Fintech Stocks under the Spotlight: Splitit, Openpay, Zip Co

  • Jun 04, 2020 AEST
  • Team Kalkine
Fintech Stocks under the Spotlight: Splitit, Openpay, Zip Co

Summary

  • Fintech players have been in the limelight and are thriving during the pandemic as people shift towards online, hassle-free, and quick credit payment options.
  • The industry is expected to perform well even in the long run when the coronavirus pandemic ends as they make banking more competent and effortless.
  • BNPL stocks Splitit, Openpay, and Zip Co have surged to record highs as more consumers and merchants are taking up online payment platform amid mobile and contactless payments.

Companies in the fintech space have seized the opportunity created by the COVID-19 pandemic to tap the market as digital technology has shaken e-commerce, online lending, B2Bs, money transfer, personal finance and banking amid SARS-CoV-2-induced slowdown and social isolation measures adopted to fight the pandemic.

With online retail surging and online subscription services gaining traction, fintech space, especially the BNPL segment, has benefitted from the current scenario. With a shift in consumer behaviour and the ease of doing banking via digital platforms, the industry will likely continue to do well in the post-pandemic era.

Let us have a look at 3 ASX-listed fintech companies doing incredibly well during these times:

Splitit Payments Ltd

Splitit Payments Ltd (ASX:SPT) provides credit card-based instalment solution to businesses and merchants. The share price of SPT has soared 302.4% from the March low of AU$0.205 (19 March) to AU$0.825 on 4 June 2020.

On 2 June, Splitit announced its integration with BlueSnap, an All-in-One Payment platform for e-commerce, B2B and SASS companies, in a partnership to improve merchant and customer experience on instalment payment transactions. BlueSnap fulfils every business requirement to surge sales, handle payments and lessen costs. SPT relieves merchants of cart abandonment while enhancing conversions and average order value, thus increasing sales. Through Splitit, customers can get quick access to credit by paying in instalments and interest-free payments.

As per its trading update on 4 June, Splitit performed strongly in May as large new merchants are being boarded in 2020, more consumers are taking up SPT to handle better their cashflows and the rising swing towards e-commerce. Some of the highlights include:

  • Record monthly Merchant Sales Volume (MSV) of US$25.8 million in May, a rise of 321% compared to May 2019 and 39% compared to the previous month. North America’s MSV was up by 336% and Europe up by 548% in contrast to May 2019.
  • Total Unique Shoppers outstripped 290,000 in May, up 18% from the end of Q1 FY20
  • 964 Total Merchants, up 12% from the end of Q1 FY20.
  • Average Order Value (AOV) of US$939 was attained in May from US$737 in Q1 FY20.

 

CEO Brad Paterson stated that the group remains confident about its growth prospects as it is persistent in executing its refreshed strategy. SPT witnessed strong merchant demand with merchants adopting strategies to improve conversion rates and meet consumer demands for more extended payment plans and greater flexibility at the time of COVID-19.

Openpay Group

Openpay Group Ltd (ASX:OPY), a ‘Buy now, Pay smarter’ fintech company has been an incredible performer for the last two months. After falling to a low of AU$0.32 on 23 March, the share price has bounced 996% closing the day at a substantial AU$3.510 on 4 June 2020. Investors have been buying Openpay as the BNPL payment method is becoming more attractive due to the shift towards online retail spending at the time of coronavirus.

Openpay has reported stellar sales, soar in active merchants and strong customer growth throughout the coronavirus outbreak. At the same time, the bad debt situation for the company has not worsened despite COVID-19 induced economic crunch. This suggests OPY’s business model is robust and has been widely accepted by the market.

ALSO READ: BNPL Stocks Flying High on ASX; OPY zooms up by ~41%, Z1P surges up by ~20%

On 1 June, OPY secured UK funding facility of £25 million from Global Growth Capital, a UK Financier through which it will have £10 million available to support its UK business. The BNPL firm also launched JD Sports in the UK.

After recording strong and positive results for Q3FY20 in April, Openpay has been persistent in recording strong growth in May. 

  • While active Plans totalled 739,000, recording a 220% rise from 231,000 in May 2019, OPY had record growth in active customers and active merchants for May 2020.
  • Total transaction value (TTV) grew to AU$170 million in May FY20 YTD, up 95% versus the previous comparable period.
  • A significant contribution to the May result has been ‘OpenMay’, a month of special promotions with Merchant partners across all industry verticals.

 

Source: ASX

Source: ASX

 

On 4 June, Openpay has raised new equity, tapping the market for roughly AU$33.77 million at AU$2.4 per share in a strongly oversubscribed placement. The issue price reflects a 9.8% premium to a 5-day volume-weighted average price of AU$2.185 and a 20.5% discount to the last close on 3 June 2020 of AU$3.020. The funds raised through the placement will be used to accelerate expansion in the UK and Australia, expand its B2B and lift its balance sheet.

Zip Co Limited

Zip Co Limited (ASX:Z1P), an Australian payments company that operates in Australia and New Zealand offering point of sale credit and digital payment services to consumers and merchants, has surged 406% from March low of AU$1.175 to a whopping AU$5.95 on 4 June.

Just a day after Zip placed its securities in a trading halt, the BNPL company through the acquisition of QuadPay, US BNPL player in a deal worth AU$403 million. It also raised up to AU$200 million from CVI Investments to drive growth by issuing convertible notes and exercising of warrants, augmenting its expansion plans globally. The acquisition will entitle QuadPay shareholders to get up to 119 million Zip shares that are 23.3% of the issued share capital of Zip at completion.

The deal is to provide access to the largest retail market in the world- QuadPay, which is a leading BNPL firm in the US when interest-free instalments are driving the payment method. After completion of the deal, the combined group will have operations across the world in 5 countries (AU, NZ, US, UK and SA) with collective annualised TTV of AU$3.0 billion, annualised revenue of AU$250 million, 3.5 million customers and 26,200 merchants.

 


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