The Zip Co Ltd (ASX: Z1P) share price has jumped over 9% this morning in response to its June quarter update.
Zip Co provides customers with a revolving line of credit to finance their retail purchase with its brands of Zip Pay, Zip Money and Pocketbook. It is one of the largest buy now, pay later providers in Australia. Some of its largest clients include Bunnings Warehouse, Appliances Online, EB Games and Officeworks.
Zip Co’s June 2019 Quarter Update
Zip said that it exceeded all financial targets set at the beginning of FY19. Transaction volume was up 108% to $1.1 billion (compared to a target of $1 billion), customer numbers were up 80% to 1.3 million (compared to a target of 1 million) whilst improving its ‘cash EBTDA’ – which is EBITDA without including interest.
The buy now, pay later company said it achieved record quarterly revenue of $27 million in June 2019, which was up 17% on the third quarter. Receivables, which is how much owed to Zip, increased by 21% over the quarter to $682.6 million.
Quarterly transaction volume increased by 105% year on year to $351.8 million with June volume over $130 million. Customer numbers increased by 159,000 over the quarter – up 14%.
Zip also said that it achieved market-leading credit performance with net bad debts of 1.63%, down from 1.75% in the third quarter. Management also pointed to increasing leverage with growing scale, costs as a percentage of average receivables fell from 15.5% in the March 2019 quarter to 14.8% in the June 2019 quarter.
Customer Highlights
Freedom, Bing Lee and Wesfarmers Ltd’s (ASX: WES) Kmart Australia joined the platform in the quarter. Zip also also signed Premier Investments Ltd’s (ASX: PMV) Just Group which includes Just Jeans, Smiggle, Peter Alexander and others.
Zip has also signed a partnership with Tyro, a EFTPOS terminal business servicing 20,000 merchants. It has also been integrated into a leading e-Commerce platform BigCommerce, enabling Zip for thousands of Australian sites.
Is Zip A Buy?
Managing Director and CEO Larry Diamond said: “As a credit card disruptor, we continue to see large numbers of customers adopt the Zip interest free digital wallet as we strive to be the first payment choice everywhere and every day.”
Zip certainly has large goals, but I really don’t know which one payment app will be successful. Will there be a winner takes all like Google? Or many operators with decent market share. Both Zip and Afterpay Touch Group Ltd (ASX: APT) are doing well.
Even so, I prefer the idea of investing in growth shares like the ones in the free report below instead,
[ls_content_block id=”18457″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
