Business Overview
MoneyLion Inc. (ML) is a digital ecosystem for consumer finance that is powering the next generation of personalized products, content, and marketplace technology. The company's mission is to give everyone the power to make their best financial decisions, and it has built a comprehensive platform that bridges the financial literacy and access gaps for American consumers.
MoneyLion operates in two key business segments: Consumer Business and Enterprise Business. The Consumer Business generates revenue from products and services such as RoarMoney Banking, Instacash, Membership Programs, MoneyLion Investing, and MoneyLion Crypto. The Enterprise Business generates revenue from services including Consumer Marketplace, Enterprise Marketplace, Media Services, and Finance Receivable Servicing.
The company is subject to various regulatory examinations and investigations by state agencies, which have and may continue to result in findings or recommendations that require the company to provide refunds to customers or modify its internal controls and/or business practices. On September 29, 2022, the Consumer Financial Protection Bureau (CFPB) initiated a civil action against the company, alleging violations of the Military Lending Act and the Consumer Financial Protection Act. MoneyLion believes the CFPB's claims are meritless and is vigorously defending against the lawsuit.
Additionally, on July 21, 2023, the former equity owners of MALKA, a company acquired by MoneyLion, brought a civil action against the company alleging, among other things, breaches of the acquisition agreement. MoneyLion believes the former owners' claims are meritless and has filed counterclaims against them. The company has also been subject to a civil action brought by certain former holders of its Series A Preferred Stock, which was dismissed by the court in May 2024.
History and Milestones
Founded in 2013, MoneyLion was created to address the financial wellness gap in America by bridging the financial literacy and financial access gaps. In its early years, the company focused on developing its core products and services, including its RoarMoney banking product, Instacash earned wage access, and a suite of personal finance tools and content. Initially, MoneyLion faced challenges in gaining traction and scale as a new fintech startup, but steadily built out its customer base and product offerings.
A significant milestone in MoneyLion's history was the 2021 business combination with Fusion Acquisition Corp., which took the company public. This move provided additional capital and resources to accelerate MoneyLion's growth. Following this, the company expanded its platform to include a robust enterprise business, offering embedded finance solutions and marketplace services to partners.
Throughout its journey, MoneyLion has faced regulatory scrutiny and legal challenges. Most notably, in 2022, the company was subject to a lawsuit filed by the Consumer Financial Protection Bureau. Despite these challenges, MoneyLion has continued to operate and grow its business, demonstrating resilience in the face of adversity.
As of 2023, MoneyLion reported having 12.1 million total customers and offering over 20 million total products, showcasing the significant scale it has achieved since its founding. This growth trajectory continued, and by the end of Q3 2024, the company had amassed an impressive 18.7 million total customers, up 54% year-over-year, with these customers consuming a staggering 30.7 million total products on the platform.
Key Strategy
The "30-60-90" Strategy
The key to MoneyLion's success lies in its "30-60-90" strategy, which highlights the company's ability to generate revenue through multiple customer acquisition channels and product offerings. The "30" represents the broad distribution network of channel partners that drive new customer acquisition, the "60" represents the company's high-margin first-party products, and the "90" represents the consumer marketplace, where MoneyLion earns revenue from third-party product offerings.
Financial Performance
This multi-pronged approach has allowed MoneyLion to maintain a healthy financial profile, even in the face of macroeconomic headwinds. In the third quarter of 2024, the company reported record revenue of $135 million, up 23% year-over-year, and adjusted EBITDA of $24 million, representing an impressive 18% margin.
Financials
MoneyLion's financial performance has been further bolstered by its strategic initiatives in the enterprise space. The company has been rapidly expanding its network of enterprise partners, which now stands at over 1,200 organizations, including financial institutions, product providers, and affiliate partners. This ecosystem allows MoneyLion to leverage its data-driven insights and technological capabilities to match consumers with personalized financial solutions, driving revenue growth and enhancing the overall customer experience.
