ASX 200 (XJO) flat, Afterpay (APT) reveals more growth & capital raising

The ASX 200 (ASX: XJO) is now flat after initially being up this morning.

Victorians will soon not be able to enter NSW without an exemption, which makes this difficult for people who live in the border towns. The permits are expected to only be given in rare circumstances. The ABC is expecting Victoria to report another (bad) record of cases this afternoon.

Afterpay’s (ASX: APT) big update

The buy now, pay later ASX share gave a trading update for the 3-month period to 30 June 2020.

In the FY20 fourth quarter Afterpay saw underlying sales of $3.8 billion, an increase of 127% compared to Q4 FY19. As you’d expect, this was Afterpay’s best quarter which reflected the shift to e-commerce since COVID-19 appeared.

Overall, the company saw $11.1 billion of underlying sales in FY20, up 112% on FY19.

Merchant revenue margins for FY20 are expected to be in line with or better than the first half of FY20 and FY19.

Active customers grew 116% to 9.9 million in FY20. Active merchant numbers rose by 72% to 55,400 in FY20.

Afterpay revealed that it expects FY20 EBITDA (click here to learn what EBITDA means) is expected to be in the range of $20 million to $25 million. This guidance excludes significant items like share-based payments and foreign currency.

Afterpay is doing a fully underwritten institutional placement to raise $650 million. Pricing will be determined by a bookbuild, but it will have an underwritten floor price of $61.75, which is a 9.2% discount to the closing price yesterday on 6 July 2020. Regular shareholders will then get the chance to buy up to $20,000 of shares, with the price yet to be decided. But it could be the placement price. The share purchase plan (SPP) aims to raise $150 million.

Afterpay co-founders Anthony Eisen and Nicholas Molnar are each going to sell 2.05 million shares, being 10% of their respective holdings. This is approximately 1.5% of the total Afterpay shares. The sell-down will be fully underwritten with pricing determined by the placement.

Magellan (ASX:MFG) announces June 20 update

Magellan said that total FUM at 30 June 2020 was $97.18 billion, down from $98.45 billion at 29 May 2020.

In June Magellan experienced net inflows of $249 million, which included net retail inflows of $173 million and net institutional inflows of $76 million.

Magellan’s funds will pay distributions, net of reinvestment, of approximately $650 million in July, and net institutional inflows of $76 million.

The fund manager said it’s entitled to estimated performance fees of approximately $81 million for FY20. Average FUM for FY20 was $95.5 billion, up from $75.8 million in FY19.

Sezzle (ASX: SZL) sales sizzle

Sezzle said it expects its underlying merchant sales (UMS) is expected to reach an annualised pace of US$1 billion by the end of 2020.

The buy now, pay later business said UMS jumped 58% quarter on quarter to US$188 million. Compared to the same quarter a year ago, UMS grew by 349%.

Active customers increased by 28% quarter on quarter to 1.48 million with growth of 243% year on year. Active merchants rose by 27% quarter on quarter to 16,112 with growth of 219% year on year.

The company announced a number of pleasing statistics. Its customers are using the product more regularly. In the June 2020 quarter 87.5% of customers were repeat users compared to 77.2% a year ago and 85.7% in the March 2020 quarter.

Customers who have been with Sezzle longer are purchasing with more frequency. The 2020 cohort uses Sezzle an average of 5x per year, the 2019 cohort uses Sezzle 9x a year and the 2018 cohort uses Sezzle 15x a year.

In terms of merchant fees growth, it grew 54.8% quarter on quarter to US$10.6 million, or 397% year on year. As a percentage of UMS, merchant fees improved 55 basis points year on year to 5.6%.

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