AfterPay, my notes

To those unfamiliar with Afterpay and BNPL competitors, as a customer, let me explain.

There are absolutely numerous competitors scrambling for market share, users, retailers etc. What I have noted using multiple providers services is this:

  1. The sign up process was incredibly simple for APT. The others are more like a credit application process, slow and tedious. Z1P charged me a monthly access fee and gave me ongoing credit, which I did not want.

  2. APT don’t charge me, the consumer, a fee at all. Unlike other services that do.

  3. The amount of retailers, both online and offline that support APT is far superior to competitors. Will be interesting to see if they can build a moat around this.

  4. The in-store experience with APT is even easier than the online experience! I walk in, open up the app, generate a barcode that the retailer scans. Then walkaway. It’s like Alipay in China.

I’m a little different to the typical millennial though, who doesn’t own a credit card and uses APT as an alternative. I do have a credit card, so am in the minority of APT’s customer base. I just like using APT because the payment process is as easy as paypal and I can smooth out payments over 2 credit card bill cycles (4 payments over 8 weeks). As a regular customer on their product, I also pay $0 on the day I purchase. The first payment is withdrawn 2 weeks after purchase.

I’ve also heard from a colleague he loves using it because he can buy things and not get in trouble from the wife, because it only comes up as Afterpay on his statements. Lol!


Hi Tominvest

I have been using this tracking approach to understand how successful Afterpay is proving in competing with Affirm in the US and Klarna in UK markets. ANZ is already game over for other players who are basically also rans in that race.

Afterpay’s trajectory in the US is astonishing. From a standing start they have overhauled Afirm. To understand why you really need to understand the power of social media and the power of customer advocacy.

Afterpay in the US…
5 year trend:-…
1 year trend:-…

Afterpay’s “Clearpay” in the UK…
1 year trend:-…

Apart from the trajectory Afterpay has achieved in the US overhauling Affirm by these kinds of analog data sets (and there are others like website referrals, web traffic etc), 1 other reason why I am completely unconcerned about Affirm as a competitor is the actual mechanics of the offering. I was recently looking at flight options and someone suggested a flight consolidator website I don’t usually use, (probably because it is US based and Skyscanner is much better in Asia). Anyhow when I searched for the flight price comparison a number of US flight websites popped up and on several of them Affirm was featured on the landing page.

At first I was concerned about it but when I clicked on the invitation for pre-approval for Affirm’s BNPL offering that sense went away completely and immediately. They effectively offer instalment credit plans to consumers at credit card rates of interest - double digits (10-30% APR over 3-12 months). They are exactly the reason why Afterpay is killing it. There is a massive rejection of credit cards and the like by millennials world wide.

Klarna right now is the only BNPL competitor I am concerned about, (leaving aside left field actions from new fintech players or desperate fight backs from established players).



Klarna right now is the only BNPL competitor I am concerned about, (leaving aside left field actions from new fintech players or desperate fight backs from established players).…

This is just 1 data point but it serves to highlight that: i) the BNPL space is a competitive landscape ii) there are clear offering differentiators to merchants between players with Clearpay/Afterpay replacing Klarna across the merchant group in US/UK.

Also - data worth tracking, besides Google trends and traffic, are app downloads and app ratings (on apple & android) - Klarna has a particularly poor customer experience rating for its app for instance.



Not like a CC as there is no interest charge to the consumer. You buy an item for $100 and you pay for it in four installments of $25. The merchant collects $96 at the time of the transaction, effectively paying $4 to Afterpay.

However, if you pay late, you get dinged pretty hard with a late fee and it impairs your ability to place larger transactions with Afterpay. The impact of late payments is very much like a CC.

This is a little difficult to compare to a CC transaction because the CC companies generally do not charge the merchant a simple percentage of the transaction amount, nevertheless from what I could glean it appears that CC merchant fees come in around 2.5% of the transaction. This is on top of the interest that the consumer pays to the CC company. The merchant fee protects the CC company from loss due to consumers like me who almost always pays with a CC but almost never pays interest because I pay my CC account balance in full every month.

