One ASX Growth Stock from the information technology sector that has emerged big recently has been AfterPay Touch Group (ASX: APT). APT lately reported to have over 6,000 retail merchants on-board and 800,000 customers. Agreeably, partnerships include Australian retailers that have an overseas presence, including: Morphine Cosmetics, Quay Australia, Margaux, Lorna Jane etc. AfterPay Touch Group Limited (the Company) also released 53,000,000 ordinary shares (Escrowed Shares) and 4,300,000 options (Escrow Options) in the Company from escrow in May 2018. The group has been investing on expansion plans across the globe.
This growth stock is an information technology stock that bases its technology on Buy-now pay-later platform. It was seen to be trading at a current Market price of $9.63 (at market open on July 02, 2018) which has been extremely close to its 52 week high that keeps on shifting base to further higher levels and the stock has advanced as much as 45.2 percent in last three months with a one year rise of 246%. The S&P/ASX 200 lately closed 0.3 percent or 20.8 points lower at 6194.6, where only few technology stocks were the best performing ones and AfterPay Touch entered the ASX 200 as part of the rebalance of June Index.
Along with this, the group has shown robust growth over the past one year and recorded a splendid growth in top line mainly due to a significant rise in the number of merchants who have recently adopted the late payment method. There has been a significant increase in the number of customers with over 90% of monthly transactions made by loyal customers. On the other hand, the group has recently commenced its online services in US market with the number of lifestyle retailers in due course thus, resulting into topline growth of the company in years to come.
On balance sheet front, the current ratio stood at 5.97x in 1HF18, representing healthy liquidity position of the firm.Underlying sales for first three quarters of FY18 is approximately $1.45 Billion and now tracking approximately $2.4 billion on an annualized basis; while Q3 FY18 underlying sales were lower than Q2 FY18 by 3.8%. Its businesses remain stable from both a margin and revenue perspective.
There has been a positive sentiment in the market for APT with big potential coming into picture from the lucrative US market and new acquisitions that aren’t expected to come at a higher cost as compared to Australia. AfterPay product is expected to have a retailer-driven push and some market experts estimate revenues of US $414.3 million by FY2020 from about $229.5 million of FY19. It appears that APT is also one among the growth tech stocks mirroring the success of FAANG stocks in the United States, amongst the best performing on the market during the quarter.
AfterPay’s value proposition is clearly resonating, supported by over 14,000 enterprises and small to medium businesses, and over 1.8 million customers in Australia and New Zealand having transacted with AfterPay. Learnings in relation to retail, initial transaction experience and customer dynamics will be translated into a program of product development specific to the U.S. market. This can offer the next leg of growth.
