FlexiGroup (ASX:FXL) Partners With Mastercard to Expand BNPL Everywhere Platform

  • November 21, 2020 12:26 PM AEDT
  • Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

FlexiGroup (ASX:FXL) Partners With Mastercard to Expand BNPL Everywhere Platform

Summary

  • FlexiGroup Limited (ASX:FXL) and Mastercard have joined hands to expand the application and distribution of bundll, the world's first buy now pay later (BNPL) anywhere platform.
  • The platform has been built by humm ventures, an initiative designed to spearhead innovation between FXL and new partners.
  • In 1Q, FlexiGroup reported solid volume performance in the BNPL and commercial space. The company expects 1H21 cash net profit after tax (NPAT) to be ahead of 1H20 cash NPAT.
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BNPL space has emerged as one of the winners amid the COVID-19 pandemic. In line with the burgeoning opportunities, competition is also heating up in the sector with many players entering the space. Moreover, several others are expanding their geographical reach and offerings.

That said, diversified full-service payments company FlexiGroup Limited (ASX: FXLhas teamed up with American multinational financial company Mastercard for bundll. The agreement will cover the application and distribution of bundll, which is the first buy now pay anywhere platform, globally, and built by humm.

As per the five-year agreement, Mastercard will support the development of the open loop, work anywhere, pilot while also working with its partners to drive adoption.

bundll Platform

Live in Australia, the platform enables customers to buy now pay later everywhere Mastercard is accepted. With inbuilt budgeting services, the platform allows bundll customers' purchases into easy-to-manage instalments that they can pay later. It supports various integration and commercial models to achieve scale in different markets.

The First Strategic Alliance for humm ventures

The collaboration is likely to deliver a sustainable growth path for humm. Also, it is the first strategic partnership for humm ventures.

FlexiGroup’s initiative humm ventures is designed to create innovation between FlexiGroup and its new partners. It will allow local and international firms to tie up with FlexiGroup and use the company's significant product and technology offering within their ecosystem.

humm ventures, in FY21, has continued to partner with merchants across crucial verticals. Moreover, it has signed 35 exclusive preferred partnerships with solar providers in FY21. The initiative has also inked an exclusive two-year agreement with AGL Energy to offer long-term financial solutions for the purchase of combined solar and battery systems.

The new deals with Readysell POS, BigCommerce and Striven will provide more than 60,000 new merchants with access to the humm platform. Furthermore, partnership with Centaur Software has been renewed for a further three-year period. It will give access to additional 4,000 dental practices with humm financing opportunities being built into the invoicing system. 

humm CEO Rebecca James highlighted that FlexiGroup within its market-leading product suite owns notable technology and data expertise. The new venture will allow the company to collaborate and partner with the best of technology and payment solutions provider around the world to realise the potential of its offerings. 

FlexiGroup is seeking to capitalise on opportunities created by humm ventures to expand the market and the geographies in which the company operates. The initiative will improve the distribution potential of its offerings so that the products can thrive in its partners' businesses, Ms James added.

Must Read: What did the most recent research about BNPL find?

FlexiGroup FY20 Highlights

FlexiGroup also recently held its annual general meeting, discussing the significant achievements for FY20 including

  • High Growth - 570,000 new customers were added, up by 37 per cent YoY. Transaction volume stood at AUD 2.5 billion, representing an increase of 17 per cent YoY.
  • It is the third largest BNPL provider domestically and a profitable leader in transactions of more than AUD 1,000.
  • The company has a resilient business mode.
  • eCommerce growth - 127 per cent YoY growth in BNPL by delivering a seamless digital experience to customers.
  • As at 30 September 2020, the company reported 9 x customer usage per annum and increasing 57 per cent NPS for humm Australia.

Also Read: Do investors still like this ASX 300 share price – FlexiGroup

1Q FY21 Business Update

The portfolio continues to perform well with a downward trend in the 30+ days arrears performance across segments as of end-September.

The company witnessed 30+ days arrears reduce in:

  • Buy Now Pay Later by 60bps to 2.2 per cent 
  • Australian Cards by 120bps to 3.2 per cent  
  • New Zealand Cards by 50bps to 2.6 per cent
  • Commercial by 50bps to 1.6 per cent

Cost to income ratio of 45 per cent represented a decline of 210bps on PCP. Government stimulus, mortgage deferrals and superannuation withdrawals have contributed to net loss/average net receivables of 3.5 per cent in 1Q21, up 10bps on PCP, driven by a reduction in receivables from larger-than-normal balance repayments.

Outlook

With improved credit performance and cost management, FlexiGroup expects cash net profit after tax in 1H21 to be more than 1H20 performance of AUD 34.5 million.

Stock Performance: On 20 November 2020, FXL closed the day's trading at AUD 1.275, up by 12.831 per cent. The Company had a market capitalisation of AUD 559.65 million.

Did You Read: Why do Millennials love Buy Now, Pay Later

 

 


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