OK, you asked to be corrected. This is the way I see it. And just to keep the math simple, I’ll pretend that Afterpay collects the full transaction amount after 6 weeks. That’s equivalent to 4% return in 6 weeks. Afterpay can repeat this process 8.67 times a year with the same amount of principle which amounts to a shade under 35% APR. That’s a pretty good return.



I went to Klarna’s Facebook page where I find customer comments on various posts. Customers are extremely unhappy with Klarna.For some customers, app doesn’t work well, while others complain that they have returned the products but have not received refund. poor customer service, complicated repayment system etc are concerns of the customers.

Following are comments by customers on Klarna’s Facebook page:

“Horrible customer service! Never recieved a product and they won’t issue a refund and are trying to get my to finish paying for it! Had to contact my bank and fill out fruad report just to get it stopped! Worse customer service ever. Ive contacted this company a dozen times to get this fixed. Nothing has been done! Avoid using this company at all cost!”

“AVOID AVOID AVOID… These people are fraudsters. They conduct unauthorised, fraudulent credit searches on unsuspecting people. I have seen many horror stories about them I myself am in the process of reporting them to the police for this.”

“This app sucks used it, it took my money, didn’t place my order, and now I have no idea when I’ll get my money. :person_facepalming:t2:??? I reached out and was told try again and it may or may not work and my money is pretty much gone for 7 business days. After pay is much better”

In some comments like the one above, customers recommend others to use afterpay. If they maintain such service standards than it will be difficult for them to compete with afterpay which has a very user friendly app, friendly customer service and easy to understand repayment system.



Afterpay (APT) is still growing during the COVID-19 crisis.

Shares are currently up 18% on the ASX, and up 225% since the 23 March low.

"Its US performance was “particularly strong”, with underlying sales in line with the second quarter despite the seasonally softer retail market, Afterpay said.

“At this point is time, it is difficult to identify any sustained trends, in any of our regions, as a result of the impacts from COVID-19,” Afterpay said." :…


Afterpay (APT) is growing rapidly in the USA.

APT stock is now up 460% from its March 23rd low.

Afterpay now has nearly nine million U.S. consumers who have joined the platform, including more than one million new customers using the platform during the COVID- 19 period of the last ten weeks. This represents a 30-40% increase in the weekly run rate from January and February. These milestones have been achieved after launching in the U.S. just two years ago - making Afterpay one of the fastest growing ecommerce payment companies in the market.…


Why has this stock rallied so much? I like the company but aren’t they going to be obliterated due to Covid-19? Do we have any sense about online purchases making up a big percentage of their business?

I sold out in March but that was unwise in retrospect. But I don’t understand the market on this one…


Beware the Afterpay train this week.

The tearaway will be included in the MSCI Australia Index at close of business on Friday which is likely to mean one thing: buying.

Equities desks have been readying clients for the past fortnight or so, which has only fuelled the stock’s dramatic rally. There’s sure to be big volume all week, especially after market on Friday.

There’s likely to be buying from index huggers, who trade based on MSCI’s recommendations, and the offshore types who wait for MSCI to name something in a country index to take the stock seriously. :…

Afterpay pre-announced their YE results (Australian companies’ financial year always end 30th June) in order to accompany a capital raise.…

They are raising $650m which will leave them with $1.2bn of cash and it is completely underwritten and providing a floor price at $62.

More importantly the results highlights contained some important information on the underlying business and progress against strategic goals in 2020. For full year, sales were up 112%, customers up 116% and merchants up 72%.

ANZ (their mature market) sales in Q4 were up 57% - a slight acceleration. US Q4 sales up 299%. Within the next Q, UK and US sales will have reached parity with their ANZ business.

eBay Australia has already been launched (and has proven amazingly successful), US in-store and Canada launch re-confirmed for FYQ1 ie in next 3 months. Further country launches slated before year end and a potential acquisition identified. Anecdotally we know that they have been registering their trade name all over Europe and Asia and that they have been hiring in China since the announcement of Tencent’s stake. Visa and Mastercard strategic moves in US and Australia still yet to come!

Overall Afterpay has performed very well during the Covid crisis. Customer acquisition, merchant onboarding and sales in the online space has more than made up for any in-store shortfall. So far they have not seen any customer repayment risk to their business model.

