Zip Co Limited (ASX: Z1P) provides digital payment services to merchants and consumers across health, retail, education and travel industries. It offers a range of retail finance solutions to businesses, both online and in-store. ZipPay and ZipMoney are the two main products of the company. ZipPay provides no interest ever digital shopping account while ZipMoney provides a continuing line of credit for a promotional interest-free period.
The company today on 21 February 2019 have announced its half-year results for the period ending 31 December 2018. The group continues to report strong revenue growth with increasing numbers of consumers and merchants embracing the benefits offered by buying now pay later solutions. It has now over one million customer accounts on its platform, a 39% increase over the six months to 31 December 2018 and over 12,600 merchants.
Revenue for the six months ending 31 December 2018 increased 114% to $34.2 million from $16.0 million for the six months ending 31 December 2017. This was driven by an increase in transaction volume from $235.3 million for the six months ending 31 December 2017 to $495.2 million for the six months ending 31 December 2018.
The company generated positive cash EBTDA of $2.4 million compared to a net outflow of ($7.7 million) in the six months to December 2017. Cash EBTDA was positive for the first time at 0.9% of average receivables, compared to (8.6%) in H1FY18.
On the balance sheet front as at 31 December 2018, the Zip Co Limited receivables portfolio was $489.0 million, having grown 54% compared to the balance at 30 June 2018 of $316.7 million. The repayment profile is healthy at approximately 14% (of prior month-end portfolio) in monthly collections suggesting a payback period of approximately seven months.
Cash inflows from operating activities amounted to $7.6 million for the half-year ended 31 December 2018, compared to a cash outflow of $2.8 million in the six months ended 31 December 2017. Cash receipts from customers were $34.0 million for the half-year ended 31 December 2018, having increased from $16.4 million in the six months ending 31 December 2017. Payments to merchants, suppliers and employees amounted to $17.8 million up from $12.3 million in the prior year, and Interest paid stood at $8.7 million compared to $7.0 million in the six months ending 31 December 2017.
The company has an outlook to beat the expectations set at the beginning of FY19. It reported record revenue and transaction growth and remains well positioned to continue its expansion. This is supported by factors including continued strong growth across all key drivers, healthy pipeline etc.
On the price-performance front, the stock of Zip Co Limited last traded at $1.390 with an increase of 8.171% during the day’s trade and with a market capitalisation of circa $404.82 million. The stock has generated a YTD return of 16.82% and posted returns of 25.37%, 33.85% and 9.83% over the last six months, three months and one-month period respectively. The stock has a 52-week high price of $1.440 and a 52-week low price of $0.750 with an average trading volume of 790,976.
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