Secular Trends Drive Growth In Fintech Stocks
Fintech has been a hot topic for many years now. Secular trends are driving mass adoption of digital commerce and other financial transactions around the world. Today we're looking at two stocks that are well-positioned as gatekeepers within their respective industries. Based on their recent results and the outlook for their industries we expect them both to continue on a hyper-growth trajectory for the next several quarters if not years.
1. Launch Portfolio Returns With Katapult Holdings
Katapult Holdings (NASDAQ:KPLT) is interesting in that it operates a finance platform connecting consumers with expensive consumer goods. The company recently came to market via SPAC and its first earnings report as a publicly traded company leaves nothing to be desired. Total revenue for the first quarter of the year was $80.6 million which is an increase of 88% from last year. The revenue strength was driven by strong growth in new loan originations that were in turn driven by new merchant acquisitions and expanded offerings with existing merchants. To help put this company's position into perspective, 3 of the 26 new retailers onboarded during the quarter are Motorola (NYSE:MSI), Simply Mac, end Cybertron.
The fact that makes the story so much more interesting is that this early phase micro-cap is already producing positive earnings and substantial earnings leverage. The adjusted EBITDA for the first quarter is up 122% from the last year reflecting the scalability of the business and the companies ability to control operating expenses. Looking forward, the company's guidance of $425 to $475 million assumes double-digit sequential growth over the next three quarters at least and we think that as this company expands its merchant offerings revenue growth will at least remain steady if not accelerate. Shares of the stock are well off the post-SPAC high and offering an attractive entry for new investors.
2. GreenBox Makes Cryptocurrency Work
Greenbox Pos (NASDAQ:GBOX) is a very interesting company in that it serves as a gatekeeper between merchants and consumers for cryptocurrency. We don't mean that this company is an exchange, rather it is a payment processing service that allows merchants and consumers to use cryptocurrency for their transactions. If that sounds like a big business or one with a very bright growth outlook you'd be right. The company recently reported its Q1 revenue growth at 2,437% YoY led by rising processing volumes. Now, we understand 2500% growth isn’t it all that exciting for an early phase start-up in a strong industry, to help put that into perspective the sequential revenue growth was 59%.
Revenue strength was driven by the launch of Generation3 software which propelled processing volume to a quarterly record. The $315 million in processed transactions is up 141% on a sequential basis and will likely grow triple digits again next quarter. Other developments include new smart contract technology that should help accelerate processing volume growth as well as open new revenue streams.
Like Katapult, GreenBox is profitable at this early stage in the business. The company reported $3.2 million in gross profit reversing a small loss from the year-ago timeframe. Net income, however, came in at a loss due to accelerated investment in the business. Among the many projects under development is a new NFT platform in conjunction with isMedia. GreenBox will act as the payment gateway while isMedia develops the platform user interface. Looking at the charts, the stock appears to be in an uptrend and poised to retest the all-time high near $20.
