ASX BNPL firm Zip Co Limited [ASX:Z1P] released its September quarterly results on Thursday, with revenue up 19% year on year to $163.2 million.
Transaction volume for the quarter rose 15% YoY to $2.2 billion as ZIP’s revenue margin ‘remained healthy’ at 7.4%.
ZIP shares are down 90% over the past 12 months:
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ZIP: ‘Moving towards positive cash flow’
Zip was enthusiastic about its September quarter results, reporting continued top-line growth and expanding customer base.
Zip co-founder and CEO Larry Diamond went so far as to say the BNPL stock is ‘moving towards positive cash flow’.
Zip’s key metrics for the quarter included:
- Group quarterly revenue of $163.2m (up 19% YoY)
- Transaction volume for the quarter of $2.2b (up 15% YoY)
- Transaction numbers for the quarter of 19.6m (up 33% YoY)
- Customer numbers 1 for the Group of 12.0m (up 50% YoY)
- Active customer numbers 2 at quarter end of 7.4m (up 17% YoY)
- Merchants on the platform increased to 94.1k (up 70% YoY)
- Revenue margin remained healthy at 7.4%
- Cash transaction margin remained solid at 2.2%
Zip said that at 30 September, it had $140.7 million in available cash and liquidity.
The fintech expects this to be sufficient to support it ‘through to cash EBTDA profitability’.
In Thursday’s update, Zip said it hopes to be cash EBTDA positive ‘during H1 FY24’.
Source: Z1P
Larry Diamond commented on his company’s performance:
‘We are pleased to deliver another solid set of numbers as Zip resets and moves toward positive cash flow, taking control of our future. During the quarter we made great progress on our refreshed strategy to deliver sustainable growth, right-size our global cost base and accelerate our path to profitability.
‘With a more focused strategy on our core markets ANZ and the US, we substantially lowered credit losses, repaid $40m of debt, and completed an upsized $300m receivables funding transaction, demonstrating the resilience of the business model in the face of ongoing external volatility.
‘The underlying business remains strong, and with the simplification of the business following adjustments to strategy, we are well funded and positioned to execute ahead of seasonal peak volumes and beyond into H2 FY23.
‘Zip’s simple, fair and easy to use product is becoming even more important to customers and we are well on our way to disrupting the traditional credit card model and providing people with control of their financial lives.’
Three exciting fintech stocks
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You could argue Zip was a victim of this strategy and is now reprioritising profitability and positive cash flow.
Clearly, profitability is back as a priority for the sector.
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Regards,
Kiryll Prakapenka
For Money Morning
