Orion Digital (ORIO) Q2 2026 Earnings Call Transcript

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DATE

Thursday, Aug. 6, 2026 at 11:00 a.m. ET

CALL PARTICIPANTS

• Investor Relations - Craig Armitage
• Founder and Chief Executive Officer - David Marshall Feller
• President and Chief Financial Officer - Gregory Dean Feller

TAKEAWAYS

• Adjusted EBITDA -- $3.3 million, up 115% sequentially and 70% year over year, driven by lower customer acquisition costs and reduced loan loss provisions.
• Adjusted EBITDA Margin -- 19.5%, expanding from 9.1% in the first quarter of 2026.
• Total Revenue -- $16.9 million, essentially unchanged compared with the prior-year period.
• Wealth Revenue -- $4.1 million, an increase of 14% year over year as the company prepares for platform commercialization.
• Wealth Assets Under Management -- $545.3 million at June 30, 2026, representing an 18% increase year over year.
• Payments Revenue -- $2.4 million, down 9% due to lower non-recurring services revenue in the quarter.
• European Transaction Volume -- $2.8 billion, stable year over year and up 6% for the first six months of 2026.
• Interest Revenue -- Declined 3% year over year, reflecting the deliberate reduction in lending originations to prioritize capital efficiency.
• Gross Margin -- 75%, expanding from 72% in the prior year due to lower loan-loss provisions and transaction costs.
• Operating Income -- $1.3 million, demonstrating cash generation capacity during a period of reduced lending deployment.
• Core Operating Cash Generation -- $5.1 million, up 29% year over year after excluding a $3 million non-recurring receipt in the prior year.
• Cash Provided by Operating Activities -- $2.7 million, an increase from $900,000 in the second quarter of 2025.
• Total Cash and Restricted Cash -- $25.1 million at quarter-end, an increase of 24% from $20.2 million at the end of 2025.
• Gross Loan Receivables -- $75.4 million at June 30, 2026, compared with $77.9 million at the end of the previous quarter.
• Lending Credit Facility -- $49.8 million at quarter-end, down from $51.4 million as of March 31, 2026.
• Share Repurchases -- 113,628 common shares at an average price of $1.32 per share during the second quarter.
• Growth and Platform Investment -- $900,000, allocated toward development and growth initiatives in the quarter.
• Lending Return Threshold -- 18 to 24 months for capital payback, representing a higher investment standard than historical levels.
• Wealth and Payments Revenue Mix -- 38% of total revenue, up from 36% in the prior-year quarter.
• Full-Year Adjusted EBITDA Guidance -- $6 million to $7 million, with management expecting results to reach the upper end or exceed this range.
• Investment Portfolio -- $5.6 million, complemented by $4.2 million in marketable securities for a combined $9.8 million in additional liquidity.

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RISKS

• Gregory Dean Feller warned that the second quarter Adjusted EBITDA does not represent a normalized run rate due to anticipated increases in marketing costs and loan loss provisions as the company ramps up lending and wealth platforms.
• Gregory Dean Feller noted the receipt of a NASDAQ notice regarding the minimum bid price requirement and stated that "maintaining our Nasdaq listing is very important to us."

SUMMARY

Orion Digital Corp. (NASDAQ:ORIO) reported second quarter results characterized by improved profitability and the commercial launch of its AI-powered wealth platform. Management reported that the business prioritized capital efficiency by reducing lending originations to meet higher return-on-equity thresholds. Revenue remained stable while Adjusted EBITDA expanded significantly through lower customer acquisition spending and disciplined operating costs. The company stated that second-half profitability will likely moderate as it increases marketing investment for the new wealth platform and gradually resumes lending originations.

• CEO Feller described the platform's objective as creating an environment where members focus on "research, patience, and reviewing decisions instead of trading activity."
• President and CFO Feller stated that the company will increase originations "only where expected net yields credit performance, acquisition costs and capital requirements satisfy those return thresholds."
• Management noted that the Intelligent Investing platform provides members with access to the FinChat professional research platform to support documented investment decisions.
• The company reported that its existing wealth business provides a "regulatory, operating and technology foundation" that allowed for commercialization without starting from zero.
• Gregory Feller indicated that the Carta payments infrastructure is now "positioned to fund its ordinary platform investment and growth internally."
• CEO Feller stated that the platform is designed for investors who want to perform "the research and discipline professional allocators have always had."

INDUSTRY GLOSSARY

• Adjusted EBITDA: A non-GAAP measure representing earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring or non-cash items.
• AUM: Assets under management, representing the total market value of investments managed by a financial firm for its clients.
• Carta Worldwide: Orion Digital's platform for European payments infrastructure and transaction processing.
• EDGAR: The Electronic Data Gathering, Analysis, and Retrieval system used by companies to file required documents with the U.S. Securities and Exchange Commission.
• FinChat: An AI-powered equity research platform partnered with Orion Digital to provide investment data to members.
• IFRS: International Financial Reporting Standards, the accounting rules used by the company for financial reporting.
• Intelligent Investing: The company's digital wealth platform that integrates commission-free trading with AI-driven research and decision tracking.
• Sedar+: The electronic filing system for disclosure documents of public companies and investment funds across Canada.

