As consumers are restricted to their homes and businesses are observing social distancing measures with majority staff working from home, there has been a major shift where most of the business, particularly financial activities have gone online. This includes purchasing grocery and essential products, managing personal finances, trading shares, ordering food, managing funds, applying for credit, as well as donating to charities and non-profit organisations.
FinTech refers to any kind of technology that is targeting and modernising the traditional methods used in the delivery or provision of financial services. Currently, it is an emerging industry in a fast growth phase and successfully delivering improvements for advanced functioning of the financial ecosystem.
At the background of restrictions imposed in the past two months to contain spread of the coronavirus pandemic in Australia, FinTech companies have been revelling, as more and more consumers and firms have been going online to avail their respective services. As a result, despite the market turbulence, some of these companies have actually been thriving, underpinned by an impressive performance by their respective stocks as investors flock to the FinTech industry to lock in gains and safeguard their portfolio amid extreme market volatility.
One may also assume that the FinTech sector is contributing to buoyancy of investors’ confidence that had taken a hard hit, globally, over the last few weeks.
Let us consider the following five ASX-listed FinTech stocks going steady in the current scenario.
Pushpay Holdings Limited (ASX: PPH)
Pushpay Holdings Limited operates as a global holding company for its subsidiaries, that are engaged in design and development of mobile payment application and solutions for users to donate to charities and non-profit organisations.
Robust FY20 Performance - For the full year ended 31 March 2020, Pushpay Holdings delivered a strong result including total revenue of USD 129.8 million, up 32% from USD 98.4 million. Besides, operating revenue rose by USD 27.2 million from USD 95.9 million to USD 123.1 million, depicting an increase of 28%. Gross margin for the year also expanded by five percentage points, from 60% to 65% and EBITDAF increased to USD 25.1 million, up 1,506% from USD 1.6 million recorded in the same period a year ago.
Pushpay’s cash flow also turned positive for the period and would provide grater flexibility to the Company, as it continues to assess further potential strategic acquisitions that would broaden current proposition and add value to the business.
The result has been achieved, despite the current COVID-19 situation, through a targeted implementation of company strategy, growing team capabilities and expertise, and responsible investment into product design and development.
Zip Co Limited (ASX: Z1P)
Leading digital retail finance and payments company, Zip Co Limited provides point-of-sale credit and digital payment services to different industries including retail, education, health, and travel with the focus being transparent, responsible, and fairly priced consumer products.
Strong March Quarter Numbers - As a licensed and regulated credit provider that is aided by a team with over 50 years’ experience in retail finance and payments, Zip has delivered a great March Quarter 2020 with revenue of $ 45.0 million, up 96% year-on-year and receivables of $ 1,168.2 million, a 107% increase from the pcp. Moreover, the quarterly transaction volume grew 84% year-on-year to $ 518.7 million and customer numbers increased to 1.95 million, up 67% year-on-year.
Amidst a globally turbulent operating environment, Zip Co signed its first global payments deal with the Cotton On Group across Australia, New Zealand, UK, South Africa and the US, while new merchants like City Chic, Grill’d, Nandos, Barbeques Galore, PVH Brands (Calvin Klein, Tommy Hilfiger) and a number of other major retailers joined the company’s platform.
Zip Co has also implemented decisive action in response to COVID-19, including a number of cost-cutting initiatives.
EML Payments Limited (ASX: EML)
EML Payments is engaged in the business of providing innovative financial technology based solutions for payouts, gifts, incentives and rewards, and supplier payments. The Company serves some of the largest corporate brands, globally, processing large payments in billions of dollars every year with utmost transparency, efficiency and flexibility. EML manages over 3,500 programs in 26 countries across Europe, North America, and Australia.
New Acquisition - Recently on 1 April 2020, EML announced to have acquired Prepaid Financial Services (Ireland) Limited at a value consideration including an upfront payment of GBP 226 million plus an earn-out over 3 years of GBP 55 million funded through a combination of cash, shares and a syndicated debt facility.
Trading in Line with Guidance - On 19 March 2020, EML announced that trading for the first eight months of the year to 29 February 2020 has been strong with gross debit volume (gdv) of $ 8.71 billion (up 58% over pcp), revenue of $ 79.6 million (up 25% over pcp), gross profit margin of 75.9% with a 34% increase in EBITDA to $ 25.3 million.
The results were in line with upper end of the FY20 guidance earlier announced, however, due to the unpredictable trading environment caused by COVID-19, EML suspended its forward earnings guidance and continues to monitor the Gross Debit Volumes (GDV) closely on a daily basis.
FINEOS Corporation Holdings Plc (ASX: FCL)
FINEOS Corporation, a leading provider of core systems for life, accident and health insurance carriers globally, has been scaling up rapidly, working with innovative progressive carriers in North America, Europe, and Asia-Pacific.
Cashflow Positive March Quarter - The Company recently published its quarterly activity report for the three-month period ended 31 March 2020 (3Q20), reporting a cashflow positive quarter with a closing cash balance of EUR 37.0 million, up from EUR 34.7 million as at 31 December 2019.
Cash receipts for the period totalled EUR 24.1 million, an increase of 45%, over the prior quarter, demonstrating cyclical billing collections in the third quarter of the financial year. Also, the headcount stood at 831 at 31 March 2020, an 11% increase over the prior quarter with growth mainly in the product consulting division.
FINEOS also maintained a High Product Consulting employee utilisation rate with a year-to-date average of 91%, reflecting sustained strong demand for services work while two new clients came onboard during 3Q20 for the FINEOS Claims and Absence products, bringing total new name contracts won to seven (7) for the financial year to date.
The Company reaffirmed that business is on track to achieve upper end of the revenue guidance range of EUR 84-86 million.
Tyro Payments Limited (ASX: TYR)
Technology-focused and values-driven company, Tyro Payments offers simple, flexible and reliable payment solutions along with value-adding complementary business banking products to businesses in Australia.
Trading Update - In the first half of FY20, more than 32,000 Australian merchants had opted for Tyro as their preferred service provider. As a result, the Company processed more than $ 11.1 billion in transaction value, with revenues totalling ~$ 117.3 million, originating loans amounting to ~$ 37.4 million and merchant deposits held in total of $39.7 million.
Currently, Tyro Payments is the fifth largest merchant acquiring bank in Australia based on the number of market terminals, just behind the four key banks.
Interestingly, the Company has been providing transaction value updates to the market for the balance of FY20 on a weekly basis, to maintain transparency about the impact of COVID-19 on its operations. The COVID-19 Trading Update #7 - Week Ended 1 May 2020 is given below:
Tyro Payments has also lodged a Participating Lender Agreement with the Department of Treasury as it was selected to participate in the Government’s Coronavirus SME Guarantee Scheme, offering working capital support to SMEs to help them through COVID-19.
With the pandemic continuing to affect the globe, healthcare companies are evaluating their lead compounds for COVID-19 treatment. Future revenue for these stocks depends on the probability of launching an approved treatment in the market.