It was a mottled start to the new financial year for the ASX-listed fintech shares. Many outperformed the S&P/ASX 200 Index (ASX: XJO) over the 3-month period. However, some went on a wayward path that led investors to no avail.
Many so-called 'fintechs' are categorised by the Australian Stock Exchange as either information technology shares or financial shares. Taking a look at both these sectors, these two dominant sectors were the third and fifth-best performing at the end of the first quarter — delivering 4.1% and 3.4% respectively.
Hence, it is worth a closer inspection to understand where the winners and losers were located.
Image source: Getty Images
Winning ASX fintech shares in the first quarter
Let's start off with the good news — there were plenty of market-beating returns to be had across the sector. Potentially investors are gearing up for the reopening of the economy as vaccination targets draw closer.
As more money circulates through the economy, many fintech companies will be clipping the ticket on transactions. This brings us to the top-performing ASX fintech share during the quarter — EML Payments Ltd (ASX: EML).
Shares in the payments company rallied through August following an update on its regulatory concerns. EML disclosed it had reached an agreement on a remediation plan to address the discrepancies present in PFS Card Services (Ireland) Limited (PCSIL).
This gave shareholders reassurance during the quarter that the worst may be behind it. Although, an announcement released late yesterday afternoon indicates that the Central Bank of Ireland has proposed certain limits to PCSIL programs.
Moving along, the second-best performing ASX fintech share in the first quarter was none other than Tyro Payments Ltd (ASX: TYR). The payment company, which specialises in payment terminals, delivered a record full-year result in August.
In FY21, Tyro processed a record $25.5 billion in transactions across its network. Meanwhile, revenue increased 13% year on year to $238.5 million. This milestone achievement resonated well with investors, resulting in the Tyro share price being bid up.
Losers of the first quarter
It appears the last quarter was a challenging one for the buy now, pay later (BNPL) sector. Out of all the fintech shares in the All Ordinaries Index (ASX: XAO), two of the worst performing were Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL).
Firstly, it was a volatile quarter for the Afterpay share price. The biggest BNPL company on the ASX endured erosion to its value throughout July. That was until it announced Square Inc's (NASDAQ: SQ) plan to acquire the ASX fintech share. In turn, the company's share price rebounded to finish the quarter 1.91% higher.
On the other hand, US-based payment company Sezzle suffered a deep drop in its share price throughout the first quarter. In August, the Sezzle share price took a dive following the release of its half year report.
Investors were unimpressed with the company's net loss of US$30.4 million. This was more than triple of FY2020's first half loss, putting a dent in sentiment.
