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The share price of Zip Co Ltd (ASX:ZIP), a prominent player in the Buy Now, Pay Later (BNPL) sector, is experiencing significant pressure today. Following the release of its full-year financial results for the 12 months ending 30 June 2024 (FY 2024), the stock has seen a sharp decline, despite notable revenue growth. As of morning trade on Monday, Zip's share price has dropped 9.3%, falling from AU$2.27 to AU$2.06. This underperformance stands in stark contrast to the broader S&P/ASX 200 Index (ASX:XJO), which is up by 0.3% during the same period.
Revenue Growth Fails to Bolster Investor Confidence
Despite the sharp decline in share price, Zip reported a robust revenue increase, with total revenue reaching AU$868 million, marking a 28.2% rise from FY 2023. Additionally, the company achieved cash earnings before tax, depreciation, and amortisation (EBTDA) of AU$69 million, a staggering 243.2% increase year on year. The total transaction volume (TTV) also grew, reaching AU$10.1 billion, up 14.0% from the previous year. Cash gross profit saw an even more impressive rise, up 52.8% to AU$373 million.
However, these positive financial metrics were not enough to satisfy investor expectations. The decline in share price suggests that investors were anticipating even stronger results, particularly given the rapid growth Zip has experienced over the past year.
Mixed Performance Across Key Metrics
Zip’s performance across various key metrics was mixed, further contributing to investor unease. While the company reported a 9.6% year-on-year increase in merchant numbers to 79,300, active customer numbers declined by 2.9%, dropping to 6.0 million. The revenue margin increased to 8.7%, up 0.96% from FY 2023, and net bad debts decreased by 0.18% to 1.7% of TTV, indicating some positive trends.
On a regional level, Zip Americas achieved record cash EBTDA of AU$77.2 million, while Zip Australia and New Zealand also delivered a record cash EBTDA of AU$33.0 million. Despite these regional successes, the overall investor sentiment remains cautious.
