Good afternoon. My name is Mike and I'll be your conference operator today. At this time, I would like to welcome everyone to Mogo's First Quarter 2020 Earnings Conference Call.

Please note that today's call contains forward-looking statements that are based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially from those projected. The Company undertakes no obligation to update these statements except as required by law.

Information about these risks and uncertainties is included in Mogo's press release for Q1, as well as its periodic filings with regulators in Canada and the United States. Also, today's discussion will include adjusted financial measures, which are non-IFRS measures.

They should be considered as a supplement to and not a substitute for IFRS financial measures. Finally, I would note that all amounts discussed today are in Canadian dollars unless otherwise indicated. With that, I'll turn the call over to David Feller. Please go ahead..

Thank you. Good afternoon and welcome to Mogo's first quarter 2020 results conference call. I'm joined today by Greg Feller, President and CFO. There's a presentation link available on our investor site for you to follow along. Firstly, I just wanted to thank all our team members for all their dedication and hard work during these challenging times.

We've made difficult decisions and significant adjustments to our business, and I couldn't be happier with how our team has handled it. Unlike our typical earnings call, today's discussion will be more focused on the actions we've taken, both financially and strategically in response to the COVID-19 pandemic and the resulting economic impact.

We're happy to go into other areas during the Q&A session. In March, we took a critical look at our roadmap and decided to quickly reprioritize and refocus our strategy for 2020.

We've always taken pride in being a responsive business, and this environment causes us to significantly rethink our strategy and product roadmap to align with reality of fewer resources, but also to better position us to take advantage of a long-term growth opportunity given the impact that these unprecedented times will have.

Our three key strategic imperatives are summarized here. One, we move forward with a leaner business model, we've made significant changes including cutting our quarterly costs in half from Q4. Greg will walk you through this in more detail. Two, we believe financial health is more important than ever.

And our new roadmap is designed to leverage our existing products and dramatically enhance our value proposition to take advantage of this new growth opportunity. And three, we are establishing a new revenue channel capitalizing on demand we see from partners for referrals.

We believe we have a big opportunity to create a meaningful new revenue channel that aligns well with our enhanced value proposition. One of the things that we've been pleased with is how well our lending has performed. We've been an online consumer lending for 17 years, and we believe it's a great business.

That said, we've acknowledged that this has not been the most appealing part of the Mogo story for many investors because of the credit risk and the concerns that how this part of the business would perform in a challenging market.

As you will see in the data we are sharing today, this environment really highlights how our portfolio composed of smaller-dollar loans with high affordability can perform well even in the most challenging times. If you look across the consumer lending industry, you are seeing deferrals at 20% to 50% while we're only at about 5% today.

The portfolio we have today is a high yielding, high margin, and drives reoccurring revenue. These loans also have a high attachment rate to our premium offerings.

We continue to believe our lending experience, our digital lending platform and years of data is key differentiator to other fintechs, both in terms of our value proposition and perhaps most importantly, a strong economic model, something that is lacking in many of the other fintechs.

This is not an easy business to get into and we think will continue to be important and valuable part of a model. Over the last few months, we've been hyper-focused on cost cutting, including stopping originations and marketing spend and managing our loan book.

With much of that behind us, we are now turning to what we see as a tremendous growth opportunity. We believe that one of the clear outcomes of this current environment is realization of the importance of financial health, and, it's the acceleration of the secular shift that presents a long-term growth opportunity for Mogo.

Pre-COVID, there was already a financial health crisis given the majority of Canadians were in debt, but given the environment including strong employment, many just didn't have the urgency to make it a priority. Now, many are saying, never again, and want to make financial health a priority.

As a result, digital financial health is now going to be mission-critical for millions. There's no question that financial health is more relevant than ever, but perhaps more importantly is making it accessible to everyone.

So with that in mind, we took a look at our strategy and our product roadmap, and our goal is to not only make our solutions more accessible, but also have a roadmap that was simpler and easier to execute on.

Democratizing financial health is not only about a digital first solution that anyone can access anywhere, but it's about making it simpler than ever to make smarter decisions. One of the other things that sometimes prevents everyone from accessing a solution is costs and nothing makes it more affordable than free.

