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- Openpay has decided to ‘materially’ reduce its workforce in the US.
- The company will be ceasing loan originations on the Openpay’s USA platform.
- Present macroeconomic conditions have impacted company and therefore this decision.
- OPY has gained more than 20% in early trade hours on the ASX today
Aiming to progress with profitability in Australia, BNPL company Openpay Group Ltd (ASX:OPY) has decided to pause its existing US operations indefinitely. Given the current macroeconomic and public market conditions, and the probable ongoing capital investment required in US to fund progress, Openpay has decided to pause existing US operations for an indefinite time period. It has also decided to stop loan originations on the Opy USA platform for now.
The company had already made a similar decision for its UK business.
Share price movement
Post this announcement on the ASX, OPY share price has jumped over 20% in early trade today (1 July). OPY shares are trading at AU$0.145 a share, up 20.833%, at 11:00 AM AEST.
What will be the consequences?
As a result, Openpay’s US workforce will be significantly reduced and only a small skeleton team is to continue. The team in the US will be working only for a short period to assist in the transition. Also, Openpay informed that it will not make any further investments to the US operations. Except any one-off costs associated with the business restructuring.
Why is Openpay focusing only on its Australian biz?
Openpay stated that available capital and funding provided for Australian business because of its stable and robust growth, market-leading margins and unique market positioning. Openpay continues to perform strongly in Australia and a clear runway to profitability is targeted for June 2023. Following on its record setting trading performance in May 2022, Openpay claims to be witnessing strong and responsible economic performance in June 2022. A trading update for June 2022 is to be made available to the ASX in July.
Dion Appel, CEO, Australia, Openpay Group Ltd., believes, that the decision to shift the company’s approach in US will now allow even greater focus on Openpay’s Australian business. As per him, the Australian arm continues to give a strong performance in terms of growth (TTV, revenue, active plans, customers, merchants, etc) and metrics (gross margin, NTM, loss and arrears rates etc). These were also highlighted in Openpay’s May trading update.
Another reason for the structural shift is that it will allow further focus on Openpay’s capital-light OpyPro B2B business which is into a significant ramp-up phase. Meanwhile, the management is also seeking to leverage and monetise Openpay’s investment in US and UK markets in future.
Are there any changes in Openpay’s management?
Openpay has already made several changes to its key executive positions to streamline management responsibilities for shifting resources and accountabilities to regional teams. Ed Bunting was appointed as interim Group CEO for simplification of the Group’s structure. Dion Appel will continue as Group CEO to oversee a streamlined business. Also, Ed Bunting will transition from his existing role to a consulting role and continue as Company Secretary for Openpay.
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