Laybuy (ASX:LBY) share price gains after record quarter

The only payoff today is for Laybuy shareholders via gains…

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a woman looks at her phone while making a transaction at the counter of a store where racks of clothing can be seen in the background.

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The Laybuy Holdings Ltd (ASX: LBY) share price is lifting this afternoon. It is currently up 2.04% to 50 cents, having leapt to 52 cents soon after market open.

Laybuy’s share price is gaining ground after the company released its quarterly activities and earnings report this morning.

Here we dissect the highlights from the buy now, pay later (BNPL) services provider’s second quarter for FY22.

Laybuy share price gains on record Q2 revenue and income

  • Laybuy remains on track to reach the NZ$1 billion gross merchandise value (GMV) target for FY22.
  • GMV reached a record NZ$206 million for Q2, a 62% year-on-year (YoY) increase when annualised.
  • United Kingdom GMV almost doubled YoY in Q2, representing an annualised 93% increase from the year prior.
  • Record income for the quarter of NZ$10.8 million, a 49% YoY increase.
  • Net transaction margin (NTM) reached 1.9%, down from 2.3% last quarter but up from 1.8% YoY annualised.
  • Active customers reached 889,000, up 57% YoY.
  • Active merchants reached 11,700, up 86% YoY.

What happened in Q2 for Laybuy?

It was a record quarter for the BNPL provider on several fronts, which looks to have boosted the Laybuy share price today.

GMV came in at an all-time high of NZ$206 million, which annualises to NZ$825 million.

This growth was underscored by contributions from the company’s UK operations, where it recorded a 332% increase in active merchants and 90% increase in active customers from the last quarter.

Perhaps some of this momentum can be attributed to the release of its Laybuy App Exclusives in the the UK in August. Already, it has 80,000 transactions running through the platform.

Laybuy also launched its “Tap to Pay in-store solution” in the UK, adding 900-plus stores as launch partners.

As such, the group’s overall active customers grew by 321,000, or 57%, YoY to reach approximately 890,000 this quarter.

This was well supported by active merchants on Laybuy’s books growing by 86% over the year. In fact, Laybuy added almost 2,000 additional merchants in Q2, including the likes of Amazon, eBay, The Fragrance Shop and InMotion.

From these impressive growth numbers, Laybuy exceeded 900,000 active customers and 12,000 active merchants in Q2. More than 3,000 of these were in the UK alone.

It also beefed up its liquidity and working capital by opening a new debt facility of 30 million British pounds.

In Australia and New Zealand, the company also extended its debt facility limit to NZ$30 million to “support ANZ loan book growth to 80% (previously 75%)”.

All of this momentum carried over to Laybuy’s profit and loss, where it recognised record income of NZ$10.8 million.

Again this growth was underlined by the company’s UK operations, however Australian income was also up 30%.

What did management say?

Speaking on the update likely driving the Laybuy share price today, managing director Gary Rohloff said:

Laybuy is delivering exceptionally strong growth as we continue to successfully implement our business strategy. We are continuing to experience robust GMV growth, up nearly 62% across all markets. In particular, we are seeing good growth in the UK, where our quarterly GMV has nearly doubled when compared to the same quarter last year.

We expect to see continued growth in the UK following the rollout of Laybuy App Exclusives (the Affiliate Marketing Network) last month. Initially launching with 160 brands, the Laybuy App Exclusives can enable payment by Laybuy at more than 5,000 of the UK’s largest brands.

What’s next for Laybuy?

The company is adamant that given its recent performance, it remains “on track to achieve $1 billion GMV in FY22”.

The release also notes the UK continues to be Laybuy’s “key growth market, with a large retail market estimated at 403 billion British pounds in 2020”.

That’s 2.2 times that of Australia, it notes, with BNPL still in its infancy. Laybuy also reckons the UK market has the “highest penetration of online sales, with 28% of retail spending being online in 2020”.

The company also continues to work alongside HM Treasury in the UK to establish am appropriate BNPL framework to govern the sector.

Annualising its Q2 revenue, the company stated this equates to NZ$285 million in GMV. This would be a 62% YoY increase if it continues along the same trajectory.

Laybuy share price snapshot

The Laybuy share price has been hit hard by the pandemic, having lost 67% in the past 12 months and 62% this year to date. It is also down by almost 10% over the last week.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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