Afterpay (ASX:APT) - Co CEOs, Anthony Eisen (left) & Nick Molnar (right)
Co CEOs, Anthony Eisen (left) & Nick Molnar (right)
Source: Supplied via The Saturday Paper
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  • Afterpay (APT) almost doubled its marketing costs over the past year in an effort to break into new markets
  • Underlying sales — the value of all the transactions facilitated — jumped from $11.1 billion to $21.1 billion
  • But the buy now, pay later (BNPL) company’s statutory loss ballooned from $22.9 million a year ago to $159.4 million
  • The company says marketing costs will remain high even after the deal with Square Inc. closes next year
  • Shares in Afterpay are down 0.57 per cent to $134.33 at 10:41 am AEST

Afterpay (APT) almost doubled its marketing costs over the past year as the buy now, pay later (BNPL) giant sought to break into new markets and capitalise on the pandemic-driven boom in online spending.

Now set to be swallowed in a $39 billion deal with Twitter boss Jack Dorsey’s Square Inc., Afterpay had spent particularly heavily in the largely untapped US market. The effort helped to boost its underlying sales: The value of all transactions facilitated leapt from $11.1 billion to $21.1 billion, while the US market overtook Australia as Afterpay’s biggest customer base.

All up, the current number of active customers — those who transacted at least once in the past 12 months — stands at 16.2 million, a 63 per cent increase over last year, while the number of active merchants has now surpassed 100,000.

Afterpay said in a statement: “Marketing expenses were higher during H2 FY21 compared to H1 FY21 and above FY20, reflecting increased investment in driving brand awareness particularly in new regions, growth and lifecycle marketing, and investment in new in-store partnerships and visual merchandising.

“Further investment in marketing will continue in FY22.”

However, the added expenses ballooned the company’s statutory loss from $22.9 million a year ago to $159.4 million. Afterpay was also hit by a put option held by another company on its UK business that jumped from around $3 million to $99.9 million as strong growth fuelled its valuation.

Afterpay will be integrated with Square’s Seller and CashApp once the deal closes, which is expected to occur in the first quarter of 2022. The deal is considered the clearest sign yet that the BNPL sector is here to stay and is likely to further fuel consolidation in an industry that’s becoming increasingly mainstream.

Shares in Afterpay were down 0.57 per cent to $134.33 at 10:41 am AEST.

APT by the numbers
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