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Highlights:
- Today, Zip Co Limited (ASX:ZIP) announced that it had inked deals to sell its Twisto and Payflex businesses.
- The company said it is on track to wrap up its business in the Middle East region.
- ZIP remains confident that it will achieve positive cash EBTDA in 1H FY24.
Shares of financial services company Zip Co Limited (ASX: ZIP) closed 3.703% higher at AU$0.560 on Thursday, 30 March 2023, after surging as much as 13.88% to an intraday high of AU$0.615. Buying interest in ZIP shares was seen after the company notified that it inked deals to sell its 100% owned businesses in Central and Eastern Europe (Twisto) and South Africa (Payflex). Also, the company said it is on track to wrap up its business in the Middle East region.
Contingent on closing conditions, consisting of regulatory consent and along with earlier notified actions to close its operations in the Middle East region, the company anticipates aggregate net cash inflows of nearly AU$20 million to be witnessed in the second half of the current fiscal year.
Zip Co’s EMEA businesses cash EBTDA was negative AU$10.2 million in 1H FY23. Once the transactions mentioned above are complete, the company said it would neutralise cash burn from its RoW footprint by the close of this fiscal year.
The transactions announced today are part of initiatives to achieve its strategic priorities. The plans notified by ZIP show the persistent implementation of its strategy for simplifying its portfolio as well as focus on core businesses in the US and ANZ regions. The anticipated cash inflows will add straight to ZIP’s available cash and liquidity. The company stays confident that it has enough available cash and liquidity to achieve positive cash EBTDA in 1H FY24.
Zip Co’s 1H FY23 results
Last month, the company released its 1H FY23 results ended 31 December last year. ZIP’s revenue increased 19% to AU$350.9 million against AU$295.8 million in pcp. Loss from ordinary activities after income tax increased 15% to AU$242.5 million against AU$211.3 million in pcp.
In 1H FY23, Zip Co witnessed growth in core markets like the US, where deeper consumer engagement led towards a 9% rise YoY in spend per active consumer. The ANZ region business generated 23% higher revenue annually, with revenue margins elevated to 7.8%.
During the reported period, the company shut down its operations in nations like Singapore, Mexico and the UK.
