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HY21 result: Laybuy (ASX:LBY) shares rise after big growth

Laybuy Holdings Ltd (ASX: LBY) shares are up after reporting big growth in its FY21 half-year result to 30 September 2020.

Laybuy is a buy now, pay later business that operates in New Zealand, the UK and Australia. Consumers pay off the purchase over six weekly payments without paying interest

HY21 result

The buy now, pay later company said that its FY21 first half gross merchant value (GMV) was up 167% on the prior corresponding period to NZ$244.8 million. The annualised GMV has reached NZ$489.6 million. The UK annualised GMV has reached NZ$212.5 million, which was an increase of NZ$196 million compared to a year ago.

Laybuy reported total group income of NZ$13.3 million, which was an increase of 151% year on year.

This growth was supported by a 48% rise in active merchants to 6,323 whilst active customers grew by 315,000 to 568,000. There was strong growth of customers in all regions according to the company.

Its defaults reduced from 3% of GMV in the first half of FY20 to 2.5% in the first half of FY21. The net transaction margin (NTM) was up 448% to NZ$4.1 million, up from NZ$0.8 million last year. The NTM increased to 1.7% of GMV in the first half, up from 0.8% from the first half of FY20.

Trading update

Laybuy said that GMV continued to grow in October and November with growth of 164% and 175% respectively compared to the prior corresponding periods.

Since 30 September 2020, Laybuy has added over 60,000 active consumers and over 1,000 active merchants.

Management comments

Laybuy Managing Director Gary Rohloff said: “Setting the foundations for growth, Laybuy has expanded its debt facilities and raised capital on the ASX, which together with its capital efficient business model supports annual GMV growth of approximately NZ$4 billion. This sets us up well to capitalise on our differentiated offering and highly scalable and flexible technology platform to capture the substantial growth opportunity in both the UK and Australian market.”

Outlook

Laybuy is focused on continued growth, particularly in the UK. But management continue to monitor the impact of a COVID-19 second wave across key markets.

It launched a market campaign in mid-October that will hopefully yield good results for the upcoming major retailer events of Black Friday, Cyber Monday and Boxing Day.

Just like other buy now, pay later businesses Laybuy is growing at a fast pace. I’m not sure what a fair price to pay for Laybuy is – can all the BNPL generate strong growth, maintain margins and keep their arrears low? It’s hard to say.

There are other ASX growth shares I prefer in the payment space like Pushpay Holdings Ltd (ASX: PPH) which is already profitable and growing strongly as well.

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Afterpay, Zip Co, Sezzle…

Is BNPL the opportunity of a lifetime or is the sector a ticking time bomb?

Rask's analyst has just finished a 7,500-word report, The Ultimate BNPL Sector Report, taking a deep dive into this booming ASX sector. It shines a spotlight on each of the major players. You can get the full analyst report for FREE by CLICKING HERE NOW.

Note: the report is 100% free.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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