Buy-now pay-later (BNPL) giant Afterpay (ASX: APT) has seen its sales more than double in the first half to reach nearly $10 billion as US customers fall in love with the platform.
Despite that, the company's losses have worsened, down to a loss of $79.2 million in the half from a $31.6 million loss in the prior corresponding period.
In conjunction with today's results, APT has announced it is looking to increase its interest in Afterpay US from 80 per cent to 93 per cent. Afterpay has launched an offering of $1.25 billion in unsecured convertible notes to fund the purchase.
Meanwhile, BNPL competitor Zip Co (ASX: Z1P) has recorded record revenue and transactions in the half.
Afterpay's financial results tell a story of a company expanding globally at a fast pace, with 5.8 million customers added in the half, and 31,500 new merchants signing up to the BNPL platform.
Eight million of the group's total 13.1 million active customers are now based in North America, demonstrating the group's spreading tendrils in that market. A stunning 23,000 new customers were added every day during the six months to December 31, 2020.
Group total income for the half was up 89 per cent to $417.2 million, driven by strong sales across all regions, but particularly in North America and the UK. US sales now represent 43 per cent of total underlying sales for the company.
With a solid foundation now set in Australia, the company says it is focussing more on growth opportunities internationally.
"Our strategy is to amplify the compounding nature of our platform by investing to scale globally, accelerate platform dynamic and develop new revenue generating products and services," says Afterpay.
"Our investment in people and marketing over the next 12 to 18 months will increase as we focus on securing our position as the global leader in interest free instalments.
"As US-based investor demand continues to increase and as our US business becomes more predominant, the board is constantly assessing how it can increase shareholder value in line with the company's evolution, which includes possible additional listings in other jurisdictions."
Though its strategic focus may be on the US, the company is still performing well back home in its "most mature market".
ANZ sales grew by 53 per cent in the half, backed by 58 per cent growth in online sales.
In-store growth in ANZ remained strong despite COVID-19 impacts, with volumes up 40 per cent on the prior corresponding period.
Afterpay increases ownership of Afterpay US
The BNPL giant has entered into an agreement with private equity firms Matrix Partners and Weston & Co (collectively 'Matrix') under which the firms will waive 35 per cent of the underlying interest it holds in Afterpay US for $373 million in cash.
The transaction implies an acquisition price that values Afterpay US at 28 per cent of APT's total market capitalisation, currently approximately $38 billion.
This offer has the potential to increase APT's total ownership of Afterpay US from 80 per cent to 93 per cent, with the path to increasing ownership of Afterpay US to 100 per cent.
As such, Afterpay has announced the offer of $1.25 billion in convertible notes to fund the proposed transaction.
Zip Co soars on record half
Shares in Zip Co were climbing in early trade this morning on the back of record results for the BNPL competitor.
They have since dived more than 5.14 per cent to $11.12 per share at 10.44am AEDT.
The group realised record transaction volume of $2.3 billion, up 141 per cent, and record revenue of $160 million, up 130 per cent.
The results were buoyed by an influx of new customers, with more than 5.7 million active customers now using Zip Co more than triple that at the end of 2019.
Z1P is also expanding internationally, having launched in the UK in December 2020 with retail partners including BooHoo, JD Sports, Fanatics, and Cotton-On.
The company also highlights its acquisition of BNPL player Quadpay in August 2020 to accelerate growth in the US.
Since then, the business has more than doubled total transaction volumes, and has strong momentum in the massive North American market.
"Highlighted by the acquisition of US-based Quadpay, the December half was transformational and saw the company position itself as a truly global BNPL leader with its footprint across nine markets," Zip CEO and managing director Larry Diamond said.
"We genuinely believe the opportunity for Zip significantly grows each and every day as we continue to execute, build momentum, and accelerate the global shift away from the broken and unfriendly credit card, towards a better, fairer digital alternative.
"Even though we are seven years in, global BNPL adoption remains in its infancy there is approximately $22 trillion addressable market volume with BNPL penetration of global e-commerce spend only 1.6 per cent. We are well on our way to becoming the first payment choice, everywhere and every day."Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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