Afterpay losses widen despite user growth

Afterpay has posted a widened before-tax loss of $35.8m, despite adding 2.7m new customers since the last financial year.

Afterpay’s Anthony Eisen. Picture: Natalie Grono

Afterpay’s losses continue to widen, with the buy now, pay later company posting a loss before tax of $35.8m for the half-year — 66 per cent worse than a year earlier.

It came as the company declared it was prioritising international growth, adding 2.7 million new customers since the end of the last financial year. Afterpay now has around four times the number of customers as its closest competitor Zip in Australia and New Zealand.

Afterpay shares were up almost 3 per cent to $37.02 at close.

Afterpay, which is aggressively pushing in to the lucrative US and British markets, and is soon launching in Canada, posted a loss after tax of $31.6m in its half-year results, compared to $22.2m in the corresponding period last year.

Underlying sales were up 109 per cent to $4.8bn, while active customers were up 134 per cent to 7.3 million globally, compared to 4.6 million at the end of the last financial year and 3.1 million at the end of 2018.

Earnings before interest, tax, depreciation and amortisation were $6.8m for the half-year, down from $13.9m a year earlier.

“We are investing in international growth, and accelerating what we see as being very good business model dynamics in those new markets,” Afterpay chief executive and co-founder Anthony Eisen told The Australian.

“We feel we’ve got a good template from our experience in Australia where more customers come on board and purchase more frequently. We’re very confident in our investment strategy we’re adopting in overseas markets. Having a leadership position at this stage is something we want to build upon.”

Afterpay allows consumers to pay for goods and services in interest-free instalments while receiving them immediately, generating most of its income from merchant fees and commissions. The US accounted for 49 per cent of active users for the Australian company, which didn’t declare an interim dividend.

Afterpay this week joined the S&P/ASX All Technology Index, a grouping of 46 public tech companies. The indexmade its market debut on Monday.

“I think it's a great initiative,” Mr Eisen said. “There are a number of companies now either exporting or have the potential to scale globally. And to have a definition for an industry or sector that encompasses a lot of good things is really positive., and it's encouragement for companies when they’re sourcing capital from the market that you can look to a more active investor base focused on early stage ventures.”

He added that the coronavirus hadn’t yet an impact on Afterpay’s bottom line but it was a matter of “wait and see” for the company's executives.

“It will be interesting to see how it plays out, we haven’t seen an immediate impact as we sit here today,” he said. “For us, we're all about helping retailers connect with customers, so the dynamics of the coronavirus on retailers will obviously be relevant to us.

“We do have a ton of new merchants and new customers coming on to our platform, and given the growth we’re seeing it is hard to unpick the impact of specific macro trends on our business, given how fast we're growing. “But we will watch it.”