Splitit share price leaps another 14% as CEO 'formulates a new vision'

A strong quarter's performance, a new enthusiasm for the BNPL sector, and a potential US deal with Google, oh my.

| More on:
Rising arrow on a blue graph symbolising a rising share price.

Image source: Getty Images

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

Key points

  • The Splitit share price is surging today, gaining 14% to trade at 24 cents following the release of the company's results for the first quarter of 2021 and its AGM 
  • Splitit's performance over the March quarter was strong, with revenue and merchant sales volume increasing 6% and 23% respectively year-on-year 
  • Looking to the future, the company's new CEO outlined a "new vision for the company in what is a rapidly evolving sector" while Splitit continues discussions on expanding its deal with Google 

The Splitit Ltd (ASX: SPT) share price is launching upwards on Thursday following the release of its latest quarterly results.

The buy now, pay later (BNPL) company that allows consumers to split payments using their existing credit line also held its annual general meeting (AGM) today.

At the time of writing, the Splitit share price is 24 cents, 14.29% higher than its previous close.

Let's take a closer look at what's going on with the BNPL provider's stock on Thursday.

Splitit share price surging as revenue jumps 6%

  • US$2.6 million in revenue – up 6% on that of the prior comparable period
  • Merchant sales volume of US$101 million – a 23% year-on-year increase
  • A 43% increase in 12-month active merchants, reaching 1,300
  • A 20% increase in 12-month active shoppers, coming to 327,000

Splitit recorded a strong performance for the 3 months ended 31 March, which followed an outstanding December quarter.

The final quarter of 2021 housed major shopping events like Black Friday, Cyber Monday, and the Christmas trading period.

Thus, when compared to the December quarter, Splitit's revenue for the March quarter fell 24% and its merchant sales volume dropped 22%.

Meanwhile, the number of active shoppers using the service fell 1% quarter-on-quarter due to the last remaining debit shoppers being removed from the 12-month lookback period.

Year-on-year, its merchant sales volumes increased more than its revenue due to more contributions from shorter dated loans. Its net transaction margins also increased 1.6% year-on-year.

Splitit recorded a cash decrease of $4.2 million last quarter – a 73% improvement on the prior quarter's. When one-off costs are removed, the company's net overall cash decrease for the quarter was US$2.2 million – an 86% improvement.

As of the end of the quarter, Splitit had US$25 million of cash, US$78 million of funded merchant receivables, and US$67 million of debt. That left it with a net cash position of US$36 million.

The company's shareholders also approved a US$150 million Goldman Sachs credit facility at today's AGM.

What else happened last quarter?

Last quarter, Splitit's customers used its service for larger purchases such as furniture, sporting equipment, and luxury items.

The company also underwent a cost rationalisation exercise that will see its costs falling from this quarter.

Finally, Splitit appointed its new CEO, Nandan Sheth, in January.

What did management say?

Sheth commented on the news helping to drive the Splitit share price higher today, saying:

[M]y initial weeks as CEO … has reinforced my conviction about why I joined Splitit, and I have also had the opportunity to formulate a new vision for the company in what is a rapidly evolving sector.

Splitit will drive the next generation of BNPL for merchants, issuers, and networks by focusing on becoming the infrastructure layer of BNPL … [it's] uniquely positioned as it bridges the gap between BNPL and credit cards …

The ability to access customers' available credit also means we operate an entirely different business model to providers of new debt that are under growing regulatory scrutiny, providing us with a path to scalable, profitable growth.

What's next?

Splitit's future is bright, according to the company's new CEO.

"BNPL has rapidly grown to account for 2% of global eCommerce in 2020 and by 2030 is estimated to reach US$3.3 billion, indicating its permanent role in the everyday lives of customers around the world," said Sheth.

"In an inflationary environment, affordability tools such as instalment solutions are becoming increasingly important, even for wealthier customers."

In the near term, Splitit will look to grow its existing partnerships to target verticals with high merchant sales volume opportunities and good product-market fits.

It will also aim to offer white-label 'instalments as a service' solutions, focusing on the US market.

Finally, the company is planning to enable card issuers to participate and monetise BNPL at the point of sale and within the shopper's purchase journey.

Splitit is also in talks with Google USA to expand its current partnership in Japan to the tech giant's US-based customers.

Splitit share price snapshot

Today's gains haven't been enough to boost the Splitit share price into the green.

The BNPL company's stock is currently 14% lower than it was at the start of 2022. It has also fallen 67% since this time last year.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares). The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on BNPL shares

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
BNPL shares

Owners of Zip shares are projected to start receiving dividends in the next few years

An expert is forecasting that passive income could start flowing.

Read more »

woman using affirm to pay
BNPL shares

Are Zip shares a buy following the ASX 200 stock's bumper quarter?

This stock continues to impress.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
BNPL shares

Why is the Zip share price jumping 10% today?

Let's see what is getting investors excited about this buy now pay later provider today.

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
BNPL shares

Here is the earnings forecast out to 2029 for Zip shares

How much could Zip’s earnings grow in the next few years?

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Technology Shares

Why this ASX 200 tech stock is 'just too cheap'

Investors are significantly undervaluing this ASX 200 tech stock, according to a leading fund manager.

Read more »

A cute young girl stands with her chest thrust out as she zips up the zip of a shiny pink jacket she is wearing.
BNPL shares

Would you be crazy to buy Zip shares at $2.90?

Zip shares have rocketed 904% in a year. Is it too late to buy?

Read more »

A young boy with a sombre face looks down at the zip fastener at the bottom of his jacket as he concentrates on unfastening the clasp.
BNPL shares

Are Zip shares too expensive to buy now?

This stock has zipped higher, but has it reached overvalued territory?

Read more »

A cool dude looks back at the camera while ziplining above the treetops.
BNPL shares

Why the Zip share price keeps going up

It's been triple-digit gains this year for Zip.

Read more »