Could Voyager Digital (VYGVF) Compete with other Crypto Platforms?

Hey Everyone, the following DD is a fraction of the research I did on Voyager Digital (VYGVF). Some of the post may refer to charts and graphics which can be found via the link below. The full DD along with charts can be found on my investment blog: http://tedinvests.com/posts/. Company Description and History 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 & Industry Trends The crypto currency space can be difficult to understand and thus I’ll try to explain in simple terms how digital assets unlock a massive market opportunity. It’s important to note that I’m oversimplifying this technology in order to make a point and therefore I encourage you to do your own research. There are two different types of crypto currencies, coins and tokens. Coins belong to crypto networks built from the ground up (via code), given to computers that verify the transactions. Because they are so difficult to create, only a few cryptos are actually coins. Tokens are far easier to make and can be made in minutes with less effort off the backing of existing networks. If someone wanted to hack a crypto network, they would need to hack more than half of the computers in the network at the same time. Some cryptos only have a few computers backing the network and run the risk of being hacked. However, it’s nearly impossible to hack the network of certain coins such as Ethereum and Bitcoin due to the fact that millions of computers are verifying the transactions of those coins at the same time. Cryptocurrency is like regular currency but digital and all one needs to access the market is a smartphone and a digital wallet. No information is needed for a wallet and all the transactions are recorded on a crypto network via blockchain technology. Crypto is decentralized because many miners uphold the network via around the clock computers that work to verify those transactions. What makes this technology so promising has to do with the concept of decentralized finance (DeFi). What decentralized finance does is remove the middleman (bank or broker) and instead replaces them with a network of computers (hence the word ‘decentralized’). This means that individuals can participate in loans, debt, and finance outside of the banking system. While traditional banking is undoubtedly the main source of access to financial products, DeFi has huge implications for the future of finance. Traditional financial systems are ripe for disruption via digital assets because they offer Instant & 24/7 accessibility, a universal borderless currency, and diversification against traditional stores of value. In recent times, many individuals have expressed dissatisfaction with traditional financial systems as shown by a declining confidence in government currencies and trust in banks/financial services as the result of expensive and slow processes. While the cryptocurrency market is in it’s very early stages and still not well understood by many, it does offer solutions and usages that early adopters have seen for years. Close to 2 million people in this day and age don’t have access to a bank account and all one needs to start leveraging the power of digital currencies is a smartphone. Those unbanked individuals can be paid in crypto (more specifically stable coins that are pegged to a specific real currency) and bypass the traditional banking system. Crypto can also act as a safe haven to escape from devaluation and inflation which has gone rampant in certain countries like Venezuela. Furthermore, Cryptocurrency can act as an investment (what most people view it as today) and also allows traders to make money by speculating on the price of cryptos if they wish to do so. Although, due to how early this technology is and the inherent risks, it’s generally recommended that someone who invests in crypto should only do so with money they are willing to lose. These are just a number of ways that cryptocurrencies can be used and some problems they solve. While what I’ve written about thus far may sound promising, there are a number of disadvantages to cryptocurrencies. It is possible to lose your virtual wallet (perhaps you forget your password) and there have also been thefts from websites that let you store cryptocurrency. More so, the value of cryptocurrencies can change significantly and some individuals don’t feel safe having their money in cryptos. Security is another factor that hinders people from entering the market. The cryptocurrency market is not regulated by the Financial Conduct Authority (FCA). Certain cryptos are more vulnerable to cyber attacks and scam which has stopped people from investing. In addition to all this is the fact that the technology is difficult to understand and not widely accepted which makes people skeptical. Now that we’ve addressed some of the pros and cons of crypto, the question arises as to how fast the crypto market is growing? 