Afterpay’s Shares Mounted High On Key Business Developments’ Updates

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Afterpay Touch Group Limited (ASX: APT) is a technology-driven payments company which has provided an update in relation to key business developments in both the US and Australia / New Zealand markets, following which the share price of the company uplifted by 9.7 percent as on 8 November 2018.  

Company reported that in US Market over A$115 million of underlying sales have been processed through the Afterpay platform till October end and to date more than 300,000 consumers and over 900 retailers have made transactions with Afterpay in the US. Further, over 1,300 additional retailers have either signed agreements with Afterpay or are in the process of integrating on company’s platform. The retailer acquisition strategy of the company remains focused on the online apparel sector and introducing the Afterpay service in partnership with leading millennial retailers.

The total addressable Gross Merchandise Volume (GMV) of retailers who are now live in the US with Afterpay is estimated to be A$4.2 billion. The company also believes that Afterpay is relevant to a number of other retail verticals in the US, as illustrated by the expanding market reach achieved in Australia and New Zealand, and the company is actively exploring these opportunities. Afterpay continues to target an FY19 EBITDA loss for its US operations of approximately $20 million which is broadly in line with the Matrix original investment in early 2018 which was earmarked for establishing the US business.

Afterpay’s UK expansion activities are continuing according to plan and they are in-line with previous updates. It is expected that the UK business od the company will require a smaller business establishment investment and further the US and UK operating losses (EBITDA) in FY 2019 are expected to be in the order of 50% – 70% of the US position.

Afterpay’s platform and network growth in Australia/New Zealand markets is also continuing with strong underlying sales performance and customer growth in FY19 YTD. Several large enterprise retailers like EB Games, ASOS Australia, Village Roadshow, Tommy Hilfiger and several others are integrating with Afterpay platform. Progress in relation to new verticals, particularly in the Health sector, is gaining momentum with a number of large practice groups in various stages of roll-out and pilot programmes. While new customer growth continues in line with past performance, repeat transaction activity is high and continues to account for over 90% of monthly underlying sales. The net transaction losses of the company are within the target band and broadly in-line with FY18 performance, equating to less than 0.5% of underlying sales or GMV (unaudited) and demonstrating continued responsible use of the platform. Afterpay is continuously engaging with government, regulatory authorities and industry stakeholders to demonstrate its unique model as well as the benefits it can bring to both consumers and retailers.

In the last six months, the share price of the company increased by 106.51 percent as on 7 November 2018. APT’s shares traded at $14.275 with a market capitalization of $2.99 billion as on 8 November 2018 (AEST 1:30 PM).


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