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Splitit share price soars 37% on interim results: users hit 196,000

Afterpay competitor Splitit (ASX: SPT) saw its share price skyrocket 37% on Friday afternoon after the company released 1H19 results that revealed active merchants, users and revenue all climbed.

Splitit (ASX: SPT) share price up 37% on interim results Source: Bloomberg

Results reaction at a glance

The battle for buy now pay later supremacy has seemingly grown even more intense, following the release of Splitit’s (ASX: SPT) interim results to the market last Friday.

The response: investors bid Splitit Payments Limited’s share price up 37% in a single day, after the A$169m fintech player posted, revenue and payments volume growth.

Investors took became more bearish Monday morning, with Splitit’s share price falling around 9%, to A$0.50 per share, as of 10:47 AEST.

What drove this bullishness?

According to the company’s CEO: a simple and convenient product are the two core reasons that customers choose Splitit Payments Limited; and by extension, two of the core reasons that Splitit has witnessed such explosive growth in recent times.

Commenting on the company’s interim results, Gil Don, Splitit's Chief Executive Officer noted that:

'We are seeing great momentum across the business, with strong growth in all of our key performance metrics.’

Possibly even more important however, was comments from Mr Don that:

'Payment solution providers like EFTPay and e-commerce platforms like Ally Commerce have signed onto Splitit as they can quickly install their own Buy Now Pay later (BNPL) solution for their customers through our technology platform.’

Splitit seems to have very much carved out a unique position in the fast-crowding, buy now pay later space – providing strong value for both customers and merchants.

1H19 results: explosive growth in focus

During the first-half of 2019, Splitit Payments Limited saw its active merchants hit 509 – an impressive 121% increase on the corresponding 2018 period.

Unique customers using Splitit’s payments platform also soared: rising 228% to 197,000 in the first-half.

Besides user growth, maybe the most important operating metric – payment volumes – came in 134% higher, reaching $34.4m. This translated into even better top-line growth, as revenue almost tripled, reaching $798,000 during 1H19.

Relative to these figures, the company remains in a robust cash position following its ASX-listing earlier this year. Splitit currently has $23.7m cash on hand.

Besides this financial and operational success, Splitit also boasts the competitive advantage of not being:

‘Subject to the same responsible lending requirements as other BNPL providers [such as Afterpay] because our end customers are simply utilising credit already available through their banks via their existing card accounts.’

In saying this, regulation remains ill-defined in the buy now pay later space. Unsurprisingly however, there has been increased scrutiny in recent years as regulators worry about the impact that new payment solutions are having on consumers.

Splitit share price action: a quick summary

Although Splitit’s fantastic operational and financial performance rank as key positives, investors should not forget the company’s broader (albeit brief) share price history – nor valuation.

Splitit Payments Limited currently trades for A$0.50 per share, with a market capitalisation of A$169m on just $798,000 in 1H19 revenue.

By comparison, APT-AU (ASX: APT), a market leader in the buy now pay later space, brought in A$272.5m in revenue for the full year, and currently has a market capitalisation A$7.83bn.

Afterpay has been criticised in the past by professional investors for its valuation; though, it generally remains well liked by analysts.

Finally, investors should keep Splitit’s recent bullish activity in perspective: When the company listed on the ASX, it closed out its first day of trade at around A$0.38 per share, on January 29.

By March, Splitit’s (ASX: SPT) share price climbed as high as A$2.00 per share.

Evidently, its share price has pulled back significantly since then. Even when counting Friday’s 37% run-up, the stock is still down a little over 70% from its all-time-high.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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