BMTX - Earnings call transcript Q1 2024

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Operator

Good morning, everyone, and welcome to the BM Technologies First Quarter and 2024 Earnings Call. Please note that this event is being recorded. [Operator Instructions] At this time, I'd like to turn the conference call over to Brian Prenoveau, Investor Relations for BM Technologies. Please go ahead.

Brian Prenoveau

Thank you, operator, and good morning, everyone, and thank you for joining us for BM Technologies First Quarter Earnings Call.

would we remind considered make we of that forward-looking. begin, statements the today we like you to some Before may be and from what These number currently anticipated. actual subject are is results uncertainties risks performance materially forward-looking cause that differ to to may statements of a the Please these of events, these update forward-looking speak in light forward-looking required only date future of the extent to note this no presentation, securities to obligation information applicable that new except or of and statements laws. as we by undertake statements Please XX-K refer factors more of our to our results. SEC risk filings, detailed and including Form that the our a XX-Qs, affect may for description turn obtained section to Luvleen the the from be or SEC Sidhu, Investor BM may Technologies of by this Relations website. At CEO. visiting will call Copies our over the I time, Luvleen?

Luvleen Sidhu

and Brian, Thanks, morning, good everyone.

on Jamie and going of Together, with an Joining growth on first for our is Technology Donahue, emphasis forward are the our call initiatives. you excited and me technology Asija, Officer. our and our strategy to and share reiterate Chief financials we Ajay CFO; transformation with today's our XXXX President quarter

financial financial have improvement to income Ajay We to about $X.X to first last improvement. significant took the over we the delivered months our million positive EBITDA. are year. show of a compared was million quarter of the last core team further the pleased last $XXX,XXX will of net This a XX% XX details through increase first first represents last quarter very the quarter of provide steps $X.X the compared increased year. Similarly, year, and that foundational results. the to quarter Revenue begun first $X.X million compared

interest coupled the to environment, high Durbin-exempt rate in a stabilized contributed with a at our new transfer partner our deposits revenue. to deposit rate pricing increased variable bank, level, However, of

P&L showing meaningfully These as lowered delivered improvements year as our Plan the Profit year-over-year last solid throughout initiatives revenue, margins profitability. higher is the expanding Additionally, structure. cost Enhancement and benefit evidenced introduced by we have

Education of The first quarter core quarter we of performance. We're EBITDA XXXX discussed results quarter about strategies will first progress, continue the represents our Jamie doubling lifetime further modernization happy as customer exciting executing fifth past innovation. The for the our remains over the efforts and remain and down growth that business same positions with for opportunity sequentially and future This discussed on increase customer-for-life are improved universities and in this to to new strategy. consecutive Higher value The to our recent is will with updates pursue quarters opportunity market and and delivering we've the BM opportunity on plan the our market on what only streams. to that contractual provide due relationships a colleges the company precursor available ripe our year, our on our unlock revenue country. of and to model growth. customer long-standing customer of distinctive we've unique the core across acquisition an statistics relationships, deepen customer Tech ample technology

believe results and more build provide review first We profitability. I to Ajay our done. overall student a customers marks profitability, with detail it banking and over improve beyond enhancing be capabilities will to quarter years. but not to and of are quarter and and upon technology aim to to customers the appeal to on stack student first technology hand a able to financial performance The that return now by long-term experience growth their growth context. continue we our we strategy, executing to financial in more drive foundation We in continue will user our that excellent the to

Ajay Asija

Thank you, Luvleen.

of first to new the the but to prior year. XX% quarter spend. Average from million up million XXXX, the processing $XXX operating under billion of driven up were with rate rates higher as due the $XX.X revenue $X.X for million higher in the to service fees revenue, by deposit of up compared from deposit $X.X an company and XX% Interchange first the quarter $X.X in million yields million quarter increase card XXXX of in $X.X Durbin-exempt million XX% interchange Servicing of compared compared quarter were and revenue million Servicing the quarter of variable service totaled for totaled to deposits the year. totaled agreement. Interchange change the the XXXX. banks $XXX primarily XXXX, quarter in first XXXX $X.X first $XX.X first XXXX million in of as the fourth the prior a fee prior and card for During for earned decrease year. overall partner

