In a sign that the buy-now-pay-later (BNPL) bubble has burst for good, Afterpay-owner Block released financial results for its recent acquisition of BNPL on Monday, revealing a sharp drop in costs in the six months to 31 December.

Afterpay’s loss after tax rose to US$345.5 million in the six-month period, from US$79.2 million a year earlier, on the back of significant operating costs.

In its first set of financial results since being acquired by US Block, Afterpay posted an operating loss of US$263.7 million, compared with US$68.2 million in the comparable period a year earlier.

Loss before tax came in at a whopping $501.9 million, up from $76.2 million in the six months to December 31, 2020.

During the same period, total income actually rose to $644.9 million, compared to $417.2 million. Merchant fee revenue reached $560.8 million, while late fees and other revenue contributed $78.5 million.

But bad debts more than doubled to US$176.8 million from US$72.1 million.

Block completed the acquisition of Afterpay on January 31 of this year. At the time, he detailed his plans to make the financial system "fairer and more inclusive."

Block's goal, the company said at the time, is to enable Square sellers of all sizes to offer BNPL at checkout, offer Afterpay users the ability to manage their installment payments directly in the Cash App, and empower customers of Cash App to find sellers and BNPL offers directly in the app.

"United by our shared goal of economic empowerment, we are excited to welcome the Afterpay team to block and help make the financial system fairer and more inclusive as we build together," the digital payments company said.

Cash App is Block's digital wallet, which has around 44 million active users in the US. Although it started as a peer-to-peer payments app, it now allows customers to deposit their salaries, pay their taxes, trade stocks and bitcoins, and send fractional stocks and bitcoins to friends and family. Afterpay is about to become an integral part of its offering.

Block's Cash App ecosystem provided almost half of its revenue and generated gross profit of $2.07 billion, up 69 percent year-over-year.

Apart from Cash App, the digital payments company boasts three other divisions – Square, Tidal and TBD.

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Already an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.