The Afterpay Touch Group Ltd (ASX: APT) share price climbed over 9% today, as investors reacted very positively to the FY19 report.
There were a number of impressive parts to the released figures.
Active customers grew by 130% during FY19 to 4.6 million, at the end of last week it had 5.2 million active customers. Over 12,500 customers are being added each day at the moment. The number of active merchants doubled to 32,300 over FY19, with the current figure being 35,300 merchants.
The combined growth of customers and retailers saw FY19 global underlying sales increase by 140% to $5.2 billion with the annual run-rate in excess of $7.2 billion – already 38% higher in the early stages of FY20. US underlying sales were almost $1 billion, with a run-rate of $1.7 billion. Perhaps most impressively, Australian and New Zealand underlying sales rose by 99% to $4.3 billion.
It's the local performance that is helping the overall picture look strong. Gross losses reduced to 1.1% from 1.5% last year thanks to higher frequency and lower losses of repeat customers. This is despite the higher losses experienced by the US in the start-up phase. It was also pleasing to see late fee income fall to 18.7% of Afterpay's revenue, in FY18 it was 24.4%.
Afterpay's pro forma income grew by 115% to $251.6 million and it generated a pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) before significant items of $33.3 million.
Although Afterpay reported a statutory loss, it said that if it weren't for one-off and non-cash items (like share-based payments and new accounting standards), it would have made a profit. But I do think investors should take into account share-based payments because they are a form of cost to other shareholders.
Foolish takeaway
Afterpay continues to target a very large gross merchandise volume (GMV) of over $20 billion by FY22 and it has entered into agreements with VISA to form a partnership for growth in the US.
The company has proven it's the one to catch in the BNPL space in Australia and in the US, but there's plenty of things that could go wrong – like the AUSTRAC audit issue which is ongoing.
With the share price above $28, I'm not sure if Afterpay is good value or not. It's kicking goals, but it's valued for a lot of success too.
