Finding some traction this week in the ever-devolving BNPL universe is local upstart, Payright (ASX:PYR), which this week delivered a record whack of Gross Merchandise Value (GMV) of well over $34m, up some 67% on previous corresponding period (pcp) and 25% on the previous quarter.

PYR climbed about 8% on Thursday morning even as the calamity of Block Ltd and Afterpay unwound in the states. 

Rag-dolled

But, while bouncing off its recent lows, Payright hasn’t escaped the broader BNPL selloff which has seen the stock rag-dolled along with the rest of the sector –  in this case shedding more than half its weight in six months.

 

Good to have friends

The company says its home improvement and retail verticals have been pretty resilient  throughout the hoo-ha of COVID-lockdowns and the various new emergent variants.

They’ve also got a bit more stability when it comes to growth through a string of established deals with Stratco, Service Seeking, Masport and Hipages.

Speaking to Stockhead joint-chief executive Myles Redward, deserved to give the quarter a solid plug and here it is: 

“Okay. We’ve delivered on all key metrics throughout the quarter, with consecutive quarterly and year-on-year growth in GMV, fee income, customer and merchant numbers, whilst responsibly maintaining our balance sheet to support the company’s ambition to become profitable in the near to medium term to fuel future growth.”

Payments: Choosing the wrong rout? 

The once impervious BNPL sector – dominated by Afterpay, now owned by Jack Dorsey’s Block  – has been caught central to the recent market rout in technology and payment stocks.

That rout turned personal on Thursday when Paypal — a 2020 BNPL market entrant — lost a quarter of its market cap giving up a full 25% after conceding it’s going to be 66% down on new users compared to last year.

That truth-bomb sent the entire fintech/retail sector into the Phantom Zone. 

Shopify lost 10% and Block Inc (Afterpay’s parent) 10%. Z1P Co, 9.8%… and so on.

Sell now, or pay later? 

Yes, life had been pretty rosy for our globetrotting BNPL firms, but they’ve largely wilted under growing calls for regulation, consolidation and a once glittering US market now caught up in consumer credit reports and oversight.

Add to this, the global payments sector is still facing up to looming regulatory clampdowns in lead markets from Ireland, to Sweden, Singapore, the UK, the US and Europe.
Sticking hard to its high-value product strategy, Payright scored some other strong quarterly numbers, incl:

  • Unaudited Gross Receivables of $89.9M, up 64% on pcp
  • Unaudited Fee Income of $3.9 million, up 47% on pcp
  • Total customers of 65,711, up 55% on pcp
  • Total Merchant stores increased to 3,617, up 26% on pcp

Consolidate this

Welcome timing, as the opportunity-pond shrinks, and the big fish begin to size up the wee ones — something Redward is watching closely.

“Scale is becoming a bigger issue and at some point investors will demand profitability, which means further consolidation between players is likely,” he said.

Since the Afterpay-Block tie up, with fears of new regulation, smaller players being crowded out and major banks offering their own services, the race to survive and thrive is on.

Here at home, the Afterpay deal and Latitude’s bid for Humm’s consumer and BNPL operations are probably just the start.

Then there’s the recent merger talks between Z1P and Sezzle, which listed on the ASX back in 2019.

Keeping it niche

With so much turbulent activity in the payments space, Redward told Stockhead the company is chuffed to just keep carving out its niche in the market, “for high-value, considered purchases, an area which we see significant room to grow.”

And with a warehouse facility in the post, Redward says PYR’s lending capacity will expand significantly – accessing more funds at a low cost.

“We’re making significant progress with onboarding new customers and expanding our merchant footprint, as well as making our technology one of the best in the industry which will further compound our growth ambitions,” he said.

Your BNPL options

The consideration here of course is when and how to get back in the market.

This is a considered, pre-Christmas appraisal from Stockhead partner Marketech.

And here’s a post-Christmas outlook piece on the sector with early Afterpay investor Dean Fergie.

In fact, most Stockhead authors are all over the sector. If you’ve got any damning comments or curious questions – mail us at [email protected] – we’ll file something on the best of them… if so moved.

Disclaimer: It’s hard to move our cold hearts.

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