Comps for fintech stocks?
Have an interview coming up and want to be prepared. What industry-specific multiples are used in the fintech sector?
Didn't find too much when searching on the site. Another WSO post said that "looking at large tech it is more about cash flow so EV/EBITDA and growth tech it is more about year over year sales growth so EV/Sales."
Primary metrics are PE (current year and next year) and EV/EBITDA, also for current and next year (which in case it doesn't go w/ out saying, are 2019/2020). And speaking VERY broadly they tend to trade somewhere between high teens and high 20s x 2019 earnings.
thank you
you're welcome, but I mixed up the years. current year is obviously 2018, but most of the multiples I see for fintech are 2019 and 2020. so not current year and next year but next year and year 2.
Can confirm this. I am currently working in the b2b software environment and I am staying away from anything fintech related. Slapping the name "fintech" on something multiplies the expected EV/EBITDA multiple by 3-5x and indeed also relates to forward looking EBITDA.
I have had contact with several fintech firms and I can't count the amount of times I have heard something in the likes of "there's really no need to talk if you don't commit to 20x EBITDA upfront". That is fine for a company that does 5% EBITDA, but these firms tend to do >40% depending on the maturity of their products.
One addition to make, EV/SALES ratio might be used some times, but EV/RECURRING REVENUE is more popular.
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