The buy now pay later sector has continued its run of outs, with Payright reporting a 40 per cent blowout in net cash outflow from operations in the year to June.
Payright is a BNPL minnow, with just A$85 million in gross merchandise value, 3400 merchant stores and 53,000 customers.
On that relatively modest GMV, net cash outflow was $32.5 million. The company reported a loss of $12.7 million.
It is pursuing the same aggressive growth strategy that has seen Afterpay, Zip, Openpay and others report weaker margins, higher impairment charges, growing cash outflows and bigger losses.
It had mixed success during the year, with its 24 per cent growth in gross merchandise value well below the growth in underlying sales reported by others in the sector.
The 30-day arrears rate hit a peak of 3.9 per cent pf receivables in June 2020 and then came back 2.8 per cent in December. But arrears were back up to 3.4 per cent in June 2021.
The company is in the process of setting up a warehouse facility, which is being arranged by Gresham Partners. It said that in the event alternative funding is not successful, it has the ability to slow down growth in both new customers and merchant acquisitions should it need to.
“The directors therefore believe that the funds available from existing cash reserves and debt facilities would provide the group with sufficient working capital to carry out its stated business objectives for at least the next 12 months,” the financial report said.
It has cash and cash equivalents of $7.1 million and current receivables of $44 million.
One question for the company is whether it has a sustainable business model. A little over $4 million of the total of $11.5 million of fee income comes from customers, who pay establishment fees, repeat purchase fees, account keeping fees and payment processing fees. Other BNPL operators offer more attractive customer propositions.
It claims to be operating in an under-serviced part of the market, offering BNPL on bigger items with longer repayment periods, but there are others in that part of the market.