In a sign that the buy now, pay later (BNPL) bubble has well and truly burst, Afterpay-owner Block released financial results for its recent BNPL acquisition on Monday, revealing a hefty cost blowout in the six months to 31 December.
Afterpay’s loss after tax climbed to US$345.5 million in the six-month period, up from US$79.2 million a year earlier, on the back of sizable operating costs.
In its first set of financial results since being acquired by US Block, Afterpay recorded an operating loss of US$263.7 million compared to US$68.2 million in the comparable period a year earlier.
Loss before tax reached a mammoth US$501.9 million versus US$76.2 in the six months to 31 December 2020.
In the same period, total income actually climbed to US$644.9 million compared to US$417.2 million. Income from merchant fees reached US$560.8, while late fees and other income contributed US$78.5 million.
But bad debts more than doubled to US$176.8 million from US$72.1 million.
Block completed its acquisition of Afterpay on 31 January this year. At the time it detailed its plans to make the financial system “more fair and inclusive”.
Block’s goal, the company said at the time, is to enable Square sellers of all sizes to offer BNPL at checkout, offer Afterpay consumers the ability to manage their instalment payments directly in Cash App, and give Cash App customers the ability to discover sellers and BNPL offers directly within the app.
“United by our shared purpose of economic empowerment, we are excited to welcome the Afterpay team to Block and help make the financial system more fair and inclusive as we build together,” the digital payments company said.
Cash App is Block’s digital wallet that has some 44 million active US users. While it kicked off as a peer-to-peer payments app, it now allows customers to deposit their paychecks, pay their taxes, trade stocks and bitcoin, as well as send fractional shares and bitcoin to friends and family. Afterpay is due to become an integral part of its offering.
Block’s Cash App ecosystem delivered nearly half of its revenue and generated a gross profit of $2.07 billion, up 69 per cent year on year.
Besides Cash App, the digital payment company boasts a further three divisions – Square, Tidal and TBD.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
