Afterpay has been mentioned on the board a few time. If you are not worried about the FX frustration, you should learn more about this Australian high growth company.
Highlights in the lastest business updates:
Underlying sales were approximately $4.7 billion in the 11 months to 31 May 2019 (unaudited), up
143% on the prior comparable period.
There are over 4.3 million active customers transacting with Afterpay as at the end of May, growing at an average of approximately 7,900 new customers per day since 31 December 2018.
Afterpay has partnered with approximately 30,600 active merchants as at the end of May,
up 7,400 or 32% on 31 December 2018.
US Market Update
? Growth continues to remain strong in the United States. After just over 1 year of operations
Afterpay has acquired over 1.5 million active customers who are now able to shop with over 3,300
active merchants as at the end of May. There are a further 1,100 merchants in the process of
integrating with the platform.
? Afterpay US underlying sales was approximately $780m (unaudited) for the 11 months to 31 May
APT market cap is less than US$4B.
APT is not a SaaS company. Growth is above 100% yoy.
APT was profitable before US expansions.
Cash utilisation is 6 X a year. 4 payments by fortnightly. 2 months total cash turnaround.
US expansion is very successful and UK expansion is underway under the banner of ClearPay.
APT has a large addressable market.
Buy Now Pay Later sector.
Big multinationals on board. And help to launch from one country to another. eg. Urban Outfitters was on board first in Australia, then became initial launching partner in US and UK.
From the initial data in Australia, any retailers rolled out Afterpay and their sales increase by around 30%. That brought a lots of its competitors rush to use BNPL (Buy Now Pay Later).
Entering into health sectors: you can pay your root canal by Afterpay now in Australia.
Risks and Concerns:
Its model is not recession tested.
APT takes a cut of around 4% from the pass-through sales. Bad debts was about 0.5% in Australia. US market is not tested. We need to monitor the figure here carefully.
A takeover from Paypal/Visa and etc.
Disclosure: My top holding since mid 2017 at U$3.00.