Afterpay says sales double as more customers turn back on credit cards

Buy now, pay later giant Afterpay’s sales have doubled as more consumers turn to instalment payments rather than credit cards.

Afterpay says the growing shift to online shopping sparked by the coronavirus pandemic has accelerated the buy now, pay later giant’s global growth strategy.

The Australian Stock Exchange tech darling said sales for the 2020 financial year more than doubled compared with the prior year as consumers continue to seek payment alternatives to high interest-bearing credit cards.

Afterpay’s net loss for the 12 months to June 30 was $19.8 million, an improvement on the prior year’s loss of $42.9 million.

The company’s reported earnings were $44.4 million, a rise of 73 per cent on the previous corresponding period.

A surge in buying activity through its online shopping channels caused underlying sales for the year to increase by $5.9 billion, or 112 per cent, to $11 billion.

“While remaining cautious in our ongoing response, it is clear that Afterpay’s predominantly e-commerce and budgeting-focused service has been a net beneficiary of the significant shift to online spending and the shift away from traditional forms of credit,” the company said.

Afterpay’s push for global expansion has resulted in the company adding 5.3 million new customers, bringing its active customer base to 9.9 million.

The majority of new customer numbers are from its rapid growth within the US market, which makes up approximately 50 per cent of its total membership.

“The continued rapid penetration of the US and UK markets is changing the geographic profile of the business,” the company said.

“While global trading and capital market conditions remain uncertain, Afterpay has

a strong balance sheet position with over $1.3 billion of pro forma cash and over $2 billion of

pro forma liquidity and growth capacity.”

Afterpay has recently launched in Canada and is attempting to acquire a Spanish company to expand its operations into the European Union.