Mogo Inc (MOGO) 2021 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Mogo Q2 Earnings Conference Call. (Operator Instructions)

Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Craig Armitage with Investor Relations. Thank you. Please go ahead, sir.

Thank you, and thanks for joining us today. Just a couple of quick notes from me before we get started. First, today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected. The company undertakes no obligation to update these statements, except as required by law. Information about these risks and uncertainties are included in our Q2 filings as well as periodic filings with regulators in Canada and the United States, which you can find on SEDAR, EDGAR and on the Investor Relations section of our website.

Second, today's discussion will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to and not as a substitute for IFRS financial measures. And lastly, the amounts today are discussed in Canadian dollars, unless otherwise indicated. And actually, a final note that we do have presentation slides available on the website to accompany today's call. So those can be downloaded from the IR section of the website.

And with that, I'll turn it over to Dave to get started. Thanks.

Thanks, Craig. Thank you. Good afternoon, and welcome to Mogo's Second Quarter 2021 Results Conference Call. I'm joined today by Greg Feller, our President and CFO.

It's been an active and highly productive start to 2021 for Mogo, and we're pleased to update you on a strong Q2 results. What continues to guide us as a simple mission, make it easy and engaging for consumers to get financially fit and live a more sustainable lifestyle. We're hyper focused on making Mogo the go-to money app for Gen Z and millennials by helping them develop healthy money habits to make it easy for them to achieve their financial goals and achieve financial freedom. We continue to make solid progress in this mission, but still early days. This strategy and focus on financial health is what's driving our results and reflected in the strong quarter of second quarter and year-to-date performance.

Highlights include 80% subscription services revenue growth for the second quarter based on the accelerating adoption of our products, and we're now at approximately 1.7 million members in Canada. Our payments business also continues to grow with volume up 83% to $2 billion. In this quarter, we also increased our ownership to Coinsquare to approximately 40%.

The transactions we completed since 2020, both strategic and financial, have completely transformed our business and accelerate our growth plans and vision, bringing us closer to one of our strategic goals of building a leading digital wealth platform in Canada. If we look at some of the key milestones and what's driving our success, our marketing partnership with Postmedia continues to be a strong strategic advantage, giving us the cost-efficient reach and exposure.

We have lots of new product feature releases, which continue to drive our growth, highlighted by the MogoCard with carbon offsetting and Bitcoin rewards. We have also improved our balance sheet by reducing debt and raising significant new equity among other steps, and we have been very active with acquisitions and strategic investment activity. Over this period, we have acquired Carta and Moka, made the strategic investment in Coinsquare, and we're close to completing the acquisition of Fortification. Together, these transactions bring us revenue scale and diversification and important capabilities and expertise in digital saving, investing and stock trading.

Let me start with our plans on the trading side. Retail investing and stock trading has become more popular than ever, and we believe there is a massive opportunity for our upcoming new product, MogoTrade. We're heads down on building this out, and it's not only the biggest investment in a product we've made, but perhaps, our most important product to date. In fact, almost our entire product and development team is focused on this product launch.

In addition to the product development milestones, our acquisition of Fortification is expected to be completed in Q3, which is an important step. The proposed acquisition would provide us with a licensed investment dealer with the requisite registrations as well as regulatory and technology capabilities, key building blocks for our trading offering.

We're targeting to launching MogoTrade in Q4. Once we have regulatory approval for the change in business with Fortification, given we now have the majority of our resources focused on this product in order to help ensure we launch it this year, we've also decided to move the launch date of our P2P to next year. There is no doubt from our perspective, this is the right decision given the growth opportunity with trading. And the good news is, many of the things needed for P2P are also needed for Trade. So the order here makes a lot of sense.

Digging into Trade a little further, based on our research of the most successful trading apps, we've decided to launch Trade as a separate app. The bottom line is that when people are trading and investing, they want an app that is all about this, especially if they're active traders. That means being able to easily log in and see your stocks and quickly see prices and make trades compared with an app with trading as one of the many products that require a user to go through multiple screens.

