Jump to content
PunishmentOfLuxury

MoneyGram Q4 2019 Report

Recommended Posts

From the press release:

  • Total operating expenses were $311.0 million, an improvement of $21.1 million over the fourth quarter of 2018. This is an improvement of 6% from 2018's fourth quarter.
  • Net loss was $11.9 million compared with $12.5 million for the fourth quarter of 2018.
  • Adjusted EBITDA was $57.6 million compared with $60.0 million in the previous year's fourth quarter. Adjusted EBITDA margin improved to 17.8% from 17.4% in the fourth quarter of 2018.

In my view:

  • Revenue is a product of how a particular company operates today, meaning that it is essentially a trailing indicator.   Not much of a surprise on the revenue miss then since changing any ship's direction takes time.
  • Growing transaction volume in MGI's digital channel is a good sign and a solid leading indicator.
  • Reduced operating expenses and improved margins are a significant plus and could be first signs of ODL benefits in action.  If this pattern continues then MGI could return to profitability in the near future.

It's a mixed bag overall, however numbers seem to suggest that MGI's future will be brighter than their present.

TLDR - wait for the price to break through current support and buy the dip in the $1.xx range?

Share this post


Link to post
Share on other sites
34 minutes ago, automatic said:

From the press release:

  • Total operating expenses were $311.0 million, an improvement of $21.1 million over the fourth quarter of 2018. This is an improvement of 6% from 2018's fourth quarter.
  • Net loss was $11.9 million compared with $12.5 million for the fourth quarter of 2018.
  • Adjusted EBITDA was $57.6 million compared with $60.0 million in the previous year's fourth quarter. Adjusted EBITDA margin improved to 17.8% from 17.4% in the fourth quarter of 2018.

In my view:

  • Revenue is a product of how a particular company operates today, meaning that it is essentially a trailing indicator.   Not much of a surprise on the revenue miss then since changing any ship's direction takes time.
  • Growing transaction volume in MGI's digital channel is a good sign and a solid leading indicator.
  • Reduced operating expenses and improved margins are a significant plus and could be first signs of ODL benefits in action.  If this pattern continues then MGI could return to profitability in the near future.

It's a mixed bag overall, however numbers seem to suggest that MGI's future will be brighter than their present.

TLDR - wait for the price to break through current support and buy the dip in the $1.xx range?

If you look overall revenue was down as well for 4th quarter this year over last year. They had less operating expenses because they downsized, not really because they got more efficient.

Share this post


Link to post
Share on other sites
  • Revenue was $323.7 million, a decline of 6% from the fourth quarter 2018
  • Net loss was $11.9 million

Another quarter of revenue decline.  Another quarter of losses.  Stock is down -14% today to $2.20 from an ATH of $284 showing no signs of recovering.  I still believe this whole MoneyGram investment was to hype and pump.  

Share this post


Link to post
Share on other sites
9 hours ago, PunishmentOfLuxury said:

I hate to say this, but this subsidy paints a picture of ODL not being able to pay its own way (save money for the company that uses it), YET.

Although I cautiously agree with you, if you look at the prior 2 quarterly reports, the Ripple reimbursement was higher. So you might infer that, as ODL is ramping up, the cost is slowly dropping.  Also note, that the most significant ODL increases happened in Q1 of this year so the next report should be interesting.

 

Still, though, there is always that concern that Ripple is idealistic and willing to burn through all the free money we have been gratiously providing them over the years to get this dead horse to dance.

Share this post


Link to post
Share on other sites
50 minutes ago, Archbob said:

If you look overall revenue was down as well for 4th quarter this year over last year. They had less operating expenses because they downsized, not really because they got more efficient.

Source?

 

The "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS" tables at the bottom show that "Compensation and benefits" increased from Q4 2018 to Q4 2019. The "Transaction and operations support" dropped

Share this post


Link to post
Share on other sites
7 minutes ago, xiaoipower said:

Source?

 

The "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS" tables at the bottom show that "Compensation and benefits" increased from Q4 2018 to Q4 2019. The "Transaction and operations support" dropped

https://www.prnewswire.com/news-releases/moneygram-international-reports-fourth-quarter-and-full-year-2019-financial-results-301010328.html

 

Revenue was $323.7 million, a decline of 6% from the fourth quarter 2018. Revenue excludes $8.9 million of benefit from Ripple, which will be accounted for as a contra expense rather than revenue based on a recent consultation with the Securities and Exchange Commission.

