Afterpay Touch earnings results

CommSec CommSec

 

27 February 2019

Results ($m)

Half Year 2019

Half Year 2018

Change

Total Income 

112.3

60.7

+85%

Australian Income 

89.8

47.4

+89.5%

US Income 

9.6

-

-

EBITDA (excl. significant items) 

11.5

14.3

-19.6%

Loss after Tax 

22.0

0.7

-

Bloomberg Consensus 

6.6

 

 

Interim Dividend ($)

Nil

Nil

-

Afterpay Touch (APT) continues spending on global expansion 

 

Results

  • Afterpay Touch (APT) – a buy-now-pay-later technology company – posted a softer than expected $22.2m loss for the six months to 31 Dec 18, while revenue surged by 85% to $112.3m.  

Drivers

  • The bigger than anticipated loss was mainly due to accounting standard changes, one-off items, costs associated with its global expansion efforts (US and UK) and a lift in employment costs (+170%) as it hires new staff. Revenue surged as its customer numbers more than doubled while the number of sales processed through its platform close to tripled. 
  • Afterpay has been benefiting from a general move away from credit cards, particularly with millennials who now account for 71% of transactions with the company. 
  • The majority of its revenues (80%) are generated in Australia. Growth has been strong locally, particularly with in-store businesses and is now available in almost 20,000 shopfronts in Australia and New Zealand (now includes dentistry and optometry). APT had over 3.1 million active customers in ANZ at the end of December. 
  • Its expansion in the US continues at a faster than expected pace and generated more than $9.5m in revenue from its American operations over the half (vs nil a year earlier). 
  • The way Afterpay works is that consumers buy a product and pay for the purchase over four equal instalments due every two weeks with no interest charged. Late fees apply for missed payments. Over the half, APT received $18.2m in late fees (as a percentage it declined from 22.5% to 17.6% of total revenues). When a purchase is made, Afterpay immediately pays the funds (less its fee) to the merchant and then collects the four instalments directly from the customer. The average purchase made by Afterpay users is $150.

Dividend

  • No dividend was declared. APT is yet to pay investors a dividend since making its ASX debut in June 2017. 

Outlook

  • It is expecting to spend an additional $10m to continue its expansion in the US and UK over the second half. While there was little disclosed about its UK debut, it is targeting an official launch by July. 
  • APT said it is on track to reach over 1 million active customers and 2,000 active merchants in the US within 11 months of operations. Since 31 December 2018 APT has added 260,000 addition active users, a 40% increase. 

Share price

  • APT shares fell on the result however is still up close to 50% Year-to-Date after more than doubling in value on the ASX in 2018. 

Tags:

APT

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