In line with this, we are making changes to several of our products. Without question, the most important part of solving the financial health problem comes down to helping people get better control of their spending.

There's a direct link to consumer debt and credit cards, and we believe consumers will increasingly be looking for simple ways to control their spending.

There's also a broader trend of mindful consumerism that's rising and people are looking for solutions that not only help them achieve their personal financial goals, but also help them make a positive impact on society and the planet.

MogoSpend was designed to not only help you be more mindful of your spending, so you could spend less, but also offset your carbon footprint. And it's the only card in Canada that does this, and importantly, with no fees. As part of our goal to create a more financially sustainable model, we also decided to eliminate cash back.

This will not only enable us to continue to offer the card for free, but turn it into a product that can drive profitable revenue growth without the need to convert these members into any other products in order to be profitable. Importantly, it also is designed to work alongside your bank account.

So unlike other cards that are trying to get you to move everything to them, our strategy is to simplify this and make this your spending account. For those, with access to Visa Direct, which is currently available at three of the five banks, users can to not only transfer instantly with the few clicks, but can also set up automated deposits.

We're in the process of removing cash back now and we expect to have this product fully rolled out in Q3. The good news is that, most of the heavy lifting and development work on this product has already been done.

We've always felt that MogoProtect was a product that every Canadian should have, and while we have built a decent customer base, the majority of consumers is not something they feel they can afford to pay for.

So, we're now planning on making this product completely free and expect this will become a material driver of new member growth, and importantly, after member growth. In Canada, the majority of these solutions typically charge between $15 and $20 a month.

MogoProtect will be the only one that's completely free with identity fraud rates up exponentially over the last few years and recent stats showing close to 40% of claims have high anxiety around this. The opportunity is significant.

Although, we will be sacrificing some revenue from current active Protect customers, we believe the increased revenue from loans and our new referrals will more than offset this overtime. MogoCrypto has continued to be a solid growth product for us, but we believe there's still a lot of opportunity here.

We're eliminating trading fees and we'll be one of the only companies in Canada offering free funding, free withdrawals, and free trading for Bitcoin. Although not a primary focus for us, this offering is very similar to Square's Cash App in the U.S.

They like us have a few products including a prepaid Visa Card and Bitcoin, and it has become an important and complementary part of their offering. We were the pioneers of free credit score in Canada, and it continues to be an important driver of member growth activity.

But from a competitive perspective, we have fallen behind as there are now a few solutions that offer full credit report as well. Your credit report is what gives you the details of what drives your score, including your current loans, mortgages and other accounts reported to bureaus.

Our plan is to bring this into the account alongside credit score later this year. There is no incremental cost to it as this is something we're already paying for. Full credit report has proven to be a great product for long-term retention and engagement and fintechs like Credit Karma then monetize through referrals for other financial products.

This will also become part of our monetization strategy, which we'll touch on shortly; as we get back to the focus on growth and beginning to market our new value proposition, having a low cost channel to get the word out will be key, our free product strategy is also designed to help drive a more scalable and cost effective customer acquisition strategy for our loans as well.

Performance marketing will be part of this, but we increasingly believe that our free value proposition will also drive a good ROI from a marketing perspective. Postmedia continues to be a key strategic partner that we believe will pay dividends with our new free offering and another key strategic advantage over others.

One of the most important evolutions in our strategies is the development of a new referral partner revenue model.

Our previous strategy has always been focused on a fully integrated solution, but we now feel that adding referrals makes a lot of sense, not only is it a much faster way to bring in partners, but the cost and resources needed to implement are a fraction of a fully integrated solution.

So for example, instead of bringing it into, in a savings account into the app, through our new referral model, we will begin by actively promoting a savings account through a selective partner where we earn a referral fee.

With over a million members we have a massively under monetized member base, as we have been primarily focused on subprime loan conversions. Yet one of the largest segments of members we have is actually in the prime category.

So again, our new strategy will be to focus not only on growing active members with a more compelling value proposition, but also on focusing, expanding the ways we have to monetize with the additional referral partners and relate to financial products like insurance, savings, et cetera.

