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LBY - Laybuy Group Holdings

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Laybuy Group Holdings is a buy-now-pay-later ("BNPL") provider with a market leading position in New Zealand and growing presence in Australia and the United Kingdom.

The Laybuy payment platform enables customers to split the payment of purchases, both online and instore, across six, weekly, interest free instalments, the first being at the point of sale. Customers are typically subject to transaction limits of approximately NZ$120 to NZ$1,500, depending on their credit report score. Currently, Laybuy is available across a wide range of retail subsectors including fashion, travel, homewares, sports and entertainment.

Laybuy launched in New Zealand in May 2017 and after experiencing early success, a year later launched in Australia through existing New Zealand merchants and new Australian merchants. In February 2019 Laybuy officially launched in the larger UK market with shoe retailer Foot Asylum. For the 12 months ended 30 June 2020, Laybuy had more than 5,600 Active Merchants and over 470,000 Active Customers on its platform, representing an increase of ~50% and ~110% respectively compared to the prior 12-month period. The United Kingdom represents a significant opportunity for Laybuy with the Company already experiencing strong growth across all key operating metrics.

Laybuy has entered into a partnership with Mastercard, which will enable it to issue digital cards to Laybuy customers in New Zealand, and expects to launch a digital card in New Zealand, Australia and the UK by the end of 2020. Issuing a digital card to Laybuy customers will allow the Company to provide a fully functional 'tap and go' BNPL offering anywhere that offers contactless payment and Laybuy. The partnership is expected to broaden Laybuy's revenue streams and deepen customer loyalty.

It is anticipated that LBY will list on the ASX during September 2020.

http://www.laybuyinvestors.com
 

Dona Ferentes

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New Zealand buy now, pay later provider Laybuy will begin trading on the Australian sharemarket this morning, following a $80 million initial public offering. The company's IPO comprised a $40 million primary issuance and a $40 million sell-down from existing shareholders, with the offer priced at $1.41 a share.

Laybuy launched in New Zealand in 2017 and describes itself as the "pre-eminent BNPL service" in the country, with a growing presence in the United Kingdom and Australia. The funds raised from the IPO are set to be used to increase the company's presence in the UK and continue delivering on its strong marketing strategy to grow its customer and merchant base.

At June 30, the company had 5,672 active merchants and 473,000 active customers, processing $NZ116 million gross merchandise value of sales for the June quarter.
"Laybuy was established to help consumers avoid the trap of high interest credit cards and to help families better manage their budgets by allowing them to stagger their purchase payments," said co-founder and managing director Gary Rohloff. "We are all very proud of what we have achieved to date. With this support from our new shareholders, the board, management and the entire Laybuy team are committed to growing the value of Laybuy as we continue to focus on achieving our goal of creating a ubiquitous global brand."
 

Dona Ferentes

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got down to around 42c late July and now climbing back... closing at 55c today.


And now, management doing the rounds with webinars hoping for a bit of AfterPay halo effect.
"I see the deal between Square and Afterpay as demonstrating that the BNPL sector is seen by very deep-pocketed investors as a sector that is very much alive and well, and which has got great prospects,” says Gary Rohloff, managing director of New Zealand-based BNPL provider Laybuy Group (ASX: LBY), which saw its share price surge more than 9% on the news.
"I think that validation does help all players in the sector. The market for all the BNPL stocks has definitely been a little softer over the course of this year, but I wouldn’t be surprised if this announcement reignites some interest, just given the fact that this is a product that is only going to grow in popularity – BNPL is still at very low percentages of penetration across the world,” says Rohloff.
“Payment in delayed instalments has been a clear hit with consumers in all of the markets where it’s been offered, but there is still a very large runway for growth. That’s why, ultimately, I see the Square bid for Afterpay as a major vote of confidence in the sector – and I think this could be a catalyst for more corporate activity conversations. I think this will be a very interesting period in the sector, over the next wee while. I think that after the initial excitement, it will make investors look a bit more closely at BNPL providers, because they’re not all the same – and we welcome investors taking a bit of a deeper dive,” Rohloff says.
 

Dona Ferentes

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Laybuy has felt the pressure of ... expectations, as an IPO price of $1.41 in September 2020 quickly became $1.76, before commencing a slide that took it as low as 42 cents...

While companies cannot control their share prices, that trajectory is intensely frustrating for CEO Rohloff.
Ultimately, we can only focus on the things that we can control, which is the performance of our business. We actually couldn’t be happier with that. For our financial year (ended 31 March 2021), we delivered gross merchant volume (GMV) growth of 159%, powered by UK GMV growth of 504% year-on-year. That puts us firmly on track to exceed GMV of NZ$1 billion ($952 million) in FY22. Our active customers increased by 87% for the financial year, reaching 756,000, with UK active customers up 202%, to 463,000,” he says.

It is the strength of its UK bridgehead that Rohloff feels the stock market does not quite appreciate.
Our focus is very firmly on the United Kingdom, where the opportunity is enormous. It is our largest market, followed by Australia and New Zealand. The UK has an addressable retail market of £394 billion, it is about 2.2 times the size of the Australian market in terms of overall spending, and it is also a market where BNPL is still in its infancy, but is expected to grow quickly.”

In the first quarter of the current financial year – that is, to 30 June 2021 – the UK business continued to underpin growth, with its GMV more than doubling year-on-year to £49 million ($90.3 million), up by 107%. UK active customers surged by more than 143% in the year to June, driving a 43% annual jump in total active customers, to 829,000.


“In the wake of the pandemic, there’s been a marked shift to online – and that translates into a rising awareness and acceptance of buy-now, pay-later,” says Rohloff. “But we’re also very excited about people starting to go back into stores shopping as well: the fact is, retail is a multichannel sector, and we are available online and in-store. The interesting thing for us is that, as the UK opens up, we’ve just rolled out our in-store contactless digital solution, “Tap to pay,” and that has really started to gain traction.”


The “Tap to pay” card allows customers to buy goods in-store by tapping their smartphones on chip and PIN devices as they would with a normal contactless card: there is zero integration required and merchants can enable in-store payments in a matter of minutes. The process is also very efficient for customers, allowing them to bypass a number steps which are usually found in BNPL processes: customers simply download Laybuy’s card onto their smartphone wallets, and they can enjoy benefits including zero interest and ability to pay for the purchase in six instalments.


But the crucial aspect of BNPL that many people do not appreciate, says Rohloff, is that it helps merchants as much as it helps shoppers. “For a merchant, you’re offering consumers a payment alternative that’s interest-free, and that enables them to spread the cost of the purchase; but what it does for you is it lifts the average basket spend, it helps increase store sales, and encourages new customers.”


And where some investors might feel the sector is threatened by the recent moves of payment giant PayPal and tech behemoth Apple to offer BNPL capability, Rohloff says it is exactly the same as the Square move on Afterpay.


“For PayPal and Apple to be coming into BNPL, for Jack Dorsey and Square to be buying Afterpay – these moves actually validate BNPL as a solution,” he says. “If you think of the penetration of BNPL as a percentage of point-of-sale purchase in retail, it’s low-single-digits. This is not going to be a ‘two-or-three-players-take-all’ kind of market – we’re talking about people buying stuff. I think the market is big enough to handle a reasonable number of players,” he says.
 
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