Last week, Voyager Digital Ltd. (CSE: VYGR | OTCQB: VYGVF) reported its fiscal 2021 first quarter financial results, which included revenue growing almost 200% quarter-over-quarter and a staggering 2,600% year-over-year.
Headquartered in New York City, Voyager operates as a fully regulated, crypto-asset broker and, through its platform, allows retail and institutional investors the ability to trade and invest in a wide variety of crypto assets.
Fiscal Q1/2021 Financial Highlights for the Quarter Ended September 30, 2020
- Revenue for FQ1/2021 was US$2.0 million, up 200% from US$0.7 in the previous quarter, and up over 2,600% from US$72,230 in the same period last fiscal year.
- Revenue is generated from two main sources: (1) Fee income, which includes spread revenue and transactional fees related to movements on the blockchain, and (2) Interest income, which is generated from the storage of cryptocurrencies with various custodians.
- In FQ1/2021, Fee income was US$1.6 million, significantly up from US$72,230 in FQ1/2020, and accounted for 81% of the quarter’s revenue.
- The Fee income increase was attributed to higher volumes as users traded approximately US$192.3 million in cryptocurrencies compared to US$20.6 million in the prior period.
- Interest revenue accounted for only 19% of the revenue in FQ1/2021 as the Company recorded US$0.4 million of interest income from custodians. Voyager did not start lending digital assets to custodians until October 2019 so it did not record any Interest income from custodians in the prior period for year-over-year comparison purposes.
- Voyager believes that allowing customers to earn interest on certain cryptocurrencies while they trade has been a significant driver in the growth of the Company’s business.
- Operating expenses for the three months ended September 30, 2020, increased by almost 78% to US$4.7 million as compared to US$2.6 million in the prior period. The Operating expense increase included additional headcount and infrastructure costs as the Company grew, US$1.0 million for non-cash, share-based payments, as well as increased marketing costs and interest paid to customers.
Stephen Ehrlich, Co-founder and CEO of Voyager commented, “Our strong fiscal 2020 momentum carried over into the first fiscal quarter of 2021, where we saw record revenue and customer asset growth,” and added in a recent InvestorIntel video that the revenue growth continued into the second fiscal quarter.
Rapid AUM Growth
Voyager has registered rapid growth in Assets Under Management (“AUM’). On November 6, the Company announced that AUM surpassed US$100 million, up 20 times from US$5 million of AUM at the end of December 2019. And, more recently, the Company reported that AUM jumped another 50% to US$150 million.
Cash Balance Continues to Grow
The Company is well funded for growth with a cash and cash equivalents balance of US$7.5 million on September 30 and believes it has sufficient capital to meet its ongoing operating expenses and project obligations for the next year.
After completing a C$5.75 million raise in September, Voyager recently announced a C$7.0 million private placement offering of special warrants to fuel the Company’s growth plans.
Platform Continue to Evolve
Even after being awarded the People’s Choice Award at the 6th annual 2020 Benzinga Global FinTech Awards in November 2020, Voyager plans an aggressive product development rollout over the next few years that includes debit and credit cards, a desktop solution, loan programs, and basket trading.
Currently, Voyager provides investors with an easy-to-use app that can be download from Google Play or the Apple App Store, and offers commission-free trading, access to over 50 coins, including three Stablecoins and 10 Decentralized Finance Coins, and customers can earn interest on 22 coins.
Its platform allows a user to open a new account in three minutes or less and rewards new account holders with a US$2 million give-away contest to encourage new cryptocurrency investors to try its trading platform.
The platform also provides portfolio tools and data to track balances, transactions, and performance, and supplies news, social feeds, and real-time alerts to keep users connected to the changing market.
For the security of accounts, Voyager offers a multi-authorization cryptocurrency wallet management solution and fiat currency is stored at custodial banks.
In October, Voyager announced the purchase of LGO SAS, a financial services company based in France and focused on trading digital assets, for US$1.0 million in Voyager shares. LGO is an Autorité des Marchés Financiers (“AMF”) regulated company and the merger provides Voyager with a fully licensed European entity to accelerate its European expansion strategy.
The LGO transaction is expected to close by the third quarter and is subject to further due diligence as well as regulatory approval.
The Company also announced that it is working with regulators in Canada to bring the Voyager products to the Canadian marketplaces. In July, Voyager announced that it expects to launch the Voyager app in Canada this year.
Bitcoin up 160% in 2020
Bitcoin continues to be one of the best performing asset classes this year, up more than 160%, and cryptocurrencies are emerging as a new asset class for institutional investors that are using them as an investment vehicle and a hedge against possible inflation, becoming an alternative to buying gold.
Voyager’s offering appears to be a “popular” product that can meet the needs of the cryptocurrency investor.