Voyager Digital Ltd. (VYGVF) is a rapidly growing cryptocurrency platform in the United States. It was founded in 2018 and brings crypto services to the markets for individuals and institutions. The company offers a safe way to trade over 60 different crypto assets using its mobile application. In addition, the app also lets users earn monthly interest payments (up to 12% annually) for maintaining minimum balances on over 30 cryptocurrencies. Through its subsidiary Coinify ApS, consumers and merchants around the globe can use the platform for crypto payment solutions. The app is available on iOS and Android devices. Voyager is traded on the Toronto Stock Exchange (TSX) under the ticker VOYG. The stock is also available through a number of U.S. brokerages and can be purchased via the symbol VYGVF.
Total Addressable Market Trends
In terms of total market cap of coins, the crypto markets are valued at roughly $2.6 trillion (as of 11/29/21). Bitcoin is the most widely acknowledged digital currency in the world and is expected to remain in its position. According to Allied Market Research, the global cryptocurrency market (based on software, hardware, end user, and process segments) was valued at $1.49 billion in 2020 and is projected to reach $4.94 billion by 2030. All that growth registers a compounded annual growth rate of 12.8% in the forecasted period.
The growth in the market can be attributable to the desire for operational efficiency and transparency in financial payment systems. In addition, the increase in demand for payment methods in developing nations and data security will drive the market. There are already a number of large companies such as Starbucks, Overstock.com, and more which take crypto as payment often through a third party such as Binance or Crypto.com.
As more people learn about digital assets, financial institutions make investments in the space, and companies accept crypto as payment, the market cap will continue to grow. Yet what presents a danger to the growth opportunity is that there may be a crypto bear market similar to what we saw from 2018 to 2020.
The crypto market can be segmented based upon region, process, end user, and hardware. In terms of region, recent data from Chainalysis shows that Vietnam, India, and Pakistan are in the lead when it comes to adoption of cryptocurrency weighted by purchasing power per capita. With the recent crackdowns in China this past spring, they dropped from fourth to 13th, meanwhile the United States dropped from sixth to eighth place.
Based on process, the transaction segment will grow at the highest CAGR of 14.6% during the forecasted period. Furthermore, the retail and E-commerce segment within the end user segment is expected to dominate by the end of 2030. Finally, within the hardware segment, the growth can be attributable to the need for upgrading performance of software and increasing the efficiency of financial payment tools.
Company’s Product Versus Competition
Cryptocurrency platforms seek to differentiate themselves in a number of ways including account type offerings, investment choices, account perks, customer service options, trading fees, crypto offerings, products (crypto-backed loans, wallet services, educational resources and crypto rewards, card services, etc.), and more. When I was conducting research to get an answer as to which crypto platform is a distinct winner and what single differentiator makes that platform the best, I was unable to find a clear answer.
Thus, I created a table outlining the differences among top platforms in order to get an answer. It seems that Voyager seeks to mainly differentiate themselves by offering low fees and high interest rates for holding certain crypto. According to a recent article from Business Insider, Voyager “is best for mobile-forward crypto traders who want access to a simple user interface, low fees, and multiple account funding options.”
Regarding drawbacks to Voyager, it appears that the consensus is that the platform offers no coin-to-coin exchanges, slightly less security than other crypto platforms, and no access to people outside of the U.S. Luckily, Voyager is making strides to offer its platform to international markets and according to coindesk.com the company plans to launch its trading app in Europe in Q1 2023.
Voyager’s Value Proposition (as shown on the September 2023 investor presentation)
- Easy to use Mobile and Desktop, Payment Infrastructure
- Earn rewards up to 12% yield
- 60+ crypto assets & stablecoins
- Yield on over 30 coins
- Faster execution & deeper liquidity
Q3 2023 Financials
- Revenue for the quarter is $65.6 million for the historical business plus the $15.9 million from the Coinify business, totaling $81.5 million. The $65.6 million in revenue is up over 3,280% compared to $2 million for the quarter ended September 30, 3020
- Operating Loss of $28.3 million for the quarter was incurred for strategic longer-term benefit, which has paid off and been reversed in the current quarter. Losses incurred were primarily due to investing in the loyalty and rewards program to continue user growth
- Total verified users on the platform stand at more than 2.15 million, up 23% from 1.75 million at fiscal year fiscal year ended June 30, 2023
- Total funded accounts exceed 860,000, up 29% from 665,000 at fiscal year ended June 30, 2023
- Total Assets Under Management grew to $4.3 billion from $2.6 billion at June 30, 2023 with Assets Under Management at present of just under $7 billion
- Improved our system architecture, focusing on scalability and security to handle rapid growth
- Increased our headcount to 231 as of September 30, 2023, from 141 at June 30, 2023, which includes the headcount added through the Coinify acquisition
- Acquired Coinify, a leading crypto payments processor and provider
What I notice after reviewing the most recent financial results of this company is that they are still in their VERY early days (as is cryptocurrency in general). Most noticeably we can see that their dedication to acquiring customers has translated into higher operating expenses across the board. They went from having total operating expenses of $4.7 million to $110 million (up 2244% YoY). While operating expenses increased significantly, so did revenue which jumped from $2 million to $81.5 million (up 3973% YoY). In the quarter they acquired Coinify which consisted of 5,100,000 of newly issued shares of Voyager and $15 million in cash for a total of $84 million.
