Splitit Ltd (ASX: SPT) has revealed enormous growth during the Black Friday sales event. Are Splitit shares worth buying now?
Splitit is one of the fast-growing, but smaller, buy now pay later businesses on the ASX.
Strong growth
Splitit reported it generated record merchant sales volume (MSV) of US$15.3 million across the holiday shopping week including Black Friday and Cyber Monday. This represented growth of 216% over the same period in 2019.
MSV averaged close to US$2 million each day across the period. There was strong growth in all of its key markets in North America, Europe and Asia Pacific. Splitit said there were shoppers from over 77 countries.
Splitit revealed that November’s MSV was another record month, growing 255% year on year.
It now has more than 410,000 total shoppers as it added 48,000 new shoppers since the end of third quarter. It grew total merchants by 30% since the end of the third quarter.
The average order value remains above $1,000. Categories with the highest volume of sales over the week were home, fitness and outdoor, jewellery and accessories. The jewellery and accessories had an average order value (AOV) of around US$5,000, driven by the purchase of diamonds and watches.
Splitit CEO Brad Paterson said: “This speaks to the significant need in the market for merchants to offer flexible payment solutions to shoppers. Never has it been more important in retail that shoppers can manage their cashflow without incurring new debt and we’re proud to partner with so many forward looking e-commerce businesses.”
Summary thoughts
In percentage terms, this was impressive growth. But the absolute number of US$15.3 million MSV means that Splitit is trading expensively for its MSV compared to its market capitalisation of close to $600 million.
If Splitit can keep raising its MSV by triple digits each update then it may well be worth thinking about. Its operating model may be more sustainable the other buy now, pay later operators.
But there are other ASX growth shares that I think look better value and have better long term profit potential such as Pushpay Holdings Ltd (ASX: PPH).
