Fintech up-and-comer Openpay Group Ltd [ASX:OPY] is feeling the pinch today.
The OPY Share Price is down 2.19% at time of writing. Feeling the pressure from traders, despite delivering a fairly upbeat Q1 result.
So is this a case of missed expectations, or just some profit taking from investors?
Let’s take a closer look at the details for some answers…
Strong growth fails to impress
With double-digit percentile increases across all their key metrics, Openpay should be very pleased with this result.
An 87% and 56% increase in active merchants and active customers respectively is a fantastic indicator. Suggesting that the company is achieving the kind of growth we’ve seen from other BNPL competitors.
However, with only 4,300 merchants and 579,000 customers, they are working off a lower base too. Something that does need to be considered when comparing them to the millions of users that rely on Afterpay or Zip.
The good news, though, is that take-up of their more traditional payment plans — with a BNPL twist — is gaining momentum. They currently have 2.2 million active plans, more than doubling (110%) the amount they had this time last year.
Better yet, 85% of new plans are coming from existing customers. Meaning that there is a lot of customer loyalty that Openpay can build upon. Particularly as their expansion into both the UK and US continues to grow and evolve.
As outgoing CEO Michael Eidel comments:
‘Through Q1FY22, we delivered continued strong operating and financial results despite challenging market circumstances for our key verticals in ANZ. We successfully entered the Healthcare market in the UK, whilst progressing the acquisition of the UK’s Automotive BNPL leader, Payment Assist.
‘A standout for the period was the work undertaken in the US to set the platform for our launch. Outside of the partnerships to drive growth and scale in B2C with PatientNow, Everyware and in B2B with Kyriba, we signed key funding and risk management agreements with Goldman Sachs, Atalaya, Cross River and Experian.
‘Our first US plans were signed and transacted in October, taking Openpay into its third major geographic opportunity. This was a major scene setter for the step change in business performance expected as we welcome customers in the world’s largest consumer payments market.’
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What’s next for the Openpay Share Price?
Despite this fairly strong result, it seems likely that investors were expecting more.
Again, BNPL has become associated with some incredible growth results in the past. Led by the early pioneers such as Afterpay and Zip.
So while it is much harder for Openpay to differentiate itself and carve out a market niche, traders are clearly expecting management to do more. Whether or not these sorts of expectations are fair, is in the eye of the beholder.
All we would say is that Openpay is doing well and continues to show growth. Given more time to flesh out their strategy and hone their product offering, they could become a serious contender.
Time will tell who will be right in the long run…
In the meantime, though, there are plenty of other exciting fintech small-caps to consider. We’ve even put together a list of three of our favourites, which you can read about — for free — in our latest report. Check it out for yourself, right here.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here