Another thing that drove us to this new direction is inbound requests for referrals. The cost to acquire customers for many financial products has recently increased and therefore companies are looking to expand the referral channel, and that is typically a lot less than traditional advertising, including performance channel.

Again, there are many examples of this model being successful in our space Credit Karma in Canada, revenues then becomes a formula based on active members, the more active members, the more opportunities for conversions or referrals. To be clear this doesn't mean that we're not going to ever create another integrative product.

This referral model will give us exposure and experience with more products and we will continue to evaluate which ones make the most sense ultimately bring into the account. But for now, this is where the focus will be.

In summary, we believe the combined value proposition of this free offering along with monetization through on balance sheet loans, partner loans, interchange on card and referral will become a stronger model for profitable growth. With that, I'll turn the call over to Greg.

Greg?.

Thanks Dave. Given the combination of the current environment, as well as the sale of our liquid both in the middle of Q1 and the significant cost cutting we've done post quarter, I'm going to focus my comments and what's happening real-time in the current second quarter versus reviewing Q1 results.

Our press release and a financial summary, and we find the full statements in MD&A on... on Cedar. It's been a very active several months with the Company we took quick and decisive action navigate both the near-term economic uncertainty as well as create a leaner more efficient cost structure that better positions our business for the long-term.

I'm going to focus my discussion today around these financial model highlights.

One, how the flexibility of our models allowed it to quickly move from investment mode into cash flow generation mode; two, the strong performance of our loan book; three, how we have recently decreased our leverage and cost of capital; and four, how we are expanding the monetization opportunities of remodel.

Given our revenue scale, we've always talked about having multiple dials and levers we can use to manage our cash flow, including the amount of origination activity and the level of cash OpEx spend.

Specifically, as it relates to our OpEx, these dials include adjusting level of growth-related spend we're doing as well as the variable spend, which includes performance related marketing as well as ongoing variable expense items that are driven by overall volume levels.

As you heard from Dave, we did a lot of the heavy lifting on the development side over the last few years, building out our app, developing the card product and digital spending account, developing a partner lending platform, which includes the announced going to partnership.

This is allowed us to reduce our level investment in this area while minimizing the direct impact for existing products.

Separately, we also felt was important for management to participate in sharing the pain by agreeing to temporary salary reductions, which included 40% salary reduction for me and our CEO, 20% for the rest of our senior management team, and 5% to 15% of the majority of our remain salaried employees.

We are very grateful and proud of our team and the belief and commitment they have in Mogo in our mission of helping Canadians get in control of their finances.

Separately, we also decided early on when COVID-19 hit that temporarily paused our loan origination, which includes pausing performance spend, which generated about 30% of our overall OpEx savings.

With these changes, we've reduced cash operating expenses by approximately 47% in Q2, as compared to Q4 from 10.7 million to an estimated 5.7 million in the second quarter.

The most significant savings are being driven by reductions headcount including natural attrition both temporary and permanently often some of the temporary salary reductions I spoke about. To-date, we have seen a reduction in headcount for 40%, of which 40% have become permanent.

We have also been able to negotiate a number of additional non-personnel related savings from a number of our vendors. Given the economic deterioration in recent months, we continue to get questions related to our loan book.

We expressed cautious optimism, when we talked in March and that's been reinforced by strong performance of our loan portfolio in Q1 in the first two months of Q2.

As Dave mentioned, we've been an online consumer lending for more than 15 years and have always believed this portfolio made up of small-dollar loans with low regular payments would be resilient during this extremely challenging times. This has proved out so far.

Specifically, we provided under 5% of our loan customers with some form of relief, including reduced interest and deferred payments, with less than half roughly 2% currently still on release. In April and May, we have seen a decrease in the rate of customer defaults relative to Q1 to record low default rates for these loans.

We've also seen higher than normal loan repayments in the second quarter, average monthly customer repayments on our line of credit product has increased over 30% relative to the first quarter. We think it's helpful to understand the profile of our loan portfolio, which we believe helps explain why it's in resilient.

