The Humm Group Ltd (ASX: HUM) share price is in focus after giving investors its FY22 first quarter update.
Humm offers several different ways for individuals and businesses to buy and pay for products and services. For example, it has various traditional consumer finance products as well as buy now, pay later options.
Humm’s good quarter
Humm said that its total FY22 first quarter volume was $763.3 million, an increase of 39.6% year on year.
The business broke that growth down into the various segments.
The buy now, pay later segment saw volume growth of 44.5% to $308.8 million. BNPL Humm ‘Little Things’ saw growth of 157% in the first quarter, which offset the 3% growth of ‘Big Things’ which was impacted by lockdowns.
‘Cards’ in Australia and New Zealand experienced 7.6% growth to $249.4 million.
Commercial and leasing volume soared 102.2% to $205.1 million.
Total Humm customers at 30 September 2021 was 2.7 million, an increase of 6.1%, including an increase of 16% of buy now, pay later customers. However, the BNPL customer increase was offset by a decrease in customers from grandfathered products.
The company had 1,433 integrated merchants across Australia and New Zealand.
Profitability metrics
Humm revealed a net loss (which it described as gross write offs net of recoveries) of $24 million, up 9.3% and it reflected growth in its receivables. However, the net loss compared to the average net receivables was 3.4%, down 10 basis points on the prior corresponding period.
So, whilst the net loss rose, the percentage of that loss compared to the amount of money outstanding to borrowers reduced.
New partnerships
It continues to take on new merchants to build its network.
Some of the new merchants included 88 Clear Skincare clinics owned by Australian Pharmaceutical Industries Ltd (ASX: API), the New Zealand business of Michael Hill International Ltd (ASX: MHJ), Barbeques Galore, LG, Shaver Shop Group Ltd (ASX: SSG) and the Mighty Ape business of Kogan.com Ltd
(ASX: KGN).
Summary thoughts on Humm and the share price
Humm is growing at a very nice rate. But it’s also profitable, which is an attractive factor in my opinion. It doesn’t necessarily need to raise more capital just to keep growing.
In the BNPL sector, it would be my pick. I’m keeping my eye on whether the growing BNPL segment means Humm’s overall profitability lessens or grows.
There are other ASX growth shares I think could achieve strong profit growth over time, unless Humm goes international.
