Confirm, Lending Platforms Lead FinTech IPO Index 8% Lower

Lenders and platforms led the FinTech IPO index down for the week, which registered an 8% loss.

But for the group overall, things remain in positive territory so far this year, up 24.6%.

Affirm’s 17% loss on Thursday, which spearheaded the wave of declines, offers a microcosm of what has rocked FinTechs midway through earnings season:

Consumers are pulling back, and as a result, these companies are finding all kinds of challenges to top-line growth. And in many cases they are forced into right-sized surgeries. The right size, which has been seen in other verticals, comes along with significant headcount.

For Affirm, as we reported in our revenue coverage, growth rates are slowing, leading the company to reduce staff and close some operations – notably the crypto initiative. Gross merchandise volume grew by 27% in the second quarter for FY 2023, while a year ago this rate had been 115%. Active consumers grew by 39% in the same period to 15.6 million; growth in this metric in the year since FY 2Q was 150%.

Pulls back on expenses

And when we look at certain segments, the 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.

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

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

Other earnings reports weigh stocks

Bill.com lost 24.3% over the past week, after having reported results showing that Revenue from core subscriptions and transaction fees increased by 49% year-on-year. Bill.com’s management expects third-quarter revenue growth to slow to 47% to 49%.

Robinhood shares lost 9.5 percent.

The company said so for the fourth time quarter, it lost 800,000 monthly active users during the quarter. Transaction-based revenue was down 11% sequentially, and as we noted, Q4 2022 monthly active users of 11.4 million are the platform’s lowest since 2020.

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

MoneyLion Inc. was down 13% in a week that saw the company launches MoneyLion Hot Pass – billed as “a rewards ecosystem” platform that offers content and rewards.

The Toast share fell 7.7 percent. The company has merged 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 partnership allows Toast restaurants to use Google Search and Maps “as an effective 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 in advance or upon pickup.