A snippet from the trading update:-

Strong performance across the business delivered underlying sales of $11.1b in FY20
Active customers2 of 9.9m for FY20, 116% above FY19
Active merchants2 reached 55.4k in FY20, 72% above FY19
Net Transaction Margin (NTM) for FY20 is expected to be approximately 2%

Strong new customer acquisition saw the Company exceed its target of 9.5m active customers by the end of FY20
Key active customer milestones were achieved in both the US and the UK in June 2020, with the US reaching 5.6m and the UK 1m active customers
Customer engagement remained strong with 91% of global underlying sales coming from repeat purchasers during Q4 FY20

Expansion into Canada and rollout of in- store in the US expected in Q1 FY21
Our updated global expansion roadmap will see us launch in Canada in Q1 FY21, and has the potential to see us launch into new markets in late 2020 or early 2021
Exploring a number of small M&A opportunities to accelerate roll out across potential new international markets. Due diligence is being undertaken, however, there is no certainty that any deal will be completed

Good luck to all holders.


Afterpay is expanding into Europe - their stock hit a record high today.


"the Australian tech darling announced it has entered into an agreement to fully acquire Spanish fintech Pagantis, which will enable Afterpay to roll out its services into the European Union.

Afterpay said the acquisition, expected to be completed by December, would allow the company to operate in France, Italy, Spain and Portugal."…


AfterPay results came out yesterday - there is a LOT of news.

Hot on the heals of their announced entry into Europe, Afterpay have just released their results which includes the bottom line beat since their prior pre-announcement.

On top of that they announced:

  1. Entry into SE Asia via an acquisition of a Singapore located Singapore/Indonesia BNPL set up
  2. Agreement to partner with Tencent on penetrating opportunities within Asia (probably SEA - Shopee)
  3. Launch into Canada
  4. Virtual card with Visa in US
  5. Virtual card with Mastercard in Australia

Numbers were exceptional:-

ANZ Sales Growth: 52% (FY)
US Sales Growth: 330% (FY)
UK Sales Growth: N/A (FY)

ANZ Active Customers Growth: 51% (FY)
US Active Customer Growth: 219% (FY)
UK Active Customer Growth: N/A (FY)

ANZ Active Merchant Growth: 18% (FY)
US Active Merchant Growth: 202% (FY)
UK Active Merchant Growth: N/A (FY)

(NB Australia doesn’t report quarterly numbers)

Australia is becoming staggeringly profitable!
Margin is up, Gross losses are down and late fees were down.
US is looking less profitable at the equivalent stage vs ANZ in terms of revenues or customers.

Share price almost reached $100 on earnings release day.


Nice move by Afterpay :

Afterpay Ltd will team up with Westpac Banking Corp to offer savings accounts, the two companies said on Tuesday, signalling a shift by the alternative credit firm into mainstream banking.

The accounts will be available to Afterpay’s three million-plus customers in Australia from next year through Westpac’s digital banking platform, and will help give the firm greater insight into its customers’ financial habits, it said.

The announcement sent Afterpay’s shares up 6% and past the A$100 mark for the first time, highlighting the staggering rise for a stock that was at just A$8 in March. :…


This is on top of:

their announced partnership with Simon Properties Group……

and in store launches in the USA……

and finalisation of their audit review with no legal or regulatory action…



Afterpay announced a quarterly update this week.

Some of the most important facts:
Underlying Sales up 115%(ANZ up 63%, US up 229% & UK up 346%)
Active Users up 98%
Active Merchants up 79%

US in store has gone live
Simon Properties to promote Afterpay throughout all its Malls during the holiday season
Canada entry on plan and progressing well
Europe and Asia launches progressing well
New mega merchant partners announced in US, Canada and Europe
Strategic partnership announced with Stripe!
Banking products including savings accounts to be launched (with WestPac)

Overall this is progressing brilliantly despite PayPal’s BNPL announced entry.

3 brokers have raised targets with a street high from Bell Potter @ $137 (AUD) citing Stripe, margin and growth.

Good luck to all holders.


