Afterpay shares dive on first half loss

Afterpay shares dive on first half loss

Just one day after Afterpay (ASX: APT) slipped through a Senate report on the buy-now pay-later (BNPL) sector without a scratch, the company is facing the rebuke of shareholders on the back of its first half results.

Shares are down after the company announced it suffered an increase to its first half loss after tax of 3043 per cent to $22 million.

The company says this loss is primarily due to share-based payments, one-off items, regulation changes, and depreciation and amortisation.

The group's before tax results also dipped from a small profit of $0.7 million in 1H18 to a loss of $21.5 million at the end of 2018.

Despite the heavy leak sales during the period did rise considerably, up 147 per cent or $1.4 billion to $2.3 billion in the six months ended 31 December 2018. The heavy loss therefore represents just 1.1 per cent of the company's total sales, softening an otherwise concerning figure.

The group's customer base continued to grow by 118 per cent during the period, with 3.1 million active users at the end of 2018 and 3.5 million as of today.

The group's income of $116.1 million includes income from stores offering the platform of $89.9 million. Late fees contribute 17.6 per cent of the group's income, declining from 22 per cent at the end of 2017.

The company has its sights well and truly set on dominating America; a market similar to Australia in that it is moving away from traditional credit products with two out of three people aged 18 to 30 in the UA not using a credit card.

The group is on track to have over 1 million active users in the US by the end of March, with a selection of around 2,000 merchants to choose from.

Major US retailers using Afterpay now include Avenue, True Religion, L'ange, and Sunglass Hut.

Expansion in the UK appears to be tracking well, with Afterpay announcing that the service will be available during the second half of the financial year.

Back home, the BNPL service is available in nearly 20,000 shopfronts. The company has recently made an effort to be available not just in retail but in dentistry and optometry too. Radiology is the group's next attempt to crack into new, wide-open markets.

Major partnerships were made with Australian retailers by Afterpay this half include Camilla, ASOS, Forever New, Adidas, Lush, Reebok, OPSM, Big W, Ray-ban, and Bupa Optical.

Yesterday the Senate Inquiry into BNPL services highlighted the need for an independent regulatory framework for these payment systems that are patently different to traditional credit products. The company says is will cooperate with ASIC, the government, consumers and industry on a regulatory framework and an industry code of practice.

Shares in Afterpay are down 4.64 per cent to $19.55 per share at 10.23am AEDT.

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