What Coinify offered to Voyager was a gateway to the crypto payment industry through its virtual currency payment platform available in Europe, Asia, North America, and South America. Investors must keep in mind that Voyager has diluted their shareholder base by 44% YoY and that is certainly of concern considering their cash reserves went down 46% YoY. Thus, further dilution could be coming and isn’t difficult to imagine in the upcoming quarters. Nevertheless it’s important to remember that volumes were down approximately 40% in the September quarter compared to the June quarter.
Although, not everything is doom and gloom when it comes to Voyager. After diving into their most recent Q1 2023 earnings call transcript, the management team stated a number of exciting developments, details surrounding expenses, and company strategy. Voyager started the calendar year with only 43,000 funded accounts and $240 million of customer assets under management.
Those numbers grew to over 1 million funded accounts and nearly $7 billion of customer assets under management at the time of the earnings call (November 16, 2023). The CEO reminded investors of their partnerships with NASCAR and the Dallas Mavericks which “has had a real long tail… it’s been something that has cultivated our increase in App Store rankings, our increase in customer engagement, our increase in customer and investor sentiment, and…we haven’t seen really much of a slowdown.”
Also, they stated the launch and preregistration of the Voyager debit card which will allow users to hold their funds in the USDC stable coin and easily pay bills using the USDC in their account. The company expects the debit card to develop deeper relationships with customers and also increase the conversion of the 2.7 million verified users who have yet to become funded accounts. More so, Voyager had recently announced that the Voyager token has increased utility as it was integrated into the quantify payment system, which allows holders the ability to use the token for payments with over 30,000 global merchants.
In terms of marketing efforts in relation to expenses, the CEO stated that they “went back to more normalization” after making the critical decision of investing in their loyalty and rewards program.
The reason for that had to do with the management team being focused on driving user engagement after seeing volumes being down approximately 40% in the September quarter compared to the June quarter for the overall industry.
They mentioned that customer acquisition costs came in around $80 an account and they expect that to rise a “little bit” going forward. Regarding the company’s focus and strategy, they mentioned they’re working to get every coin on the platform to have staking rewards, expand their rewards program, and increase their expenditures to develop their technology development, marketing, and customer service staff.
In short, Voyager is making great strides to become one of the top cryptocurrency platforms by establishing partnerships as well as investing in their staff and rewards to enhance customer engagement.
Recent Developments & Potential Catalysts
Listing on NASDAQ during 2023
On Voyager’s most recent Q1 2023 conference call, CEO Steve Ehrlich stated that “Voyager has engaged counsel to start the process to seek a listing on Nasdaq during 2023.” This is perhaps the biggest catalyst I see for the company as it generally means that the stock is moving up the stock market food chain as the company gets more successful and expands.
Hedge funds and institutional investors prefer large stock exchanges over OTC exchanges because there is poor liquidity. Since major stock exchanges have stricter requirements, it gives greater transparency and allows more experienced investors to trade the stock. Thus, this uplisting can attract institutional investors and hedge funds that can play an important role in further re-rating its valuation.
Voyager Digital Announces the Voyager Debit Mastercard®
On November 16th of this year, Voyager announced the launch of the Voyager Debit Mastercard. This is the first crypto-based debit card that pays up to 9% annual rewards to Voyager customers in addition to more rewards for Voyager Loyalty Program members. The Voyager debit card will allow Voyager customers to earn rewards of up to 9% on all USDC holdings of $100 or more, all the while being able to spend their crypto on everyday purchases with the convenience of a debit card.
