Buy now pay later provider Laybuy Group has released its first financial results since listing on the ASX last September, reporting healthy growth in merchant and customer numbers in the year to March but a big increase in its losses due to a blowout in expenses.

Laybuy’s performance over the year is typical of BNPL businesses, as they invest heavily to grow share in what is still seen as an emerging market.

The company, which operates in Australia, New Zealand and the United Kingdom, increased active merchant number from 5204 to 9126 in the year to March 2021. Active customer numbers grew from 403,000 to 756,000.

Transaction value (gross merchandise value) grew from NZ$226 million to $589 million and group revenue grew from $13.7 million to $32.6 million.

Expenses increased from $29.4 million to $64.6 million and the loss for the year was $41.3 million – up from $16.1 million the previous year. Income was fairly evenly sourced between the UK operation and Australia and New Zealand.

The net cash outflow from operating activities was $47.8 million.

The company had a net liability of $750,000 at the end of March 2020 but thanks to its capital raising through last year’s IPO it had a net asset position of $36.7 million at the end of March.

It is currently in the process of raising $40 million through an institutional placement.

The company needs to maintain its growth momentum to remain a going concern. It is forecasting that transaction value will grow to NZ$1 billion during the current financial year, while income is expected to grow by 90 or 100 per cent.

Among the performance metrics, the default rate fell from 4.1 per cent of transaction value to 2.4 per cent. The net transaction margin was 1.8 per cent of transaction value.

Repeat customer numbers grew from 66 per cent to 73 per cent in Australia and New Zealand and from 44 per cent to 62 per cent in the UK. BNPL providers use repeat business as a risk measure, with greater purchasing frequency an indicator of fewer defaults.