- Zip Co (ZIP) publishes strong results for FY23 alongside BNPL counterparts EML Payments (EML) and Tyro Payments (TYR)
- The company posted record revenues of $693 million, up 16.1 per cent YoY
- Tyro Payments and EML Payments were in the green heading into lunchtime trades, up 14 per cent and 25 per cent, respectively
- Zip’s transaction volumes were basically equal between the ANZ and Americas regions
- ZIP shares are up 4.55 per cent, trading at 34.5 cents at 12:57 pm AEST
Zip Co (ZIP) has reported its FY23 results, achieving record revenues of $693.2 million, marking a 16.1 per cent year-on-year (YoY) increase.
Cash gross profit was up 20.4 per cent YoY to $250.6 million. The same too for transaction numbers, recording 72.8 million purchases.
Transaction volumes also reached a record high, totalling $8.9 billion, reflecting a seven per cent YoY increase.
“In Australia, we launched new merchant relationships with marque merchants including eBay AU, Webjet, Jetstar, Peloton and Uber. The expected consolidation in digital financial services is playing out and there are significant opportunities for Zip,” ZIP CEO Cynthia Scott said.
“We completed our strategic review of RoW and non-core businesses and took actions to close or wind down these businesses, delivering cash inflows back to Zip and neutralising cash burn.
“We achieved an important milestone, exiting FY23 with the US and NZ businesses cash EBTDA positive, along with the Australian business which has been cash EBTDA positive for five years.”
Transaction volumes between the Australia-New Zealand and Americas markets were nearly evenly split, with ANZ netting $4.15 million (up 2.9 per cent YoY) and the Americas at $4.6 million (up 13.1 per cent YoY).
Zip Co’s revenue margins saw a 7.8 per cent YoY increase, marking a 60 basis point improvement compared to the end of FY22. Additionally, the number of merchants using Zip’s payment installment technology increased by 11.2 percent YoY, reaching 72,300.
The strong numbers come on the back of Monday’s higher-than-expected retail sales growth data, which showed a 0.5 per cent increase compared to estimates of 0.3 per cent. Morgan Stanley analysts had predicted a 0.1 per cent rise, significantly surpassing that estimate.
Zip’s strong performance aligns with a broader trend in the Buy Now, Pay Later (BNPL) market, both in Australia and internationally.
On Tuesday, Australian BNPLs EML Payments (EML) and Tyro Payments (TYR) also reported FY23 results, with the sector showing strength across all companies.
Prior to midday AEST today, EML shares were up 22.8 per cent to 91.5 cents; Tyro Payments was up 14.2 per cent to $1.28.
In the US, NASDAQ-listed BNPL player Affirm recently saw a gain of 28.8 per cent as it exceeded revenue and earnings expectations.
The BNPL sector was a former favourite for Australian share traders with the rise of Afterpay, now de-listed, which was sold to a company in the US. The stocks fell off during the COVID years, but the Australian sector now appears to be regaining strength.
The results in the Australian sector suggest a resilient consumer base. Conversely, the increased use of payment instalment solutions may also indicate that consumers are looking for more flexible spending options or are becoming more financially conscious.
ZIP shares were up 4.55 per cent, trading at 34.5 cents at 12:57 pm AEST.