The Openpay Group Limited (ASX: OPY) share price is on the move today following the release of its full-year results to the market. At the time of writing, the Openpay share price is trading for $4.48, down 4.6%. This compares to the S&P/ASX 200 Index (ASX: XJO) which is up 0.1% at 6082 points.
At one point, the Openpay share price plummeted to as low as $4.00 in early morning trade.
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What did Openpay report?
The company reported a very strong financial result for the 12 months to June 2020 (FY20). Revenue for the buy now, pay later (BNPL) business jumped a colossal 64% to $18 million from the prior year. This was reflected by a record growth in both active plans up 229%, and active customers up 141%.
FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) came in at a loss of $30.1 million compared to the FY19 loss of $11.5 million. This was in line with management's expectations as the company has made significant investment in its geographical expansion plans.
Total transaction value (TTV) grew to $192.8 million, up 98% reflected upon a significant shift to online sales in Australia. Net transaction margin was 2.5% and net transaction loss was 2.3%. Openpay advised that credit risk has remained at low levels despite the COVID-19 impact.
The BNPL provider retained a healthy balance sheet of $70.1 million in cash with $80.8 million of undrawn debt facilities to use for future funding.
UK gaining momentum
Openpay's UK business has achieved significant growth with active plans up 329% to 187,000 compared to the first-half of the year. The online retail channel added new merchants that included leading brands such as The Watch Hut, Masdings and JD Sports.
As the business prepares to move across other verticals in the UK space, this is expected to create substantial opportunities. The entire retail market is valued at UK$390 billion.
During the financial year, Openpay entered the business-to-business (B2B) space with the signing of supermarket giant, Woolworths. The agreement is an initial term of three years with the option to extend for another two. The BNPL company expects the partnership to deliver its first revenues in H1 FY21.
Looking ahead, Openpay did not provide any guidance going into FY21. However, the company plans to leverage its domestic expansion by driving platform utilisation and repeat customers growth.
The BNPL provider will also explore new verticals in the UK to complement its ongoing success, pending the approval of the Financial Conduct Authority (FCA) to diversify its product offering.
What did management say?
Independent chair Patrick Tuttle said the COVID-19 pandemic had accelerated the adoption of BNPL across a higher proportion of consumers as they embraced "the obvious benefits of transacting online from home in a highly efficient, safe and convenient way".
Said Openpay CEO Michael Eidel: "We're confident that with our purpose-driven responsible payment services in B2B and B2C, and differentiated BNPS approach, we will continue to grow and scale, both in Australia and overseas."
About the Openpay share price
Shares in the company fell to an all-time low of 32 cents in the March bear market, before shooting higher on the back of positive investor sentiment in the BNPL sector. Despite the volatility, the Openpay share price has managed to climb 357% since the beginning of the calendar year.
