Orion Digital Corp. ($ORIO)

Good afternoon, ladies and gentlemen, and welcome to the Orion Digital Corp. Q4 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 12, 2026. I would now like to turn the conference over to Craig Armitage, Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Just a few quick notes before we get started. Today's call will contain forward-looking statements that are based on current assumptions and subject to risks and uncertainties. These 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 the risks and uncertainties are included in Orion Digital's Q4 and year-end filings as well as periodic filings with regulators in Canada and the United States, which you can find on SEDAR+, on EDGAR and you can also access via the Orion Digital Investor Relations website. Lastly, today's session will include several adjusted financial measures or non-IFRS measures. Please consider these as a supplement to, and not as a substitute for, the IFRS measures. You will see that we've included reconciliations to those in the press release and in the investor deck. Last point I'd make is the investor deck is also available for downloading on the IR website. With that, I'll turn it over to Dave Feller. Please go ahead, Dave.

Thanks, Craig, and thank you for joining today. I'm also joined today by our President and CFO, Greg Feller. Q4 was a solid quarter, led by Wealth, with AUM growing by 70% year-over-year and revenue up 32% to $14.5 million. And when combined with Payments, the segment generated $24.4 million, up 27% year-over-year. Equally important is the quality of the revenue mix. Subscription and services now represent 62% of total revenue, which reflects the shift towards reoccurring, platform-driven economics. On the platform side, we now have 2.3 million members, growing 6% year-over-year. And our payment network processed $12 billion in volume, up 4% year-over-year. For the full year, we generated $68.6 million in revenue, $7.1 million in adjusted EBITDA, and ended the year with $41 million in cash and investments. So the key takeaway is simple. We have a growing Wealth platform, a reoccurring revenue model that continues to strengthen and a balance sheet that gives us the flexibility to invest in the next phase of the business. Our mission with Intelligent Investing is simple, but ambitious. We are building what we believe can become the most trusted system for long-term compounding. In other words, capital allocation system designed specifically for individuals building wealth over long periods of time. For decades, most financial platforms have focused on providing access to markets, tools for trading or products for distribution. Our focus is different. We believe the most important problem to solve is helping investors allocate capital intelligently and maintain the discipline required to compound wealth over decades. If you step back, the objective of investing is actually very simple: it's compounding. Not activity, not trading, not reacting to the latest market narrative. The objective is to compound capital over long periods of time. And yet when you look at the way most investing platforms are designed today, very few of them are actually built around that objective. We are currently seeing a broader shift happening across the entire software industry. Historically, software functioned primarily as a tool. Tools provided information and capabilities, but the user is still responsible for interpreting that information, making decisions. Artificial intelligence is changing that. Increasingly, we are seeing systems that process large amounts of information, guide decision-making and ultimately produce better outcomes. Across industries, from logistics to cybersecurity to health care, the systems that are winning are the ones designed to generate outcomes, not simply provide tools. We believe that same shift will occur in investing. Capital allocation is one of the most important decisions -- systems in the global economy. Every year, trillions of dollars are allocated through public markets. Those decisions determine long-term wealth creation, retirement security and how capital flows across the economy. And in an environment where technological change, particularly AI, is accelerating economic transformation, ownership of productive assets becomes even more important. That means the quality of capital allocation decisions becomes more important as well. One of the most important realities in investing is that behavior has an enormous impact on outcomes. Long-term studies have consistently shown that investors significantly underperform the markets they invest in. The primary driver of that gap is behavioral: trading too frequently, reacting to short-term narratives, abandoning long-term strategies during periods of volatility. This chart illustrates how even relatively small differences in behavior compound very large differences in lifetime wealth. A disciplined investor earning roughly 10% annually turns $10,000 into over $1 million over 50 years. A reactive investor earning closer to 6% ends up with a fraction of that. The difference is not intelligence or access to information, it's behavior. This slide shows the architecture behind Intelligent Investing. At the top is the objective: maximum long-term compounding. That is the governing principle of the system. What makes this different from traditional investing platforms is that most of the industry has been optimized for activity, not outcomes. The incentives are built around engagement and transaction volume. We are building around a very different objective: helping investors make better decisions over time. The middle layer is behavioral intelligence system. We believe one of the biggest causes of underperformance is emotional decision-making under pressure. So the environment itself is designed to support calmer, more disciplined investing. The bottom layer is the learning loop. Over time the platform can learn from each investor's behavior and improve the decision environment accordingly. So when we talk about Intelligent Investing, we're not talking about a brokerage with a better branding. We're talking about a capital allocation system designed to get smarter over time in service of one goal: better long-term outcomes. If you look at the investing landscape today, investors actually have access to many different solutions: trading platforms, robo-advisors, wealth managers, mutual funds and ETFs. Now these solutions generally fall into 2 categories. The first category is tools, platforms that provide access to markets and information, but leave the entire decision process to the investor. The second category is managed systems, but many of these are optimized primarily for the economics of the provider, whether that's assets under management, product distribution or trading activity. Very few systems are designed specifically to optimize for long-term investor outcomes. One of the most important principles in system design is that systems produce the outcomes they are designed to optimize. Trading platforms tend to optimize activity, wealth managers tend to optimize assets under management, financial media tends to optimize attention. Intelligent Investing is designed to optimize one thing: long-term compounding. That principle influences everything, from the architecture of the platform to the behavioral design of the experience. The first thing you'll notice when you look at the product is the design. It's intentionally minimalist and calm. Most investing apps are designed around stimulation, flashing prices, charts and constant activity. Our goal is the opposite. The environment is designed to support disciplined thinking. Second is a system optimized for long-term compounding, not trading. Serious investors tend to follow structured processes. One of the most common is writing an investment memo. Documented thesis forces clarity and accountability around why capital is being allocated. Capturing that thinking inside the platform also allows the system to become a system of record for investment decisions. Traditional retail investing apps rarely capture this kind of process. And finally, serious investing requires serious research and analysis. And that's why we're partnering with Fiscal.ai and include full access to their professional-grade research platform, a subscription that on its own costs over $90 a month. Taken together, the environment, the decision processes and the research tools are all designed around one principle: disciplined capital allocation and long-term compounding. I think this side-by-side comparison helps you understand how different our platform is from a typical trading app. Trading apps, again, are generally designed to stimulate activity: bright colors, constant price movement, promotions encouraging you to trade. Every decision pushes the investor towards short-term reactions. Fear when markets fall, excitement when prices rise. That environment produces a predictable outcome: activity. But activity is not the same as performance. Now look at the environment we built: minimalist, quiet, deliberate. The system is designed to support disciplined thinking. The result is a fundamentally different operating environment, not a trading app. A capital allocation system designed for long-term compounding. With that, I will turn the call over to Greg.

