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Afterpay’s Financial Performance: Growth Losses and Potential for Profitability

Afterpay Financial Results: A Closer LookAfterpay, the Australian fintech company that provides a buy now, pay later service, has been in the spotlight recently following the release of their financial results for the 2021 financial year. Despite reporting a significant increase in income, they announced a net loss of $345.5 million, with operating expenses and bad debts contributing to the negative result.

In this article, we will take a closer look at these results, as well as trace the history and growth of Afterpay, including its joint venture with Touchcorp, acquisition of Princess Polly, and partnerships with Matrix and Westpac.

Timeline of Afterpay Financial Growth and Funding

Afterpay was founded in 2014 by Nick Molnar and Anthony Eisen, two university friends who wanted to provide a flexible alternative to credit cards. Their buy now, pay later service allows customers to make purchases and pay them off in four installments, with no interest or fees if payments are made on time.

In 2016, Afterpay formed a joint venture with Touchcorp, a payment processing services provider, to expand their services globally. Afterpay acquired Princess Polly, an online fashion retailer, in 2018 for $54 million, giving them a foothold in the fashion industry.

In terms of funding, Afterpay raised $8 million in its early days, followed by Matrix purchasing Afterpay shares in a deal worth $25 million. However, their success was not without controversy.

In 2018, Ownership Matters, an Australian governance advisory firm, released a report that found that Afterpay’s terms and conditions allowed minors to purchase alcohol. The report led to calls for tighter regulation and greater responsibility from Afterpay.

That same year, Kim Kardashian endorsed the Afterpay service, leading to a surge in popularity in the United States. In 2019, Afterpay avoided a regulatory requirement to conduct a credit evaluation of its customers after a Senate committee decided that there was no need for further regulation at this stage.

However, their high-profile status attracted the attention of the Australian Transaction Reports and Analysis Center (AUSTRAC), which issued an external notice to ensure Afterpay was abiding by anti-money laundering and counter-terrorism financing regulations. Later in 2019, Harvard economist Larry Summers joined Afterpay’s advisory board, giving the company further credibility in the financial sector.

Meanwhile, Afterpay’s monthly sales continued to grow, exceeding $1 billion in August of that year. In 2020, Chinese tech company Tencent acquired a 5% equity share in Afterpay, signaling their confidence in the company’s future prospects.

However, not all news was positive for Afterpay. In late 2020, PayPal announced its own installment offerings, which led to a drop in Afterpay’s share price.

Despite this setback, Afterpay forged a partnership with Westpac, one of Australia’s largest banks, to provide their customers with access to the Afterpay service. This partnership, along with other factors, including the growth of e-commerce and changes in consumer behavior, led to Afterpay’s shares reaching a peak in value in February 2021.

Afterpay also introduced their Afterpay Money app in 2021, which provides budgeting and savings tools to their customers. This move was seen as a way for Afterpay to compete with other digital banking services, such as Revolut and Monzo.

Afterpay Financial Results

Despite the various highs and lows of Afterpay’s history, it was their 2021 financial year results that made headlines. While their income increased by 78% to $924.7 million, they announced a net loss of $345.5 million.

Operating expenses and bad debts were the main contributors to the negative result, with Afterpay recording a $131.2 million increase in operating expenses and a $93.9 million increase in net transaction losses. Despite the net loss, Afterpay’s customer base continued to grow, with 16.3 million active customers at the end of the financial year, up from 5.6 million the year before.

Afterpay’s CEO, Anthony Eisen, noted that the company was in a strong position and pointed to their ability to provide flexible payment solutions to customers as a key factor in their growth.


Afterpay’s journey from startup to major player in the fintech industry has been eventful, marked by significant milestones and challenges. While their recent financial results may be cause for concern, Afterpay’s strong customer base and ability to adapt to changing market conditions suggest that they will continue to thrive in the years to come.

With the recent announcement of their acquisition by Square, the future for Afterpay looks bright. Afterpay Financial Performance: Revenues, Expenses, and Profits

Afterpay, the Australian fintech company that pioneered the buy now, pay later industry, has recently announced its financial results for the 2021 financial year.

While the company reported an overall increase in income, it has also reported a substantial pre-tax loss of $501.9 million. In this article, we will take a closer look at Afterpay’s financial performance, including their income, expenses, and profits.

Afterpay’s Overall Income in 2021

For the 2021 financial year, Afterpay reported an overall income of $924.7 million, which represents a growth of 78% compared to the previous year. However, the total income for the year was below some analysts’ expectations.

