With earnings month done and dusted, the 'buy now, pay later' (BNPL) industry has had a strong season with rocketing share prices across the board. Here's an update on the top BNPL companies on the ASX:
- Afterpay Touch Group Ltd (ASX: APT)
- Zip Co Ltd (ASX: Z1P)
- Splitit Payments Ltd (ASX: SPT)
- FlexiGroup Limited (ASX: FXL)
- Sezzle Inc (ASX: SZL)
Afterpay
Since its results announcement on 26 August, Afterpay's share price has risen 35% to close at $32.47 yesterday.
The company shared impressive metrics around its revenue numbers and customer base. This included a 115% growth in revenue to $251.6 million, driven by the addition of 12,500 customers daily to a total of 5.2 million active customers.
Afterpay also managed to lower its late income fee as a percentage of sales. This dropped 5.7% lower to 18.7% compared to the last FY.
Zip
Over the last month, Zip has steadily grown its share price by 33%, to close at $3.89 yesterday.
The company recently added a new payments product for small businesses called Zip Biz. Extending the regular BNPL product for consumers, this will allow SMEs to access interest-free credit worth up to $25,000 for 60 days.
On the consumer side, Zip has grown its customer base by 80% to 1.3 million and announced its plans to expand offshore. This expansion will be sought via its acquisition of PartPay, which cost the company $50 million and puts Zip in a good position to access markets across the US, Britain, South Africa and New Zealand.
Splitit
Splitit's share price has popped 30% since announcing its FY earnings on 29 August, closing at $0.52 yesterday.
The company allows customers to split purchases into 36 interest-free instalments. It has managed to grow its operating revenue by 193% to US$798,000, as a result of a 134% increase in total payment volume to US$34.4 million.
However, the company's bottom line position actually worsened, recording a loss after tax of US$3.8 million, which was due to higher expenditure in R&D, sales and marketing and other expenses related to scaling the business.
FlexiGroup
The FlexiGroup share price is also on the rise. Strong FY results have driven shares up to $1.94, which is a 37% increase since 26 August.
Revenue was up 3% to $472.7 million as a result of a more active customer base that grew by 8%. FlexiGroup also announced a number of new products, partnering with the likes of Mastercard to launch Bundll. Its BNPL product, Humm, also delivered strong results, posting a 19% increase in transaction volume.
Sezzle
In anticipation of Sezzle's HY announcement, the company's share price popped 23% to $2.52. However, this has since rebounded back to $2.14, as of yesterday's close.
Sezzle reported some outstanding metrics. This included the growth of its merchant sales from $4.5 million to $70.2 million, with active customers rising from 26,724 to 430,000 at the end of its HY. Active merchants similarly grew by 5x, helping drive the company's overall revenue up $3.4 million from $0.2 million.
However, its net transaction margin (NTM) turned sour, due to accepting debit and credit cards which charge higher fees. This dropped NTM from 1.2% to -0.3%, compared to the prior corresponding period.
Foolish takeaway
Although I'm still team Afterpay, that's not to say that these other BNPL players don't have strong propositions. Given current retail and shopper trends, we're starting to see that there's space for more than one in the market.
While the BNPL industry is an exciting and high-growth sector, it's undeniable that this has driven up share prices to what some may consider unruly valuations.
