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Afterpay FY earnings down despite takeup

·1-min read

Afterpay has posted lower full-year earnings after a Rebel Wilson-led advertising campaign proved costly.

The pay-by-instalments provider on Wednesday revealed earnings before interest, tax, depreciation and amortisation were down 13 per cent to $38.7 million.

The decline was due to increased spending on staff and promotional efforts to gain more customers. These costs more than doubled to $298.6 million.

In Australia, promotions included television advertising using actress and comedian Rebel Wilson.

The global promotional campaign appeared to work. Sales made using the platform doubled to $22.4 billion.

Afterpay will have greater financial backing should a proposed takeover by US payments provider Square proceed.

Twitter founder Jack Dorsey started Square and early this month pitched a $39 billion takeover for Afterpay.

Square would buy all Afterpay shares in return for stock of the former on the New York Stock Exchange.

Afterpay is yet to post a profit and on Wednesday declared a net loss after tax of $159.4 million. This was greater than the previous loss of $19.8 million by the same measure.

The company said this was mostly due to losses on financial liabilities.

Despite the losses, Royal Bank of Canada analyst Chami Ratnapala said all of the key metrics for the business were improving.

She noted shoppers using Afterpay in Australia and New Zealand continued to use it more frequently.

Afterpay is yet to pay shareholders a dividend.

Shares on the ASX were down 0.84 per cent to $133.96 at 1535 AEST.

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