The future of fintech is undeniable, but which ASX fintech stocks are actually profitable?
- Only a handful of fintech plays on the ASX have reached profitability
- Digital lenders are the torchbearers
- Some BNPL companies are making money
The collapse of Openpay (ASX:OPY) last week raised concerns about the viability of the BNPL business model, and more generally the health of the fintech sector.
But despite the fragile state of the economy, finTech companies on the ASX are not doing too badly and are slowly approaching their next maturity milestone, profitability.
While some are still a long way off, a handful of companies have already launched themselves on the road to profitability.
Non-bank lender Propeller (ASX:PHL) for example, has launched a massive cost-cutting initiative in Q1 to achieve first profits.
Change Financial (ASX:CCA) has also readjusted the cost base to make the business more efficient and enable future growth and profitability.
Digital lenders shine
Meanwhile, digital lenders have proven time and time again to be torchbearers for the industry.
A handful of companies in this segment have already crossed that profitability bridge, delivering the elusive positive bottom line for shareholders.
MoneyMe (ASX:MME) is one of the leaders in this group of lenders outside the banks.
In the last quarter, MoneyMe’s shift in focus from high growth to cash returns has resulted in a return to statutory profit, beating analysts’ expectations.
For the quarter, MoneyMe reported record gross revenue of $60 million (up 140% higher than pcp), and $117 million for the half (up 143% higher than pcp).
The company also reported a solid bottom line NPAT of $8m for the half, compared to a $19m loss in pcp.
This momentum has also enabled MoneyMe to upgrade its gross revenue guidance from $200m to $220m for the full year.
Plenti Group (ASX:PLT) was another digital lender that had a profitable quarter.
Coming off a strong first half where it delivered cash NPAT of $1.4 million, the company has now followed that up with a strong Q3.
The loan portfolio increased by $1.67 billion, 51% higher than pcp driven by the auto loan business, which has grown every quarter.
Plenti also delivered more positive cash NPAT on its bottom line in the quarter, saying it remains on track to meet its H2 targets.
Harmony (ASX:HMY) is another profitable digital lender on the ASX.
The company delivered cash NPAT of $2.3 million for the half, its second consecutive half year with a positive cash NPAT.
This was on the back of revenues of more than $50 million in the last six months, and a 23% increase in loan orders to $240 million.
These BNPL shares are earning profit
BNPL sector’s largest player in Australia, Block Inc (ASX:SQ2)will report its earnings on February 23.
That report will include the results of one-time market darling, Afterpay.
Meanwhile, Zip Co (ASX:ZIP) has started 2023 with a bang with its American operations delivering a cash EBITDA positive result for the first time.
Zip US’ positive cash EBITDA in November and December means it is on track to exit FY23 cash EBITDA positive on a sustainable basis.
At a group level, Zip continues to deliver solid top line accounting with strong results across its consumer business in its core US and ANZ markets.
Zip reported record revenue of $188 million, up 12% year over year, along with record quarter transaction volume of $2.7 billion, up 22% quarter over quarter.
Sezzle (ASX:SZL) achieved positive net income and adjusted EBITDA for the second consecutive month.
In Q4, net income was USD 0.5 million, compared to a net loss of USD 25.9 million in pcp.
Adjusted EBITDA increased further to $3.8 million in Q4, compared to a loss of $24.5 million on pcp.
Sezzle Premium now has over 122,000 active subscribers.
Credit Intelligence (ASX:CI1) meanwhile is a hybrid game of digital lending and BNPL.
For the half, CI1 delivered a consolidated profit of $480k. But it was 70% lower than pcp.
This profit does not include adjustment for impairment of goodwill, which is still subject to assessment by the auditor.
The board expects the final half-year results to be completed by the end of this month.
