Exponential fintech growth boosts HomeChoice’s year-end profits

JSE-listed investment holding company HomeChoice International has seen a significant surge in its fintech business thanks to the success of its buy now pay later (BNPL) offering PayJustNow (PJN), which has seen exponential growth since coming onto the scene in 2019.

According to the group’s latest financials for the year ended December 2022, the PayJustNow platform – which HomeChoice acquired a majority share in last year – has generated R747 million in gross merchandise value, an increase of 260% from 2021.

On its own, the platform has brought in 649 000 customers for the group, making up almost 70% of the Weaver Fintech business segment it falls under. HomeChoice’s 2022 financial report states the PJN offering has even surpassed the group’s retail business customer base, by almost 15 000.

Weaver Fintech – which also includes the HomeChoice loans business FinChoice – contributed R438 million to the group’s overall operating profit of R482 million.

Operating profit growth for the segment was reportedly supported by higher interest rates, increased demand for FinChoice digital loan products, and the rapid uptake of the BNPL offering.

“Exceptional growth rates in new customers, high levels of repeat business, credit management within risk tolerance levels and optimising our customers’ digital journeys are all contributing factors to 2022’s success,” the group said.

According to the group, increased demand by consumers for credit facilities has seen loan disbursements growing by 28.9% to R4.3 billion. This value has reportedly doubled in the last two years as consumers find it tougher to make ends meet in the currently elevated inflationary environment.

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Retail slump

The retail business the group is best known for has taken a back seat to the exponentially growing fintech business.

The 2022 financial year saw the retail business back in the black – reporting an operating profit of R78 million, after making a R43 million loss in 2021.

Despite this, the segment’s revenue and sales dropped 5% and 5.6% to R2.2 billion and R1.61 billion respectively, as some of the group’s turnaround strategies were slow to bear fruit.

“Sales were negatively impacted by a strategic shift in credit granting to acquire more profitable customers within reduced risk tolerance levels aligned with current market conditions,” HomeChoice said.

“Our TV media acquisition strategy did not deliver the expected acquisition targets, as television viewership was severely impacted by the particularly high levels of load shedding experienced in Q4.”

Accelerating customer growth

Looking forward, HomeChoice executive chair Shirley Maltz noted that the group plans to invest in further customer growth for its Fintech business by “cross-selling” its products to its customers, leveraging PJN’s strong customer base.

“Our well-established digital-first strategy continues to provide the platform from which we accelerate innovation, target and acquire new customers, improve customer experiences and pursue robust growth. This, while also providing us with the ability to scale quickly and capitalise on cost efficiencies.

“More than 75% of the group’s transactions are now digital – 95% of Weaver Fintech’s 940 500 customers are digital users and 35% of HomeChoice Retail customers are digital shoppers,” she said.

“We have tremendous opportunities to broaden our product ranges, cross-sell within our sizeable fintech customer base and accelerate customer acquisition through analytics and high customer conversion. I am confident the group is well positioned and amply funded to drive our growth ambitions.”

The group managed to grow headline earnings per share by 41.8% to 288.5 cents and revenue by 6.5% to R3.6 billion.

The final dividend this period was declared at 77 cents per share, up from the 20 cents in the previous period.

Read: HomeChoice’s fintech business spurs growth