Afterpay (APT) | SNAPSHOT
Profile: Afterpay (APT) is an Australian financial technology or ‘fintech’ company focusing on the “buy now, pay later” (BNPL) market. As a provider of BNPL services, APT allows customers to purchase products and services from participating bricks and mortar and online businesses immediately and arrange to make payment via instalments. APT’s key product is differentiated from traditional loans as the consumer is not charged interest if they make repayments on time.
History: In May 2000, Touchcorp began operations to provide flexible payment and electronic product delivery solutions for a service station retailer. In 2003, Touchcorp formed relationships with major banks and integrated with their payment terminals to enable retailers to sell electronic products in store. The Afterpay system was developed by Touchcorp in 2015. In 2017, APT listed on the ASX, merged with TouchCorp and expanded operations into NZ. In 2018, APT launched in the US and acquired a 90% stake in Clearpay to accelerate its launch into the UK. In 2019, Afterpay launched in the UK under the Clearpay brand.
Revenue composition: In FY19, $197m (75%) of revenue was generated by the Afterpay Australia segment. $39m (15%) was generated by Afterpay US, $11m (4%) was generated by Afterpay Other and $17m (6%) from the Pay Now segment.
Most recent result – FY19: APT’s group revenue, which it defines as “total income”, increased 86% on the prior corresponding period (pcp) to $264m. This was driven by 140% growth in underlying sales (also referred to as gross merchandise value) to $5.2bn – this is the amount spent using the Afterpay platform. Sales in ANZ experienced strong growth, increasing 99% on the pcp to $4.3bn, while in the US, sales increased from $14m to $928m. The net transaction margin, which is after (credit) losses net of recoveries and other variable transaction costs, increased 114% to $119m. APT’s loss after tax increased to $44m, from $9m in 2018.
Company guidance: Based on the underlying sales from the month of June 2019, APT is estimating an annualised year end run rate of $7.2bn in underlying sales or gross merchandise value. This compares to $5.2bn in FY19. As at 23 August 2019, APT had over 2m customers in the US generating a total of $1.7bn of sales on its platform on an annualised basis, and over 200k customers in the UK within the first 15 weeks of its UK launch. APT expects to continue onboarding major brands in the US and UK.
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