The buy now, pay later (BNPL) revolution has certainly taken off in Australia and the ASX.
Investors blew the share prices of many BNPL companies out of the water last year as the payment providers gained popularity through COVID-dominated 2020.
It hasn't all been just a sweet ride to the top, however. Most ASX-listed BNPL shares were caught up in the US-driven tech sell-off earlier this year. Some are still actively recovering.
If you're looking to invest in ASX-listed BNPL companies, but you're not sure what makes each one different from the last, this guide is for you.
Here, we look at the recent financial performance and business models of ASX BNPL shares with market capitalisations of more than $250 million.
We note that the Commonwealth Bank of Australia (ASX: CBA) has a relatively new BNPL service, but as most of its business is in other endeavours, it isn't included in this list.
Afterpay Limited (ASX: APT)
First off, the industry-leader and arguably most well-known ASX BNPL share, Afterpay.
Business model
Afterpay uses the tried and tested 4-instalment payments plan. The first instalment is paid upon purchase, then once every 2 weeks thereafter over a total period of 6 weeks.
It has no lengthy application process and is accepted in hundreds of stores and online shops Australia-wide. The BNPL provider charges a $10 fee if a customer misses a payment and another $7 if the payment still hasn't been received after 7 days.
Afterpay is also set to add a money management service to its offerings in the first quarter of the 2022 financial year.
Recent financial performance
In its third-quarter results last week, Afterpay's underlying sales increased a whopping 123% compared to the previous comparable period. March was its second-highest monthly underlying sales ever, as it raked in $1 billion over the month.
These improvements are comparable to those in Afterpay's 2021 half year and 2020 financial year results, suggesting sustainability of growth. Although past growth never guarantees future growth.
Afterpay's quarterly report mentioned a possible US listing. While companies can list on more than one exchange, it's made some investors wary that Afterpay might be gearing up to leave the ASX.
Recent share price performance
The Afterpay share price was hit hard through the tech sell-off, dropping by 22% over the last week of February and the first week of March. However, it didn't reach its lowest closing price until 30 March.
This dip accounts for the Afterpay share price's lazy year-to-date growth – it has increased just 3% in 2021. Having said that, the Afterpay share price has ballooned by 342% over the last 12 months.
Afterpay has a market capitalisation of around $35 billion, with approximately 290 million shares outstanding.
Zip Co Ltd (ASX: Z1P)
Introducing the second-largest BNPL company on the ASX: Zip, which offers both Zip Money and Zip Pay.
Business model
Zip Money is similar to a credit card, while Zip Pay is a BNPL service.
Zip Money has low minimum monthly payments ($40 for balances under $1000) and charges a $6 fee if a user is left with unpaid credit at the end of each month. It also charges interest.
Zip Pay is accepted at many stores and online shops, and even offers users the option to pay their bills through the platform. Users can link Zip to their Apple Wallet or Google Pay to 'Tap and Zip' payments.
Zip Pay charges $5 per missed payment and performs credit checks on users.
Zip also purchased Quadpay in August 2020, accelerating its growth into the US market.
Recent financial performance
In Zip's third-quarter results for FY21, the company announced record revenue of $144.4 million – up 80% on the previous corresponding period (pcp).
It also recorded its largest number of transactions, with customers using the platform for 12.4 million purchases. This represents a 195% increase since the pcp.
Recent share price performance
The Zip share price was not hit as badly as others in the tech sell-off, coming out the other side with a year-to-date gain of 53%. It's also up 309% over the last 12 months.
Zip has a market capitalisation of $4.9 billion, with approximately 552 million shares outstanding.
Sezzle Inc (ASX: SZL)
Business model
Sezzle's BNPL service is similar to the Afterpay model, where a quarter of a purchase is paid upfront, and the other three quarters are paid at two-week intervals thereafter.
If a Sezzle user is more than 2 days late on a payment, their account is deactivated and unusable until they reactivate it and pay a $10 fee. Users have the ability to reschedule the payment once on any order they make.
Sezzle doesn't conduct credit checks on users, although it reserves the right to.
Recent financial performance
The latest results we have for Sezzle are from its 2020 annual results. Within them was an income increase that many companies can only dream of.
Sezzle reported a net income increase of 250% over 2020, reaching $74.3 million. In addition, its active consumers and merchants also rose by 143.9% and 166.6%, respectively.
Recent share price performance
The Sezzle share price had a massive February before 2021 fell on its head. It spent the first 10 days of March falling and the rest of the month coasting. It has recovered slightly in April.
Currently, the Sezzle share price is up 37% year to date and lifted 462% over the last 12 months.
Sezzle has a market capitalisation of around $881 million, with approximately 199 million shares outstanding.
Humm Group Limited (ASX: HUM)
Business model
Humm is a one-of-a-kind ASX BNPL share. In fact, its got 2 BNPL services.
First is its Little Things service, which can be used for purchases under $2,000. There is no interest in Humm's offerings, although a late payment for a Little Things purchase will result in a $6 fee. Users can choose between paying their purchase back in 5 or 10 fortnightly installations.
Humm's Big Things service can be used for purchases worth between $2,000 and $30,000. Humm still doesn't charge interest on Big Things purchases, but it does charge an $8 monthly fee. Users have between 6 and 60 months to pay off Big Things. New users will also have to pay between $35 and $90 to initiate a Big Things BNPL service while existing users will be charged $22. Once again, a late payment fee of $6 applies.
Recent financial performance
Humm released its half-year financial report in February, and within it was a solid performance.
It generated a net profit after tax (NPAT) of $43.4 million, up 25.8% from the previous corresponding period. Its statutory NPAT also increased, up 15.9% to $38.6 million.
While Humm's profit this financial half looks impressive, some of it can be attributed to its 12.7 reduction in operating expenses due to lower employee expenses from JobKeeper and reduced employee numbers.
Recent share price performance
The Humm share price started strong in 2021, but come March, it all came undone.
Currently, its share price is down 16% year to date. It's still up 36% over the last 12 months, though.
Humm has a market capitalisation of around $480 million, with approximately 495 million shares outstanding.
Splitit Payment Ltd (ASX: SPT)
Business model
Splitit is a unique ASX BNPL share in that it pre-authorises a user's credit card for the entirety of the purchase then simply splits a payment into instalments.
For instance, if you were to use Splitit to purchase a $200 toaster in 4 payments, Spiltit would hold the $200 over your credit limit but only charge you $50 per instalment.
To make its bucks, Splitit charges merchants a fee for their customers' use of the service.
Recent financial performance
Splitit released its results for the quarter ended 31 March last week.
The company recorded merchant sales volume (MSV) of US$82 million. This is an increase of 247% compared to the prior comparable quarter, but 5% less than the previous quarter.
It was a similar story for its revenue. Splitit recorded gross revenue of US$2.7 million through the first quarter, 292% more than the prior corresponding period. But, it was down from the fourth quarter's gross revenue of US$2.9 million.
The company states this drop is due to its risk reduction tactic of disallowing customers to use the service with their debit card.
Recent share price performance
The Splitit share price really suffered from the tech sell-off, and it has barely started to recover.
Year to date, the Splitit share price is down by 41%. But, it's up 45% since this time last year.
Splitit has a market capitalisation of around $361 million, with approximately 457 million shares outstanding.
