What we’ve noticed: A record number of fintech companies have gone public, which means they now have to publish their quarterly earnings. Their reports offer us a temperature check on the industry.
Fintech earnings highlights: A number of listed fintechs are on track to beat their 2020 revenues, and some have already done so. But the net loss for many has widened.
Looking ahead: Fintech exit momentum shows no signs of slowing down as more startups seek to emulate their predecessors’ rapid growth.
Just 88 fintechs accounted for 70% of global fintech funding in Q2, leading to a record number of startups reaching sky-high valuations. The VCs will likely encourage them to go public to capitalize on the current fintech hype and make lucrative exits—whether or not they experience widening losses. In addition, a surplus of available SPACs is competing for acquisition targets—meaning fintechs can potentially shop for the best deals to take them public. KPMG expects that H2 will see an increase in SPAC acquisitions focused on unicorn and near-unicorn fintechs.
Zooming in on insurtechs
Troubled waters: It hasn’t been smooth sailing for publicly listed insurtechs, which have had a controversy-ridden year.
Oscar Health stands out as an exception—its Q2 earnings report mirrors that of the fintechs we discussed earlier. The US-based health insurtech shared strong revenue growth, hitting $723,927 on the back of a 44% direct policy premium bump, while its losses widened. Its medical loss ratio—which measures the portion of premiums income insurers pay out through health care claims—reached 82.4%, from 60.7% in Q2 2020.
Looking ahead: The controversies may make insurtechs more cautious than other fintechs when deciding whether to go public—especially after seeing Hippo’s loss. They may rather rely on record-setting levels of private funding to keep fueling growth.