this university million $XXX quarter There totaled for $X,XXX fourth XXXX, March for million quarter from XX% were interest deposits year for up prior accounts $X.X of in in the to for the in accounts active XXXX, XXXX and approximately the accounts XXXX. our million attractive totaled our $XX,XXX Higher quarter first Average active the compared XXXX. Account $X,XXX spend XXXX, fees $X,XXX, quarter Annualized direct averaged BaaS of of of of the both our Higher compared of fees quarter per the XX% XXXX. Deposits within sensitivity BaaS up $X.X at active up within balance 'XX. Spend to at cohort was XX-day period. first active in our XX-day the quarter All slightly than 'XX portion first ago of vertical XXXX, BaaS vertical of in X and first with reduction first customer-driven $XXX quarter of for XX, new vertical debit million X.X% Education XXX,XXX and the were December sign-ups $XXX the for makes a rate account of of very the as due XX, approximately first per up occurred vertical. in quarter first of within year. our higher This Education vertical deposits million highly minimum quarter transactions our card and of large from those to averaged approximately a Spend users, of during the XXXX. first these $X,XXX accounts. the Education month, Higher both from

the remained of of Higher of refund clients. the operating XXXX. during for During and a costs billion, XX% from Of core first first last XXXX. a million million Education and XX, interest, retained a checking quarter $XX.X XX% Core to $X.X expenses the turnaround company amortization company disbursements aid capital of into working Vibe the core or its BankMobile quarter strong since for totaled amortization processed $X.X institutional XXXX. lower meaningfully million developed of net of from of first was approximately financial to income loss totaled $XX.X first amortization the Total the and plan. full from accounts. Core $XXX last XXXX, in the million over $X.X internally disbursed We XXXX, Liquidity of marked at portion the $X.X This year. a software $XX.X reduction the billion student in net first compensation in XXXX, taxes, million XXXX $XX.X EBITDA implementation onetime before and positive first first increase PEP EBITDA the the the of and decreased $XX.X substantial plan, million a of year. QX of $X.X comparing the first the incurred compared EBITDA depreciation QX of no reduction with quarter the quarter primarily in the our with expenses million XXXX, from first million was million of quarter result in cash, quarter lower expenses favorably quarter of $XXX,XXX XXXX, of the of to a core primarily March PEP implementation depreciation of from positive quarter was million negative loss the debt. share-based in expense. Core of $X.X our

of and the Jamie EBITDA to positive his that, start investments anticipate year PEP, I'd to on turn the strong over to XXXX and delivering year the for discussions the our Jamie? core call the with for we technology Given XXXX. And impact improvements. full like continued

James Donahue

Ajay, and Thank good you, morning.

on to last on way its is we our executing technology quarter, As transformation. shared well BMTX

We that enhance the quarter experience. have new BankMobile features exciting customers new are experiences with for launched and our we happy overall user our to web to announce Vibe mobile this

driven by and vision customers. offer our products modernize our to platform services was architecture and our transformation to innovative technology Our

clients. We are executing on new our exciting that for vision features and delivering

the take focus to over spending encourage engine rewards be Our few advantage of quarters students next banking to primary a main everyday behavior. add allow our will and their to

for deposit student direct account and looking flow linking will account changes population. funding. lifelong external BankMobile account also with that Vibe make to will All savings easy checking grow and the a these enhance feature-rich, are our We our

next during a their to value and fraud first It partnership product service time. I'm on enrollment is more us We've we pain we university to to working a to SaaS one that product X product. the schools to have student enable product Our over announce are our diversify with points, so several technology fraud. assists vulnerabilities signed pipeline truly service, a biggest platform have successfully integrate revenue is is excited new mitigates customers IDV. refund will we standpoint our easily can add our we the partners The process. clients launched or The enrollment strong date to launched verification with called disbursement XX of of identity beyond which have and from original over also product quarters. that universities over product clients and also our

sell stickiness few that our call education I a BMTX. executing want this doors automation to to Luvleen, relationships I before and but new lifetime over existing do, new the and update I machine will front are on on and our within of you to increases -- to turn opens excited the higher learning clients. In progress offering back minutes, We value

[ total automation We agents, overall bringing we've modules, share lower met that within our our with XX process have back to reduced we efficiency, that RPA more are last, automation to rates expenses. (sic) our production deployed robotic robotic office increased and since happy processing X ]

We agents XX,XXX just hours in this in were of example, handled and automated one since an saved these some AI ML has X,XXX of As cases application launch its alone. over intelligent January. estimate

executing on the functions across larger expanding quarters. the these working in are We organization coming

AI few fronts. to leveraging are on new a lab our addition In innovation we this,

clients frankly, our direct also leveraging API existing the in prospective activity is our large is tuned our language API and that predict available to first to legacy automate We've actively just being deeply and The production across ways. new platform. our in employs This and that meaningful proprietary built And to data was an fraudulent and set on portfolio. marketing not model trained.

