Are you on a Shopping Spree? Take a look at BNPL Stocks

  • May 09, 2020 AEST
  • Team Kalkine
Are you on a Shopping Spree? Take a look at BNPL Stocks

In the past few months, various payment solution providers and buy now, pay later (BNPL) players saw strong momentum in their businesses. Customers shifting to online shopping amid Covid-19 restrictions, is a major reason why several payment solutions providers are witnessing an increased number of transactions and increased customers. We have screened few ASX-listed BNPL stocks which have recently provided their business update to markets. Let’s take a closer look at these stocks and their recent updates.

Zip Co Limited (ASX: Z1P)

Digital retail finance and payments solutions provider, Zip Co Limited recently provided a trading update wherein it informed that its revenue model has delivered strong results in the month of April despite a challenging economic environment. During the month the company saw robust transaction volume causing monthly revenue to increase by 81% to $15.1 million.  Over the period, the monthly transaction volume increased by 86% (YOY) to $181.6 million.

 

April Financial Results (Source: Company’s Report)

April Financial Results (Source: Company’s Report)

 

By looking at the results, it looks like the money the company has put in its credit and decision technology platform in the past 7 years, its flexible wallet product, and the unique levels of engagement it has with its customers are finally paying off. Looking forward, the company expects to perform relatively better in May 2020, assuming that the social restrictions will ease, and brick and mortar stores will begin to re-open.

In the last one month, Z1P’s stock has increased by 57.2% on ASX. At market close on 8 May 2020, the stock was trading at $3.270.

Afterpay Limited (ASX: APT)

Australia’s leading Buy Now Pay Later (BNPL) player, Afterpay Limited recently welcomed Tencent as a substantial shareholder in its business. This a testament to the company’s team and the strength of its differentiated business model and moreover this move will provide the company the opportunity to learn from one of the world’s most successful digital platform businesses.

During the three months ending 31 March 2019, the company saw strong performance across its business with underlying sales at $7.3 billion year to date (YTD), up 105 per cent on pcp. March month alone was the company’s third-largest underlying sales month on record with active customers growing strongly to 8.4 million, representing 122% growth on the pcp.

Looking forward, the company is progressing well for its expansion into Canada. It is currently preparing to launch in-store in the US. At this point in time, the company goal is to exceed its underlying sales mid-term target of approximately $20 million by Financial year 2022. The company is currently on track to achieve its objective of 9.5 million customers by 30 June 2020. At the end of the March quarter, the company’s cash and cash equivalents stood at US$36.6 million. In the last one month, the stock of APT has increased by 100.60%.  

Sezzle Inc. (ASX: SZL)

North American payment solutions provider, Sezzle Inc. recently provided an update for the quarter ending 31 March 2020, wherein it informed that it continues to witness strong momentum as shift to online shopping has positioned it as a key partner for merchants.

In the March quarter, the company’s Underlying Merchant Sales (UMS) grew by 13.6% QoQ, and improved by over 321% YoY. Further, the growth in Merchant Fees outpaced UMS, as fees increased 17.5% QoQ. During the period, the active customers reached 1.15 million, while 2,705 Active Merchants were added, representing the single largest quarterly increase for the company.

The company’s financial position remains strong, as reflected in its liquidity, improving net transaction margin and stable credit performance and it is well positioned to support its growing business operations and to weather protracted effects from the global pandemic.

In response to Covid-19, the company has undertaken a broad range of monetary and fiscal stimulus. This includes interest rate cuts, lower capital restrictions, loans and asset purchases.

Splitit Payments Ltd (ASX: SPT)

Splitit Payments Ltd, a global payment solutions provider, recently announced the appointment of Mr Ben Malone as Chief Financial Officer (CFO) of the company. Ben Malone has over 15 years of finance and leadership experience from Australian and international businesses and his appointment will bring increased strategic and operational capabilities to the finance function and broaden its scope in support of the company’s rapid growth.

The company has also signed a new merchant agreement with leading US comfort technology company, Purple Innovation, Inc. (NASDAQ: PRPL), to offer Splitit’s instalment payment solution on its website, purple.com and to provide a superior customer experience and improve conversion with installment payments.

On 7 May 2020, the company announced that it has completed the issue and allotment of around 39 million shares to raise $16 million (before costs), to institutional, sophisticated, professional, and experienced investors. This placement will allow the company to execute its high-growth strategy by investing in go-to-market and technology resources, support existing merchant credit facilities and for general working capital.

EML Payments Limited (ASX: EML)

EML Payments Limited recently provided a trading update for the eight months ending 29 February 2020, wherein it informed that its performance has been strong and in line with the upper end of the guidance range, including:

  • Gross Debit Volume (GDV) of $8.71 million, up 58% on PCP
  • Gross Profit margin of 75.9% and EBITDA of $25.3m with more than $3m of breakage on December activations still to be recognized
  • Revenue of $79.6 million, 25% on pcp
  • Operating cash flow of $22.8 million
  • Group cash balance of $278.6 million with nil debt.

 

Although the company has performed well in recent months, EML Payments Limited has suspended forward earnings guidance for the year ending 30 June 2020, due to the uncertainty surrounding the Covid-19 impacts. Recently EML announced that it has completed the acquisition of Prepaid Financial Services (Ireland) Limited for an upfront enterprise valuation of GBP 131.5 million.

In the last month alone the stock of EML has increased by 42.08% on ASX. At market close on 8 May 2020, the stock was trading at $3.410.

 


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