These are tough times to be a publicly traded tech company.
The last few days have been seismic in the industry. Silicon Valley Bank’s gone under. Signature Bank has collapsed, too.
Stocks have gyrated, to put it mildly.
But that same volatility should foster discipline in how they manage their businesses and how they report their performance to the public at large.
He noted that the ripple effects of the Silicon Valley Bank (SVB) implosion will be widely felt.
Even if companies had not had deposits with the bank, they were likely to have processed payments through SVB, he said — and MoneyLion had in the past, indeed, processed payments through SVB.
“One of the tragedies is that they actually had a very strong payments process business,” Choubey said.
But the gyrations, stretching back well before the news of the past week, have masked solid underlying business fundamentals. In what might be proof of the broad brush investors have been using in the markets: Two years ago, MoneyLion went public at a $2.4 billion valuation, when revenues were $76 million; as of Tuesday, the market cap was $160 million, though 12-month sales clocked in at $340 million, nearly doubling from 2021 levels. The stock is a fraction of its peak of roughly $12, notched during the years since its debut in September 2021.
But as Choubey said, there are trends that will continue long after the current fears over startup funding and stock returns and bank bailouts have subsided.
Among those trends: Digital ecosystems are being forged across platforms that serve as an intersection for consumers and businesses to educate themselves about finance, investing and saving.
“There’s a large swath of the U.S. population that finances themselves on a week-to-week basis,” he told Webster. And the platform model, which serves embedded finance marketplaces and products, with data underpinning it all, can create value for individuals and enterprise clients alike.
Within finance itself, as Webster noted, the important lesson to be learned from the SVB debacle has been that client concentration (and relatively few lines of diversification) leads to a risky business model. By way of contrast, Choubey noted that MoneyLion’s app, as described in its investor materials from Tuesday’s earnings report, has a slew of monetizable opportunities by offering everything from direct deposit and cash advances to third-party offers for insurance and loans.
By the Numbers
Total customer count increased 97% year on year to 6.5 million, representing 20% sequential growth (65% of sales come from consumers, 35% from enterprises).
In describing MoneyLion’s different customer segments — which act as hedges to one another — he noted that in the enterprise business, the platform is providing the APIs and interfaces that help client firms monetize their audiences, matching them with a range of financial products “through just five lines of code.”
MoneyLion charges an origination fee and a software-as-a-service (SaaS) platform fee to the partner. The consumers matched with the channel partners, he said, typically have $250,000 to $300,000 in household income, and FICO scores above 740.
On the consumer side of the equation, the typical user earns between $50,000 to $150,000, and typically have not been “properly served by banks.” The recent retrenchment by regional banks amid the SVB and Signature blowups has helped present new opportunities for MoneyLion, he said. These consumers have been embracing digital banking and investing. InstaCash, he said (the cash advance product) has proven popular, too.
Most consumers use at least two products from the company, he said, as cross-pollination takes root. The consumer who opens a checking account might naturally gravitate toward investing or credit building. As the company sees when a consumer’s paycheck hits their bank account, it can also gauge how fast that fund inflow “decays” and how other financial products and education might help mitigate that impact.
As much as 75% of the company’s top line in the most recent period has come from consumers who were platform users dating back more than a year. Those cohorts, he said, “are a significantly recurring user base for us … the app never competes with the marketplace.” Outreach and customer acquisition costs are streamlined by the fact that in November 2021, MoneyLion bought Malka Media, a creator network and content platform that has helped develop shows and multimedia efforts, such as MoneyLion University.
In a nod to the fundamentals of the business, he said the MoneyLion is “ahead of plan,” in reaching profitability goals: MoneyLion recorded positive EBITDA (a rough measure of cash flow) in the December period.
“Ultimately, once you hit that [metric],” he said, “then you start thinking about net income.”
As has been seen in virtually every corner of industry, the past several months have not been without challenges, he said, as MoneyLion has sought to right-size expenses, reducing marketing costs while delivering significant customer additions. And looking ahead, he said, the company will be embedding offers from gig economy firms such as DoorDash and Uber to help users reach their financial goals.
The stock remains undervalued, he contended, for a company that has $154 million in cash on its balance sheet.
“We’re nowhere near any sort of ceiling,” Choubey said, “because we’re seeing 20-million-plus consumers come through our system on a quarterly basis. … The markets are going to want to see us continue to execute, and we know we’ve got great momentum. We’re the interface layer on the existing financial services ecosystem.”