The Splitit (ASX: SPT) share price is going nuts today after providing its September 2019 quarter update.
Splitit offers consumers the ability to split the purchase price of basic products (e.g. lemons, toilet paper or both). Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.
What Did Splitit Reveal In The Sept 19 Update?
The Splitit share price has gone up 7.7% after telling investors that its total merchants has increased by 97% to 624 over the past year.
Perhaps more impressively, the total number of shoppers grew by 187% to 230,000.
The increase of merchants and customers saw merchant transaction volume rise by 100% to US$30.5 million, resulting in merchant fees of US$466,000 for the quarter – up 96% compared to the September 2018 quarter.
Splitit also revealed some of the new merchants that are utilising its service including Kogan.com (ASX: KGN), Philips Respironics and Ableton. Splitit management was pleased with these additions because they are well known brands.
During the quarter Splitit announced partnerships and integrations with GHL (which has 2,000 merchants) and Ally Commerce. After the quarter had ended Splitit also announced the partnerships with Shopify and Divido.
Some merchants that were signed after the end of the quarter include Chili Technology, Eight Sleep, Ace Marks, Nili Lotan, Blue Fly, Ashford and 1800-Accountant.
During the quarter the company burned through US$6.9 million of cash, with US$0.5 million of cash receipts from customers. In terms of cash usage, the two biggest items were the self funding arrangement (US$4.5 million) and advertising (US$1 million).
At 30 September 2019, Splitit had US$16.1 million of cash, which it said provides significant funding for continued growth.
Is The Splitit Share Price A Buy?
Well that’s the $1 million (plus) question isn’t it? Some might say that Splitit has the most sustainable model compared to competitors. I don’t believe they can all be large and profitable at the same time.
The accepted way to value assets is the amount of cash profit they will produce in the future. If Splitit is a buy at this price then I fear some other BNPL operators are not.
For me, it’s too difficult to say how much sustainable profit Splitit will be generating in three or five years from now. That’s why I would rather invest in the growth shares revealed in the free report below.
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