BM Technologies, Inc. (BMTX)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 marked a return to profitability: operating revenue rose 21% year over year to $16.18M, diluted EPS was $0.06, and core EBITDA turned positive at $1.4M, the fifth consecutive quarter of core EBITDA improvement .
• Operating expenses fell 21% YoY to $15.53M, driven by PEP cost actions and lower amortization; liquidity remained strong with $14.6M cash, $4.8M working capital, and no debt .
• Management reiterated expectation of positive core EBITDA for FY 2024, but declined to provide broader guidance; interest-rate sensitivity remains high (≈$2M revenue impact per 25 bps change) .
• Near-term catalysts: Durbin-exempt interchange uplift (implemented with First Carolina Bank), Q2 launch of a cash-back rewards engine, and commercial traction for the new IDV SaaS product (9 clients signed, >50 in pipeline) .

What Went Well and What Went Wrong

• What Went Well

  • Positive core EBITDA ($1.4M) and net income ($0.748M) on 21% revenue growth; “Revenue increased 21%... and we delivered $1.4 million of positive core EBITDA” .
  • Durbin-exempt interchange and variable-rate servicing drove revenue uplift; servicing fees up 35% YoY and interchange up 15% YoY .
  • Technology transformation delivered: new mobile/web launched, 10 RPA modules saving ~5,000 hours, AI innovation lab and proprietary LLM now in use .

• What Went Wrong

  • Provision for operating losses increased YoY due to third-party fraud in unauthorized card transactions (though improved sequentially vs Q4) .
  • BaaS deposits remained pressured; management noted stabilization but still modest runoff ahead .
  • No comprehensive FY revenue/margin guidance; management reaffirmed core EBITDA positivity but withheld broader outlook given macro and rate sensitivity .

Financial Results

YoY comparables:

Revenue components:

KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Revenue increased 21% compared to the first quarter last year, and we delivered $1.4 million of positive core EBITDA… the transfer of deposits to our new Durbin-exempt partner bank, coupled with variable rate deposit pricing… contributed to our increased revenue.” – Luvleen Sidhu .
• “Servicing fee... up 35%… Interchange and card revenue were up 15% driven primarily by the change in partner banks with Durbin-exempt interchange rates and higher overall spend.” – Ajay Asija .
• “We have launched our new mobile and web experiences… add a rewards engine… enhance direct deposit flow… launched [IDV]… signed 9 clients… pipeline of over 50 schools.” – James Donahue .
• “Liquidity remained strong… $14.6 million of cash, $4.8 million of working capital and no debt… we anticipate delivering positive core EBITDA for the full year 2024.” – Ajay Asija .

Q&A Highlights

• Interest rates: For every 25 bps Fed funds change, revenue shifts ≈$2M; core EBITDA outlook for FY 2024 unchanged despite rate fluctuations .
• BaaS deposits: Stabilized after meaningful declines in 2023; modest continued runoff expected .
• Fraud losses: Year-over-year increase tied to unauthorized card transactions; sequential improvement vs Q4 .
• IDV monetization: SaaS-like subscription plus per-student transactional pricing; mix depends on university size; management withheld revenue guidance pending more deployments .
• Rewards engine: Launch in Q2; customers can select retailers for rewards; expected to drive primary banking behavior .

Estimates Context

Wall Street consensus EPS and revenue estimates via S&P Global were unavailable for BMTX due to a missing Capital IQ mapping, so estimate comparisons could not be performed. Note: S&P Global consensus data was not retrievable during this analysis.

Key Takeaways for Investors

• The quarter delivered a clean inflection to profitability with positive net income and core EBITDA on 21% YoY revenue growth; the PEP cost program and Durbin-exempt economics are flowing through the P&L .
• Interchange uplift and variable-rate servicing fees materially support margins; adds resilience if rate cuts are shallower than feared, but sensitivity remains high (≈$2M per 25 bps) .
• Execution on product road map (Q2 rewards engine) and IDV SaaS traction are incremental revenue streams that should enhance engagement/retention and diversify beyond disbursements .
• BaaS deposit runoff appears to have stabilized, reducing a 2023 headwind; growth emphasis remains on Higher Education where BMTX is structurally advantaged .
• Operational discipline persists: operating expenses down 21% YoY, cash of $14.6M, no debt; positive full-year core EBITDA targeted, with limited forward guidance otherwise .
• Watch fraud mitigation (provision up YoY) and internal control remediation (material weakness targeted for resolution by end-2024) as critical execution areas .
• Near-term trading catalysts: confirmation of Q2 rewards engine launch, IDV contract wins beyond 9, and continued interchange/servicing fee momentum; risk lens should include macro rate path and fraud trends .