FinTech IPO Index Plunges 6.6% as Upstart and Nuvei Earnings Weigh on Shares

Seemingly everywhere you looked this past week, earnings were the sole arbiter of how stocks performed.

And no matter the earnings, almost across the board, the performance was decidedly to the downside.

The FinTech IPO Index sank 6.6% through the past five sessions, led by several double-digit decliners that gave back notable run-ups — at least in part — that had occurred through recent past. Year to date, the performance is still positive, as the index is up 32%.

Leaders to the Downside

As to the leaders of losses:

Upstart posted results that wound up spurring a stock downdraft that ate into triple-digit gains notched through the past several months.  Revenues sank by 40% to just under $136 million.

The company’s earning announcement said 88% of its unsecured loans were fully automated. The company also disclosed that 70% of applicants used a mobile phone to apply. The stock declined more than 53% through the past week.

In our own coverage of Nuvei’s earnings results, we noted that total payments volume increased 68% to $50.6 billion from $30.1 billion, and revenue increased 45% to $307.0 million from $211.3 million.

Management said on the conference call with analysts that during the quarter, the company onboarded two large independent software vendors, processing more than $1 billion in annual volume and servicing over 20,000 unique locations across North America. Nuvei lost 43.6%.

Hippo Insurance shares gave up 37%. The company said this past week that total generated premiums during the quarter were $318 million, up 56% year over year. Revenues surged 66% to $48 million. But management noted on the conference call with analysts that catastrophic weather-related losses attributable to Hippo were $108 million compared to a loss of $74 million last year.

Lemonade stock lost 11.6%.

In the company’s latest results, the company said that at $687 million, in-force premiums grew by 50% year over year. Premiums per customer stood at $360, up 24% year over year. The total customer tally was up 21% to 1.9 million. Second quarter gross earned premium of $163.9 million increased by $57.1 million or 53% vs. the year ago second quarter.

Some Gainers Too

Opportun shares were up 17.5%.

The company said this week that its membership roster gained 10% to 2 million vs. the year ago June quarter.

Products were 2.2 million, an increase of 12% compared last year. Aggregate originations were $485 million, down 45% compared with 2022’s second quarter.

Managed principal balance at the most recent end of period was $3.25 billion, flat compared to the prior-year quarter. The company noted that its annualized net charge-off rate of 12.5%, increasing from 8.6% last year.

Separately, the company also said that it had struck a pact for a $400 million whole loan flow sale agreement with Castlelake, for loans to be originated through the next 12 months.

Toast was up 10%. As reported here, less than a month after restaurant point of sale (POS) provider Toast rolled back its decision to add a $0.99 fee for consumers on online orders of $10 or more, Toast CEO Chris Comparato acknowledged that the company erred.

“Listening to our customers is a core ethos for how we operate, and our day-to-day efforts are guided by a relentless focus on being the restaurant community’s trusted partner. It was on this basis and after extensive constructive discussions with our customers that we decided to remove the $0.99 consumer facing fee from Toast digital ordering channels,” Comparato told analysts on the call.

He added that the company will be “more thoughtful” on how pricing is adjusted moving forward. The restaurant technology platform said it surpassed $1 billion in annual recurring revenue in Q2 and posted positive adjusted EBITDA and free cash flow for the first time as a public company.

Paymentus shares led companies that showed positive performance through the week, up just about 30%. Paymentus added bookings and new clients across a variety of verticals in its most recent quarter,  and the company recorded 24.1% revenue growth year over year to $148.9 million.