Buy now pay later company Splitit continued to rack up losses in the June half but it moved to reassure the market that it has the continuing support of its lender and its major shareholders.
The company’s 2022 annual report, released in February, raised issues about its ability to continue as a going concern, as had its 2021 annual report. A couple of developments in recent months have taken a bit of the pressure off.
Splitit reported a loss of US$12.5 million for the six months to June, similar to the loss of US$12.2 million in the previous corresponding period. Revenue was up but so were operating expenses and finance costs.
It finished the half with cash of US$13.8 million (down from US$29.8 million in the previous corresponding period) and net assets of US$16.5 million (down from US$26.5 million).
In May, it amended its credit facility agreement with Goldman Sachs to provide a temporary reduction of its net tangible asset covenant, cutting the minimum net tangible asset requirement from US$22.5 million to US$13 million. It also reduced the minimum unencumbered cash balance requirement from US$10 million to US$5 million.
These amendments are in place until September or until a capital event occurs, which Goldman Sachs must approve.
In July, the company raised US$10 million of convertible note finance from its two largest shareholders, Thorney Investment Group and Perea Capital.
And earlier this month, it announced that it was working on a US$50 million investment from private equity firm Motive Partners.
On the business side, merchant sales volume of US$248 million was up 27 per cent on the previous corresponding period. The company did not report the change in merchant or customer numbers during the period.
Splitit provides a variation on the standard buy now pay later offering. It allows consumers to use an existing credit card to pay for purchases on an instalment basis, with no fees or interest. It has network links with Visa, Alipay and Ingenico.
Splitit is listed on the Australian Securities Exchange but does most of its business in the United States. US revenue was US$3.4 million for the half, UK and European revenue US$2 million and Australian revenue $254,000.