International expansion? Continued growth in the US? Here’s what Zip has planned for FY22.
The post Got Zip (ASX:Z1P) shares? Here’s what the company has in store for FY22 appeared first on The Motley Fool Australia. –
Zip Co Ltd (ASX: Z1P) shares crossed the FY21 finish line with a solid gain of around 43% for the 12-month period.
But this was considerably lower than the February peak when the Zip share price was sitting on 1-year returns of around 165%. At the time, the company’s shares had been bolstered by an explosive second-quarter update and US listing rumours.
With FY21 done and dusted, let’s take a look at what Zip has planned for the new financial year.
What Zip has planned for FY22
Finalise European and Middle East acquisitions
Zip revealed its continued global expansion plans back on 24 May, when it acquired the remaining shares in its minority European and Middle East investments.
This announcement saw the Zip share price rally 2.98% on the day to $7.25.
One of Zip’s acquisitions, Twisto, is a leading payments platform operational in Czechia and Poland. This acquisition was described as a “gateway to one of the largest e-commerce markets globally”.
Twisto holds a European Payment Institution licence, which allows it to provide payments services to all EU member states, subject to necessary regulatory approvals.
Zip also acquired Spotii, a leading player in the United Arab Emirates and Saudi Arabia.
The combined enterprise value of the two acquisitions is ~$180 million, with a transaction consideration of $160 million.
According to Zip, the Spotii acquisition is expected to be complete in the third quarter of 2021 (Q3 CY21) and the Twisto acquisition in the fourth quarter.
Continued UK growth
Zip’s FY21 third-quarter results released on 13 April described the UK as a “significant regional opportunity and a key strategic focus for the company, that will be a strong driver of growth throughout 2021”.
The third quarter announcement managed to rally the Zip share price 16.95% to $9.73.
Zip launched in the UK in late 2020 with the Zip app released to the app store in late March this year. The company said that the utilisation of its virtual card technology will be a key pillar in its UK strategy.
Looking over at rival Afterpay Ltd (ASX: APT), the UK was the company’s fastest-growing region in the FY21 third quarter, on a percentage basis.
Afterpay UK sales surged 246% against the prior corresponding period from $0.1 billion to $0.5 billion.
This compares to its North America and ANZ regions, with sales growth of 167% and 48% respectively for the quarter.
Zip’s third-quarter announcement also revealed a soft launch into Canada and strategic investment into South East Asia via a leading Philippines buy now, pay later player, TendoPay.
The Canada launch was driven by US merchant demand, with plans to build out an initial local presence.
Zip share price snapshot
At the time of writing on Friday morning, Zip shares are trading 1.17% lower at $7.61. The Zip share price reached its 52-week high of $14.43 during intraday trading on 16 February. The company’s shares have gained around 8.5% over the past month.
Based on the current share price, Zip has a market capitalisation of around $4.3 billion.
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Motley Fool contributor 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 and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.