The Splitit Ltd (ASX: SPT) share price is going to be on watch today after revealing huge growth in the first quarter of its FY21.
What happened in Splitit’s 2021 Q1
Splitit reported that merchant sales volume (MSV) grew strongly to US$82 million, up 247% year on year. Gross revenue went up 292% to US$2.7 million.
The buy now, pay later business said that adjusting for a deliberate and strategic shift away from debit cards in January 2021 onwards, MSV in the first quarter would have surpassed that of the fourth quarter of FY20 and growth rates would have exceeded 300% year on year. Debit cards contributed 5% of FY21 Q1 MSV, compared to 20% in the first quarter of FY20.
Total merchants increased to 2,200 with new brands adopting Splitit during the quarter including Google, Giant Bicycles, Hastens and Findex. Total shoppers reached 0.5 million, increasing by 70,000 in the first quarter.
How much growth can Splitit’s balance sheet support? Splitit pointed out that it has a US$150 million receivables warehouse facility with Goldman Sachs to support $800 million of annual MSV, in addition to its US$75 million closing cash balance.
Splitit also reminded investors that it signed a new global partnership with UnionPay after the quarter end, providing access to its global network of cardholders. UnionPay has a network of 9 billion cardholders and is accepted in 180 countries and regions, cover over 55 million merchants.
Management comments
Splitit CEO Brad Paterson said: “The first quarter saw an acceleration in growth across all key operating metrics, accounting for seasonal trends. In addition to another quarter of MSV growing more than 3X, revenue growth 4X year on year reflects the increased adoption of our funded merchant model.
“The strong momentum across the business has continued into Q2. With several key hires in place, we are well-positioned to continue growing in the year ahead.”
Summary thoughts
Splitit continues to grow at a very fast pace, though we’re still talking about relatively small numbers compared to the likes of Zip Co Ltd (ASX: Z1P) and Afterpay Ltd (ASX: APT). The Splitit share price has dropped off in recent times.
It could be one of the ASX growth shares if it can continue to grow by triple digits for multiple years. But it’s hard to say what BNPL valuations will be like in the future.
