Sign in

You're signed outSign in or to get full access.

BT

BM Technologies, Inc. (BMTX)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 operating revenue was $14.1M, down 2% year over year and up 12% sequentially; GAAP net loss widened to $(5.0)M with diluted EPS of $(0.42), reflecting an “Other loss” of $0.95M and continued cost pressure .
  • Interchange and card revenue rose 30% YoY to $3.0M, benefiting from Durbin‑exempt interchange rates following the higher education deposit transfer to First Carolina Bank completed in Dec 2023 .
  • Core EBITDA loss deteriorated to $(2.1)M with margin at (15)%, from $(0.9)M and (7)% in Q2, driven by higher technology/processing and provision for operating losses; liquidity remained solid with $11.2M cash and no debt .
  • Strategic catalyst: the company entered into a definitive agreement to be acquired by First Carolina Bank for $5.00 per share (approx. $67M equity value), a 55% premium to the 10/24/24 close; closing expected in Q1 2025 subject to approvals .
  • Wall Street S&P Global consensus estimates were unavailable for Q3 2024; no company numeric guidance was issued in Q3, though prior Q2 commentary expected 2024 revenue growth and positive Core EBITDA .

What Went Well and What Went Wrong

What Went Well

  • Durbin‑exempt interchange uplift: Interchange and card revenue increased 30% YoY to $2.99M, confirming the benefit post‑deposit transfer to FCB; management previously estimated a ~$4.4M annual uplift at the then‑current HE spend run‑rate .
  • Higher Education resilience: University fees rose 21% YoY to $1.71M, retention remained 99%, and FAR disbursements were $3.9B in Q3, signaling strong seasonal activity and engagement .
  • Strategic exit/value realization: Agreed sale to FCB at $5.00 per share with a 55% premium; CEO emphasized enhanced services for BMTX and FCB customers post‑close: “This transaction not only delivers a significant premium to our stockholders but will also bring enhanced banking services and technology…” .

What Went Wrong

  • Revenue mix and fee pressure: Servicing fees fell 13% YoY to $7.56M and account fees declined 13% YoY, offsetting interchange growth, weighing on total revenue .
  • Profitability deterioration: Core EBITDA margin fell to (15)% from (7)% in Q2; GAAP operating expenses rose sequentially to $18.2M, with provision for operating losses of $2.65M and an “Other loss” of $0.95M impacting GAAP results .
  • BaaS contraction: BaaS ending deposits decreased 36% YoY to $230M and debit POS spend fell 11% YoY, consistent with management’s view that the BaaS relationship is unprofitable and may be wound down after Feb 2025 .

Financial Results

MetricQ3 2023Q2 2024Q3 2024Consensus (S&P Global)
Total GAAP Operating Revenue ($USD Millions)$14.381 $12.541 $14.077 N/A (S&P Global consensus unavailable)
GAAP Net Income (Loss) ($USD Millions)$(3.952) $(4.831) $(4.995) N/A (S&P Global consensus unavailable)
Diluted EPS ($USD)$(0.34) $(0.41) $(0.42) N/A (S&P Global consensus unavailable)
Core EBITDA (Loss) ($USD Millions)$(0.789) $(0.881) $(2.081) N/A (S&P Global consensus unavailable)
Core EBITDA Margin (%)(5)% (7)% (15)% N/A (S&P Global consensus unavailable)

Segment/Revenue Composition

Revenue Line ($USD Thousands)Q3 2023Q2 2024Q3 2024
Interchange and card revenue2,292 2,284 2,990
Servicing fees8,658 6,874 7,557
Account fees1,931 1,805 1,680
University fees1,412 1,469 1,712
Other revenue88 109 138
Total GAAP Operating Revenue14,381 12,541 14,077

KPIs

KPIQ3 2023Q2 2024Q3 2024
Debit card POS spend – Higher Education ($USD Millions)567 472 511
Debit card POS spend – BaaS ($USD Millions)171 158 152
Total POS spend ($USD Millions)737 631 663
Total Ending Deposits ($USD Millions)994 642 820
Total Average Deposits ($USD Millions)853 685 708
Higher Education retention (%)99% 99% 99%
FAR disbursement amount ($USD Billions)$3.6B $1.9B $3.9B
Organic deposits – Higher Education ($USD Millions)411 366 353

