Afterpay reports its biggest ever month during a $2 billion first half
Written on the 21 January 2019 by David Simmons
Afterpay (ASX: APT) continues to rake in more revenue every time they report, and the end of 1H19 is no different.
An influx of new users saw Afterpay's underlying sales boosted by 140 per cent, up from $918 million in 1H18 to $2.2 billion in 1H19.
The company says that December 2018 was the company's largest ever month on record for Afterpay, demonstrating its stranglehold over Australian online and physical retail during the Christmas period.
Slowly but surely Afterpay is creeping into the US market. The company processed $260 million of underlying sales in 1H19, with annualised underlying sales now in excess of $500 million based on the first half performance.
Over 23,000 merchants now transact with Afterpay as an option, and the platform had 3.1 million active customers in the last 12 months, growing at an average of around 7,500 new customers per day.
The company has also managed to reduce gross losses whilst also reducing customers' late fees. Investments in risk management have brought down late fees, which now contribute just 20 per cent to Afterpay's total income.
"Afterpay was created to provide customers with a better alternative to traditional credit products," says the company in its ASX statement.
"It is in our financial interest to only deal with customers who can and do use Afterpay regularly as a free service. We are committed to continuous improvement and it is pleasing to see initiatives such as the capping of late fees instigated in 2018 having a positive impact."
Impressively, the company says that one in four millennial Australians have now used Afterpay and that is likely because of the strong selection of retailers opting to offer Afterpay as a payment method.
During the half, retail giants Nike, Bally, LUSH Cosmetics, Lululemon, Jag and Officeworks joined up to the lay-by system.
The company appears to be interested in more than just retail; it's partnerships with Village Roadshow and Luna Park demonstrate its broader ambitions and a growing entertainment vertical.
It's health division, still somewhat small and mostly centred on optometry (with Bupa Optical and OPSM on board) is set to grow in 2019 with partnerships with dentistry groups coming online soon.
The company is also hinting at a possible travel vertical with "an industry partner" already on board.
As for its US operations, the company stressed to shareholders that it expects the rollout in the region to be slow and expensive as it scales. However, the results of its tentative push into the country are optimistic.
With over $260 million in sales being processed by Afterpay in the US, and over 650,000 new customers and 1,400 retailers, the company is poised for success in the region.
It's US retail partners include brands like Sunglasses Hut, Forever21, Everlane, Kim Kardashian West, Boohoo, and Colourpop.
The company intends to branch out into the UK soon too, however no solid announcements have been made on this point. The company says that discussions with retailers in the UK have been "positive".
Shares in Afterpay are up 3.98 per cent to $16.74 per share at 10.50am AEDT.
Business News Australia
Author: David Simmons