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. As previously stated, 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 2022. Voyager’s Value Proposition (as shown on the September 2021 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 Community Q3 2021 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, 2021 Total funded accounts exceed 860,000, up 29% from 665,000 at fiscal year ended June 30, 2021 Total Assets Under Management grew to $4.3 billion from $2.6 billion at June 30, 2021 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, 2021, from 141 at June 30, 2021, 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 2022 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, 2021). 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. Management Team Steve Ehrlich – CEO Steve Ehrlich is the CEO and Co-founder of Voyager and has worked in the capital markets industry for over 25 years. Steve’s first job in the capital markets industry was with TIR Securities. When the company was acquired by E*Trade, he was asked to become a member of the financial team and eventually became the CEO of the company’s Professional Trading Division. He later went on to create Voyager in 2018 and took the company public in 2019. In a recent blog post by Steve, he predicted that 2021 would be the year crypto goes mainstream and mass adoption would occur. He states in the blog post that “In 2021 Bitcoin will continue to establish itself as the ultimate inflation and economic hedge, continuing to out-perform every asset class.” So far he has been right about crypto as Bitcoin has achieved a return of 96.52% YTD. He is active on Twitter and can be found under the twitter handle @Ehrls15. Philip Eytan – Co-founder & Chairman Philip Eytan is the co-founder and Chairman of Voyager. He began his career at Morgan Stanley in 2000 as an analyst in Telecom M&A. He later went on to help manage a large distressed debt book at Cerberus Capital from 2002 to 2007. After leaving Cerberus, he started his own hedge fund. Since 2007 he has been investing in tech. He was a founding investor in Livestream (sold to IAC in 2017), Socure (cyber fraud prevention company), and an early investor in Uber. Philip co-founded Pager (a digital health startup) in 2014 which he is currently the Chief Strategy Officer and a director. Philip holds a Bachelor and Master degree in Finance and Management from the University of Geneva. Gaspard de Dreuzy – Co-founder Gaspard de Dreuzy is a co-founder of Voyager. He is an entrepreneur who started his career as an advisor to Warner Music. He founded Kapitall in 2008 which is an online broker built in partnership with BNY Mellon and IHS Markit. In addition, he co-founded the fin-tech startup Trade.it, a leading investing API platform backed by Peter Thiel as well as the digital healthcare startup Pager. Oscar Salazar – Co-founder & Advisor Oscar is a co-founder and advisor of Voyager. He is known for his work with Uber as its founding Architect and Chief Technology Officer. Oscar is also the co-founder and Chief Technology Officer of Pager. In addition to being an advisor to Voyager, Oscar also provides technical and marketing advice to companies such as Rubicon Global, ALEX AND ANI, CARGO X, and more, which are located in the U.S . and internationally. Recent Developments & Potential Catalysts Listing on NASDAQ during 2022 On Voyager’s most recent Q1 2022 conference call, CEO Steve Ehrlich stated that “Voyager has engaged counsel to start the process to seek a listing on Nasdaq during 2022.” 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, 2021, 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 2022 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. Conclusion 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 2022, a credit card, a way to invest in NFTs, and access to the European market coming in 2022. 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. As always, best of luck! Connect with me Twitter: @TedInvests Instagram: Tedinvests Sources: https://www.pewresearch.org/politics/2021/05/17/public-trust-in-government-1958-2021/ https://www.edelman.com/sites/g/files/aatuss191/files/2021-04/2021%20Edelman%20Trust%20Barometer%20Trust%20in%20Financial%20Services%20Global%20Report_website%20version.pdf https://medium.com/geekculture/9-problems-solved-by-crypto-b885a9016ec5 https://coinmarketcap.com/charts/ https://www.alliedmarketresearch.com/crypto-currency-market https://www.marketsandmarkets.com/Market-Reports/cryptocurrency-market-158061641.html https://www.prnewswire.com/news-releases/cryptocurrency-market-size-to-reach-usd-4-94-billion-by-2030–growing-at-a-cagr-of-12-8—valuates-reports-301370336.html https://www.cnbc.com/2021/08/18/new-cryptocurrency-bitcoin-user-global-map.html https://www.stilt.com/blog/2021/11/voyager-crypto-exchange-explained/ https://www.finextra.com/pressarticle/88778/voyager-digital-acquires-coinify-for-84-million https://play.google.com/store/apps/details?id=com.investvoyager&hl=en_US&gl=US https://www.investvoyager.com/blog/voyager-ceo-steve-ehrlichs-2021-crypto-predictions/ https://www.investvoyager.com/pressreleases/voyager-makes-an-investment-in-particle-a-new-way-to-own-collect-and-experience-fine-art-through-nfts https://www.investvoyager.com/pressreleases/voyager-digital-announces-the-voyager-debit-mastercard-r

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Could Voyager Digital (VYGVF) Compete with other Crypto Platforms?

Dec 9, 2021

bullish

general Analysis

[16 min Read]

Hey Everyone, the following DD is a fraction of the research I did on Voyager Digital (VYGVF). Some of the post may refer to charts and graphics which can be found via the link below.
The full DD along with charts can be found on my investment blog: http://tedinvests.com/posts/.

Company Description and History

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 & Industry Trends

The crypto currency space can be difficult to understand and thus I'll try to explain in simple terms how digital assets unlock a massive market opportunity. It's important to note that I'm oversimplifying this technology in order to make a point and therefore I encourage you to do your own research.

There are two different types of crypto currencies, coins and tokens. Coins belong to crypto networks built from the ground up (via code), given to computers that verify the transactions. Because they are so difficult to create, only a few cryptos are actually coins. Tokens are far easier to make and can be made in minutes with less effort off the backing of existing networks. If someone wanted to hack a crypto network, they would need to hack more than half of the computers in the network at the same time. Some cryptos only have a few computers backing the network and run the risk of being hacked. However, it's nearly impossible to hack the network of certain coins such as Ethereum and Bitcoin due to the fact that millions of computers are verifying the transactions of those coins at the same time. Cryptocurrency is like regular currency but digital and all one needs to access the market is a smartphone and a digital wallet. No information is needed for a wallet and all the transactions are recorded on a crypto network via blockchain technology. Crypto is decentralized because many miners uphold the network via around the clock computers that work to verify those transactions. What makes this technology so promising has to do with the concept of decentralized finance (DeFi). What decentralized finance does is remove the middleman (bank or broker) and instead replaces them with a network of computers (hence the word ‘decentralized'). This means that individuals can participate in loans, debt, and finance outside of the banking system. While traditional banking is undoubtedly the main source of access to financial products, DeFi has huge implications for the future of finance.

Traditional financial systems are ripe for disruption via digital assets because they offer Instant & 24/7 accessibility, a universal borderless currency, and diversification against traditional stores of value. In recent times, many individuals have expressed dissatisfaction with traditional financial systems as shown by a declining confidence in government currencies and trust in banks/financial services as the result of expensive and slow processes. While the cryptocurrency market is in it's very early stages and still not well understood by many, it does offer solutions and usages that early adopters have seen for years. Close to 2 million people in this day and age don't have access to a bank account and all one needs to start leveraging the power of digital currencies is a smartphone. Those unbanked individuals can be paid in crypto (more specifically stable coins that are pegged to a specific real currency) and bypass the traditional banking system. Crypto can also act as a safe haven to escape from devaluation and inflation which has gone rampant in certain countries like Venezuela. Furthermore, Cryptocurrency can act as an investment (what most people view it as today) and also allows traders to make money by speculating on the price of cryptos if they wish to do so. Although, due to how early this technology is and the inherent risks, it's generally recommended that someone who invests in crypto should only do so with money they are willing to lose. These are just a number of ways that cryptocurrencies can be used and some problems they solve.

While what I've written about thus far may sound promising, there are a number of disadvantages to cryptocurrencies. It is possible to lose your virtual wallet (perhaps you forget your password) and there have also been thefts from websites that let you store cryptocurrency. More so, the value of cryptocurrencies can change significantly and some individuals don't feel safe having their money in cryptos. Security is another factor that hinders people from entering the market. The cryptocurrency market is not regulated by the Financial Conduct Authority (FCA). Certain cryptos are more vulnerable to cyber attacks and scam which has stopped people from investing. In addition to all this is the fact that the technology is difficult to understand and not widely accepted which makes people skeptical.

Now that we've addressed some of the pros and cons of crypto, the question arises as to how fast the crypto market is growing? 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.

As previously stated, 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 2022.

Voyager's Value Proposition (as shown on the September 2021 investor presentation)

  1. Easy to use Mobile and Desktop, Payment Infrastructure
  2. Earn rewards up to 12% yield
  3. 60+ crypto assets & stablecoins
  4. Yield on over 30 coins
  5. Faster execution & deeper liquidity
  6. Community

Q3 2021 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, 2021
  • Total funded accounts exceed 860,000, up 29% from 665,000 at fiscal year ended June 30, 2021
  • Total Assets Under Management grew to $4.3 billion from $2.6 billion at June 30, 2021 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, 2021, from 141 at June 30, 2021, 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 2022 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, 2021). 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.

