Pitchbook is reporting mixed fintech performance as public fintech companies delivered mixed returns in Q1 2024.
Pitchbook notes in a report that when “compared to the S&P 500’s 10.2% return and Nasdaq’s 9.1% return for the quarter, the neobanks, brokers, and crypto cohort was the greatest outperformer with a median return of 47.8%.”
According to the research report from Pitchbook, this was primarily “driven by the rebound of companies previously thought to be ‘left for dead’ (Dave, MoneyLion, Robinhood, and Coinbase), which have now rallied on robust financial results.”
Conversely, the proptech cohort was “the greatest underperformer, delivering a median return of -32.4% for the quarter. However, Latch was a bright spot among its peers, as the company saw a return of 16.4% in Q1.”
The report pointed out that Multiples see positive re-ratings: Several fintech cohorts saw “their enterprise value (EV)/trailing 12-month (TTM) sales and EV/TTM EBITDA multiples expand compared with Q4 2023. Cohorts that saw the strongest expansion of their median EV/TTM sales multiples include neobanks, brokers, and crypto (3.2x to 4.4x); medium-growth and legacy payments (3.8x to 4.5x); and medium-growth and legacy fintech (5.2x to 6.1x).”
In contrast, median EV/TTM sales multiples notably contracted “for high-growth
fintech (8.7x to 8.2x) and proptech (1.8x to 1.7x).”
The Pitchbook report added that public fintech companies “have also generally traded on higher multiples due to greater EBITDA growth.”
Positive re-ratings for EV/TTM EBITDA multiples “were seen for companies in high-growth payments, medium-growth and legacy payments, and neobanks, brokers, and crypto.”
The report from Pitchbook further noted that acquisition activity rises: Q1 saw “a noteworthy level of M&A activity as the valuation dissonance between buyers and sellers began to dissipate. The largest deal announced in the quarter was Capital One’s $35.3 billion all-stock acquisition of Discover.”
Other notable deals seen in the quarter “include Nationwide’s $3.7 billion acquisition of Virgin Money; Barclays’ $76.1 million acquisition of Tesco Bank; Thomson Reuters’ and Vertex’s $429.0 million acquisition of Pagero; Stripe’s acquisition of Octane; S&P Global’s acquisition of Visible Alpha; and nCino’s acquisition of DocFox. Nuvei was also bought by PE firm Advent International in a $6.3 billion public-to-private deal for all cash, while Shift4 Payments seems to be fielding interest for a sale—though the company has not accepted bids from Fiserv or Amadeus.”
Pitchbook’s reported concluded that they “continue to expect acquisition activity this year to finish ahead of 2023 levels.”
