The Zip Co Ltd (ASX: Z1P) share price surged on Tuesday after a solid quarterly update. Could this key move help it catch up to Afterpay?
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Investors turned their attention as to whether or not rising competition in the buy now pay later sector would impact near-term growth. And if Zip could continue to capitalise on the significant United States retail and e-commerce market.
Off to the races with the Zip share price
The Zip shares opened a solid 4.5% higher on Tuesday. However, this was just the beginning of its bullish intraday run. Unrelenting buying momentum throughout the day pushed its shares an eye-watering 16.95% higher by close.
It is apparent that the market is pleased with the quarterly results. The company delivered an 80%, 195%, and 114% increase in revenue, transaction numbers, and transaction volume respectively on the prior corresponding period.
Perhaps more importantly, the company’s US-based QuadPay business continued to gain momentum. Transaction volumes grew 234% to $762 million and active customers growing 153% to 3.8 million. This also translated to a 188% increase in revenue to $54.4 million, or a record 47.55% contribution to group revenue.
Zip takes aim at greater international exposure
Afterpay has always led the buy now pay later (BNPL) sector in terms of international exposure. It was one of the first ASX-listed BNPL shares to begin operations in the US and UK. Additionally, it took the initiative to acquire Pagantis to access Europe and furthermore establish a base in Singapore.
More recently, the company successfully obtained the go-ahead from the Bank of Spain, going live with merchants in France, Spain, and Italy with additional access to Germany and Portugal.
Zip has lifted its international efforts following a $120 million capital raising back in late December 2020. This capital raising established a “New Markets” division for the business to lead the active pursuit of global growth opportunities.
The division hit the ground running with an investment in Spotii, a leading BNPL focused on the Gulf Cooperation Council region. In addition to Twisto, a leading payments platform operational in Czechia and Poland.
In Tuesday’s quarterly update, the New Markets division continued to expand its global footprint across both the developed and developing world. This included a soft launch in Canada, driven by its US merchant demand, a strategic investment into South East Asia via TendoPay in Philippines, and a follow-on investment into Twisto.
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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.