Afterpay Gathering Troops for US Escalation

Afterpay is building up its forces to step up its attack on the US retail credit market.

The company revealed on Thursday that it will spend $373 million on increasing its ownership of the company’s rapidly growing US business.

The surprise news came as it also reported a doubling in underlying sales for the six months to December.

The buy now, pay later business said in the results statement to the ASX that active customers numbers jumped 80% to 13.1 million in the six months to December, with the US customer numbers growing at 127% to 8 million, which helps explain the stepped up US move.

Global underlying sales on the company’s platform were up by 106% to $9.8 billion.

The results were released after Afterpay shares went into a trading halt to allow it to announce a deal to raise $1.25 billion in convertible notes, and increase its ownership of Afterpay US. The company has reserved the right to boost the raising by $250 million.

It said the deal would see Matrix Partners X and other part owners of its US business sell down their equity interests in Afterpay US, so that Afterpay’s underlying interest in the business rose from 80% to 93%.

Afterpay requested the trading halt until Monday next week, said the halt “is requested for the purposes of execution of a capital raising, to be undertaken through an issue of convertible notes.“

Meanwhile smaller Afterpay rival, Zip Co has reported a $453.8 million loss for the half but says but revenue more than doubled as it expanded in Australia and the US

The buy now, pay later business reported 130% growth in revenue to $160 million in the December half, while its loss soared on last year’s.

The company said the revenue growth was driven by 42% expansion in its Australian business, and $57.6 million in revenue from the QuadPay business in the United States, which it bought in August.

It reported a statutory loss of $453.8 million, which it said included a number of non-recurring items.

No dividends.


Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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