Hayden Capital have just published a 34 page presentation on Afterpay. It may be helpful to those who are still considering adding Afterpay to their portfolio :…


AGM business update out today including most importantly: Q1 performance details, global business expansion and cross border facilities.

All in all, looks solid.

Our Q1 FY21 Performance
As we shared only a few weeks ago, we have had a solid start to FY21.
Our active customers continued to grow in the first quarter reaching 11.2 million active customers1 by the end of September. We also continued to increase the number of merchant partners on the platform to over 63 thousand. Q1 FY21 Underlying Sales grew by 115% to $4.1b, up from $1.9b Q1 FY20 as a result of strong growth across all regions.
The benefits of our retail platform continued to drive value with an average of over 19m lead referrals generated per month to retailers in Q1 FY21.
If we look at each region’s performance during the first quarter, ANZ grew strongly year on year, up 63% on Q1 FY20, underlying sales momentum continued to accelerate both online and in-store. Underlying sales in the US increased by 229% compared to Q1 FY20, and Underlying sales in the UK in Q1 FY21 grew by 346% when compared to Q1 FY20…

October was another record month for underlying sales globally and we are performing ahead of this in November.
Instore sales in ANZ continue to increase as a percentage of total sales reaching 23% in recent weeks. Notwithstanding the growth in in-store and the relaxation of lock-down conditions across ANZ we see online sales growth continue to track strongly.
While retailer and consumer demand for our offering internationally continues to be strong.
The growth of new customers is accelerating since the end of Q1 in both the US and UK as the pipeline of new merchants go live on our platform.
We have had a number of key international new merchants join our platform in the past week alone including, Bed Bath & Beyond, Buy Buy Baby, Glossier, SAXX and Arcadia (which includes the major Top Shop brand). Nick will speak more on our new regions in a few minutes.
On our key financial and performance metrics, there is no change to the comments we made around gross losses, net transaction losses and Net transaction Margins in our Q1 business update and we are pleased with how the business is tracking in the first 6 weeks of Q2 FY20…

Global expansion
I would like to start by reflecting on our global expansion efforts over the past few months.
A key focus for our growth strategy is to be where our customers and merchants want us to be. And, we know this from what they tell us.
Launching into Canada in August was a really exciting moment for the team. We have had a solid start with a number of large merchants now live, integrating or signed.
The acquisition of Pagantis in Europe, which remains subject to approval from the Bank of Spain, is a key step in our efforts to be a truly global business. Pagantis provides us with the opportunity to launch into Spain, France and Italy immediately and creates a glidepath to other countries in the European Union. Our teams are busy developing integration plans to ensure we are ready to launch as soon as the acquisition is completed. We are excited about working with the talented Pagantis team and learning from their wealth of knowledge.
The discovery of our expansion plans into Asia are also progressing with a base now established in Singapore. This will enable us to drive the development of a strategy for the South East Asia market.
Our Cross Border Trade also builds on our global expansion by enabling our merchants to offer their products to customers across the world. Specifically, all Afterpay merchants can now open their ecommerce sites to Australian, British, Canadian and New Zealand shoppers. Next year, global merchants will also be able to sell to US consumers.
As with all of our global expansion opportunities, we will continue to use our successful ANZ operations as a blueprint for execution……


AfterPay continues to impress. Shares are up sharply over the past week on news of a strong holiday season:…

“The average basket size for Afterpay customers in the US increased by 30% when comparing the 2020 and 2019 Holiday shopping seasons. Traffic to Afterpay’s brand partners was also strong, as the company saw a 145% year-over-year increase in referrals to global merchants from its Shop Directory.”

(This also buoyed my hopes for a strong showing from two other popular board holdings: SHOP and Peloton.)

International expansion continues. I like what this gets me as COVID recovery legs in at different rates around the world.

Q1 FY21 Underlying Sales grew by 115% to $4.1b, up from $1.9b Q1 FY20 as a result of strong growth across all regions
Active customers up 98% (6.5m of an 11.2m total in the U.S.)
The U.S. market remains AfterPay’s hypergrowth region.
Underlying sales in the US increased by 229% ($1.6b of all underlying sales) compared to Q1 FY20

I opted for AFTPF since I’m U.S. based - no problem purchasing the OTC shares through my online broker. (I had to pay a ~$7 commission, but that was well worth it. It’s turned into one of my biggest winners of the past year.)



