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Buy-now pay-later fintech Afterpay Touch Group's (ASX: APT) latest business update shows the company's US expansion is performing well on track.
As it stands Afterpay's US business is generating approximately $1.7 billion in annualised underlying sales. This figure was achieved just 13 months after the group first landed in the country. According to Afterpay it took three years for the group's Australian business to reach those levels of sales, demonstrating the fast growth of the US business.
After one year the company says it has acquired over 1.5 million US customers that are shopping with 3,300 active merchants.
Recent US brands that have gone live on the platform include Levi's, Tarte, Jeffree Star Cosmetics, Windsor, Ray-Ban, and Lime Crime.
At the end of May the company says it had recorded $780 million in sales a strong way for the company to enter the FY19 reporting period.
All together the company says underlying sales are at $4.7 billion in the 11 months to 31 May 2019, up 143 per cent on the prior comparable period.
There are 4.3 million active customers on the buy-now pay-later platform at the end of May, and that number is growing by around 7,900 customers per day since 31 December 2018.
The company has also provided an update on its early-stage UK expansion, which is has described as a "soft test".
Results are positive, with the company claiming the Afterpay model is an "effective product fit in markets outside the US, Australia and New Zealand".
The group's foray into the UK market has been accelerated by its acquisition of competitor buy-now pay-later service Clearpay. Afterpay adopted the Clearpay name, re-launched the business, and added the Afterpay arrows and branding to get to market faster in the UK.
The UK launch is being rolled out in a strategic fashion, beginning with US launch partner Urban Outfitters whose brands include Anthropologie and Free People.
Once the UK launch is complete Afterpay hopes to grab a substantial slice of the $130 billion online retail market in the region. In comparison the Australian online retail market is worth just $30 billion.
Additionally, Afterpay hopes to tap into the millennial market which represents 27 per cent of the global population and will have the highest spending power in the world by 2020.
"The changing nature of millennial spending habits in the UK presents the same opportunity to launch a pro-consumer retail service as in Australia and the US," says Afterpay.
Back in Australia and New Zealand the Afterpay model is becoming "entrenched" in bricks and mortar, as well as dominating online.
In-store sales now represent 20 per cent of the group's ANZ sales at the end of May, up from 15 per cent at the end of the first half, with close to a quarter of Afterpay's new customer growth coming through in-store acquisition.
There are currently more than 2.7 million active customers in Australia and New Zealand that are able to shop at approximately 27,300 merchants.
The group has rapidly grown its healthcare vertical, bringing on more than 1,100 dental and optical practices in the last 10 months. These include Specsavers, National Dental Care, George and Matilda, and Teachers Union health.
The company is also trailing the Afterpay payment system with TerryWhite Chemmart at the moment to service pharmacies.
"We are receiving strong customer feedback that Afterpay is making healthcare more affordable for Australians and allowing them to get access to the treatment they need," says Afterpay.
"Afterpay for healthcare is a growing segment as more Australians opt out of private health cover, and only 45.6 per cent of Australians are currently covered (according to APRA)."
Shares in Afterpay are down 2.09 per cent to $23.40 per share at 11.08 am AEST.
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