Which ASX fintech companies are actually profitable. Picture Getty Image
The future of fintech is undeniable, but which ASX fintech stocks are actually profitable?
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- Only a handful of fintech plays on the ASX have reached profitability
- Digital lenders are the torch bearers
- Some BNPL companies do make profits
The collapse of Openpay (ASX:OPY) last week raised concerns about the viability of the BNPL business model, and more broadly the health of the fintech sector.
But despite the fragile state of the economy, finTech companies on the ASX are not doing too badly and are slowly approaching their next maturity milestone, profitability.
While some are still a long way off, a handful of companies have already launched themselves on the pathway to profits.
Non-bank lender Propell (ASX:PHL) for example, has embarked on a massive cost-cutting initiative in Q1 to achieve maiden profit.
Change Financial (ASX:CCA) has also realigned its cost base to streamline the business and enable future growth and profitability.
Digital lenders shine
Meanwhile, digital lenders have proven themselves time and again to be the torch bearers for the industry.
A handful of companies in this segment have already crossed that profitability bridge, delivering the elusive positive bottom line for shareholders.
MoneyMe (ASX:MME) is one of the leaders in this non-bank lenders cohort.
In the last quarter, MoneyMe’s shift in focus from high growth to cash returns has resulted in a return to statutory profit, beating analyst expectations.
For the quarter, MoneyMe reported record gross revenues of $60m (up 140% higher than pcp), and $117m for the half (up 143% on pcp).
The company also reported a heathy bottom line NPAT of $8m for the half, compared to $19m loss in the pcp.
This momentum has also allowed MoneyMe to upgrade its its gross revenue guidance from $200m to $220m for the full year.
Plenti Group (ASX:PLT) was another digital lender that had a profitable quarter.
After coming off a strong first half where it delivered cash NPAT of $1.4 million, the company has now followed that up with a strong Q3.
Its loan portfolio increased by $1.67 billion, 51% higher than the pcp driven by its auto loans business, which has grown every quarter.
Plenti also delivered more positive bottom line cash NPAT in the quarter, and said that it remains on-track to meet its H2 objectives.
Harmoney (ASX:HMY) is another profitable digital lender on the ASX.
The company delivered cash NPAT of $2.3 million for the half, its second consecutive half with a positive cash NPAT.
This was on the back of revenues of over $50 million for the last six months, and a 23% increase in loan orginations to $240 million.
These BNPL stocks are delivering profits
The BNPL sector’s biggest player in Australia, Block Inc (ASX:SQ2), will report its earnings on February 23.
That report will include the results of once market darling, Afterpay.
In the meantime, Zip Co (ASX:ZIP) has kicked 2023 off with a bang with its US business delivering a cash EBITDA positive result for the first time.
Zip US’ positive cash EBITDA in November and December means that it is on track to exit FY23 cash EBITDA positive on a sustainable basis.
At group level, Zip continues to deliver solid top line metrics with good results across its consumer operations in the core markets of the US and ANZ.
Zip reported record top line group quarterly revenue of $188m, up 12% YoY, along with record transaction volume for the quarter of $2.7b, up 22% QoQ.
Sezzle (ASX:SZL) achieved positive net income and adjusted EBITDA for the second month in a row.
In Q4, net income was US$0.5m, compared to a net loss of US$25.9m in the pcp.
Adjusted EBITDA improved further to US$3.8m in Q4, compared to a loss of US$24.5m on pcp.
Sezzle Premium now has over 122,000 active subscribers.
Credit Intelligence (ASX:CI1) meanwhile is a hybrid play of digital lending and BNPL.
For the half, CI1 delivered consolidated profit of $480k. But it was 70% lower than the pcp.
This profit does not include the impairment loss adjustment on goodwill, which is still subject to review by the auditors.
The board expects final half year results to be finalised by the end of this month.
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