This is a highly diversified portfolio composed of small-dollar lines of credit with an average balance of roughly $1,500 per loan, an average payment of $50 make your loans high on the affordability index, which we believe is a critical factor during times of financial stress.

A 100% of our loans are set up for digital payments and approximately 88% used loans are set up with multiple payments per month that more closely coincide with our customers pay cycles.

55% of our customers have loan extra insurance with a purchase a time loan granted, the insurance is applicable in a number of scenarios can cover their loan payments for up to six months, and potentially more.

While the portfolio performance has been solid under IFRF-9 is required that forward-looking macroeconomic and indicators be considered in developing the provision for future losses.

So as a result of the current uncertain economic environment, a loan loss provision in the first quarter was approximately 1.2 million higher than it otherwise would have been. In addition to a lower cost structure, we move forward with a substantially improved balance sheet and lower costs stable capital structure.

Four recent initiatives have driven this improvement. This includes the sale of illiquid books to go easy, reducing our credit exposure by approximately 32 million or about 32%.

The subsequent payoff of one of our two credit facilities outstanding, reducing our total credit facilities outstanding the 45 million at the end of Q1, down from 77 million at year-end. This also generates roughly 900,000 per quarter in interest savings.

The increase of our remaining credit facility is 60 million which included reduced interest rate of up to 400 basis points in the extension of the maturity date to July 2022. Lastly, in May, we amended our $12.5 million convertible debentures and extended the maturity date by two years to May 2022 as well as reduce the conversion price.

At quarter end, we had cash and investments for an investment portfolio totaling 25.5 million. Like many businesses we're in a period where liquidity is at a premium, with all the initiatives I just outlined along with the resiliency of our loan portfolio, the net effect is that we now expect to dramatic sequential increase in our cash flow.

Specifically, we now expect to generate 5 million to 6 million of cash flow from operations, net of investing activities during the second quarter of 2020, a roughly $9 million to $10 million positive swing from the first quarter, again, clearly demonstrating the power and flexibility of our financial model.

Our expectation is that much of this operating cash flow will be directed towards the reduction of the credit facility further deleveraging our balance sheet. As Dave highlighted, we've had to take steps to manage through these uncertain times. We are not simply playing defense however.

In particular, we will continue to make investments in new products and expand our ability to monetize our large member base. This includes four specific growth drivers. One, once, we see market condition stabilized, we plan to slowly resume on balance sheet lending of our low dollar high yielding loans.

Access to responsible credit solutions remains one of the pillars of financial health. And we have deep capabilities in data as well as the most convenient mobile-first loan experience in Canada. And this is a highly profitable product for us. Two, we will also continue to focus on growing our partner lending revenue.

Three, we plan to roll out new products like MogoSpend in the third quarter with the value proposition adjustments we have made including eliminating cash back, this now becomes a profitable product for us as we scale.

And for our goal is to bring in new revenue streams from referrals and products that our members are asking for, but which we don't currently offer. We expect to get a referral program off the ground in the second half of this year.

In summary, it's clear that financial health is more important than ever with consumers increasingly desperate for easy and affordable mobile-first digital solutions to help them achieve their financial goals.

We believe that these trends, which are only accelerating play to Mogo's strength including our unique platform value proposition in the Canadian market, which we plan to take advantage of over the coming quarters.

Lastly, I would like to echo David's earlier sentiment, a huge thank you to our team for the dedication and resilience they have shown during these challenging times. With that, we will open up the call to questions operator..

[Operator Instructions] Your first question comes from Nikhil Thadani from Mackie Research Capital..

So, I wanted to go back to your comment about the Q-on-Q savings and the cash flows, the $9 million to $10 million swings, that's been impressive.

Could you maybe just walk us through the components off that and how you get to that point? I guess 5 million is coming from the cash OpEx savings, and maybe if you could give us a walk us through the moving parts there? And second part of that, what part of the cash OpEx savings might be permanent once we pass through this crisis in terms of commercial real estate and things of that sort?.

Yes, thanks, Nikhil. So, yes, the cash flow, the significant change in cash flow from cash used to material cash generation in the second quarter versus first quarter is really a component of a number of factors.

