FILE PHOTO: A smartphone is held in front of a displayed Afterpay logo in this illustration taken, August 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
August 25, 2021
(Reuters) – Afterpay said on Wednesday its annual marketing costs more than doubled as it expanded into new markets to tap a pandemic-driven boom in demand for buy now, pay later services, widening the Australian company’s loss.
Set to be scooped up in a $29 billion buyout by Jack Dorsey’s Square, Afterpay had spent heavily over the past year to boost its presence in the largely untapped U.S. market – the sector’s biggest prize.
The move helped the company’s underlying sales – the value of transactions facilitated – nearly double to A$21.1 billion in the year to June, with the United States overtaking Afterpay’s home country of Australia to become its biggest market.
But its statutory loss ballooned to A$159.4 million ($115.66 million) from A$22.9 million a year earlier. The results were also hit by a put option held by another company on its UK business that jumped to A$99.9 million from around A$3 million, as strong growth fuelled a rise in the unit’s valuation.
Afterpay, which had largely pre-reported its annual results, will be integrated with Square’s Seller and Cash App – the U.S. company’s respective merchant- and consumer-focused offerings after the deal closes, expected in the first quarter of 2022.
Square’s buyout of Afterpay is the clearest sign yet that the BNPL sector is here to stay, with the deal likely to fuel further consolidation in an industry attracting interest from more well-known names.
The company’s gross loss was unchanged at 0.9% of total transactions, while net transaction margins were 2.1%, slightly lower than 2.3% a year earlier.
($1 = 1.3782 Australian dollars)
(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Aditya Soni)
Source: One America News Network