Thanks, Dave. Let me now spend a few minutes talking about our payments infrastructure platform, Carta Worldwide. From a financial systems perspective, Carta operates within the authorization layer of payment networks, the set of systems responsible for receiving authorization requests from card networks and applying program rules and balance checks. In other words, Carta sits at a critical point in the payment stack where transactions are actually authorized and governed. Carta supports a wide range of clients, including fintech platforms, enterprise programs and public sector programs, providing the infrastructure that connects the programs to global payment network. In terms of scale, we have up to 7 million end users and $11 billion in transaction volume. Platform revenue mix has steadily transitioned towards a platform revenue model, with increasing contributions from Wealth and Payments. Importantly, our results exceeded the operating range we communicated to the market at the beginning of the year, driven by stronger-than-expected growth in both Wealth and Payments. For the fourth quarter, total revenue was $17.4 million, compared to $18 million in Q4 of '24. And total revenue for the year was $68.6 million, compared to $71.2 million in '24. The decrease was driven by the exiting of 2 unprofitable businesses in Q1 as well as the impact of rate changes in Canada in '25. Adjusting for these exits, revenue actually increased 7% in the fourth quarter and 4% for the full year. Turning to Wealth. Our Wealth platform showed continued growth, benefited by phase one rollout of our Intelligent Investing platform, growing 36% year-over-year to $14.5 million. Assets under management increased to $498 million, up from $428 million in '24 and $288 million in '22. As financial markets become increasingly automated and AI assisted, we believe platforms that help investors maintain discipline in capital allocation will become increasingly valuable. The next phase of the platform will be driven by the rollout of Intelligent Investing phase two, which we expect in the first half of this year. On the payment infrastructure side, Carta, we processed $11.9 billion in total for the year. Excluding the exit of Canada, it was $11.1 billion, which was up 14% year-over-year. And adjusted payments revenue increased 23% for the year and 12% for the quarter. Overall these results demonstrate the continued scaling of Carta and both in transaction activity and revenue. On the platform economics side, adjusted subscription services revenue increased 12% to $41.5 million, up from $37 million in '24, representing now 62% of total revenue. For the full year, gross margin was 70%. Adjusted EBITDA totaled $7.1 million, an increase of 7% year-over-year and above our increased guidance range that we gave last quarter. The results reflect improving operating leverage as recurring revenue becomes a larger share of the business. In addition to strong platform growth, we also significantly strengthened our balance sheet during the year, including more than doubling our cash position as a result of portfolio monetizations along with capital discipline in the business. At year-end, we held approximately $20 million of cash and $21 million of marketable securities and other investments, for total cash and investments of $41.2 million. This liquidity was increased further post year-end following the monetization of our remaining [ 1-to-5 ] position in early '26. Our consumer lending portfolio increased slightly, but we continue to manage this not as a growth engine, but as a stable cash-generating component of the business, supporting our broader capital allocation framework. For a point of reference, our total loan book has only increased about $7 million cumulatively over the last 3 years. Our capital priorities remain consistent: reinvestment in the Wealth platform, continued development of our Payments infrastructure, share repurchases when appropriate and maintaining our balance sheet flexibility. We continue to have significant room on our share repurchase program of CAD 10 million. Looking ahead to 2026, we expect a continued growth in subscription services revenue as Wealth expands and our Payments infrastructure continues to scale. Key drivers include the rollout of Intelligent Investing phase two in the first half of the year and expansion of existing European programs in the Carta platform. Consolidated revenue is expected to remain relatively stable in '26, reflecting the continued disciplined management of our consumer lending portfolio, which we are managing for cash flow, not growth, as well as the impact of the rate change in Canada. Based on these trends, we expect adjusted EBITDA in the range of $7 million to $8 million for the fiscal year 2026. In summary, 2025 represented another step forward in Orion's transition towards a platform-driven business model. Our Wealth platform continues to grow assets and revenue. Our Payments infrastructure provides additional strategic capability. And our lending portfolio provides stable cash flow and balance sheet support. We believe this combination positions Orion well as financial systems become increasingly digital and automated. We'll now open up the line for questions.

[Operator Instructions] Your first question comes from Scott Buck with H.C. Wainwright.

A quick question and just kind of follow up there on your commentary on the lending platform. The language in the outlook seems to suggest significant pullback in lending this year. What are you seeing from the consumer? And longer term, how important is lending to the overall business?

Yes. I wouldn't -- first of all, I wouldn't characterize our guidance as a significant pullback. I would characterize it as probably a similar trend to what we saw in 2025. So we're trying -- our focus again on the loan book is to manage it for cash flow primarily, not as a growth platform. We do have the impact of the rate cap, which was implemented in '25, which is going to put pressure on interest revenue for the existing loan book. And so our goal there, I would say, is to keep the loan book relatively flat. But because of the rate cap impact, that that would result in and a decline of interest revenue. I think by -- as we get to year-end, we think that that really stabilizes from a revenue perspective. But look, I think we're -- we've always been cautious on the lending side just given our focus really on our Wealth and our Payments business. And so that's really where we want to allocate excess capital. And I think we're taking -- continue to take, as we have over the last couple of years, a cautious approach on the overall macro market. And quite frankly, the best way to do that is keep a flat book and not drive meaningful growth in it.

Yes. No, that makes sense. And long term, you think lending remains an important kind of component of the overall platform?

We think it's an important cash flow-generating component of the business today. Long term as it becomes a smaller percent of revenue, that strategic position could change. But I would just say that, in general, we believe a consumer-facing financial platform, having access to credit is important to customers. It's a core competency that we have. We've been doing it for 20 years in the Canadian market. So we think it's an asset and a valuable one that we have. But we're just going to continue to be conservative as it relates to the loan book. And rather than focusing on putting capital into the loan book, we think we're going to get a higher ROI by putting capital into Wealth primarily and then Payments secondarily.

Okay. Perfect. I appreciate that. And David, I'm curious, could you give us a little bit of color on what phase two, what that rollout looks like, maybe what your timing could be, and maybe what customers are getting -- or members are getting access to through phase two?

Sure. So yes, phase one, remember, we essentially had 2 different brands, 2 different apps. Moka was our managed investing offering, and that was through a separate application. And then we launched MogoTrade, which is our self-directed investing app. And our goal was to unify these into one brand and one new platform called Intelligent Investing. So phase one was effectively launching the new managed experience under Intelligent Investing. So now Moka is no longer -- all of those users are now on the new Intelligent Investing managed solution. And platform and brand and phase two is going to be essentially bringing in the new self-directed piece to that. So now we have one unified app, all under Intelligent Investing, all in this new user interface. And that will then eventually mean the sunsetting of the MogoTrade app and brand. So that's phase two, and that's actually starting this month. We expect kind of in the next kind of 30 to 60 days, we expect that there'll be no more MogoTrade and all new users will be coming on the new Intelligent Investing unified platform. Does that make sense?

Okay. Yes. Perfect. That's great. And then I wanted to ask, given how well-capitalized the business is at this point, how are you prioritizing your repurchase program versus some additional investments in some of your more growthier verticals?

Yes. So really, the order of priorities, from a capital allocation perspective, would be, number one, Wealth; number two, Payments; and then number three, share repurchases. That's the order.

Okay. Perfect. And would you guys look at potential M&A on the Wealth side? I know you guys have done deals in the past, but curious whether that's something that you would consider.

I'll let Dave comment on it too. But look, we're always open to opportunities that make sense. I think, to be honest, at this stage, we think what we're doing is pretty unique. And we believe a core part of success here on, especially rolling out a new product, is focus. So I think at this stage right now, we think staying focused on the rollout of Intelligent Investing is the right priority. But it doesn't mean if there's something that made sense to be part of Orion, that we wouldn't take a look at it.

Yes. Related to that, I would say on the Wealth side, things relating to enhancing and speeding up the rate of our new platform, so those types of opportunities, versus an existing wealth platform and/or product customer base where you've got to do the whole kind of legacy transitioning everybody over. So obviously, our phase one and phase two, I mean, this is still what we consider kind of our MVP of Intelligent Investing. And as we talked about kind of that long-term capital allocation system, a lot of that, obviously, I mean, the entire road map is primarily focused on technology enhancements, AI, et cetera. So if there was a specific opportunity, it would really be around advancing the speed of which we brought more of that kind of capability into the experience, and we kind of speed that up and give us some unique opportunity there versus other kind of customer bases, if that makes sense.

Yes. No, that makes sense. Congrats the quarter and the year.

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Dave for closing remarks.

Okay. Thanks again for joining us on our Q4 call. We look forward to giving you update post Q1. Thanks again.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines.