So, the use of artificial intelligence, right — so, we’ve been a pioneer in using those technologies for 11 years at this point, right? This is part of our DNA. So, we first, of course, use those applications in the consumer side of the business. But in the enterprise side of the business, just kind of creating those journeys to be much more personalized and contextualized, that’s the ultimate evolution. So, as we talk about really running this marketplace, the more customer inquiries we get, so in Q1, we saw 80 million total customer inquiries, the more our information advantage increases. The more we know about customer preferences, customer intent, the more we’re able to really put that back into that machine learning capability of ours and provide higher-intent consumers back to our enterprise partners, right?
That’s the reason really for our enterprise partners to think of MoneyLion as a must have and a trusted partner in their customer acquisition, customer monetization and customer retention strategies, because we have such high-intent consumers in market looking for a financial product. So, as that top of the funnel increases over time, we have a lot of ability to create form factor changing mechanisms to engage those consumers, right? So, we’ve said a lot about AI-powered, GenAI-powered financial search. So that’s again — a lot of work is being done from a technology perspective. Those are — we’re at the leading edge there in terms of that build out. And as we roll those out, we’re seeing a lot of success in getting the consumer back in for the second product, the third product, right?
The reason to invest in the content, the reason to invest in all this personalization and machine learning is to be with the consumer as a trusted companion across multiple financial products line decisions. And we’re showing a lot of progress towards that.
George Sutton: Just as a follow up. It really didn’t come up at all, the EY partnership and also your WOW offering. Could you just give us quick updates on both of those?
Dee Choubey: Sure. So, EY is progressing nicely. The pipeline is active. We’re having positive conversations with banks. And as we’ve said last quarter that this is a joint development with EY. So, we’re building that interface layer, we’re building the technology receptors, if you will, that help banks connect to really the offering that we’ve been building out. We’ve been very pleased by the traction that we’re getting with the target banks that we have in mind. And as we said before, we expect the EY partnership to start adding growth for us in late Q4 of this year going into 2025. And all of that is very well on track. On WOW, we said last quarter that we believe that this is a incredibly powerful bundle of products for us.
We’ve said that, the full market launch, we’re really getting ready for that. We’re refining our marketing message, the contextual upsell strategies, revamped dashboard, a clear articulation to the customer of the value. We believe that priced at $9.99 a month, WOW offers hundreds of dollars of benefits annually to consumers. And really, if you think about the hub into our marketplace, WOW brings the benefits of our first-party products, our third-party products, the customer value proposition really nicely into one bundle, right? It expands our target addressable market, increases recurring revenue, and over time, we really think of this as a chassis that increases our product adoption, right? Ultimately, the name of the game is can we get our consumers into using multiple of our products coming back to us for multiple financial buying decisions, and this will lead naturally to increasing ARPU, increasing retention, and becoming that trusted companion with our consumers over time.
So that’s really progressing nicely as well. And we have a lot more exciting things for us to really execute on from a marketing messaging perspective in Q2. And you’ll see that we’ve been very efficient with our marketing spend. As we continue now, progressing down the evolution of generating more free cash flow, we’ll have opportunities really to reinvest in that marketing message around WOW to make that an even bigger of a growth story going forward.
George Sutton: All right. Great stuff. Thanks, guys.
Operator: Thank you. Our next questions come from the line of Hal Goetsch with B. Riley Securities. Please proceed with your questions.
Hal Goetsch: Thank you. Hey, great quarter, guys. My question is on the forward flow arrangement. Hey, Rick, could you comment on what this balance sheet looks like or how much different it will look in Q2 or Q3 as this happens? And what it might do to provision expenses? Any comments there would be appreciated. Thanks.
Rick Correia: Yeah. Thanks, Hal. So, on the forward flow, as we talked about, we’re continuously looking for opportunities to be more efficient on cash. And the forward flow arrangement allows us to sell our receivables in real time and basically realize all the kind of cash upfront. So, you’ll see an increase to our cash. If you’re looking at the flow through from our adjusted EBITDA-to-cash, one of the reconciling items there is the use of cash for our haircut capital for our receivables. So that goes away as soon as we transition to the forward flow arrangement. From a provision perspective, in a steady state, that will go away because, of course, we no longer basically have the receivables on balance sheet and therefore we no longer provision for them.
Hal Goetsch: Okay. All right. Thank you.
Operator: Thank you. Our next questions come from the line of Kyle Peterson with Needham & Company. Please proceed with your questions.
Kyle Peterson: Great. Thanks, guys. Good morning. Thanks for taking the questions. I want to start on the enterprise segment, just kind of what you guys are seeing there, particularly in consumer and personal loans, I guess from some of our checks, some of the trends have been kind of mixed, but you guys still seem to be performing well. So, just any color there would be helpful.
Dee Choubey: Hey, Kyle. Good morning. I’ll start, and Rick can chime in as well there. Quarter-over-quarter, we actually saw our marketplace business see some growth, right? So, personal loans as a percentage of the total marketplace revenues for us continues to be around that 55%, we brought that down from historically, where it was over 80%. So this has been the result of a lot of diversification. We really see a lot of opportunities here to increase our market share in verticals like credit cards, insurance, mortgages, auto insurance, right? So this is, again, product-led growth. We talked a lot about this idea of hosting the decisioning of a lot of the financial institutions, completing the checkout experience. So, consumers actually have a much more seamless experience inside of, whether it’s the marketplace flows that we have or the direct-to-consumer flows that we have.
