Splitit (ASX:SPT) share slips on record half-year result and CEO transition

Splitit reveals a record first half performance and a “proactive change of leadership” …

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The Splitit Payments Ltd (ASX: SPT) share price edged 1.1% lower to 44.5 cents on Tuesday after the company released its 1H21 results.

Let’s take a closer look at the key takeaways of the buy now, pay later (BNPL) company’s results:

Splitit share price edges lower on record result and CEO change

  • Merchant sales volume (MSV) increased 94% to US$172.5 million
  • Gross revenue rose 79.7% US$5.5 million
  • Total merchants jumped 167% to ~2,800
  • Total shoppers lifted 83% to ~566,000
  • Strong balance sheet including US$66 million in available cash and US$150 million credit facility

What happened to Splitit in 1H21?

The Splitit share price has been in a downtrend since late 2020, tumbling 65% year-to-date and down 75% in the last 12 months.

Despite a struggling share price, Splitit delivered a record first half-year performance with strong growth across its key metrics of MSV, revenue, active merchants and shoppers.

In the first half, multiple new large merchants with significant addressable MSV signed up to Splitit services including Google Japan. Splitit services are available in Japan’s Google Store to support instalment services for customers purchasing new Pixel 5 mobile phones, Nest products and Chromecast streaming devices.

Splitit described this high profile customer as an important step in its expansion into Asia, supplementing its growing merchant presence in key US and European markets.

The company added ~134,000 new shoppers in the first half, growing its customer base by 83% to ~566,000 shoppers. The company was pleased to highlight that its average order value remains over US$1,000 and continues to be a “critical differentiator” in an increasingly crowded BNPL market.

During the half, Splitit launched its SplititPlus payment gateway in April to reduce onboarding complexity for merchants. In addition, the company also announced that it will develop a white-label Platform as a Service offering to “broaden its opportunities and grow in non-core markets and categories”. The product has already secured new partnerships with leading Middle East BNPL provider, tabby, and leading BNPL in Pakistan, QisstPay.

In addition to its operational performance, Splitit advises that its CEO Brad Paterson will cease in this role and John Harper will be appointed as Interim CEO.

The leadership change announcement said that the Board determined “a proactive change of leadership is necessary for the company to continue building on its achievements and prioritise its ambitions to significantly expand merchant footprint across all geographies”.

Management commentary

Splitit Chair Dawn Robertson commented on the results, saying:

Splitit is pleased to report a strong first half, with the delivery of 94% YoY MSV growth, along with growth across other key metrics of revenue, merchants and shoppers. The ongoing development of our new product innovations, including Splitit Plus, and our strong global partnerships, are expected to provide more and more opportunities to increase ongoing acceptance as we pivot from a period of foundational build, into a period of scaling up.

Robertson flagged the recent M&A activity in the BNPL sector and why the Splitit offering can stand out.

Recent BNPL M&A activity has highlighted sector wide opportunities, which is likely to accelerate the strategic focus and commercial integrations across the entire sector. Splitit remains uniquely placed within the credit card / BNPL ecosystem with extensive commercial relationships that have only just begun to scale. Providing a point-of-sale solution to improve retailer conversion whilst leveraging a consumer’s existing credit, puts Splitit at the unique intersection of two significant markets – credit cards and BNPL. We believe this is a unique point of difference in an otherwise increasingly crowded market.

What’s next for Splitit?

The Splitit share price continues to underperform large-cap BNPL shares such as Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL), perhaps reflecting investor preferences for more established players.

Despite a struggling share price, the business believes it is “well placed to execute on the growth opportunities ahead”.

Splitit pointed to SplititPlus as a solution to address onboarding and integration complexity, while its emerging white-label offering could present opportunities to deliver complementary revenue.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. 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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