Afterpay has posted shocking losses of $345 million, as the Aussie buy now pay later company’s financials reveal that many of its customers are failing to pay their debts.
The company’s costs rose by 60 per cent, with bad debts up 70 per cent. Operating expenses for the six-month period to December 31 blew out from $72.1 million a year ago to $176.8 million.
Afterpay’s late payment fees ballooned by 124 per cent, to hit $79 million.
Gerard Brody from the Consumer Action Legal Centre told AFR those increasing late fees show an unethical and broken business model.
“If late fees are increasing that is a further, really worrying indicator about the harms of this business model,” Brody said.
“Any business making a significant proportion of revenue from late fees, it really indicates to me that they succeed when their customer loses. That’s a really unethical way to run a business.”
Block, who bought the Aussie company for $39 billion last year, had already braced its investors that the 70 per cent growth it forecast would actually be around 25-30 per cent – quite the slip.
At least Dorsey can take comfort that nearest competitor Zip has seen 80 per cent of its stock market value disappear in just six months, forcing it to consider a merger with fellow BNPL company Sezzle.
