Afterpay reports 90% jump in sales as loss widens to AU$159 million

Australian tech success story Afterpay has reported a net loss after tax of AU$159.4 million for the 12 months to 30 June 2021.

Total revenue was up over the year prior by 78% to AU$924.6 million, as the buy-now, pay-later (BNPL) firm reached 16.2 million customers and 98,200 merchants on its platform.

10.5 million customers live in North America, 3.6 million in Australia and New Zealand, and 2.1 million individuals are customers of the company's Clearpay operation in Europe and the United Kingdom. Afterpay went live in Canada in August 2020.

Underlying sales for the year experienced a 90% increase, totalling AU$21.1 billion. This was comprised of AU$9.8 billion from North America, AU$9.4 billion from Australia and New Zealand, and Clearpay contributed AU$1.8 billion.

On an EBITDA basis, AU$38.7 million was reported, which is down 13% year on year.

"Afterpay is deeply committed to delivering positive outcomes for customers. The majority of Afterpay's income is derived from merchants, rather than customers," it told shareholders on Wednesday. "Afterpay's mission is to power an economy in which everyone wins."

The company ended the year with 1,300 employees, up from 665 at the end of FY20, with operations now boasted in nine countries.

During early FY21, Afterpay completed a capital raise, which delivered net proceeds of AU$774 million. In March, the company also undertook a AU$1.5 billion convertible note offering.

Afterpay earlier this month entered into an arrangement with US payments player Square that will see it become part of the Jack Dorsey enterprise.

Under the scheme implementation deed, Square has agreed to acquire all of the issued shares in Afterpay. The transaction has an implied value of approximately $29 billion -- AU$39 billion -- based on the closing price of Square common stock on 30 July 2021 and is expected to be paid in all stock. 

Based on Square's closing price of $247.26 per share, this represents an implied transaction price of approximately AU$126.21 per Afterpay share, a premium of approximately 30.6% to Afterpay's latest closing price of AU$96.66.

Following completion of the transaction, Afterpay shareholders are expected to own approximately 18.5% of the combined company on a fully diluted basis.

The transaction, Afterpay confirmed on Wednesday, is expected to close in the first quarter of next year.

During the year, Afterpay was also given the all-clear by the Australian Transaction Reports and Analysis Centre (Austrac) following anti-money laundering investigations.

Austrac said at the time it had "reiterated the importance" for Afterpay to meet its compliance obligations in the future, and that it would continue to work with the company to ensure it understands the compliance obligations it has, as well as its role in fighting financial crime.

The company also signed up to Australia's BNPL code of practice alongside Brighte, Humm Group, Klarna, Latitude, Openpay, Payright, and Zip Co.

The code is touted as being a "proactive approach to increasing consumer protections" that goes "beyond current regulatory obligations for BNPL products or services".

"We welcome the opportunity to engage with regulators, governments, and other stakeholders across all our regions to talk about what makes us different and our commitment to promoting fairness and financial freedom for all," Afterpay said on Wednesday.

During FY21, Afterpay launched in-store cards across Australia and New Zealand and the US, with the UK to follow in Q2 FY22. In-store gained further momentum during FY21, it claimed, and said following the launch of the ANZ Afterpay Card, more than 1.4 million customers have added the Afterpay Card to their digital wallet.

In July, Afterpay launched its new money and lifestyle app, Money by Afterpay, which will kick off with a pilot for its own Australian staff before a full go-live in October.

Afterpay will also shortly launch Afterpay iQ, its new merchant insights platform.

"The new product combines artificial intelligence, machine learning, and data science to provide merchants with deep consumer insights to optimise their marketing investment," the company explained.

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