Exponential fintech growth boosts HomeChoice’s annual profit

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

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

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

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

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

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

According to the group, increased consumer demand for credit facilities has seen loan disbursements grow by 28.9% to R4.3bn. This value has reportedly doubled in the past two years as consumers find it harder to make ends meet in the current high inflation environment.

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Decline in retail trade

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

The 2022 financial year saw the retailer return to the black – reporting an operating profit of R78m, following a loss of R43m in 2021.

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

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

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

Accelerate customer growth

HomeChoice head Shirley Maltz looks forward to the group planning to invest in further customer growth for the Fintech business by ‘cross-selling’ the products to customers, leveraging PJN’s strong customer base.

“Our well-established digital-first strategy continues to provide the platform on which we accelerate innovation, target and acquire new customers, improve customer experiences and pursue robust growth. This, at the same time, gives us the opportunity to scale quickly and utilize cost efficiency.

“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 huge opportunities to expand our product range, cross-sell within our large fintech customer base and accelerate customer acquisition through analytics and high customer conversion. I am confident that the group is well positioned and amply funded to drive our growth ambitions.”

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

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

Read: HomeChoice’s fintech business spurs growth