I’ve been extremely stretched for free time this year and wasn’t able to give much time to earnings at all. So this is about a week overdue.
It was a disappointing report following one of the most confident earnings calls that I’d heard last quarter. Reading the transcript, it all came down to management prudence in slowing down the volume of loans being approved. While they chose their words carefully, this was a reaction the continued geo-political chaos that ripples through the financial system and markets. Given there is no guarantee on if or when the chaos will slow, I decided to sell the majority of my position. Their prudence is likely wise but if they can’t open up growth in the current state of affairs, I am not holding my breath/shares.
Here are the numbers:
- Revenue of $335M missed estimates, was a quarterly decline, and was 20% YoY increase, down from 36%. It was their first miss in 2 years.
- GAAP Net Income rose 48% to $34M as they continue to prioritize profitability over revenue growth
- Network volume was down 4% QoQ as they shifted to a conservative bent
- They will announce 3 new partnerships in the coming months
- The FY Revenue guide at the mid-range was $1,487.5B, representing only a 14% YoY Increase, reflecting their overall prudence
I sold them down from 14% of my portfolio to currently 4%. I imagine there’s not much more downside, so I’m holding to see if some of these new partnerships are big enough to lead to a re-rating by the market.