Afterpay HY20 Results (ASX: APT)

Afterpay HY20 Results (ASX: APT)

Afterpay (ASX: APT) has reported its first-half results for FY20. We take a look at the company’s headline figures, key commentary and guidance outlook, plus review the share market’s reaction across the trading day.


Headline result

Afterpay has reported an increase in total income for the period of 96%, growing from $112.3m to $220.3m.

The company’s loss before tax has grown from $21.5m to $35.8m, signifying movement of 66%. Meanwhile, its loss after tax has also grown, accelerating from a loss of $22.2m in HY19 to a loss of $31.6m in HY20.

As per previous reporting periods, no dividend has been declared as the company opts to pursue growth instead.

Across the trading day, it was a fierce battle between buyers and sellers, with the stock swinging wildly between sharp gains and sharp losses. However, by the end of the day, Afterpay shares closed up by 1.4% at $36.47


Key commentary

As the company’s global expansion continues, Afterpay managed to grow total income by 96%. This includes a full half-year contribution from its UK division. Customer and merchant adoption has continued to increase at a significant rate, with active customer numbers increasing 134% to 7.3m, and active merchant numbers growing 86% to 43.2k. As a result, underlying sales jumped 109% and supported the company’s above-mentioned income growth.

Across the group, net transaction margins were $107m, which was an increase of 108% on the prior comparable period.

EBITDA excluding significant items was $6.8m for the half, down almost 50% compared with $13.9m in HY19. The result was impacted by higher costs relating to operating expenditure, staff and marketing initiatives. EBITDA losses also widened from $5.4m in HY19 to $14.1m in HY20, predominantly influenced by AUSTRAC-related costs and international expansion costs.

Expenses relating to receivable impairments also jumped significantly, rising 75% from $27.4m in HY19 to $47.8m in HY20, however, down 20 basis points as a portion across all underlying sales. Meanwhile, late fees as a percentage of total income reduced 230 basis points to 15.3%.

Due to timing of merchant settlements and growth in receivables, total debt increased from $50.2m to $416.9m year-on-year, with net cash at $8.7m.


Guidance outlook

Increased investment is expected to continue into the second-half in pursuit of the company’s global expansion strategy, which will impact short-term profitability at the group level.

Afterpay is targeting 9.5m active customers by the end of FY20 and in excess of $20bn underlying sales by the end of FY22.

The company will implement its in-store launch in the US during H2 FY20, while it will also launch in Canada in 2020.


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