Openpay share price bounces despite losses amplifying in FY22

The ASX BNPL share enters FY23 with a simplified business structure.

| More on:
A young boy sits on top of a big rubber bouncing ball with handles as he smiles a toothless grin at the camera and bounces above the ground in a grassy field with a blue sky.

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

  • Openpay has reported its full-year FY22 results 
  • The company's operating cash outflows and net loss expanded even further in FY22 
  • The company is committed to delivering positive cash flow by June 2023 

The Openpay Group Ltd (ASX: OPY) share price is on the move today as investors digest the buy now, pay later (BNPL) company's FY22 results.

The Openpay share price raced out of the gates this morning, soaring 13.9% when the market opened.

But the ASX BNPL share has since run out of steam, printing a 2.8% gain at the time of writing.

Openpay share price rises on mixed full-year results 

Here are some of the key numbers from Openpay's Australia and New Zealand (ANZ) operations in FY22:

  • Record total transaction value (TTV) of $344 million, up 49% year on year (YOY)
  • Revenue of $26.3 million, up 30% from $18.8 million in the prior year
  • Active merchants of 4,100, up 9% YOY from 3,700
  • Active customers of 321,000, up 35% YOY from 265,000
  • 65% of active customers had multiple plans, up from 57% in the prior year 
  • Active plans of 1.8 million, up 50% YOY from 1.2 million

Turning to unit economics, the company's revenue margin continued its backwards trend, albeit at a decelerating rate, falling from 8.2% in FY21 to 7.7% in FY22. 

Openpay's revenue margin is its revenue as a percentage of TTV. In other words, it represents how successfully the company can convert the transaction value that flows through its platform into revenue. 

For comparison, competitor Zip Co Ltd (ASX: ZIP) recently reported a revenue margin of 7.1% in FY22.

Despite the fall in revenue margin, Openpay managed to keep its net transaction margin stable at 2.9% as cost of sales grew at a slower rate than operating income.

Meanwhile, the company's net bad debts marginally reduced to 1.6% of TTV.

On the bottom line, Openpay's net loss ballooned from $63.1 million in FY21 to $82.5 million.

What else happened in FY22?

In January, Openpay announced a significant reduction in its UK operations. At the time, the company said it was instead turning its focus to ramping up its US presence and accelerating towards profitability in ANZ. Investors cheered this decision, sending the Openpay share price soaring.

In May, Openpay tapped the market for more capital, completing an $18.25 million placement.

Then, in July, the company announced it was pausing its existing US operations indefinitely and ceasing loan originations on its US platform.

Openpay had been on the hunt for potential investors in the US to provide the capital required to scale its early-stage US operations.

In the end, the company said the current macroeconomic and public market conditions led to a change in strategy.

Openpay will continue to look for commercialisation opportunities for both its UK and US platforms. But at this stage, it will not be using them for loan originations.

As a result, the company has simplified its operations, freeing up capital to support an even greater focus on its core ANZ market.

Across the year, Openpay reported a daunting $81.2 million in net operating cash outflows. This is far greater than the company's cash balance of $10.3 million at the end of FY22. But it will receive a $17.5 million boost when the proceeds from its capital raising come through.

But in a sign of possible greener pastures, the company expects its simplified business will generate positive net operating cash flow by June 2023.

What did management say?

Commenting on the results, Openpay CEO Dion Appel said:

During and shortly after FY22, Openpay rapidly responded to changes in the equity market and macroeconomic environment and simplified its business model.

These decisions enabled laser beam focus on Australia, our most mature market, and the one closest to delivering cash profitability.

​​The simplification strategy has resulted in a leaner and more efficient business where cost synergies will continue to flow into 2023, alongside the momentum of stronger performance, industry leading margins and unit economics and improved bad debts and arrears.

What's next?

Management refrained from issuing forward guidance and didn't provide much commentary about the year ahead.

The outlook slide in today's investor presentation simply stated it is committed to delivering cash EBITDA profitability in ANZ by June 2023.

This will be driven by TTV growth across the company's key verticals, an enhancement in its product suite to support unit economics, and its simplified business structure.

Openpay share price snapshot

Despite making a resurging comeback in July, the Openpay share price has been battered and bruised this year.

The Openpay share price has nearly been cut in half over the last six months. And it's suffered a steep 75% fall since the beginning of the year.

As a result, Openpay's market capitalisation has shrunk to $43 million.

Motley Fool contributor Cathryn Goh 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 ZIPCOLTD FPO. 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 Scott Phillips.

More on Earnings Results

Miner looking at a tablet.
Earnings Results

Rio Tinto share price on watch following FY 2023 earnings miss

Rio Tinto's iron ore operations were on form in 2023. It's a shame the rest of the business wasn't.

Read more »

Man with rocket wings which have flames coming out of them.
Earnings Results

4 All Ords ASX dividend shares going gangbusters on results

All Ords investors are sending these ASX dividend shares soaring on the back of their earnings results.

Read more »

Man waiting for his flight and looking at his phone.
Earnings Results

Corporate Travel share price plunges 18% despite tripling net profits

An explosion in earnings is taking a backseat to changes in Corporate Travel Management's full-year forecasts.

Read more »

happy woman throws arms in the air
Bank Shares

NAB shares hit 52-week high on first-quarter earnings beat

NAB appears on track to at least deliver on first-half expectations.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Earnings Results

Santos share price slips on 42% profit drop in FY23 result

Profits come back down to Earth in FY23.

Read more »

a man sits on a ridge high above a large city full of high rise buildings as though he is thinking, contemplating the vista below.

Here are 4 ASX 200 REITs results catching the eye on Wednesday

A mixed set of results have been announced by these property companies.

Read more »

Three analysts look at tech options on a wall screen
Earnings Results

WiseTech share price leaps 8% today as revenues surge

ASX 200 investors are bidding up the WiseTech share price today.

Read more »

Two parents and two children happily eat pizza in their kitchen as a top broker predicts a 46% upside for the Domino's share price
Earnings Results

Domino's share price charges higher on improving outlook

Here's how this struggling pizza chain operator performed during the first half.

Read more »