Our goal is to build the leading trading app in Canada, and we could be more excited with how this product is evolving. We believe Trade can be a $100 million business in 3 to 5 years post launch. Our road map includes bringing full crypto trading into the app as well beginning next year.

While we are moving forward with a separate app, Trade will also be designed to work together with the existing Mogo app. Although there are 2 separate apps, and it's important that the friction for Mogo members between the 2 apps is as low as possible. Users will have one account and log in. MogoTrade users will be able to easily log into their Mogo app. Just the same as Mogo users can log into the Trade app with the same log in.

And users will also be able to easily move or transfer money from card, crypto or trade. So if I have money on my card and want to use it to buy stocks, I can simply transfer that money in a few clicks. We're excited to share more as we get closer to launch and eventually get all of the use in the products yourself.

We continue to be excited about the opportunity with our Card and see it as a key driver of member adoption and engagement. We are truly focused on making this the easiest way for someone to control their spending and avoid the overspending of credit cards while at the same time, helping them save the planet from climate change. I believe the 2 biggest challenges we face today are solving the wealth gap and climate change, and the fact is financial health and the health of the planet are directly linked. Again, how someone manages their spending has perhaps the biggest impact on their financial health, highlighted by the fact that about 60% of consumers live paycheck to paycheck. And 72% of carbon emissions comes from our consumption and spending. Spend less, save more and lower your footprint.

As we've all seen in the news recently, climate change is only getting worse, and we all need to do more to help stop it, and Mogo makes it really easy to do a lot more while also helping you save money. One pound of CO2 is offset for every dollar spent, and our current initiative is helping protect the Amazon Rainforest, one of the world's largest carbon absorbing land masses. Ball spending in Canada was down on the MogoCard. Canada could hit our goal of becoming carbon-neutral almost immediately. This value proposition is driving accelerated growth in transaction volume. In fact, Q2 volume was up over 1600% year-over-year.

Another critical measure we look at is Net Promoter Score, which measures how likely your customers are to refer others. Are they promoters or detractors. Our NPS for active card users in our most recent survey is 66, driven by strong savings users are seeing as well as the positive environment impact they're making. What's also particularly interesting is, for those that chose the card because of the environmental impact, our NPS is 77. And for those that are using their card for more than 75% of their budgeting, their NPS goes up to 87.

For context, the industry average for financing commercial banks is 0, and two of Canadian big 5 banks have an NPS of 4 and 6. So we're really excited from what we are seeing here to continue to get feedback and make adjustments to our value prop and experience. Again, our goal is to make this the most powerful tool in Canada to help someone control their spending, while also helping save the planet. So stay tuned for more updates.

Our Save & Invest product continues to grow with over 120,000 subscribers and revenue up 64% year-over-year. Recall, this product enables anyone to connect their debit or credit card and either roundup purchases or set a regular fixed recurring deposit. Unlike traditional roundup products that put money into a savings account, this is money that's actually being invested, which means that every time the user spends money, they are actually investing in companies like Tesla, Shopify and Apple.

Our goal is to continue to expand and enhance this product offering and enable our members to automate their wealth building with a passive investment strategy and complement that with active investing through MogoTrade, all part of our digital wealth strategy.

Our Bitcoin trading product continues to trend well. While Bitcoin is a relatively small component of our revenue today, it continues to be an important part of our broader value proposition and helps drive engagement. Bitcoin users are also 7.5x more likely to refer a friend. Q2 trading volume was up 390% year-over-year, building on this success or plans launch a full crypto offering within MogoTrade next year. This means that existing MogoCrypto users will be able to access and trade a full range of crypto through MogoTrade.

As many of you are aware, our roots are in consumer credit, and it's always been an important part of our offering and just like every other area of banking, consumer credit is evolving in this new digital world. Gen Z and millennials are looking for simpler, easier and more flexible solutions, and this is driving a shift away from using traditional forms of credit like credit cards. Square's recent acquisition of Afterpay highlights the shift, and our goal is to continue to evolve our own credit offering and give our members the same level of convenience and affordability of buy now, pay later.

