The Zip Co Ltd (ASX: Z1P) share price is up after the buy now, pay later business revealed more strong growth in FY21.
What was Zip’s growth?
Zip said that it continued to deliver record results across all of its operating regions (Australia, New Zealand and the US).
It said that its FY21 year to date revenue was $96.7 million, up 91%, for the first four months of the year. October’s monthly revenue was $27.6 million.
Including Zip Business, total revenue was $100.2 million, with $28.4 million recorded in October.
In terms of the transaction volume in October, that grew by 104% year on year to $401.1 million.
Customer numbers also grew strongly, going up by 109% to 4.8 million. Global merchant numbers went up by 74% to 36,500.
Zip US, which operates under the QuadPay brand, saw October deliver $160.6 million in transaction volume (up 200% year on year), with $11.4 million of revenue and more than 2.5 million customers. The US is now seeing more than 15,000 downloads per day.
Credit and arrears
In Australia, Zip’s monthly arrears, a forward indicator of future losses, reduced from 1.33% in June to 0.89% in October.
November progress
Zip said that the momentum across the company has continued in November with all regions set to deliver step change month on month growth, prior to the inclusion of the cyber promotional activity at the end of the month.
Management comments
Zip CEO and Managing Director Larry Diamond said: “Whilst online trade is expected to be very strong this year, and Zip will enjoy it share, this season Zip expects to significantly lift its in-store volumes. Our partnership with Visa and access to Apple Pay and Google Pay wallets, unlocks everyday spend, providing our customers with more utility and choice.”
Summary thoughts
Zip continues to grow at a fast pace every year, indeed it’s growing every month. I’m impressed by how much the business has grown and what it is achieving. It’s taking a larger slice of the transaction pie.
The Zip share price could keep rising as investors ride the wave of global growth from Zip. However, I do think there are some important long term questions that the industry isn’t completely clear of. Will merchants margin always be this high? Will regulators ‘disrupt’ the industry, which could become more likely as they become an even more important piece of the economy?
There are other ASX growth shares I’d want to buy first in the payments space such as Pushpay Holdings Ltd (ASX: PPH) and EML Payments Ltd (ASX: EML). Even FlexiGroup Limited (ASX: FXL) could be a better pick because of its recent Mastercard deal, and it’s already profitable.
