The passage of a zero interest rate policy environment, ZIRP in common parlance, provides a a notable boost for a number of fintech companies. Fintech entities that once earned the vast majority of their revenue from transaction fees are seeing their interest-generated revenue skyrocket this year. As a result, many fintech companies that seemed poised for a structural shake-up of their business models have proven more sustainable than we might have predicted; holding cash is now a very lucrative proposition.
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But it’s not just the fintech sector that is experiencing similar tailwinds due to the increasing value of cash. SaaS is another.
Looking through this week’s earnings reports, two companies stood out: WalkMe and Monday.com. Both Israeli software companies released their recent results in recent days. And both companies reported some better-than-expected profits. In both cases, their results were based in part on interest-related income.
Although we expect investors to pay more attention to operating results than other sources of income, it is worth noting that interest rates have increased so much that income from cash has increased sufficiently so that their positive impact on profits extends.