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance (Q3)Change
RevenueFY 2024“Anticipates revenue growth in 2024” No numeric guidance reiterated in Q3; press release focused on acquisition and reported YTD revenue of $42.8M (+6% YoY) .Not updated; qualitative outlook unchanged
Core EBITDAFY 2024“Expects a positive Core EBITDA in 2024” No explicit reiteration in Q3; Core EBITDA (Loss) in Q3 was $(2.1)M .Not updated; execution risk elevated
BaaS contribution2024–2025Relationship expires Feb 2025; wind‑down expected to increase pro‑forma Core EBITDA ≥$1M/quarter .BaaS KPIs continued to contract in Q3; no new quantitative guidance .Maintained directional commentary

Earnings Call Themes & Trends

Note: A Q3 2024 earnings call transcript was not available in our corpus; themes are synthesized from Q2 and Q4 materials and the Q3 press release.

TopicPrevious Mentions (Q4 2023 and Q2 2024)Current Period (Q3 2024)Trend
Durbin‑exempt interchange upliftTransfer to FCB expected to add ~20 bps and ~$4.4M annualized at HE spend levels . Q2 interchange +57% YoY to $2.28M .Interchange $2.99M (+30% YoY), reinforcing benefit .Improving
Technology/NextGen platformModernization plan to unify platforms and reduce costs .Continued execution; higher technology/processing expense; NextGen costs peaked in Q2 .Execution ongoing; near‑term cost drag
New products (Rewards engine, IDV)Rewards engine launched; 15 IDV sales YTD; expected to drive engagement and reduce fraud .No quantitative update in Q3; HE engagement metrics strong .Building pipeline; limited Q3 visibility
BaaS portfolioUnprofitable under current environment; potential wind‑down post‑Feb 2025 .BaaS deposits and spend down YoY; contraction continues .Contracting
M&A/StrategicNone prior.Definitive agreement to be acquired by FCB for $5.00 per share; Q1 2025 expected close .New strategic path
Regulatory/legalStandard risk disclosures .Merger‑related regulatory/closing risks outlined .Heightened transaction risk disclosures

Management Commentary

  • “We are excited to announce this transaction with our partner bank, First Carolina... This transaction not only delivers a significant premium to our stockholders but will also bring enhanced banking services and technology to all current BMTX customers as well as current and future FCB customers.” — Luvleen Sidhu, Chair, CEO and Founder .
  • “Our technology transformation is driven by our vision to modernize our platform architecture and offer innovative products and services to our customers... We have added a rewards engine... Our next product launch is targeted before the end of the year and will provide our students with financial, insurance, and wellness benefits.” — Jamie Donahue, President & CTO .
  • Liquidity posture: “Liquidity remained strong... $11.2 million of cash and no debt.” — Q3 press release .

Q&A Highlights

  • No Q3 2024 earnings call transcript was found; therefore, Q&A themes and any guidance clarifications are unavailable in our source set [SearchDocuments returned none].

Estimates Context

  • S&P Global consensus data for BMTX (Q3 2024 revenue and EPS) was unavailable due to missing CIQ mapping; as a result, beat/miss versus consensus cannot be assessed in this recap. Values retrieved from S&P Global were unavailable for this issuer in our tools.

Key Takeaways for Investors

  • Revenue mix continues to shift toward interchange, aided by Durbin‑exempt rates; however, servicing and account fees remain under pressure, tempering total revenue growth .
  • Profitability worsened sequentially with Core EBITDA margin at (15)%; provisions for operating losses and technology/processing costs remain key drags near term .
  • Higher Education business is resilient: 99% retention, strong FAR disbursements ($3.9B), and seasonal uptick in POS spend; organic deposits moderated, suggesting room to deepen primary banking behavior .
  • BaaS is shrinking and likely to be de‑emphasized; management previously indicated a wind‑down could improve Core EBITDA by ≥$1M per quarter post‑Feb 2025 .
  • Strategic outcome likely caps near‑term trading around the $5.00 take‑out price contingent on deal closure; focus shifts to merger approvals and timing risks cited in filings .
  • With consensus unavailable, estimate revisions are uncertain; near‑term narrative hinges on integration planning, cost control, and durability of interchange uplift .
  • Cash of $11.2M and no debt provide operational flexibility through transaction closing; watch for any merger‑related costs and changes in expense trajectory .