Why is Afterpay considering a US IPO?

Written by Kapronasia || April 28 2021

Buy now, pay later may be the greatest thing for payments since well, credit cards, or even better, depending whom you ask. “What we’re seeing now is a once-in-a-lifetime generational shift away from traditional credit products,” Afterpay CEO and co-founder Anthony Eisen recently told The Australian. While the concept of zero-interest installment payments is not exactly revolutionary, Afterpay is one of the fintechs that has figured out how to package it right. As a result, Afterpay is not only one of the biggest BNPL firms in Australia but also the US. In March, Afterpay surpassed AU$1 billion in monthly sales in the US. With the US increasingly driving Afterpay’s growth, the company is considering an IPO on the Nasdaq. 

While Afterpay will remain headquartered in Australia, it may decide to list on the Nasdaq like the software company Atlassian. That firm was set up in Sydney but listed on the Nasdaq in 2015 and now has a market capitalization of US$57 billion. Being able to tap the world’s deepest and most liquid capital markets has its advantages. Afterpay could access a larger investor pool if it listed in the US. Funds with US-only mandates currently have limited BNPL investment options: Paypal and Affirm. 

US investors are also generally more likely than their Australian counterparts to have patience with unprofitable but fast-growing tech companies like Afterpay. The company lost AU$76.5 billion in the first six months of FY 2021 even as revenue grew 89%. 

Afterpay said March 2021 was one of its best-ever months for sales, as revenue rose 104% year-on-year across all of its markets. Meanwhile, 17,600 new US customers are signing up for Afterpay’s service every day. Overall, Afterpay has 9.3 million customers in North America, up more than 100% annually, and well above the 3.5 million it has in Australia and New Zealand.

According to Afterpay, no timeline has been set for a decision by its board on a US listing. In addition, any listing would be subject to market conditions, approval by a US exchange and satisfying other customary listing prerequisites. However, sources cited by Australian media say that the move towards a US listing has progressed fairly far. If Afterpay does decide to list on the Nasdaq it may also delist from ASX as Atlassian did. Goldman Sachs is reportedly advising Afterpay on its prospective US listing.