Afterpay Full Year Results to 30 June 2021

Afterpay has reported underlying sales of $21.1B, an increase of 90% compared to last financial year. The growth was lead by its North American business, which is Afterpay's largest region.

Group Total Income was $924.7M, an incease of 78% from last financial year, but below market predictions of $941.2 million.

The concern is a net loss of $159.4M, compared to $22.9m the year prior. Analysts had expected a full-year loss of $87.2M. The Group’s loss after tax has been impacted by the net loss on financial liabilities at fair value of $96.8M as a result of an increase in the valuation of Afterpay’s UK operations (included within Clearpay).

FY21 Results

Underlying Sales = $21.1B +90%
Active Customers = 16.2M +63%
Active Merchants = 98.2k +77%
Group Total Income = $924.7M +78%
EBITDA excl. sig items = $38.7M -13%
Statutory Loss after Tax = $159.4M
No dividend declared

Afterpay to expand into Europe

SUMMARY

• Afterpay is expediting its expansion into new markets to capitalise on strong consumer and merchant demand and to increase its global footprint.
• Afterpay has identified the European Union (EU) as the next logical step for international expansion due to its large millennial population, vast fashion and beauty retail markets, and significant debit card usage.
• The addressable ecommerce market in the EU exceeds €300b1 ($494b).
• Afterpay has entered into an Agreement to acquire Pagantis. Pagantis currently provides a range of buy now, pay later and traditional credit services across Spain, France and Italy with regulatory approval to also operate in Portugal. The addressable ecommerce market in these 4 countries exceeds €150b1 ($247b).
• This acquisition accelerates and de-risks the roll-out of Afterpay’s Clearpay branded platform across the EU market with launch targeted for Q3 FY21.
• The acquisition provides a fully staffed and experienced team, an existing technology stack and intellectual property as well as an immediate regulatory right to operate across all EU member states (subject to regulatory approval).
• Pagantis’ current business which includes its existing technology and traditional credit style products (Pagantis Legacy Business) will be managed as follows on completion of the acquisition:
  * Existing technology will be re-configured to provide the Afterpay core product, and the business will be rebranded to Clearpay, enabling an expedited launch into Spain, France, Italy and Portugal with local language compatibility.
  * Pagantis’ existing consumer fee instalment and credit card offerings will be discontinued post completion of the acquisition.
  * Existing loan book will be retained by NBQ and is excluded from the transaction.
• As part of the Agreement, NBQ will receive a minimum €50m in consideration (subject to customary adjustments), payable as follows:
  * Upfront Consideration - €5m in cash payable at completion; and
  * Deferred Consideration - €45m in cash, payable 3 years post completion. Deferred Consideration can exceed €45m, with any excess being payable in cash or Afterpay shares (at Afterpay’s election), provided the equity value of Pagantis exceeds €45m, 3 years post completion.
• Completion of the acquisition is expected to occur in or before December 2020, subject to Bank of Spain regulatory approval to the proposed change of control.