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MoneyGram Q4 2019 Report

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It`s way too early to make any conclusions about XRP, ODL etc. This is a highly risky investment, let`s wait another 5 years and see if we can hit 2-3 USD / XRP

Edited by Andy_79

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1 hour ago, nakedzzrp said:

Also no one mentioned that moneygram said volume will pretty much stay the same from Q1 throughout this year..wonder why nobody mentioned it here hmmm

Where did Moneygram mention they don't expect ODL volume to increase throughout 2020?  Everything Alex and Ripple have said and indicated thus far has suggested we should see incredible growth in ODL volume throughout the year as new corridors open and existing corridors continue to build liquidity.   We have already seen very black and white figures showing an increase from 3% to 7.5% and growing on remittences into Mexico in less than 2 months.  Given Moneygrams current financials it may take several more quarters or possibly a year or more of this incredible growth to manifest in sizable corporate profits.  Of course Ripple will be investing in the development of the ODL ecosystem and as an XRP holder I fully support them investing in this.  The flywheel is in motion.  There is an awful lot of noise and headwinds though.  

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15 hours ago, princesultan said:

This post makes no sense. 

MGI received 8.9m. This is not subject to r&d credits since they are receiving the money. 

Are you a CPA or a tax attorney? 

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2 hours ago, nakedzzrp said:

Ripple keeps paying moneygram just to force then to use odl, that is just sad.

Also no one mentioned that moneygram said volume will pretty much stay the same from Q1 throughout this year..wonder why nobody mentioned it here hmmm

Do you really think MGI would have used their own capital on something they might not have initially been all in on or not quite understood the benefits of, if any? This is where Ripple saw the potential to incentivize MGI's adoption via contribution as 10 percent owner. They knew MGI need cash and used their weakness in the market as a leveraging tool.

Furthermore, MGI can't arbitrarily decide on anything without first obtaining board approval from their members (controlling members) via the Operational Agreement (or whatever the name of that particular agreement is by and between the members).  

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7 hours ago, princesultan said:

Thanks for sharing and if true I retract my previous comments in this thread. 

It’s never done here,  but my practice in over 25 years of using forums is to go back and strikethrough or otherwise adjust my earlier post if I find I’ve been in error.  Generally with an explanatory note.  
 

The reason for this is so that anyone coming along later and not reading the whole thread through to the revelation of error does not walk away with incorrect information.

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2 minutes ago, Tinyaccount said:

It’s never done here,  but my practice in over 25 years of using forums is to go back and strikethrough or otherwise adjust my earlier post if I find I’ve been in error.  Generally with an explanatory note.  
 

The reason for this is so that anyone coming along later and not reading the whole thread through to the revelation of error does not walk away with incorrect information.

In the minutes, maybe up to an hour, after making a post I will make corrections to improve the grammar, strengthen the meaning and generally improve the content of what I want to say.  Personally I think this is beneficial, although I have to admit I am surprised others have not complained about my habit. 

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2 minutes ago, Julian_Williams said:

Personally I think this is beneficial, although I have to admit I am surprised others have not complained about my habit. 

Haha.  I’ve been assuming you were toning your initial responses down a bit because of intemperate language!   :) 

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8 hours ago, aavkk said:

Where did Moneygram mention they don't expect ODL volume to increase throughout 2020?  Everything Alex and Ripple have said and indicated thus far has suggested we should see incredible growth in ODL volume throughout the year as new corridors open and existing corridors continue to build liquidity.   We have already seen very black and white figures showing an increase from 3% to 7.5% and growing on remittences into Mexico in less than 2 months.  Given Moneygrams current financials it may take several more quarters or possibly a year or more of this incredible growth to manifest in sizable corporate profits.  Of course Ripple will be investing in the development of the ODL ecosystem and as an XRP holder I fully support them investing in this.  The flywheel is in motion.  There is an awful lot of noise and headwinds though.  

Listen to their Q&A. They said volume will not increase anymore this year, don't just hear what you wanna hear

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3 minutes ago, nakedzzrp said:

Listen to their Q&A. They said volume will not increase anymore this year, don't just hear what you wanna hear

Weren’t they talking about volume incentive payments, rather than volume itself? That is, the payments are not arithmetic and the volume increase anticipated would not unlock a proportionate incentive increase? I could be mistaken so don’t hesitate to correct me. 

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On 2/25/2020 at 9:40 AM, SquaryBone said:

He's referring to that investment, not extra payment.

