Afterpay Share Price Up 3%, Results Prove Their Leading Position

The FY19 results for fintech giant Afterpay Touch Group Ltd [ASX:APT] was a much anticipated release on the ASX this morning.

The ‘buy now, pay later’ leading provider finished 7.8% higher yesterday, likely due to optimistic investors wanting in before the Afterpay share price inevitably shot higher today on the back of stellar results.

And they didn’t disappoint.

As expected, Afterpay saw significant growth in FY19, with a key stand-out being a 140% increase in global underlying sales, from $2.2 billion to $5.2 billion.

The Afterpay share price climbed 3% within the first 30 minutes of trading following the news.

Afterpay results deliver on all fronts

Key highlights from the results include but are not limited to:

  • 130% increase in active customers, currently on-boarding over 12,500 new customers each day
  • 101% increase in active merchants to 35,500
  • 99% increase in Australia and New Zealand Underlying Sales
  • High Afterpay Net Promotor Score and purchasing frequency
  • Gross losses down to just 1.1%
  • Underlying free cash flow of $33.3 million
  • More than $230 million cash on hand

Of particular interest is the amount of growth in the US and UK, which ‘exceed[ed] expectations’.

Underlying sales in the US reached nearly $1 billion and a recent strategic partnership with VISA is expected to even further expand their US reach.

And for the UK launch, more than 200,000 customers on-boarded in the first 15 weeks, an even better result than the US launch.

That’s great, but what’s new?

Afterpay intend to focus on and invest in further innovation in FY20 ‘to provide further value to the customer and merchant experience’.

One such innovation is Variable Payment Upfront (VPUF), which will allow customers to pay extra upfront ‘to avoid a decline for limits and other reasons’.

This may help them flatten up-and-coming competitors like FlexiGroup Ltd [ASX:FXL], who are relying on their points of difference to try and compete with the brand recognition of Afterpay.

Afterpay’s VISA US partnership will also create more flexibility and efficiency for their US customers.

They are planning to announce ‘further developments arising from our arrangement with VISA’.

It’s promising to see the company is yet to fall into the ‘why fix what isn’t broken’ trap, particularly in this tech-driven world.

Of course, Afterpay isn’t the only fintech out there worth considering as an investment.

We’ve listed our three favourites in this free report, which outlines what the fintech revolution could achieve for forward-thinking investors. Download now.

Regards,

Ryan Clarkson-Ledward,

For Money Morning


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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