due to seasonality and increased transaction volume during peak quarters [89]
BM Technologies(BMTX) - 2023 Q3 - Earnings Call Transcript