Laybuy reports $41.3m loss: 'It's a bit foreign to me'
Thursday, 27 May 2021
New Zealand buy now, pay later provider Laybuy has reported a loss of $41.3 million, despite Covid-19 prompting a surge of interest in online shopping.
The company, which listed on the Australian stock exchange last September, has reported its financial result for the year to March.
The loss was bigger than the year before, when the company lost $16.1m.
Laybuy launched after New Zealand retail veteran Gary Rohloff and his wife, Robyn, raised a mortgage to start the company with their two sons, Alex and James.
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Alex Rohloff mentioned that he wanted to buy some jeans to wear out and pay them off weekly.
“I mentioned to him that we’d actually had this idea when I was working for Ezibuy back in the early 2000s, and in typical teenager fashion he said, well when are you going to stop talking about it and get on with it,” Rohloff said last year.
The provider allows shoppers to purchase an item but pay it off over six weeks. The service is free to shoppers and no fees or interest are charged unless someone falls behind in their payments.
The retailer pays a fee to accept Laybuy payments.
Laybuy listed on the Australian stock exchange in September last year, when its value shot up A$118m or NZ$128m in 24 hours.
Laybuy reported revenue of $32.6m in the year to March 31, up 138 per cent year-on-year.
It processed transactions $589m in the year, up 159 per cent, and Rohloff said it was on track for $1 billion in the next financial year. Growth was particularly strong in Britain.
He said the $41m loss was due to the costs of listing. The normalised EBITDA loss was $21m. “It’s very normal for a hyper-growth company. It’s a bit foreign to me coming from running retail businesses. You don’t lose money in a retail business and stay in business for long.”
He said Laybuy was not publicly predicting when it expected to turn the loss into a profit because it could be affected by the investment required for its growth plans.
He said Covid-19 had “unquestionably” driven growth in the business because people who could only shop online discovered Laybuy. When lockdowns lifted, those who had become used to the service discovered they could use it in physical shops, tool.
There was also was a wider shift away from traditional credit cards to no-interest offers such as Laybuy.
Laybuy’s default rate had fallen year-on-year for 4.1 per cent to 2.4 per cent, he said.
“Listing on the ASX provided Laybuy with the necessary capital to deliver our growth strategy, and we have delivered.
“Throughout the year, our focus has remained firmly on the United Kingdom, where the opportunity is enormous. The UK has an addressable retail market of £394b (NZ$762.5b), more than twice the size of the Australian market. It is also a market where buy now, pay later is still in its infancy but is expected to grow quickly.”
He said, while there were a number of new players entering the buy now pay later space, Laybuy was well positioned as one of the more established.
CORRECTION: An earlier version of this story said the default rate had dropped to 3.4 per cent. (Updated 28/5 at 5.02pm.)