Openpay Group Ltd (ASX: OPY) shares are tumbling today after the company released its half-year results for FY21. At the time of writing, the Openpay share price is slumping 6.23% to $2.71.
Let's take a look at how the buy now, pay later (BNPL) provider has been performing.
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What's impacting the Openpay share price?
The Openpay share price is taking a dive on Friday as the Afterpay Ltd (ASX: APT) competitor posted a loss of $25.7 million. This represents an increase of around 37% on the $16.1 million loss posted in the prior corresponding period (pcp). While Openpay's revenues were up $5.4 million on the pcp, its expenses increased by $15 million.
The large increase in outgoings was driven by a $6.4 million change in the fair value of derivatives, a $4 million lift in employee-related expenses, a $2.8 million increase in receivables impairment expenses, and a $1.3 million increase in marketing and advertising expenses.
In a silver lining for the Openpay share price, the company's earnings per share (EPS) loss was down from 0.37 cents in the pcp to 0.24 cents.
No dividends were declared for the half-year ended 31 December 2020.
Words from the CEO
Striking an optimistic tone, Openpay CEO Michael Eidel said:
H1 was a scene setter for Openpay. We announced a highly targeted and customised strategy to enter the US – one of the world's biggest payments markets, leveraging deep industry experience and knowledge. Having built a strong Retail customer base in the UK, we are now preparing to bridge into Healthcare and Automotive – two verticals which have driven Openpay's differentiation in Australia. Through our B2B product, OpyPro, we are positioned to tap into the multi-trillion-dollar enterprise payments market.
Current and future endeavours
As highlighted by the CEO, Openpay is attempting to differentiate itself from its competitors by focusing on the B2B sector. Having already signed a deal with Woolworths Group Ltd (ASX: WOW) for its OpyPro system (formerly Openpay for Business), the company is looking to further expand, particularly in the United Kingdom market.
Openpay has 1.4 million active plans (a 213% jump on the pcp) and approximately 2,700 active merchants (up 46% on the pcp).
Possible headwinds
While in its announcement, Openpay highlighted the fact it has "a strong mix of available cash and debt for a total funding runway of $173 million", the auditor's report was less upbeat.
In its review report, Price Waterhouse Coopers (PWC) gave the following note on the "material uncertainty related to the going concern":
The Group incurred a net operating cash outflow of $37.2 million and a net loss of $25.5 million for the half-year ended 31 December 2020. The ability of the Group to continue as a going concern is dependent upon maintaining existing cash reserves and debt facilities and securing additional debt facilities and/or the issue of new shares.
PWC added:
These conditions…indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.
Openpay share price snapshot
Over the past year, the Openpay share price has surged by more than 135%. However, looking at the last six months, Openpay shares have plunged by nearly 40%.
Based on the current Openpay share price, the company has a market capitalisation of around $250 million.
