Splitit (ASX:SPT) share price tumbles despite quadrupling its revenue

The Splitit Ltd (ASX:SPT) share price is tumbling lower today despite releasing its full year results and revealing strong revenue growth…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Like most tech shares today, the Splitit Ltd (ASX: SPT) share price is sinking deep into the red this morning.

At the time of writing, the buy now pay later provider's shares are down 4% to $1.14.

Why is the Splitit share price sinking?

A selloff of tech shares this morning is dragging the Splitit share price lower and appears to have overshadowed its full year results release.

At the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down over 5.3%.

This follows a very poor night of trade on Wall Street's Nasdaq index after bond yields continued to climb.

How did Splitit perform in FY 2020?

For the 12 months ended 31 December, Splitit reported a 179% increase in Merchant Sales Volume (MSV) to US$246 million.

Based on its fourth quarter performance, the company's MSV annualises to US$345 million. This is 40% higher than its FY 2020's MSV.

This led to the company reporting a 300% increase in gross revenue to US$8.4 million.

However, also growing was its loss after tax, which came in at US$25.47 million. This compares to a loss of US$21.47 million and leaves it with a cash balance of US$92.8 million.

What were the drivers of its growth?

Splitit's growth was underpinned by increases in customer and merchant numbers, plans, and average order sizes.

At the end of the period, the company had 231,000 active shoppers on its platform. This was up 94% on the prior corresponding period.

From these, the company achieved a 94% increase in initiated plans to 257,000 and a 45% lift in average order value to US$949.

Management commentary

Splitit's CEO, Brad Paterson, commented: "Splitit delivered a breakout year with record financial and operational results in FY20, despite a globally challenging year due to the COVID-19 pandemic. Our annualised MSV hit US$345M in Q4 and revenue (non GAAP) increased 300% to US$8.4M, annualised to US$11.6M in Q4."

"We formed foundational partnerships with Stripe, Visa and Mastercard during the year which enabled innovation and is beginning to accelerate merchant acceptance. With our new US$150M receivables warehouse funding facility from Goldman Sachs in place, we are expecting to deliver another step change in growth in 2021."

No guidance was given for the year ahead. However, management advised that it expects its MSV and revenue growth trajectory to continue.

Following today's decline, the Splitit share price is now down 12% in 2021.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »