Afterpay Touch Group Limited’s (ASX: APT) shares went up by 12.737 percent today (18 January 2019) following the announcement of its total underlying sales in 1H FY19 which has increased by 240% to $2.2 billion as compared to 1H FY18. The contribution from Afterpay’s larger/enterprise merchant partners and Holiday season underlying sales performance were the main reasons behind the increase in the Underlying sales in 1H FY19.
The company’s business in the US processed $260 million of underlying sales in the first half of FY 2019, with annualized underlying sales now in excess of $500 million based on 1H performance.
In the last twelve months, more than 23k merchants have transacted with Afterpay globally. During the period, the company was also able to reduce its losses and late fees. As per the announcement, the late fees as a percentage of total Afterpay income have declined to below 20 percent in 1H FY 2019.
Further, the company’s Net Transaction Loss (NTL) performance in the first half of FY 2019 was broadly in line with 1H FY2018. NTL is estimated to be at the lower end of the company’s target range of 0.6 - 1.0%.
The company also witnessed growth in both online and in-store sales with in-store sales now representing around 16% of total ANZ underlying sales. In the last twelve months, 21,500 retailers have transacted with Afterpay in Australia and New Zealand with new online retailers like BALLY (AU), Morphe Cosmetics (AU), North Beach (NZ) and Stirling Sports (NZ). Several in-store retailers like Nike (AU), Lululemon (AU), Officeworks (AU) and North Beach (NZ) also transacted with Afterpay.
The company has established new verticals to respond to both merchant and customer demand. In addition to Village Roadshow, the company has recently added Luna Park (Sydney) to its entertainment vertical, which helps families budget. During the first half of FY 2019, the company experienced strong momentum in particular in the health and hair & beauty sectors.
In health, specifically optometry, Bupa Optical and OPSM have entered agreements to rollout Afterpay nationally in-store. Further, the company is continuing to develop further opportunities for new verticals for its customer base. A trial collaboration with an industry partner on the staged introduction of a new travel service is underway.
In the US, the company is progressing to formal documentation with two major US investment banks for a total facility size of up to US$300 million which is anticipated to be completed in H2 FY19. A US$300 million facility is able to fund well in excess of US$4 billion in annual underlying US sales. In the UK, the company is progressing with its expansion plans by developing the technology platform and business processes to support the expansion. The company’s half-year results are scheduled to be released on 26 February 2019.
APT’s shares traded at $16.065 with a market capitalization of circa $3.34 billion as on 18 January 2019. (AEST 1:42 PM).
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