FY19 Report – Why The Afterpay (ASX:APT) Share Price Is Up 5%

Afterpay Touch Group Ltd (ASX: APT) has reported its FY19 result to investors, sending the Afterpay share price up by over 5%.

Afterpay Touch is the owner of the popular “buy now, pay later” app. As of mid 2019, Afterpay had over 4.3 million registered users worldwide, making it one of Australia’s true technology success stories.

Afterpay’s FY19 Result And Global Growth

The buy now, pay later company reported that in FY19 its (pro forma) revenue rose by 115% to $251.6 million and its net transaction margin (NTM) profit was $126.1 million – an increase of 126%. The NTM profit margin percentage was quite similar to last year at 2.4%, despite higher losses in the earlier growth phases in the US and UK.

The above growth numbers were from global underlying sales of $5.2 billion, growth of 140%.

There was strong growth across the board. During FY19 active customers grew by 130% to 4.6 million and it currently has over 5.2 million customers. It’s adding more than 12,500 customers per day, according to the company.

The number of merchants also grew impressively, up by 101% to 32,300 at June 2019 and it currently has 35,300 merchants.

In the US it achieved underlying sales of almost $1 billion with an annualised underlying sales of $1.7 billion.

Australia and New Zealand underlying sales increased by 99% to $4.3 billion.

In the UK it has added 200,000 customers in the first 15 weeks, and, according to Afterpay, this is higher than the US Afterpay business at the same time post-launch.

One of the most important statistics from the report may be that gross losses reduced to 1.1% in FY19, compared to 1.5% in FY18. Late fee income as a percentage of total income reduced to 18.7%, down from 24.4% last year.

Pro forma EBITDA (click here to learn what EBITDA means) was similar to last year at $35.5 million with growth in Australia and New Zealand offset by the start-up costs in the US and UK.

Afterpay shareholders saw the net loss worsen by 377% to $42.9 million due to expenses like share payments and new accounting standards. Afterpay said that excluding these items, the company generated a profit. According to Bloomberg, investors were expecting Afterpay to report a net loss of almost $36 million.

Is The Afterpay Share Price A Buy?

Afterpay said it is working towards its goals for FY22 of over $20 billion of gross merchandise value and a net transaction margin of 2%.

It is undoubtedly doing well, but there is plenty of competition these days from the likes of FlexiGroup Limited (ASX: FXL) (including MasterCard), Zip Co Ltd (ASX: Z1P), Splitit Ltd (ASX: SPT) and Sezzle Inc (ASX: SZL).

I wonder how profitable Afterpay can get, even as it gets bigger and bigger. It could go on to be an excellent profit maker, but it’s not the type of share that I’d buy for my own portfolio. I’d much rather buy shares like the ones revealed for free in the report below.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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