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Fundamentals

Size Analysis: The number of publicly traded fintech companies has exhibited a gradual decline since the third quarter of 2022. However, it's important to note that this reduction in the number of public fintech firms does not necessarily imply a slowdown in mergers and acquisitions (M&A) within the fintech sector. During the entirety of the first quarter of 2023, the fintech industry witnessed a total of $4 billion in transaction value, comprising 51 transactions. This represents a noteworthy increase of $1 billion compared to the previous quarter. Notably, when assessed against the SPX Index, the fintech industry's performance shows a relatively modest underperformance of only -3.7%. Furthermore, it experienced a healthy upswing of 4.4% when contrasted with the performance of the preceding quarter. These metrics suggest that the fintech sector remains robust and dynamic, with ongoing M&A activities and resilience in terms of market performance.

Public Market Dynamics: The number of publicly traded companies decreased from 83 in the first quarter of 2023 to 73 in the second quarter of 2023. Interestingly, despite this reduction in the number of public companies, the market capitalization increased by a significant $7 billion. During this quarter, the companies with the highest market capitalization had a Year-Over-Year return of 6.33%, while the smallest company experienced a significantly lower return of -4.62%. This disparity in returns between the largest and smallest companies underscores the diverse performance landscape within the market during this period.

Transaction Trends: In total, there were 62 transactions in this period, comprising 6 M&A deals, 33 private placements, and 17 public offers. These 62 transactions collectively amounted to a total value of $5.2 billion. In comparison to the preceding quarter, we observed an increase of 10 transactions in the current quarter. 

Dispersion Insights: In the previous quarter, Asia stood out as the most saturated market, while in the current quarter, North America has taken the lead in terms of market saturation. Notably, North America remained a strong contender in both quarters. It's worth noting that historically, Asia has played a prominent role in the market. They were the dominant player until the second quarter of 2022, experienced a period of reduced activity in the fourth quarter of 2022, and have now reasserted their dominance once more in the current quarter. This historical context provides insights into the evolving dynamics of these regional markets.

Methodology

We screened CapitalIQ using its industry classification. Transactions were filtered by announced date within the last 3 years. Companies were filtered by having a public company type. The main industry selected was "Financials". The keywords "fin tech*", "fin-tech*", and "fintech" were used to screen the database. CapitalIQ industry "Financials" was used as category. Our sectors were defined by keywords from the CapitalIQ market intelligent level 2 primary industry classification.

THIS REPORT IS NOT TO BE USED OR CONSIDERED UNDER ANY CIRCUMSTANCE BY ANYONE AS INVESTMENT ADVICE

This research report is for informational and discussion purposes only. Information presented here is not investment advice of any kind to any person and does not constitute a recommendation as to the purchase or sale of any interests or as to any other course of action. General, financial, and statistical information concerning the details of this report and related industry are from sources Spaulding Financial believes to be reliable.

Spaulding Financial has accurately reflected such information in this research report; however, Spaulding Financial makes no representation as to the sources’ accuracy or completeness and has accepted this information without further verification. Neither all nor any part of the content of this report may be conveyed to the public through advertising, public relations, news, sales, mail, direct transmittal, or other media without the prior written consent of Spaulding Financial. Spaulding Financial ’s research is as of the date reported herein.

Spaulding Financial has no affiliation with any of the companies comprising the industry used as a basis for research in this report, nor does Spaulding Financial hold any investments in the companies listed herein. The content of this report may be used, in part, as a basis for any work that Spaulding Financial performs for you in the future at the sole discretion of Spaulding Financial. All data is from Capital IQ database.

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