The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how diversified financial services stocks fared in Q3, starting with Paymentus (NYSE: PAY).
Diversified financial services encompass specialized offerings outside traditional categories. These firms benefit from identifying niche market opportunities, developing tailored financial products, and often facing less direct competition. Challenges include scale limitations, regulatory classification uncertainties, and the need to continuously innovate to maintain market differentiation against larger competitors expanding their offerings.
The 10 diversified financial services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 2.8% on average since the latest earnings results.
Best Q3: Paymentus (NYSE: PAY)
Founded in 2004 to simplify the complex world of bill payments, Paymentus (NYSE: PAY) provides a cloud-based platform that helps utilities, municipalities, and service providers automate billing and payment processes.
Paymentus reported revenues of $310.7 million, up 34.2% year on year. This print exceeded analysts’ expectations by 10.7%. Overall, it was a stunning quarter for the company with a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ EBITDA estimates.
“Paymentus continued to execute in the third quarter with double-digit year-over-year growth in revenue, contribution profit and adjusted EBITDA, of 34.2%, 22.8% and 45.9%, respectively, driven by strong new implementations and customer demand. Our exceptional bookings year-to-date, along with our considerable backlog, provide us great visibility for the remainder of 2025 and 2026,” said Dushyant Sharma, Founder and CEO.
Paymentus achieved the fastest revenue growth but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 32.2% since reporting and currently trades at $37.73.
NerdWallet (NASDAQ: NRDS)
Born from founder Tim Chen's frustration with the lack of transparent credit card information when helping his sister in 2009, NerdWallet (NASDAQ: NRDS) is a digital platform that provides financial guidance to help consumers and small businesses make smarter decisions about credit cards, loans, insurance, and other financial products.
NerdWallet reported revenues of $215.1 million, up 12.4% year on year, outperforming analysts’ expectations by 11.3%. The business had an exceptional quarter with an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.
NerdWallet pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 19.1% since reporting. It currently trades at $14.30.
Is now the time to buy NerdWallet? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: NCR Atleos (NYSE: NATL)
Spun off from NCR Voyix in 2023 to focus exclusively on self-service banking technology, NCR Atleos (NYSE: NATL) provides self-directed banking solutions including ATM and interactive teller machine technology, software, services, and a surcharge-free ATM network for financial institutions and retailers.
NCR Atleos reported revenues of $1.12 billion, up 4.5% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a softer quarter as it posted a significant miss of analysts’ EPS estimates.
As expected, the stock is down 5.5% since the results and currently trades at $35.82.
Read our full analysis of NCR Atleos’s results here.
Donnelley Financial Solutions (NYSE: DFIN)
Born from the need to navigate increasingly complex financial regulations in the digital age, Donnelley Financial Solutions (NYSE: DFIN) provides software and technology-enabled services that help companies comply with SEC regulations and manage financial transactions and reporting requirements.
Donnelley Financial Solutions reported revenues of $175.3 million, down 2.3% year on year. This print beat analysts’ expectations by 3.3%. Overall, it was an exceptional quarter as it also logged a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Donnelley Financial Solutions had the slowest revenue growth among its peers. The stock is down 9.5% since reporting and currently trades at $46.79.
PayPal (NASDAQ: PYPL)
Originally spun off from eBay in 2015 after being acquired by the auction giant in 2002, PayPal (NASDAQ: PYPL) operates a global digital payments platform that enables consumers and merchants to send, receive, and process payments online and in person.
PayPal reported revenues of $8.42 billion, up 7.3% year on year. This number surpassed analysts’ expectations by 2.2%. It was a very strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ transaction volumes estimates.
The stock is down 4% since reporting and currently trades at $67.40.
Read our full, actionable report on PayPal here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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