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- Buy now, pay later company Zip Co (ZIP) reports a 57.4 per cent increase in revenue to a record $620 million for FY22
- Zip says transaction volumes increasing to $8.7 billion, alongside an increase in customers and merchants across the Americas, APAC and EMEA regions, helped drive the revenue growth
- However, the fintech stock reported a 75.8 per cent rise in its cost of sales and 44.4 per cent increase in expenditure, which led to Zip reporting a net loss of roughly $1.1 billion
- As part of a review to reduce cash burn and focus on core assets, Zip closed its Singapore and UK operations and discontinued the Pocketbook and Trade and Trade Plus products
- Zip says this will ultimately serve its goal of achieving profitability by FY24
- Company shares are up 2.06 per cent to trade at 99 cents as of 2:23 pm AEST
Over the 2022 financial year, Zip Co (ZIP) increased its revenue by 57.4 per cent year-on-year to a record of $620 million.
The buy now, pay later business said the increase was mainly driven by growth in transaction volumes and originations of 50.8 per cent to $8.7 billion, generated by its Consumer and small and medium-sized merchant (SME) operations.
Zip Co also saw customer numbers increase by 56 per cent to 11.4 million, while merchant numbers grew 77 per cent to around 90,700.
The majority of the customer growth came from Zip’s American operations, which grew by 45.5 per cent, followed by the Asia-Pacific region, which experienced a 14.3 per cent increase. Customers from the EMEA region (Europe, Middle East, Africa) grew from 100,000 to 1.8 million.
Similarly, merchant growth was primarily driven by the Americas, followed by the Asia Pacific and EMEA.
Following a hefty 75.8 per cent increase in Zip’s cost of sales, the company made a gross profit of $151 million, up 18.8 per cent on the prior year.
Yet, a 44.4 per cent increase in expenditure to roughly $1.3 billion saw Zip Co report a significant net loss of $1.1 billion for the full-year period. This marks a 63 per cent increase on the loss in the prior year.
As part of an ongoing review of its strategic priorities and to reduce cash burn, Zip decided to close its Singapore and UK operations and discontinue its non-core Pocketbook app and Trade and Trade Plus products.
The company said the review reflected its focus on delivering sustainable growth in its core markets, improving unit economics, and optimising its global cost base to accelerate its path to profitability in FY24.
“While FY22 has been a year of change and consolidation, our mission and values remain
constant,” Co-Founder and Global CEO Larry Diamond said.
“In times of heightened inflation and cost of living pressures, BNPL has become even more of an important budgeting tool for everyday consumers,” he added.
“That is why we have never felt more passionate about giving people the knowledge, access and the ability to control their financial lives so they can live every day with confidence.”
By June 30, Zip had cash and liquidity of $279 million and said it remained well funded for growth.
Company shares were up 2.06 per cent to trade at 99 cents as of 2:23 pm AEST.
