Brierley-backed Afterpay surges after strong quarter of growth

Shares in Afterpay are back to almost 2½ times the value of their listing price.

Corporate raider Ron Brierley backs Afterpay.

Shares in Afterpay, the fintech start-up backed by corporate raider Ron Brierley and a host of his Guinness Peat alumni, are back to almost two-and-a-half-times the value of their listing price a year ago after the company delivered a strong March quarter update.

Afterpay revealed last week that total merchant sales rose to $144.9 million in the quarter, 19 per cent ahead of stockbroker Bell Potter’s $121.8m estimate.

Significantly the company almost doubled the number of retailers using its services quarter-on-quarter, with total retailers signed up now about 3700 compared to 2000 at the end of the last quarter. As a result Afterpay shares surged over the $2.50 mark after they floated in May last year at $1 per share. They closed 8c lower yesterday at $2.38. They rose as high as $3.05 last August.

Afterpay facilitates ­online transactions for consumers and merchants by providing a real-time buy-now, pay-later ­credit service. “The company now accounts for about 3 per cent of all online sales in Australia and about 15 per cent of Australian online fashion retail transactions,’’ the broker told clients yesterday.

“Some of the big names retailers added in the last three months includes Myer, Officeworks, Telstra, Alannah Hill and Billabong Group. The product is gaining mainstream acceptance and awareness and it appears this rapid growth is set to continue.’’

As a result of the rapid growth the company has doubled the size of its lending facility with NAB from $20m to $40m.

Bell Potter, which has raised capital for the company, is now forecasting it to be profitable for the full year of 2017, rather than just in the second half of the year.

For the six-month period ending December 31, 2016, the business posted a net loss after tax of $1.4m on revenues of $6m.

Bell Potter’s valuation has increased to $4.24 per share.

But other analysts are more wary, noting the company’s high valuation and the complication of a scrip-based merger with the profitable payment services provider Touchcorp, which is due to be completed by late June 2017.

They are also waiting to see the details of Afterpay’s cash flow statement for the quarter.