Afterpay Touch Group Limited (ASX: APT) is an Australian listed technology driven payment company. It comprises Afterpay and Touch products through which it drives retail innovation by allowing leading Retailers to offer “Buy now, Receive now, Pay later” service. Afterpay has over 25,000 active retail merchants and around 3.5 Mn active customers on-boarded whereas Touch focuses on digital payment businesses providing services to the organizations with customer-facing roles such as telecommunications, convenience retail, and health sectors. It is based in Melbourne, Australia and currently headed by Mr. Nicholas David Molnar who is the co-founder, CEO & Executive Director.
In its half-yearly report, underlying sales were reported at $2.3 Bn for H1FY19 with an increase of 147% as compared to the previous corresponding period (pcp). It reported an active customer of 3.1 Mn on December 31, 2018, with an increase of 118% as compared to the previous period. As per the report, the group has around 3.5 Mn of active customers. Its active merchants as on December 31, 2018, was reported around 23,200, an increase of about 101% on pcp, with active merchants currently reaching 25,300.
Its total income increased by 91% pcp to $116.1 Mn. Although income margin of the merchant was stable and stood at 3.9% as compared to 4% pcp, income for Afterpay merchant increased by 140% to $88.9 Mn from $37.1 Mn as compared to the previous corresponding period.
There were huge investments in risk management capabilities, coupled with scale benefits by the company to ensure that they have a reduced gross loss along with the reduction in late fees as well. The gross loss margin stood at 1.1%, as compared to 1.6% in the previous comparing period whereas the late fee income as a per cent of total statutory income stood at 17.6%, as compared to 22.5% in the pcp.
Its net transaction pro-forma loss of the company stood at 0.5% with the reported result at 0.6%, which is the bottom of the target range of 0.6%-1.0%.
To support growth, the group has maintained its strong balance sheet along with capital raising through equity issue of $142 Mn in September 2018, improving the diversity and maturity of the bank funding including new facilities under negotiation in the US and warehouse funding facilities in Australia.
With the given understanding and knowledge of the market size and opportunity along with international capability, global support, and infrastructure with key brand relationships, it is planning to reinvest to accelerate customer and merchant growth.
In its global expansion plan, within 11 months of operation, the company is on track to attract over 1 Mn active customers and 2K active merchants in the US by the end of March. In Australia and New Zealand only, it has nearly 20,000 shopfronts providing services in optometry, dentistry and in radiology going forward.
On demography front, its average customer age has increased to thirty-three with millennials on-board influencing other age groups as well.
Meanwhile, the stock price has fallen over the past one month by 8.40%, also over the period of past six months the stock has receded by 22.83%, also if we look at the YTD performance, the stock is down by a drastic 30.66%, thus demonstrating a below par performance.
Meanwhile, the price dropped from $20.50 during February 25, 2019 to $18.44 during February 28, 2019, however since then it has been continuing an uptrend with a surge in price and currently again trading above $20 level. APT’s shares traded at $20.550 down by ~1.20% (March 15, 2019, 4.00 PM), with the market capitalization of ~$4.95 Bn.
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