I we morning. and believe we customers. Thank add account turn momentum and keeping makes close We support to this with work are Luvleen immense extremely are provide our hard forward dedication of closing questions, for will activity team the and of your life. to time you the impressive that this on the BankMobile -- support going. And answer answer technology some value that, I positive developing I will come Vibe talented assistant an help also proud amazing to that our back for with thought: detail thoughts. call over to this look

Luvleen Sidhu

you, Thank Jamie.

can about tell, lot the you opportunities amongst our trajectory of of that team a is leadership there As the our excitement lie and ahead. business

we is X an drive offer before. This our focused that never new enabler on now growth streams technology in to year, and to up tactics technology key have products positions are and that customers partnerships our Our revenue we place. we us opens could particularly

be Vibe student our First, QX. new our a for checking cash-back will rewards in account. engine launch This launching product

is which Second, signed we IDV clients for a have to launch This university our product X clients. our date. new product,

Third, marketing conversion to provide increase engagement. omnichannel funnel and personalized

that will improve X AI, advantages believe With revenues. these new increase better for attract with positioned efforts customers, help of are customers and we engagement focused micro the existing us our personalization. We

the created value revenue on side our our our to with to with and products one time, offering keep of on and increase the new unique side have student and a services goal provide marketplace also best is marketplace We Over customers each universities potential. to customers other. our

needs and based road map and will delivering. then and our customers' understanding go-forward listening be to Our wants on

about future we our We building. are and optimistic are what

now XXXX in step line direction. I will great our for quarter a the thank to call open on was future of we questions. want today, you joining for first us The our and

Operator

with Instructions] question [Operator first Pendy line from Your Greg of the comes Chardan.

Gregory Pendy

to puts sure big survey next not bump for raise education week your if be and year. be put increase What Fed the are of takes for you gain much supposed into business? a thinking -- couple this a people to next X.X% year uptick would momentum a what questions. That's the we starts the about it, noted value or Just for year, start expectations expectations or big a next but earlier increase. that to college this to I'm for should X% are if

James Donahue

nice to from you. Greg, Jamie. Yes. This is hear

the we what we think market-dominant a have is disbursements So position in business.

happens the Vibe anything boosts space that side, that output for accounts. signing and then of So up is more that that in the clients

So that's how we see it.

what what people funnel So on day. or customers. we it's it's team -- those is every we hard Vibe work the every laser-focused convert through how into to prospects The BankMobile call on

Gregory Pendy

thought in in on quarter. you'd there want Okay. Great. Any I provide to and And know like for this that from few it positive changed for that thing you notably put color EBITDA the core But outlook looks is you we of heard maintained your just days you year. core fluctuated, a rates ago. any -- then kind process? have EBITDA up positive has

Ajay Asija

Asija. Yes. It's Ajay

Let that me question. take

what so, business initiatives we So continued in ago talked Education consistent and month growth have a growth with Jamie or and you Higher about. the that several Luvleen we expect the told

So we're we're the but optimistic not this providing time. guidance at about a future,

Gregory Pendy

Okay. just from question, the losses and seeing provision final year-over-year then your operating Anything go XQ just into -- you're can then change? And Fair there? you one enough. just down for

Ajay Asija

Yes.

to it for provision as of operating was was primarily fraud related first as well. QX third-party up So last unauthorized down the It you losses related from were see, to can But transactions. from card quarter year.

Gregory Pendy

the take And initiatives -- on Okay. working it, Very that's that, helpful. announced? you you're with I

Ajay Asija

Yes.

Operator

Northland the Mike line Securities. Grondahl comes with of from question Next

Mike Grondahl

of the you're little a I in business. emphasis bit outlook is less deposits BaaS there on of kind new But the what couple your putting for know next quarters?

Ajay Asija

in a a down but there's of you has business. deposits, The -- for the BaaS meaningfully part, stabilized. runoff it's So bit is most It we bit -- as runoff still saw little business year, a were of last deposits the a the little the in mostly stabilized.