The two biggest ones are the substantial reduction in OpEx and cash OpEx, $5 million that we've talked about loss, about one and -- just under $1.5 million of capitalized interest expense, which was also cash savings over the first quarter.

And then, the other piece is effectively a combination of pausing originations in the second quarter, so effectively, reducing the amount of basically eliminating the cash that actually we're investing in growing the loan book.

And as I mentioned in my remarks, we've actually not only have we seen a decrease in default, but we've seen an acceleration in increase in full principal pay downs.

So, the combination of pausing with continued strong performance on our existing books, the significant cash OpEx and interest savings along with principal pay downs is driving the big swing in overall cash flow. As it relates to ongoing savings, once we're through this, the vast majority of these savings I would say are within our control.

And so again, those are levers that we control. The variable expenses related to marketing spend, which is somewhere in the vicinity of $1.5 million a quarter in the past, that as we get start ramping back up. You're going to see that number go up, but we're going to be, pretty judicious and prudent about how quickly that ramps up.

And then, we're going to continue to assess based on the demand, what costs and resources that we believe we need to keep longer-term. But again, importantly, those are going to be well within our control.

I would say that, the vast majority of the same that we're seeing, outside of the variable ones, definitely are going to be driving a permanent overall reduction and a material overall reduction in our overhead, so positioning us for operating leverage going forward. We're not looking to get back to our historical quarterly spend.

We've really taken this as an opportunity to streamline the Company, focus on our core business, obviously making some decisions to really sort of push out growth investments.

And like anything once you start, just like the consumer, they're sitting at home, focused on their budget and finding ways to save money, they didn't realize they could save before, companies are doing the same thing and we're no different..

Got it. And in terms of the 5% deferrals that you've been offering to your customers versus some of the industry data of 20% to 50% that you spoke about.

How does that compare to the default rates back in '07, '09 at that point in the cycle back then?.

To be totally honest, it's actually hard for us to compare it, given the mix of our portfolio, is that vastly different now. I would say, look, one of the things we have said is even during those periods, our loan book remained profitable, even during historical periods of economic stress.

I mean our general view is the economic stress and environment we're seeing today, is unprecedented.

And so, we were -- although we were optimistic and, and have always believed, that we've got a, a loan book and that the book that we're keeping on our balance sheet, low dollar amount, high affordability, we've always believed in the customer base that we're serving as well. We've always believed, would be resilient to the downturn.

We've actually seen defaults actually go to record low. We're not suggesting those stay at record low. But the bottom line is we continue to believe that, the area that we are focused on on our balance sheet is a very attractive risk adjusted return portfolio. And right now, we think that the, our performances is clearly highlighting that.

Obviously that's been a question for investors for a long time, what would happen to, you know, our, our book, in a downturn. And so, we think this is an opportunity, to prove out, what we've been saying for awhile..

How should we think about the debit card cash back and the MogoProtect fees? On a cash basis, are those two roughly the equivalent and maybe just help us understand the thinking behind that decision of bit more?.

Yes.

Dave, you want to take that?.

Sure, maybe just to clarify the question, the thinking behind the elimination of the cash back..

Yes, that's right..

Yes, I mean, I think the -- when obviously, when all this stuff happened, we took a look at everything and one of the primary goals too, just kind of sustainability and profitable growth. We always knew that offering cash back on the card was aggressive, although, essentially it was the interchange that we're offering.

Ultimately, the profitability model there would depend on how many of those card users you manage to really kind of convert over into other products, including loans and referrals.

By eliminating the cash back, we think that not only do we still have a significant compelling value proposition, but it obviously makes that card product, a sustainable product on its own. That is a product that, as it scales, it should drive meaningful, profitable contribution margin, whether or not those customers convert into anything else.

So, it's just a more profitable model. But at the same time, feeling like the focus on controlling your spending, keeping it free the carbon offset, along with the rest of our combined value proposition, you that add in free protect pre credit score with full, full credit report, free Bitcoin.