Share this post


Link to post
Share on other sites
33 minutes ago, Julian_Williams said:

I saw somewhere, maybe Crypto Eri (?), that Western Unions last quarterly figures were dire. 

ODL is a tiny fraction of Moneygram transactions, so savings are unlikely to figure prominently for a while

They weren't great, but they were still profitable.

Share this post


Link to post
Share on other sites
1 hour ago, Archbob said:

https://www.prnewswire.com/news-releases/moneygram-international-reports-fourth-quarter-and-full-year-2019-financial-results-301010328.html

 

Revenue was $323.7 million, a decline of 6% from the fourth quarter 2018. Revenue excludes $8.9 million of benefit from Ripple, which will be accounted for as a contra expense rather than revenue based on a recent consultation with the Securities and Exchange Commission.

What exactly does the SEC and Ripple Labs, Inc. have to do with a reimbursement expense by MGI (it's noted as a reimbursement on MGI's financials)? There are no securities handled by licensing software by Company A to Company B. The only difference, and this isn't uncommon, is that Company A is paying the operating expense (this usually means foregoing the licensing fee and providing free support) for Company B until the desired result or condition has been met so that Company B will have a better chance of utilizing the software from Company A. The end goal is for a revenue generating licensing agreement for x months/years/month-to-month. 

Share this post


Link to post
Share on other sites
3 minutes ago, princesultan said:

The main point here is that ripple actually paid MoneyGram $8.9m. They shouldn't be paying money if the solution is working. 

Couple that with the fact that ripple bought a 10% stake in MGI at an above market price just to get their foot in the door. 

Ya... Real good...

First off, who is "they" and how do we know the software is or isn't working as desired this early in the game? You can't put a time frame on software adoption, especially when Ripple is most likely getting feedback from MGI so that the software can work for the client. The client might want the software to be built out to fit their unique operational capabilities, and that takes a lot of man hours by Ripple developers (any software developer) to make happen.

Lastly, no one knows what is in the Contribution or Purchase and Sale Agreement (whatever the title of that particular document is) by and between Ripple Labs, Inc. and MGI/other interested Parties. These Agreements are quite large when you have multiple members and some members have voting rights and others might not. Owning 10 percent of a company as large as MGI doesn't give you a lot of room to request anything other than receiving dividends, if any, or other disbursements, whatever they may be.  Therefore, I would assume what is the governing document is the licensing agreement for the Software, which is pointless to speculate on because that is protected by a confidentiality clause between the Parties. 

Share this post


Link to post
Share on other sites
1 hour ago, princesultan said:

Couple that with the fact that ripple bought a 10% stake in MGI at an above market price just to get their foot in the door. 

I finally got the HTML file to work on EDGARS. Ripple Labs, Inc. purchased 6,237,523 shares of common stock at $4.10 on 11/22/19 (see Table 1 and Table 2 of Form 4). 

EDGARS

https://www.sec.gov/Archives/edgar/data/1273931/000120919119058039/xslF345X03/doc4.xml

Edited by Panzer_Kitteh
Finally got the HTML file to work on EDGARS

Share this post


Link to post
Share on other sites
3 hours ago, princesultan said:

The main point here is that ripple actually paid MoneyGram $8.9m.

I may not fully understand, but they re-allocated the 8.9M and 2.3M from revenue to contra. This would mean that the money wasn't pocketed by MG directly, right?

Share this post


Link to post
Share on other sites
Just now, aye-epp said:

I may not fully understand, but they re-allocated the 8.9M and 2.3M from revenue to contra. This would mean that the money wasn't pocketed by MG directly, right?

Contra expense is a financial statement classification. Instead of classifying the 8.9m as revenues, they reduced the related revenue account by 8.9m. It's purely classification. The point is, MGI received 8.9m from ripple last quarter. Whether it was classified as revenue or a reduction of their expenses makes no difference to us. We should be concerned about the fact that ripple had to pay them money, likely because ODL resulted in efficiencies that cost MGI money

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...