Consumer finance company Flexigroup is changing its name to humm, reflecting a greater focus on its buy now pay later businesses humm and bundll. And it has launched an equity issue, seeking funds to pursue growth in the BNPL market.
The company is making a big bet on higher volumes to offset lower margins. Transaction volume in the BNPL business rose 18 per cent to A$2.1 billion in the year to June 2020, but because the company reduced fees to improve the competitiveness of its products, BNPL net income fell 6 per cent.
The company has also started a strategic review of its commercial division, which specialises in equipment finance, with the prospect of a sale of the division.
The restructured group will include humm, a BNPL service that allows consumers to make purchases of up to $30,000; humm90, a credit product with up to 60 months interest free; and bundll, a BNPL offer for small payments targeted at millennials.
The company has plans to launch hummpro, a BNPL offering for small businesses. Bundll will retain its distinctive brand identity.
Two credit card products, Once and Lombard, are in run-off.
Flexigroup says humm is the number three BNPL product in the Australian market, behind Afterpay and Zip. It has 2.1 million customers (up from 1.5 million last year) and 56,700 retail partners (up from 51,600).
The average number of transactions per account across the company’s interest-free products was more than nine a year.
Humm also operates in Ireland, where Flexigroup turned a consumer leasing subsidiary into a BNPL provider.
Flexigroup chief executive Rebecca James said the “unified humm ecosystem” would operate on a “common credit and insights engine”, giving the company greater cost efficiency.
Flexigroup made a net profit of $21.4 million in the year to June – down from $61.7 million in 2018/19. Cash profit, after adjusting for amortisation of intangibles and other one-off costs, was $29.2 million.
The company included a $30.9 million COVID-19 overlay, Cash profit before the overlay was $60.1 million.
Overall transaction volume fell three per cent to $2.48 billion and net income also fell three per cent to $361.1 million.
With the COVID-19 overlay, receivables and customer loan impairment expenses rose from $87.5 million in 2018/19 to $145.2 million.
The BNPL 30-day arrears rate was 2.3 per cent, compared with 2.2 per cent in the previous year.
The equity raising has a total offer size of $140 million, with an underwritten amount of $115 million.