Mike Grondahl

could revenue the the you average maybe Good. model? And for feel like Got so you per kind revenue It the its business IDV it. of I signed. describe can a sounds clients know, X Got it. business? that model revenue we for have and just school, get don't

Luvleen Sidhu

level, aren't guidance on that this high about want But Yes, time, say providing product. Michael. At very we that. we're is at we excited what to the a

student at urgent why schools. And their a identified go SaaS have level of is mix the a We verification is annual refund disbursement, have fees model revenue there's high the seen that it's for enrollment of variable through actually where that pain model, recurring our is subscription the of as and the students point a multiples pipeline per because but the we reason also a beauty is cost process. so like

diversified so launch pipeline. a we're schools And these we it's us, to as more upon and stream share to the new and for really of more build continue excited revenue

Mike Grondahl

the recurring Got it. transactional And be? between the sort will any mix of cost the student per subscription guess what and

James Donahue

billion the identify of fraud universities enroll us as enrollment SaaS students -- fraud, play subscription this was CARES aware, space be There's mean, the that into really interesting you're a through dance. per This where as suspect there to side right? the our it's the to helps get see Mike, And top about right, the we funnel, is come offering, a subscription usage. was Yes. Because a it's that an gate, think of here. folks. and that then I at -- an $X value some the public so the would proposition Yes, I without that. is Jamie right, answer Act hit might hard.

So the side. the is on revenue subscription

wanted coming with that looking we felt model revenue. what you we for build as looks to SaaS the And share in outlined, contracts signed to when Luvleen models like. guys you're quarters strongly pretty the some think Just that you

Mike Grondahl

kind the -- Is Got an kind be signed would I of guess university they they up, all it process? just their do And it. to of want one the all... enrollees just of ID-verified? put Is select question. last they that Or a enrollees do through

James Donahue

outpace Yes. available, this, seats across great beauty applicants in our the far the right? a right, side, And The from It's question. that's, the spectrum.

all plan applicants the university the take right, different then state file that the is different a university enrollment as rules. So rules, from of push through mechanism. And they all private -- rules, and the screening have we

So them. our their that they provide make But we on scoring decisions it's based everyone. yes,

Mike Grondahl

could Got it. business. question, And the talk any ed Are environment changes last then just If the that. for you you higher there? seeing in competitive about

James Donahue

No.

directly. have you -- to as to nearly players have our valuable of value we've we're takes unique we fastest believe, and think universities, answer are off access we provides said out our service the -- that think to are no, -- a We proposition money still and out there. students. burden that a I The the we fastest a there gives

to both and themselves we as Vibe BankMobile described, sides, we're So think customers. on service universities to the Luvleen education providing real a our value higher

Operator

question next Tieton from Capital. comes Bill with the Dezellem of line Your

William Dezellem

down card not start which What first quarter, up in the changed? with in to being fourth XX% the and then but the Let's were switched interchange quarter. revenues, but up only

Ajay Asija

take that Bill. me Ajay here. Let question, It's over Asija

So up to Bank BPSA with a revenues the a and spend allows on higher primarily was revenue because as Durbin-exempt First the basis. the earn Carolina the card well. interchange Plus little us of interchange bit that were new

the are reasons. big So those X

William Dezellem

versus And case? why speaking versus have the the if is up guess, holiday was have seasonality $XXX QX mind, where a thinking was And my would so, spend been spend, million. Because driven of I'm was the quarter? fourth million spend the that up spend the the if higher. correct in -- would I this $XXX

James Donahue

Yes.

Jamie. Bill, So

that our in implemented technology of of year the refresh, added work our of of our we sign we prior: a -- which we as features marketing, some April. that some our of before ahead direct did think campaigns, we So the

So marketing in the campaigns stabilized -- has other of and to we flattened that added our we the believe thing, especially and some that. And higher that business. the we've to plus, is some legacy that runoff that higher tech and the out, of seen the drivers contributes think, on are number services being ed I

positive X those So are factors, signs. we think,

Luvleen Sidhu

Additionally, to peak. business, just I that, there's and there's in would a seasonality though, winter so add our

another seasonality similarly, So August to a tends students bump QX, beginning business. of And disbursement from it's that be October That a time. enrolled January, of -- kind refund our high-volume in is that QX, February. standpoint in through

William Dezellem

Right.

the going to to were And to required place? engine what's be going that be Okay. rewards that implementing, you then put into

James Donahue

Yes.

it's partnership a yes, lift So place. tech and a in which agreement, have we

so as pick is So with going we're it's to where of with a And cards, this program some seen enroll to -- the from. other and but right? rewards want debit you've incentivize the be generated in can card, they users credit this

So And really feature really, it's the we're request our surveys -- that of that us excited. #X cohort. tell it's

to the that excited impact experience. that, have primary really So to banking we're see will drive

William Dezellem

get say we'll when about, you can to pick, I'm choose want Safeway, at? So make referring And rewards this Kroger -- so, is I Jamie, less excited you they does and there? could the that they but so about, Or they retailers to care are that what mean what selection?

James Donahue

Yes, Bill, right on.

There for the that right part steer the on hit and that those rewards. our users are the nail signed our to get where individual have are of offering, You consortium they get up retailers head.

