Afterpay’s earnings take a hit as buy-now-pay-later sector booms

Buy-now-pay-later juggernaut Afterpay has reported a 13 per cent earnings drop of $38.7 million for the past financial year as the business spends money expanding into overseas markets.

Announcing its full-year results to June 30 this year, Afterpay said its net transaction loss had widened to $132.6 million, eclipsing the $42.8 million it reported for the same period a year prior.

But despite the drop in earnings, Afterpay recorded a massive jump in underlying sales, growing 90 per cent to $21.1 billion in FY21.

READ MORE: PayPal takes on Afterpay with new buy now, pay later service

Afterpay logo on phone (Getty)

In the last financial year, Afterpay launched into four key regions including Canada, Spain, France and Italy.

In its home base of Australia and New Zealand, the top 10 per cent of consumers are using Afterpay more than 60 times a year.

In just 12 months the number of active customers using the service grew 63 per cent to 16.2 million.

READ MORE: How the Oodie became a multi-million dollar business

Afterpay founders Anthony Eisen and Nick Molnar will sell their company to Square Inc, a US fintech company.

In its commentary, Afterpay said the losses come as a result of higher valuations of its overseas businesses.

"The Group's loss after tax has been impacted by the net loss on financial liabilities at fair value of $96.8 million as a result of an increase in the valuation of Afterpay's UK operations," Afterpay noted in its results presentation.

"The Group has adopted Afterpay Net Margin as a key performance metric, which is Afterpay Net Transaction Margin (merchant margin earned directly from underlying sales), plus other income and margin items associated with the Afterpay platform."

For FY21 Afterpay's Net Margin was $434 million, up 74 per cent.

At the close of trade Afterpay's share price was down 1.2 per cent to $133.50.

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