Openpay share price surges 29% higher after BNPL provider reports record month

The Openpay Group Ltd (ASX: OPY) share price jumped as much as 29.07% in morning trade today after the company announced a new funding facility and record results for the month of May.

Openpay is a small-cap buy now, pay later (BNPL) provider that made its debut on the ASX in December 2019. If offers payment plans up to $20,000 over 2 to 24 month periods.

Where rival Afterpay Ltd (ASX: APT) focuses on the retail sector, Openpay targets 3 verticals that historically lacked BNPL solutions – automotive, healthcare and home improvement. Leading merchants offering Openpay include Bupa, Bunnings Warehouse, Spotlight, Smiggle and Repco.

New funding facility

This morning, Openpay announced it has secured a £25 million debt funding facility with Global Growth Capital. From this, Openpay will immediately have £10 million available to support its fast-growing UK business. The UK business is currently operating online in the retail vertical and recently achieved a major milestone after launching with JD Sports in mid-May.

This new UK funding facility is on top of the company’s existing $75 million debt facilities, of which $45 million remains undrawn.

Commenting on the new funding facility, CEO Michael Eidel said:

“Openpay UK is emerging as a significant contributor to our Total Transaction Value. This funding facility with Global Growth Capital adds strength to our strong balance sheet and provides us with ample funding to support the delivery of our current growth objectives in the UK.”

Record month of May

Openpay also provided a trading update this morning following its Q3 FY20 results released in April. The company declared May 2020 as its strongest month in history, with key highlights including:

• Active plans totalling 739,000, up 220% from 231,000 in May 2019;
• 293,000 active customers, up 131% from from 127,000 in May 2019;
• 2,096 active merchants, up 50% from 1,396 in May 2019; and
• Total transaction value (TTV) of $170 million year to date, up 95% from $87 million in May FY19 year to date.

Growth in active plans, active customers and TTV were all record results. This performance was primarily driven by ‘OpenMay’, a month of special promotions with merchant partners across all industry verticals.

Importantly, the company noted its underlying loan book credit quality remains strong, while the number of weekly COVID-19 hardship requests continues to decline. Additionally, the incidence of fraud is also continuing its downward trend as a result of recent technology upgrades to Openpay’s platform.

At the time of writing, the Openpay share price is sitting 15.5% higher for the day at $1.49, taking its current year-to-date gains to 19.2%.

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Motley Fool contributor Cathryn Goh owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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