All of these as part of that kind of holistic, value proposition we think is, is still obviously very differentiated, very compelling in the market. Um, and quite frankly, a lot more profitable than if we were going to offer this the cash back. So, that's why we decided to move to eliminating the cash back.

And at the same time when we took a look at MogoProtect, we just believed that, you know, this is a product that quite frankly, we could see 10 times, 20 times what, we're, what we're currently seeing, if this is a free product and not something that anybody, once they signed up for many would, would basically churn once you have it, you're probably want to keep it.

There's no reason you wouldn't have it. Obviously it gives you a reason to download the app, become an engaged member. It would be the only product like this in Canada.

And again gives us, you know, a lot of opportunity to then kind of monetize those members as they're coming in for their free product with, with essentially a low customer acquisition costs, monetize them into whether through referral, whether it's card, whether it's loans.

So it all kind of ties together that referral model is going to be an important part. As I said, up until now, we've been primarily focused on really trying to convert people into subprime loans. Even though, a large segment of our member bases, actually prime consumers. So those five consumers we really weren't trying to monetize.

And now we're going to be able to monetize both in these referral programs as well as things like MogoSpend itself..

The other thing I would just add to that is that pre-COVID, everybody that uses our card loans the value and the ability to control the spending and they start to see the value of that.

And but it does require you actually starting to use it sort of pre-COVID when, as we say the majority of consumer were more focused on accumulating Aeroplan Miles and the credit card. You needed -- we felt we needed to offer more incentives to get consumers over to try it like cash back.

We think the mindset is clearly shifting a post-COVID world, where everybody is increasingly focused on their spend their budget and their finances in order. Every consumer out there has seen the credit card bill dropped dramatically during this period.

And the vast majority of them are saying, as things open back up, I don't want my spend to go back to the level of was that. And by the way, I need to spend less save more. So we think, consumers are really sort of desperate for a solution like this.

So part of that change is also just recognizing that I think consumers are probably more open and ready for that solution today than they were before..

And just one last thing before I cross the line, in terms of the referral model some new products. Did you see the timeline to launch that was sometime in Q3? Thanks, guys..

We're saying that we expect to get that model going in the second half of the year..

And your next question comes from Suthan Sukumar from Eight Capital..

My first question here is on, obviously, the evident -- the resilience in your loan base, that's clearly evident here. In the press release, you guys voted 2% of your customers have only 4% of required some sort of intervention. That's down from the 5% you guys talked about him in your COVID update.

Can you kind of speak to some of the factors behind that improvement that you're seeing now?.

Yes. So, the 5% is really a cumulative. And so, the majority of relief measures that we're giving were temporary. So, a lot of those temporary ones have rolled off and the customers back on a regular payment schedule.

So, I think some of the dynamics to think about, I mean, you -- I think what happened was, when initially hit and people were panicked, a lot of people started requesting relief before they actually necessarily knew, if they needed it. And so, that's why I think you sort of saw a spike earlier.

And then, A, as people get a handle on kind of what their status is? Do they need it? Do they not need it? And we, as a lot of people sort of roll off the relief that that number naturally comes down, unless there's other reasons, new reasons for that number two to increase.

Again, obviously government programs out there have helped the consumer a lot. Our average consumer is making about $50,000 a year. And that's really that everyday Canadian that a lot of the government support areas are focused on. So, we think that that's also helping our overall performance as well.

Look, if you're making $200,000 a year and you lost your job, even all the government support that's out there isn't going to make a material dent in your sort of employee income cash flow. And so, you wind up having much bigger challenges to manage your commitments in that kind of scenario..

Right. Okay, great. Thanks that makes sense. My second question is on crypto. You guys touched on some commentary on the crypto segment in your opening remarks. It sounds like you're saying some higher engagements on your platform as a result of the offering.

Can you touch on some of the trends that you've seen with respect to new user acquisition, as kind of post the quarter from crypto? And what conversion kind of looks like it uses into your other offerings?.

Sure. It's Dave. I would say on the crypto side, quite frankly in the last, say, two months, we really haven't at all focused on crypto at all, quite frankly. I mean, from a marketing perspective and customer acquisition we've just had our kind of known offering out there in the marketplace.

