Afterpay losses jump to 700% year on year

Karthik Subramanian

Afterpay, the buy-now-pay-later payments platform, has posted a loss of $156.3 million for the last financial year, which is more than 700% when compared to the losses from the previous year.

square

A massive amount of funds seem to have been spent on new staff and marketing as it pushed ahead with its plans for fast expansion to different regions during the year as the BNPL segment attracted massive interest from both existing payment companies and also from investors as well. This has placed a lot of pressure on the companies in the BNPL segment to buck up and expand quickly and capture their share of the market or be left behind by the competition.

“This is a once in a generation opportunity,” said co-founder and co-CEO Anthony Eisen. “Buy now, pay later is still really in the early stages, if we look at the global opportunity. What we’re seeing in every aspect is a shift from what is known as the credit economy to the debit economy, and that is being stimulated by the next generation of Millennials and Gen Z. The opportunity is quite immense.”

Except for the losses, the other metrics showed up some strong improvement with revenue showing an increase of 78% to $822 million, userbase growing by 63%, and sales by 90%. All this shows that there does seem to be a big market for the BNPL product with the latest generation of users preferring to pay up for large purchases using instalments rather than paying a large amount upfront for the purchase. It is also estimated that it is this generation of users that would form the bulk of the retail shopping segment in the years to come and so the available opportunity is pretty clear.

It is with an eye on this that Square has acquired Afterpay in a move for its entry into the BNPL segment as it gets ready to take on the big competition in the form of Paypal, Klarna and Apple as well. The BNPL space has been in the news of late for a spate of partnerships, investments and acquisitions as the industry heats up. These companies rely on the users defaulting on their payments and hence having to end up paying fees for their late payments much like how the credit card companies operate and just as how cards took off decades ago, this space is also expected to follow the same trajectory.

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