By Stuart Condie
SYDNEY – The annual profits of Afterpay Ltd. fell 13% as the Australian buy-it-now and later-payment provider increased its investments in the year leading up to its acquisition by Square Inc.
The ASX-listed installment payments company reported earnings before interest, taxes, depreciation and amortization for the 12 months to June of A $ 38.7 million ($ 28.1 million), at the exclusion of important items. This compared to AU $ 44.4 million a year earlier.
Revenue jumped 78% to A $ 924.7 million, propelled by an increase in the number of customers to 16.2 million from 9.9 million a year earlier. The total value of transactions on the Afterpay platform jumped 90% to A $ 21.09 billion, and more than doubled once the impact of currency movements was removed.
Afterpay’s net loss widened to A $ 156.3 million from A $ 19.8 million due to increased expansion costs, meaning the company remains unprofitable ahead of its acquisition of 39 billion Australian dollars by Square. The transaction is expected to close in the first quarter of calendar year 2022, which is the third quarter of Afterpay’s fiscal year.
Square is hoping that Afterpay – which generates most of its revenue from merchant fees but attracts the passionate support of consumer customers drawn to its interest-free payout model – more closely links its Cash app and seller ecosystems.
North America accounted for nearly 50% of Afterpay’s underlying sales for fiscal 2021 at constant currencies, up 177% year-on-year versus an overall increase of 102% across the board. group. The number of customers in the region increased by 88% in one year to 10.5 million, compared to an increase of 63% across the group.
Afterpay, Australia’s largest tech company by market capitalization, said marketing costs in the second half of fiscal 2021 were higher than in the first half. He said he expects marketing spending to remain high in fiscal 2022.
He said more than 1.4 million customers added an Afterpay digital card to their wallets after the product launched in fiscal 2021, while the Afterpay-branded bank account product is expected to launch to the Australian public. in October.
Founded in 2014, Afterpay launched in the United States in 2018. Facing Affirm Holdings Inc., Klarna Holding AB and its local rival Zip Co., Afterpay expanded its investor base through a series of capital raises for finance growth, most recently raising A $ 1.5 billion in March through a convertible note offering jointly led by Citi, Goldman Sachs and JP Morgan.
Many analysts had speculated that Zip’s lower multiples made it a more likely takeover target, but Square surprised investors with its move this month.
Afterpay did not declare a dividend.
Shares of Afterpay last traded at 135.10% A $, up 14% this calendar year.
Write to Stuart Condie at [email protected]