FinTech IPO Index Edges Up 1.7% as Katapult Earnings Lead Platforms Higher

This week was dominated by earnings reports from fintech firms specializing in connecting supply and demand, such as those in lending and modernizing payments between merchants and consumers. Despite ongoing stock volatility, the FinTech IPO Index climbed 1.7%.

FinTech IPO Index Highlights

Katapult saw its stock soar by 18.5% this week. The company reported that Katapult Pay gross originations grew over 150% year-over-year to $55.6 million, with 55.9% of these originations in Q1 2024 coming from repeat customers. Total revenue increased by 18.1% to $65.1 million.

Blend Labs experienced a share increase of just over 15%. Their Q1 2024 earnings revealed total company revenue of $34.9 million, comprising $23.8 million from the Blend Platform segment and $11.1 million from the Title segment. Within the Blend Platform, mortgage suite revenue declined by 15% year-over-year to $15.1 million, while consumer banking suite revenue rose by 29% to $6.7 million. Professional services revenue increased by 21% to $2.1 million.

Paysafe saw a 15.2% rise in its stock. The company’s earnings report indicated an 11% increase in revenue from its Merchant Solutions segment, driven by strong eCommerce performance and SMB client demand. Digital wallet-related revenue increased by 5%, mainly due to growth in the gambling sector. Overall, consolidated revenue rose by 7% to $418 million on a constant currency basis, with total payment volume up 7% to $36.1 billion, and transactions per active user increasing by 14%.

Open Lending shares climbed 7.8% following their partnership with Core Specialty Insurance Holdings, which will now provide credit default insurance policies for Open Lending’s Lenders Protection platform.

Robinhood saw a modest increase of 3.4% over the past week. The company exceeded Q1 profit expectations, driven by strong cryptocurrency trading volumes and a 22% rise in net interest revenue to $254 million. Retail traders, optimistic about economic prospects, have reentered the market, resulting in a 59% increase in transaction-based revenue.

Oportun shares rose by 2.7%. The company’s official Q1 report on May 9 confirmed preliminary results, showing aggregate originations of $338 million, down from $408 million last year. The portfolio yield was 32.5%, an increase of 113 basis points from the previous year, and the annualized net charge-off rate improved to 12% from 12.1% a year ago and 12.3% in the previous quarter.

Declines in the Index

dLocal experienced a significant decline, with shares dropping by 27%. Despite a 49% year-over-year increase in total payment volume to $5.3 billion and a 34% rise in revenue to $184.4 million, gross profit margins were pressured by renegotiated terms with a top merchant and higher payout volumes. Consequently, operating income fell by 32% year-over-year.

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Nu Holdings reported the addition of 5.5 million customers in Q1, bringing its global total to 99.3 million by the end of March. The company, now the fourth-largest financial institution in Latin America by customer count, saw monthly average revenue per active customer grow by 30% year-over-year. However, its shares slipped by 0.6%. The NPL ratio for its Brazilian consumer credit portfolio was 5%, consistent with expectations and historical patterns.

Expensify added unlimited virtual cards to its spend management platform. The new Expensify Visa Commercial Card allows businesses to manage expenses across employees and merchants, setting fixed or monthly spending limits for each card. Despite this innovation, the company’s shares fell by 3.4%.

In summary, the fintech sector showcased a range of performances, with several companies delivering strong earnings that boosted the FinTech IPO Index, while others faced challenges that impacted their stock prices.

Source: pymnts.com

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