FinTech IPO Index Moves 3.1% Higher in Earnings-Fueled Rally

Earnings reports were the key determinants of the FinTech IPO Index’s fortunes this week, with the platforms sharply in focus.

No matter the direction of stock prices, a few trends have emerged, where banks and enterprises have looked to these platforms to hasten their own digital shifts in modernizing core operations and fund flows.  Demand for loans was also, in most cases, sharply higher.

Marqeta Surges Double Digits

Marqeta shares were up 19.8%.

The company said this week that growth was borne aloft by new buy now, pay later (BNPL), flexible credential and embedded finance opportunities. Total processing volumes were up 29% and revenues surged by 20%, while management raised guidance for the year. Europe remains a high-growth market, with use cases such as BNPL growing more than 100%. Net revenues gathered 20% year-on-year to $150 million.

Mike Milotich, interim CEO and CFO of Marqeta, said on the call with analysts that “one area of strength has been our continued broadening of lending and buy now pay later use cases … while others eventually caught up on instant issuance, we continued to leap ahead, enabling BNPL providers with pay anywhere card solutions.”

Delving into value-added services, where gross profit more than doubled, according to commentary on the call, there’s been demand for real-time decisioning capability that is Milotich said is “issuer centric” and “allows customers to create rules and controls to manage transaction fraud based on the expansive and diverse underlying transaction information.”

OppFi shares also moved in the wake of the company’s earnings. The firm noted in its materials and commentary that it recorded record quarterly revenue amid an uptick in loan sizes.  Revenue increased 12.8% year over year to a record $142.4 million.

Meanwhile, OppFi’s Model 6 system managed 80% auto-approval rates while reducing net charge-offs.

During the question-and-answer portion of the company’s earnings call, management was asked about the uptick in average loan size, with CEO Todd Schwartz saying that OppFi is “now able to incrementally … increase that up to closer to $5,000.”

Pamela Johnson, the firm’s chief financial officer, added that “our average loan size … has increased by about $100 for the year-over-year.”

Oportun’s second-quarter results notched originations of $481 million, an 11% increase compared to $435 million in the prior-year quarter. Owned principal balance at end-of-period was $2.6 billion, a decrease of 3% compared to $2.7 billion in the prior-year quarter. The company’s annualized net charge-off rate of 11.9%, a decrease of 41 basis points compared to 12.3% in the prior-year quarter; dollar net charge-offs declined 6% year over year, marking the seventh consecutive quarterly decrease, the company said.

But management said in the release that “while first half results exceeded expectations, we expect higher loan repayment rates and a slower decline in our net charge-off rate than previously anticipated for the second half.

Oportun shares slipped 4.1% through the past five sessions.

Upstart Dips Despite Growth in New Lending Lines

Upstart’s shares were 14.9% lower. Triple-digit gains across key business segments — as measured in loan originations and revenues — were notable.

Company materials revealed that revenues surged 102% year on year in the second quarter, while the platform’s loan originations topped more than 372,590 in the period, up 159%. The data showed that as loans topped $2.6 billion, personal loan originations were up 143%. The company also noted that borrowers with super-prime FICO scores represented 26% of originations.

The platform originated more than 4,600 auto loans in the second quarter, up more than 6x from a year ago and up 87% sequentially, equating to $114 million in volume. Home loans were up by 9x year on year to $68 million in originations, jumping 67% sequentially. Management has guided to $1 billion in revenues for the current quarter, which is in line with Wall Street consensus.

During a conference call with analysts, CEO Dave Girouard said that with respect to the auto business, “the dealership adoption right now is like nothing we’ve seen in the past, and the volume of loan requests and closed agreements from our dealer partners is on a steep climb. This is a recent phenomenon.”

Upstart’s models, he added, powered by AI, helped drive conversion rates from 19% in Q1 to 24% in Q2. The improvements were tied to Model 22, which the company launched in early May.