And quite right now, for example, we're through posts; we're marketing essentially mostly credit score. We actually have not gone out there and really marketed anything around Bitcoin. It's something that most people are just finding out, I'd say through kind of word of mouth.

And we typically are seeing a continued increase in the percent of new members that are signing up that are activating their Bitcoin account and buying Bitcoin. And as I mentioned, similar to I think the square cash app in the U.S. definitely this is not a main focus of ours. We're not obviously an exchange.

We're only offering Bitcoin, but we definitely believe that if there is a correlation between member that activates Bitcoin and then the level of activity of that member, many of our members that are buying Bitcoin, it's their first time. So they haven't necessarily ever purchased Bitcoin or owned it before.

So kind of the decision to move to take away the fees, it already wasn't that meaningful of an impact, but ultimately we increasingly our focus on what are those things that really can help drive that kind of viral word of mouth. NPS score net promoter score is something that we're really focused on as well.

And we do believe that there's a correlation between somebody who signs up for a mobile account, activates a crypto gets Bitcoin, that actually impacts our overall experience with Mogo, even though they didn't necessarily sign up just for Bitcoin. So, we're really kind of, I'd say, leveraging it for in that way.

And our hope is that we're going to move forward with this in Q3. Some point in Q3, those fees will be taken away and then that value proposition would be enhanced.

And again continue to leverage it mostly for engagement from our member base and hopefully viral kind of word of mouth, but not necessarily a product that we're actually going to go out there and spend money on marketing..

Okay. Thanks. That's helpful. And last one from you guys regarding the deferral model.

Is the plan here to be working with maybe select strategic partners today? Or is the vision here to really build some sort of broader marketplace type model? And the follow-up is, how do you anticipate the monetization of work? Will these transactions to be done on a revenue share basis? Is there an affiliate model or some combination of all the above?.

Yes, I mean, I'd say the model that we're looking at initially is again, we're being strategic in terms of the partners that we're looking at. As I mentioned, what we've seen is; A, we've always had inbound, but we're seeing increasing inbounds from companies saying, hey, we would love to be able to get referrals from you guys.

One of the things I think increasingly companies are realizing is, for example, if you're a secured lender and you're looking to offer say a secured loan for those people that own a home looking to buy, basically do debt consolidation, they have some equity in their home, they don't necessarily qualify for a traditional line of credit, maybe they have a challenged credit score.

There's companies like that are obviously around. They go out there and they're doing direct-to-consumer marketing TV, et cetera. And increasingly, it's expensive to acquire those customers, given that these customers are already customers somewhere else, including Mogo.

So, and, obviously for most consumers, they really don't want to go somewhere else to open a new account. They're really looking for something that is already kind of related to where they are. That really is, I would say the Credit Karma model, right, that referral model that you talked about.

But what we're doing is we're essentially looking at our member base, really analyzing our member base. And what do we think those most relevant products based on that member base is, that we initially want to start with. So for example, there can be obviously a high interest rate savings account.

That would be a product that we've never monetized anything related to that before. Secured loans, as I mentioned insurance, but we're really kind of spending some time right now to kind of really analyzing, where do we think we have the best opportunity based on our member base, based on the level of engagement from those members.

And then, we're already having a whole bunch of partner discussions. Most of these are typically a referral as in you signed up and you might get anywhere from $50 to a couple hundred dollars for an application. But some might actually be for you essentially do it if they convert and then you get a bigger fee.

So, no decisions have been made on there, but we're kind of exploring all those different scenarios. And then essentially, we'll have an internal team that is essentially just focused on mining our member database and continue to look for those opportunities to make sure that, we're bringing the right products to the right people. So, it's relevant.

Obviously, you don't want to be marketing your product to a member that clearly isn't a relevant solution for them, but we expect that as early as Q3 will begin to start doing some referral partnerships..

[Operator Instructions] There are no further questions at this time. I will turn the call back over to the presenters..

Okay. Well, thanks again for everybody for your time today. We appreciate the support. We look forward to updating you after our next quarterly earnings call. Thanks..

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect..