Affirm, Lending Platforms Lead FinTech IPO Index 8% Lower

The lenders and platforms led the FinTech IPO Index down in a week, which logged an 8% loss.

But for the group, overall, things are still in positive territory year to date, with a 24.6% surge.

Affirm’s 17% loss Thursday, spearheading the spate of decliners, and offering up a microcosm of what’s been shaking up FinTechs amid earnings season:

Consumers are pulling back, and as a result, these companies are finding all manner of challenges to top-line growth. And in many cases, they’re being forced to right-size operations. The right sizing, as has been seen in other verticals, comes along with sizable headcount reductions.

For Affirm, as we reported in our earnings coverage, growth rates are decelerating, leading the company to slash staff and shutter some operations — notably its crypto initiative. Gross merchandise volumes grew by 27% in the FY 2023’s second quarter, whereas a year ago, that rate had been 115%. Active consumers grew 39% in the same period to 15.6 million; growth in that metric in the year ago FY 2Q was 150%.

Pulling Back on Spending

And, drilling down into certain segments, sporting goods and outdoor categories were down 49% year over year (due to a decline in Peloton GMV), the electronics category was down 11% year over year, while the home and lifestyle category (which includes items such as furniture) grew just 2% year over year.

Folks are digesting the purchases they made during the pandemic, management said. And in response, Affirm is cutting 19% of its staff.

Upstart lost 31% through the past five sessions. As reported, headed into February, 365 employees were cut due to reduced demand for lending. The company noted in a U.S. Security and Exchange Commission filing that many lenders and credit investors have significantly reduced loan originations — and Upstart also has said it would suspend the development of its small business loan product “until macroeconomic conditions improve,” according to the filing.

Other Earnings Reports Weigh on Shares

Bill.com shed 24.3% through the past week, having reported results showing that core subscription and transaction fee revenues gained 49% year on year. Bill.com’s management expects third-quarter revenue growth to slow to 47% to 49%.

Robinhood shares lost 9.5%.

The company said that for the fourth quarter, it lost 800,000 monthly active users during the quarter. Its transaction-based revenues were down 11% sequentially, and as we noted, the fourth quarter 2022 monthly active user count of 11.4 million is the platform’s lowest going back to 2020.

Share of nCino slipped 6%. Earlier this week, the company announced a value-added reseller agreement with Rich Data Co., an artificial intelligence (AI) decisioning platform, to enhance the lending process for its customers. The companies said the partnership would “equip financial institutions with deeper insights into their clients’ business and improve, streamline and further automate workflow and monitoring,” creating significant value and efficiencies in small business and commercial lending.

MoneyLion Inc. was off 13% in a week that saw the company launch MoneyLion Hot Pass — billed as “a rewards ecosystem” platform offering content and giveaways.

Toast shares were down 7.7%. The company has teamed with Google to streamline online ordering.

The company has integrated Order With Google into its platform, allowing restaurants to unlock a new channel for orders, Toast said this week.

According to the release, the collaboration lets Toast restaurants use Google Search and Maps “as an efficient ordering channel and marketing engine.” With Order With Google, customers can search for the food they want, connect with local restaurants, and pay for their orders either ahead of time or at pickup.