The debit card will work by being based upon the USD coin (USDC), a stable coin priced 1-to-1 to the U.S. dollar. This will offer customers a predictable and rewarding way to hold and easily convert crypto for payments while offering Voyager Loyalty Program members additional rewards. Metropolitan Commercial Banks (NYSE:MCB) is the issuing bank and Usio (NASDAQ: USIO) will act as the program manager and processor for the debit card. Additional features include:
- no annual fees and no lock up of assets to earn rewards.
- annual rewards of up to 9% on all USDC holdings of $100 or more, paid monthly—this means USDC holders receive crypto back (additional USDC) in their Voyager accounts, based on their average monthly balance.
- seamless integration of debit card balances and transactions within the Voyager app.
- a personal routing and account number for direct deposit and bill pay, for each card.
- anytime access to assets via ATMs.
Voyager Makes an Investment In Particle, a New Way to Own, Collect, and Experience Fine Art Through NFTs
On November 18th, 2023, Voyager announced the participation in the $15 million seed funding round in Particle. Particle is a platform that allows anyone to own some of the world’s greatest art by participating in the market. In the press release, CEO Steve Ehrlich stated “Voyager plans to deliver unique access to NFTs and more to our customer base as part of our product roadmap, all with the goal of providing a wide range of NFTs to our over 2.7 million users. Voyager Loyalty Program (“VLP”) members will have first access to purchase the highly-anticipated, debut NFT collection from Particle.”
Particle works by dividing each piece of art into 10,000 unique NFTs or “Particles”, each of the pieces have their own title deed stored on the Avalanche blockchain. When a buyer purchases a Particle, they receive a digital certificate or collectors card which represents its owner’s specific ownership in the artwork.
Those purchasers then have the right to buy or sell their Particles on secondary markets, trade, or transfer them to anyone they wish. Particle purchasers can also view the artwork as they please and wherever it is displayed. This is a huge step for Voyager as they now have their foot in yet another market and can offer their customers yet another service.
Voyager Digital Secures Final Approval to Begin Operations in Europe
As stated previously, Voyager had announced that after being reviewed by the Autorité des marchés financiers (AMF) and the Autorité de contrôle prudentiel et de résolution (ACPR), that their subsidiary LGO Europe SAS (LGO) was declared “fit and proper” to operate in Europe. Voyager is the first non-French, non-European firm to get this designation. This recognition is a huge step in the process of bringing Voyager one step closer to satisfying European customers with products and services that build upon their goal of becoming a global financial services company.
In the press release, CEO Steve Ehrlich stated “Leveraging the recent acquisition of Coinify, which has fully compliant KYC and AML solutions as well as fiat on-ramps in over 20 currencies, Voyager is positioned for an initial launch of our trading app in certain European countries late in the March 2023 quarter.”
This announcement acts as a huge catalyst for Voyager’s business as long as they can attract European customers onto their platform. While marketing expenses will certainly increase in order to grab the European consumers attention, if all goes well this market can add a significant amount of shareholder value in the upcoming years. This announcement in addition to the announcement that followed on October 27th resulted in Voyager’s stock price jumping from roughly $9.50 to $14. As of writing this the stock is currently trading at $14.14.
To conclude, I must say that I like where Voyager is headed. They have a strong platform that competes with crypto giants such as Coinbase, Binance, and Crypto.com. The company’s platform is primarily for mobile-forward crypto traders who want access to a simple user interface, low fees, and multiple ways to fund their accounts. Their catalysts appear to be strong and include the potential to be Listed on the NASDAQ in 2023, a credit card, a way to invest in NFTs, and access to the European market coming in 2023.
In addition, as stated on their more recent investor presentation, they’re looking for future growth opportunities through offering customers a desktop app, credit card, access to equities, further international expansion, and more. Their management team has experience in early stage startups and fintech which position them to drive shareholder value in the upcoming years.
However, as the company continues to scale, investors need to be made aware that Voyager still faces heavy competition, continues to dilute shareholders, expenses continue to increase, face regulatory hurdles, have yet to prove themselves profitable, and more. With that being said, for anyone looking to jump into the cryptocurrency space by investing in an early stage company, Voyager looks appealing on a number of fronts.
I don’t hold an investment in this company, but if it were to fall to the $10 range I would consider picking up some shares as a speculative play. I see where the value is in cryptocurrency and I don’t doubt that the market is here to stay.
Be aware that the crypto market isn’t infallible and if the market is to enter a long period of decline then Voyager stock is likely to fall as a result. Nevertheless, by no means is this post all the research you need to do in order to be an expert on this company and I encourage you to do your own research.
This article was written by u/Tedi_Westside.