BNPL Provider Openpay slides 25% on listing price, partners with Woolworths

It’s been a rough first month since listing on the ASX for Buy-Now-Pay-Later (BNPL) service provider Openpay (ASX: OPY) but the fintech is diversifying into the B2B market with the launch of Openpay For Business – software designed to streamline trade account management. 

Despite its Openpay branding, Openpay For Business will not offer B2B partners with any BNPL options but is instead a portal for trade account applications, credit checks and account management. 

Major retailer Woolworths (ASX: WOW) has signed up on a 3-year  subscription base with Openpay aiming to rollout the platform across Australia and internationally as a SaaS revenue stream. 

“Businesses with trade accounts currently face manual, very time-consuming processes to gain approval for credit checks and manage their accounts,” said Openpay CEO, Michael Eidel.

“With Openpay For Business, these companies can now seamlessly control the whole trade account process from signing new accounts to invoicing in the one system, saving much needed time and resources and improving trade customers’ experiences.” 

Securing a client of Woolworths’ scale is significant for Openpay For Business however shareholders have faced a rough January since the company listed on the ASX on 16 December 2020 at an IPO Offer Price of $1.60 per share, raising $50 million in new funds. 

Openpay’s share price has since slid down to $1.20 despite growth in their flagship BNPL business which increased the number of its active payment plans to 462,384 for the December quarter, a rise of 46.2% on their September quarter, which reported 316,118 active plans. 

Similar to other BNPL providers, Openpay enables customers to make retail purchases on interest-free payment plans but offers payment terms between 2-24 months and for purchases up to $20,000. 

With the bulk of their revenue coming from management fees, late payment fees and merchant fees, Openpay has reported cash receipts of $76.5 million for H1 FY20, however the company is still a notable distance away from cash flow positivity, with that same period reporting a net cash loss of $31.9m.

No revenue expectations or financial terms relating to the Woolworths partnership were disclosed.