2019-10-22 09:38:281970-01-01 00:00:00

Afterpay Business Update

Afterpay Touch (ASX: APT) has recently released its business update providing a one year summary of its operations. Despite sales growing by more than 143% over the past year, share prices were rather subdued due to ongoing talks with regulators on money laundering issues. Prices dropped by more than 3% to $23.2 from $25.17/share at time of writing.

Afterpay Touch

Afterpay Touch (ATG) is a fintech operating in the United States, New Zealand and mainland Australia. Its core operation is centred on the concept of “buy now and pay later”. Its “pay later” business segment makes it possible for retailers to provide credit facilities without the traditional interest and upfront fees. The “pay now” segment specialises in fraud protection, regulatory compliance, digital payment and data analysis. Notable businesses in Australia that employ ATG products include 7-Eleven, Valora and Optus.

Fintech has been making a splash in the world of finance. The blurring line between finance and technology sees new applications, products and services that were previously not possible. In Australia, a set of stocks known as the WAAAX have been making headlines due to their explosive performance. Afterpay Touch, a part of this group, listed at $1/share and reached more than $27/share at its peak. The release of its latest business summary however sees its shares drop back down to $23.2/share.

Business Update: What you need to know

The biggest highlight from its global business comes from bumping underlying sales figures to an impressive $4.7 billion in the past 11 months, up 143% compared to the previous period. Over 4.3 million active customers were transacting with Afterpay, or 7900 new customers per day. 7400 new merchants signed up, representing an increase of 32%. This could not be possible without the company going global. Key metrics such as Gross Loss, Net Transaction Loss and Net Transaction Margin were all maintained in line with previous performance, and was achieved due to the contribution to underlying sales from international markets. Afterpay remains focused on its merchant and customer base, as well as innovation, global support and infrastructure.

Growth remains strong in the US. Afterpay managed to acquire over 1.5m active customers and 3300 merchants before end of May. Sales were approximately $780 million. Afterpay is also looking at expanding operations into the UK. The UK e-commerce market is now the third largest behind the US and China, and presents a good credit environment for Afterpay to take advantage of. Having completed a “soft launch” to positive feedback, Afterpay is now live and operating under the name Clearpay. The UK team will be headed by Fintech veteran Carl Scheible, and the launch will be rolled out in a phased approach. Within Australia and New Zealand, Afterpay is expanding its physical presence through brick and mortar stores. Afterpay is reportedly making healthcare more affordable, as more patients opt out of private healthcare.

Its successful expansion overseas however belies some regulatory issues that Afterpay is facing at the home. The Australian Transaction Reports and Analysis Centre (AUSTRAC) identified issues with regards to AML/CTF compliance, which covers anti-money laundering and counter-terrorism financing. This could be related to changes Afterpay made to anti-money laundering framework last July, which included amendments to external identity verification processes. The outcome is still pending. Regulatory risk has also been amplified as ASIC has been charged with regulating the “Buy Now Pay Later” industry and granted intervention powers. Regulatory pressures were the main contributor to the fall in share prices.

No real impact to Afterpay Touch

Despite the setback, the compliance issue represents a temporary market shock with no long term implications. The report states that, “Afterpay has not identified any money laundering or terrorism financing activity via our systems to date,” and the whole situation likely boils down to housekeeping issues. Afterpay has in the meantime employed a professional firm to review its AML/CTF framework.

By Oliver Ju

Click here for a 7 days access to our Lotus Blue Portal.

KOSEC does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information provided. KOSEC is intended to provide general information only. Please be aware that investing involves the risk of capital loss. This message is confidential and may be privileged. It is intended only for the use of the addressee named above. If you are not the intended recipient, any unauthorised dissemination, distribution or copying is illegal. We do not guarantee the security or completeness of information hereby transmitted and are not liable in either respect or in respect of any delay. Nothing in this message is intended as an offer or solicitation for the purchase or sale of any financial instrument. Any market prices or data, unless specifically verified and identified as such, are not warranted as to completeness or accuracy. Kodari Securities Pty Ltd (KOSEC) is a Corporate Authorised Representative (No. 399 556) of Longhou Capital Markets (AFSL No. 292464) which is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC wishes to disclose that KOSEC and its staff may hold stock they recommend in their own portfolios and that any decision to purchase recommended stock should be done so after the purchaser has made their own inquires as to the suitability to their own requirements. Click here to view our FSG.

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial