Afterpay Touch share price rockets higher on business update

The Afterpay Touch Group Ltd (ASX:APT) share price has rocketed higher in early trade after releasing a global business update…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Touch Group Ltd (ASX: APT) share price is on course to finish the week with a bang following the release of a business update this morning.

In early trade the payment solutions company's shares are up 10% to $15.68.

What was in the update?

In the first half of FY 2019 the company's strong underlying growth and performance continued.

Underlying sales in the first half came in at over $2.2 billion, up 140% on the prior corresponding period. Playing a big role in this strong growth was the company's performance in December, which was the largest on record for the Afterpay platform.

The main driver was the company's Australian & New Zealand operations. Approximately $2 billion in total underlying sales were processed through the Afterpay platform in the first half, which is double the prior corresponding period.

Its ANZ holiday season underlying sales performance was particularly strong, with a significant uplift and contribution from Afterpay's larger merchant partners.

The U.S. business also continued its strong form, processing $260 million of underlying sales in the first half. This compares to over $115 million of underlying sales at the end of October.

Its expansion into the United States means that there are now over 23,000 merchants that have transacted with Afterpay globally over the last 12 months.

Management advised that there are now over 3.1 million active customers using the Afterpay platform, up from 2.8 million at the end of October. Customer numbers grew at an impressive 7,500 new customers per day during the second quarter.

Pleasingly, thanks to scale benefits and its investment in risk management capabilities and processes, Afterpay has reduced its gross losses while also reducing late fees. Late fees as a percentage of total Afterpay income are estimated to have declined to below 20% in the first half.

Another positive is that despite the reduction in late fees, it has maintained its Net Transaction Loss (NTL) performance. NTL in the first half was broadly in line with the prior corresponding period and is estimated to be at the lower end of its target range of 0.6% – 1.0%.

Should you invest?

I think this update demonstrates why Afterpay Touch is one of the most promising tech companies on the Australian share market along with Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

All in all, I believe it would be a great buy and hold investment. However, due to the enormous amount of future growth that has already been built into its share price, it is certainly a high risk one and suitable only for those with a high tolerance for risk.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a nervous, but positive, Tuesday for ASX investors.

Read more »

two colleagues high five each other as they sit side by side at a long desk in front of their laptop computers in an office environment.
Share Gainers

Why Bapcor, Ramelius, Sandfire, and WIA Gold shares are rising today

These shares are having a better day than most on Tuesday. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors started the week off in a good mood today.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Bellevue Gold, Bubs, Clarity Pharmaceuticals, and Regal Partners shares are rising today

These shares are starting the week on a positive note.

Read more »

Two people lazing in deck chairs on a beautiful sandy beach throw their hands up in the air.
Travel Shares

Guess which ASX All Ords travel stock just rocketed 17% on an earnings upgrade

Investors are piling into the ASX All Ords travel stock today. Here's what's happening.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »