Laybuy Holdings Ltd (ASX: LBY) has announced its first quarterly business update since its initial public offering (IPO) in September 2020.
The company had an IPO offer price of $1.41 with an indicative market capitalisation of $246 million. Despite a strong open on its first day of trading, reaching a peak of $2.30, the Laybuy share price has drifted lower to close at $1.71 on Wednesday.
Quarterly business update
Laybuy delivered some classic buy now, pay later (BNPL) growth figures with a gross merchandise value (GMV) of NZ$127.1 million or annualised GMV of NZ$508.4 million, up 162% on the prior corresponding period (pcp). The increase in GMV trickled down to its other financial metrics including a 166% increase in revenue compared to the pcp or 21% QoQ. The UK contributed significantly to its uplift with annualised UK GMV increasing from NZ$19 in Q2 FY20 to NZ$231 million in Q2 FY21.
The increased purchasing frequency of its customers combined with better fraud management technology has resulted in a reduction in credit losses. Gross loss as a percentage of GMV has fallen from 3.4% in Q1 FY21 to 2.1% in Q2. Its net transaction margins have also significantly improved from 0.5% to 2.3% over the quarter.
The business has experienced significant pcp GMV growth across specific sectors including a 313% increase in healthy and beauty, 320% increase in electronics and 183% increase in mixed gender clothes. The only sector which experienced a decrease in GMV was travel, which saw a decline of 51%.
Interestingly, increased purchasing frequency was seen across from both ANZ and UK regions with repeat customers increasing from 66% of active customers in Q2 FY20 to 70% of active customers in ANZ, and 39% to 56% in the UK. Purchasing frequency in the UK is ahead of where NZ was at a similar maturity indicating the UK market's growing responsiveness to BNPL products.
Investing for growth
Laybuy continues to invest for future growth to maintain its BNPL growth status. The company entered into a partnership with Mastercard Asia Pacific which will enable it to issue digital cards to Laybuy customers in New Zealand. In Q2 FY21, Laybuy also formally engaged major payments technology specialist EML Payments Ltd (ASX: EML) to bring a digital card to market in Australia and the UK. This will allow the company to provide a fully functional 'tap and go' BNPL offering, much like what Zip Co Ltd (ASX: Z1P) announced this week.
