Why is the IOUpay (ASX:IOU) share price tumbling 7% on Tuesday?

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The IOUpay Ltd (ASX: IOU) is losing ground on Tuesday and has slipped into the red from the open. At the time of writing, shares in the BNPL player are down more than 7% at 19.5 cents apiece.

IOU shares are on the move as the market responds to its operations update which the company released earlier.

Here are the key takeouts from IOU’s business update with information current up until 14 November 2021.

IOU share price struggles despite 13% merchant growth

Key investment highlights from the operational update include:

  • $3.2 million in Total Transaction Value (TTV)
  • $306,616 in Net Transaction Revenues (NTR)
  • Strong growth in consumer and merchant sign ups, approval, and onboarding
  • 2,613 merchants now onboarded (up 13% since 30 September)
  • 1,182 merchants systems activated and listed on myIOU (up 25% since 30 September)
  • 28,370 consumer downloads of myIOU (up 67% since 30 September)
  • 8,201 consumer activated accounts (up 71% since 30 September)

What did IOU announce in its update?

The company posted its earnings results up until November. It has delivered $3.2 million in TTV, resulting in NTR of $306,616 for the period.

It also grew its merchant base by 13% since 30 September and now has 2,613 merchants onboarded. At the same time, IOU saw 28,370 consumer downloads of the myIOU platform, up 67% over the same period.

This activity means IOU now has 8,201 consumer activated accounts, representing a substantial growth of 71% since 30 September.

The IOU Merchant Services team also trained staff from Razor Merchant Services (RMS) during the period. Following the completion of systems integration testing by RMS, a pilot group of merchants is set to go live by early December.

The company’s Malaysian operations added more than 100 merchants operating more than 300 outlets to the myIOU platform during this quarter so far.

New merchants have been added to almost every industry vertical category including electrical and electronics, automotive, IT and gadgets, home and garden, beauty, and health and personal care.

On its IDSB settlement process and acquisition progress, IOU advised it is waiting for third party consent from one of IDSB’s banking partners for the change of shareholding in the acquisition.

It notes that “the Company expects this to be a formality and this has only been delayed due to the banking partner’s ability to convene its normally scheduled formal Board meetings due to local COVID restrictions”.

In respect to its COVID-19 response in Malaysia, the company advised that it has deployed a dedicated regional commercial officer to develop regional areas outside of the Klang Valley central economic hub encompassed by Kuala Lumpur and Selangor.

Speaking on its ongoing marketing strategy and digital campaign, IOU stated:

As shopping choice expands with many new merchants added across industry verticals and physical store locations, consumer engagement with myIOU has shown a significant growth trend over recent weeks. This growth also correlates with the Government’s easing of COVID-19 restrictions, the Company’s ongoing Digital Marketing Strategy and various promotional campaigns.

IOU share price snapshot

In the last 12 months, the IOU share price is down 2.5% despite gaining around 18% this year to date.

Despite this, it has slipped 22% into the red over the past month, falling more than 11% in the last week.

The post Why is the IOUpay (ASX:IOU) share price tumbling 7% on Tuesday? appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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