[BMTX] Summary of BM Tech. 2023Q1 Earning Call

BMTX participants

Brian Prenoveau - IR
Luvleen Sidhu - CEO
Jim Dullinger - CFO
Raj Singh - Co-CEO

Business Highlights

1. Cost-saving initiatives:

BM Technologies, Inc. (BMTX) reported achieving $7 million in annualized savings in Q1 2023, with a goal of achieving $15 million in annualized savings for the full year. The company is working on identifying and implementing operational efficiencies to lower costs, leveraging automation, technology enhancements, and data-driven decision-making to improve functionality and efficiency.

2. Growth opportunities:

BMTX is exploring Banking-as-a-Service (BaaS) as a growth opportunity, but they are only looking for deals that can be structured in a win-win way and are profitable. The company is focusing on their student business, which has a market of 5 million students, and is investing in unifying their technology platform, revamping their marketing, and launching a rewards-based loyalty program.

Financial Status:

1. Operating revenues:

BMTX reported operating revenues totaling $13.5 million in Q1 2023, despite the challenges faced by the company due to the volatile market conditions and regulatory changes.

2. Core operating expenses:

The company's core operating expenses totaled $15.4 million in Q1 2023, with a reduction in costs under the profit enhancement plan yielding approximately $7 million of anticipated annualized cost savings.

Overall, BM Technologies, Inc. is focused on improving operational efficiencies, exploring growth opportunities, and investing in their student business. The company is achieving cost savings and expects a margin improvement in Q2, with a return to growth in the second half of 2023. Despite the challenges faced by the company due to the volatile market conditions and regulatory changes, the company's operating revenues totaled $13.5 million, and its average service deposits totaled $1.2 billion, with a 16% increase in debit card spend from the previous quarter. The company is optimistic about its future growth and value creation for its shareholders.

Question and Answer

BM Technologies, Inc. (BMTX) reported on their 2023Q1 Earning Call that they are implementing a new data-driven decision-making process to improve operational efficiencies. The company is leveraging their access to a wealth of data to create operational efficiencies and better monetize their revenue. BMTX is exploring Banking-as-a-Service (BaaS) as a growth opportunity, but they are only looking for deals that can be structured in a win-win way and are profitable. The company is focusing on their student business, which has a market of 5 million students, and is investing in unifying their technology platform, revamping their marketing, and launching a rewards-based loyalty program.

BMTX reported a slight reduction in deposits from Q4 to Q1, but they expect stabilization by the end of the first half of 2023 and a return to growth in the second half of the year. The company achieved $7 million in annualized savings on their way to achieving $15 million in annualized savings for full year 2023. The majority of those costs are people-related costs, and the company is working with their partners and providers to initiate various procurement strategies to achieve further savings.

BMTX expects a 150 basis point improvement in margin beginning in Q2 across the entire portfolio, which is based on the current rate. They anticipate a return to growth in the second half of 2023, primarily within the higher education vertical. The company is not giving guidance on a quarterly basis for their operating expenses, but they reported $70 million in core operating expenses at 12/31/2022, and the goal is to see a $15 million reduction in that line item for the full year.

Overall, BMTX is focusing on improving operational efficiencies, exploring growth opportunities, and investing in their student business. They are achieving cost savings and expect a margin improvement in Q2, with a return to growth in the second half of 2023.BM Technologies, Inc. held its 2023Q1 Earning Call, where the company's presenters discussed the company's performance and future plans. The company's main focus is on facilitating deposits and banking services between customers and its partner bank, Customers Bank, through its fintech banking platform. The company offers digital banking and disbursement services to consumers and students through digital channels.

The company's CEO, Luvleen Sidhu, expressed excitement about the future and where the company is going. The company's CFO, Jim Dullinger, discussed the company's cost-saving initiatives, which are expected to achieve the remainder of the company's $15 million goal over the course of Q2 through the end of the year. He expects that roughly half of that would be achieved in the second half of the year. The company achieved $7 million in the first quarter from people initiatives, and there will be continued savings in Q2.

The company's Co-CEO, Raj Singh, discussed the ongoing regional bank crisis and its potential impact on the partnership with FCB. He stated that the company continues to have active dialogue with FCB on a weekly basis and that they remain optimistic based on the feedback and their current standing. He also discussed the company's plans to organically grow deposits after the First Carolina Bank partnership. The company has a variety of initiatives underway, including changing the way that its product technology platforms can be leveraged, adapting those products, leveraging marketing initiatives and communication channels, and integrating improved technology in terms of sign-ups and onboarding processes.

The company's CFO, Jim Dullinger, discussed the company's nonrecurring expenses and the drop in cash balance. He stated that there were nonrecurring cash outlays in Q1, including severance expenses and nonrecurring items related to working capital. He expects a close correlation between the improvement of core EBITDA and cash as the company continues throughout the remainder of 2023.

The company's CEO, Luvleen Sidhu, expressed appreciation for the continued support of investors and stated that the company is in a pivotal moment with a lot of excitement about the future and where the company is going.

In summary, BM Technologies, Inc. is focused on facilitating deposits and banking services through its fintech banking platform. The company is implementing cost-saving initiatives and expects to achieve the remainder of its $15 million goal over the course of Q2 through the end of the year. The company is also focused on organically growing deposits after the First Carolina Bank partnership through a variety of initiatives, including changing the way that its product technology platforms can be leveraged, adapting those products, leveraging marketing initiatives and communication channels, and integrating improved technology in terms of sign-ups and onboarding processes. The company experienced nonrecurring expenses in Q1, including severance expenses and nonrecurring items related to working capital, which led to a drop in cash balance. The company expects a close correlation between the improvement of core EBITDA and cash as the company continues throughout the remainder of 2023. The company's presenters expressed excitement about the future and where the company is going.