The Afterpay Touch Group Ltd (ASX: APT) share price is up after the buy now, pay later company updated the market about its FY19 growth.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 3.5 million registered users worldwide, making it one of Australia’s true technology success stories.
Afterpay’s FY19 Update
The headline number that Afterpay reported for the 11 months to 31 May 2019 was that underlying sales were approximately $4.7 billion, up 143% on the first 11 months of FY18.
There are now more than 4.3 million active customers transacting with Afterpay at the end of May. Afterpay has been adding an additional 7,900 new customers per day since 31 December 2018.
In terms of retailers, Afterpay is partnered with approximately 30,600 active merchants at the end of May. It has added 7,400 merchants since December 2018, which is growth of 32%.
Afterpay’s profit margins have remained consistent. The gross loss, net transaction loss and net transaction margin on a year to date basis has been “broadly in line” with the performance achieved in the first half of FY19.
The buy now, pay later company then re-iterated the growth it experienced in the US that it reported yesterday,
However, the company did reveal that its underlying sales were around $780 million for the 11 months to 31 May 2019 and it’s currently generating approximately AU$1.7 billion in underlying annualised sales.
Afterpay’s US net transaction margin is increasing month on month, driven by improving Afterpay merchant fee income and stabilising losses as the business scales. US merchant fees are trending in line with Australia.
Afterpay is now live and transacting under the “Clearpay” name using the same business model, technology and platform.
It has ongoing integration with around 50 retailers including US and Australian based retailers, starting with Urban Outfitters.
The UK company is being led by Carl Scheible who joined the company several months ago, the UK staff is now 26 in strength.
In the second half of FY19, in-store sales represented around 20% of total Afterpay ANZ underlying sales, which was up 15% from the first half. Around a quarter of new Australian Afterpay customers have come from in-store additions.
Afterpay now has over 2.7 million active customers in Australia and New Zealand who can shop at 27,300 merchants. Some of the newest customers include Strandbags NZ, Forever New Australia and Myer Holdings Ltd (ASX: MYR).
The company also said that in less than 10 months it now has over 1,100 dental and optical practices offering Afterpay. A trial for travel with Layaway Travel is also underway.
In April 2019 the Federal Parliament passed laws which give ASIC powers to intervene where it identifies risk of significant detriment to consumers, which Afterpay has supported the introduction of.
Afterpay is currently working with AUSTRAC about issues regarding anti-money laundering and counter-terrorism financing compliance, with the outcome yet to be determined. Afterpay is going to appoint a professional services firm to conduct a review.
Is Afterpay A Buy?
The Afterpay share price is up 0.5% in response to this news, so it seems it is around what the market was expecting.
I really don’t know if Afterpay is a buy or not today. Afterpay has tons of potential but it has a high valuation to match. It will need to do well in the US and UK to justify the current valuation in the near future.
I’d rather invest in one of the rapid growth shares in the free report below over Afterpay today.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.