William Dezellem

it. Got

be you between anticipate to or revenue push asked questioner them those student subscription funnel? the subscription per per X then Which fees. larger, as do the And split verification the the about identity last the student and Okay. through you of

James Donahue

it side. specialized smaller is way Jamie see Bill. are So We some here, the that again, size, have The this it matters schools is university right? we on

the universities, them. we So believe, going -- for sizes. all a But fair the to that's We our on larger larger mix. obviously, larger be for it, funnel's that's priced

But So scenario. colleges, education trade the outpace cost numbers by subscription the per substantial and universities. again, service high unit we schools might a higher in of all that percentage universities,

So a we think it's mix.

William Dezellem

or more up then? But could you. would of fee, being the half per it pay cases, the applicant the applicant other the subscription some could piece be be revenue student per this the situations, than the in that in larger, larger ends where that So school

James Donahue

That's That's spot on. spot on.

William Dezellem

in you Okay. do is a take queue? I for helpful. time That And or me step shall have more to the couple back questions

Luvleen Sidhu

ahead. ahead, Go Bill. Go

William Dezellem

Yes.

Okay.

additional questions. X So

$X.X of First declined in million communications processing all, million expense technology the to $X.X from down the quarter. fourth and

couple sequentially. million-dollar So of led a decline What to that?

Luvleen Sidhu

mute. on you're Ajay,

James Donahue

mute. on you're Ajay,

Ajay Asija

I'm Asija. Bill, it's I apologize. Ajay sorry.

Let me that question. take

because were last had internally an that So the of and developed down expenses had X quarterly $X.X amortization, piece it amortized software million we to we in down quarter.

that that's of part largest category. in change the So the expense

William Dezellem

Great.

you're referenced line; your guess, and in magnitude. the opening and micro a opening -- I that reference time the number the, was to appreciate remarks, through then number that plan there about You Would the wanting two, plan? didn't remarks And accomplish personalization. about I one, just talk that you in really the and what

Luvleen Sidhu

phased the Braze Yes. at using us. customer right a the mining our been about year, approach with technology customers were understand new really there, picked. It's and data that marketing starting have created base haven't before, that a we team which partner that by the Bill, has And allows platform of we're industry-leading better. to the us Jamie our that top that with we the at we it's automation excited for is finding a partner we're platform which level accelerated coupled

and to haven't And that you a the third then data automation but just allows marketing the tools testing you much and new is do So us wasn't more level that plus certain at as for our very portfolio as marketing on to possible able level have well in messaging, be we students allows before. individual become tools historical focus which segment A/B leveraging granular can automation that marketing the to a not before. AI segments

high a that's So level, at Bill.

of types prepared of and individual now for able that we've tangible, kind that's might sort more we of more the message to to us we that allows that's some be those give technology But as exists at this, levels. engage examples. think execute, I how and

William Dezellem

those an efforts? accomplish with Luvleen, endgame what you are from perspective wanting to ultimately And

Luvleen Sidhu

that that when that conversion are them. goal important hypothesis type meeting unique a there's that able at customer at about understanding empathy the the you're the the and what's The understood. to the segment to individual, you is level of feel and There's end messaging, improves of in they Yes. engagement be personalization, because would level

hypothesis. So the that's

William Dezellem

have A's to Great. another through to transfer student And account Vibe student then the from Vibe B's lastly, account? do ability students student money to one

James Donahue

Yes, Bill. We're Vibe ourselves. move we've really is one enrollment for in the to in-house the solution. It's happy of only that's platform payment. new that peer-to-peer also a -- announce an aren't It for our encourages not enhancements written It's accounts. between homegrown software Vibe those but feature funds does let accounts

So somebody you accept cash then to enroll money and another have account one isn't that could it Vibe send and the them then a from to money. from

So excited that feature a as encourage about going to that's primary banking. we're really

William Dezellem

that. congratulations for And implementing Great.

James Donahue

Thank you, Bill.

Luvleen Sidhu

Bill. you, Thank

Operator

to turn over submitted back will now the I Please Brian take any webcast. on call Prenoveau ahead. the to questions go

Brian Prenoveau

Thank don't questions. any you. At this web-submitted see time, I

concluding some call So for Luvleen over to turn back the I remarks. will

Luvleen Sidhu

soon. a this you, we everyone, us quarter, one. for Thank Have look joining base to and Thank good Great. forward touching you.

Operator

and call. that all today's may Ladies you and disconnect. now Thank you for concludes joining, gentlemen,

BM (BMTX) 16 May 242024 Q1 Earnings call transcript