Buy now pay later company Openpay has “paused” its US operation indefinitely and ceased loan originations on its Opy USA platform.
The company said in a statement to the ASX on Friday that it has been unable to secure the investment it needed to develop its US business.
It said it will now direct all its available capital and funding into its Australian business.
This is the second major setback for the company this year. In January, it announced that it would “materially reduce its origination and physical presence in the UK market, including withdrawal from the retail vertical.”
It also said it would not proceed with the acquisition of UK BNPL company Payment Assist, which was announced in June last year. Instead, it will partner with Payment Assist.
The company’s December half financial report painted a picture of a business under severe stress. It made a loss of A$41.9 million over the six months, compared with a loss of $25.5 million in the previous corresponding period.
Net cash outflows from operating activities rose from $37.1 million in the December half 2020 to $60.4 million in the latest half. Cash and cash equivalents on the balance sheet fell from $52.1 million to $32.1 million.
It reported that it had a US$271.4 million asset-backed revolving credit facility for receivables funding, “which is subject to certain conditions precedent that are not currently satisfied”.
At its results presentation in February the company said its US operation, launched in 2021, would enhance growth.
On Friday, it said it had appointed a US investment bank, Keefe Bruyette & Woods, to assist with the search for potential investors.
“However, given the current macroeconomic and public market conditions, together with the likely ongoing capital investment required in the US to fund its progress for an extended period, Openpay has decided to pause its existing US operations indefinitely,” it said.
The UK and US operations were in the early development stage and their closure will have a relatively small impact on revenue. Of $15.2 million of income reported in the December half, $11.7 million was from Australian and New Zealand operations and $3.3 million was from “the rest of the world”.
But the company now faces a battle to raise more equity capital and its big cash outflows indicate that without fresh capital there will be questions about its ability to keep going.