The Splitit Ltd (ASX: SPT) share price is down after reporting a high level of growth in its FY20 result.
Splitit is a small, but fast-growing, buy now pay later business on the ASX. It’s headquartered in New York.
What did Splitit report in FY20?
The buy now, pay later company reported a 179% increase in its merchant sales volume (MSV) to US$246 million. It reached an annualised US$345 million in the fourth quarter. The average order value (AOV) increased by 45% to US$959. Splitit said that the increase in AOV highlights an advantage that Splitit provides its merchant partners by enabling instalments on any transaction at any price point.
Gross revenue grew 300% year on year to US$8.4 million. The number of total merchants jumped 144% to 1,800, which was supported by self-onboarding through Stripe. Total shoppers grew by 106% year on year to 432,000. However the 12-month active merchants and active shoppers increased by 100% to 771, and 94% to 231,000, respectively.
Some of the highlights during the period were foundational partnerships formed with Visa, Mastercard and Stripe. The Stripe partnership enabled the streamlining of merchant onboarding and enhancing the merchant funding experience. Merchants can now self-onboard to the Splitit platform in over 100 countries, while significantly reducing the onboarding time. The goal is to enable any merchant that accept cards to offer instalments within minutes.
Splitit also said that integration with Visa is now complete with a pilot program launched in late 2020 with select merchants and issuing bank partners. It’s also working with Mastercard.
Several new large brands were added, with Google Japan being a highlight after the year end.
With the new US$150 million receivables funding facility in place from Goldman Sachs, and US$92.8 million of cash on the balance sheet, the company thinks it has enough funding to support up to US$800 million of annual MSV.
Management comments
Splitit CEO Brad Paterson said: “With financial empowerment and responsibility core to our values, 2020 was a year we refreshed our brand and visual identity that positions Splitit as the only buy now, pay later solution to empower shoppers to use their existing credit to pay over time. This key difference has been important to our success this year with merchants seeking innovative new ways to improve cart conversion by serving credit cardholders who want the benefits of instalment payments, without entering into further debt.”
The business is growing strongly but it’s hard to say how much it should be worth today in this environment and so many competitors.
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