For the fiscal year 2023, MoneyLion reported revenue of $423.43 million and a net loss of $45.25 million. The company generated operating cash flow (OCF) of $116.35 million and free cash flow (FCF) of $110.34 million in the same period.
In the most recent quarter (Q3 2024), MoneyLion reported revenue of $135.47 million, representing a 23% year-over-year growth. The net loss for the quarter was $2.79 million. The company generated strong cash flows, with OCF of $60.34 million and FCF of $56.95 million for the quarter.
The increase in revenue was primarily driven by a 33.5% increase in banking revenue, which was partially offset by an 8.3% decrease in membership subscription revenue. The rise in banking revenue was attributed to higher fee income related to Instacash advances.
MoneyLion primarily operates in the United States and does not disclose performance by geographic markets.
Liquidity
As of September 30, 2024, MoneyLion's liquidity position remained strong. The company had a cash balance of $111.94 million and a debt-to-equity ratio of 0.74. MoneyLion has access to two credit facilities: an $80 million ROAR 1 SPV Credit Facility and a $100 million ROAR 2 SPV Credit Facility for funding consumer receivables. As of September 30, 2024, the outstanding balances on these facilities were $42.9 million and $64.5 million, respectively.
The company's current ratio and quick ratio both stood at 6.49 as of September 30, 2024, indicating a strong ability to meet short-term obligations.
Recent Developments
One of the company's most recent and exciting developments is the launch of MoneyLion Checkout, a groundbreaking marketplace solution that allows consumers to search, apply for, and complete financial transactions across numerous third-party products, all within the unified MoneyLion platform. This innovation is poised to disrupt the traditional financial product shopping experience, improving conversion rates and revenue per lead for MoneyLion's enterprise partners.
MoneyLion continues to track several key metrics to evaluate its business performance. As of September 30, 2024, the company had 18.7 million Total Customers and 30.7 million Total Products. The company's network of Enterprise Partners grew to 1,270, comprising 622 Product Partners and 648 Channel Partners. For the three months ended September 30, 2024, MoneyLion had $776 million in Total Originations, which includes the dollar volume of secured personal loans originated and Instacash advances funded.
Challenges and Competition
Despite the company's impressive growth and innovation, MoneyLion is not without its challenges. The fintech industry is highly competitive, and the company faces competition from traditional banks, credit unions, non-bank digital providers, specialty finance companies, and other digital financial platforms. Additionally, the regulatory environment surrounding financial services continues to evolve, requiring MoneyLion to maintain a robust compliance and risk management framework.
Future Outlook
MoneyLion's strong track record of execution, coupled with its innovative technology and data-driven insights, positions the company well to navigate these challenges and continue its ascent as a leading player in the consumer finance ecosystem. The company's recent guidance for the fourth quarter of 2024, which calls for revenue growth of 34% year-over-year and an adjusted EBITDA margin of up to 17.9%, further underscores its momentum and the confidence it has in its ability to deliver sustained financial performance.
For Q4 2024, MoneyLion expects revenue between $149 million to $154 million, representing 32% to 36% year-over-year growth. At the midpoint, this represents 34% year-over-year growth, up from 23% growth in Q3 2024. The company also expects adjusted EBITDA of $22 million to $27 million for Q4 2024, representing an adjusted EBITDA margin between 14.1% to 17.9%.
For the full year of 2024, MoneyLion has revised its guidance upward. The company now expects revenue between $536 million to $541 million, representing 27% to 28% year-over-year growth. This is an improvement from their prior guidance of 25% growth. Additionally, MoneyLion expects adjusted EBITDA of $88 million to $93 million for the full year, representing an adjusted EBITDA margin of approximately 16.3% to 17.4%. At the midpoint, this represents an adjusted EBITDA margin of 16.8%, up from their prior guidance of 15.8%.
In conclusion, MoneyLion Inc. (ML) is a financial technology company that has firmly established itself as a disruptive force in the consumer finance industry. With its comprehensive platform, data-driven insights, and innovative product offerings, the company is well-positioned to capitalize on the growing demand for personalized financial solutions and continue its trajectory of rapid growth and profitability.