As our card offering continues to grow, this will become an increasingly bigger opportunity, and we believe that most will gravitate to this new way of managing money, where they use a card like Mogo to better manage and control their spending, while staying away from credit cards, but occasionally need access to credit and looking for a more modern digital experience that gives them a more convenient and accessible solution. We're also seeing increasing demand for our credit products and believe a background in credit will become an increasingly large competitive advantages versus other players.

We're also seeing growth from our B2B payments business, Carta. In fact, this quarter was its biggest quarter ever for new customers. Just to highlight a few, Carta recently launched its fifth country rollout with Sodexo, which included successfully migrating a card portfolio of roughly 2.5 million cards. Several additional country rollouts are currently being scoped with Sodexo for deployment in the next year. Carta is also providing the transaction processing for leading fintech and banking solutions in Canada, including Payfare, which provides a gigs economy payments for Uber drivers in Canada. It's also powering ATB's new digital bank Brightside's card product.

Another Carta customer [Alpay] recently launched one of the largest public sector card programs for the National Health Service in the U.K. The program is expected to roll out over 250,000 cards within its first quarter being live and anticipate to see significant growth as it rolls out across the U.K.

Clearly, there is a lot going on in a variety of areas, and this also ties into our platform and how we're building a moat. We continue to build the deep expertise in these areas and each of them on their own are very complex. And together, this continues to build a competitive moat that isn't easy to replicate. It takes years of experience and lots of investment to get where we are today. This platform is also what's enabling us to relatively quickly launch something as complicated as stock trading app. And there are many things that we are developing to support Trade that will also be leveraged in our existing Mogo app. So we're starting to see some good synergies and even economies of scale that can be very impactful.

So I'm excited about how things are evolving, both on the business side, but also from a platform perspective, which is critical as we continue to grow our business, which we are clearly still in the early days in terms of scale.

With that, I'll introduce Greg to talk you through the financials. Greg?

Thanks, Dave, and good afternoon. As Dave mentioned earlier, during the second quarter, we continued to accelerate our plans to expand our product capabilities and build the most comprehensive digital world in Canada. This really was a milestone quarter from a financial perspective with strength across multiple measures, and we entered the second half with strong momentum, which you will see in an updated outlook that now calls for year-over-year growth of 100% to 110% in subscription revenue above our previous guidance of 80% to 100%.

Keys highlights included a significant increase in our member base, both organically and through the Moka acquisitions, accelerating subscription services revenue growth. Record gross profit -- in addition, we reported an adjusted EBITDA loss of $3 million in the quarter as we significantly increased our growth investment across the board given the strong secular tailwinds in fintech adoption in Canada. We also reported positive income in the quarter of $9 million, which included a $25 million gain related to our investment in Coinsquare. Lastly, we ended the quarter with a strong balance sheet, including approximately $76 million of cash, investment portfolio and digital assets.

After eclipsing the million member market at this point last year, total member base grew to 1.7 million members this quarter, an increase of 63%. Just over 60% of this was driven by acquisition of Moka with strong organic growth driven by MogoCard as well as Crypto accounting for the balance. If you were to include Coinsquare's 600,000 members as part of our broader member ecosystem, we would be in excess of 2 million members in Canada, which would put us in rare category in terms of member breadth and scale. We are still early in the journey to more fully monetize our members, but as David has talked about today, this large face is a highly valuable asset that gives us great confidence in our ability to successfully launch new products like the stock trading.

This product, in particular, we believe, will enable us to significantly increase the monetization of our members as well as further accelerate growth of new members in '22. Total revenue increased in the quarter by 29% to $13.7 million, again driven by Subscription & Services revenue, which really drove all the growth in the quarter. Specifically, Subscription & Services revenue grew by 81%, reflecting a strong combination of new revenue streams from Carta and Moka, along with strong underlying growth within both of these businesses and a substantial increase in MogoCard volume, which saw volumes increase 1600% year-over-year. MogoCrypto also had grew nicely during the quarter, although represented a smaller portion of total revenue.

