Fintech Q4 2021 Earnings Overview

metamorworks/iStock via Getty Images

By Bradley Cipriano, Equity Analyst for I/O Fund

Fintech companies aim to disrupt traditional finance and with our increasingly digital worlds, it only makes sense that traditional finance is also moving online. Many different innovations have taken place, from digital payments to using AI to better assess credit risk.

We’re in the middle of the fourth quarter fintech earnings period, and there have been a handful of fintech companies that have already released reports, including PayPal. PayPal disappointed when its guide fell short of expectations. The company cited weakness among lower-income cohorts and explained on its fourth quarter conference call that while spending was strong during the fourth quarter holiday season, it has since stagnated in 2022. This has led the company to reduce her guide that she originally published in November.

This negative commentary was offset by, which reported strong fourth quarter results, driven by the strength of small and medium-sized businesses. reported its fourth consecutive quarter of accelerating revenue growth, suggesting SMBs are performing strongly.

In the discussion that follows, I provide an overview of the fintech space and outline the key metrics investors need to know before hitting fourth quarter earnings.

Fintech: Top 10 EV/FWD revenue multiples

Below, we’ve ranked fintech stocks by their EV/NTM sell multiples. (BILL) ranks number one as the company reported a string of strong results over the past few quarters. For example, sales have accelerated for four consecutive quarters, even after adjusting for acquisitions. As mentioned above, the company has done well with its core cohort of small and medium-sized businesses, suggesting that business activity continues to be robust beyond businesses.

Global payment processors Visa (V) and Mastercard (MA) also sport premium multiples, likely due to their payment duopoly. However, it should be noted that Visa and Mastercard have underperformed in 2021, as investors may be wary that the pair will be able to retain its relatively high fees. For example, Amazon has stopped accepting Visa credit cards in the UK in a dispute over payment charges. Amazon controls more than 40% of e-commerce, so the e-commerce giant may be able to pressure the duopoly to lower fees.

EV/AV table

I/O Funds and YCharts

Fintech: Top 10 three-month forward annual growth rates

Below is a chart of the fintech stocks expected to grow the fastest in sales over the next quarter. Looking ahead, Upstart (UPST) is expected to grow sales 238% year-on-year in the fourth quarter, which is well ahead of its peers but slightly slower than its 262% growth rate in the third quarter. Upstart’s growth has benefited from banking partnerships, which use Upstart’s AI-powered lending platform to originate loans. The company primarily issues personal and auto loans, which have seen strong growth in recent months. The New York Federal Reserve recently released its quarterly report report on Household Debt and Credit, which pointed out that auto loans and personal loans both increased by $15 billion sequentially and that delinquencies also fell across different loan categories, pointing to the environment favorable macroeconomics for Upstart.

Coinbase (COIN) is also expected to grow more than 200% in the next quarter as trading volume on the cryptocurrency exchange has exploded this year, with trading volumes up more than 600% year-over-year. annual to reach $327 billion in Q3 2021. Guided direction for higher trading volumes in Q4 compared to Q3, due to higher levels of volatility. Also of note is Voyager (OTCQX:VYGVF), a cryptocurrency trading platform that is expected to grow sales by more than 3,000% year-over-year in the next quarter. Voyager has been excluded from the table below for presentation reasons, as sales are growing from a low base. However, sales are expected to increase by 50% sequentially, underscoring the overall strength of cryptocurrency demand.

I/O Funds and YCharts

I/O Funds and YCharts

Top 10 Weekly Stock Price Moves

Below is a chart of the weekly share price change for our fintech stock universe (as of 2/08). As mentioned above, recently reported results and organic sales accelerated for the fourth straight quarter, leading its stock price to rebound. However,’s share price is still down year-to-date. In fact, most fintech stocks are down year-to-date, with the exception of Visa and Mastercard. Investors likely sold fast-growing fintech companies in favor of “safer” high-tech stocks such as Visa and Mastercard. Nonetheless, fintech has started to rebound over the past week and fourth quarter earnings could be an additional catalyst for a rebound in valuations.

