Orion Digital Corp. ($ORIO)

Good morning, ladies and gentlemen, and welcome to the Orion Digital Q1 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded today, Thursday, May 7, 2026. I would now like to turn the conference call over to Craig Armitage, Investor Relations. Please go ahead.

Thank you, John, and good morning, everyone. Before we begin, I'd like to cover a few brief items. Today's call will include forward-looking statements based on current assumptions and subject to risks and uncertainties that could cause actual results to differ materially. The company undertakes no obligation to update these statements, except as required by law. Additional information about these risks is included in Orion Digital's Q1 filings, and its periodic filings with Canadian and U.S. regulators, which you can find on SEDAR+, EDGAR and the Orion Investor Relations website. In addition, today's discussion will include certain non-IFRS or adjusted financial measures. These should not be considered -- sorry, these should be considered as a supplement to and not as a substitute for IFRS results. We've included reconciliations to these measures or for these measures in the Q1 press release and filings. With that, I'll turn the call over to Dave Feller. Dave?

Thanks, Craig, and thank you to everyone joining us today. I'm joined by our President and CFO, Greg Feller. This is our first quarter operating under the Orion Digital name following our rebrand from Mogo earlier this year. The new name reflects the company we are building, a financial technology company focused on platforms for the next generation of financial services. We operate 2 distinct growth platforms, Intelligent Investing in Canadian digital wealth and Carta Worldwide in European payments infrastructure. These platforms are supported by a consumer lending portfolio that generates cash flow to fund continued investment in the business. Before walking you through Q1 results, I want to spend a few minutes on Intelligent Investing, why we're investing in it and why we believe it is one of the most significant opportunities in front of Orion. The retail investing industry has spent the last 2 decades telling a story of democratization, easier access, lower cost empowerment. The product that was actually built behind the story was optimized for activity, engagement and frequent decision-making because the activity is what generates revenue under the prevailing business models. That is why prediction markets are showing up next to retirement accounts. That is why trading interfaces keep adding leverage and frictionless speculation. That is why every layer of the experience is tuned for engagement rather than outcome. We think AI changes the structure of this as research, analysis and decision support tools become broadly accessible. The question of what an investing platform is actually for becomes harder to avoid. Platforms designed around activity will continue to optimize for activity. What many of them are really optimized for is the dopamine loop of engagement. The opportunity as we see it is to build a platform designed for what investing is actually supposed to do, compound capital over long periods of time. That is what Intelligent Investing is, not a better trading app, not a cheaper brokerage. It is a different category of product designed around a different objective with a different set of incentives embedded in it. One of the most important financial principles in system design is that systems produce the outcomes they are designed to optimize. Trading platforms optimize activity, wealth managers optimize assets under management, financial media optimizes retention. Intelligent Investing is designed around long-term compounding, and that principle shapes every layer of architecture, the environment, the decision process, the research tools, the incentives. The first thing you notice in the product is the design. It is intentionally minimalist and calm. Most investing apps are built around stimulation, price movement, charts, alerts, frequent prompts. We are building the opposite. The environment is designed to support disciplined thinking because the environment in which decisions are made shapes the quality of the decisions themselves. The second layer is research. Serious investing requires serious research, which is why we partnered with FinChat AI to give every member full access to its professional-grade research platform, a subscription that on its own costs over $90 a month. The third layer, which we're building towards, is decision architecture. Serious investors document the reasoning, they write investment memos, they capture the thesis before committing capital, do it afterwards. That process is what separates disciplined capital allocation from reactive trading and is one of the core areas we'll be developing on the platform in the quarters ahead. As the foundational architecture comes into place through Phase 2 rollout, we will be positioned to release these capabilities and continue building on them in a regular cadence. Taken together, the environment, the research tools and the decision architecture we're building are designed around disciplined capital allocation and long-term compounding. As Charlie Munger said, show me the incentive, and I will show you the outcome. The incentives embedded in our wealth platform are aligned with long-term investor outcomes. The activity maximizing platforms are competing for ground the market is leaving behind. We are building for what comes next. On Q1, results for wealth specifically grew -- revenue grew 12% year-over-year to $3.9 million. Assets under management were $495.6 million at March 31, 2026, representing 14% growth year-over-year. We are progressing through the Phase 2 rollout, which expands the offering behind -- beyond the managed portfolio framework introduced in Phase 1 and introduces self-directed investing within the same unified platform. As Phase 2 deployment continues through the first half, the foundational architecture of Intelligent Investing is coming into place, and we expect it to roll out the new capabilities on a regular cadence as we build on that foundation. The platform rests on 3 principles. First, the core S&P 500 portfolio is a default foundation, reflecting the long-run reality that most investors and most professional managers underperform the market. Second, self-directed investing in a disciplined layer, where capital allocation decisions can be measured against an S&P 500 benchmark over time. Third, an environment intentionally designed to reduce emotional and reactive decision-making in favor of structured long-term thinking. That is the direction of Intelligent Investing. We are not building a faster trading app. We are not building a cheaper brokerage. We are building a platform designed for the thing that investing is actually supposed to do, compound capital over the long run. And we believe that is where the next generation of investor value gets created. I'll now turn it over to Greg to cover Carta, the financial results and our 2026 outlook.

