Alternative Data Provider Hatched Analytics Takes a Distinctive Approach to Transaction Data

By Sanford Bragg September 6, 2022

Dublin-based Hatched Analytics comes to transaction data with a different perspective than most suppliers of the data.  Rather than relying on credit card or point-of-sale data, it dissects each company’s e-commerce ecosystem to measure activity to payment systems and other indicators of consumer purchases.  The process is cumbersome and difficult to scale, but it yields results that track reported KPI metrics with a high degree of accuracy. Its unusual methodology also allows the firm to cover segments such as B2B firms or non-US companies where conventional transaction data is sparse or non-existent.  The firm has been quietly expanding and, as of the fourth quarter of this year, will end all third-party distribution of its data.

Founded by two digital marketers, Hatched Analytics leverages its e-commerce expertise to reverse-engineer each covered company’s digital marketing strategy.  By mapping a consumer’s purchase journey the firm measures transactions which are then used to estimate a company’s e-commerce and subscription KPIs.  Hatched Analytics says the overall error rate for predictability of its data can be as low as 1% for headline KPIs.  For each dataset, the firm provides a track record – how closely its estimate has matched the actual KPI. 

“We concentrate solely on headline KPIs in order to get the most accurate read,” said co-founder Donal Byrne in an interview.  “We back-test all our data, and only initiate coverage once the data meets our standards.”

The downside to Hatched Analytics’ methodology is that it is time consuming.  The first step is to enlist a panel of customers for a public company of interest.  Panel participants are directly compensated for sharing their browser logs and emails, consistent with data privacy regulations such as GDPR and CCPA/CPRA.  The company then analyzes the panel data to understand how the public company receives online payments for products.  One of the roles within Hatched Analytics is a ‘SEO Data Detective’ who “investigates websites and customer purchase journeys of target companies.”    

The methodology is most effective for tickers with a significant digital component to revenues.  Hatched Analytics prioritizes tickers that are not well covered by other sources of transaction data, namely B2B companies and non-US consumer stocks.  

Compliance is a major component of the process, limiting coverage further.  Each dataset receives a full compliance review from a third-party law firm.  “As one example, if the target company’s terms and conditions are unfavorable to our process, we don’t cover it,” said Byrne.

Hatched Analytics currently predicts 70 KPIs associated with 42 publicly traded companies, up from 15 companies two years ago.  Its ambition is to cover 100 names by the end of next year.  

The firm was founded in 2015 by Byrne and Charmaine Kenny, both of whom having digital marketing expertise from online gaming sites and other e-commerce experience.  Byrne first developed the methodology by analyzing Adobe’s digital footprint, then enlisted Kenny to help scale the process. 

The firm initially worked on a white label basis through third-party distributors, then in 2020 began offering its data directly.  As of the fourth quarter of this year, it will cease distributing its data through third parties altogether.  The firm says its client base totals over forty firms.  Current clients are primarily long-short hedge funds but the company reports seeing more interest from multi-strategy and quant funds since its coverage has passed 40 tickers.

Hatched Analytics has bootstrapped its financing so far.  It employs fifteen full-time staff and is currently recruiting for two open positions, including more data analytics resources, reflecting its  goal of reaching 100 tickers under coverage by the end of next year.

Our Take

Hatched has developed a following primarily through word-of-mouth, with very little visibility.  It benefits from a differentiated methodology that yields quality results.  However, the methodology also constrains the company’s growth. Even if the company achieves its goal of 100 companies covered by the end of 2023, it will still have a narrow offering.  Since it solely centers on headline KPI it doesn’t have the breadth of data to offer corporate customers, unlike most of its transaction data competitors who are busy diversifying away from the financial sector.

And this might be the secret of Hatched Analytics success.  Even though its founders don’t come from the financial sector, they seem comfortable centering their service on the financial community.  The company is scaling patiently without flashy private equity capital raises.  Its slow and steady pace seems quite capable of winning the race. 

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