The Zip Co Ltd (ASX:Z1P) share price will be on watch today after it reported 130% growth of revenue for the first half of FY21.
The post Zip (ASX:Z1P) share price on watch with 130% revenue growth in HY21 appeared first on The Motley Fool Australia. –
The Zip Co Ltd (ASX: Z1P) share price will be on watch today after revealing strong levels of growth in its FY21 half-year result.
What did Zip report?
Zip revealed that it generated record revenue of $160 million, which was growth of 130% year on year. At December 2020 it was generating annualised revenue of at least $480 million.
This revenue growth was made possible thanks to total transaction volume (TTV) growth of 141% year on year to $2.32 billion – this was annualising at $7.5 billion at December 2020.
Zip reported that it made positive cash earnings before tax, depreciation and amortisation (EBTDA) with cash gross profit margins increasing to 54%. The buy now, pay later company said that it is demonstrating market leading unit economics whilst investing for global growth.
The company said that the addition of Quadpay delivered a step change in unit economics, revenue yield and capital efficiency for the company. Revenue as a percentage of TTV was 6.89%, the gross profit margin as percentage of TTV was 3.71% and the blended book is now recycling every three months on average.
Zip said that it now has more than 5.7 million active customers, which was an increase of 217% year on year. It also has more than 38,500 merchants across the US, Australia, New Zealand and the UK.
The company said that its credit performance continues to deliver market leading results with net bad debts of 1.93% in Australia, demonstrating the strength of Zip’s proprietary real-time credit decision technology.
New growth and partnerships
Zip said that it has secured key partnerships with Gamestop, Fanatics, Newegg and Sunglass Hut in the US. It has also partnered with Harvey Norman Holdings Limited (ASX: HVN), Domayne and Adore Beauty Group Ltd (ASX: ABY) in Australia.
The buy now, pay later business also said that it has launched in the UK in December 2020 with a number of brands including Boohoo, JD Sports, Fanatics and Cotton On with a strong global pipeline building.
Zip said it has now launched ‘Tap & Zip’ in Australia, becoming a Visa principal issuer. It has enabled a Chrome extension in the US, which enables users to pay later on any website.
It has established a new markets team to explore strategic and opportunistic expansion. During the half, a number of investments were made in the buy now, pay later space across Europe and the Middle East. Canada is currently in the pilot stage and scheduled for a soft launch in the second half of FY21 to support the US merchant base.
Zip business was formally launched after its beta period, with a refreshed brand, signing names like eBay and Facebook as partners. This allows small businesses to buy now, pay later for advertising and working capital.
Zip share price movements
The Zip share price has been shooting higher this year. Since the start of 2021, Zip shares have risen higher by 112%.
Zip said that it has global momentum and it has set the foundations to accelerate growth across the world over the rest of FY21. It’s looking for new opportunities and strategic partnerships to expand the footprint.
It also said that it has a strong pipeline of global retail partnerships. Zip is going to keep focusing on healthy and sustainable unit economics.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
- 5 things to watch on the ASX 200 on Thursday
- 3 things to watch when Zip (ASX:Z1P) releases its half year results
- Why is the Telstra (ASX:TLS) share price falling today?
- The IOUpay (ASX:IOU) share price is skyrocketing 30% today
- Why the Afterpay (ASX: APT) share price is down 8% today
Tristan Harrison 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.