MoneyLion Continues to Play Winning Hand With Paycheck-to-Paycheck Consumers

The MoneyLion business model pivot continues. A year after posting substantial losses as a neobank, the financial services portal rode its new business model to a second straight profitable quarter as it announced its Q2 earnings Tuesday (Aug. 6).

As CEO Dee Choubey told Karen Webster, the middle-income, paycheck-to-paycheck consumer is fueling the company’s growth.

“Our clients on the consumer side are mostly middle income,” Choubey said. “They’re the firemen, the teachers, the cops, the gig economy workers. We are not as yet seeing a lot of job displacement in that segment. This is probably going to be the first white collar recession, and that’s going to potentially impact existing credit card books. But our risk selection technology is good and the demand from the essential workforce for our products is going up.”

MoneyLion is enjoying a successful pivot from a neobank to what is essentially a consumer and business financial services portal and shopping mall. Among the products its “essential” consumers are buying more of from the site and app: buy now, pay later, income advances, earned wage access, secured card products and short-term installment loans. What’s not moving yet: mortgages. However, Choubey expects business to increase if the Fed cuts prime rates as expected in September.

Q2 Earnings

Whatever Choubey and his team are doing is working. By the numbers, total revenues, net increased 23% to $130.8 million for the second quarter of 2024 compared to the second quarter of 2023, with a net income of $3.1 million for Q2 coming in the second versus a net loss of $27.7 million in the second quarter of 2023. Adjusted EBITDA was $18.5 million for the second quarter of 2024 versus $9.2 million in the second quarter of 2023.

Total customers grew 73% year-over-year to 17 million and total originations grew 40% to $770 million. The growth comes not only from the middle-income consumers Choubey referenced but from the ecosystem strategy that the company embarked on in mid-2023. That ecosystem will expand, he said. The company has launched a search tool on its site and is working on its checkout solution.

And speaking of search, one of the most interesting points of the conversation with Webster occurred when she asked Choubey if the Google antitrust decision could open some opportunities for his company as a customer acquisition and marketplace solution.

“We’re now building these web tools for any CMO that runs a financial institution, a bank, a lender … to actually think of MoneyLion as a channel,” he told Webster. “Just like they think of Google SEO as a channel.” He emphasized that the company’s teams are now optimizing bidding strategies and audience building on MoneyLion’s channel, similar to how they approach other major platforms.

Choubey also highlighted the company’s acquisition of Even Financial as a key component of this strategy, allowing MoneyLion to operate its own “walled garden” in the financial services ecosystem. This approach aims to provide a more precise and personalized experience for consumers seeking financial products, moving away from the “flea market” approach common in the industry.

Growth Drivers

Choubey outlined three main growth drivers for MoneyLion: increasing the number of suppliers (lead sources), expanding the consumer base, and broadening the range of financial product options available on the platform. The company reported that third-party products have eclipsed MoneyLion’s own offerings, accounting for 51% of products taken on their marketplace to date.

“We measure success by how many decisions a consumer’s making on our platform in a recurring manner over time,” Choubey stated, emphasizing the importance of user engagement and trust in the ecosystem.

Regarding MoneyLion’s banking strategy, Choubey presented a nuanced approach. “We don’t believe that we are the best banking solution for every American out there,” he said. Instead, MoneyLion positions itself as an “interface layer,” complementing existing banking relationships while serving as an first bank account for certain segments of the population.

The company is also making strides in implementing AI capabilities despite the challenges in the financial services sector. “It’s really hard to build GenAI capabilities in financial services,” Choubey noted, highlighting the importance of accuracy when dealing with people’s money. MoneyLion is working on integrating AI to provide personalized insights and recommendations based on users’ financial data.

Looking ahead, Choubey expressed confidence in MoneyLion’s long-term prospects, despite short-term stock market reactions that resulted in MoneyLion stock price taking a hit despite its successful earnings.

“Our team is doing such great work to ultimately get the essential workforce access to premium capabilities and insights that no one else is really creating for that universe,” he said. “It’s an important thing that we’re doing. And I think in the long run. I tweeted this today: In the short run, it’s a voting machine; in the long run it’s a weighing machine. I think we’re in a way pretty heavy in the long run.”

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