FinTech IPO Index Loses 0.4% Despite Big Gains by Upstart and Sezzle

The wild Wall Street ride continues as earnings have moved the FinTech IPO Index hither and yon, though the past week wound up being mostly a draw, as the overall Index slipped a relatively tame 0.4%.

Despite the cases where several names reported positive momentum, new subscribers, loan originations and other advancing metrics, the overall selloff that bedeviled markets globally at the beginning of the week was enough to paint most of our names with a broad (red) brush of negative performance.

Investors shot first, as the saying goes, and may not have stuck around to ask any questions later — at least not until the end of the week, when we saw some retracement of losses.

Upstart and Sezzle shares were the standout here, surging a respective 35% and 38%.

The latest Upstart data came in its earnings report on Tuesday (Aug. 6), which noted total revenue was $128 million, a decrease of 6% from the second quarter of 2023, and remained flat sequentially. Total fee revenue was $131 million, a decrease of 9% year over year (YoY). During the quarter, 143,900 loans were originated, totaling $1.1 billion across the company’s platform in the second quarter of 2024, down 6% YoY. Conversion on rate requests, said Upstart, was 15% in the second quarter of 2024, up from 9% a year ago.

Sezzle’s latest report also offered a tailwind to stocks. PYMNTS delved into the report on Wednesday (Aug. 7) and detailed that underlying merchant sales (UMS) increased by 38.9% YoY to $532.2 million, surpassing the previous non-holiday quarterly high. Consumer purchase frequency rose to 4.8 times from 3.3 times in the same period in 2023. The top 10% of consumers transacted 70 times per year on average. Total revenue grew by 60.2% YoY to $56 million, accounting for 10.5% of UMS.

Decliners Drove Overall Performance

MoneyLion’s stock sank more than 26.7%.

In earnings coverage posted here, the company’s new business model helped it attain a second straight profitable quarter as it announced its Q2 earnings Tuesday. Total revenues on a net basis increased 23% to $130.8 million for the second quarter of 2024 YoY, with a net income of $3.1 million for Q2 versus a net loss of $27.7 million in the second quarter of 2023. Adjusted EBITDA was $18.5 million for the second quarter of 2024 versus $9.2 million in the second quarter of 2023.

Total customers grew 73% YoY to 17 million, and total originations grew 40% to $770 million.

Opendoor’s stock lost 21%.

In the company’s latest quarter, the data shows that revenue of $1.5 billion was down 24% versus 2Q23 and up 28% versus the year ago second quarter; the company said there were 4,078 total homes sold, down 24% from a year ago and up 32% versus the first quarter of this year. During the most recent period, the company purchased 4,771 homes, up 78% from a year ago.

Shares of Alkami were slightly lower by 0.5%.

In a Tuesday press release, Texans Credit Union (Texans), announced the launch of Atomic Financial’s direct deposit switching solution, in partnership with Alkami. The joint efforts, the companies said, enable Texans’ members to manage and transition their direct deposits with enhanced efficiency through their payroll providers. Members can now independently initiate changes without the involvement of HR representatives.

Flywire’s stock was 8% higher. As reported here, Flywire has acquired Invoiced, a software-as-a-service (SaaS) platform that enables B2B finance teams to automate the order-to-cash process. This acquisition will enhance Flywire’s B2B payments solution, extend its customer footprint across a diversified customer base and provide it with the opportunity to monetize the domestic and international invoicing volume managed by the Invoiced platform, Flywire said, per the announcement.

As we noted in our coverage of Marqeta’s results, the company’s total processing volumes (TPVs) surged 32% to $71 billion.

During the conference call with analysts, CEO Simon Khalaf noted on Wednesday that “consumers continued to branch out in financial services looking for alternatives to traditional banks,” as had been seen in past quarters.

With a nod to the just-announced five-year pact with Varo Bank and other relationships, Khalaf said that TPV growth and momentum “goes well beyond financial services.”

Use cases across the company’s platform continue to grow, and 10 of the top 20 company customers’ volumes grew by more than 50% YoY in the quarter. Use cases include expense management, small- to medium-sized business working capital and buy now, pay later options. Pay anywhere card solutions are now 15% of BNPL volumes, management said on the call. On-demand delivery growth was in the double digits as well, per commentary on the call.

Looking ahead, management said it expects 2H 2024 TPV growth to remain north of 30%, based on the current business trajectory and newer programs that are still ramping up. Investors sent the shares down about 3% in after-hours trading.

Marqeta shares were 4.3% higher through the week.

We saw Robinhood’s stock slip more than 12% through the past five sessions. In the company’s latest earnings report, the company’s total net revenues for the second quarter 2024 increased 40% year over year to $682 million, while transaction-based revenues increased 69% year over year to $327 million.

Per Robinhood’s materials, this 69% growth was primarily driven by options revenue of $182 million, which was up 43%; cryptocurrencies revenue of $81 million, up 161%; and equities revenue of $40 million, up 60%.