The Afterpay Ltd (ASX: APT) share price is under the spotlight this morning. It released a trading update and said it’s going to be taken over by Square (NYSE: SQ).
You can read all about the Square takeover.
Afterpay’s trading update
Afterpay has told investors how it performed in FY21.
Underlying sales
The buy now, pay later business said that its total underlying sales increased by 90% to $21.1 billion. There were adverse foreign currency movements, so if exchange rates had stayed the same it would have seen growth of 102%.
That total underlying sales saw different growth rates for different regions.
North American underlying sales surged 148% to $9.8 billion (or 177% growth in constant currency).
ANZ underlying sales increased 44% to $9.4 billion.
Clearpay underlying sales (which includes the UK and EU) saw growth of 227% to $1.8 billion.
Underlying sales is a key figure that investors like to focus on, it can influence the Afterpay share price.
Afterpay said that it achieved its previous goal of $20 billion of underlying sales a year ahead of target.
Revenue
The revenue growth rate wasn’t quite as strong. Total group revenue increased 78% to $925 million (88% in constant currency).
Merchant revenue, which excludes late fees and other revenue, saw 90% growth of $822 million (102% in constant currency).
Gross profit
The company’s gross profit increased 75% over the year to $675 million (there was growth of 84% in constant currency).
Active customers and merchants
Afterpay’s active customer number increased 63% over the year to 16.2 million.
North American customers increase 88% to 10.5 million, ANZ customers only rose 8% to 3.6 million and Clearpay customers increased 104% to 2.1 million.
Total merchants increased 77% to 98,200. North American merchants increased 148% to 28,400, ANZ merchants rose 47% to 63,100 and Clearpay increased 501% to 6,700.
Other highlights
Afterpay said that the longer customers are on the platform, the more often they spend. Around 93% of FY21 underlying sales came from repeat customers. The customers that have been around the longest are now transacting more than 30 times a year.
The company also said that its merchant revenue margin stable in FY21. Margins were consistent across all major regions.
Its gross losses remain low and are expected to be below 1% as a percentage. Net transaction losses as a percentage of underlying sales are expected to be slightly above FY20 as a result of a lower contribution from late fees.
The net transaction margin for FY21 is expected to be above 2%. The second half of FY21 saw a “moderate” decline because of a higher contribution from international markets during the period.
Summary thoughts on Afterpay and the share price
Whatever investors would have thought about this news, it has been trumped by the takeover deal with Square.
Afterpay’s customer growth has slowed right down in ANZ. But the northern hemisphere looks like there’s plenty of growth to come.
It’ll be interesting to see Afterpay’s progress under Square’s ownership.
