Yahoo Finance – Buy-now, pay-later app Afterpay is booming

September 3, 2019
By Aarthi Swaminathan

Microlending is surging, and Afterpay is riding the wave. The Australian fintech company — which offers buy now, pay later options for consumers — announced stunning huge results, noting that the underlying global sales for the fiscal year of 2019 increased by 140% to $5.2 billion.

The company — which entered the U.S. market just 15 months ago — stated that it had 4.6 million active customers, up 130% from the previous year, and was currently on-boarding over 12,500 new customers per day.

“We are extremely pleased with the FY19 results in which the company improved across every key metric — customers, retailers, GMV, income net transaction margin and losses,” Afterpay Co-Founder and U.S. CEO Nick Molnar told Yahoo Finance. The “results are a testament to the success of our business model and our laser focus on our customers.”

Growth in America as well as the UK was “exceeding expectations,” the annual report said, and “major new merchants continue to onboard.”

The company had over 6,500 merchants onboarded — or being onboarded — into their system, giving them access to over 2.1 million active U.S. customers.

Molnar added that “there is so much runway ahead. We continue to engage and integrate with new merchants and consumers, while evolving our technology platform with new capabilities and services for our customers. We couldn’t be more excited about the opportunity ahead.”

The company noted that underlying sales in the U.S. “continued beyond expectations, increasing to almost $1 billion in the first full year of operations.” The company expects a current run-rate in excess of $1.7 billion.

Additionally, the rate of U.S. customer acquisition “is accelerating as the network effect of our platform plays out,” the report stated, adding that the U.S. is “currently acquiring 50% more new customers per day than the FY19 daily average.”

Banking on millennials and Gen Z

In a detailed presentation, Afterpay noted that millennials and Gen Z are “driving change in global spending habits
which is meaningful today and will be even more meaningful in 10 years” and that “Afterpay is uniquely positioned to benefit from this shift.”

In Australia, the company found that 27% of millennials in Australia have used Afterpay. “U.S. millennials and Gen Zs are similar to those in [Australia],” Molnar said. “These shoppers prefer a way to pay that allows them to pay over time, without incurring revolving debt, paying interest or fees — especially when buying fashion and beauty.”

Customer retention has also been strong with Afterpay, the company reported, with those who started purchased
items with the company more than 3 years ago are now purchasing more than 20 times a year.

“The relationship is clear,” the report stated. “The longer that the longer that customers are on our platform the
more they purchase and the more they love Afterpay.”

The average transaction value on Afterpay is around $150, and the average outstanding balance is $218 — far lower than what a credit card holder would carry, at $3,260.

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