I partly listened to the MGI call and I now am confused :) They're talking about a fee being paid for building those markets. Which seems separate from the investment in MGI.

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10 hours ago, ICookinBrine said:

Weren’t they talking about volume incentive payments, rather than volume itself? That is, the payments are not arithmetic and the volume increase anticipated would not unlock a proportionate incentive increase? I could be mistaken so don’t hesitate to correct me. 

I think so. As you said it yourself: 

Quote

Everything Alex and Ripple have said and indicated thus far has suggested we should see incredible growth in ODL volume throughout the year as new corridors open and existing corridors continue to build liquidity.

I think that's spot on. I didn't listen to every detail though so perhaps some others should listen to it too and pay extra attention to these points.

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Additional details from Moneygram's filings are below on the details of their relationship with Ripple. This gives more specific contours to everything previously diclosed, indicating that the market development fees are paid by Ripple in XRP and Moneygram liquidates the XRP, as the CEO has publicly said in the past:

Quote

Note 8

...

Intangibles — All of the Company’s intangible assets are included in “Other assets” in the Consolidated Balance Sheets. As of December 31, 2019, the Company had $6.2 million of cryptocurrency indefinite-lived intangible assets. This entire position was liquidated in the secondary market in January 2020.

...

 

Note 18

On June 17, 2019, the Company entered into a multiple element arrangement with Ripple consisting of two contracts: a securities purchase agreement (the “SPA”) and a commercial agreement. The commercial agreement is scheduled to expire on July 1, 2023.

Securities Purchase Agreement — Pursuant to the SPA, Ripple agreed to purchase and the Company agreed to issue up to $50.0 million of common stock and ten-year warrants to purchase common stock at $0.01 per underlying share of common stock (“Ripple Warrants”). Ripple purchased this common stock and the Ripple Warrants as follows:

• In connection with the execution of the SPA, Ripple purchased, and the Company issued, (i) 5,610,923 shares of common stock at a purchase price of $4.10 per share and (ii) a Ripple Warrant to purchase 1,706,151 shares of common stock at a per share reference purchase price of $4.10 per share of common stock underlying the Ripple Warrant, for an aggregate purchase price of $30.0 million. The Company incurred direct and incremental costs of $0.5 million related to this transaction.

• On November 22, 2019, the Company issued and sold to Ripple (i) 626,600 shares of common stock at a purchase price of $4.10 per share and (ii) a Ripple Warrant to purchase 4,251,449 shares of common stock at a per share reference price of $4.10 per share of common stock underlying the Ripple Warrant, exercisable at $0.01 per underlying share of common stock, for an aggregate purchase price of $20.0 million representing the remaining amount of common stock and warrants that Ripple agreed to purchase under the SPA. The proceeds from the issuance to Ripple, net of the direct incremental costs, are recorded in “Additional paid-in capital” with the corresponding par value of the common stock issued in “Common stock” on the Consolidated Balance Sheets as of December 31, 2019.

The Company evaluated the fair values of each element within the multiple element arrangement and determined that it was not necessary to allocate any proceeds from the SPA to the commercial agreement.

Commercial Agreement — In June 2019, we entered into a commercial agreement with Ripple to utilize Ripple’s ODL platform (formerly known as xRapid), as well as XRP, to facilitate cross-border non-U.S. dollar exchange settlements. The Company is compensated by Ripple in XRP for developing and bringing liquidity to foreign exchange markets, facilitated by the ODL platform, and providing a reliable level of foreign exchange trading activity. We refer to this compensation as market development fees.

The Company accounts for the XRP received as an indefinite-lived intangible asset, which is measured based on the fair market value of the XRP. Any future liquidation of such indefinite-lived intangible assets will result in capital gains or losses and will be recorded in “Occupancy, equipment and supplies” in the Consolidated Statement of Operations. See Note 8 — Goodwill and Intangible Assets for more information on the Company’s indefinite-lived intangible assets.

MoneyGram will recognize the XRP fees received from Ripple as vendor consideration, which will be presented as an offset to costs incurred to the vendor in “Transaction and operations support” in the Consolidated Statements of Operations. All activity related to the Ripple commercial agreement, including purchases and sales of XRP and consideration received in XRP, will be presented as part of operating activities in the Consolidated Statement of Cash Flows. Per the terms of the commercial agreement, the Company does not pay fees to Ripple for its usage of the ODL platform and there are no claw back or refund provisions.

Related party transactions are not necessarily indicative of an arm’s length transaction or comparable to a transaction that had been entered into with independent parties.

 

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