For those following Afterpay, they announced their H1 results last week.

You can find the results announcement, the presentation and a playback of the earnings call here:-

The results were on track but probably didn’t blow investors away with any major announcements or reaching a clear profitability break through. Also the results were accompanied by a capital raise by way of a convertible loan note which whilst on exceptional terms, is never taken well.

Headline growth metrics are all looking great:-
So just to match ANZ’s current penetration (10% of the population) in terms of active customers that means an opportunity of 10x in both UK and North America! Wow! Then take a market size differential of 10x in US and 2x in UK, then add something for whatever that’s worth in Europe and SE Asia! Then plus plus. Seems like a real growth story with a long run way.

**H1_FY21 H1_FY20 VARIANCE**

**Underlying Sales (A$)**
9.8b    4.8b    106%
4.8b    3.1b    53%
North America
4.2b    1.4b    195%
0.8b    0.2b    288%

**Active Customers**
13.1m   7.3m    80%
3.4m    3.1m    10%
North America
8.1m    3.6m    127%
1.6m    0.6m    161%

**Active Merchants**
74.7k   43.2k   73%
53.6k   35.5k   51%
North America
17.9k   7.4k    141%
3.3k    0.4k    812%

To me the most important new news and highlights from:-

The prepared slides and remarks are:

NTM as a % of sales increasing from 2.1% to 2.2% - the business quality is getting better

EBITDA excluding items rose from 7.7m to 47.9m up 521% - that’s incredible leverage

Canada run rate now at $90m

US instore run rate at $180m

UK outperformance in terms of growth and value of the business with underlying sales growing by 288% and merchants by 190%, active customers by 161% and clearpay app reaching 1m device downloads

Total retail TAM = $9.4 trillion

Afterpay Money - Mobile banking product to be launched in Australian later in 2021 (FY22) (prelaunch already begun) and rolled out beyond AUS in 2022 and this will integrate banking functionality with cards with Afterpay with Pulse - this could dis-intermediate banks and banking as we know it. Scalable to all other Geos

European Expansion - to be approved in Q3 (so in the next 6 weeks) to be followed by immediate launch in 4 countries and $1bn pipeline identified - that’s huge

International region overtook ANZ for the first time in H1 FY2021

Loss rates reduced from 0.7% to 0.4%

Capacity to support an additional $26bn gross transaction value (underlying sales) OVER & ABOVE the current annualised $23bn run rate

NEW Opportunities say only “starting” with Afterpay Money!


Asia expansion timeline and sequence: going to link with consolidation and leverage of core merchant relationships and to launch in the “relative near term future”

Doing the Matrix transaction now is aimed at optimising accretion and growth plus opportunity in the US is even greater than they previously thought hence needing to increase ownership

Looking for new revenue opportunities on both the merchant and consumer side

Looking to continue increasing in-store business although usually built up after launching online first as well as going up the transaction value curve as well as up the frequency curve - sometimes these are different directions

Seen scale competitors during the H1 within retailers and platforms. Not seeing any impact on top line take rate and using referral and marketing investment to win

Analysts really impressed with credit quality and wanted to know was this due to maturity of the platform or improved quality of consumers with increased duration with repeat customers. Definitely not as a result of tightening the system.

Customer numbers appeared flat in Q2, not due to competition but maybe suppressed by market / pandemic situation but expected to accelerate

Merchant pipeline is always weakest in new calendar year quarter but next quarter looking very strong esp in Nth America

Cross border becoming more relevant over time

Stripe is a primary gateway and Squarespace is the platform for SMB. These partnerships are ready to onboard merchants and customers immediately. Still processing transactions through usual lines but this is a retail scale play.

No visible impact from Paypal on share of checkout where PayPal exists alongside Afterpay and overlap of customer between providers is not as significant as you would imagine. No material diminishing.

Good to see gross loss % fall - what’s behind it? What proportion of losses are from hardship vs fraud? Answer - nothing material in hardship or fraud. Q2 What are you seeing in lead conversion? Answer: Conversion is very high quality.