Research discussing investments in fintech is extensive, yet there is almost no discussion of the actual financial performance of the companies comprising the sector. How fast are they growing? How profitable are they? And how is their relative performance? For established Fintech businesses this report enables them to benchmark themselves against their peers. For the many new entrants, the vast majority of which remain below the size at which they are required to file full accounts, this report provides them with some benchmarks as they seek to challenge the incumbent providers. Are they really challenging the top performers in the sector by achieving sustained revenue growth in excess of 20% per annum, and profit margins in excess of 20%?
In this report an extract of which is provided below we examine the last 12 months performance of the established firms in the sector with their 5 year trend. This compliments our research published in July 2015 which compared the performance of the same group to listed companies in the sector. A free copy of the report can be downloaded from http://www.novitasftcl.com/research ),
Extract from report: Private Fintech 12 month performance vs 5-year trend
At a summary level (as represented by the fictional ‘median’ fintech firm) revenue growth over the last 12 months has been 5% having fallen 5 percentage points below its 5-year CAGR of 10%. EBITDA margins across the sector remain broadly flat at 7%. However, as can be seen from the scatter graph behind this median is a wide range of relative performances:
- 27% of firms show both an accelerating revenue growth rate and an EBITDA margin that has increased over the last 12
months
- 16% report accelerating revenue growth with a decreasing margin
- 30% increased their EBITDA margin but revenue growth slowed
- 27% reported both a decline in their revenue growth rate and in their EBITDA margin
