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Attention: Afterpay is now taking a cut of $12 billion in annualised sales per year

It’s probably the best growth story on the S&P/ ASX200 (ASX: XJO) in the last few years and buy-now-pay-later juggernaut Afterpay Group Ltd (ASX: APT) is not slowing down. 

Today it revealed it processed more than $1 billion in underlying retail sales over the Black Friday-boosted month of November.

On an annualised basis that’s $12 billion in underlying sales per year and Afterpay is still growing like nuts.

It reportedly added 0.5 million new customers over November to take the total to 6.6 million active shoppers. 

Underlying sales are what Afterpay takes a fixed percentage of from its retail merchant clients.

They make up the vast majority of its revenue other than late payment fees levied on the consumer that have recently been capped in agreement with regulators.

In fiscal 2019 for example it earned total income of $264.1 million minus late payment fees from shoppers of $17.1 million to equal fees from merchants of $247 million on underlying sales of $5,247 million. 

A back of the envelope calculation suggests Afterpay charges merchants around 4.7% on each sales ($247m/$5,247) so we can see that on annualised sales of $12 billion it’s raking it in assuming a similar fixed fee percentage.

In fact 4.7 per cent of $12 billion is $564 million in revenue or what Afterpay terms ‘income’.

This is of course before costs and bad debts, but we can see Afterpay is now a serious business and growing fast.

Around 76 per cent of sales over the Black Friday weekend were via mobile to show how it’s also capitalising on structural shifts in consumers’ shopping habits. 

A lot of professional analysts also expect Afterpay will be able to monetise the data it has on consumer shopping habits to help retailers grow profitable sales further. 

It’s not hard to see why the stock has gone gangbusters and I wouldn’t be surprised to see it even higher this time next year. 

Others tech players coming up on the rails to watch include EML Payments Limited (ASX: EML) and PointsBet Holdings Ltd (ASX: PBH). 

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Tom Richardson owns shares of AFTERPAY T FPO.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited and Pointsbet Holdings Ltd. 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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