FinTech IPO Index Slips 2.4% as OneConnect, Lufax Decline After Earnings Reports

The last of the earnings reports are trickling in across the FinTech IPO Index, with more decliners than gainers, which in turn helped send the index down 2.4% for the week.

OneConnect posted results that showed total revenues declining in the most recent quarter by 9.1% year over year to RMB 925.9 million ($130.8 million). The company noted in its earnings filings with the Securities and Exchange Commission that the revenue slide came amid a decline in transaction-based and support revenues. Shares were down 21.4% over the week.

Lufax Holding’s own latest quarterly earnings report detailed a nearly 26% decline in the outstanding balance of loans to RMB 495.2 billion ($70 billion) as of March 31, 2023. The cumulative number of borrowers increased by 9% to approximately 19.4 million at the end of the most recent quarter. New loans enabled in the quarter were 65% lower year over year.

The 30-plus days past due delinquency rate for the total loans the company had enabled was 5.7% at the end of the March quarter, increasing from the 4.6% rate seen at the end of 2022. The 90-plus day delinquency rate for secured loans was 1.9% as of the end of March this year compared to 1.2% as of Dec. 31, 2022.

Yong Suk Cho, Lufax CEO, said on the conference call with analysts that “it is clear that macro and operating environments continue to pose challenges for many small business owners. However, we are encouraged by some indications of an economic rebound, giving us cautious optimism in our U-shape recovery.” Lufax shares were down more than 18% on the week.

InsurTechs Get Some Ink the Journal

Shares of Hippo Insurance were 13.7% lower and shares of Lemonade were basically flat in a week that saw The Wall Street Journal report that the promise of disrupting the insurance industry has not panned out.

The Journal noted that Lemonade, Root Insurance and Hippo “have each lost tens of millions of dollars in their most recent quarters and watched their share prices plummet over the last few years.”

Among the pain points, contended the article, has been the fact that gathering and analyzing data to build effective pricing models has been difficult and profits have not come in tandem with efforts to build those models.

Paysafe shares gave up 9% through the past five sessions. As noted in our own coverage of the most recent earnings report, revenues were up 7%, tied to a rise in digital wallet use, which was up double-digit percentage points. Paysafe’s first-quarter revenue was $387.8 million, compared to $367.7 million in the same quarter last year. Digital wallet revenue rose 2% on a reported basis and 6% on a constant currency basis.

These declines overpowered the flat-to-slight gains seen several other names through the week, and more than offset the most notable gainer in the week: XP Inc. saw its share surge by 11.9%. The company’s shares continued on the uptrend in the wake of earnings reported earlier in the month. The company posted first-quarter earnings that showed a 9% boost in client assets to 954 billion reais ($189.4 billion) in Brazil. Active clients were up 13% year over year to 3.9 million.