BM Technologies, Inc. (NYSE:BMTX) recently held its Q2 2024 Earnings Call on August 15, 2024, at 9:00 AM ET. The call featured key executives, including Luvleen Sidhu, Co-Founder, Chairman, and CEO, Ajay Asija, CFO, and James Donahue, President and CTO. The company reported operating revenues of 12.5 million for the quarter and highlighted the growth in Interchange and card revenue, which increased by 57% year-over-year.
Technology Transformation and Growth Initiatives
One of the key highlights of the earnings call was the company’s focus on digital transformation and growth initiatives. BM Technologies completed its technology platform transformation, introducing a cutting-edge microservice architecture platform. This transformation enables the company to bring new products and services to market at an industry-leading pace. The platform also allows for the offering of targeted products and services to student customers in a compliant manner.
The launch of the cash back rewards engine was a significant milestone for BM Technologies. This feature, introduced in July, allows customers to earn cash back on everyday debit purchases. The response to this new feature has been positive, with over $20,000 in cash back value returned to customers within the first 12 months. Additionally, customers using the cash back feature are swiping on average one more time per month compared to typical active account customers.
Furthermore, BM Technologies saw strong demand for its Identity Verification (IDV) product, launched in the first quarter. The IDV product is a Software-as-a-Service offering that helps universities mitigate fraud vulnerabilities during the student enrollment process. The company has signed on 15 universities for this product year-to-date and has a robust pipeline for future sales.
Financial Performance and Outlook
In terms of financial performance, BM Technologies reported operating revenues of 12.5 million for the second quarter of 2024. Interchange and card revenue saw a significant increase of 57% year-over-year, driven by the change to a Durbin-exempt bank. While servicing fees were down due to lower average service deposits, the company retained over 99% of its Higher Education and institutional clients.
The company processed over 1.9 billion in student financial refund disbursements during the quarter, with approximately 12% dispersed into BankMobile Vibe checking accounts. Despite the seasonally weak second quarter, BM Technologies remains confident in delivering positive core EBITDA for the full year 2024.
Technology Investments and Innovation
BM Technologies also provided insights into its technology investments and innovations during the earnings call. The company launched a new platform architecture that serves as the foundation for its web and mobile interface for BankMobile Vibe customers. This investment allows for seamless integration of best-of-breed partners into products and services.
Two new features were highlighted during the call, including the cash back rewards engine and the IDV solution. The cash back rewards engine, in partnership with Card, has seen strong adoption rates among customers, with a 30% sign-up rate and an increase of 1.4 transactions per month for users. The IDV solution, aimed at universities, provides enriched identity information to inform business rules for student enrollment applications.
Additionally, BM Technologies is piloting new AI and machine learning technologies to enhance customer service and operational efficiency. The company aims to leverage these technologies to provide real-time assistance to customers and reduce operational costs in the call center.
Strategic Initiatives and Future Growth
Looking ahead, BM Technologies outlined its strategic initiatives for driving growth and usage in student accounts. The company plans to launch additional value-enhancing products and features for customers, including financial, insurance, and wellness benefits. These offerings are expected to further enhance the marketplace for both universities and student customers.
BM Technologies is focused on offering value-added products and services to colleges and universities, with a strong pipeline for the IDV product and future offerings. The company aims to leverage its unique marketplace position to deepen customer relationships, increase customer lifetime value, and unlock new revenue streams.
In conclusion, BM Technologies remains optimistic about its future growth prospects, with a strong focus on digital transformation, technology investments, and innovative product offerings. The company’s commitment to enhancing the customer experience and driving operational efficiency positions it well for continued success in the higher education market and beyond.
