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MOGO: A Rapidly Growing Canadian Fintech Provider

By Lisa Thompson



Mogo (MOGO) is a rapidly growing Canadian fintech company with over 800K members that generates revenues from a series of innovative products to help consumers manage & control their financial health. These products include a digital spending account with a Platinum Prepaid Visa Card, ID Fraud protection product, digital mortgage, crypto account that enables buying and selling of bitcoin, and access to smart credit products called MogoMoney. Mogo combines all of these into an easy to use integrated app, which allows consumers to open a Mogo account in under 3 minutes all from their mobile phone. Mogo is part of a wave of global digital challenger banking models that are taking on the legacy banks who’s legacy products and business models still rely on high fees and a clunky consumer experience.


‣ Mogo Finance Technology is a leader in the Canadian fintech industry and provides a unique opportunity for investors to participate in the worldwide trend of fintech adoption. It is one of a new breed of emerging digital challengers replacing traditional banks globally.

‣ Mogo is a high growth disruptor. Was the company not fighting the headwinds of strategically exiting the short-term loan business that it phased out throughout 2018, it would have shown 71% revenue growth on what it calls “core revenues” or revenues of continuing operations. Core revenue, excludes the company’s legacy short term lending revenue which Mogo fully exited at the end of Q3 2018. In 2018, the company generated $61 million in total revenues representing 26% growth, spurred by a doubling of its subscription and services business to $27 million. In the most recently reported quarter, Q4 2018, Mogo’s core revenue increased 75% versus the same period in 2017 with Subscription & Services revenue having its fourth consecutive quarter of at least 100% year over year growth. In 2018, it added more than 210,000 new members to reach 756,000 members on December 31, 2018 (up 39%), and on March 21st it announced it has surpassed 800,000 members.

‣ Fintech is disrupting traditional banking by providing a generation adept at technology, and demanding ease-of-use and low costs, with tools to deal with money. Mogo’s mission is to make it easier for consumers to get in control of their financial health. For that, it is providing services at the customer’s fingertip by providing an app that allows free credit score checks, loans, identity protection, payments, and the buying and selling of bitcoin combined, with more capabilities to come. This convenient solution is taking market share from traditional banks and credit unions that have been slow to adapt to change.

‣ Not only is MOGO’s approach easier and quicker, it is less expensive for consumers. Canadian banks still charge expensive fees just to maintain an account, something the millennial generation seeks to avoid. Since most of MOGO’s services are free to the user, it is the natural choice for the younger set.

‣ MOGO is ahead of the pack by integrating multiple services in a one-stop solution. It also partners with providers rather than just promoting its own proprietary products. By comparison, in the US a consumer needs to access separate products, which do not work together to paint a complete picture for the customer. For example, someone might use Credit Karma for credit monitoring, a bank or Lending Club for a loan, LifeLock for identity protection, a VISA prepaid card for payments, and Coinbase to buy and sell bitcoin, all using separate apps and different accounts which have no knowledge of each other’s status.

‣ The company continues to add capabilities to monetize its base. Shortly we expect the rollout of the enhanced MogoCard with a new cash back program, and the addition of a feature called MogoWealth which will provide customers with choices for investing their cash. Also contemplated is a subscription service that would include multiple services combined at a discount price much like an Amazon Prime.

‣ Mogo is in the midst of an all-stock merger with Difference Capital Financial, a publically traded Canadian Business Development Company (BDC.) Difference Capital was originally founded as a public Canadian investment company that invested in mostly private Canadian technology companies. Today, Difference is primarily a holding company with approximately C$10 million of cash, plus an additional C$24 million of investments in some of Canada’s leading private technology companies, including Hootsuite and Vision Critical. The transaction is creative financing for Mogo which, due to Difference holding an approximately 10% stake in Mogo prior to the transaction, will only result in an incremental issuance of approximately 3.2 million shares (in addition to Mogo’s currently existing 23.5 million shares outstanding.) It will bring approximately C$34 million in cash and monetizable assets to the company which it plans to use to fund its existing business. The transaction, which is still subject to shareholder approval, is expected to close in June 2019 and will result in Mogo shareholders owning approximately 80% of the combined company and Difference shareholders owing the remaining 20%. This transaction expected to close in the June quarter, and will need to be approved by shareholders of each company.

‣ We expect the company to reach cash flow break even sometime this year excluding the funding of the growth of its loan portfolio. Management has stated it expects to use its cash on the balance sheet, combined with partnerships with other companies that will fund Mogo-originated loans using their own balance sheets, rather than raising any more cash and diluting current shareholders.

‣ Based on a combined value of the company’s lending business and its subscription services and fee generation business we believe the company is worth $7.67 per share when compared with other companies in these spaces.

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