Subscription & Services now make up 60% of total revenue versus 43% in the prior period. Even dating back to our origins and online lending, there was a high recurring revenue element to our business. With the evolution of our model, including the expansion of our products in recent years, approximately 95% of our revenue is now recurring in nature, be it subscription fees, transaction processing, interchange revenue or interest revenue. These stable and recurring revenue streams give us increased revenue visibility, which is one of the key factors underpinning our first ever forward fiscal year revenue outlook.

As I mentioned, with the confidence in the underlying model of our -- within 2020, we have significantly increased our investments in growth initiatives this year as we believe the tailwind fintech adoption in Canada has never been stronger. This increase in investment drove the decrease in adjusted EBITDA, which included a significant increase in product and development investments. In particular, we're making large investments, one of the largest in the company's history, in order to deliver a free stock trading app in Canada by year-end, a market which is still at very early stage relative to the U.S.

In addition, we are also making big investments in sales and marketing, both in Mogo to expand our user base as well as investing in the geographic expansion of our digital payments business, Carta, which recently expanded into the large U.S. [fans] market. Importantly, these growth investments are levers and dials we control. Specifically, approximately 80% of the increase in OpEx year-over-year is growth-related spending.

As Dave outlined, during the second quarter, we executed on multiple transactions to increase our ownership in the leading -- Canada's leading crypto platform, Coinsquare, to approximately 39%. We also maintained an auction and a warrant to increase the ownership to 53% that would caveat that we require Coinsquare's Board approval to do this.

The warrants has an exercised price at a significant discount to loss transaction prices for Coinsquare shares, which results in us recognizing a meaningful gain in the quarter for the value of these warrants. It is also worth noting that this is the first period in which we have accounted for the strategic investment under the equity method. As a result, going forward, you will see some new disclosure in MD&A, along with one line nonoperating income on our income statement to account for a proportionate share of Coinsquare's income or losses in each period.

At a high level, Coinsquare experienced very strong growth in the business during Q2, up over 450% year-over-year. Like others across the industry, however, the growth was heavily weighted in the first half of the quarter with volumes falling substantially in June. June is also the period in which our ownership increased from 19.9% to 39%, and therefore, our proportionate share of Coinsquare's results were weighted towards the lower June results.

Volumes remained low in July, but have been seen a recent rebound month-to-date in August, although still at much lower levels and peak levels in Q2. We anticipated this volatility when we made our investment, which is why we structured this as a minority investment with the call option. We continue to be big believers in the disruptive power of crypto, and it's important in any next-gen digital financial platform and continue to view Coinsquare as a very strategic and attractive long-term investment.

Although we do have crypto-related revenue of Mogo, it accounts for less than 5% of our total revenue. So crypto volatility doesn't have a meaningful impact on our core business results. Instead, over 95% of our crypto exposure will continue to be through our investment in Coinsquare, which currently sits on our balance sheet at a book value of approximately $102 million.

Separately, after quarter end, we announced a small investment in Tetra, which was spun off from Coinsquare and began Canada's first qualified facility for cryptocurrency assets. Tetra's core business is the custody and storage of cryptocurrency assets, including Bitcoin, Ether and a variety of other digital assets. Prior to Tetra's launch, the Canadian market for cryptocurrency custody was limited to U.S. providers and unregulated Canadian custodians.

In addition to Coinsquare and Mogo, Tetra Trust is backed by several industry participants, including point-based ventures, an investment arm point base and the Canadian Securities Exchange. Coinsquare owns approximately 47% of Mogo, and Mogo has approximately 4% in Tetra. We continue to have a sizable investment portfolio in our balance sheet of about $20 million at quarter end, which includes about a dozen equity investments from private technology and e-gaming companies as well as small investments in both Ethereum and Bitcoin.

