Buy-now-pay-later (BNPL) fintech Openpay’s [ASX:OPY] saw its available cash and cash equivalents dwindle to $8.9 million in 1Q23, leaving the BNPL stock with less than two-quarters of cash runway left.
Despite the perilous cash position, OPY highlighted the continued growth in its total transaction volume.
Total transactional revenue (TTV) rose by 56% in the previous corresponding quarter to $114.3 million.
OPY shares are down by 70% year to date.
Source: Tradingview.com
Openpay’s 1Q23
Here are the key highlights from OPY’s 1Q23 release:
- TTV is up 56% on the previous corresponding quarter to $114.3 million
- Total revenue (including Opypro) up by 87% to $10 million
- Active BNPL plans up 46% to 1.9 million
- Active customers up 18% to 332,000
- Active merchants up 2.4% to 4,300
- Revenue margin up to 8.5%
- Net transaction loss up to -1.4%
Dion Appel, Openpay’s CEO, commented:
‘Our first quarter in the new financial year continues to deliver market leading margins driven by strong growth in TTV. At the same time, we’re proactively managing credit quality and loss rates which remain within target range.
‘We are actively monitoring consumer sentiment across the broader macroeconomic environment and remain prepared for the ongoing market pressures on households’ cashflow as the cost-of-living increases. With continued management of our operating costs, we have clear milestones to deliver ANZ cash EBITDA profitability by June 2023, including having extended existing working capital facilities to support the growth.’
Openpay’s low cash position
However, while OPY’s top-line growth was solid, its cash position is on shaky ground.
Openpay recorded cash outflows from operating activities of $19.7 million as customer receipts ($113.9 million) were more than offset by payments to merchants ($116.1 million).
Were it not for a capital raise during the quarter, the fintech would have ended the quarter in overdraft.
As it stands, Openpay has 1.7 quarters of funding available.
But OPY said it is confident it can improve its cash position:
‘The entity has high confidence in amending and increasing the cash available to be drawn under existing debt facilities in the very near term.
‘The entity continues to actively manage its funding requirements…and other measures as necessary. Operating losses are reducing following the exit of UK and US markets in calendar year 2022, and the entity is targeting cash EBITDA profitability in the Australia and New Zealand region on a monthly basis by June 2023.’
Top three exciting fintech stocks
While the fintech sector has been beaten down in 2022 (and OPY’s cash struggles show why), the recent bounce from the likes of Tyro Payments [ASX:TYR] shows there’s still interest in the sector.
Fintechs can still provide value opportunities — at the right price and with the right growth prospects.
There’s no doubt that in recent years many fintechs suffered from overconfidence in the ‘growth-at-all-costs’ business model that caught them off guard when the markets turned.
Clearly, profitability is back as a priority for the sector.
With the right choices, some fintechs can grow into very sturdy, lucrative businesses.
Our market expert, Ryan Clarkson-Ledward, has done the necessary research required for discerning these.
He’s discovered three profitable fintech stocks flying under the radar. One of them, he says, is a start-up ‘wrestling with the big banks — and winning’.
Download Ryan’s free research report on three exciting fintechs here.
Regards,
Kiryll Prakapenka,
For Money Morning
