Is the drop in momentum temporary for these buy now, pay later stocks: Splitit, Openpay Group, Sezzle?

Summary

• The Buy Now, Pay Later (BNPL) market has been thriving significantly higher than the ASX 200 index driven by ever increasing customer base and merchants onboarding.
• However, many BNPL players experienced a drop in their share prices despite announcing positive earnings.
• SPT share price recorded a low of A$1.765 but closed the trading session on 31 August, up by 1.639%.
• On 31 August, OPY share price closed the trading session below 8.085%, followed by SZL ending the trading session below 9.436% on the day of announcing their respective earnings report.

The “Buy Now, Pay Later” (BNPL) market has been thriving significantly higher than the ASX200 index, with Afterpay Limited (ASX:APT) driving hopes of investors led by its ever increasing customer base and merchant onboarding.

On 31 August 2020, APT share price settled at A$91.44 and the stock has given a return of 180.15% in the last six months. However, on 1 September, APT share price was trading at A$83.62, decreasing by 8.552% (at AEST 1:47 PM).

Interesting Read: How this ASX200 Share Price is having a magical spell in the equity market: Afterpay on next jump

Also, the BNPL market hosts many players. Let us deep dive into three BNPL ASX stocks and take a peek at their respective share prices.

Splitit Payments Ltd (ASX:SPT)

Splitit Payments released its half-year financial statement ending 30 June 2020 with significant improvement in top line led by increased number of merchants sign up.

Also, 116 new merchants signed post period, comprising The Hut Group, Specialized, Frederique Constant, Echelon Fitness and 77 Diamonds.

Despite a positive result announcement, on 31 August 2020, SPT share price recorded a low of A$1.765 but closed the trading session at A$1.860 up by 1.639% from A$1.830 recorded on previous day.

Key Financial Highlights include

• Merchant Sales Volume (MSV) grew by 133% YoY to US$89.1 million, led by increasing number of merchants sign up. North America and Europe experienced maximum growth, 148% and 89% YoY, respectively.
• Gross Revenue (Non GAAP) went up by 244% YoY to US$3.1 million.
• Average Order Value (AOV) increased by 59% to US$845 in H1 FY20 from US$531 in H1 FY19.
• The Company recorded an operating loss of US$9.0 million for the H1 FY20.
• Total costs, exclusive of share-based payments and depreciation, increased by 137% to US$5.5 million. Costs were incurred to expand senior leadership team, strengthening its European business along with bolstering sales and marketing initiatives with a focus on North America.

Apart from the financial achievements, the Company signed key partnerships with Mastercard, Stripe, and Visa in H1 FY20 to fast-track merchant acceptance.

Total merchants have almost doubled up on pcp, exceeding the mark of thousand by the end of 6-month period this year, with 12 Month Active Merchants recorded at 519 in H1 FY20, up from 270 in H1 FY19.

Total number of shoppers reached 309K with 12 Month Active Shoppers recorded at 149K in H1 FY20, up from 116K in H1 FY19.

As on 1 September 2020, Splitit Payments was trading at A$1.77, down by 4.839% (at AEST 1:45PM). The Company has given a return of almost 295.74% in the last six months.

Please Read: BNPL Stocks, Capital Raise and Success Stories – Splitit, Afterpay

Openpay Group Limited (ASX: OPY)

Openpay Group released its full year financial statement ending 30 June 2020 highlighting significant jump in revenues.

Despite a positive result announcement, on 31 August 2020, OPY share price closed the trading session below 8.085% from previous day.

Key financial highlights from the FY20 report are as follows:

• Total transaction value (TTV) increased by 98% to A$192.8 million demonstrating preference for online sales in Australia.
• Revenue jumped by 64% to A$18 million over FY19, backed by strong growth in active plans (up 229% YoY) and active customers (up 141% YoY).
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) was recorded at a loss of A$30.1 million compared to loss of A$11.5 million of FY19. This EBITDA performance was in line with management’s expectations.
• The Company recorded a net transaction margin of 2.5% of TTV and net transaction loss of 2.3% of TTV.
• Openpay demonstrated a strong balance sheet with cash on hand of A$70.1 million, and A$80.8 million as undrawn debt facilities available for future funding.

The company’s UK market has experienced strong momentum with active plans up by 329% and active customers up by 223% in H2 FY20 over H1 FY20.

No earnings guidance was provided for FY21, but Openpay intends to expand domestically by bolstering repeat customers growth and driving platform utilisation. The Company aims to focus on the UK market growth to provide more momentum and venture into other geographies as well.

As on 1 September 2020, Openpay Group was trading at A$4.03, down 6.713% (at AEST 1:43 PM). The Company has given a return of almost 323.53% in the last six months.

Sezzle Inc. (ASX: SZL)

Sezzle released its half-year financial results ending 30 June 2020 highlighting noteworthy growth in business.

Despite a positive result announcement, on 31 August 2020, SZL share price closed the trading session below 9.436% from previous day.

Key financial highlights from the 1H20 report are as follows:

• Underlying Merchant Sales (UMS) increased by 338% YoY to US$307.4 million, and Total Income rose by 384% YoY, in H1 FY20. The rise was backed by increase in customer base.
• Merchant Fees which represented 84% of Total Income for H1 FY20, increased 390% YoY.
• Net Transaction Margin (NTM) was US$5.1 million in H1 FY20 representing 1.7% of UMS over negative US$0.2 million in H1 FY19.
• As on 30 June 2020, Sezzle noted cash and cash equivalents of US$55.7 million with US$38.47 million as total debt.
• Following 30 June 2020, the Company raised US$58.3 million (net of costs of the offer) through an Institutional Placement and Securities Purchase Plan to accelerate growth and strengthen the balance sheet.

Active Consumers reached 1.5 million and 16.1K Active Merchants had been recorded as of 30 June 2020, demonstrating yoy increase of 243% and 219%, respectively.

For full year FY20, Sezzle reconfirmed its UMS guidance of achieving an annualised run rate in excess of US$1.0 billion by the end of 2020.

As on 1 September 2020, Sezzle was trading at A$9.04, down 11.977% (at AEST 1:40 PM). The Company has given a return of almost 589.26% in the last six months.

Also Read: Cashflows for Fintech & BNPL Stocks: Sezzle, Afterpay, Zip