Zip Reports Record Quarterly Revenue In Q3 FY19, Revenue Up 105% On PCP

Zip Reports Record Quarterly Revenue In Q3 FY19, Revenue Up 105% On PCP

Zip Co Limited (ASX: Z1P), a payment solution provider deals in digital retail finance and payments industry. The company provides digital payment services to sectors like education, retail, travel and health industries. The firm aims to offer transparent and reasonably priced consumer products.

Zip has announced its quarterly results for the period ending 31 March 2019 (Q3 FY19) today. The company has reported a record quarterly revenue of $23.0m in the quarter, a 20% rise on Q2 while a 105% rise on Q3 FY18.

Apart from the revenue, the company has delivered strong growth in other operational metrices also as indicated in the below table:

Financial and Operational PerformanceQ3 FY19 Results (unaudited)% increase on Q2 FY19 (unaudited)% increase on Q3 FY18 (unaudited)
Merchants14,36313%ñ60%ñ
Customers1,166,24714%ñ86%ñ
Receivables$565.3m16%ñ113%ñ
Transactions1,237,3200%162%ñ
Transactions volume$281.4m8%ò107%ñ

Key Operational Metrics (Source: Company’s Report)

The company also delivered a positive Cash EBTDA of 1.7 per cent of average receivables during the quarter. There has been a decline in Cash Cost of Sales to 8.2% in Q3 (8.3% in Q2) and Cash Operating Costs to 7.3% in Q3 (7.8% in Q2).

The total facilities worth $631.5 million are available with the company by the end of the quarter including an increase in the NAB facility of $100 million post the extension of the agreement with NAB and FIIG (primary funders of the zipMoney 2017-1 Trust) for additional two years.

As per Zip’s Managing Director and CEO, Mr Larry Diamond, the company has witnessed a decline of 8% in transactions volume, but the transaction numbers have remained flat during the quarter as the company emphasised on pushing monthly active usage, in turn generating positive results. There was a continuous addition of well-known enterprise clients to the platform like the Chemist Warehouse to the company.

The company has raised $57 million in equity to capitalise on BNPL and credit card sectors that are providing a vast market opportunity. Due to a large number of participants in capital raising activity, the company saw oversubscriptions in both the Share Placement and the Share Purchase Plan.

A Senate inquiry was conducted during the quarter into “credit and financial services targeted at Australians at risk of financial hardship”. The company’s current practices were found to be following the Senate Committee’s recommendations.

The firm plans to use the raised capital of $57 million to speed up the growth initiatives and to strengthen the balance sheet. The proceeds from the capital would be used to accelerate investment in IP, to push customer acquisition, to enter new markets and to expand Pocketbook’s product range.

The Zip Native App has received a positive response from the users as over 740k downloads were recorded across IOS and Android. The App has got a ranking of #5 in the finance category in Google Play and a ranking of #10 in the shopping category in the Apple Store.

The merchant base of the firm has widened with over 14,300 partners that accept Zip digital payments. During the quarter, the company signed an agreement with global payments group Adyen under which the company will provide an integrated payment option for the retailers using Adyen platform.

Pocketbook, a brand under which Zip operates, has added over 60k customers to its platform, taking the user numbers to 660,000. The management of the company is planning to expand the app in Q4 FY19 beyond tracking, budgeting and saving.

The company stock is currently trading at AUD 2.720 (as at AEST: 2:53 PM on 29th April 2019), up by 9.677% than the previous day’s market price. 3,901,445 number of shares are presently in trade with 352.14 million shares outstanding.


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