Fintech Performance has Rebounded with Shares of Public Financial Technology Firms Closing Higher in Q3 – Report

PitchBook has shared key insights that focus on developments in the Fintech and payments ecosystems.

The PitchBook report pointed out that Fintech performance has rebounded with shares of public fintech firms closing higher during Q3 of 2024, tracking the “broader” stock market’s rebound.

PitchBook also mentioned that early concerns about rising inflation as well as potential rate hikes caused market fluctuations, but a late-quarter rally followed the Federal Reserve’s decision to slash interest rates by 50 basis points.

The researchers at PitchBook further noted in its latest Fintech industry report that the median returns were generally positive across all fintech cohorts, and were notably led by property tech (proptech) (+42.4%), medium-growth and legacy fintech (+16.3%), as well as medium-growth and legacy payments (+11.%).

Meanwhile, in comparison, PitchBook pointed out that the S&P 500 as well as the  Nasdaq posted quarterly returns of 4.6% and 0.9%, respectively.

PitchBook also noted that multiples stay mixed with Median enterprise value (EV) to trailing 12-month (TTM) sales multiples saw mixed patterns in Q3. Median EV/ TTM sales multiples expanded for proptech (1.6x to 2.4x), medium-growth & legacy fintech (5.0x to 5.7x), and high-growth payments
(2.8x to 2.9x).

Conversely, PitchBook noted that the median EV/TTM sales multiples contracted for high-growth fintech (6.2x to 5.5x), medium-growth & legacy
payments (4.3x to 3.8x), insurance tech (insurtech) (2.4x to 2.2x), and neobanks, brokers & crypto (4.6x to 4.5x). EV/TTM EBITDA multiples primarily contracted except for medium-growth & legacy payments (10.3x to 11.3x) and medium-growth & legacy fintech (11.3x to 12.6x).

The PitchBook report added that this indicates that although investors continue to value fast-growing fintech companies for their “revenue potential,” concerns around profitability still “weigh heavily” on valuations.

PitchBook further noted that Fintech M&A shows signs of life: While Q3 did not bring a surge in fintech M&A activity, “some notable deals were still observed.”

PitchBook added in its update that several public companies and banks contributed to Q3’s fintech dealmaking activity, such as Paylocity’s $350 million acquisition of Airbase, Global Paymentsacquisition of Yazara, Flywire’s acquisition of Invoiced, U.S. Bank’s acquisition of Salucro, BNY Mellon’s acquisition of Archer, and Amazon’s acquisition of Axio.

PitchBook further noted in its extensive research report that private fintech firms have also seen deals, such as Fintech firm Stripe’s acquisition of Lemon Squeezy, Klarna’s acquisition of Laybuy, and Nuvei’s acquisition of Payaut.

As PitchBook said they have noted throughout this current year, they believe fintech M&A will continue to “tick upward” as interest rates decline and buyers continue to seek opportunities at “discounted valuations.”

The PitchBook fintech & payments comp sheet was reportedly constructed with the PitchBook Excel plugin using both PitchBook and Morningstar data.



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