Afterpay share price: what's the outlook following FY20 results?

We examine the highlights from Afterpay’s full-year results, as well as commentary around the fiscal 2021 outlook.

Afterpay share price rises on FY20 report

Buy now pay later darling Afterpay (APT) saw its share price rise at the open after releasing its full-year (FY20) results to the market.

While the information contained within this report was mostly already known – with Afterpay providing extensive trading updates in July and August – investors still bid the stock higher, as enthusiasm around the BNPL sector fails to abate.

Overall, the company reported triple digit growth in its transaction volumes and active customers, while total group revenue grew a staggering 97% to $519.2 million.

‘The past 12 months has seen an accelerated movement away from traditional credit and a shit to online shopping. It has also been a year of continued growth and expansion across our regions, despite the challenges we have faced with COVID-19,’ noted Anthony Eisen, Afterpay’s MD and CEO.

Afterpay opened at $93.99 per share, representing more than a 1,000% run-up from the low the company recorded in March.

Report highlights

On the top line, Afterpay continued to notch up significant growth across all of its key markets – as users and merchants continue to flock to its platform.

Overall, Afterpay saw its underlying sales – hit $11.1 billion in FY20, representing an increase of 112%. In FY19 underlying sales stood at just $5.2 billion.

Active users rose to 9.9 million and active merchants hit 55.4 thousand.

With the pandemic benefiting many e-commerce companies as well as those in adjacent industries, Afterpay unsurprisingly reported strong customer acquisition momentum towards the back-half of FY20. Indeed, while the company averaged 17.3 thousand new customers per day in fiscal 2020, in Q4 of FY20 this number surged to 20.5 thousand per day on average.

Further highlighting the stickiness of the Afterpay ecosystem, the company noted that:

'Customers are transacting more frequently the longer they remain on the platform with ~90% of underlying monthly sales coming from repeat customers'

In step with those results, Afterpay's total income (revenue) – on a group level – came in at $519.2 million (+97%), against earnings (EBITDA) of $44.4 million (+73%), slightly ahead of the company's recently revised guidance.

Elsewhere, Afterpay, which often touts the consumer friendly nature of its products, revealed that late fees as a percentage of revenue continues to fall, hitting 14% of Afterpay Total Income in FY20 or 0.6% of Underlying Sales.

In FY19 late fees made up 19% of total income and 24% in FY18.

The FY21 outlook

Looking forward, the company noted that the strong momentum achieved in FY20 had been maintained during the early parts of FY21 across all of its key regions.

In Australia, online sales momentum accelerated across July and August, with it further being noted that 'The recent on-boarding of large scale, new vertical merchants in ANZ is expected to deliver continued growth into FY21.'

'US underlying sales in July have continued at the record levels experienced in Q4 FY20 and customer acquisition has remained strong,' it was also noted.

Elsewhere, Afterpay also said it is exploring expansion opportunities in Asian markets, with the company revealing it had entered into a share purchase plan to acquire the Singaporean-based, BNPL company EmpatKali.

By 11:29 (AEST) Afterpay traded down close to a full percent, at $89.94 per share.

What are your thoughts on Afterpay...

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