Full Conference Call Transcript

Operator: Morning, ladies and gentlemen, and welcome to the Orion Digital Second Quarter 26 Earnings Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press 0 for the operator. This call is being recorded on Thursday, 08/06/2026. I would now like to turn the conference over to Craig Armitage, Investor Relations. Please go ahead.

Craig Armitage: Thank you, Joanna, and good morning, everyone. Before we begin, I would 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 Q2 filings, and the periodic filings with Canadian and U. S. Regulators which you will find on SEDAR+, EDGAR, and on the Orion Investor Relations website. In addition, today's discussion will include certain non-IFRS or adjusted financial measures.

These should be considered as a supplement to and not a substitute for IFRS results We have included reconciliations of these measures in the Q2 press release and other filings. With that, I will turn the call over to David Marshall Feller. David?

David Marshall Feller: Thanks, Craig. I am joined today by our President and CFO, Gregory Dean Feller. Before I get into wealth, a word on the quarter: Consolidated adjusted EBITDA was $3.3 million up 115% sequentially and 70% year over year, with margins expanding to 19.5%. Gregory will cover the mechanics, but I want to talk about something the numbers do not fully capture. On July 27, we commercially launched intelligent investing. We are still early, and we expect to make a lot of improvements from here. But we are encouraged by what we are seeing so far. Intelligent investing pairs commission free investing with independent AI powered research and a structured system for how members make and track capital allocation decisions.

Built on top of an established wealth business with the regulatory and operating foundation already in place. Here's the belief behind it. The retail investing industry promised democratization. Access, low cost, empowerment. What the economics of the category actually reward is activity. Because revenue follows transaction volume. that is not a claim about anyone's motives. it is what the incentive structure produces. We built something else. We are asset class neutral. Over time, subject to regulatory approval, we expect to support a broader range of instruments. What we are not neutral on is process. Every asset class on the platform gets the same discipline. Documented decisions, and performance measured against a benchmark over time.

The instrument is not the problem, offering it with no record of the reasoning behind it is. That is rooted in a simple premise. Behavior is not a byproduct of information. it is a byproduct of environment. Give someone perfect information inside an activity driven environment and they will still behave accordingly. We want engagement, too, just pointed at research, patience, and reviewing decisions instead of trading activity. that is why the platform is calm rather than stimulating. Why members get full access to FinChat's professional research platform, and why we are building towards the decision architecture that asks investors to document the reasoning and revisit it later.

Our thesis is that the platforms that win the next era will be the ones that can demonstrate performance, not the ones that win the most trading activity. And to be precise about what performance means, not a big year, which is often just risk or luck. But compounding over decades. that is the number that actually builds wealth. Looking forward, we expect model capability to keep improving. And over time, we believe AI becomes a meaningful part of how investors make better, more disciplined decisions. Not by replacing judgment, but by helping surface what actually drove good outcomes and what did not. That only works if the underlying system is capturing the right data now.

The decisions, the reasoning, the context behind them. Structured well enough to eventually determine what drives good outcomes over time. That is a data-structure problem today and an intelligence layer we intend to build on top of it over time. We are building towards a capital allocation system with AI eventually as part of what makes it smarter and as more disciplined decisions run through it. Not a trading app with a feature bolted on. This is a commercializing off of a real business. $545 million in client assets, up 18% year over year. And $4.1 million in wealth revenue, up 14%. That foundation is what has let us commercialize without starting from zero.

For the rest of the year, we will be putting the platform in front of more investors, testing what brings in the right ones, and building an acquisition model that earns the right to more growth capital. This is not a trading app. it is built for investors who want to improve their performance often because they are not happy with it today and who want to do the research and discipline professional allocators have always had. With that, I will pass it over to Gregory, who will take you through the quarter, the financials, and the outlook.

Gregory Dean Feller: Thank you, David. I will now focus on the financial performance behind the quarter. How we are allocating capital and what investors should watch as we continue to execute the strategy our CEO outlined: Q2 was an important financial milestone for Orion. Adjusted EBITDA increased $3.3 million up 115% sequentially and 70% year over year. Adjusted EBITDA margin expanded to 19.5%, gross margin increased to 75% and we generated $1.3 million of operating income. The results demonstrate that Orion has meaningful earnings and cash generation while operating with a lower level of lending deployment. As we have made clear in our disclosures, this should not be viewed as a normalized quarterly run rate in the near term.

