A Glimpse At ‘Buy Now, Pay Later’ Payment Solution Providers- SPT, APT

Buy Now Pay Later Service

‘Buy now, pay later’ Or BNPL is a fast-expanding industry. BNPL concept is based on borrowing money on credit, but it is not deemed as a credit as per credit laws of Australia. Buy now pay later enables customers to buy goods and services and pay the amount borrowed during the specific time period. BNPL has made it easier for the shoppers to spend money. However, the buy now pay later industry is not regulated by NCCP Act because the provider does not charge the customer by offering the credit.

Let us discuss the two companies from buy now, pay later space:

Splitit Payments Limited (ASX: SPT

Splitit Payments Ltd was founded in 2012 and is engaged in payment solutions business. The company has a global presence and provides its service to above two hundred nations.

SPT inked a deal with Shopify

On 14 October 2019, the company announced on signing an agreement with Shopify to provide SPT’s BNPL solution to Shopify’s above 800k merchants throughout twenty nations of the world. SPT’s solution has been incorporated with Shopify’s platform and is currently listed precisely within Shopify. Shopify’s merchants can add SPT’s Buy Now Pay later solution to their websites to offer their consumers an option of BNPL payment connected to their credit cards.

Splitit inked a deal with Divido

SPT also signed an agreement with Divido, which allows SPT to offer its payment solution to Divido’s network of beyond thousand merchants along with banks and other associates. The solution would be introduced in the United States region after its launch in the United Kingdom region.

On new merchant agreements front, SPT mentioned that it has signed various agreements with well-known US brands like Chili Technology, Eight Sleep, Ace Marks etc and a B2B deal with 1800-Accountant. These agreements have increased the company’s portfolio and strengthened US go-to-market infrastructure along with establishing a presence in Canada region.

Appointment of CEO

On 19 September 2019, the company announced on the appointment of its new Chief Executive Officer, Mr Brad Paterson, w.e.f. 1 October 2019.  The previous CEO, Gil Don had decided to depart from his designation as Chief Executive Officer (CEO) and assume as the General Manager of EMEA.

Agreement signed with Shaked Partners Fund, L.P.

On 11 September 2019, SPT signed a deal with Shaked Partners Fund, L.P to provide Splitit with an interim finance facility to expand its merchant business model (funded).  The facility is to be drawn down in 3 tranches for approximately USD 8 million in next eleven months and maturing two years after each draw down.

Gross Profit soared by 550 % in half-year results

On 30 August 2019, SPT declared the six months results closed 30 June this year. The highlights of the results are as mentioned below:

  • SPT’s revenue during the period rose by 293% standing at $1.14 million versus pcp.
  • Gross profit of the company grew by 550 percent to $1.03 million compared to pcp.
  • Cash in hand of the company stood at $33.9 million
  • Active merchants expanded by 121 percent to 509.

Outlook

SPT remained to lay a foundation for business growth in the first half of 2019. Solid growth is anticipated in active consumers and transaction volume, leading to an increase in merchant fees in H2 2019. The company is expecting new partnerships to increase its footprint around the world. Further, the company will continue to invest in platform innovation and marketing segments to add product features. Also, the company feels that it has a solid balance sheet that would help it to take advantage of the available opportunities.

Stock Performance

The stock of SPT last traded at $0.875 on 23 October 2019, dipping by 2.235 percent from its previous closing price. The company has a market cap of $275.24 million and around $307.53 million outstanding shares. The 52-weeks high and low of the stock was noted at $2.000 and $0.305, respectively. The SPT stock has generated -14.76 percent return during the last 6 months’ period.

Afterpay Touch Group Limited (ASX: APT)

Afterpay Touch Group is a technology driven payments entity, consisting of Afterpay and Touch products and businesses. APT has approximately 4.3 million active consumers and approximately 30,600 active retail merchants involved with it.

APT’s response to Media commentary

On 21 October 2019, updated the market that it was aware of media along with an analyst report of late, where they commented on probable regulatory developments after the RBA’s 2020 review of payments regulation, which consisted of “surcharging” practices in the Australian region.

APT mentioned that it was at present not subject to an RBA inquiry or review procedure. However, it welcomed the opportunity engage with Reserve Bank of Australia as part of its periodic review of the payments industry in 2020.

Advisory Board Appointment

On 9 October 2019, the company announced that the former Secretary of the U.S. Treasury Lawrence H. Summers will join its U.S Advisory Board. The company’s U.S. Advisory Board has been formed to identify major business opportunities and collaborations, when American customers are increasingly turning to an alternate payment method to avoid revolving and external debt.

Total income soared by 91 per cent in FY19 results

APT on 28 August 2019 published its financial report for the FY 2019 period closed 30 June; a few pointers from the report are as follows:

  • Gross profit rose to $204.6 million relative to $114.1 in FY 2018 period.
  • Cash in hand of APT was noted at $231.5 million.
  • The receivables of the company grew by $213.6 million in FY 2019.
  • APT’s debt reduced by $111.4 million or 69 per cent versus pcp.
  • The total income for the group rose by 91 per cent to $264.1 million relative to pcp.
  • The company has decided to utilise the proceeds from capital raising process to pay off warehouse debt with a corresponding rise in liquidity.

Mid-Term Growth Strategy

  • The company is executing on its mid-term strategy and capturing the substantial addressable international market opportunity in its existing markets.
  • Global merchant acquisition run-rate is in surplus at present times, currently attracting more than 12,500 new consumers to the international platform each day.
  • Low Net Transaction losses and high NTM in Australia and New Zealand provides ‘glidepath’ for new international markets.
  • NPS has continuously been above a market leading 80 points throughout its New Zealand, US and Australian markets.

Stock Performance

The stock of APT last traded at $29.780 on 23 October 2019, moving up by 1.951 per cent from its previous closing price. Afterpay has a market cap of $7.38 billion with ~252. 73 million outstanding shares. Its 52 weeks high and low was noted at $37.410 and $10.360, respectively. The stock has generated +27.39 per cent in the last 6 months timeframe.


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