So, some of those efforts are mitigating some of the conversion elements. We are seeing a lot of success in the product-led areas there. And ultimately, I think we’re muting some of the macroeconomic headwinds that we see in the credit and personal loan verticals. Let’s be clear, the interest rate regime continues to keep conversions at historically low levels right now for us on the personal loan side. But that’s also an opportunity. If you think about, if we can return back to even late 2022 levels on conversions on the personal loan side, there’s a lot of built-in growth with our existing massive top of the funnel. The consumer demand, and throughout our network, both in the consumer and the enterprise side, continues to grow very nicely.
It’s just that the position we’re in, in the economic cycle, mutes that a little bit, right? So, this is really where product-led growth around cross-sell, around being contextual and being relevant for the consumer is mitigating and actually leading us to an area where the marketplace itself had quarter-over-quarter growth. I think Rick mentioned that our media business, we’ve made some strategic decisions there to get out of some non-core revenue-generating items there. And that’s what’s led really to the quarter-over-quarter decline there. But the marketplace — the core marketplace itself, continues to have strong growth based on some of the things that I just mentioned.
Rick Correia: Yeah. And I’d say the two kind of key drivers around that, if you look at the recurring revenue profile of that enterprise business, and specifically the marketplace business, as you see from the cohorts, we continue to have over a 90% recurring revenue profile with our partners. The second is that we’ve invested heavily in our AI-driven algorithmic cross-selling functionality. So, when someone comes onto the platform subsequently, we are retargeting them to be able to drive that kind of second and third derivative product, which of course has margin expansion opportunities for us. So, the durability of that marketplace business is really shining through. And that’s also in the face of some of the headwinds that Dee talked about from a macro perspective. So, we believe that we’re seeing the kind of early signals that that’s turning in the quarter, which gives us a lot of confidence as things unfold over the rest of the year.
Kyle Peterson: Got it. That’s really helpful. And then just to follow-up, great to see you guys were profitable on a GAAP net income basis this quarter. Is that something we should expect to see moving forward from you guys? Or is there anything one-time on the expense front that benefitted during the quarter? Just how should we think about profitability on a GAAP basis from here?
Rick Correia: Yeah, we didn’t have any one-time items that drove that. That’s blood, sweat and tears, that got us there. I would say, if you looked at our business year-over-year from an operating leverage perspective, we continue to show significant improvement there. So year-over-year, our revenue was up 28%, but our OpEx was only up 13%. So that expansion in terms of being able to drive our EBITDA margin, our net income margin, is really coming from the platform advantage. We’ve been talking about it for a long time. And we’ve hit that inflection point where we feel really good about us continuing to drive free cash flow, continuing to drive net income. Obviously, this season, we talked about tax season kind of happening within the quarter, so that had some effect in terms of the overall performance of our provision. But again, the real driver is that we are creating operating leverage from our platform advantage, and we don’t see that changing going forward.
Kyle Peterson: Got it. That’s really helpful. Thanks, guys. Nice quarter.
Operator: Thank you. Our next questions come from the line of Jacob Stephan with Lake Street Capital Markets. Please proceed with your question.
Jacob Stephan: Hey, guys, congrats on the quarter and GAAP profitability here. I was just kind of hoping you could elaborate a little further on the comments you made about lower conversion rates on the enterprise side of the business. It sounds like product partners might be spending less with you and it’s kind of affecting you, but any kind of comments you have there would be really helpful.
Dee Choubey: Hey, Jacob. Good morning. Look, as we said before, given our — given the mix that we have between the burgeoning new verticals that we’re building out across credit cards, insurance, mortgages, auto loans, and sort of the strength of the business and the credit verticals, it is clear that we are still in the troughs of marketing spend with a lot of our partners, but we’re mitigating that. The consumer demand continues to be really high for products. Now really the opportunity, there are very few people out there in the market that can take the intentions and the preferences. When we talk a lot about machine learning, we talk about the application of generative AI, these aren’t things that we’re doing for fun, right?
These are things that we’re doing really to glean the second derivative, the third derivative of why the consumer is in market looking for the financial product. So, they’re coming in for a credit product, but we can solve the problem of the consumer with a substitution product. We’re now able to mitigate the macro and abstract away from the fact that marketing spends are muted. So, we’re continuing to add suppliers, right? So, we are — because of the way we are set up, because we are API first, because we’re developer-friendly, if you’re a publisher, we’re a leading partner to use, to monetize your impressions that you’re getting as a publisher through financial products, right. So, we’re best-in-class there, and that’s mitigating a lot of the conversion elements that we’re seeing.
So yes, there are muted conversions, but we’re mitigating that with product-led growth as well as an increase in the number of supply that we’re bringing into the ecosystem. I’ll turn it over to Rick to add any color to that as well.
Rick Correia: Yeah. Hey Jacob, I appreciate you double clicking into this one. If you’re looking into our marketplace and we break it into our lending and our non-lending products, certainly within lending, I think everyone is now acutely aware, as we’ve talked about what the macro looks like. If you look at our non-lending business, where we invested in terms of growing our ability to offer non-lending products, mortgages, credit cards, insurance, wellness products, that’s actually up from a conversion perspective and that’s more reflective of us, again, abstracting away from the macro, investing in areas where we see opportunities to sell that kind of second and third derivative product. As a reminder, when customers come in and take a first-party product with us, they have a 60% product margin.