Some of the improvements reflected lower customer acquisition costs, lower loan loss provisions, and lower funding requirements associated with reduced lending deployment. As we selectively increase lending originations, and continue investing behind marketing of intelligent investing, some of these costs will naturally increase during the second half. Key takeaway is that we strengthened the underlying economics of the business while establishing a more disciplined framework for deploying capital. Turning to revenue. Revenue was $16.9 million in the quarter, essentially unchanged from the prior year. Within the results, wealth revenue increased 14% to $4.1 million while assets under management in our consolidated wealth business increased 18% to $545.3 million.

Important to distinguish those existing assets from the adoption of the newly launched intelligent investing experience. Our existing wealth business provides a regulatory, operating, and technology foundation for commercialization of intelligent investing. But to be clear, our total AUM includes both our intelligent investing platform and our legacy wealth business. Payments revenue was $2.4 million down 9% year over year primarily reflecting lower nonrecurring services revenue in the quarter. While European transaction volume of $2.8 billion was up slightly from the last quarter and stable year over year. Interest revenue declined 3%, reflecting the deliberate reduction in Mogo lending operations.

We continue to accept the near-term revenue pressure from lowered lending revenue because we believe deploying additional lending capital below our return and liquidity requirements would create lower quality growth. Our objective is to build a more durable earnings base not simply maximize near-term revenue. The improvement in profitability reflected 3 primary factors: continued growth in wealth, lower lending acquisition costs and provisions and continued operating discipline across the business. Looking ahead, we expect the second half adjusted EBITDA to moderate from first half levels as lending originations gradually and as associated provisions normalize, and commercialization of investments for wealth increase. that is entirely consistent with our strategy.

Our objective is not to maximize quarterly EBITDA, it is to invest where returns justify the capital while continuing to improve the long term cash generation. Turning to cash flow. Cash remains 1 of the most important ways we evaluate our performance. Cash provided by operating activities in the quarter was $2.7 million compared with $900 thousand in the prior year period. Core operating cash generation of $5.1 million. This supplemental measure is intended to show the cash generated by our operating business before growth investment in lending activity, and corporate finance activity.

Excluding the $3 million nonrecurring receipt included in the prior year quarter, core operating cash generation increased by approximately $1.1 million or 29% During the quarter, we invested approximately $900 thousand in growth and platform development, and approximately $1.65 million into our loan portfolio. We also repaid approximately $1.6 million under the lending credit facility and just over $500 thousand of debentures. After these investing and financing activities together with share repurchases, total cash declined by approximately $500 thousand in the quarter to $25.1 million Our primary financial objective remains achieving sustainable consolidated cash flow after funding recurring growth investment, lending, capital requirements and corporate obligations. Now I want to talk about our capital allocation.

Capital allocation is ultimately what ties the financial strategy together. Our first priorities are maintaining liquidity and meeting our obligations. From there, we evaluate every discretionary use of capital against expected returns, payback, downside risk and long term value creation. In lending, our current framework targets approximately 18 to 24 months for return. Total capital includes both the equity we are required to contribute on the lending facility and customer acquisition costs. This represents a higher investment standard than we have historically used. We will also increase originations only where expected net yields credit performance, acquisition costs and capital requirements satisfy those return thresholds. Growth on the lending portfolio is an output of qualifying economics. It is not the objective.

At the quarter end, gross loan receivables were $75.4 million while the related lending credit facility was $49.8 million Additional investment in Intelligent Investing will be driven by demonstrated customer engagement, retention, funded account growth and customer economics. Carta is now positioned to fund its ordinary platform investment and growth internally. Lastly, share repurchases and debt reduction continue to compete for capital alongside internal investment opportunities. Turning to our outlook, we are not changing it from Q1 guidance.

However, based on stronger than expected first half performance, we expect full year adjusted EBITDA to be at the upper end or exceed our previously communicated guidance range of $6 million to $7 million As investors assess our execution in the coming quarters, I would encourage them to focus on 3 areas: disciplined growth in the lending portfolio under our updated return framework measured commercialization progress in intelligent investing, and Carta continuing to operate as a financially self sustaining business. With that, operator, we are now happy to turn it over and take questions.

Operator: Thank you. Ladies and gentlemen, we will now take questions from analysts. If you wish to ask a question, please press *, followed by 1. If you are using a speakerphone, please lift the handset before pressing any keys. We have no questions from analysts. I will turn the call back over to Gregory Dean Feller for closing comments.

Gregory Dean Feller: Great. Thank you. Actually, before we do close, I did want to answer or address 1 question that we have understandably received from a number of investors, which relates to the NASDAQ notice. As we did disclose, we received a NASDAQ notice regarding the minimum bid price requirement, which was not unexpected given where the share price has been trading. As you know, we are also listed on the Toronto Stock Exchange. That said, maintaining our Nasdaq listing is very important to us. And we have a defined compliance period And our primary focus is on executing the business and continuing to close what we believe is a meaningful disconnect between our operating performance and our market valuation.

So with that, if there are no other questions, I think we will end the call. Thank you, everyone, again for joining, and we look forward to giving you an update for the next quarter. Thanks, everyone.

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

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