Afterpay’s Profit Surge and Service Expansion in Regions
Afterpay Ltd. (Afterpay), known for its innovative financial service “buy-now, pay later,” (BNPL) recorded a double profit for the fiscal 2020 and announced plans to expand its service to the other regions on Thursday, August 27, 2020. The firm, which claims to be adding an average 17,300 new costumers each day, has able to make its big fortune because of the growing online shopping across the globe triggered by the COVID-19 pandemic.
Now, the BNPL service provider has plans to accelerate its global expansion as its share price surged to a record high for its annual financial disclosure on Thursday amid the coronavirus outbreak. The company recorded a record surge of the share price of $93.99 on Thursday morning, as compared to its low share price fell to $8.90 in late March.
In its financial disclosure for the year, Afterpay has recorded $519.2 million in profit for the 2020 financial year (FY), which is nearly the double revenue earned during FY2019. The company witnessed a net loss for the year to $22.9 million, which is a remarkable fall from the last year’s loss of $43.8 million.
Partially led by the sharp increase in sales in Australia and New Zealand operations, Afterpay’s sale grew by 52% to $11.1 billion up from $5.2 billion in the FY2020. Nevertheless, the market of the United States (US) represented $6.6 billion or 60 percent of the total sales of the company, compared to 52% growth for Australia and New Zealand. According to Financial Review (FR), the company “has a target of $20 billion in underlying sales by 2022.”
On July 7, 2020, Afterpay expanded its balance sheet by announcing an $800 million equity raising to fund expansion and a partial sell-down by co-founders Anthony Eisen and Nick Molnar. As described by FR, Afterpay has $1.3 billion in cash reserve and its existing funding lines have the ability to fund more than $30 billion in underlying sales above current levels.
At present, Afterpay has its operations in four countries: Australia, New Zealand, the United States, and the United Kingdom. As part of its global expansion for the FY2021, the company announced to accelerate its investment into new markets across four continents including from Asia to Europe, and countries from Canada to Asian countries.
Afterpay said earlier this week it would venture into mainland European countries including Spain, France, and Italy via the $82 million acquisition of a Barcelona-based e-commerce platform, Pagantis S.A.U. Meanwhile, the company said its service would be available soon in Canada, after signing up a posse of leading North American retailers.
For the expansion in Asia that has nearly 10 million active costumers, Afterpay has announced a further acquisition of a Singapore-based online retail company, EmpatKali, which operates in Indonesia, to explore opportunities to enter “select Asian markets”. CEO Anthony Eisen told Reuters, “They have got an established, albeit, very early stage position in Indonesia,” since the Southeast Asian country is expected to boost its digital financial market to top $130 billion by 2025. “We are in the land grab phase of growth,” said Andrew Mitchell, a senior portfolio manager at Ophir Asset Management.