Splitit Payments Limited

SPT Details

SPT Enters into New Partnerships and Merchant Agreements: Splitit Payments Ltd (ASX: SPT) provides payment solutions which enable the customers to split the expense into interest-free monthly instalments. Recently, the company reported 83% growth in its underlying sales over Black Friday and Cyber Monday long weekend, across the US market. SPT also announced its partnerships with Magento, iPay88 and BlueSnap. The business also reported new merchant agreements with the high-value product and service providers including Dick Smith, Reds Baby, ReST, Plus Shop, Slabway, Later Gator and Mobvoi. The company reported US$3 million of underlying merchant sales during the four-day trading period incorporating Black Friday and Cyber Monday. The Average Order Value (AOV) during this period came higher at US$820, as compared to an AOV of US$644 in the prior corresponding period.

Q3FY19 Operational Highlights for the Period ending 30 September 2019: SPT declared its third-quarter operations highlights, wherein, the company reported total merchants at 624 as compared to 509 in Q2FY19. Total customers were recorded at 235,000, up from 197,000 in the second quarter of FY19. Total merchant fees came in at US$ 466,000 as compared to US$ 245,070 in the previous corresponding quarter. Transactional volume during the third quarter came in at 30,500,000 as compared to 15,220,500 in the previous corresponding quarter.


Q3FY19 Operational Highlights (Source: Company Reports)

H1FY19 Financial Highlights for the Period ended 30 June 2019: SPT announced its first half FY19 results, wherein the company reported revenue of US$0.79 million, depicting an increase of 293% on y-o-y basis aided by growth in merchant fees. Gross profit came in at US$0.72 million as compared to US$0.127 million in the previous corresponding period. The company reported cash in bank at US$23.7 million, aided by initial public offering that provided funds amounting to $12 million, and by the additional capital raising of $30.3 million. During the half, the business developed inbound and outbound campaigns on Google, LinkedIn and other social channels. The company reported general and administrative expenses at US$1.933 million as compared to US$0.699 million in the previous corresponding period on account of requirement of professional services post-listing, expansion of management team and higher travelling expenses due to global team.

Guidance: The company expects the AOV to remain slightly higher than average during the holiday period, while the company expects the sales to normalise during January 2020. The new partnership with Magento is expected to enable the company’s instalment payment solution to be actively promoted in the Magento community. The three-year partnership agreement with iPay88 is expected to offer the company’s instalment solution across 15,000 online merchants in Malaysia. Under the strategic collaboration with BlueSnap, the business is looking to increase sales and reduce costs for their merchants through the integration of instalment payment solution into BlueSnap’s All-in-One Payment Platform.

Stock Recommendation: The stock of SPT is quoting at $0.660 with a market capitalization of $210.28 million. The stock is trading at the lower band of its 52-week trading range of $0.305 to $2.00. The stock has generated returns of 13.45% and 14.41% in the last three months and six months, respectively. The increase in average order value reflects higher customer usage of high value products which is expected to aid business growth in the coming quarters. The business reported excellent progress in executing the growth plans through addition of new partners and merchants within its key markets. Considering the aforesaid facts, recent price movements, current trading levels, recent collaborations and higher AOV, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.660, down 2.222% as on 31 December 2019.

 
SPT Daily Technical Chart (Source: Thomson Reuters)

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