Thanks, Dave. I'll cover 3 things today: our Q1 financial results and balance sheet, our '26 outlook and the platform driving our growth. Let me start with Q1 performance. Adjusted EBITDA grew 46% year-over-year to $1.5 million with gross margin expanding from 67% to 69% as our revenue mix continued to shift towards higher-margin platform revenue. Wealth revenue grew 12% as Intelligent Investing scaled, while European transaction volume at Carta grew 12% to $2.7 billion and adjusted other subscriptions-related revenue grew 6%. Total revenue was $16.9 million in Q1 '26 compared to $17.3 million in Q1 of '25 with adjusted revenue up 2% year-over-year, excluding the noncore businesses we exited during '25. Net loss was $5.8 million in the quarter, an improvement of 51% year-over-year, primarily reflecting lower nonoperating revaluation loss compared to Q1 of 2025. Cash flow from operating activities before investment in gross loan receivables was $4 million, up 6%. I also want to spend a moment on our balance sheet, which strengthened materially during the quarter. We ended Q1 with $35.4 million in cash, marketable securities and investments. Within that cash and restricted cash of $25.6 million was up 96% year-over-year and 27% from year-end '25. The increase reflects the deliberate conversion of noncore holdings into operating cash, primarily from monetization of WonderFi position, which earlier in '25 agreed to be acquired by Robinhood Markets. This is one of the most significant balance sheet improvements in the company's recent history, and it positions us with meaningful operating flexibility going forward. Turning to our payments platform. I'd like to say a word about Carta. Carta operates within the authorization layer of European payments, providing a system that authorizes transactions, enforces program rules and connects payment activity. As payments increasingly become AI-mediated and agent-initiated, this position becomes increasingly strategic. Carta has a long history of supporting clients that have scaled meaningfully, including previously supporting U.K.-based Wise during earlier phases of its growth and current clients like Pluxee, one of the leading European employee benefits platforms, which remains an anchor client today. We believe Carta operates with a structurally competitive pricing position in Europe issuer processing, and we see a meaningful opportunity to expand within our existing client base and selectively into new accounts. We also are evaluating stablecoin-based infrastructure for selected cross-border payment flow where it can improve settlement speed, transparency and cost efficiency. Wealth platform metrics reflect early progress against the much larger opportunity that Phase 2 opens up. Wealth revenue grew 12% to $3.9 million and AUM grew 14% to $495.6 million in the quarter. We expect increased marketing investment in Intelligent Investing during the second half of Phase 2 rollout. Now to our outlook. We are providing updated guidance for 2026, Q2 adjusted EBITDA of $2.5 million to $3.5 million, full year adjusted EBITDA of $6 million to $7 million and consolidated revenue modestly lower year-over-year. We are reducing Q2 loan originations by approximately 50% from Q1 levels. We want investors to see clearly what business produces under this scenario with reduced new origination activity. The existing loan book generates cash without the offsetting customer acquisition and incremental provision costs we incur at full deployment pace. The Q2 adjusted EBITDA guide reflects that. This is a temporary modulation, not a run rate. We are guiding second half adjusted EBITDA lower than the first half as we step origination volume back up and increased marketing investment, including for Intelligent Investing following its Phase 2 launch. We believe these investments are aligned with our goal to compound per share value over multiyear periods. We think the cash-generative characteristics of our portfolio when origination spend is dialed back are an important attribute of the model for investors to understand, particularly in environments where capital flexibility matters. Lastly, we continue to believe the public market current valuation does not fully reflect the economics of our business and our share repurchase program reflects that view. We have retired 7% approximately of outstanding shares since June 2022. With that, we will open the line up for questions.

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Dave Feller. Please continue.

Thank you again for joining us on our Q1 call. We look forward to updating you post Q2. Thanks again.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.