Our goal with new investments in this portfolio is to support the broader ecosystem in Canada that we ultimately see playing a role in consumers' digital wallet, while monetizing noncore investments such as the sale recently of our stake in Venice, for proceeds of $4.7 million, in which we recognized a 116% gain from -- versus book value at year-end. Also, post quarter end, we exchanged a portion of our investment in private media company, Blue Ant, into shares of public e-gaming company enthusiast gaming.

Our strong results year-to-date and the multiple growth drivers you see here enable us to revise our financial guidance for 2021 and introduce 2022 guidance. Specifically, we expect year-over-year growth of 100% to 110% in Subscription & Services revenue in Q4 2021 as compared to Q4 2020. And again, this is above our previously communicated range of 80% to 100%. We also are introducing total revenue guidance for fiscal year 2022 in the range of $70 million to $75 million. We also anticipate improving adjusted EBITDA margins as a percentage of revenue beginning in fiscal 2022 as we continue to benefit from scale.

And we believe that as we continue to increase our scale, EBITDA margins, we believe, in the range of 35%, are achievable over time. We are assuming continued growth investments, both in technology and in marketing to drive continued product expansion along with increased engagement and monetization to support accelerating revenue growth. While we also expect to remain active in M&A, we have not factored that into our outlook for FY '22 at this time.

With that, we will open the call up to questions. Operator?

(Operator Instructions)

Your first question comes from the line of Scott Buck with H.C. Wainwright.

Congrats on the quarter.

Thanks, Scott.

I'm curious, can you give us a little bit of color on what the uptake has been from the Moka or legacy Moka members with some of the legacy Mogo products? Are you seeing adoption of the card and then some of the other services that you guys provide?

So it's Dave. Yes, I mean, it's definitely still early days there. We've just literally begun some of the cross-sell. So Moka members are starting to receive, obviously, communication from Mogo and vice versa. But generally, I would say, low general kind of cross-sell, given the two experiences. So our road map calls for integrating the two, and that, obviously, is going to accelerate that.

So right now, again, Moka still is a separate app. So separate log in and password, and those accounts aren't linked. So the conversion really is just happening through some e-mail campaigns we're beginning to test. We're definitely seeing conversion, including even, obviously, on our other products. So when we run these campaigns, not only do we see uptake on the card, but we see Moka users also getting loans and other things. So it just continues to reinforce our view that having an integrated solution with, obviously, more products for up-sell and cross-sell, obviously, it just drives a better LTV and ARPU for customers.

So again, that is on our road map, and we hope to basically integrate that into the Mogo app at some point in as early as first half of next year.

Great. That's very helpful. Second one, I'm just kind of curious, how we should be thinking about the lending business moving forward. It sounds like you guys have some creative things you're thinking about, but as we look out in 2022, should we assume this is kind of a low single-digit growth business or really just static with 2021 levels?

Yes. So Scott, I'll take that. So as you heard in Dave's commentary, lending, obviously, we've been big believers in lending for a long time. That's the roots of the company, very sticky product, very high LTV product. And our focus on our own balance sheet is low-dollar loans, very capital efficient and then lending through partnership for higher-dollar loans. So we think we've got a very good model there. We do believe that increasingly, lending is becoming more and more relevant for fintechs across the board, and we have a very unique position and strength there that, quite frankly, others don't. So we do see that advantage, and we see increasing demand from our own members to tap into convenient credit.

So I think one thing that has changed now going forward is, we see lending as no longer going to be sort of a drag on growth. We still think our primary growth driver will be Subscription & Services, but lending will actually participate in that to a certain degree as well. So I think that's probably the sort of the color I can give you at this point.

I appreciate that. And one last quick modeling question. It looks like stock comp ticked up quite a bit this quarter. What was driving that? And what's kind of the expectation for that line item moving forward?

Yes. The -- well, so what happened with this quarter is when options were granted this quarter, our stock was at a very high level, higher than it was today. So those options, therefore, are out of the money, but valuations and that expense is based on the price at the time. And under IFRS, it's more heavily weighted towards the quarter of grant.

So -- but look, it's hard to predict stock option grant -- sorry, stock option comp because it is dependent on valuations at the time. So -- but I wouldn't think that, that number would be higher than what it was this quarter. But also, that's why you'll see on the income statement, we specifically broke out stock-based comp and D&A from our 4 main OpEx categories just to make it a little easier to see what the real sort of drivers are from a cash basis versus a noncash basis.

(Operator Instructions)

Your next question comes from the line of Adhir Kadve with Eight Capital.

Congrats on the quarter.

Thank you.

Thanks.

Just maybe on Carta. Obviously, you guys did announce a couple of client wins in the U.S. Can you maybe talk about their pipeline, and how maybe that's kind of evolving now that they've been with you for almost a quarter?

Yes. So look, Carta is definitely an area that we're investing in. So we've been -- we've hired up some people in the U.S., and we're making investments -- further investments in Europe. We continue to see a lot of opportunity in that sector and quite frankly, increasing synergies. So we're seeing demand from some of Carta clients to tap into some of kind of Mogo's capabilities in regions where Mogo is not.

So Mogo is, obviously, focused from a B2C perspective in Canada. We're not looking to build that B2C brand outside of Canada. Carta is really sort of our international growth strategy, but that actually allows us to potentially leverage some of our platform, move up the stack as it were at the Carta level with clients. And so we think there's a big opportunity there as well. So I think we're -- we feel good about the Carta platform and the investments we're making there so that Carta continue to be a growth driver for us going forward.

Fantastic. Maybe just one more on the -- sorry, I'm just giving a little bit of feedback here. On your overall cross-sell on the platform, I'm talking about like outside of Moka, which you kind of already addressed, but can you maybe talk about the cross-sell that you're experiencing on the platform from Bitcoin to the card to maybe even platform lending just in the overall ecosystem, please?

So -- sure, it's Dave. Maybe just to touch on it a bit. So I would say, increasingly, on the Mogo side, given a lot of the positive data points we have on the card program, we're starting to focus more in -- on the card product. It's still, again, early days, even though we're seeing big growth there. Obviously, the -- one of the key attributes, obviously, of a card user is, they're more engaged than any other user, including Bitcoin. So our average card user is logging in 28 times a month.

So again, very high active engagement. And as we all know, cross-selling really an adoption of other products usually is a -- there's a direct correlation to engagement, how many times somebody is logging in to ultimately cross-selling into other products. That's also where we see the opportunity on the loan side and obviously, on the kind of the buy now, pay later type digital offering. So our plans include bringing that more into the experience so that it's more of a natural ability for someone to tap into some credit, if they need it, with a kind of in-app digital experience and options very similar to a buy now pay later.

The other important, I think, thing to note is, our penetration right now on card is still relatively low on our member base. It's sub-10%. So there's still a massive opportunity in terms of just growth on our member base into the card product itself. We're, again, still doing a lot of work in terms of surveys, getting customer feedback, see what's resonating the stat I just shared, in terms of the savings is another great one that just came from our recent survey results in terms of the average card user that reported savings.

So 66% of users reported savings using the card and averaged off over $200 a month, which is, obviously, material. And then also seeing the connection to the carbon offsetting and environmental impact. Increasingly, we see that as a big opportunity, and based on this, we've got some changes that are going to be coming up that we think are going to make a big impact in terms of making that product even more appealing.

And what we're starting to see is a higher percentage of our members that are signing up now that are actually getting the card. So that number continues to go up, and it's now starting to be in the 20% plus range in terms of users that are new users signing up and actually ordering a card. So things are continuing to evolve. And again, I would say, the card especially is becoming kind of a key driver and ultimately, will be that key driver of conversion into other products.

Also including on the Invest side, our plan is to actually incorporate that directly into the card experience so that just like you can do a roundup on the Moka app, you can do roundup in the card and have that money, obviously, automatically go in to Invest. So you can see how that will also tie into conversion.

And the other related point that I mentioned earlier is with Trade. When Trade launches later this year, the goal is, you're going to have the ability to use the money on the card to buy stock or move money from your stock account into your card and i.e., if you have money sitting in your account and you want to spend it, you can easily spend it on the card. Same thing in crypto. That is a key driver of cross-selling.

So if you look at an app like Cash App, that's obviously been one of the key drivers of their success, the money you have in your account can be used to buy Bitcoin, can be used to buy stock or it can be used in P2P. And today, at Mogo, your card -- the money sitting on your card cannot be used to buy crypto and vice versa. So that's also going to be happening later this year, and we think that's going to be a key accelerator in terms of conversion and adoption of other products.

Your next question comes from the line of Doug Taylor with Canaccord Genuity.

You mentioned the stretch target of EBITDA margins of 35% being achievable kind of at maturity. Now obviously, you've got a lot of exciting opportunities that you're investing in, in the near term. But maybe you could help us think about the bridge between now and maturity, and how you're balancing investment versus growth and then delivering margin and profitability?

Sure. Thanks, Doug. So I guess a couple of things. As you know, in Q2 and Q3 last year, we generated close to 50% EBITDA margin on $10 million of revenue. And obviously, our revenue is scaling now. Now that was, obviously, a period where we dialed back our growth spend. So we could be at that level at that scale, right, and growing the way we want to be.

So obviously, that wasn't long-term sustainable at that scale, but I think it did highlight how quickly we are able to turn the dials on our own business and how much of our spend is variable. So the other thing I just -- we mentioned in our comments here is that if you look at the big increase in OpEx spend year-over-year, about 80% of that is growth-related.

So there is a portion of it that's not growth-related, i.e., kind of more just based on scale of growing the business. But I think our focus is definitely on investment right now, not EBITDA margin and profitability. We've shown we have the ability to do that and do that quickly, if we need to. But we think that with the tailwinds finally on fintech adoption in Canada catching up quite frankly to where things have been in the U.S. and other markets, we think this is the time to invest and focus on growth. We, obviously, have provided guidance that we expect improving EBITDA margins beginning in FY 2022. Therefore, what we're, obviously, saying as well is, as we scale up, we're looking for a portion of that incremental gross profit dollars to fall to the bottom line and some of those investing put towards investment, but with a commitment to drive to profitability and drive to that sort of long-term target EBITDA margin in and around 35%.

So obviously, difficult to say exactly when we're going to be at a point to do that, but quite frankly, I think that will depend on the market, our ability to drive meaningful growth in ROI from those investments. And if we're not seeing that, then we make -- we have the ability and flexibility to turn those dials down and get to EBITDA margin profitability sooner rather later, if that's what we decided is the right decision.

So just to put a finer point on that. I mean you've talked now about $70 million to $75 million in total revenue next year, and what you're suggesting is narrowing EBITDA losses, which is, I think, consistent with what is being expected a view by the street right now.

Yes, that's correct. EBITDA -- narrowing EBITDA losses as a percentage of revenue.

Your next question comes from the line of Steven Li with Raymond James.

Dave, can you elaborate a bit more on MogoTrade being a separate app? So I have the Mogo app. How do you engage me and drive take-up? Or the initial marketing for MogoTrade is also going to be a bit standalone?

Yes. So there's going to be 2 components. MogoTrade will be its own campaign. And I think there's already an example, obviously, in Canada in terms of Wealthsimple. They launched a separate trading app. Obviously, they've seen big success, and quite frankly, they now have multiple apps. They have 3 separate apps. And Trade is clearly the one that's driving their accelerated customer acquisition and that then becomes a conduit for kind of cross-selling into these other products. And similar to what we're doing, these are products that you essentially have the ability to manage even multiple apps essentially with one account.

So you have one way to transfer money in and out. You can easily, in your Mogo app, transfer money to Trade or vice versa. So those -- so there's a connection there that you can quickly go from one app to the other, which, let's say, is completely different than what we're talking about with Moka.

Today, Moka and Mogo, those are 2 totally separate apps. There's no link at all. Obviously, not even right now in the name. Whereas, Trade and Mogo, they're going to be completely interlinked. So if you're, again, a MogoTrade customer or a Mogo customer, you're going to know that there's this other app, and you're going to -- there's going to be some of that functionality in there. And that includes the ability to even have some of the information showing up in the app, which potentially we may do as well.

