Some ASX payment shares have exciting futures and may be able to generate good returns over the longer-term.
The world is steadily moving away from cash and towards digital payments. Some ASX shares can give investors exposure to that theme, whilst also displaying good signs of growth.
These two fit that description:
Humm Group Ltd (ASX: HUM)
Humm, which used to be called FlexiGroup, is focused on the buy now, pay later space.
It also offers other payment services including revolving credit and small and medium enterprise (SME) finance. It facilitates purchases for over 2.6 million customers.
In the first half of FY21, it generated cash net profit after tax (NPAT) of $43.4 million – up 25.8%. Statutory NPAT increased by 15.9% to $38.6 million. It’s one of the few businesses involved in buy now, pay later. In the first six months it processed 1.5 million BNPL transactions. Total BNPL volume was $473 million, up 13.8%.
Humm ‘Little things’ volume was up 46.5%. It can facilitate transactions of up to $30,000, with payment terms ranging from five fortnights to five years.
The ASX payment share also recently launched hummpro, a BNPL product for SMEs.
Its impressive HY21 result reflected a reduction of operating expenses. It also included the benefit of continued investment in a superior credit decisioning platform and adopting a customer-centric approach to managing hardships and collections during the pandemic, according to management.
The company plans to launch in the UK and Canada in the second half of FY21. It also continues to win market share in the healthcare and wellbeing sector, with new partners across dental, pharmacy, audiology, mobile and wellbeing. It now covers 25% of dental chairs in Australia.
Pushpay Holdings Ltd (ASX: PPH)
The donor management system ASX payment share is seeing very strong growth right now.
Pushpay has been reporting strong processing volume over the last 12 months as people choose to donate through the technology rather than with cash in these COVID-19 times.
Management have regularly updated earnings guidance as its benefits from growing operating leverage. The latest upgrade increased FY21 earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance to a range of US$56 million to US$60 million.
In the six months to 30 September 2020, total operating expenses only increased by 16%. As a percentage of operating revenue, total operating expenses improved by 12 percentage points from 50% to 38%.
Its operating leverage is growing thanks to revenue growth, further margin improvements and disciplined cost management. Management is expecting “significant” operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.
In the half year, net profit after tax grew 107% to US$13.4 million. Operating cashflow tripled to US$27 million. The ASX share continues to assess further potential strategic acquisitions that broaden Pushpay’s current proposition and add significant value to the current business.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended Humm Group Limited and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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