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In 2024, Zip Co Ltd (ASX:ZIP) has emerged as one of the standout performers on the Australian Securities Exchange (ASX), boasting an extraordinary 241% gain since January. This surge reflects Zip's growing dominance in the Australian buy now, pay later (BNPL) market. For context, a $6,000 investment in Zip made approximately a year ago would now be worth over $42,000.
Zip’s robust financial performance for FY24 underscores this impressive stock growth. The company reported a 28% increase in revenues, reaching $868 million. Total transaction volume (TTV) also grew by 14%, hitting $10.1 billion. The most notable achievement was a 53% surge in gross profit, which climbed to $373 million. Following a challenging period in FY22 and FY23, Zip has now achieved profitability for four consecutive quarters, boosting its stock to a 'strong buy' rating, according to CommSec's August analysis.
Klarna’s Global Expansion and Financial Turnaround
In comparison, Klarna, the Swedish fintech powerhouse, has made significant strides in the global BNPL landscape. Founded in 2005, Klarna now operates in 45 countries and reported a 27% revenue increase in H1 2024, reaching 20.9 billion Swedish Krona (approximately AUD $2.93 billion). Notably, the company reversed its losses from the previous year, achieving an operating income of 673 million Swedish Krona (AUD 94.2 million), contrasting sharply with a 1.1 billion Swedish Krona (AUD 154 million) loss in H1 2023.
Klarna’s growth in the US market has been particularly impressive, with revenues jumping 38% and gross profits climbing 93%. The company has maintained profitability for seven consecutive quarters, outpacing Zip’s timeline. Klarna’s strong position is further reinforced by its status as the "partner of choice for 1 in 4 of the top 100 US merchants," as noted by fintech investment expert Linas Beliunas, who describes Klarna as "building the ultimate shopping destination of the future" with aspirations to become "the Google of Shopping."
Comparative Metrics: Zip vs. Klarna
When comparing the two BNPL giants, Klarna’s scale is significantly larger. Klarna’s gross merchandise volume (GMV) reached 1 trillion Swedish Krona (AUD 140 billion) over the past twelve months. While Zip does not use GMV, its TTV of AUD $10.1 billion is a similar metric, reflecting the total value of transactions processed on its platform.
Despite Klarna's larger scale, the growth rates of both companies are comparable. Zip posted a 28% increase in revenue, while Klarna’s revenue grew by 27%. However, Klarna’s global reach, including partnerships with major brands like Uber and Airbnb, highlights its broader market presence and influence.