Weekly stock price movements

I/O Funds and YCharts

Top 10 Changes in Sales Growth Estimates – Last 90 Days

The table below ranks fintech stocks according to their major revisions over the past 90 days. An increase in revenue revisions indicates that the street believes the business will grow faster than initially thought, which may lead to outperformance. Block Inc. (SQ) has undergone significant revisions, in part due to its recent acquisition of the BNPL Afterpay platform.’s (BILL) forecast exceeded expectations, leading to a higher sales estimate. It should be noted that’s peer, Intuit (INTU), has also seen its revenue estimate increase by 5% over the past three months. Software provider QuickBooks is likely enjoying similar tailwinds to as SMBs have performed well in recent quarters.

EV/FWD Revenue Multiples

I/O Funds and YCharts

Update on EV/Fwd revenue multiples:

Global statistics:

  • Global fintech forecast median: 4x
  • Front median of the fintech top 5: 15x
  • Overall fintech forward average: 6x


As shown below, the median and average fintech EV/NTM sales multiple had been relatively static throughout 2021, but has since compressed significantly in 2022. Valuations are now below the levels they were in 2020. The market may be concerned that consumer spending may decline due to a lack of stimulus and a slowing economy. With fourth quarter earnings on the horizon, new information could lead to a “risky” environment in fintech and a rebound in valuations.

EV/FWD Sales

I/O Funds and YCharts


In the chart below, we can see the wide dispersion of fintech valuations more clearly, as the top 5 valued fintech stocks saw their EV/Fwd sell multiples increase throughout 2021 with a peak in October, followed by of a general sale. heading into 2022. The top 5 fintech stocks and the median sold off, suggesting that the selling was widespread and related to changing sentiment.

Top 5 EV/FWD Sales

I/O Funds and YCharts

EV TO FWD Sales Growth Segments:

We can further dissect the evolution of fintech valuations by dividing the group into high growth (>30%), medium growth (>15% and

EV to FWD Sales Growth Segments

I/O Funds and YCharts

FWD EV Best Sellers:

The chart below provides a more holistic view of fintech valuations ahead of Q4 earnings, sorted by EV to NTM earnings multiples. There is a wide disparity in valuations, with companies clustered closer to the tail than the median. As mentioned above, (BILL) has a higher valuation and has already reported fourth quarter results, which surprised on the upside. PayPal (PYPL) fell below the median valuation of the fintech based on NTM sales after its disappointing fourth quarter results, as management explained that spending on its platform slowed after the holiday shopping season .

Best Selling VE to FWD

I/O Funds and YCharts

EV/Fwd revenue adjusted for growth (EV/Fwd Rev/Fwd Growth)

The latest chart is based on EV to FWD sales, but also takes into account future growth expectations. By laddering valuation against future growth, we can see more clearly which companies are the cheapest against future growth. Companies with negative growth expectations are excluded from the chart below. A low value in the chart below means a company is cheap relative to growth. Interestingly, PayPal (PYPL) stands at a relative premium valuation after factoring in its future growth. On the other hand, DLocal (DLO) is approaching the median valuation once you consider its expected growth rate of 112% ahead of Q4 earnings.

EV/FWD Adjusted Growth

I/O Funds and YCharts

Finally, the last chart we will discuss includes aggregate fintech operating metrics. The table below illustrates the median revenue growth, margins, and FCF generation for the fintech industry. The median growth rate was 60% and the market expects the median fintech stock to increase sales by 42% year-on-year in the next quarter. Median gross margins were 54% and median free cash flow margin was 9%.

Fintech Aggregate Operating Metrics

I/O Funds and YCharts

As noted above, the overall fintech space appears to be healthy, with high growth rates and strong margins. This supports a rebound in valuations ahead of fourth quarter earnings.

Comments are closed.