Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Afterpay (ASX:APT) share price unmoved as losses soar to $159 million

Buy-now-pay-later leader Afterpay Ltd (ASX: APT) has reported a widening net loss of $159.4 million despite growing sales 90% in FY21. 

Buy-now-pay-later leader Afterpay Ltd (ASX: APT) has reported a widening net loss of $159.4 million despite growing sales 90% in FY21.

Sales rocket, losses widen

Key financial highlights for the year ending 30 June include:

  • Total group income of $924.7 million, jumping 78%
  • Underlying sales increased by 90% to $21.1 billion.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) minus significant items of $38.7 million, down 13%
  • Marketing expenses ballooned 239% to $168.8 million
  • Bad debts increased 106% to $194.9 million
  • Statutory loss of $159.4 million, a significant drop from the $22.9 million loss in FY20

Afterpay’s income margin (the commission received from merchants) remained stable at 3.9%.

The net interest margin (the gross profit received after accounting for bad debts and finance costs) fell from 2.3% to 2.1%, largely due to a reduction in late fees.

This is somewhat concerning, given the net interest margin is effectively Afterpay’s gross profit. A 20 basis points movement downwards is effectively a 9% fall in gross profit.

The 13% fall in EBITDA is less worrying, given it is largely due to the increase in operating expenses to spur growth.

The statutory loss of $159.4 million was exacerbated by a number of one-off items including $59.0 million share-based payments and a non-cash fair value adjustment of $96.8 million.

From a regional perspective, sales in North America and Clearpay (Europe) were up 177% and 242% respectively in constant currency.

The more mature ANZ market grew sales at 44%.

BNPL continues to grab merchant and customer attention

The company and broader BNPL sector continued to gain traction over FY21. Over the past two years, BNPL has increased over 300% whereas credit card purchases have stagnated.

BNPL growth compared to debt and credit. Source: APT FY21 presentation
BNPL growth compared to debt and credit. Source: APT FY21 presentation

Afterpay’s active merchants increased 77% to 98,200 and active customers increased 63% to 16.2 million.

In Afterpay’s most established ANZ region, the top 10% of consumers are now using Afterpay more than 60 times per year.

The company launched into new regions throughout the past year – Canada, Spain, France, and Italy.

Its global team grew in line with income, up 95% to 1,300 employees.

The additional hires were made across sales, marketing, technology and marketing divisions to support Afterpay’s growing expansion.

My take

There are two ways you can look at today’s result.

On one side of the fence, this is a business scaling rapidly, with 90% sales growth, increased merchants and active customers, who love the product.

On the other hand, sales are only up because of the jump in marketing, bad debts are ballooning and competition remains rampant with the likes of Zip Co Ltd (ASX: Z1P) and Paypal Holdings Inc (NASDAQ: PYPL).

Whichever lens you see this result through, this is a product gaining traction with a huge market opportunity.

To keep up to date on all the latest news regarding Afterpay and the ASX, be sure to bookmark the Rask Media home page.

And to stay up to date with the flurry of reports this month, bookmark our ASX reporting season calendar.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Lachlan does not have a financial or commercial interest in any of the companies or funds mentioned.
Skip to content