By Stuart Condie
SYDNEY–Australian buy-now-pay-later provider Zip Co. said it generated positive cash earnings for its fiscal first quarter and now expects to do the same for the whole of its 2024 fiscal year.
Zip on Tuesday cited growth in U.S. volumes, margin expansion and cost discipline among the reasons for its improved outlook. Zip had previously expected to achieve positive cash earnings during the December half.
Revenue for the three months through September rose 32% on-year to 204.4 million Australian dollars (US$129.5 million), despite a 1.8% fall in active customers.
The total value of transactions on the Zip platform rose 13% on-year to A$2.29 billion, with revenue margin expanding to 8.9% from 7.5%.
“Cash transaction margin improved 110 basis points year-on-year to 3.5%, demonstrating the resilience of the business model in a challenging external environment,” Chief Executive Cynthia Scott said.
Zip focused on becoming profitable in the midst of reporting total statutory losses of more than A$1.4 billion across its last two fiscal years. The losses were primarily driven by hefty impairments and the divestment or closure of non-core businesses, including in the U.K. and mainland Europe.
Zip said the wind-down of its business-lending unit that started in the last quarter of fiscal 2023 remains on track. Zip Business contributed A$2.5 million of 1Q revenue.
The ASX-listed company has slashed costs and jobs as the installment-payment sector faded in popularity with investors since valuations peaked against the backdrop of Covid-era online shopping.
Zip’s stock, which peaked at A$14.53 in 2021, last traded at 30 Australian cents.
Write to Stuart Condie at [email protected]
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