The financial market is expanding owing to the evolving demands of both individuals and organizations. Moreover, the rising adoption of digital technologies, broad access to various loans, and the availability of easier and more accessible payment options are helping the industry grow.

Amid this backdrop, investing in fundamentally stable financial stocks, Q2 Holdings, Inc. (QTWO), Upstart Holdings, Inc. (UPST), and Block, Inc. (SQ) could be a wise idea for investors. All three stocks are well-positioned for growth in 2025.

The financial industry is undergoing a dynamic transformation driven by technology and evolving consumer needs. Innovations like artificial intelligence (AI) and data analytics are streamlining operations, enhancing customer experiences, and opening new avenues for growth. This wave of change promises a future that is smarter, faster, and more inclusive.

AI has become a game-changer for finance, offering capabilities far beyond traditional methods. From generating predictive insights to performing real-time calculations, AI ensures efficiency at every turn. Tasks like customer servicing and intelligent data retrieval now operate seamlessly, creating a market that thrives on speed, accuracy, and profitability.

Moreover, as per a report by market.us, the consumer finance market is projected to hit $2.53 trillion by 2033 at a 7.1% CAGR. Simplifying financial processes has been a game-changer, making finance accessible to all. This democratization of finance is fueling innovation and paving the way for an inclusive financial ecosystem.

Considering these trends, let us dive deep into the fundamentals of three Financial Services (Enterprise) stocks, starting with #3.

Stock #3: Q2 Holdings, Inc. (QTWO)

QTWO offers cloud-based digital solutions to regional and community financial institutions. Its Digital Banking Platform provides an end-to-end solution, enabling financial institutions to deliver unified, seamless banking services across multiple digital channels.

On November 21, QTWO announced that First Pacific Bank had selected QTWO’s advanced digital banking platform. The decision reflects QTWO’s ability to empower community banks with cutting-edge technology, enabling them to enhance their services, attract commercial banking clients, and maintain a competitive edge in Southern California’s dynamic financial landscape.

On November 19, QTWO revealed a strategic reseller partnership with Larky, a provider of consumer engagement technology. The partnership underscores QTWO’s commitment to innovation, equipping financial institutions with tools to engage account holders proactively through personalized, timely, and location-aware push notifications.

For the fiscal 2024 third quarter that ended September 30, QTWO’s non-GAAP revenue increased 12.9% year-over-year to $175.02 million. Its non-GAAP gross profit grew 17.2% from the year-ago value to $97.96 million. Moreover, the company’s non-GAAP operating income rose 101.2% from the prior year’s quarter to $25.32 million.

In addition, QTWO’s adjusted EBITDA grew 65.9% from the prior year’s quarter to $32.61 million.

Analysts expect QTWO’s revenue  and EPS for the fiscal fourth quarter ending December 2024 to increase 11% and 73.4% year-over-year to $179.95 million and $0.47, respectively. Moreover, the company has surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Shares of QTWO have surged 72.4% over the past six months and 205.1% over the past year to close the last trading session at $107.36.

QTWO’s POWR Ratings reflect its fundamentals. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

QTWO has an A grade for Growth. It is ranked #56 out of 83 stocks in the Financial Services (Enterprise) industry.

In addition to the POWR Rating highlighted above, you can check QTWO’s ratings for Stability, Value, Quality, Momentum, and Sentiment here.

Stock #2: Upstart Holdings, Inc. (UPST)

UPST operates a cloud-based AI lending platform, offering a wide array of loan products such as personal loans, automotive loans, home equity lines of credit, and small-dollar loans. By using AI, UPST connects consumer demand for loans with banks and credit unions, streamlining the loan process and making it faster and more efficient.

On November 19, UPST announced that DR Bank, an FDIC-insured member bank, adopted UPST’s small-dollar loan product to support customers with short-term financial needs. The collaboration allows UPST to strengthen its presence in the banking sector, showcasing its ability to deliver tailored credit solutions for diverse financial requirements.

On November 13, UNCLE Credit Union, a Northern California credit union with over 38,000 members, partnered with UPST to offer personal loans to new and existing members. The agreement demonstrates UPST’s potential to enhance its footprint in the credit union market by providing flexible and efficient lending tools.

For the fiscal third quarter that ended September 30, 2024, UPST achieved a 20.5% year-over-year increase in revenue, totaling $162.14 million. The company’s adjusted EBITDA was reported at $1.41 million. As of September 30, 2024, UPST’s cash reached $445.27 million, with total assets amounting to $1.81 billion as of September 31, 2024.

For the fiscal year ending December 2025, Street expects UPST’s revenue to increase 35.7% year-over-year to $812.75 million. Moreover, its EPS for the same period is expected to come in at $0.53. The company has surpassed the consensus revenue and EPS estimates in all four trailing quarters.

UPST’s shares surged 228.1% over the past nine months and 235.1% over the past year to close the last trading session at $79.52.

UPST’s fundamentals are mirrored in its POWR Ratings. It has a B grade for Growth.

The stock is ranked #53 out of 83 stocks within the Financial Services (Enterprise) industry.

Click here to access UPST’s ratings for Value, Momentum, Stability, Quality, and Sentiment.

Stock #1: Block, Inc. (SQ)

SQ builds ecosystems centered around commerce and financial services through its Square and Cash App segments. Additionally, the company operates TIDAL, a music streaming platform, and several blockchain-focused initiatives like TBD, Bitkey, and Spiral.

On October 21, SQ’s Square announced new partner integrations and a distribution partnership with SalonCentric, expanding its offerings to beauty professionals. By introducing these tools, Square enhances its platform to help sellers grow and succeed, providing solutions that streamline operations, improve client personalization, and increase sales.

On October 17, SQ’s Cash App partnered with Lyft to provide digital-first consumers with more flexibility in paying for rides. The collaboration integrates Cash App Pay into Lyft’s payment system, focusing on the convenience and preferences of the next generation of riders.

By offering seamless payment options, SQ strengthens Cash App’s role in the digital payment space and meets the increasing demand for streamlined, flexible transaction experiences.

For the fiscal third quarter that ended September 30, 2024, SQ’s total net revenue increased 6.4% year-over-year to $5.98 billion. Its adjusted operating income rose 394.2% from the year-ago value to $443.52 million.

Additionally, the company’s adjusted net income and adjusted net income per share rose 76.5% and 76% from the prior year’s quarter to $555.08 million and $0.88, respectively.

The consensus revenue and EPS estimates of $6.25 billion and $0.87 for the fiscal fourth quarter ending December 2024 exhibit a year-over-year rise of 8.2% and 92.8%, respectively.

Shares of SQ have gained 36.8% over the past six months and 52.1% over the past year, closing the last trading session at $90.75.

SQ’s POWR Ratings reflect its prospects. The stock has an A grade for Growth and a B for Momentum.

Within the same industry, it is ranked #42 out of 83 stocks. Click here to access SQ’s ratings for Quality, Stability, Value, and Sentiment.

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SQ shares were unchanged in premarket trading Tuesday. Year-to-date, SQ has gained 17.32%, versus a 26.90% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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