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FlexiGroup share price flies on full-year earnings and new product launch

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The FlexiGroup Limited (ASX: FXL) share price has surged more than 13% in morning trade after the company reported its FY19 earnings and launch of new products.

What did FlexiGroup announce?

FlexiGroup reported its results for the full-year and announced plans for the company’s future expansion with the launch of new products including a partnership with Mastercard.

The full-year report saw FlexiGroup report an Underlying Cash Profit of $76.2 million down 12% from the year prior. The result was in line with revised guidance and market expectations following a $12million write-down from the collapse of a commercial vendor partner.

Highlights from the full-year report included;  

  • Cash NPAT in line with revised guidance of $76.1 million
  • 76 million active customers, up 8% on the prior year
  • 65,000 retail partners, up 8%
  • Transaction volume up 12% from previous year to $2.65 billion
  • Receivables of $2.64 billion, up 11% from year prior
  • Launch of three new products: bundll, wiired money and wiired lease
  • Launch of new card brand: cartt

FlexiGroup also declared a fully franked dividend of 7.7 cents per share for FY19.

What has driven growth for FlexiGroup?

The growth in customers and retail partners has driven the increase in transaction volumes and total receivables for FY19. FlexiGroup highlighted that the company’s new humm product had experienced a 19% increase in volume since its launch in April, with the app being downloaded 1,200 times a day.

Australian credit card volumes grew 10% as a result of strong growth in receivables and a 21% increase in interest-bearing balances. FlexiGroup’s New Zealand operations also experienced strong growth with BNPL volumes up 383% and an additional 114,000 customers and 1,800 retailers.

Chief Executive Officer, Rebecca James commented that “FlexiGroup has delivered strong customer, retailer, transaction and receivables growth while executing against our four strategic pillars … humm has gone from strength to strength, reporting robust volume growth since launch”.

FlexiGroup’s growth strategy

Earlier this year FlexiGroup outlined a new strategy designed to transform the company and ensure it grows its market share, especially in the BNPL sector. The four strategic pillars included simplifying the business, becoming a leader in the BNPL sector, streamlining the company and expanding the company’s reach.

FlexiGroup’s BNPL sector has experienced a 250% growth following the launch of humm in April. humm has experienced volume and transaction growth and is the only product that can offer instant finance for purchases up to $30,000. humm has added 63,000 new customers and 5,000 sellers to the platform since its launch.

FlexiGroup also announced the launch of 3 new products in a bid to expand its reach. bundll is an extension of the company’s BNPL services and has partnered with Mastercard to accept transactions. The product is set to launch in the second quarter of FY20.

FlexiGroup looks to expand its credit card business by launching a new card offering called cartt, offering 90 days interest-free. FlexiGroup also announced the launch of wiired lease and wiired money, digital lease platforms designed to target small businesses.

Outlook for FlexiGroup

FlexiGroup maintains that the company’s objectives over the next 2 years are to accelerate growth, reduce costs, deliver best in class digital platforms and invest in loved brands. Management expects double digit return on equity and volume growth of at least 15% in FY20 as FlexiGroup launches new products and extend is audience and partnerships.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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