Alex Rohloff (left) and Gary Rohloff, co-founders of Laybuy.
Buy now, pay later provider Laybuy says it will drop 45 employees, mostly in its head office in Auckland, as it restructures as part of its work to become profitable.
The part-payment platform has experienced a significant drop in value since it listed, dropping from A$246 million to A$19.62m this week.
Laybuy reported a loss of $51.6m for the year to the end of March – $10.3m more than it lost the previous year.
In April, it appointed UK advisory firm Nor Capital to find a strategic investor to provide it with more capital. Without that, the directors were not sure that it would be able to stay afloat.
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But Laybuy managing director Gary Rohloff said on Thursday the restructure, and the firm’s focus on containing costs, improving efficiencies and reducing fraudulent activity would mean it was profitable by the fourth quarter of this financial year. It would mean it did not need any further capital in the medium term.
“This will make Laybuy one of, if not the first, profitable pure play BNPL companies on the ASX,” he said.
“The restructure will help streamline our operations and will reorientate the company away from focussing on high rates of growth towards achieving ongoing and sustainable profitability, in line with our revised strategic direction. We do not anticipate a significant impact on our customers or merchants from these changes.”
He said the job losses would be across all parts of the business and would deliver significant savings.
That would be invested into technology and fraud prevention.
Buy now, pay later (BNPL) loans have become a habit, a government survey shows. Many people are caught in a cycle of BNPL-fuelled consumerism. It has another dark side. Some people are buying necessities like meat and medicine on BNPL.
“This is an incredibly difficult time for our team and we are committed to supporting them through this process in any way that we can. While this is a heartbreaking decision to be making, it is the right decision for the company,” Rohloff said.
“Unfortunately current market conditions and negative investor sentiment towards the tech sector means that we needed to shift our focus away from obtaining new funding to drive our continued growth and instead focus on achieving profitability in the short-term.”
The announcement follows a strategic review by the company that confirmed Laybuy had a strong pathway to profitability, he said.
“Our ANZ operations, excluding group overheads, are already profitable and the strong results we are seeing from our fraud prevention strategy have helped us confirm both the sustainability and profitability of our business model.”
He said while the review explored a sale or partial sale of the business, it was determined it was not in the best interest of the company’s staff or shareholders.
“There was strong interest in the business, with a number of investors expressing an interest in acquiring a part of the business. The review concluded that given our strong pathway to profitability, shareholders were best served by focussing on achieving profitability in the short term.
“Maintaining our presence in the UK will also allow us to take advantage of the opportunities in that market where BNPL is still in its infancy but is experiencing significant growth and where we have carved out high brand recognition and strong market share.
“We are already one of the top three providers in that market and our focus will now be onattracting and retaining quality customers that can drive sustainable and profitable growth and support our Australian and New Zealand operations.”
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