The shift from a zero interest rate policy environment, ZIRP in the common tongue, is providing a notable boost to a number of fintech companies. Fintech entities that once made the vast majority of their revenues from trading-related fees are seeing interest-driven incomes skyrocket this year. As a result, many fintech companies that may have appeared to be set for a structural unraveling of their business model have proved more durable than we might have anticipated; holding cash is now a very lucrative proposition.
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But it’s not just the fintech sector that is seeing similar tailwinds from the expanded value of holding cash. SaaS is another.
Digging through this week’s earnings reports, two companies stood out: WalkMe and Monday.com. The two Israeli software companies reported their recent results over the last few days. And both companies had certain profit results that bested expectations. In both cases, their results were partially predicated on interest-related revenues.
While we expect that investors will pay more attention to operating results than other income sources, it’s notable that interest rates have risen so much that revenue from cash holdings has grown large enough that their positive earnings impact is broadening.