The Openpay Group Ltd
(ASX: OPY) share price has tumbled more than 5% in early morning trade after the buy now, pay later company released half-year results. Here are the details.
Openpay’s key highlights
For the half-year ended 31 Dec 2020, Openpay reported total transaction value (TTV) of $165 million, an increase of 96% on the prior corresponding period (pcp).
Gross revenue yield decreased by roughly 100 basis points to 8.1% over the period, resulting in reportable revenue of $13.4 million, which represents an increase of 63% on HY20.
Operating costs of $35 million were substantially higher (60%) than the previous period as the business continues to significantly invest in its people, processes and technical platforms which will support the ongoing growth of the business.
Net bad debts for the half-year were $3.3 million (2% of TTV), compared to $1.9 million in HY20 (2.2% of TTV).
Openpay reported an EBITDA loss of $21.9 million, an increase of 56% against the pcp. Net loss before tax widened to $25.5 million, which was up 60% from the prior period.
The company’s cash balance dropped to $39.3 million as of 31 December 2020 as a result of anticipated high disbursements to merchants over the period.
Strong growth metrics
Openpay continues to show strong growth in user engagement, with the number of active customers reaching 461,000, an increase of 123% on the pcp. Additionally, its number of active plans and active merchants increased by 213% and 46%, respectively.
The company’s current growth strategy revolves around building a critical mass of customers in retail and other selected verticals while developing a differentiated value proposition that targets more “finance savvy” customers.
Its UK expansion is set to enter phase 2, bridging into healthcare and automotive to complement the existing retail vertical. The UK business reported an increase of active plans of 1,059% on the pcp to 506,000 and active customers up 541% to 216,000. This contributed 47% and 72% to overall active plans and active customers respectively for the half-year.
The road ahead
A key focus of 2021 will be the continued development of OpyPro (formerly Openpay for business), which is a software-as-a-service (SaaS) transactional business-to-business (B2B) product that already supports large organisations such as Woolworths Group Ltd (ASX: WOW).
The US expansion is currently in the first phase of operation. Under its six pillar strategy, Openpay will focus on aggregators and large merchant groups which will ideally lay the foundation for scale to build its competitive position.
The US platform will emphasise larger transaction values and focus on the companies four main verticals of healthcare, automotive, education and home improvement.
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