FinTech IPO Index Gives Up 1.9% as OppFi Leads Post-Earnings Decliners

Stocks swooned into the end of the week, as inflation data from the government showed us all that inflation’s here to stay, perhaps longer than many investors had anticipated.

And as a result, the read across is that interest rate cuts from the Federal Reserve may not be coming until the summer, if at all. And with the specter of higher rates comes the negative ripple effect of lower loan demand — which would impact many of the names in the FinTech IPO Index. The overall index was down 1.9% for the past week.

There were a few standouts to the upside.

Paymentus continued a post-earnings winning streak, as the shares surged 27%.

As we noted in our own earnings coverage, the company revealed that it had digitally processed 124.8 million transactions in the fourth quarter of 2023, an increase of 28.4% from the fourth quarter of 2022. CFO Sanjay Kalra mentioned that the company plans to invest in sales and marketing to support future growth.

Paymentus said that the strong financial performance was driven by increased transactions from existing billers, the launch of new billers, and growth in its instant payment network (IPN) business. Quarterly revenue was $164.8 million, an increase of 24.7% year over year.

Paysafe reported results for the December quarter.

The company noted in its materials that fourth quarter volumes were 8% higher to $35.8 billion. Revenues were up 6% in constant currency to $414.5 million. The company’s latest quarter growth was led by eCommerce, classic digital wallets and small and mid-sized businesses (SMB). Merchant Solutions volumes were up 8%, with resilience in the SMB market. Digital wallet-related volume was up 13% in the quarter.

The company’s shares were up 4.9% through the past five sessions.

Riskified, whose shares lost a bit more than 2%, said in an announcement that it had launched Auth Rate Enhance, billed as a configuration of Chargeback Guarantee that, per the announcement, helps merchants propel eCommerce growth by maximizing authorization rates and approving more online orders “without compromising on fraud prevention.” In terms of the offering itself, Riskified said that Auth Rate Enhance prescreens orders and enriches the analysis with data points that help issuers authorize more orders.

OppFi Leads Downside

But those gains were offset by other names that gave up ground.

OppFi earnings were released this past week, sending the shares 33% lower.

The company said that is net charge-off rate as a percentage of total revenue improved by 8.1 percentage points to 43.5% for full-year 2023. The annualized net charge-off rate as a percentage of total revenue improved by 12.9 percentage points year over year (YoY) to 46.4% for fourth quarter of 2023.

Total revenue increased 10.7% YoY to $132.9 million for fourth quarter of 2023.

Net originations increased 3% YoY to $192 million. The company added in its earnings materials that its automatic approval rate increased to 73% from 69% YoY, reflecting the continued application of algorithmic automation projects that it has said streamline the origination process.

Total revenue of $510 million to $530 million has been guided for the current year, with adjusted net income of $46 million to $49 million through the same timeframe.

Doma stock sank 20%.

The company posted earnings that recorded revenue gains of 11% in the fourth quarter to $85 million as measured sequentially. Retained premiums and fees were up 7% sequentially to $17 million. CFO Mike Smith said on the conference call with analysts, “During the fourth quarter, the underwriter performance was aided by the strength in the homebuilder portion of the business and positive improvement in gross profit resulting from favorable reserve development.” There should be continued “positive momentum” in the underwriting business, he said during the call.