Afterpay Touch Group Ltd (ASX: APT) released its 2018 financial results to the market today revealing a 390% increase in revenue.
Afterpay Touch is a ‘buy now, pay later’ provider for both in-store and on-line purchases.
Here are some of the highlights from its report:
- Revenue grew by 390% to $142.3 million
- Underlying EBITDA Grew by 468% to $33.8 million
- Reported loss improved by 6% to $9 million
A key driver of Afterpay’s result was the rise of underlying sales, being the products it funds for customers. Underlying sales grew by 289% to $2.18 billion in the year.
Another part is the margin Afterpay makes on those sales. Afterpay’s net transaction margin increased to 2.6% of underlying sales. In FY17 it was 2.5%.
Some market commentators have been questioning the financial strength of Afterpay’s customers. The company said that net transaction losses reduced to 0.4% of underlying sales, compared to 0.6% last year. Afterpay said this is “demonstrating customers are continuing to use the platform responsibly. Approximately 95% of instalment payments received in FY18 did not incur a late fee.”
The company also added late fee caps and ID verification, with fraud prevention an ongoing focus.
Some of the new retailers that Afterpay added during the year were: Asos Australia, Chemist Warehouse, Boohoo, Bing Lee, Best & Less, Mitre 10, Barbeques Galore and Pandora.
In the US Afterpay has signed over 800 retailer contracts with 400 merchants transacting on the US Afterpay platform. Afterpay already has over 150,000 customers who have used the service. The company expects to add more retailers over time in the US.
UK Expansion
Afterpay is now expanding to the UK, the third largest e-commerce market. To do this, Afterpay is partnering with ThinkSmart Limited (AIM: TSL) and is acquiring 90% of ClearPay Finance Limited, a UK-based buy now, pay later business, for 1 million Afterpay shares. This will be completed today.
The UK launch will occur in the next six months and it isn’t expected to materially contribute to the first half of FY19.
Additional funding
Afterpay has completed a $200 million receivables warehouse facility with Citi. It now has $500 million when combined with the National Australia Bank Ltd (ASX: NAB) facility.
The buy now, pay later provider also announced it was undertaking a capital raising that would raise $108.1 million from institutional shareholders and will also raise money from retail shareholders.
Chairman Anthony Eisen said: “It has been another year of inspiring growth for Afterpay and a successful first year for the merged Afterpay Touch Group.”
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