The Openpay Group Ltd (ASX: OPY) share price has been on the move this week with the buy now, pay later (BNPL) provider reporting record growth across leading indicators. Openpay recorded strong growth in customer and merchant numbers, as well as a significant increase in total transaction value in 4Q FY20.
What does Openpay do?
Openpay operates in the BNPL sector and listed on the ASX last year at an offer price of $1.60 per share. Openpay targets a slightly different market to Afterpay Ltd (ASX: APT), focusing on longer and higher value plans. Openpay's BNPL plans range from 2 to 24 months duration, and allow for values between $50 and $20,000. Its customer base tends to be a little older (often with higher transaction values) than the average BNPL customer.
What did Openpay announce?
Openpay announced record growth across its leading indicators in 4Q FY20, along with rapid business growth in the United Kingdom. Active customer numbers grew 141% relative to the prior corresponding period (a new record), reaching 319,000. Active plans grew 229% to 824,000, with notable improvements seen in the healthcare, retail, and automotive verticals.
Total transaction value grew to a record $192.8 million for the full year, up 98.2% compared to FY19 and 119% for the quarter. The move to digital commerce was evident in Openpay's results, with online channels accounting for 39% of plan originations in Q4 FY20 compared to 14% in Q4 FY19. Nonetheless, Openpay has observed that previously deferred purchases and consumption of essential services in healthcare (e.g. dental treatments) and automotive (e.g. car servicing) which typically happen in-store started picking up again in late June.
Openpay CEO Michael Eidel said, "This period of historic growth for Openpay was set against a backdrop of COVID-19 related global market volatility". He went on to say "As more customers sought better ways to structure purchases across their life needs, we saw a strong surge in new customers and plans".
Openpay also saw strong growth in its UK business, with active customers increasing 95% and active plans 103% between the end of March and the end of June 2020. A major agreement with 2.1 billion pound retailer, JD Sports, was launched, with initial trading well above expectations. The UK business, which was launched in June 2019, operates in the online channel only.
What's next for the Openpay share price?
The Openpay share price saw strong gains early this week ahead of the announcement, climbing 50% across Monday and Tuesday. The share price hit a high of $4.84 immediately after the announcement on Wednesday, but has since slid lower, and is currently trading at $3.48. Nonetheless, the Openpay share price remains 19% above its close last week.
The BNPL provider is launching in new industry verticals including Education and Memberships. Integrations with leading retail and eCommerce platforms including Big Commerce and Hybris are expected to extend Openpay's reach into thousands of additional merchants in Australia and the UK.