But yes, we're going to be marketing it separately. It's going to be its own separate marketing campaign and essentially download that app. The nice thing about it, you don't have any of the confusion of the other products. Nobody is thinking about, well, what do I want to do with this? It's all about trade. It's meant to compete with best-in-class trading apps in Canada.

One of the things, too, that -- specially for the U.S. audience, in Canada, there really -- there's only today one app that offers commission-free trading. Mogo is going to be the second app, and obviously, all of the big banks, all of those are still charging material commission and really have more of a legacy experience, this is, obviously, all built in with a modern UI and experience very similar to the leaders in the U.S.

Got it. And then on MogoCard, any KPIs you can share? Like number of users with a card or maybe dollar transaction volume?

Well, so a couple of things that I will share in terms of just as we shared in the presentation, if you look at the average carbon offsetting of just -- of about 650 pounds, that also equates to the average spend. So our average user is spending about $650 a month based on our kind of most recent data. So that is definitely -- especially at this stage, we think that's very successful to start getting anywhere close to that $1,000 range. And again, what we're starting to see is increasing spend from users.

So as we continue to bring on more users, we're getting better and better at being able to convert them and turn them into a longer-term users on the card program. In terms of getting into more specifics around the numbers still at a stage where we don't want to fully disclose. But obviously, as you're seeing in the transaction volume, is -- at that growth rate, it's going to be -- start to become increasingly meaningful. And I'm sure at some point, we'll start to give some more color on that.

The other thing -- data point I would give is that card revenue is roughly 3x what our crypto revenue is right now, and obviously, and it was up and growing faster as well. So just to give you kind of a sense of the two.

Okay. That's helpful. And then if I remember on that slide, Dave, I think, I saw like saving $200 per user per month. What did that mean?

So we're essentially doing a survey, and we're really kind of honing in on. Obviously, part of the value prop, if not the biggest piece, is trying to help people spend less. I mean this is all about the fact that most consumers are overspending. That's where people struggle the most. The reason why -- and even look at recent retirement surveys, the reason why people aren't actually saving more money for investing is they don't have any money left over at the end of the month. They're typically overspending. And even if they make more money, they're still tending to overspend.

So there really is a gap in terms of a solution that really helps them to better control their spending, to better budget, et cetera. Increasingly, that is kind of the main focus of the card. So we essentially did a survey of our active users to find out, are they seeing savings, et cetera. And 2/3 of them reported that using the card actually help them save money and the average of the users was over $200 a month. So -- which is obviously material, right? And so that -- and that really is the primary goal.

Can -- so somebody who is using typically a credit card and they go from using a credit card to the MogoCard, the big benefit from a dollars perspective is how much money -- how much less they spend, right? There is no immediate access to credit. You're putting your own money on it. It's essentially like spending cash. Obviously, there's a lot of data out there that continues to show that using your own money, on average, you'll spend significantly less. In fact, using a credit card, you'll typically -- you can spend up to 100% more, just knowing the fact that you have, obviously, unlimited credit and you can pay it at a later date.

So this whole kind of buy now, pay later as much as it's a positive and it's more of a convenient digital form, there's also a trend, quite frankly, to buy now, pay now, right? If you really want to stay in control of your finances and spend less, it actually is about using your own money, staying in control and that's why we're starting to see the same -- the data kind of supporting the same thing in the U.S. where millennials -- younger millennials and Gen Z in particular, are increasingly using essentially a Visa debit card instead of a credit card because of this control.

There are no further questions at this time. Mr. Feller, do you have any closing remarks?

Well, thanks, everybody, for joining us on our Q2 call. We appreciate your support, and we look forward to updating you on our next quarter. Obviously, we've got a lot going on, and we'll keep you updated in terms of as we get closer to the launching of the Trade app, but thanks again.

Ladies and gentlemen thank you for participating. You may now disconnect.