Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 21% compared to the first quarter of the previous year, demonstrating strong financial growth.
- Net income saw a significant rise, with a $5.7 million increase compared to the first quarter of the previous year.
- The introduction of the Profit Enhancement Plan (PEP) has successfully reduced costs and improved profitability.
- BM Technologies Inc has maintained a strong liquidity position with $14.6 million in cash and no debt.
- The company has launched new technology initiatives, including a new mobile and web experience for customers, enhancing user engagement and operational efficiency.
Negative Points
- Despite overall growth, average service deposits decreased from $1.2 billion in the first quarter of the previous year to $828 million in the current quarter.
- The company experienced a reduction in balances within its Banking as a Service (BasS) vertical due to interest rate sensitivity.
- Provision for operating losses increased year-over-year, primarily due to third-party fraud related to unauthorized cloud transactions.
- The competitive environment in the higher education sector remains intense, with no significant changes to alleviate competitive pressures.
- While technology upgrades are a focus, the ongoing costs and challenges associated with implementing and maintaining cutting-edge technological solutions could impact short-term profitability.
Q & A Highlights
Q: Hey, guys. Just a couple of questions on. I'm not sure if you put much value into it, but the Fed survey earlier this week, I've noted that expectations for college educations are supposed to increase 9% or a 2.5% increase. That's a big uptick. And for next year, what would be the if this starts to gain momentum or as people start to raise expectations for a big bump next year, what are the puts and takes we should be thinking about for next year to your business?
A: Jamie Donahue - Bm Technologies Inc - President and Chief Technology Officer: Yes, Greg, nice nice to hear from you on this, Jamie. So what we what we think is we have we have a market dominant position in the disbursements business. So anything that happens in that space, boost that side. And then you know what the output of that is more clients signing up for the five accounts. That's how we see it. So it's every it's what we work on hard every day. The team the team is laser focused on how to how to convert those, what we call prospects or people through the funnel, interbank mobile by customer.
Q: Okay, great. And then it looks like you maintained your outlook for core positive EBITDA for the year. I know rate rates have fluctuated and we just heard from your 30 days ago, but is there any color you'd want to provide on you put up positive core EBITDA on that and this quarter, any kind of thing that has changed and notably in that thought process?
A: Ajay Asija - Bm Technologies Inc - Chief Financial Officer: Yeah, hi. It's Ajay Asija. Let me take that question. So consistent with what we told you a month ago or so, we expect continued growth in the higher education business and on the several growth initiatives that's leveling out. Again, we have talked about. So we're optimistic about the future, but we're not I'm waiting and guidance at this time.
Q: Hey, thank you. I know you're putting a little bit less emphasis on the BasS new business, but what is kind of your outlook for deposits there? Then couple of quarters.
A: Ajay Asija - Bm Technologies Inc - Chief Financial Officer: And so we as you saw last year, deposits were down meaningfully in the BasS business. The business has mostly stabilized. It is a little bit of a runoff there's still a little bit of a runoff in the deposits, but for the most part, it's stabilized.
Q: Got it. Good. And could you kind of describe the revenue model for the IDV business. It sounds like you have nine clients signed from, I don't know, maybe the average revenue per school and just so we can get a feel for that business and its revenue model?
A: Luvleen Sidhu - Bm Technologies Inc - Chairman of the Board, Chief Executive Officer, Founder: Yeah, Michael, at this time, we aren't providing guidance on that that but at a high level, what we want to see is that we're very excited about the products. We have seen that the pipeline is actually multiples of refund disbursement. And the reason why is because you know that the pain point that we have identified is so urgent for schools.
Q: Let's start with the interchange and card revenues, which were down in the fourth quarter. But then I switch to not only being up but up 15% in the first quarter. What changed?
A: Ajay Asija - Bm Technologies Inc - Chief Financial Officer: Let me take that question, Bill. It's Ajay Asija, again, here. The interchange and card revenue were up primarily because of the new DPSA request Carolina bank that allows us to earn the interchange revenues on a Durbin exam basis, plus the spend was a little bit higher as well. So those two are the two big reasons.
Q: And then speaking of the spend, the spend was up, was this correct that the spend was up versus the fourth quarter? I'm thinking $809 million versus $714 million. And if so, why was that the case? Because I guess in my mind, the holiday spend would have would have driven a seasonality where Q4 would have been higher?
A: Jamie Donahue - Bm Technologies Inc - President and Chief Technology Officer: So the Bill, Jamie. So we are we think of that as a sign of our work that we did the year prior, our direct marketing, some of our campaigns some of the features we added on the before ahead of our technology refresh, which we implemented in April. So we believe that some of the some of the marketing and our campaigns and some of the services we added on the legacy tech help our drivers to that.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