Management Team

Steve Ehrlich - CEO

Steve Ehrlich is the CEO and Co-founder of Voyager and has worked in the capital markets industry for over 25 years. Steve's first job in the capital markets industry was with TIR Securities. When the company was acquired by E*Trade, he was asked to become a member of the financial team and eventually became the CEO of the company's Professional Trading Division. He later went on to create Voyager in 2018 and took the company public in 2019. In a recent blog post by Steve, he predicted that 2021 would be the year crypto goes mainstream and mass adoption would occur. He states in the blog post that “In 2021 Bitcoin will continue to establish itself as the ultimate inflation and economic hedge, continuing to out-perform every asset class.” So far he has been right about crypto as Bitcoin has achieved a return of 96.52% YTD. He is active on Twitter and can be found under the twitter handle @Ehrls15.

Philip Eytan - Co-founder & Chairman

Philip Eytan is the co-founder and Chairman of Voyager. He began his career at Morgan Stanley in 2000 as an analyst in Telecom M&A. He later went on to help manage a large distressed debt book at Cerberus Capital from 2002 to 2007. After leaving Cerberus, he started his own hedge fund. Since 2007 he has been investing in tech. He was a founding investor in Livestream (sold to IAC in 2017), Socure (cyber fraud prevention company), and an early investor in Uber. Philip co-founded Pager (a digital health startup) in 2014 which he is currently the Chief Strategy Officer and a director. Philip holds a Bachelor and Master degree in Finance and Management from the University of Geneva.

Gaspard de Dreuzy - Co-founder

Gaspard de Dreuzy is a co-founder of Voyager. He is an entrepreneur who started his career as an advisor to Warner Music. He founded Kapitall in 2008 which is an online broker built in partnership with BNY Mellon and IHS Markit. In addition, he co-founded the fin-tech startup Trade.it, a leading investing API platform backed by Peter Thiel as well as the digital healthcare startup Pager.

Oscar Salazar - Co-founder & Advisor

Oscar is a co-founder and advisor of Voyager. He is known for his work with Uber as its founding Architect and Chief Technology Officer. Oscar is also the co-founder and Chief Technology Officer of Pager. In addition to being an advisor to Voyager, Oscar also provides technical and marketing advice to companies such as Rubicon Global, ALEX AND ANI, CARGO X, and more, which are located in the U.S . and internationally.

Recent Developments & Potential Catalysts

Listing on NASDAQ during 2022

On Voyager's most recent Q1 2022 conference call, CEO Steve Ehrlich stated that “Voyager has engaged counsel to start the process to seek a listing on Nasdaq during 2022.” 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, 2021, 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 2022 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.

Conclusion

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 2022, a credit card, a way to invest in NFTs, and access to the European market coming in 2022. 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. As always, best of luck!

Connect with me

Twitter: @TedInvests

Instagram: Tedinvests

Sources:

  1. https://www.pewresearch.org/politics/2021/05/17/public-trust-in-government-1958-2021/
  2. https://www.edelman.com/sites/g/files/aatuss191/files/2021-04/2021%20Edelman%20Trust%20Barometer%20Trust%20in%20Financial%20Services%20Global%20Report_website%20version.pdf
  3. https://medium.com/geekculture/9-problems-solved-by-crypto-b885a9016ec5
  4. https://coinmarketcap.com/charts/
  5. https://www.alliedmarketresearch.com/crypto-currency-market
  6. https://www.marketsandmarkets.com/Market-Reports/cryptocurrency-market-158061641.html
  7. https://www.prnewswire.com/news-releases/cryptocurrency-market-size-to-reach-usd-4-94-billion-by-2030-growing-at-a-cagr-of-12-8—valuates-reports-301370336.html
  8. https://www.cnbc.com/2021/08/18/new-cryptocurrency-bitcoin-user-global-map.html
  9. https://www.stilt.com/blog/2021/11/voyager-crypto-exchange-explained/
  10. https://www.finextra.com/pressarticle/88778/voyager-digital-acquires-coinify-for-84-million
  11. https://play.google.com/store/apps/details?id=com.investvoyager&hl=en_US&gl=US
  12. https://www.investvoyager.com/blog/voyager-ceo-steve-ehrlichs-2021-crypto-predictions/
  13. https://www.investvoyager.com/pressreleases/voyager-makes-an-investment-in-particle-a-new-way-to-own-collect-and-experience-fine-art-through-nfts
  14. https://www.investvoyager.com/pressreleases/voyager-digital-announces-the-voyager-debit-mastercard-r
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VYGVF

Voyager Digital Ltd.

0.47

0.12
35.59%

Return

-96.79%
Change % Since Posting
-14.11
Change Since Posting
14.58
Price When Posted

Metrics

25.00
Target Price
7/ 10
Confidence
1-3 Years
Timeframe
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