Despite this, Afterpay has managed to grow its active customer base to 16.3 million, which represents a growth of 160% year-over-year. Additionally, the company has expanded its footprint globally, with operations in Australia, New Zealand, the United States, the United Kingdom, and Canada.

Afterpay’s Expenses and Employment Costs

While Afterpay’s income growth is certainly positive, it is essential to examine the company’s expenses, including operating and employment costs. The company has reported a significant increase in operating expenses, which rose by 131.2 million, or 63%, compared to the previous year.

Afterpay has attributed the increase in operating expenses to the company’s expansion into new markets, the acquisition of Pagantis, and the merger with Touchcorp. Employment expenses also increased by 97.2 million, or 85%, compared to the previous year, primarily due to an increase in headcount and share-based payments.

Afterpay’s Pre-Tax Loss

Afterpay’s pre-tax loss of $501.9 million for the 2021 financial year is a substantial loss. The main contributors to this loss are the increase in operating expenses and a significant rise in net transaction losses, which have jumped to $171.3 million, an increase of 140% compared to the previous year.

Net transaction losses are those losses incurred when customers fail to make payments on time. Despite this significant loss, Afterpay CEO Anthony Eisen remains optimistic about the company’s future prospects.

He has noted that a significant portion of the loss is due to a one-off impairment related to the company’s UK business. He also has highlighted that Afterpay is almost breaking even and has doubled its merchant count, which indicates the company could be on the path to profitability.

Potential for Profitability

To achieve profitability, Afterpay must adopt various strategic measures. Afterpay has an opportunity to be profitable by focusing on market divisions with higher loan sizes, developing customer micro-segments and pricing strategies, utilizing alternative data to enhance underwriting, offering different types of installment lending products, and incorporating other banking products to cross-sell.

Market Divisions with Higher Loan Sizes

Afterpay has primarily served customers with small purchases, and as such, its average loan size has been modest. However, the company can venture into market divisions with higher loan sizes and cater to bigger purchases.

Going into bigger purchases can translate to more significant profits margins for Afterpay.

Develop Customer Micro-Segments and Pricing Strategies

Afterpay should focus on micro-segmenting and developing pricing strategies that align with customers’ individual purchasing behaviors. A well-defined pricing model can help Afterpay acquire more significant value for every transaction processed.

Such a strategy would mean developing the right pricing structure according to the customer and providing incentives that both encourage customer loyalty and profitability.

Enhance Underwriting by Utilizing Alternative Data

Alternative data sources like banking transactions, social media, and public records can be used in underwriting credit decisions. By using this information, Afterpay can reduce its reliance on credit bureau data that is limited.

It can give Afterpay a more nuanced view of an applicant’s financial behavior, which can enable the company to make informed credit decisions.

Different Types of Installment Lending Products

One way Afterpay can be profitable is by exploring different types of installment lending products. The company can offer loans for a more extended period, and with higher annual percentage rates, it can generate more revenue.

Additionally, Afterpay can consider different lending structures, such as residual-based lending, broken down payments, seasonal payments, or lease-like structures.

Incorporate Other Banking Products to Cross-Sell

Afterpay has the opportunity to cross-sell other banking products to its loyal customers. This would mean diversifying the revenue streams for Afterpay, and it can significantly contribute to its bottom line.

For example, the company can offer its customers a digital wallet that integrates with other financial products, including credit cards and online payment systems.


Afterpay’s financial results for the 2021 fiscal year have been a mixed bag. While the company has seen an overall increase in income, it has also experienced a substantial pre-tax loss.

To achieve profitability, the company needs to adopt strategic measures such as focusing on bigger purchases, developing customer micro-segments and pricing strategies, utilizing alternative data to enhance underwriting, exploring different types of installment lending products and incorporating other banking products to cross-sell. By implementing these strategies, Afterpay could experience more significant financial growth and meet its ultimate goal of being a profitable company.

Afterpay’s recent acquisition by Square could also mean new opportunities and possibilities. In summary, Afterpay’s financial performance for the 2021 fiscal year has been marked by a significant pre-tax loss despite overall income growth.

The company has seen an increase in expenses, particularly operating and employment costs, which have contributed to the negative results. To achieve profitability, Afterpay needs to adopt strategic measures such as focusing on higher loan sizes, developing customer micro-segments and pricing strategies, utilizing alternative data for underwriting, offering different installment lending products, and incorporating other banking products for cross-selling.

These steps are crucial for Afterpay to overcome challenges and pave the way for future success in the fiercely competitive buy now, pay later industry. By implementing these strategies, Afterpay can position itself as a leader in the field, offering innovative financial solutions to its customers while driving sustainable business growth.

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