Splitit share price leaps another 14% as CEO ‘formulates a new vision’

Rising arrow on a blue graph symbolising a rising share price.Rising arrow on a blue graph symbolising a rising share price.

The Splitit Ltd (ASX: SPT) share price is launching upwards on Thursday following the release of its latest quarterly results.

The buy now, pay later (BNPL) company that allows consumers to split payments using their existing credit line also held its annual general meeting (AGM) today.

At the time of writing, the Splitit share price is 24 cents, 14.29% higher than its previous close.

Let’s take a closer look at what’s going on with the BNPL provider’s stock on Thursday.

Splitit share price surging as revenue jumps 6%

  • US$2.6 million in revenue – up 6% on that of the prior comparable period
  • Merchant sales volume of US$101 million – a 23% year-on-year increase
  • A 43% increase in 12-month active merchants, reaching 1,300
  • A 20% increase in 12-month active shoppers, coming to 327,000

Splitit recorded a strong performance for the 3 months ended 31 March, which followed an outstanding December quarter.

The final quarter of 2021 housed major shopping events like Black Friday, Cyber Monday, and the Christmas trading period.

Thus, when compared to the December quarter, Splitit’s revenue for the March quarter fell 24% and its merchant sales volume dropped 22%.

Meanwhile, the number of active shoppers using the service fell 1% quarter-on-quarter due to the last remaining debit shoppers being removed from the 12-month lookback period.

Year-on-year, its merchant sales volumes increased more than its revenue due to more contributions from shorter dated loans. Its net transaction margins also increased 1.6% year-on-year.

Splitit recorded a cash decrease of $4.2 million last quarter – a 73% improvement on the prior quarter’s. When one-off costs are removed, the company’s net overall cash decrease for the quarter was US$2.2 million – an 86% improvement.

As of the end of the quarter, Splitit had US$25 million of cash, US$78 million of funded merchant receivables, and US$67 million of debt. That left it with a net cash position of US$36 million.

The company’s shareholders also approved a US$150 million Goldman Sachs credit facility at today’s AGM.

What else happened last quarter?

Last quarter, Splitit’s customers used its service for larger purchases such as furniture, sporting equipment, and luxury items.

The company also underwent a cost rationalisation exercise that will see its costs falling from this quarter.

Finally, Splitit appointed its new CEO, Nandan Sheth, in January.

What did management say?

Sheth commented on the news helping to drive the Splitit share price higher today, saying:

[M]y initial weeks as CEO … has reinforced my conviction about why I joined Splitit, and I have also had the opportunity to formulate a new vision for the company in what is a rapidly evolving sector.

Splitit will drive the next generation of BNPL for merchants, issuers, and networks by focusing on becoming the infrastructure layer of BNPL … [it’s] uniquely positioned as it bridges the gap between BNPL and credit cards …

The ability to access customers’ available credit also means we operate an entirely different business model to providers of new debt that are under growing regulatory scrutiny, providing us with a path to scalable, profitable growth.

What’s next?

Splitit’s future is bright, according to the company’s new CEO.

“BNPL has rapidly grown to account for 2% of global eCommerce in 2020 and by 2030 is estimated to reach US$3.3 billion, indicating its permanent role in the everyday lives of customers around the world,” said Sheth.

“In an inflationary environment, affordability tools such as instalment solutions are becoming increasingly important, even for wealthier customers.”

In the near term, Splitit will look to grow its existing partnerships to target verticals with high merchant sales volume opportunities and good product-market fits.

It will also aim to offer white-label ‘instalments as a service’ solutions, focusing on the US market.

Finally, the company is planning to enable card issuers to participate and monetise BNPL at the point of sale and within the shopper’s purchase journey.

Splitit is also in talks with Google USA to expand its current partnership in Japan to the tech giant’s US-based customers.

Splitit share price snapshot

Today’s gains haven’t been enough to boost the Splitit share price into the green.

The BNPL company’s stock is currently 14% lower than it was at the start of 2022. It has also fallen 67% since this time last year.

The post Splitit share price leaps another 14% as CEO ‘formulates a new vision’ appeared first on The Motley Fool Australia.

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More reading

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares). The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). 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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